Group 1 - The recommendation to buy Ambev (NYSE: ABEV) shares is reiterated following the release of its first-quarter 2025 results [1] - The article serves as a continuation of the initial coverage published on May 8, 2024, indicating ongoing analysis and insights into the company's performance [1] - The analyst has over 5 years of experience in equity analysis in Latin America, providing in-depth research and insights for informed investment decisions [1]

Core Insights - Steven Cress is a key figure in quantitative strategy and market data at Seeking Alpha, contributing to the development of the platform's quantitative stock rating system and analytical tools [1][2][3] - The Seeking Alpha Quant Rating system aims to interpret data for investors, providing insights that save time and enhance investment decision-making [1][2] - Cress has a strong background in investment research, having founded CressCap Investment Research and Cress Capital Management, and previously worked at Morgan Stanley and Northern Trust [3][4] Company and Industry Summary - Seeking Alpha utilizes a data-driven approach to investment research, focusing on removing emotional biases and simplifying complex analyses through algorithms and technologies [2] - The platform offers a systematic stock recommendation tool called Alpha Picks, designed for long-term investors to build high-quality portfolios [1][2] - With over 30 years of experience in equity research and portfolio management, Cress is well-equipped to address various investment topics, enhancing the credibility of Seeking Alpha's offerings [4]

Core Viewpoint - Investors are evaluating Ambev (ABEV) and Constellation Brands (STZ) for potential undervalued stock opportunities in the Beverages - Alcohol sector [1] Group 1: Zacks Rank and Earnings Outlook - ABEV has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while STZ has a Zacks Rank of 4 (Sell) [3] - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, suggesting ABEV is likely to see greater improvement in its earnings outlook [3][7] Group 2: Valuation Metrics - ABEV has a forward P/E ratio of 14.29 compared to STZ's forward P/E of 14.77, indicating ABEV may be more attractively priced [5] - ABEV's PEG ratio is 3.03, while STZ's PEG ratio is significantly higher at 8.87, suggesting ABEV offers better value relative to its expected earnings growth [5] - ABEV's P/B ratio is 2.42, compared to STZ's P/B of 4.74, further supporting ABEV's valuation advantage [6] - Based on these metrics, ABEV earns a Value grade of B, while STZ receives a Value grade of D [6]

Group 1 - Ambev (NYSE: ABEV) is experiencing growth driven by premiumisation, contributing to decent EBITDA growth [2] - The non-alcoholic product portfolio is performing well in terms of volume, indicating a positive trend in consumer preferences [2] - Net revenues for Ambev have increased modestly, which is crucial for maintaining operational stability [2] Group 2 - The Value Lab focuses on long-only value investment ideas, targeting international mispriced equities with a portfolio yield of approximately 4% [1] - The Valkyrie Trading Society consists of analysts sharing high conviction investment ideas that are expected to generate non-correlated and outsized returns in the current economic environment [3]

Financial Performance - Net revenue increased by 6.7% year-over-year, with net revenue per hectoliter growing by 5.9%, driven by a 19.5% increase in Latin America South and an 11.4% increase in Brazil NAB[7]. - Consolidated net revenue reached R$ 22,497.4 million, an 11.0% increase, with organic growth of 6.7%[43]. - Gross profit improved from R$ 10,217.3 million in Q1 2024 to R$ 11,551.6 million in Q1 2025, marking a 9.9% growth[77]. - Normalized Operating Profit increased by 15.6%, from R$ 4,902.4 million in Q1 2024 to R$ 5,731.4 million in Q1 2025[77]. - Normalized EBITDA grew by 12.7%, from R$ 6,534.8 million in Q1 2024 to R$ 7,444.6 million in Q1 2025[77]. - The company reported a profit of R$ 3,804.6 million in Q1 2025, slightly up from R$ 3,804.2 million in Q1 2024[81]. Market and Volume Growth - Consolidated volumes grew by 0.7%, with Brazil increasing by 1.4% and Latin America South by 1.1%, while Central America and the Caribbean and Canada saw declines of 4.9% and 4.2%, respectively[6][7]. - Brazil NAB achieved record volumes of 8,934.6 thousand hl in 1Q25, reflecting a 3.2% organic growth compared to 1Q24[31]. - In Brazil, total volume reached 32,093.3 thousand hl in 1Q25, representing a 1.4% organic growth[34]. - Latin America South (LAS) reported a net revenue increase of 25.8% to R$ 5,536.1 million, with organic growth of 19.5%[38]. - The core beer segment represented close to 70% of total beer volumes, with megabrands increasing volumes by 3.5% and non-alcoholic beer brands growing volumes by mid-thirties[16][30]. Cost and Profitability - Normalized EBITDA grew by 12.7%, with margins expanding by 180 basis points to 33.1%, supported by disciplined cost management[8][26]. - Cash COGS per hl in Brazil increased by 12.1% primarily due to commodity headwinds, impacting overall profitability[32]. - The company reported a gross profit margin of 51.1% in Q1 2025, compared to 49.2% in Q1 2024[77]. - The normalized EBITDA margin improved from 32.2% in Q1 2024 to 33.1% in Q1 2025[77]. Cash Flow and Dividends - Cash flow from operating activities increased by 67.6% to R$ 1,204.0 million compared to R$ 718.2 million in 1Q24, driven by Normalized EBITDA growth and lower cash taxes[9][26]. - The Board of Directors approved the distribution of intermediary dividends of approximately R$ 2 billion to be paid in July[11][26]. - Dividends and interest on shareholders' equity paid surged from R$ 11.6 million in Q1 2024 to R$ 6,611.4 million in Q1 2025[83]. Financial Position and Debt - The company's total consolidated debt decreased from R$ 3,452.7 million as of December 31, 2024, to R$ 3,218.2 million by March 31, 2025[51]. - Total assets decreased from R$ 162,507.9 million as of December 31, 2024, to R$ 147,299.0 million as of March 31, 2025[79]. - Total liabilities reduced from R$ 62,927.4 million to R$ 51,823.1 million during the same period[79]. Market Share and Digital Initiatives - The company gained market share in carbonated soft drinks, with no-sugar variants like Guaraná Antarctica Zero and Pepsi Black growing by mid-twenties and mid-thirties, respectively[32]. - BEES Marketplace reached 1.4 million monthly active buyers, a 9% increase year-over-year, with Gross Merchandise Value (GMV) growing by 60%[20]. - The digital initiative BEES covered 83% of net revenue in Argentina, 76% in Bolivia, and 87% in Paraguay[39]. Financial Results and Expenses - Net finance results in 1Q25 totaled R$ (856.4) million, a significant decrease of R$ 450.4 million compared to R$ (405.9) million in 1Q24[48]. - Interest income decreased slightly from R$ 585.6 million in 1Q24 to R$ 564.2 million in 1Q25, while interest expenses also decreased from R$ (549.5) million to R$ (506.2) million[49]. - The effective tax rate increased from 15.0% in 1Q24 to 21.7% in 1Q25, with income tax and social contribution expense rising from R$ (671.2) million to R$ (1,051.7) million[53]. - Other operating income increased from R$ 593.0 million in 1Q24 to R$ 615.2 million in 1Q25, reflecting a growth of 3.7%[45]. Forward-Looking Statements - The company remains focused on investing in brands and operational efficiency, despite anticipated FX and commodity headwinds in the second quarter[27]. - Forward-looking statements indicate potential risks and uncertainties affecting future performance, with no guarantee that current expectations will be met[74].

Economic Indicators - Brazilian GDP growth was 3.4% in 2024, up from 3.2% in 2023 and 3.0% in 2022, indicating a positive trend in economic conditions [447]. - Brazilian unemployment rate decreased to 6.8% in 2024 from 7.8% in 2023 and 9.3% in 2022, reflecting improved labor market conditions [448]. - Brazilian inflation, measured by IGP-M, was 6.5% in 2024, compared to a deflation of 3.2% in 2023 and inflation of 5.5% in 2022, indicating rising cost pressures [451]. - The real depreciated against the U.S. dollar by 27.9% in 2024, following appreciations of 7.2% in 2023 and 6.5% in 2022, which may create inflationary pressures [452]. - Argentine GDP contracted by 2.6% in 2024, marking the second consecutive year of decline, with inflation rates reaching 117.8% [458]. - The average exchange rate for the Argentine Peso against the U.S. dollar was ARS 916.75 in 2024, reflecting significant depreciation [456]. Company Financial Performance - Net sales increased by 12.2% in 2024, reaching R$89,452.7 million compared to R$79,736.9 million in 2023, driven by a 13.3% growth in net revenue per hectoliter [475]. - Sales volume decreased by 0.9% to 181,920.5 thousand hectoliters in 2024 from 183,659.0 thousand hectoliters in 2023, primarily due to declines in Latin America South and Canada [475]. - Gross profit rose by 13.3% to R$45,837.6 million in 2024, with a gross margin improvement to 51.2% from 50.7% in 2023 [473]. - Net income slightly decreased by 0.8% to R$14,847.0 million in 2024, resulting in a net margin decline to 16.6% from 18.8% [473]. - Brazilian operations net sales increased by 4.8% to R$48,605.3 million, with volumes growing 1.5% to 128 million hectoliters, marking a historical high [477]. - Latin America South operations saw a significant net sales increase of 43.7% to R$19,829.7 million, driven by a 59.6% rise in net revenue per hectoliter [481]. - Cost of sales increased by 11.0% to R$43,615.1 million, but as a percentage of net sales, it decreased to 48.8% from 49.3% [485]. - Net revenue per hectoliter for total operations increased by 13.3% to R$491.7 in 2024, with notable increases in Latin America South (59.6%) and NAB (9.2%) segments [477]. - Canada operations net sales increased by 4.8% to R$9,993.9 million, supported by an 8.2% increase in net revenue per hectoliter despite a 3.1% decline in volume sold [482]. Tax and Credits - The company recognized R$19 billion in tax credits from the exclusion of ICMS from the PIS and COFINS calculation base from 2017 to 2024 [465]. - In 2024, the company recorded a positive impact of R$2,533.9 million in net revenue due to hyperinflation accounting adjustments in Argentina [463]. - The company has R$607.5 million in tax credits related to IRPJ and CSLL taxes unduly paid over SELIC interest, pending judicial proceedings [467]. - The company recorded R$3,243.1 million in tax credits for 2024, compared to R$3,040.4 million in 2023, reflecting gains from tax incentive programs [564]. - The total amount deferred in tax benefits as of December 31, 2024, was R$372.2 million, with a current portion of R$145.1 million [564]. Operational Changes and Market Dynamics - The impact of COVID-19 led to significant changes in market dynamics, with a notable increase in e-commerce sales despite restrictions on on-trade channels [468]. - Strategic revenue management initiatives contributed to the growth in net sales across various segments, particularly in Brazil and CAC operations [480]. Expenses and Income - Sales, marketing, distribution, and administrative expenses increased by 12.6% in 2024 to R$26,392.4 million [494]. - Other net operating income rose by 21.1% in 2024 to R$2,457.3 million, primarily due to higher VAT tax credits [502]. - Income from operations increased by 15.8% in 2024 to R$21,801.7 million [504]. - Net finance result improved, decreasing by 35.8% in 2024 to an expense of R$2,318.2 million [505]. - Consolidated income tax expense totaled R$4,640.4 million in 2024, with an effective tax rate of 23.8% [507]. Cash Flow and Debt - Cash flows generated from operating activities increased by 19.7% in 2023, to R$24,711.4 million from R$20,642.1 million in 2022 [553]. - Cash flows used in investing activities increased by 15.2% in 2023, to R$5,766.0 million from R$5,004.2 million in 2022 [554]. - Cash flows used in financing activities decreased by 1.4% in 2023, to R$16,115.2 million from R$16,337.8 million in 2022 [555]. - As of December 31, 2024, the total net cash position was R$26,384.9 million, an increase from R$12,835.1 million in 2023 [557]. - Short-term debt as of December 31, 2024, totaled R$1,276.4 million, with 27.0% in foreign currencies, compared to R$1,298.1 million and 19.6% in foreign currencies in 2023 [558]. - Long-term debt as of December 31, 2024, was R$2,176.3 million, with 28.0% in foreign currencies, down from R$2,203.0 million and 28.7% in foreign currencies in 2023 [560]. Leadership and Governance - Ambev's CEO, Carlos Eduardo Klutzenschell Lisboa, has been with the company since 1993 and has held various leadership positions, including Global Vice President for Global Brands [599]. - Lucas Machado Lira serves as the Chief Financial, Investor Relations, and Shared Services Officer, having joined Ambev in 2005 and held multiple leadership roles [600]. - Leticia Rudge Barbosa Kina is the Legal and Compliance Vice President, with a background in law and economics, and has been with the company since 2002 [601]. - Ricardo Morais Pereira de Melo, the People and Management Vice President, has been with Ambev since 1996, holding various sales positions [602]. - Eduardo Braga Cavalcanti de Lacerda, the Commercial Vice President, has been with the company since 2001 and has held various roles including Non-Alcoholic Vice President [603]. - Valdecir Duarte, the Industrial Vice President, has been with Ambev since 1998 and has held several engineering and supply chain management positions [604]. - Paulo André Zagman, the Logistics Vice President, joined Ambev in 2002 and has held various roles including Chief People Officer [605]. - The Board of Directors includes independent members and experienced executives, enhancing governance and strategic oversight [593]. - The company has a strong focus on leadership development, with many executives holding advanced degrees and specialized training [599][600][601][602][603][604][605]. Compensation and Share Plans - The total compensation for all members of the Board of Directors, Executive Officers, and Fiscal Council in 2024 amounted to R$177.1 million, including fixed and variable remuneration, benefits, and share-based payments [614]. - The average compensation for Executive Officers in 2024 was R$11.7 million, with a maximum of R$46.3 million [617]. - As of December 31, 2024, there were 72.5 million stock options outstanding under the Ambev Stock Option Plan, covering approximately 528 employees [618]. - The Share Based Payment Plan allows for the granting of up to 3.0% of Ambev's share capital, with 120.5 million Restricted Shares offered to approximately 519 participants as of December 31, 2024 [630]. - The average individual compensation for members of the Board of Directors in 2024 was R$3.1 million, with a maximum of R$14.3 million [617]. - The total number of Board of Directors members in 2024 was 13, with 7 members compensated for their service [617]. - The variable remuneration for Executive Officers in 2024 was R$19.5 million, contributing to a total of R$152.7 million for this group [615]. - The minimum individual compensation for Executive Officers in 2024 was R$6.5 million [617]. - The Share Plan includes provisions for Restricted Shares and Performance Shares, which vest in three to five years depending on the program [630]. - The Board of Directors has the authority to manage the Share Plan and establish terms for each Share Based Payment Program [627]. Pension Plans and Profit-Sharing - As of December 31, 2024, Ambev had 8,896 participants in its pension plans, including 220 in the defined benefit plan and 7,448 in the defined contribution plan [637]. - The expenses under the profit-sharing programs amounted to R$1,431.3 million for the year ended December 31, 2024, compared to R$963.5 million in 2023 and R$1,119.2 million in 2022, indicating a significant increase [642]. - Ambev adopted a clawback policy on October 19, 2023, allowing recovery of incentive-based compensation from executives in case of financial restatements, applicable to compensation received after October 2, 2023 [632]. - The defined contribution pension plan covers substantially all new employees, while the defined benefit plan has been closed to new participants since May 1998 [634]. - The profit-sharing plan's variable payments are based on achieving corporate, departmental, and individual performance targets, with a three-tier distribution system [640]. - Ambev's pension plan assets are primarily composed of equity securities, government and corporate bonds, and real estate properties [637]. Shareholder Engagement - The company held individual and group meetings with shareholders and analysts in 2024 to discuss business performance and growth opportunities [643]. - The IAPP (Ambev Private Pension Institute) manages the pension plans, which are independent and benefit solely the employees [634]. - The company has a collective award system for operational employees based on performance at production sites and distribution centers [641]. - No ABI exceptional stock options or restricted stock units were outstanding or held by Ambev executives as of the date of the report [633].

Core Insights - The article emphasizes the importance of in-depth research and insights for informed investment decisions in the Latin American equity market [1] Group 1 - The company has over 5 years of experience in equity analysis specifically focused on Latin America [1] - The research provided aims to assist clients in making informed investment decisions [1]

4Q24 & FY24 Earnings Call This presentation was prepared by Ambev S.A. ("Ambev" or "Company") for the exclusive use in the earnings conference call of the fourth quarter and full year of 2024 (4Q24 and FY24). This presentation should not be considered as a complete document and should be analyzed together with the Company's financial statements (DFP) for the year and the respective press release, both available on the U.S. Securities and Exchange Commission – SEC and the CVM website. This presentation was p ...

Financial Data and Key Metrics Changes - Consolidated EBITDA grew by 11.4% organically and 12.1% excluding Argentina [21] - Normalized profit declined by 2.3% due to increased tax deductibility issues in Brazil, with nearly 60% of net value added going to taxes, up from 53% the previous year [22] - Free cash flow to equity increased by 37%, totaling nearly R$18 billion [15][25] - Gross margin expanded by 170 basis points organically and EBITDA margin expanded by 200 basis points organically [23] Business Line Data and Key Metrics Changes - Volumes excluding Argentina grew by 1.4%, with mega brands increasing by 7.6% [14] - In Brazil, beer industry volumes increased by 0.6%, with core brands growing by low teens, while Skol volumes declined [17] - Non-alcohol beer segment grew by 20%, led by Corona Cero and Budweiser Zero [18] Market Data and Key Metrics Changes - In Argentina, the beer industry declined by low 20s, but market share remained stable [19] - Dominican Republic volumes grew by mid-single digits, driven by the Presidente family of brands [19] - In Canada, total volumes declined by 3.1%, despite a positive performance in Q4 [20] Company Strategy and Development Direction - The company aims to lead and grow the beer category, digitize and monetize its ecosystem, and optimize its business for sustainable value creation [35][38] - Focus on expanding margins and improving earnings per share while continuing to invest in organic growth opportunities [27][78] - Emphasis on productivity and revenue management to overcome cost inflation challenges [75][76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the competitive landscape in Brazil, emphasizing that competition strengthens the category [126] - The company sees potential for growth in per capita consumption and opportunities to develop the beer category in various occasions [120][123] - Management is committed to margin expansion despite cost headwinds, particularly in Brazil [27][128] Other Important Information - The company has executed approximately 45% of its current share buyback program and approved R$2 billion in intermediary dividends to be paid in April [16][26] - Digital transformation has been a key enabler, with over 88% of gross revenues transacted through the BEES platform [11] Q&A Session Summary Question: Insights on Skol's performance and its importance - Management acknowledged Skol's decline in 2024 and emphasized its priority for 2025, highlighting its significance in the portfolio and market [41][50] Question: Regional performance differences in Brazil - Management confirmed that regions like the North and Northeast led in volume growth, consistent with overall trends [53] Question: Position of mega brands and pricing strategies - Management discussed the importance of a diverse portfolio and the need for strategic pricing to maintain competitiveness [56][112] Question: Inorganic growth opportunities - Management stated that organic growth remains the priority, but they are open to inorganic opportunities that align with strategic goals [71][78] Question: Marketing investments and distribution costs outlook - Management indicated a commitment to continue investing in marketing while managing distribution costs effectively [86][88] Question: Update on BEES marketplace and profitability - Management reported a 47% year-over-year growth in GMV for BEES, emphasizing the importance of partnerships and distribution capabilities [101][106]

Core Insights - The article highlights Paul Franke's extensive experience in stock picking and investment strategies, emphasizing his contrarian approach and the development of a system called "Victory Formation" for identifying investment opportunities [1]. Group 1: Investment Strategy - Paul Franke employs a contrarian stock selection style, utilizing daily algorithm analysis of fundamental and technical data to identify stocks [1]. - The "Victory Formation" system focuses on supply/demand imbalances indicated by specific stock price and volume movements, which are critical for successful stock selection [1]. - Franke recommends a diversified approach, suggesting investors hold at least 50 well-positioned stocks and use stop-loss levels of 10% or 20% on individual choices to enhance market outperformance [1]. Group 2: Focus Areas - The "Bottom Fishing Club" articles target deep-value candidates or stocks that are experiencing significant upward technical momentum reversals [1]. - "Volume Breakout Report" articles discuss positive trend changes supported by strong price and volume trading actions, indicating potential investment opportunities [1].