Performance Analysis - Brazilian brewer Ambev S A has experienced significant declines in its stock performance over various time frames including a 30% drop over the past year a 22% decline over three years a 52% decrease over five years and a 58% fall over ten years all figures include dividends [1] Investment Strategy - The investment approach discussed favors a long-term buy-and-hold strategy focusing on stocks that can sustainably generate high-quality earnings typically found in the dividend and income sectors [2] Analyst Position - The analyst holds a beneficial long position in shares of BUD through stock ownership options or other derivatives and the article reflects the analyst's personal opinions without any compensation from the mentioned companies [3]

Company Overview - MoneyShow is a pioneer in investor education since 1981, operating globally as a financial media company [1] - The company hosts leading investment and trading conferences that attract thousands of investors [1] Services Offered - Each conference features workshops, presentations, and seminars led by top financial experts in the nation [1] - MoneyShow provides exclusive seminars-at-sea in collaboration with leading partners in the investment industry [1] - The company operates Moneyshow.com, an award-winning multimedia online community [1] - MoneyShow publishes free Investing and Trading newsletters, offering individual investors access to the latest investment and trading ideas from respected financial newsletter advisors [1]

Investment Strategy - The investment strategy focuses on protecting principal and thinking long-term, with a 5-10+ year investment horizon [1] - The strategy includes being long on treasuries and select high-quality companies, with no use of margin [1] - The approach covers multiple sectors, employing both dividend and non-dividend long-only stock strategies [1] Global Market Performance - Brazil is highlighted as one of the worst-performing markets historically, with the iShares MSCI Brazil ETF mentioned as an example [1] - The strategy occasionally seeks stock investments outside the US, particularly during periods of macroeconomic stress [1] Macroeconomic Focus - The strategy includes coverage of macroeconomics, particularly monetary policy and global excessive debt levels [1]

Financial Performance - The company reported an EBITDA growth of 8.5%, with a 8.7% increase excluding Argentina. Gross margin expanded by 180 basis points organically and 220 basis points ex-Argentina. EBITDA margin increased by 110 basis points organically and 130 basis points ex-Argentina. However, normalized profit declined by around 11% [26][27][29] - Cash flow from operating activities totaled approximately BRL8.1 billion, showing a slight increase of nearly BRL200 million compared to the previous year [31][32] Business Line Performance - In Brazil, the non-alcoholic beverage (NAB) segment achieved all-time high volumes, particularly in the Health and Wellness portfolio, with Guarana Zero up over 50% and Pepsi Black and Gatorade up low 20s. Beer volumes reached record levels, with premium brands growing above 20% [14][15][17] - In Canada, volumes improved sequentially, with premium and core plus brands growing by low-single digits. The market share remained stable, with brand health indicators improving [12] - In the Latin America South (LAS) region, volumes declined in the mid-teens due to a tough consumption environment in Argentina, although market share gains and improved brand health indicators were noted [11] Market Performance - The Dominican Republic showed mid-single digit volume growth, driven by strong brand health for Corona and Presidente. However, Panama faced industry contraction due to recent tax increases [13] - The company noted that the Brazilian beer market is structurally improving, with a focus on premiumization and brand health [36] Company Strategy and Industry Competition - The company is focused on maintaining core brand relevance while expanding premium and super-premium segments. The strategy includes a nimble pricing approach and a commitment to margin expansion [74][75] - The company has made significant investments in technology and sustainability, including the launch of carbon-neutral plants and a digital marketplace [22][23] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about cash generation in Q4, despite facing tough comparisons from the previous year. They believe that the macroeconomic environment in Argentina is improving, with expectations for sequential improvements moving forward [78][79] - The company is committed to maintaining a balance between price increases and brand health, with a focus on innovation in the premium segment [74][75] Other Important Information - The company announced a BRL2 billion share buyback program, reflecting a disciplined approach to capital allocation and a belief in the company's intrinsic value [24][60] - Management highlighted the importance of Ze Delivery, which has gained significant traction among consumers, and the RGB initiative, which is expected to enhance brand performance [82][84] Q&A Session Question: Pricing strategy in Brazil and performance of Skol - Management acknowledged that while the beer segment performed solidly, Skol faced more pressure than expected. They believe this is a short-term issue and expect normalization in future performance [36][38] Question: Revenue per hectoliter and premiumization impact - Beer net revenue per hectoliter grew by 2.6%, with a positive brand mix contributing to this growth. Management emphasized the importance of expanding the wholesaler network [42] Question: Strategy for lower-end market competition - Management stated that the focus remains on premiumization rather than competing in the lower-end market. They are working on maintaining core brand relevance through strategic pricing and packaging [47][48] Question: Innovations for 2025 - Management discussed ongoing innovations, particularly in the functionality of beer, including gluten-free and low-calorie options, which are expected to drive future growth [54] Question: Taxation and monetization strategy - Management noted that while the effective tax rate has increased, cash flow generation remains strong due to available tax credits and deferred tax assets [69] Question: Competitive landscape and cost outlook for 2025 - Management indicated that while costs are expected to rise, they are committed to margin expansion and maintaining a nimble pricing strategy [74][76]

Company Overview - Ambev S.A. (NYSE: ABEV) is a significant player in the beverage market, demonstrating steady demand and growth in recent years [1] - The company boasts a large portfolio of products, which creates diverse revenue streams and aids in expanding its market share [1] Investment Strategy - The investment approach focuses on identifying good companies at bargain prices that promise long-term returns and dividends, regardless of the investing climate [1] - The strategy is influenced by value investing principles, particularly those of Warren Buffett, aiming to acquire companies with strong fundamentals at substantial discounts from their intrinsic value [1]

Core Viewpoint - Ambev SA is approaching a golden cross, a technical indicator that may signal a potential bullish trend for the stock after a challenging year marked by stock price declines and currency issues [1][2]. Group 1: Company Overview - Ambev controls 66% of Brazil's beer market and has a near-monopoly in the Dominican Republic, with significant stakes in Argentina and Canada, showcasing its dominance in the Latin American beverage market [1]. - The company is part of AB InBev and has shifted its focus towards premium beer brands, which, along with steady price increases, has helped it navigate market challenges [1]. Group 2: Financial Performance and Projections - After a slowdown in 2023, Ambev is experiencing a rebound in 2024, with growth picking up in the second quarter and expectations of improved margins by 2027 due to stabilizing commodity prices [2]. - The stock is currently trading at $2.25, below key moving averages, indicating a bearish sentiment among cautious traders [2]. - Ambev's fundamentals remain strong, trading at a discount to historical averages, with a dividend yield of 6.71% and a net cash position of 10.7 billion reals (approximately $1.88 billion) [4]. Group 3: Technical Indicators - A golden cross is imminent as the 50-day moving average is close to crossing above the 200-day moving average, which could indicate bullish momentum [2]. - The Relative Strength Index (RSI) is at 38.41 and declining, suggesting that the stock may soon be oversold, potentially leading to buying pressure [3]. - The Moving Average Convergence/Divergence (MACD) indicator shows a negative value of -0.02, indicating a need for closer observation of the stock [3].

Group 1 - Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter, focusing on contrarian and value-oriented investment opportunities in the US and Canada [1] - Contra the Heard was founded in 1995 and is based in Toronto, with Philip being part of the company since 2011 and investing since 2004 [1] - The newsletter also covers M&A, special situations, and includes investments in bonds, preferred shares, and convertible securities [1] Group 2 - Philip maintains a personal finance blog at mymoneymoves.ca and is active on social media platforms like Twitter and YouTube [1]

Core Insights - Investors in Ambev S.A. (ABEV) should monitor stock movements due to significant activity in the options market, particularly the Jan 17, 2025 $5.50 Call which has high implied volatility [1] Company Analysis - Ambev currently holds a Zacks Rank of 4 (Sell) within the Beverages - Alcohol industry, which is in the bottom 14% of the Zacks Industry Rank [3] - Over the past 60 days, no analysts have increased earnings estimates for the current quarter, while one analyst has lowered the estimates, resulting in a decrease of the Zacks Consensus Estimate from 5 cents per share to 4 cents [3] Options Market Insights - The high implied volatility in Ambev's options suggests that traders are anticipating a significant price movement, potentially due to an upcoming event that could lead to a rally or sell-off [2][3] - Options traders often seek high implied volatility options to sell premium, aiming to benefit from the decay of options value if the underlying stock does not move as much as expected [3]

Financial Data and Key Metrics Changes - EBITDA grew nearly 16%, with an 18% increase excluding Argentina [13] - Gross margins expanded by 200 basis points organically, and EBITDA margin expanded by 300 basis points organically [13] - Normalized profit declined around 8%, while cash flow from operating activities decreased by nearly 2%, totaling about BRL 3.4 billion [13][15] Business Line Data and Key Metrics Changes - In Brazil, volumes grew almost 8%, with the non-sugar portfolio growing 15% [7] - In CAC, volumes increased by 3.4% and EBITDA by 18%, with a margin expansion of 330 basis points [6] - In Canada, EBITDA declined by 2% due to a tough industry environment, but cash flow increased [6] - In Argentina, volumes declined by over 21% due to a challenging consumption environment [7] Market Data and Key Metrics Changes - Net revenue per hectoliter in Brazil grew 6.8% driven by revenue management initiatives [7] - Fresh retailers grew nearly 6%, ahead of general consumer inflation [8] - The marketplace grew GMV sequentially by 32% compared to last year, contributing close to 10% of net revenue growth year-to-date [8] Company Strategy and Development Direction - The company is focusing on four "focus brands" for additional investments, which include Corona, Spaten, Budweiser, and Brahma [9][10] - The strategy aims to balance volume growth with net revenue per hectoliter growth, prioritizing price increases in line with inflation [22] - The company is committed to maintaining operational performance and cash flow generation despite tax headwinds in Brazil [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in volume growth, particularly in Brazil, despite challenges in Argentina and Canada [12][66] - The company anticipates continued tax impacts on net income but aims to deliver consistent and sustainable results [66] - Management noted that April and May were the toughest months in Argentina, but there are signs of a reverting trend [57] Other Important Information - The company donated over BRL 16 million to support local communities affected by heavy rains in Rio Grande do Sul [5] - The company has identified over 75% of its main suppliers in Brazil operating with renewable energy sources [19] Q&A Session Summary Question: Pricing strategy in Brazil beer - Management confirmed that pricing adjustments for ICMS in beer were implemented, and future pricing will focus on sustainable balance between volume and revenue growth [22][23] Question: Dynamics of mainstream brands - Management highlighted that Brahma and Antarctica are performing well, with Brahma prioritized as a focus brand [28] Question: Capital allocation and CapEx - Management indicated a trend of lower CapEx in 2024, focusing on capacity investments and maintaining a strong free cash flow [29][32] Question: Competitive dynamics and market share - Management noted that the beer industry in Brazil remains competitive, with the company gaining ground against competitors [40] Question: Core portfolio and premiumization - Management emphasized the importance of maintaining core brand relevance while also focusing on premium and innovative products [43][46] Question: Performance by channel - Management reported strong performance in third-party distribution channels, with off-trade performing slightly better than on-trade [63]

Earnings Call 2Q24 This presentation was prepared by Ambev S.A. ("Ambev" or "Company") for the exclusive use in the earnings conference call of the second quarter of 2024 (2Q24). This presentation should not be considered as a complete document and should be analyzed together with the Company's quarterly information form (ITR) for the second quarter and the respective press release, both available on the U.S. Securities and Exchange Commission – SEC and the CVM websites. This presentation was prepared for i ...