Q1 2024 Ambev SA Earnings Call

May 8, 2024

Jean Jereissati Neto: Investors should understand that general economic conditions in the and other operating factors could also affect Ambev and could cause a decrease in revenue from Bells Express. I would also like to remind everyone that, as usual, the percentage changes that will be discussed and, unless otherwise stated, the first quarter results. Normalized figures refer to performance for Exceptional Idols, which are either income or expenses that do not occur regularly as part of Ambev's normal activities. As normalized figures are non-gap, the company discloses the consolidated profit, EPS, operating profit, and EBITDA on a fully reported basis in the earnings Now, I'll turn the conference over to you. So, hello everyone.

Operator: Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements. I would also like to remind everyone that, as usual, the percentage changes that will be discussed during today's call are both organic and normalized in nature. Unless otherwise stated, percentage changes refer to comparisons with 2023 Q1 results. Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of Ambev's normal activities. As normalized figures are non-GAAP measures, the company discloses the consolidated profit, EPS, operating profit, and EBITDA on a fully reported basis in the earnings release. Now, I'll turn the conference over to Mr. Jean Jereissati. Mr. Jereissati, you may begin.

And that general economic conditions industry conditions, and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward looking statements.

Jean Jereissati Neto: I would also like to remind everyone that as usual the percentage changes that will be discussed during today's call are both organic and normalized in nature.

Speaker Change: And unless otherwise stated percentages changes refer to comparisons with 2023 first quarter results.

Jean Jereissati Neto: Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of ambev normal activities.

Jean Jereissati Neto: As normalized figures are non-GAAP measures the company discloses the consolidated profit EPS operating profit and EBITDA on a fully reported basis in the earnings release.

Speaker Change: Now I'll turn the conference over to Mr. Jim Judy Saatchi <unk> Saatchi you may begin.

Jean Jereissati: Hello, everyone. Thank you for joining our Q1 earnings call. Today, before jumping into our first quarter results, I would like to say some words about the situation in the state of Rio Grande do Sul. Since last week, we have been working with all our energies to help our team and the population affected by the floods in the state. As a Brazilian company, we will always be at the side of Brazilians in all situations. In addition to protecting and helping our colleagues, we have already donated more than 185,000 liters of water to 11 affected municipalities. We have also been taking water directly from our brewery in the Greater Porto Alegre to supply four hospitals in the capital of the state, totalizing 375,000 liters.

Speaker Change: So hello, everyone. Thank you for joining our Q1 earnings call.

Jean Jereissati Neto: Thank you for joining our Q1 earnings call. Today, before jumping into our first quarter results, I would like to say some things about the situation in the state of Rio Grande do Sul. We have been working with all our partners to help and the population affected by the floods in the.

Jean Jereissati Neto: Today before jumping into our first quarter results I would like to say some words about the situation in the state of yoga useful.

Jean Jereissati Neto: Since last week, we have been working with all our energies to help our team and the population affected by the floods in the states.

Jean Jereissati Neto: As a Brazilian company, we will always be at the side of... in all situations. So, in addition, we have already donated more than 185,000 liters of water to 11 affected municipalities.

Jean Jereissati Neto: As a Brazilian company, we will always be at the side of resilience in all situations. So in addition to protecting and helping our colleagues we have already donated more than 185000 liters of water to 11 affected municipalities. We have also taken water.

Jean Jereissati Neto: We have also been taking water directly from our..., in the greater, in the capital, totalizing 375,000 liters. In addition, we have stopped our production in Porto Alegre, and we will start producing water again. And we won't stop.

Jean Jereissati Neto: Directly from our brewery in the greater Porto Alegre to supply four hospitals in the capture of the states.

Jean Jereissati Neto: Totalizing 375000 liters.

Jean Jereissati: In addition, we have stopped our production in Porto Alegre to start producing water to distribute to the local population, and we won't stop. We will continue our efforts to find other solutions to help our ecosystem. Now, talking about Q1. In our last call, I left you with three main messages regarding 2024. First, that we were, and still are, confident about volume growth, especially in Brazil. Second, we are working to deliver solid free cash flow generation. Lastly, our main challenge in the year is taxes in Brazil. This quarter was a good example of this. Brazil had its best volume performance for a Q1 in history in both beer and NABs. CAC grew volumes. In Canada, volume declines were mainly driven by industry.

Jean Jereissati Neto: In addition, we have started our production in Porto Alegre.

Jean Jereissati Neto: Start producing water to distribute to the local population and we won't stop.

Jean Jereissati Neto: We will continue our efforts to find other solutions to help our ecosystem.

Jean Jereissati Neto: We will continue our efforts and find other solutions to help our Now, talking about the first course. In our last call, I left you with three main messages regarding 2020. First, that we were, and still are, confident about volume growth, especially in... Second, we are working to deliver solid free cash flow generation. And lastly, our main challenge for the year is..., and this quarter was a good example of this. Brazil had its best volume performance for a Q1, in both beer and magic. CAC group volumes in LA in Canada, and cashflow from operations. Pre-cash flow grew almost 1%, and net income was slightly negative.

Jean Jereissati Neto: Now talking about the first quarter.

Jean Jereissati Neto: In our last call I left you with three main messages regarding <unk> 24.

Jean Jereissati Neto: First that we were <unk> golf them about volume growth, especially in Brazil.

Jean Jereissati Neto: Second we are working to deliver solid free cash flow generation and lastly, our main challenge in the year is taxes in Brazil.

Jean Jereissati Neto: And this quarter was a good example of this <unk>.

Jean Jereissati Neto: Brazil had its best volume performance for a Q1 in history in both beer and labs.

Jean Jereissati Neto: <unk> grew volumes in loss in Canada volumes declines were mainly driven by industry.

Jean Jereissati: Cash flow from operating activities and free cash flow grew almost BRL 1.3 billion each versus last year. Net income was slightly negative, thanks to currency devaluation in Argentina and to a higher effective tax rate due to lower deductibility from IOC and VAT government grants in Brazil. All in all, a good start to the year. Going into more details on this quarter's performance, I would like to focus on three topics. First, the Brazil beer top line, then Brazil NABs, and Argentina. Let's get started. Brazil beer volumes grew 3.6% in the quarter. According to our estimates, industry was slightly positive this quarter, and we estimate to have gained market share. Premium and super premium brands grew in the low teens, led by Corona, that grew over 70%, Spaten and Original.

Jean Jereissati Neto: Cash flow from operating activities and free cash flow grew almost one 3 billion reais each versus last year.

Jean Jereissati Neto: And net income was just slightly negative thanks to currency devaluation in Argentina into a higher effective tax rate due to lower deductibility from IOC N V go over to MS rents in Brazil.

Jean Jereissati Neto: Thanks to CurrencyDevaluation, to a higher, effective package due to lower deductibility from Iowa and VAT Government Grants in Brazil. All in all, a good start to the year. On this quarter's performance, I would like to focus on three topics. First, the Brazilian beer topic, then Raziel Nabs and their, So let's get started.

Jean Jereissati Neto: All in all a good start to the year.

Jean Jereissati Neto: Going into more details on this quarter's performance I would like to focus on three topics.

Jean Jereissati Neto: Brazil beer volumes grew 3.6% in the quarter, according to our estimates. This was slightly positive this quarter, and we estimate to have gained market share Premium and Super Premium brands grew in the low, led by Corona, that grew over 70%. And for the fifth consecutive quarter, we estimate to have gained market share within premium brands. Budweiser's family grew 55 percent.

Jean Jereissati Neto: First in Brazil beer top line.

Jean Jereissati Neto: Then, Brazil, nabs and Argentina.

Jean Jereissati Neto: So, let's get started Brazil beer volumes grew three 6% in the quarter. According to our estimates industry was slightly positive this quarter and we estimate to have gained market share.

Jean Jereissati Neto: Premium and Super premium brands grew in the low teens led by Corona that grew over 70% sparkling and original.

Jean Jereissati: For the fifth consecutive quarter, we estimate to have gained market share within premium brands. In Core Plus, Budweiser family grew 55%, reaching the all-time high volumes in any given quarter. Our core brands remained healthy, growing slightly above the industry. Growth this quarter was led by Antarctica and Brahma. Our value brands declined double digits. I'm very satisfied with this shape of volume growth led by premium and Core Plus with a resilient core, while trade inventory levels remained stable. Now on to net revenue per hectoliter, that grew 0.9% versus last year. Let me break it down into the main components of growth. Price to retailers grew above CPI at about 5%. This is well aligned with our strategy of keeping prices in line with inflation, plus and minus the mix impacts.

Jean Jereissati Neto: And for the fifth consecutive quarter, we estimate to have gained market share within premium brands.

Jean Jereissati Neto: In core plus Budweiser family grew 55% reaching.

Jean Jereissati Neto: All time high volumes in any given quarter.

Jean Jereissati Neto: Our corporates remained healthy, growing slightly above. Growth this quarter was led by Antarctica and Brown, and our value. I'm very satisfied with this shape of volume, led by Primo and Corpolis with a resilient core while trade inventory levels remained stable. Now, on to net revenue per hectare. That's Guru Point, versus. Let me break it down into the main components of Globe.

Jean Jereissati Neto: Our core brands remained healthy growing slightly above the industry.

Jean Jereissati Neto: Growth this quarter was led by Antarctica and Brahma.

Jean Jereissati Neto: In our value brands declined double digits.

Jean Jereissati Neto: I'm very satisfied with this shape of volume growth led by premium and core plus with a resilient core while trade inventory levels remained stable.

Jean Jereissati Neto: Now onto net revenue per hectoliter that grew 9% versus last year.

Jean Jereissati Neto: Let me break it down each of the main components of growth.

Jean Jereissati Neto: Pressure retailers grew above CPI at about $5,000. This is well-aligned with the forward of keeping prices in line with Blas in my. In addition, when we look at Bezier, D. Dear Consumer, inflation reached 4.2% in the quarter. Such data coupled with a growing, structurally healthier, our industry is. However, State VAT grew ahead of ours, This growth is mainly due to the different schedule of the States of their Consumer Price Reference Tables, on which VAT rates compared to our price calendar of the year. Although we might see such for the next quarter, that is not the case.

Jean Jereissati Neto: Retailers grew above CPI.

Jean Jereissati Neto: At about 5%.

Jean Jereissati Neto: This is well aligned with our strategy of keeping prices in line with inflation plus and minus the mix impacts. In addition, when we look at <unk> data beer consumer.

Jean Jereissati: In addition, when we look at IBGE data, beer consumer inflation reached 4.2% in the quarter. Such data coupled with a growing industry show how structurally healthier our industry is. However, state VAT grew ahead of our pricing. This growth is mainly explained by the different schedule that states updated their consumer price reference tables on which VAT rate applies compared to our price calendar of the year. Although we might continue to see such impact for the next quarters, that is not a structural headwind. With that, net revenue grew 4.5% in the quarter ahead of COGS, delivering a 200 basis points gross margin expansion and an EBITDA margin of 33.6%, 260 basis points ahead of last year. In Brazil NAB, volume grew 6.5% versus last year.

Jean Jereissati Neto: Inflation reach at four 2% in the quarter.

Jean Jereissati Neto: Such data coupled with our growing industry show, how structurally healthier our industry yes.

Jean Jereissati Neto: However state VA grew ahead of our pricing this.

Jean Jereissati Neto: This growth is mainly explained by the different schedule that state's updated their consumer price reference tables on which VT rate applies compared to our price calendar of the year.

Jean Jereissati Neto: Although we might continue to see such impact for the next quarters that is not a structural headwind.

Jean Jereissati Neto: With that, Net Revenue Group 4.0, delivering a 200 basis points gross, and I beat the margin of 33.6%. 260 basis points ahead. In Brazil, NAB, volume grew 6.5% for a Gruff was last, by Health and Wellness Brand.

Jean Jereissati Neto: With that net revenue grew four 5% in the quarter ahead of Cogs, delivering a 200 basis points gross margin expansion and a bit the margin of 33, 6%.

Jean Jereissati Neto: <unk> hundred 60 basis points ahead of last year.

Jean Jereissati Neto: In Brazil, Nab volume grew six 5% versus last year.

Jean Jereissati: Growth was led by health and wellness brands. Pepsi Black grew 33% and now represents 25% of total Pepsi-Cola family, and Guaraná Antarctica Zero confirmed its momentum with a 61% growth. Number of buyers grew versus last year in all categories supported by BEES, with a highlight to Guaraná Antarctica Zero that more than double the number of buyers. Net revenue per hectoliter grew 7% as revenue management initiatives, coupled with a positive brand and single serve mix, more than offset increased VAT taxable basis. Even though COGS per hectoliter grew in line with net revenue per hectoliter on the account of mix, sugar, and overall inflation, EBITDA grew almost 18%, reaching an EBITDA margin of 28.6%. Finally, Argentina. Volumes contracted almost 20% this quarter as macro environment continues to be challenging.

Jean Jereissati Neto: Growth was led by health and wellness brands Pepsi.

Jean Jereissati Neto: Pepsi Black grew 33% in now, 25% of total, and Guarana Zero confirmed its momentum, with a 61% growth. The number of buyers grew, with a highlight to Guaraná Táscara Zero. That's more than double.

Jean Jereissati Neto: Pepsi Black grew 33% in now represents 25% of total Pepsi Cola family and.

Jean Jereissati Neto: And whatnot zero confirmed its momentum with a 61% growth.

Jean Jereissati Neto: Number of buyers grew versus last year in all categories supported by beef with a highlight to garner basket zero debt more than double the number of buyers.

Jean Jereissati Neto: Net Revenue Per Hectoliter Grew 7.3% Ezra, Coupled with a positive brand. More Than Offset, Increase, Even though COGS per hectoliter grew in line with net revenue per hectoliter, on the account of mix, sugar, and overall inflation, EBITDA grew almost 18%, reaching an EBITDA margin of 28.6%. And finally, our volumes contracted almost. Porter, as the macroenvironment, continues to be challenged. In nominal terms, it'd be the...

Jean Jereissati Neto: Net revenue per hectoliter grew 7% as revenue management initiatives, coupled with a positive brand and single serve mix more than offset increases Z teeth taxable basis.

Jean Jereissati Neto: Even though Cogs per hectoliter grew in line with net revenue per hectoliter on the account of mix sugar in overall inflation EBITDA grew almost 18%, reaching an EBITDA margin of 28, 6%.

Jean Jereissati Neto: And finally, Argentina.

Jean Jereissati Neto: Volumes contracted almost 3% this quarter as the macro environment continues to be challenging.

Jean Jereissati: In nominal terms, EBITDA reduced significantly given currency devaluation that took place in December 2023. Lastly, despite the industry performance, cash generation, excluding cash upstreams, was above last year performance. Regarding CAC in Canada, the Dominican Republic led CAC to another great quarter with volume increase, double-digit EBITDA growth, and gross and EBITDA margins expansion. Canada saw a tough industry again. However, we were able to offset top-line performance, delivering a slight negative EBITDA performance with a resilient cash generation. When we put things in the long-term perspectives, we see that we made huge progress since 2019. Brazil Beer is a good example of how our commercial momentum continues. We have been making great progress in brand health. Together, our focus brands, Corona, Spaten, Brahma, and Budweiser, reached an all-time high brand health indicator.

Jean Jereissati Neto: In nominal terms EBITDA reduced significantly given currency devaluation that took place in December 2023.

Jean Jereissati Neto: Significantly given the currency devaluation that took place in December, Lashley. Despite the industry performance, cash-in-array [inaudible] was above last year. Regarding CAC in Canada, the Dominican Republic led CAC to another great cause.

Jean Jereissati Neto: Lastly, despite the industry performance cash generation, excluding cash upstream was above last year performance.

Jean Jereissati Neto: Regarding tech in Canada, the Dominican Republic led CAC to another great quarter.

Jean Jereissati Neto: With Volume Increase, double-digit EBITDA growth, and growth in the EBITDA margins expression, Canada saw a tough industry again. However, we were able to offset top-line performance, delivering a slight negative EBITDA performance with resilient cash generation. And when we put things in the long-term perspective, we see that we have made huge progress since 2019. Brazil Beer is a good example of how our commercial momentum continues. We have been making great progress on brand health. Together, our focus brands, Corona, Spatula, Brahma, and Budweiser, Richard, have an all-time high brand health indicator.

Jean Jereissati Neto: With volume increase.

Jean Jereissati Neto: Double digit EBITDA growth and growth in the beat the margins expansion.

Jean Jereissati Neto: Canada saw a tough industry again, however, we were able to offset topline performance delivering a slight negative that beat the performance with a resilient cash generation.

Jean Jereissati Neto: When we put things in a long term perspective, we see that we made huge progress since 2019 breast.

Jean Jereissati Neto: Brazil beer is a good example of how our commercial momentum continues.

Jean Jereissati Neto: We have been making great progress in brand health.

Jean Jereissati Neto: Together, our focus brands Corona, Spartan Brahma and Budweiser reach at an all time high brand health indicator.

Jean Jereissati Neto: Innovation continues to work with Stella Puregold and Budweiser Zero, combined, going over 40 versus Last Quarter, and we will add Corona Zero to the portfolio as the official beer of the Summer Olympic Games.

Jean Jereissati: Innovation continues to work with Stella Artois Pure Gold and Budweiser Zero, combined it growing over 40% versus last quarter, and we will add Corona Cero to the portfolio as the official sponsor of the Summer Olympic Games in Paris. BEES continued to expand and add new third-party products in the marketplace, resulting in a wider assortment of products, and a better experience to our customers. Zé Delivery reached over 65% of population coverage in Brazil, with presence in more than 700 cities. To close, no different than other years, this year presents challenges and opportunities along the way. Short-term uncertainties are part of operating in Latin America, and that's why we focus on what we can control and on our long-term strategy. For the year, we continue confident in volumes.

Jean Jereissati Neto: Innovation continues to work with stellar fugal, and Budweiser zero combined with growing over 40% versus last quarter, and we will add corona faro to the portfolio as the official sponsor of the summer.

Jean Jereissati Neto: Games of berries.

Jean Jereissati Neto: These continue to expand and add new third-party products to the market, resulting in a wider assortment of products and a better experience for our customers, and Zé Delivery reached over 65,000 population coverage in Brazil, with presence in more. And to close, no different than other years, this year presents challenges and opportunities along the way. Short-term uncertainties are part of operating in Latin America, and that's why we focus on what we can control and on our long-term strategy. For the year, we continue to believe in volleyball.

Jean Jereissati Neto: Beef continued to expand and add new third party products in the marketplace, resulting in a wider assortment of products and a better experience to our customers.

Jean Jereissati Neto: And as the delivery reached over 65% of population coverage in Brazil with presence in more than 700 seats.

Jean Jereissati Neto: And to close no different than other years this year presents challenges and opportunities along the way.

Jean Jereissati Neto: Short term uncertainties, our bar of operating in Latin America, and that's why we focus on what we can control and on our long term strategy.

Jean Jereissati Neto: For the year, we continued confidence in volumes.

Jean Jereissati Neto: TACS will continue to be a headwind impacting both the top line and the bottom line, and we will work to deliver consistent and sustainable results, expanding margins and improving cash flow. So, thank you very much. Now, I will hand over to Lucas.

Jean Jereissati: Tax will continue to be a headwind impacting both the top line and the net income, and we will work to deliver consistent and sustainable results, expanding margins and improving cash flow. Thank you very much. Now let me hand over to Lucas.

Jean Jereissati Neto: <unk> will continue to be a headwind impacting both the top line and the net income and we work to deliver consistent and sustainable results expanding margins and improving cash flow.

Jean Jereissati Neto: So thank you very much now let me hand over to Lucas. Thank you yeah. Good morning, and good afternoon, everyone.

Lucas Machado Lira: Thank you, Jean. Good morning and good afternoon, everyone. I close our February call by saying that in terms of our financial performance, the name of the game in 2024 would be consistency and delivering growth, profitability, and resilient cash flows despite the Brazil tax and Argentina hedge. To do that, our focus would remain on financial discipline, value creation, and capital allocation. And Q1 figures show that we're off to a good start. Ibiza grew about 12%, 15% ex-Argentina. Gross margins expanded 100 basis points organically, 150 basis points, ex-sergeant. EBITDA margin expanded 240 basis points organically, 290 basis points, ex-Argentina. Normalized profit declined slightly by 0.6%, and cash flow from operating activities totaled $718 million.

Lucas Lira: Thank you, Jean. Good morning and good afternoon, everyone. I closed our February call by saying that in terms of our financial performance, the name of the game in 2024 would be consistency and delivering growth, profitability, and resilient cash flows despite the Brazil tax and Argentina headwinds. To do that, our focus would remain on financial discipline, value creation, and capital allocation. Q1 figures show that we're off to a good start. EBITDA grew about 12%, 15% ex Argentina. Gross margins expanded 100 basis points organically, 150 basis points ex Argentina. EBITDA margin expanded 240 basis points organically, 290 basis points ex Argentina. Normalized profit declined slightly by 0.6% and cash flow from operating activities totaled BRL 718 million.

Lucas Machado Lira: I closed our February call by saying that in terms of our financial performance. The name of the game in 2024 would be consistency and delivering growth profitability and resilient cash flows despite the Brazil tax and Argentina headwinds.

Lucas Machado Lira: To do that our focus would remain on financial discipline value creation and capital allocation.

Lucas Machado Lira: In Q1 figures shows that we're off to a good start.

Lucas Machado Lira: EBITDA grew about 12%, 15% ex Argentina gross margins expanded 100 basis points organically 150 basis points ex Argentina.

Lucas Machado Lira: EBITDA margin expanded 240 basis points organically 290 basis points ex Argentina.

Lucas Machado Lira: Normalized profit declined slightly by <unk>, 6% and cash flow from operating activities totaled 718 million Reais.

Lucas Machado Lira: Now, today I want to spend a bit more time on our net finance results, income tax, and cash flow, given the materiality of the impacts of Brazil taxes and our. Starting with net finance results, which improved by nearly 600 million reais compared to last year, there were three main drivers of such an improvement. First, lower losses on derivative instruments given lower carry costs to implement our hedging strategy for FX in Brazil and for commodities.

Lucas Lira: Now, today I wanna spend a bit more time on our net finance results, income tax, and cash flow, given the materiality of the impact from Brazil taxes and Argentina. Starting with net finance results, which improved nearly BRL 600 million compared to last year. There were three main drivers of such improvement. First, lower losses on derivative instruments given lower carry costs to implement our hedging strategy for FX in Brazil and for commodities. Second, lower fair value adjustments of payables pursuant to IFRS 13 and CPC 46. Third, the impact of our financial performance decisions in Argentina, where higher cash flow generation during 2023 led to higher interest income. We had lower losses on derivative instruments given our change in hedging strategy and USD exposure, and we also had lower losses on non-derivative instruments, thanks to less third-party and intercompany payables exposures.

Lucas Machado Lira: Now today I want to spend a bit more time on our net finance results income tax and cash flow given the materiality of the impacts from Brazil taxes in Argentina.

Lucas Machado Lira: Second, lower fair value adjustments of payables pursuant to IFRS 13 and CPC 46. Third, the impact of our financial performance decisions in Argentina, where higher cash flow generation during 2023 led to higher interest income. We had lower losses on derivative instruments given our change in hedging strategy and U.S. exposure. And we also had lower losses on non-derivative instruments, thanks to less third-party and intercompany payables exposure. Lower carry costs in Brazil and lower fair value adjustments of payables should continue to help our net finance results year-over-year performance going forward.

Lucas Machado Lira: Starting with net finance results, which improved nearly $600 million high as compared to last year.

Lucas Machado Lira: There were three main drivers of such improvement first lower losses on derivative instruments, given lower carry costs to implement our hedging strategy for FX in Brazil and for commodities.

Lucas Machado Lira: Second lower fair value adjustments of payables pursuant to <unk> 13, and CPC 46 third the impact of our financial performance decisions in Argentina, where higher cash flow generation. During 2023 led to higher interest income, we had lower losses on derivative instruments given.

Lucas Machado Lira: Our change in hedging strategy and U S exposure.

Lucas Machado Lira: And we also have lower losses on non derivative instruments, thanks to less third party and intercompany payables exposures.

Lucas Lira: Lower carry costs in Brazil and lower fair value adjustments of payables should continue to help our net finance results year-over-year performance going forward. However, the year-over-year gains related to Argentina will be significantly reduced as we lowered our hedging and US exposure throughout last year. Also, we should continue to see higher costs associated with judicial bonds and judicial guarantees expenses. Now let's move to income taxes. Our income tax expense totaled almost BRL 700 million in the quarter, which was equivalent to an effective tax rate of 15%. Four main drivers here. First, higher EBT, which grew from roughly BRL 3.9 billion to nearly BRL 4.5 billion. Second, the final approval during the quarter of our 2023 request to renew the income tax incentive for Arosuco, our subsidiary in the state of Amazonas, which is a one-off.

Lucas Machado Lira: Lower carry cost in Brazil, and lower fair value adjustments of payables should continue to help our net finance results year over year performance going forward.

Lucas Machado Lira: However, the year-over-year gains related to Argentina will be significantly reduced as we lowered our hedging and US exposure throughout last year. Also, we should continue to see higher costs associated with judicial bonds and judicial guarantees. Now let's move to income. Our income tax expense totaled almost 700 million Reais in the quarter, which was equivalent to an effective tax rate of 15%. There were four main drivers. First, higher EDT, which grew from roughly R$3.9 billion to nearly R$4.5 billion.

Lucas Machado Lira: However, the year over year gains related to Argentina will be significantly reduced as we lowered our hedging and U S exposure throughout last year.

Lucas Machado Lira: Also we should continue to see higher costs associated with judicial bonds and judicial guarantees expenses.

Lucas Machado Lira: Second, the final approval during the quarter of our 2023 request to renew the income tax incentive for Arosuco, our subsidiary in the state of Amazonas, which is a one-off. Third, following the December 2023 change in legislation, there were no deductions related to state VAT government grants.

Lucas Machado Lira: Now, let's move to income taxes.

Lucas Machado Lira: Our income tax expense totaled almost 700 million reais in the quarter, which was equivalent to an effective tax rate of 15%.

Lucas Machado Lira: Four main drivers here first higher EBT, which grew from roughly $3 9 billion reais to nearly $4 5 billion reais.

Lucas Machado Lira: Second the final approval during the quarter of our 2023 request to renew the income tax incentive for <unk>, our subsidiary in the state of Amazon US, which is a one off.

Lucas Lira: Third, following the December 2023 change in legislation, there were no deductions related to state VAT government grants. Although the new law is already being challenged, we are not yet technically in a position to continue accruing such deductibility. Should the situation change on the litigation front, we will then accrue the corresponding benefit retroactively. Fourth, following the December 2023 change in legislation, there was less IOC deductibility given lower IOC basis for the 2024 fiscal year. We continue to work towards offsetting this as much as possible. In other words, though net income was pretty much flat in Q1, these headwinds remain for the time being and should impact our performance during the rest of the year. Since I'm on the topic of taxes, let me provide a quick update on tax litigation and the tax reform on consumption in Brazil.

Lucas Machado Lira: Third following the December 2023 change in legislation there were no deductions related to state government grants.

Lucas Machado Lira: Although the new law is already being challenged, we are not yet technically in a position to continue accruing such deductibility. Should the situation change on the litigation front, we will then accrue the corresponding benefit retroactively. And fourth, following the December 2023 change in legislation, there was less IOC deductibility given the lower IOC basis for the 2024 fiscal year. We continue to work towards offsetting this as much as possible. In other words, though net income was pretty much flat in the first quarter, these headwinds remain for the time being and should impact our performance during the rest of the year.

Lucas Machado Lira: Although the new law is already being challenged we are not yet technically and are positioned to continue accruing such deductibility.

Lucas Machado Lira: Should the situation change on the litigation front, we will then accrue the corresponding benefit retroactively.

Lucas Machado Lira: And fourth following the December 2023 change in legislation there was less IFC deductibility, given lower IFC basis for the 2020 for fiscal year.

Lucas Machado Lira: We continue to work towards offsetting this as much as possible.

Lucas Machado Lira: In other words, no net income was pretty much flat in the first quarter. These headwinds remain for the time being and should impact our performance during the rest of the year.

Lucas Machado Lira: Since I'm on the topic of taxes, let me provide a quick update on tax litigation and the tax reform on consumption in Brazil. In terms of litigation, there were no material administrative or judicial rulings during the court hearing.

Speaker Change: Since I'm on the topic of taxes, let me provide a quick update on tax litigation and the tax reform on consumption in Brazil.

Lucas Lira: In terms of litigation, there were no material administrative or judicial rulings during the quarter, but we continue to expect decisions at the administrative level in the coming quarters. As for the tax reform on consumption, on 24 April, the federal government formally submitted to Congress the draft enabling legislation, which may be voted in the House of Representatives by mid-year. Although the transition period will only begin in 2026, and the parameters for the excise tax are somewhat clearer, there are still some important topics to be addressed, such as what the federal and state VAT rates will actually be, what the excise tax rates for beer and sugary drinks will actually be, and finally, how the transition period will be structured so as to ensure that there is no increase in the total tax burden of the industry, which is already among the highest in the world.

Lucas Machado Lira: In terms of litigation there were no material administrative or judicial rulings during the quarter, but we continue to expect decisions at the administrative level in the coming quarters.

Lucas Machado Lira: But we continue to expect decisions at the administrative level in the coming weeks. As for the tax reform on consumption, on April 24th, the federal government formally submitted to Congress the draft enabling legislation, which may be voted on in the House of Representatives by mid-year. Although the transition period will only begin in 2026, and the parameters for the excise tax are somewhat clearer, there are still some important topics to be addressed, such as what the federal and state VAT rates will actually be, and what the excise tax rates for beer and sugary drinks will actually be.

Lucas Machado Lira: As for the tax reform one consumption on April 24th the federal government formally submitted to Congress the draft, enabling legislation, which may be voted in the house of representatives by mid year.

Lucas Machado Lira: Although the transition period will only begin in 2026 and the parameters for the excise tax or somewhat clearer. There is still some important topics to be addressed such as.

Lucas Machado Lira: What the federal and state rates will actually be.

Lucas Machado Lira: The excise tax rates for beer and sugary drinks will actually be and finally, how the transition period will be structured so as to ensure that there is no increase in the total tax burden of the industry, which is already among the highest in the world.

Lucas Machado Lira: And finally, how the transition period will be structured so as to ensure that there is no increase in the total tax burden of the industry, which is already among the highest in the world. Okay, let's quickly go over the cash. Cash flow from operating activities was positive, thanks to a combination of EBITDA growth, lower net finance expenses, and better working capital performance, where higher inventories driven by a faster inventory buildup versus last year were more than offset by better payables, which benefited not only from a lower crop in Argentina that adversely affected Q1 2023 but also from short-term raw material market dynamics in Argentina, which should revert going forward. Cash flow used in investing activities totaled approximately 1.8 billion reais.

Lucas Lira: Okay, let's quickly go over cash flow now. Cash flow from operating activities was positive, thanks to a combination of EBITDA growth, lower net finance expenses, and better working capital performance, where higher inventories driven by a faster inventory buildup versus last year were more than offset by better payables, which benefited not only from a lower crop in Argentina that had adversely affected Q1 2023, but also from short-term raw material market dynamics in Argentina, which should revert going forward. Cash flow used in investing activities totaled approximately BRL -1.8 billion, and year-over-year performance was mainly impacted by CapEx investments, which were 12% lower than last year and roughly BRL 800 million of investments in Brazilian Treasury bonds, so there was ultimately no cash outflow.

Lucas Machado Lira: Okay, let's quickly go over cash flow now cash flow from operating activities was positive.

Lucas Machado Lira: To a combination of EBITDA growth lower net finance expenses and better working capital performance were higher inventories driven by our faster inventory buildup versus last year were more than offset by better payables, which benefited not only from a lower crop in Argentina that had adversely affected Q.

Lucas Machado Lira: 102023, but also from short term raw material market dynamics in Argentina, which should reverse going forward.

Lucas Machado Lira: Cash flow used in investing activities totaled approximately negative $1 8 billion reais and year over year performance was mainly impacted by Capex investments, which were 12% lower than last year and roughly $800 million of investments in Brazilian treasury bonds. So there was ultimately no cash.

Lucas Machado Lira: And year-over-year performance was mainly impacted by CapEx investments, which were 12% lower than last year, and roughly $800 million of investment in Brazilian Treasury bonds. So there was ultimately no cash, and cash flow from financing activities was about negative 2.3 billion, with year-over-year performance pretty much entirely driven by the 1.7 billion reais disbursement in January given the Dominican Republic put-off.

Lucas Machado Lira: Helpful.

Lucas Lira: Cash flow from financing activities was about BRL -2.3 billion, with year-over-year performance pretty much entirely driven by the BRL 1.7 billion disbursement in January given the Dominican Republic put option. We began 2024 better cash flow-wise than we did in 2023, which is great, but we still have work to do during the remainder of the year. Finally, regarding sustainability, we will publish our annual sustainability report on our website in the coming weeks. Stay tuned. With that, now let me hand it back to the operator for Q&A.

Lucas Machado Lira: And cash flow from financing activities was about negative $2 3 billion with year over year performance pretty much entirely driven by the $1 7 billion Reais disbursement in January given the Dominican Republic put option.

Lucas Machado Lira: So we begin 2024 better cashflow wise than we did in 2023, which is great, but we still have work to do during the remainder of. And finally, regarding sustainability, we will publish our annual sustainability report on our website in the coming weeks, so stay tuned. With that, now let me hand it back to the operator for saying that you got an injunction for March so that you no longer have to pay fiscal things on top of the state level subvention.

Lucas Machado Lira: So we begin 2020 for better cash flow wise than we did in 2023, which is great, but we still have work to do during the remainder of the year.

Lucas Machado Lira: And finally regarding sustainability, we will publish our annual sustainability report on our website in the coming weeks so stay tuned.

Speaker Change: And with that now let me hand, it back to the operator for Q&A.

[Analyst]: Thank you. You got an injunction for March so that you no longer have to pay PIS/Cofins on top of the state-level ICMS. Just wondering, number one, whether this had an impact on RHL as well in terms of your revenue per hectoliter. Finally, and also in a related question, historically, we would see the industry and the company passing on higher taxes into prices. It doesn't seem to be the case here, and my understanding from Jean's remarks in the beginning, it continues not to be the case going forward. If you could elaborate on that. I'm trying to get the full picture on the taxation on sales. Thank you.

Lucas Machado Lira: That you you you got an injunction for March so that you no longer have to pay fiscal things on top of the state.

Lucas Machado Lira: Level salvation. So just wondering number one whether this had an impact on as well in terms of your revenue per hectoliter.

Thiago Duarte: So just wondering, number one, whether this had an impact as well in terms of your revenue per hectoliter. And finally, and also in a related question, historically, we would see the industry and the company passing on higher taxes to the price. It doesn't seem to be the case here, and from Gianna's remarks in the beginning, it continues not to be the case going forward. So if you could elaborate on that, I'm trying to get the full picture on the taxation on sales. Thank you. Hi Thiago.

Speaker Change: And finally also and a related question here.

Thiago Duarte: Historically, we would see the industry and the company passing on higher taxes into prices. It doesn't seem to be the case here in my understanding from <unk> remarks in the beginning.

Speaker Change: It continues not to be the case going forward.

Speaker Change: So if you could elaborate on that so I'm trying to.

Thiago Duarte: To get the full picture on the taxation on sales. Thank you.

Jean Jereissati: Hi, Tiago. Thank you very much for the question. Let me give you some information on that. Yes, you know that the VAT in Brazil is, we have this methodology that is substitute, right? I'm responsible for the whole VAT of my customers, so it's a big chunk. It's an important line for us. What happens if you look 10 years back to our performance in net revenue per hectoliter in Brazil beer, this some reduction on net revenue per hectoliter, Q1 versus Q4 happens more frequently than not.

Thiago Duarte: Hi, Joel.

Jean Jereissati Neto: Thank you very much for the question. So, yes, you know that the VAT in Brazil is, we have this methodology that is substituted, right? I'm responsible for the whole VAT of my customers.

Speaker Change: So very much for the question.

Speaker Change: Ah. So so let me give you some information on that so so he as you know that the VA team. Brazil is we have this methodology that is so bicester tooth right I'm responsible for the whole via Chi of my customers. So we sell a big chunk.

Jean Jereissati Neto: So it's a big chunk of, it's an important line for us. What happened if you look 10 years back at our performance in net revenue per hectoliter for Brazil beer? This sum reduction in net revenue per hectoliter, Q1 versus Q4, happens more frequently than not. So if you look 10 years back, this would happen more frequently than what happened in the previous two or three years, when things changed a little bit because of the pandemic and because of the discussions on tax reform.

Jean Jereissati Neto: Ah is an important line for us.

Jean Jereissati Neto: What's happened.

Jean Jereissati Neto: If you if you look.

Jean Jereissati Neto: 10 years back.

Jean Jereissati Neto: Our performance in net revenue per hectoliter in Brazil beer.

Jean Jereissati Neto: This <unk>.

Jean Jereissati Neto: Some reduction on net revenue per hectoliter Q1 versus Q4.

Jean Jereissati Neto: Happens more frequently than not so if you look 10 years back.

Jean Jereissati: If you look 10 years back, this would happen more frequently than what happened in this previous 2 or 3 years, that things changed a little bit because of the pandemic and because of the discussions on the tax reform. It's important to note when the year turns that the states decide to get their tables actualized, right? Usually this impacts on the net revenue per hectoliter. This happens more frequently than not. It was different 2 or 3 years ago than the historical. We suffered, for example, this in the NAB business during Q3 and Q4. If you look at my numbers, we suffered a little bit on this VAT changes in NABs in Q3 and Q4.

Jean Jereissati Neto: This would happen more frequently.

Jean Jereissati Neto: That's what happened in the this grievous toward three years that things change in a little bit because of the pandemic and because of the discussions on the tax reform, but there's important date when turned the year.

Jean Jereissati Neto: But it's an important date when it's the year that the states decide to get their tables actualized right. And usually, this impacts the net revenue per hectoliter. So this happens more frequently than not. It was different two or three years ago than it is now.

Jean Jereissati Neto: The states decide to choose.

Jean Jereissati Neto: To get their tables.

Jean Jereissati Neto: Actualize, it right and usually there is impact.

Jean Jereissati Neto: On the net revenue per hectoliter sold so this happens more frequently than not.

Jean Jereissati Neto: We suffered, for example, this in the NAB business during Q3 and Q4. If you look at my numbers, we suffered a little bit on these VAT changes in NABs in Q3 and Q4. And now we are okay as we pass it through and find revenue management initiatives. And what I mentioned in my initial remarks, and I'm not sure if you got it right, is that these things. Long term, they connect, so what's happening is more of a mismatch, because in the long term, the things should grow together.

Jean Jereissati Neto: It was different.

Jean Jereissati Neto: Three years ago.

Jean Jereissati Neto: The story co.

Jean Jereissati Neto: So for it's for example, this in the lab business.

Jean Jereissati Neto: During Q3 and Q4, if you look at my numbers, we suffered a little bit on on this day to changes in <unk> in Q3, and Q4 and now we are.

Jean Jereissati: Now we are okay as we pass it through and what I mentioned in my initial remarks, and I don't. I'm not sure if you got it right, is that these things, long-term wise, they connect. What's happening is more of a mismatch that in the long term, these things should grow together. We had 18 states that updated their VAT taxable basis during Q4 and beginning of Q1. We protected the carnival with all these changes happening. In March, we already started to pass it through to our customers and to consumers. Long-term wise, this thing should be in balance. Okay?

Jean Jereissati Neto: We are okay, as we pass it through and find revenue management initiatives.

Jean Jereissati Neto: And and and what ice Imation and in in my initial remarks, and I don't I'm not sure. If you got it right is that this things.

Jean Jereissati Neto: Long term wise they connect so day DSO is what's happening is more of a mismatch.

Jean Jereissati Neto: That in the long term this things should grow together. So we had 18 states that updated their VA kit taxable basis during Q4 and the beginning of Q1.

Jean Jereissati Neto: So we had 18 states that updated their VAT taxable basis during Q4 and the beginning of Q1. We protected the carnival when all these changes happened. In March, we already started passing it through to our customers and to consumers. And long-term, this thing should be in balance, OK? So, so let me get to Lucas to, for Lucas to, to update you on the theme of PeaceCoffee. Yeah. Thank you, Jean. Good, good afternoon, Thiago.

Jean Jereissati Neto: We protected the carnival.

Lucas: With all this changes happened in March.

Lucas: We already started to.

Lucas: Two passing it through.

Lucas: True to our customers into consumer as in long term why this thing should be.

Jean Jereissati Neto: Imbalanced, Okay. So so let me get to Lucas two for Lucas two to update you on the theme of fiscal fees. Yeah. Thank you John good good afternoon Chad.

Jean Jereissati: Let me get to Lucas to update you on the theme of PIS/Cofins.

Lucas Lira: Yeah. Thank you, Jean. Good afternoon, Tiago. Regarding PIS/Cofins, you're right. Note seventeen, right, to our quarterly financials discloses the injunction that we obtained already in connection with the PIS/Cofins. However, that injunction was granted towards the end of March, so it didn't really impact Q1. The impact will be seen going forward. Okay? It's more of a prospective impact than having any material impact on Q1.

Lucas Machado Lira: Regarding piscofins, you're right. Note 17, Rights to Our Quarterly Financials, discloses the injunction that we already obtained in connection with piscofins. However, that injunction was granted towards the end of March, so it didn't really impact Q1. The impact will be seen going forward, OK? So it's more of a prospective impact than having any material impact on Q1. It's all very clear. Thank you. Next question is from Isabella Simonato with Bank of America. Hi Jean and Lucas,

Lucas: Regarding fiscal themes euro.

Isabella Simonato: Youre right.

Isabella Simonato: Not 17 rights to our quarterly financials on.

Isabella Simonato: Discloses the injunction that we obtain already in connection with the fiscal things. However that injunction was granted towards the end of March. So it didn't really impact Q1, the impact will be seen going forward. Okay. So it's more of a prospective.

Isabella Simonato: In fact, then having any material impact on Q1.

[Analyst]: It's all very clear. Thank you.

Lucas Machado Lira: That's all very clear thank you.

Operator: Next question from Isabella Simonato with Bank of America.

Isabella Simonato: Next question from Isabella Simonenko with Bank of America.

Isabella Simonato: Hi everyone. Thank you for the opportunity. I have just two quick topics. First of all, I wanted to explore a little bit more the cost performance of Beer Brazil. Because I understand that this was maybe the quarter right when we look for the four quarters of 2024 with the easiest comp in terms of costs, right? So, thinking about the guidance, right, that you guys provided in Q4, how should we think about, (inaudible) that might be reversed right in the next couple of quarters. And if I understood correctly, the... The cash level that you run in Argentina, and consequently, the financial revenues associated with that and other deposits and so on. So if you could just reconcile with us.

Isabella Simonato: Hi, Jean, Lucas. Hi, everyone. Thank you for the opportunity. I have just two quick topics. First of all, I wanted to explore a little bit more the cost performance of Beer Brazil. Because I understand that this was maybe the quarter, right? When we look for the four quarters of 2024 with the easiest comp in terms of cost, right? Thinking about the guidance that you guys provided in Q4, how should we think about this cost deceleration going forward? And if you can elaborate on what drove the -3.5% this quarter, I think it would be helpful. The second thing, Lucas, thanks for detailing the financial result performance.

Isabella Simonato: Hi, Sharon Lucas.

Lucas Machado Lira: Everyone.

Isabella Simonato: Thank you for the opportunity I have just two quick topics are first of all I wanted to explore a little bit more the cost performance of beer Brazil.

Isabella Simonato: Because I understand that this was maybe the quarter right. When we look for for the four quarters of 2024 with the easiest comp.

Isabella Simonato: In terms of of course right. So.

Speaker Change: Uh huh.

Isabella Simonato: Thinking about the guidance right that you guys provided in Q4.

Isabella Simonato: How should we think about.

Isabella Simonato: This cough deceleration.

Isabella Simonato: Going forward and and if you can elaborate.

Isabella Simonato: And what drove the the minus three 5% this quarter I think it will be helpful and the second thing Lucas.

Isabella Simonato: Thanks for for detailing the financial results for farmers, but if you could just a recap a little bit you mentioned about some of the effects.

Isabella Simonato: If you could just recap a little bit. You mentioned about some of the effects that might be reversed, right? In the next couple of quarters. If I understood correctly, the cash level that you run in Argentina, consequently, the financial revenues associated to that, and other deposits and so on. If you could just reconcile to us what's the trend of these main lines, I think it would be helpful for us to understand the sustainability of this. That's it. Thank you.

Isabella Simonato: That might be reversed right at the back scope of waters.

Isabella Simonato: S.

Speaker Change: Yeah as the.

Isabella Simonato: If I understood correctly.

Isabella Simonato: The cash level that you are running Argentina, the consequently, the financial revenues associated to that.

Isabella Simonato: And and other deposits and so on so if you could just reconcile to us.

Jean Jereissati Neto: What's the trend for these mainlines? I think it would be helpful for us to understand the sustainability of this. That's it. Thank you. So, thank you, Isabella. I'll get the first one.

Isabella Simonato: What are the trend of this mainline because I think it would be helpful for us to understand the sustainability of this.

Isabella Simonato: That's it thank you.

Jean Jereissati: Thank you, Isabella. I'll get the first one, and then Lucas get the second one. Yeah. Our cash COGS in Q1 Brazil Beer ex marketplace declined 3.5%. This is, it was, as you mentioned, you were right. This Q1 was an easy comp. But we have been working very hard to get this cash COGS down. What happened, it was really affecting commodity tailwinds, partially being offset by the premium mix, and suppliers NPV and inflation overall.

Speaker Change: So thank you Isabella I'll get the first one.

Jean Jereissati Neto: And then Lucas got the second one. So yeah, so our cash cogs in Q1, Brazil Beer, X Marketplace, declined 3.5%. This is, as you mentioned, you were right. This Q1 was an easy call.

Jean Jereissati Neto: And then Lucas got the second one so yes, all of our cash Cogs in Q1, Brazil.

Jean Jereissati Neto: Brazil beer ex marketplace declined in.

Jean Jereissati Neto: Three 5% this is.

Speaker Change: It was.

Jean Jereissati Neto: As you mentioned you are right. This.

Jean Jereissati Neto: Q1 was a I.

Jean Jereissati Neto: I usually comp.

Jean Jereissati Neto: But we have been working very hard to get this cash cogs down. So what happened was it was really affecting commodity stay-awings, partially being offset by the premium mix, and suppliers, NPV, and inflation overall. But we don't, even though Q1 is outside of the full year guidance that we made, that cash cogs will be in between minus 0.5 to minus 3. We should converge during the year inside this range that we mentioned in the previous quarter. So there is not that much news here. The plan is going as we did, and we maintain the guidance we maintain. Thank you, Jean. Isabella, good afternoon.

Jean Jereissati Neto: And.

Jean Jereissati Neto: But we have been working very hard to get this cash Cogs down.

Isabella Simonato: So what happened it was really effects and commodity stay wings.

Jean Jereissati Neto: Partially being offset by the premium mix.

Isabella Simonato: And suppliers NPV and inflation overall.

Jean Jereissati: Even though the Q1 is outside of the full year guidance that we made, it cash COGS will be in between -0.5 to -3, we should converge during the year inside this range that we mentioned in the previous quarter. There is not that much news on here. The plan is going as we did. The guidance we maintained.

Speaker Change: But we don't even though the Q1 is outside of the full year guidance that we.

Speaker Change: Made that it was it cash cogs will be in between minus 0.5 to minus three.

Isabella Simonato: We should converge.

Isabella Simonato: During the year inside.

Jean Jereissati Neto: This range that we that we mentioned tying the previous quarter. So there is not that much news on here. The plaintiff is going as as we as we did and in the guidance we've maintained.

Lucas Machado Lira: Thank you for the question. Let me break down the financial results by the main lines just to try and give some additional color on the quarter performance and what shouldn't change or what should change going forward, if that helps. So, the first big impact that we saw in Q1 was related to losses on derivative instruments, which were significantly lower than the losses of last year. Two main effects here: carry costs in Brazil and lower U.S. dollar exposure in Brazil.

Lucas Lira: Thanks, Jean. Isabella, good afternoon. Thank you for the question. Let me break down financial results by the main lines, just to try and give some additional color on the quarter performance and what shouldn't change or what should change going forward, if that helps. The first big impact that we saw in Q1 was related to losses on derivative instruments, which were significantly lower than the losses of last year. Two main effects here. Carry costs in Brazil and lower US dollar exposure in Brazil. That was big impact number one. There was marginally some lower exposure to the US dollar on our cost base in Brazil, $1.8 billion versus $2 billion last year.

Jean Jereissati Neto: Thank you Yung Isabella good good afternoon. Thank you for the question.

Lucas Machado Lira: Let me, let me breakdown financial results.

Lucas Machado Lira: By the main lines, just to try and and give give some additional color on our quarter performance and what what that Shouldnt change your or what should change going forward if that helps so.

Lucas Machado Lira: The first big impact that we saw in Q1 was related to losses on derivative instruments, which were significantly lower the losses of last year two main effect here.

Lucas Machado Lira: Carry costs in Brazil, and lower U S dollar exposure in Brazil, So that was big impact number one there was <unk>.

Lucas Machado Lira: So, that was a big impact number one. There was marginally some lower exposure to the U.S. dollar on our cost base in Brazil, 1.8 billion versus 2 billion last year. In addition to that, the carry costs declined from roughly 7.5% to 3.9%.

Lucas Machado Lira: Marginally some lower exposure to the U S dollar on our cost base in Brazil, a $1 8 billion versus 2 billion last year.

Lucas Lira: In addition to that, the carry costs declined from roughly 7.5% to 3.9%. That's kind of the biggest chunk of gain year over year. The second is really related to hedging in Argentina. As we disclosed in December, we started the year with no financial hedges, so we carry no carry costs in the quarter whatsoever. Whereas in Q1 2023, we were still ramping down gradually our hedging. So there was some carry costs embedded into the performance for this line in Q1 of last year. Okay? That was benefit number one. What this means going forward is with respect to the Brazil hedging strategy. We should continue to see kind of benefits throughout the year, right?

Lucas Machado Lira: In addition to that the carry costs declined from roughly seven 5% to three 9%. So that's kind of the biggest chunk of gain year over year and the second.

Lucas Machado Lira: So, that's kind of the biggest chunk of gain year over year. And the second is really related to hedging in Argentina. As we disclosed in December, we started the year with no financial hedges.

Lucas Machado Lira: Is really related to hedging in Argentina, as we disclosed in December we started the year with no financial hedges. So we carry.

Lucas Machado Lira: So, we carry no carry costs in the quarter whatsoever, whereas in Q1 of 2023, we were still gradually ramping down our hedging. So, there were some carry costs embedded into the performance for this line in Q1 of last year. So, that was benefit number one.

Lucas Machado Lira: No carry cost in the quarter whatsoever, whereas in Q1 of 'twenty to 'twenty three we were still ramping down gradually our our hedging so there was.

Lucas Machado Lira: Some carry costs embedded into the performance for.

Lucas Machado Lira: For this line in Q1 of last year. Okay. So that was benefits number one what this means going forward is with respect to the Brazil hedging strategy. We should continue to see kind of benefits throughout the year right assuming carry cost stays where they are today.

Lucas Machado Lira: What this means going forward is that with respect to the Brazil hedging strategy, we should continue to see some benefits throughout the year, right? Assuming carry costs stay where they are today. So, the Brazil portion of this gain, right, should continue to be a reality. And for Argentina, we continue to see some benefit going forward, but to a lesser extent because, as 2023 progressed, we reduced our hedging, so the carry cost was gradually lower as well. So, when we took that, even though we remain unhedged, and as we continue to remain unhedged in Argentina, the year-over-year benefit is lower because we were already gradually reducing our hedging in Argentina. Okay?

Lucas Lira: Assuming carry costs stays where they are today. The Brazil portion of this gain, right, should continue to be a reality. For Argentina, we continue to see some benefit going forward, but to a lesser extent, because as 2023 progressed, we reduced our hedging, so the carry cost was gradually lowering as well. When we lap that, even though we remain unhedged, and as we continue to remain unhedged in Argentina, the year-over-year benefit is lower because we were already gradually reducing our hedging in Argentina. Okay? That was the big effect, number one. The second one relates to NPV payables. That was a lower expense in 2024 in Q1. That should continue to be positive throughout the year. Right?

Lucas Machado Lira: Hey.

Lucas Machado Lira: So the Brazil portion of this gain right should continue to to to be a reality.

Lucas Machado Lira: And for Argentina, we continue to see some benefit going forward, but to a lesser extent because as 2023 progressed, we reduced our hedging so the carry cost was gradually lowering as well so when we lap that even though we remain unhedged.

Lucas Machado Lira: And as we continue to remain unhedged in Argentina, the year over year benefit is lower because we were already gradually reducing our hedging in Argentina. Okay. So that was the.

Lucas Machado Lira: So, that was the big effect number one. The second one relates to NPV payables. So, that was a lower expense in 2024 in Q1. That should continue to be positive throughout the year, right? Jean mentioned that in our cash costs per hectolitre performance, there's a negative impact coming from this, but on the flip side, there's a positive impact on our net finance results pursuant to the provisions of IFRS 13 and CPC 46.

Lucas Machado Lira: The big the big effect.

Lucas Machado Lira: Number one the second one relates to NPV payables. So that was a lower expense in 'twenty in 2024 in Q1 that should continue to be.

Lucas Machado Lira: The positive throughout the year right mentor.

Lucas Lira: Jean mentioned that in our cash COGS per hectoliter performance, there's a negative impact coming from this, but on the flip side, there's a positive impact in our net finance results pursuant to kind of IFRS 13 and CPC 46. With the lower interest rates, this line should continue to be positive throughout the year, number one. Also another important interest expense that's coming down year-over-year is the CND put option that it was already exercised. The tail that's left is still gonna impact, but to a much lesser extent. Interest expense should also flow through positively for the remainder of the year. I think the third big bucket relates more to Argentina. Argentina, I already talked about derivative instruments, but there are two other elements that are relevant.

Lucas Machado Lira: Mentioned that in our cash Cogs per hectoliter performance.

Lucas Machado Lira: A negative impact coming from from this but on the flip side. There is a positive impact in our net finance results.

Lucas Machado Lira: Pursuant to kind of <unk> 13 in CPC 46, so with a lower interest rates. This line should continue to be positive throughout the year number one and also another important interest expense that's coming down year over year is the CND put option.

Lucas Machado Lira: So, with the lower interest rates, this line should continue to be positive throughout the year, number one. And also, another important interest expense that's coming down year-over-year is the C&D put option that was already exercised. So, the tail that's left is still going to impact this line, but to a much lesser extent.

Lucas Machado Lira: That it was already exercises so the tail that's left it's still going to impact but to a much lesser extent. So interest expense should also flow through positively.

Lucas Machado Lira: So, interest expense should also flow through positively for the remainder of the year. And then, I think the third big bucket relates more to Argentina. Argentina, I have already talked about derivative instruments, but there are two other elements that are relevant.

Lucas Machado Lira: For the remainder of the year.

Lucas Machado Lira: And then I think the third big bucket it relates more to Argentina.

Lucas Machado Lira: Argentina, I already talked about derivative instruments.

Lucas Machado Lira: But there are two other elements that are relevant number one interest income since we generated in 2023 more cash flows than we generated.

Lucas Lira: Number one, interest income. Since we generated in 2023 more cash flows than we generated before, we started the year with a higher cash balance, and so that translated into more interest income on the cash balances that was deposited in Argentina year-over-year. So that was positive impact number one. On the losses on non-derivative instruments line, even though there was an impact of the funds that we took out of Argentina through the blue chip swap, this was more than offset by lower balances that we had in Argentina with respect to third party suppliers, with respect to intercompany payments. So the lower cash balance more than offsets the impact that we had as we took money out in the beginning of the year. Okay?

Lucas Machado Lira: Number one, interest income. Since we generated more cash flows in 2023 than we had generated before, we started the year with a higher cash balance, and so that translated into more interest income on the cash balances that were deposited in Argentina year over year. So that was a positive impact number one, and on the losses on non-derivative instruments line, even though there was an impact on the funds that we took out of Argentina through the blue chip swap, this was more than offset by lower balances that we had in Argentina with respect to third-party suppliers and intercompany payments, and so the lower cash balance more than offset the impact that we had as we took money out in the beginning of the year.

Lucas Machado Lira: Before we started the year with a higher cash balance and so that translated into more interest income on the cash balances that was deposited in Argentina year over year. So that was positive impact number one and on the losses on derivatives non derivative instruments line even.

Lucas Machado Lira: Though there was a there was an impact of the funds that we took out of Argentina through the Blue chip swap this was more than offset.

Lucas Machado Lira: By lower balances that we had in Argentina with respect to third party suppliers with respect to intercompany payments and so the lower cash balance more than offset the.

Lucas Machado Lira: The the impact that we had as we took money out in the beginning of the year, Okay going forward.

Lucas Lira: Going forward, this line is really gonna depend on what we do in terms of cash upstream in Argentina. Let's see how the year progresses and also how these cash balances behave. We've been reducing them consistently since 2023. If we continue to do a good job, this should continue to be a benefit going forward. Last but not least, I think the additional piece of information that I introduced in my prepared remarks was on the other financial expenses line. We saw in Q1, and we should continue to see going forward.

Lucas Machado Lira: Going forward, this line is really going to depend on what we do in terms of cash upstreaming in Argentina. Let's see how the year progresses and also how these cash balances behave. We've been reducing them consistently since 2023, so if we continue to do a good job, this should continue to be a benefit going forward. And last but not least, I think the additional piece of information that I introduced in my prepared remarks was on the other financial expenses line, which we saw in Q1 and which we should continue to see going forward, and this is not necessarily just a 2024 point, but it's perhaps a longer-term point to follow, is...

Lucas Machado Lira: This line is really going to depend on what we do in terms of cash upstream in Argentina, let's see how the year progresses and also how these cash balances behave we've been reducing them consistently since plenty of 'twenty. Three so if we continue to do a good job. This should continue to be a benefit going forward.

Lucas Machado Lira: And last but not least I think the additional piece of information that I I introduced in my prepared remarks was on the other financial expenses line. We saw in Q1, and we should continue to see going forward and this is not necessarily just a 'twenty 'twenty four points, but it's a.

Lucas Lira: This is not necessarily just a 2024 point, but it's perhaps a longer term point to follow: the expenses related to letters of credit that are necessary to the extent we decide to litigate in the judiciary our tax litigation. As you may recall, of our tax litigation, roughly 70% is still at the administrative level. To the extent we don't prevail on the administrative level, given that we believe in the merits of our case from a legal, technical perspective and looking into kind of case law in the judiciary, right? Assuming we decide to litigate in the courts, which has been the case so far, that entails some degree of letters of credit.

Lucas Machado Lira: Perhaps a longer term.

Lucas Machado Lira: 0.2 to follow is.

Lucas Machado Lira: The expense is related to letters of credit that are necessary to the extent we decide to litigate in the judiciary our tax litigation. As you may recall, of our tax litigation, roughly 70% is still at the administrative level.

Lucas Machado Lira: The the the expenses related to letters of credits that are necessary.

Lucas Machado Lira: To the extent, we decides to mitigate in the judiciary.

Lucas Machado Lira: Our tax litigation so as you may recall of our tax litigation.

Lucas Machado Lira: Roughly 70% seven zero percent is still at the administrative level and to the extent, we don't prevail on the administrative level given that we believe in the merits of our case from a legal technical perspective, and looking into kind of case line the judiciary.

Lucas Machado Lira: And to the extent we don't prevail on the administrative level, given that we believe in the merits of our case from a legal technical perspective and are looking into some kind of case law in the judiciary, right, assuming we decide to litigate in the courts, which has been the case so far, that entails, right, some degree of letters of credit. So as our administrative cases move to the judicial system, that's going to require some greater degree of guarantees. And so it already impacted to some extent in Q1. So I just wanted to flag that for everybody's reference.

Lucas Machado Lira: Assuming we decide to litigate in the courts, which has been the case, so far that entails right. Some degree of letters of credit so as our administrative cases move to the judicial system that is going to require some greater degree of guarantees and so it already.

Lucas Lira: As our administrative cases move to the judicial system, that's gonna require some greater degree of guarantees. It already impacted to some extent in Q1. I just wanted to flag that for everybody's reference. Again, this is over time, depending on the pace of decisions at the administrative level, which we obviously don't control. Directionally, this is a line that may continue to impact negatively down the road. Hope this helps.

Lucas Machado Lira: Impacted to some extent in Q1, so I just wanted to flag that for everybody's reference, but again this is over time, depending on the base.

Lucas Machado Lira: But again, this is over time, depending on the pace of decisions at the administrative level, which we obviously don't control. But directionally, this is a line that may continue to impact negatively down the road. Hope this helps. Now very well, super clear. Thank you so much.

Lucas Machado Lira: Of of decisions at the administrative level, which we obviously don't control.

Lucas Machado Lira: But directionally this is aligned that.

Lucas Machado Lira: May continue to impact negatively down the road.

Speaker Change: I hope this helps.

Isabella Simonato: Yeah, very. It was super clear. Thank you so much.

Lucas Machado Lira: Now very was super clear. Thank you so much.

Operator: Next question from Felipe Ucros with Scotiabank.

Lucas Machado Lira: Next question from Philippe <unk> with Scotia.

Felipe Ucros Nunez: Next question from Felipe Ucus with Scotia: Great, guys. Thanks, operator, for taking my question. Good morning, John, and Lucas.

Felipe Ucros: Great, guys. Thanks, operator, for taking my question. Good morning, John, Lucas. You've had a very good performance on the zero sugar products for quite a few quarters in NAB in Brazil, and I imagine that's changing a little bit your mix in the NABs. I'm just wondering if you can comment on any effect that has. Not sure how the cost of sugar relates to the sweeteners that you use, but for example, maybe less sugar per hectoliter may be good for margins in the long run as the zero products continue to perform really well. Just wondering if you can comment on the effects that such high growth in the zero products is having. Thank you.

Speaker Change: Great guys. Thanks, operator for for taking.

Felipe Ucros Nunez: Taking my question.

Felipe Ucros Nunez: Morning, John Lucas.

Jean Jereissati Neto: You've had a very good performance on zero sugar products for quite a few quarters in NAB in Brazil, and I imagine that's changing a little bit your mix in the NABs. So I'm just wondering if you can comment on any effect that that has. I'm not sure how the cost of sugar relates to the sweeteners that you use. But, for example, maybe less sugar per hectoliter may be good for margins in the long run as the zero products continue to perform really well. I'm just wondering if you can comment on the effects that such high growth in zero products is having. Thank you.

Felipe Ucros Nunez: You've had a very good performance on the zero sugar products for quite a few quarters.

Jean Jereissati Neto: <unk> in Brazil, and I imagine, that's changing a little bit your mix in the mab sales. So I'm just wondering if you can comment on the any effects that that has not sure how the cost of sugar relates to sweeteners that we use.

Jean Jereissati Neto: But for example, maybe less sugar per hectoliter may be good for margins in the long run as is euro products continue to perform really well.

Jean Jereissati Neto: Just wondering if you can comment on the effects that that such high growth in video products as having thank you.

Jean Jereissati Neto: So, thank you very much for the question, Felipe. So, yes, this is a big bet of ours. When you look at our business, our NAB business, we have something around 18% market share in the total business, but we have 30-plus... in the no sugar portfolio when we compare it with other products that are no sugar. So, this is a big trend that we are very well-positioned to ride it. More recently, we stepped up the portfolio with Pepsi Black, and that has been a success. And then last year, we renovated Guaraná Zero. Both these products have a cash cost, a BIC, that is better when we compare them with sugared products.

Jean Jereissati: Thank you very much for the question, Felipe. Yes, this is a big bet of ours. When you look at our business, our NAB business, we have something around 18% market share in the total business, but we have 30+ in the no sugar portfolio when we compare with other products that are no sugar. This is a big trend that we are very well positioned to surf it. More recently, we stepped up the portfolio with Pepsi Black.

Speaker Change: So thank you very much for the question Philippe So yes. This is a big berth of ours.

Jean Jereissati Neto: When you look at our business our NAV business.

Jean Jereissati Neto: We have something around.

Jean Jereissati Neto: 18% market share in the total business, but we have 30 plus.

Jean Jereissati Neto: In the no sugar portfolio, when we compare with other products that are no sugar.

Jean Jereissati Neto: So this is a big.

Jean Jereissati Neto: The trends that we are very well positioned.

Jean Jereissati Neto: Two to surface.

Jean Jereissati Neto: More recently, so so we step it up the portfolio with Pepsi Black.

Jean Jereissati: That is a success. Then last year, we renovated Guaraná Zero. Both these products, they have a cash COGS, a VIC that is better when we compare with the sugared products. They are doing very well. We are very excited about the performance of more recently of Guaraná Zero that we just started. In reality, we were not able to supply all the demand that we have, so we are having some SKUs that we could meet demand with our production. Guaraná Zero grew 60%, and overall, we really believe that this rate of growing non-sugar products at 20% for nine quarters in a row is really something structural that is happening in the business in our company.

Jean Jereissati Neto: There is a success and then less the year, we renovated guarana zero.

Jean Jereissati Neto: Both of these products.

Jean Jereissati Neto: They have.

Jean Jereissati Neto: Our cash Cogs in the IC.

Jean Jereissati Neto: That is a better when we compared with the sugared.

Jean Jereissati Neto: And they are doing very well. So, we are very excited about the performance of, more recently, Guaraná Zero that we just started. In reality, we were not able to supply all the demand that we have. So, we have some SKUs that we could meet demand with our production. Guaraná Zero grew by 60%.

Jean Jereissati Neto: Products.

Jean Jereissati Neto: And they are doing very well. So we are very excited about the performance of more recently of <unk> that we just started.

Jean Jereissati Neto: In reality, we were not able to supply all the demand that we have so we are having some.

Jean Jereissati Neto: Some some skus that we could meet demand with our production.

Jean Jereissati Neto: And as Ed Woo, 60%.

Jean Jereissati Neto: And overall, we really believe that this rate of growing non-sugared products at 20% for 9 quarters in a row, which is really something structural that is happening in the business in our company. And yes, it's true, it has a higher, a better margin overall. And also, John, just to complement and with respect to the part of the portfolio, right, that contains sugar, I think one of the things that the team has been focused on and successful over the last few years is to consistently lower the sugar content of those products.

Jean Jereissati Neto: In an overall, we really believe that.

Jean Jereissati Neto: This rate of growing non sugared products at 280% for nine quarters in a row is really something structural that is happening in the business in our company.

Jean Jereissati: Yes, it's true. It has a better margin overall this product.

Jean Jereissati Neto: And yes, it's true it has a more.

Jean Jereissati: Yes, it's true. It has a better margin overall this product.

Jean Jereissati Neto: A better.

Jean Jereissati Neto: Margin overall this product.

Lucas Lira: Jean, just to complement. With respect to the part of the portfolio, right? That contains sugar, I think one of the things that the team has been focused and successful over the last few years is to consistently lower the sugar content of those products. There has been also kind of very good progress on that front as well. No low sugar, health and wellness trend, innovation targeted there to really leverage that kind of tailwind, but also with respect to the remaining part of the portfolio, consistently lowering the sugar content.

Jean Jereissati Neto: And also John just so just to complement.

Jean Jereissati Neto: And with respect to the part of the portfolio right that contain sugar I think one of the things that the team has been <unk>.

Jean Jereissati Neto: Focused and successful over over the last few years is to consistently lower the sugar content of those products. So there has been also kind of very good progress on that front as well so no low sugar health and wellness trend innovation targeted there.

Jean Jereissati Neto: So there has also been kind of very good progress on that front as well. So no low sugar, health, and wellness trend, innovation targeted there to really leverage that kind of tailwind, but also with respect to the remaining part of the portfolio, consistently lowering the sugar content. Through technology being able really to make the most from each gram of sugar. Next question from Rodrigo Alcântara with UBS. Hi, good afternoon.

Lucas Ferreira: To really leverage that kind of tailwind, but also with respect to the remaining part of the portfolio consistently lowering the sugar content.

Jean Jereissati: Yeah. Through technology, being able really to make the most from each gram of sugar.

Lucas Ferreira: Through technology of being able really to make the most from each gram of sugar.

Operator: Next question from Rodrigo Alcântara with UBS.

Lucas Ferreira: Next question from HUD, Regal, our contact with UBS.

Lucas Ferreira: Thanks for taking my question. I mean, I guess this is not the first time we asked this question, right? I mean, on capital allocation, right? I mean, you certainly have fulfilled your, you know, commitment to cash flow generation. And we have seen that, right?

Rodrigo Alcântara: Hi. Good afternoon. Thanks for taking my question. I mean, I guess this is not the first time we ask this question, right? I mean, on capital allocation, right? I mean, you certainly have fulfilled your, you know, committed to cash flow generation, and we have seen that, right? You guys meeting your targets. Somehow we see this mismatch with the share price and valuation. I mean, just curious here, I mean, if this situation persists, I mean, is this something that could lead us to maybe perhaps thinking on Ambev taking a different approach on buybacks or dividends? Could this be a potential scenario, something fair to assume in the investment case?

Rodrigo Alcantara: Hi. Good afternoon. Thanks for taking my question. I mean, I guess this is not the first time we ask this question, right? I mean, on capital allocation, right? I mean, you certainly have fulfilled your, you know, committed to cash flow generation, and we have seen that, right? You guys meeting your targets. Somehow we see this mismatch with the share price and valuation. I mean, just curious here, I mean, if this situation persists, I mean, is this something that could lead us to maybe perhaps thinking on Ambev taking a different approach on buybacks or dividends? Could this be a potential scenario, something fair to assume in the investment case?

Lucas Ferreira: Hi, good afternoon, Thanks for taking my question.

Lucas Ferreira: I mean, I guess it is not the first time, we asked US This question right now.

Lucas Ferreira: <unk> on our on capital allocation right. I mean, you certainly have a full scale you're committed to cash flow generation and we have seen that read you guys meeting your targets.

Lucas Ferreira: But somehow we see this.

Lucas Ferreira: A mismatch with the share price inflation. So just curious here I mean, if this situation.

Lucas Ferreira: You guys are meeting your targets, but somehow, we see this mismatch with the share price in valuation. So I mean, just curious here, I mean, if this situation persists, I mean, if this is something that could lead us to, maybe perhaps thinking about Ambev, taking a different approach on buybacks or dividends. Is this a potential scenario or something for too soon in the investment case? That would be my question.

Lucas Ferreira: Persist I mean is this something that could.

Lucas Ferreira: The leaders lead us to.

Lucas Ferreira: Maybe perhaps thinking and.

Lucas Ferreira: Taking a different approach on buybacks or or dividends.

Lucas Ferreira: But could this be a potential scenario a social purpose.

Jean Jereissati Neto: Thank you very much, Lucas and Jean. Hi Rodrigo, thank you for the question. In short, Rodrigo, the... The mindset around capital allocation has not changed. So we continue to look towards reinvesting in the cash flows that we've generated consistently, the resilient cash flows that our business has delivered over the last several years. And reinvest in the growth of the business, be it organically, be it non-organically.

Speaker Change: And in the investment case that will be my question. Thank you very much Lucas.

Rodrigo Alcântara: That would be my question. Thank you very much, Lucas, Jon.

Rodrigo Alcantara: That would be my question. Thank you very much, Lucas, Jon.

Lucas Lira: Hi, Rodrigo. Thank you for the question. In short, Rodrigo, the mindset around capital allocation has not changed. We continue to look towards reinvesting the cash flows that we've generated consistently, the resilient cash flows that our business has delivered over the last several years. Reinvest in the growth of the business, be it organically, be it non-organically. Over and above those opportunities that we look at on an annual basis or even shorter, we were always looking to return excess cash to shareholders over time. This will be over time, a combination of IOC. There has been less deductibility since the beginning of the year, but there's still some deductibility. We will continue to look to maximize the IOC that's still available.

Speaker Change: Hi, Rodrigo Thank you for the question.

Speaker Change: In short <unk>.

Jean Jereissati Neto: The.

Jean Jereissati Neto: The mindset around capital allocation has not changed.

Jean Jereissati Neto: So we continue to look towards <unk>.

Jean Jereissati Neto: Reinvesting the cash flows that please generated consistently the resilient cash flow that our business has delivered over the last several years reinvest in the growth of the business be it organically via its non organically.

Jean Jereissati Neto: And over and above those opportunities that we look at on an annual basis or even shorter, we were always looking to return excess cash to shareholders over time. And this will be, over time, a combination of IOC. There has been less deductibility since the beginning of the year, but there's still some deductibility.

Jean Jereissati Neto: And.

Jean Jereissati Neto: Over and above those opportunities that we look at right.

Jean Jereissati Neto: On an annual basis or even shorter.

Jean Jereissati Neto: We were always looking to return excess cash to shareholders over time and this will be over time, a combination of IOC.

Jean Jereissati Neto: There has been less deductibility.

Jean Jereissati Neto: Since the beginning of the year, but theres still some deductibility. So we will continue to look to maximize the IOC. That's still available. So we will continue focusing on maximizing IOC deductibility.

Jean Jereissati Neto: So we will continue to look to maximize the IOC that's still available. So we will continue focusing on maximizing IOC deductibility. Number one, and then the balance will be a combination of dividends and or share buybacks from time to time as we discuss with the Ambev board consistently, right? And so the board always looks at capital allocation.

Lucas Lira: We will continue focusing on maximizing IOC deductibility, number one. Then the balance will be a combination of dividends and/or share buybacks from time to time, as we discuss with the Ambev board consistently, right? The board always looks at capital allocation. This is always a live discussion with the board. Historically, our payout has been skewed towards December, given that our cash flow generation, our operational cash flow is very skewed towards Q4, particularly December. That's when we have the greatest visibility of the excess cash that's available to be returned to shareholders, number one.

Jean Jereissati Neto: Number one and then the balance.

Jean Jereissati Neto: We will be a combination of dividends.

Jean Jereissati Neto: <unk> share buybacks from time to time.

Jean Jereissati Neto: As we discuss with the Ambev Board.

Jean Jereissati Neto: Consistently right.

Jean Jereissati Neto: And so the board always looks at.

Jean Jereissati Neto: Our capital allocation. So this is always a lively discussion with the board.

Jean Jereissati Neto: So this is always a live discussion with the board. Historically, our payout has been skewed towards December given that our cash flow generation, our operational cash flow is very skewed towards Q4, particularly December, so that's when we have the greatest visibility of the excess cash that's available to be returned to shareholders, number one. Number two, that's the moment in time when we're looking at the budget for the next year, so we have much better visibility on what we plan on reinvesting for growth in the year to come.

Jean Jereissati Neto: Historically our payout.

Jean Jereissati Neto: Hasn't been skewed towards December.

Jean Jereissati Neto: Given that.

Jean Jereissati Neto: Our cash flow generation, our operational cash flow is very skewed towards Q4, particularly in December. So that's when we have the greatest visibility.

Jean Jereissati Neto: The excess cash that's available to be returned to shareholders number one number two that's the moment in time when we're looking at the budget for the next year. So we have a much better visibility on what we plan on reinvesting for growth in the year to come.

Lucas Lira: 2, that's the moment in time when we're looking at the budget for the next year, so we have a much better visibility on what we plan on reinvesting for growth in the year to come. I think this is gonna be more of a H2 conversation than where we are now. This is always a topic that we look very closely at and are very kind of diligent behind.

Jean Jereissati Neto: And so I think this is going to be more of a H2 conversation than where we are now, but this is always a topic that we look very closely at and are very kind of diligent about. No, that was clear.

Jean Jereissati Neto: And so I think this is going to be more of a H two conversation than where we are now but this is always a topic that we look very closely at in a very kind of diligence behind.

Rodrigo Alcântara: No, that was clear. Thanks. Thanks, Lucas.

Rodrigo Alcantara: No, that was clear. Thanks. Thanks, Lucas.

Speaker Change: No that was clear thanks, Thanks Lucas.

Jean Jereissati Neto: Next question from Lucas Ferreira with J.P. Morgan. Hi guys, thanks for the space to ask questions. My question is about Argentina.

Operator: Next question from Lucas Ferreira with JP Morgan.

Jean Jereissati Neto: Next question from Lucas behavior with J P. Morgan.

Jean Jereissati Neto: Yes.

Lucas Ferreira: Hi guys. Thanks for the space for asking question. My question is on Argentina. I know the situation remains, you know, hard to read, but in general terms, when you look at inflation coming down, we've been hearing from other companies that probably Q1 was the weakest point in terms of volumes. If you have the same perception that things could start improving on the margin from here. Then more, maybe to Lucas on how to think about margins from here because what we're seeing is FX effects relatively stable, right, even the blue. The official FX is kind of narrowing the gap to the blue while inflation remains high.

Lucas Ferreira: Hi, guys. Thanks toward this space for for asking the question. My question is on Argentina, I know the situation remains.

Lucas Ferreira: I know the situation remains... you know, hard to read, but in general terms, when you look at inflation coming down, we've been hearing from other companies that probably the first quarter was the weakest point in terms of volumes, so if you have the same perception, things could start improving on the margin from here. And then more, maybe you're to Lucas on how to think about margins from here because, What we're seeing is effects relatively stable, right, even in the blue, so the official effects are kind of narrowing the gap to the blue, while inflation remains high.

Lucas Ferreira: Hard to read but in general terms, when you look at inflation coming down.

Lucas Ferreira: We've been hearing from other companies that probably first quarter was the weakest point in terms of volumes. If you have the same perception that things could start improving on the margin from here and then more maybe youre to Luca as Glenn.

Lucas Ferreira: How to think about margins from here because.

Lucas Ferreira: What we're seeing is effects relatively stable right in the blue Sadove, Mr effects kind of narrowing the gap to the blue.

Lucas Ferreira: Inflation remains high so I would imagine that you guys keep on pace on on on the topline from in terms of basket on prices.

Lucas Ferreira: I would imagine that you guys keep pace on the top line front in terms of passing on prices in the market. I would suppose that the impact on costs has been probably smaller than that one on the top line. My question is basically if we could see an improvement in profitability in the country given that we're seeing these changes in these FX effects and inflation kind of going to the right direction, put it this way. Thank you.

Jean Jereissati Neto: So I would imagine that you guys keep up with pace on the top line front in terms of passing on prices to the market. But I would suppose that the impact on costs has probably been smaller than that on the top line. See you next time, changes in these uh, in these effects, and inflation kind of going in the right direction. Put it this way. So, let me start, and then I hand it over to Lucas.

Jean Jereissati Neto: Market, but I would suppose that the impact on costs has been probably smaller than that one on the top line. So my question is basically if we could see an improvement in profitability in the country given that we're seeing this.

Lucas Ferreira: Changes in these in these effects and inflation kind of going to the right direction put it this way.

Lucas Ferreira: Thank you.

Jean Jereissati: Let me start and then hand over to Lucas. Lucas, yes, Argentina is going through a stabilization plan, where we know that there is the need of an adjustment in the country. We are seeing favorable evolution month after month on the macro numbers, on the fiscal surplus, on CPI decelerations, on central bank reserves. As you mentioned, the gap between dollar blue and official is coming down. I think it is still early for us to assess if the volumes will begin to recover from Q1 on. I think it is still early because the country is really adjusting the inventory levels, the wholesaler inventories, the consumers.

Lucas Ferreira: So let me start and then I haven't look at him to over to Lukas.

Jean Jereissati Neto: Lucas, so yes, Argentina is going through a stabilization plan where we know that there is a need for an adjustment in the country, but we are seeing favorable evolution month after month on the macro numbers, on the fiscal surplus, on CPI decelerations, and on central bank reserves.

Jean Jereissati Neto: Lucas.

Lucas Ferreira: So so so yes, Argentina is going through any stabilization plan.

Lucas Ferreira: Where we know that there is the need of an adjustment in the country.

Lucas Ferreira: But we have seen.

Lucas Ferreira: Favorable evolution month after month on the macro numbers on the fiscal surplus on CPI deceleration.

Lucas Ferreira: On Central Bank reserves as.

Jean Jereissati Neto: As you mentioned, the gap between the dollar blue end of.., is coming down. I think it is too early for us to access if the volumes will begin to recover from Q1 onwards. I think it is still early because the country is really adjusting the inventory levels, the wholesaler inventories, and the consumers, so we are still on high alert on that. As we have been mentioning before, what we are looking at is that we want to really maintain the grip with our consumers and maintain our market share over there and really protect the cash, so these are the two main important KPIs for us and then go through this correction that Argentina is doing. The good part is that there is a possibility of Argentina really making it work for H2 and for 2025, but for now, I think this is the most we can say.

Lucas Ferreira: As you mentioned the gap between.

Jean Jereissati Neto: Dollar blue window.

Jean Jereissati Neto: This show is coming down.

Jean Jereissati Neto: I think it's too early for us to.

Jean Jereissati Neto: To access it.

Jean Jereissati Neto: If we if the volumes that would begin to recover from from Q1 on I think it's too early because the country is really adjusting the inventory levels the wholesaler inventories.

Jean Jereissati Neto: The consumers saw with steel.

Jean Jereissati: We are still with the high guard on that. As we have been mentioning before, what we are looking is that we want really to maintain the grip with our consumers and maintain our market share over there and really protecting the cash. These are the two main important KPIs for us, and then go through this correction that Argentina is doing. The good part is there is a possibility of Argentina really making it work for H2 and for 2025. For now, I think this is the most we can say. I think it's early to say that all the correction is done.

Jean Jereissati Neto: We are still with the.

Jean Jereissati Neto: With the high guard on that.

Jean Jereissati Neto: As we have been mentioning before or what we are looking at as debt. So we want really to maintain.

Jean Jereissati Neto: The grip with our consumers and maintain our market share over there and really protecting the cash. So these are the two main barton.

Jean Jereissati Neto: Kpis for us and them go through this.

Jean Jereissati Neto: This correction that Argentina is doing at the good part of it is so so there is.

Jean Jereissati Neto: Our possibility of Argentina, really making it work for age two and for 2025 so.

Jean Jereissati Neto: So but for now I think this is the.

Jean Jereissati Neto: The most we can say I think it's early to say that all the correction is done.

Jean Jereissati Neto: I think it is early to say that all the correction is done. Hi Lucas, Lucas here, thank you for the question. Regarding margins for Argentina, a few comments. I think the tougher comp is going to be H2, particularly Q4.

Lucas Lira: Hi, Lucas. Lucas here. Thank you for the question. Regarding margins for Argentina, a few comments. I think the tougher comp is going to be H2, particularly Q4, subject to everything that Jean mentioned, right? It's a very volatile situation in the short term. If the country, right, continues to make progress, I think the bigger hurdle that we face on the margin side, I would say is H2 and particularly Q4, okay, number one. Number two, I think it's important to call out that when we look at profitability, it's important to kind of go beyond the EBITDA. As a company, we don't stop at the EBITDA, right?

Jean Jereissati Neto: Hi, Lucas Lucas here. Thank you for the question.

Lucas Ferreira: Regarding margins for Argentina, a few comments I think.

Lucas Ferreira: I think the tougher the tougher comp is going to be.

Lucas Ferreira: H, two particularly Q4.

Lucas Machado Lira: Subject to everything that Jean mentioned, right, it's a very volatile situation in the short term, but if the country, right, continues to make progress, I think the bigger hurdle that we face on the margin side, I would say, is H2 and particularly Q4, okay, number one. And number two, I think it's important to call out that... When we look at profitability, it's important to kind of go beyond EBITDA. As a company, we don't stop at EBITDA, right?

Speaker Change: Subject to everything that Jim mentioned right, it's a very volatile situation in the short term.

Lucas Machado Lira: But if the country continues to make progress.

Lucas Machado Lira: I think the.

Lucas Machado Lira: The bigger hurdle that we face on the on the margin side I would say is H, two and particularly Q4, a number one and number two.

Lucas Machado Lira: It's important to call out that.

Lucas Machado Lira: When we look at the profitability, it's important to kind of go beyond the beta.

Lucas Machado Lira: We keep going and also spend a lot of focus and energy around free cash flow, but even more so in Argentina. But the reason I'm saying this is, Given our lack of hedging in Argentina, right, even though it's above EBITDA, our EBITDA margin, right, may be more impacted in H2, um, given that there is no hedging, no carry cost associated with that, if you look at kind of our margins, right, from a net income standpoint, that could help, right, this dynamic could help offset kind of the So keep that in mind. Perfect.

Lucas Machado Lira: As a company we don't stop at amid the rightfully keep going in and also spend a lot of focus and energy around right free cash flow, but even more so in Argentina.

Lucas Lira: We keep going and also spend a lot of focus and energy around, right, free cash flow, but even more so in Argentina. The reason I'm saying this is given our lack of hedging in Argentina, right, even though above EBITDA, our EBITDA margin, right, may be more impacted in H2, given that there's no hedging, no carry cost associated to that, if you look at kind of our margins, right, from a net income standpoint, that could help, right? This dynamic could help offset kind of the headwinds, from a margin perspective, from an EBITDA margin perspective. Okay? Keep that in mind.

Lucas Machado Lira: But the reason I'm, saying this is <unk>.

Lucas Machado Lira: Given our lack of hedging in Argentina, right, even though above EBITDA, our EBITDA margin right may be more impacted than H two.

Lucas Machado Lira:

Lucas Machado Lira: Given that there is no hedging.

Lucas Machado Lira: No carry costs associated to that if you look at kind of our margins right comment on net income standpoint.

Lucas Machado Lira: That could help right. This dynamic could help offset kind of the the headwinds from a margin perspective.

Lucas Machado Lira: From an EBITDA margin perspective, okay, so keep that in mind.

Lucas Ferreira: Perfect. Thank you very much, guys.

Speaker Change: Perfect. Thank you very much guys.

Lucas Machado Lira: Thank you very much, guys. Next question from Robert Ottenstein with Evercore ISI. Good. Thank you.

Operator: Next question from Robert Ottenstein with Evercore ISI.

Lucas Machado Lira: Next question from Robert <unk> with Evercore ISI.

Robert Edward Ottenstein: You mentioned that you had record brand health indicators for Corona, Brahma, Budweiser, and Sputnik. Could you just remind us what those indicators are, you know, how meaningful that is, and how the overall trend on brand health is in aggregate, because presumably not everything's going in the same direction. Thanks.

Robert Ottenstein: Great. Thank you. You mentioned that you had record brand health indicators for Corona, Brahma, Budweiser, and Spaten. Could you just remind us what those indicators are, you know, how meaningful that is, and how the overall trend on brand health is in aggregate? Because presumably not everything's going in the same direction. Thank you.

Robert Edward Ottenstein: Great. Thank you.

Robert Edward Ottenstein: You mentioned that you had record brand health indicators for kroner Brahma Budweiser on spot.

Robert Edward Ottenstein: Could you just remind us.

Robert Edward Ottenstein: What those indicators are.

Robert Edward Ottenstein: How meaningful that is and.

Robert Edward Ottenstein: How the overall trend on brand health is in aggregate.

Robert Edward Ottenstein: Because presumably not everything is going in the same direction. Thank you.

Jean Jereissati Neto: So thank you, Robert, for the question. So having a broader perspective, a more long-term one, we always mention that as part of our strategy, pillar one of our strategy was really to have a portfolio with more people declaring that they love one of our brands. So this is the KPI that we follow.

Jean Jereissati: Thank you, Robert, for the question. Having a broader perspective, a more long-term one, we always mention that in, as part of our strategy, the pillar one of our strategy was really to have a portfolio with more people declaring they love one of our brands. This is the KPI that we follow, and the declaration of consumers that mention that one of our brands is one brand that they love. When we compare today with 2019, we have something around 4 million people declaring that they adopt one of our brands as a loved one, in this time horizon of 5 years. It was something around 800,000 a year.

Speaker Change: So thank you Robert for the question.

Jean Jereissati Neto: So having a broader perspective.

Jean Jereissati Neto: A more a long term one so we always mention that as part of our strategy to below one of our strategy. It was really to have a portfolio with more people.

Jean Jereissati Neto: Declaring that love one of our brands. So these are the kpis that we fall on the asphalt the declaration of consumers that mention that one of our brand as one brand that they love.

Jean Jereissati Neto: So the declaration of consumers that mention that one of our brands is one that they love. And when we compare today with 2019, we have something around 4 million people declaring that they have adopted one of our brands as a loved one over this time horizon of five years. So it was something around 800,000 a year.

Jean Jereissati Neto: And when we compare today through 2019.

Jean Jereissati Neto: We had we have.

Jean Jereissati Neto: Something around 4 million people declaring that they adopt one of our brands as a loved one.

Jean Jereissati Neto: When this.

Jean Jereissati Neto: Time horizon of five years, so it was something.

Jean Jereissati Neto: Something around the 800000 a year.

Jean Jereissati: The brands that really led this performance were the mega brands. Corona is doing very well. Spaten is doing very well. Brahma is very solid, and Budweiser is more stable. These are the brands that made this uplift. We still have some headwinds on the long tail. We have many brands like Bohemia, like we had regional brands like Polar, that when we add up the long tail, we have been concentrating on the four brands, but the brands that we believe that are the brands of the future and the total add up of lovers in our portfolio, both they are positive.

Jean Jereissati Neto: The brain the brands that's really led.

Jean Jereissati Neto: The brand that really led this performance was. They were the mega brands, so Corona is doing very well, Spartan is doing very well, and Brahma is very solid. And Budweiser is more stable. So these are the brands that have made this uplift. We still have some headwinds on the long tail. So we have many brands like Bohemia, and we have regional brands like Polar that when we add up the long tail, we have not, we have been concentrating on the four brands, but the brands that we believe are the brands of the future and the total add up of lovers in our portfolio are both positive. And What about the back?

Jean Jereissati Neto: This performance was.

Jean Jereissati Neto: They were the Mega brands so corona.

Jean Jereissati Neto: He is doing very well with patheon as Greenville, real Brahma is very solid.

Jean Jereissati Neto: And Budweiser is more stable.

Jean Jereissati Neto: But so these are the brands that made this.

Jean Jereissati Neto: This uplift.

Jean Jereissati Neto: We still have we still have some.

Jean Jereissati Neto: Uh huh.

Jean Jereissati Neto: Headwinds on the long steel.

Jean Jereissati Neto: So we have many brands like ball EMEA.

Jean Jereissati Neto: Like we had the regional brands like Paula that the when we add up the long tail.

Jean Jereissati Neto: Uh huh.

Jean Jereissati Neto: We have not we have been cautious Raytheon only four brands, but the brands that we believe that our the brands of the future and the total adds up of law for us in our portfolio both.

Jean Jereissati Neto: They are positive.

Jean Jereissati Neto: Okay.

Jean Jereissati Neto: So, BAX, that's a good question, Robert. BAX is, let me look at exactly the right number, pretty stable. And in the end, we mentioned at Investors' Day, and we're going to show you again, that BAX was really a bet on the super premium. And what happened with the investors, that Investors' Day and today, is that we unlocked a lot of capacity. We were constrained on Corona. We could not make this statement on Corona at that time.

Robert Ottenstein: What about Beck's?

Jean Jereissati Neto: And what about BACS.

Jean Jereissati: Beck's, that's a good question, Robert. Beck's is. Let me look at exactly the right number. It is pretty much stable. In the end, we mentioned in the Investors Day, and we're gonna show you again that Beck's was really a bet on the super premium. What happened from that Investors Day and today it is that we unlocked a lot of capacity. We were constrained on Corona. We could not make this statement on Corona at that time. We unlocked capacity, new packs, production, and then Corona is really leading our efforts on the super premium part of the segment. Beck's will continue there. Corona is really leading the super premium as we've been able to produce more.

Jean Jereissati Neto: So.

Jean Jereissati Neto: Banks, that's a good question Robert Vaxes, Let me look at exactly the right number is pretty much stable.

Jean Jereissati Neto: And.

Jean Jereissati Neto: And in the end.

Jean Jereissati Neto: We mentioned in the Investor day, and we're going to assure you again that backs was really a bet on the super premium.

Jean Jereissati Neto: And.

Jean Jereissati Neto: What have been from the investors that investors day and today. It is that we unlock a lot of capacity we were constrained on Corona, we could not make this statement on corona on that time, we unlocked capacity new Bax.

Jean Jereissati Neto: We unlocked capacity, new BAX production, and then Corona is really leading our efforts in the super premium part of the segment. BAX will continue there, but Corona is really, really, really leading the super premium as we've been able to produce more. Thank you.

Jean Jereissati Neto: Production and then Corona is really leading our airports on the Super premium part of the segment and backs, we'll continue there, but but corona is really really really leading the super Primo as we've been able.

Jean Jereissati Neto: To produce more.

Robert Ottenstein: Thank you.

Speaker Change: Thank you.

Jean Jereissati: Okay.

Jean Jereissati Neto: Okay.

Benjamin M. Theurer: Next question from Ben Theurer with Barclay. Thanks for taking my question. I just wanted to get a little more granular as to general consumer trends in Brazil in particular and how you guys have been performing market share-wise in both beer and NAP. What are the initiatives you're taking to potentially gain further share, particularly in beer, and maybe my sense is that we need to catch up a little bit on NAP. What are the strategies you're putting out as it relates to market share in Brazil? Okay, that's a good question, Ben.

Operator: Next question from Benjamin Theurer with Barclays.

Jean Jereissati Neto: Next question from Ben Theurer with Barclays.

Benjamin M. Theurer: Okay.

Benjamin M. Theurer: Yes.

Benjamin Theurer: Yeah. Hi. Well, good afternoon, and thanks for taking my question. Just wanted to kind of get maybe a little more granularity as to just the general consumer trends in Brazil in particular, and how you guys have been performing market share-wise in both beer and NAB. What are the initiatives you're taking to potentially gain further share, particularly in beer, and maybe my sense is needing to catch up a little bit on NAB. What other strategies you're putting out as it relates to market share in Brazil? Thank you.

Ben Theurer: Yeah. Hi. Well, good afternoon, and thanks for taking my question. Just wanted to kind of get maybe a little more granularity as to just the general consumer trends in Brazil in particular, and how you guys have been performing market share-wise in both beer and NAB. What are the initiatives you're taking to potentially gain further share, particularly in beer, and maybe my sense is needing to catch up a little bit on NAB. What other strategies you're putting out as it relates to market share in Brazil? Thank you.

Speaker Change: Hi, Good morning, good afternoon, and thanks for taking my question.

Benjamin M. Theurer: Just wanted to kind of get maybe a little more granularity as to with just general.

Benjamin M. Theurer: <unk> trends in Brazil in particular, and how you guys have been performing market share wise.

Benjamin M. Theurer: Fear and nap and what are the initiatives you're taking to.

Benjamin M. Theurer: A bunch of potentially.

Benjamin M. Theurer: Gain further share, particularly in beer and maybe my census of needing to catch up a little bit of an absence of whatever strategies, you're putting out as it relates to market share in Brazil. Thank you.

Jean Jereissati Neto: Let me give you a broader answer to that. So, first of all, it's good to talk about top-line brands and industries. So, industry in Brazil is very resilient, even though we have, and it's structurally better. So, in our numbers, industry in Brazil was slightly positive in Q1, and our volumes were record volumes. We never had this volume, so it shows that market share gains are there. The industry is structurally better, so there is no trade-down.

Jean Jereissati: Okay. That's a good question, Ben. Let me give you a broader answer on that. First of all, good to talk about top-line brands and industry. Industry in Brazil very resilient, even though we have and is structured better. In our numbers, industry in Brazil was slightly positive in Q1, and our volumes were record volumes. We never had this volume, so showing that market share gains are there. The industry is structurally better, so there is no trade down. There is a premiumization trend overall. Our core resilient, growing ahead of the total industry. Then we really trading up with the Core Plus brands.

Speaker Change: Okay. That's a good question Ben let me give you a broader answer on that so crystal for good to talk about about topline brands in the industry. So in.

Jean Jereissati Neto: Industry in Brazil.

Jean Jereissati Neto: Very resilient.

Jean Jereissati Neto: Even though we have.

Jean Jereissati Neto: It is a structural better so in our numbers.

Jean Jereissati Neto: Industry in Brazil was slightly positive.

Jean Jereissati Neto: In Q1 in our volumes war record volumes, we never had this volume so showing that.

Jean Jereissati Neto: Market share gains are there.

Jean Jereissati Neto: So the industry structurally breath better so there is no trade down.

Jean Jereissati Neto: There is a premiumization trend overall, our core resilience growing ahead of the total industry, and then we are really trading up with the corporate brands, now Budweiser is the one leading, and the super-premium brands, premium, super-premium, with Spartan and Corona. Okay, so we are very happy with the shape of these volumes. We are really over-indexing investments in the mega-brands, making intentional choices about that, and now we are seeing for the fifth consecutive quarter that we're gaining market share on the premium and super-premium. The core plus that we talked about for a while is that we lose some steam with Brahma Duplo Mauch.

Jean Jereissati Neto: There is a premium amortization.

Jean Jereissati Neto: Trend overall.

Jean Jereissati Neto: Our core.

Jean Jereissati Neto: Resilience.

Jean Jereissati Neto: Growing that have of the total industry and then we are really trading up with the corporate or a core plus brands now Budweiser is there one there.

Jean Jereissati: Now Budweiser is the one there leading in the super premium brands, premium, super premium with Spaten and Corona. Okay. We are very happy with the shape of these volumes. We are really over-indexing investments on the mega brands, making intentional choices on that. Now we are seeing for the fifth consecutive quarter we gaining market share on the premium, super premium. The Core Plus that we talked about for a while that we lost some steam with Brahma Duplo Malte. Now the combination of Brahma Duplo Malte and Budweiser now they are back on double-digit growth.

Jean Jereissati Neto: Leading in the Super premium brands premium superpremium with Spartan and <unk>.

Jean Jereissati Neto: In.

Jean Jereissati Neto: Quarter on them. Okay. So these are we are we are very happy with this the shape of these volumes.

Jean Jereissati Neto: We are really over indexing investments on the Mega brands, making intentional choices on that and now we have seen for the fifth consecutive quarter, we gained market share.

Jean Jereissati Neto: On the premium superpremium.

Jean Jereissati Neto: The core plus that we talked for a while that we lose some steam.

Jean Jereissati Neto: So, now the combination of Brahma Duplo Mauch and Budweiser, now they are back on double-digit growth, and this is an avenue that we really continue to bet on, and all this strategy with B's, and distribution, and finding the right execution for the core, to maintain the core healthy, is really paying off, because we are having core volumes growing ahead of the total industry. So, on top of that, we continue to think about brands of the future, innovation, and this year, we are pretty much focused on functionality.

Jean Jereissati Neto: But I'm gonna do Promulge. So now the combination of Brahma promotion Budweiser now they are back on on double digit growth and this is an avenue that.

Jean Jereissati: This is an avenue that we really continue to bet. All this strategy with beers and distribution and finding the right execution for the core to maintain the core healthy is really paying off because we are having core volumes growing ahead of the total industry. On top of that, we continue to think about brands of the future on innovation. This year we are pretty much focused on functionality. We are upgrading our capabilities to do zero alcohol beers. Budweiser is doing very well. Brahma is performing. We are gaining market share in this segment. We launched a low-calorie beer, Stella, as the evolution of a gluten-free.

Jean Jereissati Neto: That we really continue to Tibet and in all the strategy with BS.

Jean Jereissati Neto: Distribution in finding the right execution for for the corps to maintain the core healthy.

Jean Jereissati Neto: It is really paying off because we are having a core volumes growing ahead of the total windows. So on top of that we continue to think about.

Jean Jereissati Neto: Brands of the future are on innovation and.

Jean Jereissati Neto: This year, we are pretty much focused on.

Jean Jereissati Neto: Functionality. So we are upgrading our capabilities to do zero alcohol beers, though Budweiser is doing very well Brahma is performing.

Jean Jereissati Neto: So, we are upgrading our capabilities to do zero-alcohol beers, so Budweiser is doing very well, Brahma is performing, we are gaining market share in this segment, we launched a low-calorie beer, Estela, as the evolution of a gluten-free beer, now it's gluten-free and low-calorie, with a price that is very super-premium, it's doing very well, and Beyond Beer So, the portfolio strategy, together with the distribution of B's and Z delivery technology, are the two bets for us to continue to gain market share when we go to NAB. Really, this trend of low sugar and no sugar is really in our favor.

Jean Jereissati Neto: We are gaining market share in this segment.

Jean Jereissati Neto: We launch at a low calorie beer I stellar as the evolution of.

Jean Jereissati Neto: Our gluten free now is gluten free and low calorie with very.

Jean Jereissati: Now it's gluten-free and low calorie, very, with price very super premium. It's doing very well. Beyond beer, the portfolio that goes beyond the ready to drink. These are our bets on innovation that add up for the total market share that we are planning. The portfolio strategy together with the distribution of beers and the delivery technology, these are the two bets for us to continue to gain market share. When we go to NAB, really, the trend, this trend of low sugar, no sugar is really in our favor. We are well positioned in this trend. We distribute Red Bull, that is a very important brand on the energy segment that is growing a lot.

Jean Jereissati Neto: With price very Super Prime is doing very well and beyond beer that so the portfolio debt rose.

Jean Jereissati Neto: Beyond the ready to drink. So these are.

Jean Jereissati Neto: Our bets on innovation that adds up.

Jean Jereissati Neto: The total market share that we have planned so so the portfolio strategy together with the distribution of <unk> delivery technology. So these are the two beds for us to continue to gain market share.

Jean Jereissati Neto: And when we go to Nab.

Jean Jereissati Neto: Really the trend this trend of low sugar low sugar is really in our favor we are well position.

Jean Jereissati Neto: We are well-positioned for this trend, and we are, so we distribute. So Red Bull is a very important brand in the energy segment that is growing a lot. So there is market share gaining, coming from the energy side, and Gatorade, there is hydration, there is a very healthy category, and we are very well-positioned again. Okay, so these are pretty much the initiatives. I could go over here the pack assortment that we are bringing to premium and super premium.

Jean Jereissati Neto: In this trend and we are so we distribute believe so ratable there is a very important brand in the energy segment that is growing.

Jean Jereissati: So far, there is market share gaining coming from the energy side. Gatorade, there is hydration, there is a very healthy category, and that we are very well positioned again. Okay. These are pretty much the initiative. I could go over here the pack assortment that we are bringing to premium, super premium. I could go over here the returnable 300ml bottles that give affordability to core. Overall, it's a portfolio strategy that is really working, intentional bet on brands of the future, innovation on white spaces and a lot of technology to make these things happen.

Jean Jereissati Neto: Growing a lot. So barra so there is market share gain coming from the energy side and Gatorade. There is hydration. There is a very healthy category and that we are very well position again. Okay. So so these are pretty much they need such a I could go over here.

Jean Jereissati Neto: The back assortment that we are bringing to premium superpremium.

Jean Jereissati Neto: I could go over here the returnable 300 ml bottles that give affordability to the core, but overall, it's a portfolio strategy that is really working, an intentional bet on brands of the future, innovation in white spaces, and a lot of technology to make these things happen. Perfect, thank you very much.

Jean Jereissati Neto: Could go over here.

Jean Jereissati Neto: The returnable 300 ml bottles that teva for the ability to core.

Jean Jereissati Neto: But overall, it's a portfolio strategy that is really working the intentional bet on brands of the future innovation on white spaces and in a lot of technology to meet to make these things happen.

Benjamin Theurer: Perfect. Thank you very much.

Ben Theurer: Perfect. Thank you very much.

Speaker Change: Okay perfect. Thank you very much.

Renata Cabral: Next question from Renata Cabral with Citibank. Hi, everyone. Hi Jean, Lucas, thanks for taking my question. My question is a follow-up in terms of the discussions on volume, specifically on the core portfolio. We saw that in this quarter, you grew above the industry, and it seems that the third player is seeking growing volumes, so it could mean that we could have a more promotional environment in this segment from now on in the market.

Operator: Next question from Renata Cabral with Citi.

Jean Jereissati Neto: Next question from Hamed <unk> with Citi.

Renata Cabral: Hi, everyone. Hi, Gian, Lucas. Thanks for taking my question. My question is a follow-up in terms of discussions on volume, specifically on the core portfolio. We saw that on this quarter, you grew above the industry. It seems that the third player is seeking for growing volumes. It could mean that we could have a more promotional environment in this segment from now on in the market. My question is about the competitive environment, specifically on the core portfolio. If you are feeling already this pressure in terms of pass-through pricing, and how are you perceiving this continuation of the growth on the core portfolio, not only in volumes, but also in pricing. Thank you.

Renata Cabral: Hi, everyone.

Renata Cabral: Hi, Jim Lucas Thanks for taking my question Mike.

Renata Cabral: My question is a follow up in terms of discussion handle volume is specifically on the core portfolio. We saw that on this quarter U you grew.

Renata Cabral: Above the.

Renata Cabral: Street, and it seems that the towards the player.

Renata Cabral: Is seeking for growing volumes, so it could be in that.

Renata Cabral: We could have a more promotional environment in the segment from now on in the market.

Renata Cabral: So my question is about the competitive environment, specifically on the core portfolio, if you are already feeling this pressure in terms of best true pricing, and how are you perceiving this continuation of growth in the core portfolio, not only volumes but also in pricing? Thank you.

Renata Cabral: So my question is about the competitive environment, specifically on the core portfolio. If you are feeling you read. These this pressure in terms of pass through pricing and how are you. Chris CB is a continuation of the growth will own the core portfolio not only volumes, but also <unk>.

Renata Cabral: Pricing thank you.

Jean Jereissati Neto: So thank you very much for the question, Renata. So what we are seeing is really an industry that is in positive territory and more rational overall when we think about the whole industry. Of course, we have the first player, the second player, and the third player trying to find ground for some of their brands. It's more like a brand strategy that everybody is trying to put the brands in the right places and have the right proposition in terms of value for consumers.

Jean Jereissati: Thank you very much for the question, Renata. What we are seeing is really an industry that is on the positive territory and more rational overall when you think about the whole industry. Of course, we have the first player, the second player, and the third player trying to find ground for some of their brands. It's more like a brand strategy that everybody is trying to put their brands in the right places and have the right proposition in terms of value for consumers. What we saw in the overall industry is really more rationality on what's happening. I don't see this thing about the portfolio and something different on the competitive landscape.

Speaker Change: So thank you very much for the question and answer.

Jean Jereissati Neto: So what we have seen is really.

Jean Jereissati Neto: Our industry that is on the positive territory.

Jean Jereissati Neto: And more rational overall, when we think about that.

Jean Jereissati Neto: So the whole industry.

Jean Jereissati Neto: Of course that we have.

Jean Jereissati Neto: The first player the second player in the third player trying to find ground for some off.

Jean Jereissati Neto: Their brands is more like a brand strategy that everybody is trying to put the brands on the right places and have them there right.

Jean Jereissati Neto: Sure.

Jean Jereissati Neto: Proposition in terms of value for consumers, but what we saw as overall.

Jean Jereissati Neto: But what we saw as the overall industry is really more rationality about what's happening. So I don't see this thing about the portfolio and something different in the competitive landscape. And we are happy with our strategy. Talking specifically about the core, we still have a lot of room to continue to grow the core. The biggest opportunity that we have in Brazil in the industry is to bring the C class to drink close to the median income class.

Jean Jereissati Neto: The industry is really more rationality.

Jean Jereissati Neto: On on whats happening so I don't see.

Jean Jereissati Neto: This thing about.

Jean Jereissati Neto: Sure.

Jean Jereissati Neto: Portfolio and some something different on the competitive landscape.

Jean Jereissati: We are happy with our strategy. Talking specifically about the core, we still have a lot of room to continue to grow the core. The biggest opportunity that we have in Brazil, in the industry, it is to bring the C class to drink close to the medium income class. There is a big gap over there on affordability and ability to be more intense in this. This is a huge opportunity for us that even though with this big per capita, the C class still drinks much less frequently than the average middle income population. Bridge this gap. It is something that we are working on to make the per capita consumption solid.

Jean Jereissati Neto: And and we are happy with our strategy talking specifically about the core we still have a lot of room.

Jean Jereissati Neto: <unk> continue to grow the core.

Jean Jereissati Neto: The biggest opportunity that we have in Brazil in the industry. It is to bring.

Jean Jereissati Neto: The C class to drink.

Jean Jereissati Neto: Close to the median income class there is a big gap over there on on on affordability and the ability to you too to be more intense in this so this is a huge opportunity for us that even though with this big bet carpet at the C class.

Jean Jereissati Neto: There is a big gap over there on affordability and ability to be more intense in this. So this is a huge opportunity for us, that even though with this much per capita, the C class still drinks much less frequently than the average middle-income population. Bridge this gap.

Jean Jereissati Neto: Steel.

Jean Jereissati Neto: Links less much less frequently than than the average.

Jean Jereissati Neto: Middle income population. So bridge. This gap it is something that we are working on to make the breakup the consumption.

Jean Jereissati Neto: It is something that we are working on to make per capita consumption solid. So we have strategies for that with our core brands. So the RGB 300 ML has been growing for five years in a row.

Jean Jereissati Neto: Solid so we have strategies for for that with our core brands.

Jean Jereissati: We have strategies for that with our core brands. The RGB 300 ml for 5 years in a row have been growing. It's a lower out-of-pocket strategy, a price point strategy that is really paying off, and we wanna continue to invest on that. That's a place where great brands with the right price point will really include a lot of consumers that they don't have, like, the money to do. They have great margins because they are returnable for us. Overall, what I could say is that. The industry is healthy, rational, with opportunities on the per capita, and our strategy in the core is a strategy that is working.

Jean Jereissati Neto: So the RGB 300 ml for five years in a row have been growing it's a lower out of pocket.

Jean Jereissati Neto: It's a lower out-of-pocket strategy, a price point strategy that is really paying off. And we want to continue to invest in that. And that's really a place where great brands with the right price point will really reach a lot of consumers that they don't have the money to do. And they have great margins because they are returnable for us.

Jean Jereissati Neto: Our strategy of price points threat, because your debt is really paying off and we weren't a cold chain Youtube to invest on that and that's really some of a place where great brands with the right price point, we really includes a lot of consumers that they don't they don't have.

Jean Jereissati Neto: Like.

Jean Jereissati Neto: The money to do.

Jean Jereissati Neto: And they have great margins because they are returnable for us. So overall, what I could say is that the industry is healthy our rational with opportunities on the per capita in our strategy and the core is a strategy that that isn't working.

Jean Jereissati Neto: So overall, what I could say is that the industry is healthy, rational, with opportunities per capita. And our strategy, at the core, is a strategy that is working. That's very clear. Thanks so much, Jim. Next question from Ricardo Alves with Morgan Stanley. Hey Jean, Lucas.

Renata Cabral: That's very clear. Thanks so much, Jean.

Lucas Ferreira: That's very clear thanks, so much Jim.

Operator: Next question from Ricardo Alves with Morgan Stanley.

Lucas Ferreira: Next question from <unk> <unk> with Morgan Stanley.

Lucas Ferreira: Thanks so much for the call. I have a follow up on the last two questions that were asked in Brazil Beer. And Jean, I think you just mentioned rationality in Brazil Beer. And actually, looking at that chart, that was really helpful in the Revenue Product Leader. It does seem that your pricing on an ex-ICMS effect was quite solid, so I think that that underscores the message that you just conveyed on rationality. But when we look at your volumes of 3, 4% Heineken reporting, high single-digit volumes, that implies really, really tough numbers for Petropolis, right? I think that that's just basic math.

Ricardo Alves: Hey, Gian, Lucas. Thanks so much for the call. I have a follow-up on the last two questions that were asked in Brazil beer. Gian, I think you just mentioned rationality in Brazil beer, and actually looking at that chart, that was really helpful on the revenue per active liter. It does seem that your pricing on an ex-ICMS effect was quite solid. I think that underscores the message that you just conveyed on the rationality. When we look at your volumes up 3-4%, Heineken reporting high single-digit volumes, that implies really tough numbers for Petrópolis, right? I think that's just basic math.

Lucas Ferreira: Hey, Jim Lucas. Thanks, so much for the call I have a follow up on the last two questions that were asked in Brazil beer.

Lucas Ferreira: And John I think you just mentioned rationality in Brazil beer.

Lucas Ferreira: And actually looking at that chart that it was really helpful on the revenue per hectoliter.

Lucas Ferreira: It does seem that your pricing on an ex <unk>.

Lucas Ferreira: Yes.

Lucas Ferreira: The effect was quite solid so I think that that underscores the message that you just conveyed on the rationality.

Lucas Ferreira: But when we look at your volumes up three 4% Heineken reporting high single digit volumes that implies really really tough numbers for petropoulos right I think.

Lucas Ferreira: Just the basic math.

Jean Jereissati Neto: And I also think, correct me if I'm wrong, but Jean mentioned specifically in the remarks that Antarctica and Brahma are doing better on the margins. So I'm curious about the competitive environment, particularly with your smaller competitor. But in particular, again, on the core, it seems that you may be gaining.

Ricardo Alves: I also think you correct me if I'm wrong, but I think that Jean mentioned specifically in the remarks that Antarctica and Brahma are doing better on the margin. I'm curious about the competitive environment, particularly with your smaller competitor. In particular, again, on the core, it seems that you may be gaining significant share on the margin. Specifically on those two brands that I mentioned for you, if there's something more specific you can elaborate on that, given the relevance of them for your portfolio. Then just another follow-up on a prior question that was asked on revenue per active liter. I'm just curious if maybe there was some impact on the channel mix.

Lucas Ferreira: And I also think E. Correct me, if I'm wrong, but I think that John mentioned specifically.

Jean Jereissati Neto: In the remarks that entire chicken, but on what Youre doing.

Jean Jereissati Neto: Better on the margin so I am curious about the competitive environment, particularly with your smaller competitor bleeding.

Jean Jereissati Neto: But in particular again on the core.

Jean Jereissati Neto: It seems that you may be gaining significant share on the mark So specifically on those two brands that I mentioned for you if there is something.

Jean Jereissati Neto: Significant share in March, so specifically on those two brands that I mentioned for you, if there's anything more specific you can elaborate on that given the relevance of them for your portfolio. And then just another follow-up on a prior question that was asked on Revenue Per Actual Leader. I'm just curious if maybe there was some impact on the channel mix.

Jean Jereissati Neto: More specific you can elaborate on that given the relevance of them for your portfolio and then just another follow up on a prior question that was asked grown on a revenue per hectoliter.

Jean Jereissati Neto: I'm just curious if maybe there was some impact on the channel mix I know that.

Ricardo Alves: I know that I asked this question in the last conference call, but I'm just wondering if besides the tax impact, maybe there was something related to, you know, third party distribution or something that could be maybe a one-off for the quarter and improve down the road. Two follow-ups on competition and then revenue per active liter. Thank you so much.

Jean Jereissati Neto: Ask this question in the last conference call, but I'm just wondering if besides the tax impact maybe there was something related to third party distribution or something that could be.

Jean Jereissati Neto: Maybe a one off for the quarter and improve down the road. So two follow ups on competition and then and then revenue per hectoliter. Thank you so much.

Jean Jereissati Neto: I know that I asked this question in the last conference call, but I'm just wondering if, besides the tax impact, maybe there was something related to, you know, third-party distribution or something that could be maybe a one-off for the quarter and improve down the road. So, two follow-ups on competition and then Revenue Per Actual Leader. Thank you so much.

Jean Jereissati: Okay. Thank you for the question, Ricardo. Let me try to give some information on the competitive landscape and see if it fits your question. We have a great intelligence here on trying to put the numbers together on what's going on in the competitive landscape. We have a whole area that really reconciles Nielsen with our performance, with the delivery information. We really try to have a broader intelligence on what's going on. I think what some competitors mentioned their performance. What we've heard from here is that some brands, some competitors sell in ahead of sell out.

Jean Jereissati Neto: OK, thank you for the question, Ricardo. Let me try to give you some information on the competitive landscape and see if it fits your question. So we have great intelligence here trying to put the numbers together on what's going on in the competitive landscape. So we have a whole area that really reconciles new things with our performance and delivery information. So we really try to have a broader intelligence on what's going on.

Speaker Change: Okay. Thank you for the question.

Jean Jereissati Neto: Let me try to let me try to give some information on the competitive landscape and see if it's if it fits your question. So.

Jean Jereissati Neto: So we are we have a great intelligence here on trying to put the numbers together on on what's going on on the competitive landscape. So we have a whole area that really reconcile new same.

Jean Jereissati Neto: With our performers with delivery formation. So we really try to have a broader intelligence on what's going on.

Jean Jereissati Neto: I think what some competitors mention, their performance, so what we've heard from here is that some brands, some competitors, Sellout, Celine, head of Sellout, so I think this was something that we saw in our numbers and it was mentioned, so I think we have to understand how this plays. I saw some information coming from the industry overall that the first assessment was a negative one, but in our assessment, it was positive. So when we put all these things together, in our numbers, Petropolis, the third player, is really trying to find its feet and is performing better than last year.

Jean Jereissati Neto: I think what.

Jean Jereissati Neto: Some competitors mention.

Jean Jereissati Neto: Yes.

Jean Jereissati Neto: Their performance there so what we've heard from here is that.

Jean Jereissati Neto: Some brands some competitors sell out sell lean ahead of sell out so.

Jean Jereissati: I think this was something that we saw in our numbers and it was mentioned. I think we have to understand how this plays. I saw some information coming from the industry overall that the first assessment was a negative industry, but in our assessment, the industry was positive. When we put all these things together in our numbers, Grupo Petrópolis, the third player, is really trying to find its grounds, and it's performing better than the previous year. You have to put all these things together and try to make your assessment. In our numbers, we did increase inventories.

Jean Jereissati Neto: I think this was something that we saw in our numbers.

Jean Jereissati Neto: And it wasn't mentioned.

Jean Jereissati Neto: So I think we have to.

Jean Jereissati Neto: Understand how this plays.

Jean Jereissati Neto: I saw some information coming from.

Jean Jereissati Neto: The industry overall that the first assessment was a negative industry.

Jean Jereissati Neto: But in our.

Jean Jereissati Neto: Assessments say industry was positive.

Jean Jereissati Neto: So when we put all this put these things together.

Jean Jereissati Neto: In our numbers like Petropolis third play is really trying to find its ground and is performing better than.

Jean Jereissati Neto: Then the previous year so.

Jean Jereissati Neto: So you have to put all these things together and try to make your assessment. And in our numbers, we did increase inventories. In reality, when we began to pass through the VAT changes, it was the end of February or beginning of March.

Jean Jereissati Neto: You have to put all these things together and try to make your assessment.

Jean Jereissati Neto: And in our numbers.

Jean Jereissati Neto: Dealer inquiries.

Jean Jereissati Neto: Inventories in reality, when we begin to.

Jean Jereissati: In reality, when we begin to pass through the VAT changes, it was end of February, beginning of March. In the end, we felt that our inventory in the market could be lower than the average because we were, by the end of February, really passing through the VAT. We have to put all these things together to have the final assessment. We are confident with our portfolio, with our market share gains. Somehow, this is, I think, what I can mention more when we talk about channels and the impact on net revenue per hectoliter. Yes, you are right. There is a piece of this happening. There are our dedicated wholesalers.

Jean Jereissati Neto: Best through the Vit changes.

Jean Jereissati Neto: It was end of February <unk>.

Jean Jereissati Neto: Beginning of March so in the end we felt.

Jean Jereissati Neto: So in the end, we felt that our inventories in the market could be lower than the average because we were, by the end of February, really passing through the VAT. So we have to put all these things together to make the final assessment. We are confident with our portfolio, with our market share gain. And somehow, this is, I think, what I can mention more. When we talk about channels and the impact on net revenue per hectoliter, so yes, you are right, there is a piece of this happening. There are our dedicated wholesalers, this is an intentional strategy that we have, dedicated wholesalers with B2B, going Brazil-wide, northeast, and north. And this is good on a narrow, wide perspective. So it's a satellite.

Jean Jereissati Neto: That is.

Jean Jereissati Neto: Our inventories in the market could be low could be lower than than the average because we were.

Jean Jereissati Neto: By the end of February really.

Jean Jereissati Neto: Passing through the VA. So we have to put all the things all these things together to have the final assessment that we are confident with our portfolio with our market share gains.

Jean Jereissati Neto: And and somehow this is I think what I can emission more when we talk about channels.

Jean Jereissati Neto: And the impact.

Jean Jereissati Neto: On a net revenue per hectoliter. So yes, you are right.

Jean Jereissati Neto: There is a piece of this.

Jean Jereissati Neto: Happening there are.

Jean Jereissati Neto: Our dedicated wholesalers. This is our intentional strategy that we have.

Jean Jereissati: This is an intentional strategy that we have, dedicated wholesalers with B2B going Brazil-wide, Northeast and North. This is good on a narrow and wide perspective. It's a satellite. There is a lot of reach, but there is some of this distribution cost that goes over the net revenue. When we go direct, it goes in our cash SG&A. This impact is happening. We think this is something intentional and structural that we should live with, that it pays off. There is another part positive. The brand mix is really positive, is really something that is helping.

Jean Jereissati Neto: Dedicated wholesalers with beef going Brazil wide northeast and north in this brings.

Jean Jereissati Neto: This is good on a narrow wide perspective, so with asset light there was a lot of reach but there is.

Jean Jereissati Neto: There is a lot of reach, but there is some of this distribution cost that goes over net revenue. When we go direct, it goes in our cash as DNA.

Jean Jereissati Neto: Some of this.

Jean Jereissati Neto: Distribution cost that rose.

Jean Jereissati Neto: Over the net revenue.

Jean Jereissati Neto: When we go direct it goes in our cash SG&A. So this impact.

Jean Jereissati Neto: So this impact is happening, but we think this is something intentional and structural that we should live with, that it pays off. There is another part, the positive. There is the brand mix is really positive.

Jean Jereissati Neto: If is happening, but we think this is something intentional when structural debt.

Jean Jereissati Neto: That we should leave with that it pays off there.

Jean Jereissati Neto: There is another part positive there as the brand mix is really positive is really something that is.

Jean Jereissati Neto: It's really something that is helping. But when we put all these things together, what really came out of the impact was really taxes that impacted net revenue practically. Thank you very much. This concludes the Q&A session. I would like to invite Mr. Jean-Gerais Satie to proceed with his closing remarks. Please, go ahead, sir.

Jean Jereissati Neto: Is is is helping but when we put all these things together.

Jean Jereissati: when we put all these things together, what really came out, or the impact, was really taxes that impacted the net revenue per hectoliter.

Jean Jereissati Neto: What really.

Jean Jereissati Neto: <unk> the impact was really Texas.

Jean Jereissati Neto: Impacted net revenue per hectoliter.

Ricardo Alves: Thank you very much, yeah.

Jean Jereissati Neto: Thank you very much.

Operator: This concludes the Q&A session. I would like to invite Mr. Jean Jereissati to proceed with his closing remarks. Please go ahead, sir.

Jean Jereissati Neto: This concludes the Q&A session I would like to invite Mr. Yes. It has started to proceed with his closing remarks. Please go ahead Sir.

Jean Jereissati Neto: So thank you, everybody, who joined the call for your time and attention. We kicked off the year with a good operational performance. We remain confident in volumes, especially with the Brazil commercial momentum. Tax is something that we have to handle, but in the long term, this thing should converge. And we will continue working to deliver consistent, sustainable results. We are focusing on margins, volumes, and cash flow generation.

Jean Jereissati: Thank you everybody who joined the call for your time and attention. We kick off the year with a good operational performance. We remain confident in volumes, especially with Brazil commercial momentum. Tax is something that we have to handle, but in the long term, this thing should converge. We will continue working to deliver consistent, sustainable results. We are focusing on margins, volumes, and cash flow generation. Okay. Thank you very much. See you in August, and have a great day.

Jean Jereissati Neto: So thank you everybody who joined the call for your time and attention.

Jean Jereissati Neto: We kicked it off with a good operational performance.

Jean Jereissati Neto: We remain confident in volumes, especially with Brazil commercial momentum.

Jean Jereissati Neto: Texas, something that we have to handle but in the long term.

Jean Jereissati Neto: Things should converge.

Jean Jereissati Neto: And we will continue working to deliver consistent sustainable results.

Jean Jereissati Neto: We are focusing on on margins volumes and cash flow generation. Okay. So thank you very much.

Jean Jereissati Neto: Okay, so thank you very much, see you in August, and have a great day. This concludes today's presentation. Thank you, and have a nice day.

Jean Jereissati Neto: During August and have a great day.

Jean Jereissati Neto: Yes.

Operator: This concludes today's presentation. Thank you, and have a nice day.

Jean Jereissati Neto: This concludes today's presentation. Thank you and have a nice day.

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