Welcome to the Anheuser-Busch InBev's First Quarter 2018 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Carlos Brito, Chief Executive Officer; and Mr. Felipe Dutra, Chief Financial and Technology Officer. To access the slides accompanying today's call, please visit AB InBev's website now at www.ab-inbev.com and click on the Investors tab and the Reports and Filings page. Today's webcast will be available for an on-demand playback later today. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions, and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev's future results, see Risk Factors in the company's latest Annual Report on Form 20-F filed with the Securities and Exchange Commission on the 19 March, 2018. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Carlos Brito. Sir, you may begin. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Thank you, Maria. Good morning. Good afternoon, everyone, and welcome to our first quarter 2018 earnings call. Today, I'd like to take you through the results and highlights of our first quarter 2018 performance. Next, I'll take you through…

Thank you. The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up question. Our first question comes from the line of Trevor Stirling of Bernstein.

Hi, Brito and Felipe. So two questions from my side, please. So the first one was, last time, there was – volumes clearly very weak but still we've managed to deliver over 300 bps of EBITDA margin expansion. Was that mainly done to the rollover of the hedges on the transactional FX or were there other factors at play there? And the second question, I suppose, looking at the other angle, South Africa had very strong margin expansion, 300 bps, but EMEA was still down 100 bps. So what was going on in the rest of EMEA that pulled down the region? Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: So, Trevor – hi, Brito here – so your first question's about Brazil, right? The connection's not so good, but I understood it was about Brazilian's margin, right?

Yes, and the strong margin. Exactly. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Yeah, well, strong margin, first, we're in margin recovery mode in Brazil, as you know. I mean, we have high watermarks some years ago. Then we had the tax issues and currency issue in 2016 that we couldn't pass all the way to consumers. So we're now in recovery mode. And this quarter was no different. We recovered some, mostly because of a couple things. First, the mix continued to evolve as high-end brands continue to outpace core brands in terms of segment growth. Second, the growth of the returnable glass bottle, which is margin accretive, continues to be the case. And third, when you think of cost of sales, there was a benefit this quarter in terms of our hedge position, currency hedge position, because the currency was lower than it was a quarter, year ago. So those three. So mix of brands, RGD, COGS, currency would have been behind the margin expansion, despite a top line that was subdued.

Great. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: And your second question about South Africa, can you repeat that? Because, again, connection's not good.

Yeah, sorry, Brito. You had very good margin expansion in South Africa, but EMEA was down 100 basis points. Just wondering what was going on in the rest of the region that managed to drag down the strongest results in South Africa? Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Okay. Yeah, yes. That was because of basically sales and marketing in Europe ahead of the World Cup. That was one of our regions where sales and marketing was more, not more, but having more of an impact in the first quarter P&L. So because Africa and Europe were together, that would be the explanation. So (28:01).

Thank you very much, Brito. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Okay. Great.

Our next question comes from the line of Olivier Nicolai of Morgan Stanley. Olivier Nicolai - Morgan Stanley & Co. International Plc: Hi. Good morning, Brito, Felipe. First question is regarding the U.S. Your margin came down in Q1 and you flagged in the press release that negative operating leverage, higher input costs and also freight costs. Now how should we think about 2018? You said that your margin could still be flat or even growing slightly only driven by the positive mix, how do you expect freight costs to, for instance, be worse? And just to follow-up on your presentation. Your global brands are growing really fast and they have obviously a higher revenue per hectoliters. Now out of your 4.9% organic revenue per hectoliter growth in Q1 for the group, could you perhaps quantify the mix benefit from the three global brands outside of their home markets? Thank you very much. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: So, hi, Olivier. So, in terms of the first questions about U.S. margins, again, it is true that transportation costs is higher year-on-year, around 15% higher. And as you said, we had commodity prices impacting the EBITDA number for this quarter and, of course, the weak industry compared to last year. So delta industry, delta commodity and delta transportation costs explained the decrease in margin in the U.S. In terms of margin – in terms of EBITDA, in terms of EBITDA margin, I don't think we should take one quarter because if you look at last year, U.S. increased EBITDA margin by 159 basis points. Last quarter, fourth quarter last year increased by 213 basis points (29:52). This quarter decreased by 1 or 2 basis points (29:54) at 39 – getting to 39%. So still very high margins. And what we see about the U.S. is what we see about all markets in which we operate is that we continue to see space and room for margin expansion, not every quarter, not every year, but as we continue to premiumize our mix, as we continue to use the category expansion model, as we continue to be more efficient in our investments and the way we use our money to run our business, we continue to see opportunities to continue to expand margins. So that's exciting news for us and has always been the mantra in our company. In terms of your second question of global brands and how much, it represents of our top line. What I can say is that global brands in 2017, which didn't (30:44) have a full year, represented 35% of our total net revenue growth for the company. Okay? Olivier Nicolai - Morgan Stanley & Co. International Plc: Thank you, Brito. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Again, outside of their home markets. Okay? Olivier Nicolai - Morgan Stanley & Co. International Plc: Yes.

Our next question comes from the line of Edward Mundy of Jefferies. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Hi, Edward?

And it looks like Edward removed himself from the queue. We'll move on to Robert Ottenstein of Evercore ISI.

Great. Thank you very much. I' wondered if you could give us some more detail on China and Nigeria. And in particular in terms of China a sense of what's going on there in margins specifically for China. And then maybe break out your business in terms of how Corona and Budweiser did in the Chinese market? So that's the questions on China. And then a little bit of detail on your strategy in Nigeria, and in terms of your growth there, how much of that is global brand, and how much of that is value in mainstream? Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Hi, Robert. So, Brito here. In terms of China, I mean we had an amazing quarter. We have to remember that last year we had a very strong quarter, first quarter last year. Look at Budweiser, for example, last year, first quarter of 2017, we grew Budweiser volumes by 18%, 1-8. Of course, Budweiser was up to a very tough comparable, but even then revenue in China grew by 4.4%, cycling again double-digit revenue growth last year. Volume grew 1.6% and revenue per hectoliter grew 2.7%. Budweiser didn't grow as much as it normally would, because it's against an 18% growth, but continues to lead the Premium segment by far. Our High End Company continues to do very well, especially Corona, which became the number one imported beer in China and growing very rapidly. So China, both Corona and Hoegaarden have doubled the margin of Budweiser and continue to grow in, what we call, the Super Premium Company in China. Our e-commerce is also doing very well, which is also something to be said about China being ahead of any other market in terms of e-commerce development, and that's again is very important for…

Thank you very much. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Thank you.

Our next question comes from the line of Andrea Pistacchi of Deutsche Bank.

Yes. Hi. Good morning. Two questions, please. The first one, in your outlook comments, you say that growth will accelerate in the balance of the year, primarily in the second half. Now, how should we read this? Does it mean that you expect to see some acceleration in Q2 and then further acceleration in the second half? Or are there any reasons that could hold back Q2? And the second question, please, on Brazil. What gives you confidence that Brazil will return to volume growth starting in the second quarter? Thank you. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Hi, Andrea. First, in terms of Brazil, I mean, we said we're confident. We have reasons to believe, of course, that in the second quarter volume will resume growth. You have to remember we're already in May, so we have some view into the second quarter. And we have the World Cup, right? So those are two big things for the second quarter in Brazil. We also had some one-offs in the first quarter in Brazil that won't happen again in the second quarter. So that's your second question there. In terms of the guidance for the rest for the year, the balance of the year, while we had flagged already in the last call is that there'll be some concentration of sales and marketing expenses in the first half of this year, especially now in the second quarter, and that's one of the reasons why the second half will see better results or more acceleration, because, of course, more sales and marketing will be in the first half. And yes, the first quarter was slightly better than we expected. Yes. That's also true.

Thank you. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Thank you.

Our next question comes from the line of Edward Mundy of Jefferies.

Hi. Morning. Thanks for taking the question. Two questions, please. Brito, I think you flagged an increase in sales and marketing spend ahead of the World Cup in Q1. When I look back at Q1 2014, I think this is about a 3% drag on your EBITDA growth in that quarter. Is it roughly a similar drag on your EBITDA growth in Q1? Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Well, the drag, I would say, this time is more between 50 and 100 basis points. So compared to 2014, it would be more concentrated in the second quarter.

Okay. Great. Thank you. And the second question is on the U.S. Clearly, we have Michel Doukeris now as part of the year (37:57), slightly different style. Are there any early signs you can point to of encouragement? I mean your market share losses are moderated to some extent in the first quarter. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Yeah, I mean, as you saw it again, despite the tough industry, that declined 2.3% compared to 1.3% on average last year. So one percentage point worse. Of course, that's all due, we think, because of the cold temperatures we experienced in the quarter, right, way worse, like 10% worse what you would have seen in other years. And our market share, the share – the trends are improving. Our share performance, we lost 50 bps. That's much better than we had – 20 bps at least better than what we had on average over the last three quarters and the last year. At the same time, net revenue per hectoliter grew 1.9%, so very healthy brand mix once again. And gross profit expanded once again. Right? Gross profit margin. The Above Premium portfolio in terms of the share, Above Premium portfolio continues to accelerate and Michelob Ultra, again, the biggest share gain in the U.S. for the 12th consecutive quarter, was the number one share gainer. And the Above Premium portfolio grew by 80 bps, right, in this quarter. The other thing we said is that both Bud and Bud Light saw sequential improvements in terms of their share within their respective segments. And that's good news. I think Bud Light, (39:32) Dilly Dilly and the Philly Philly and everything that came from that, I mean that brought the brand back as the number one social beer conversation topic in the quarter. Budweiser continued to show improvement and got to a flat share within the Premium segment this quarter year-on-year, so again, that's growing nicely in terms of share within segment. It's still losing share of total market. In terms of Michelob Ultra, we had new news. So innovation has been more active this year than last year so we have Michelob Ultra Pure Gold. Also Bud Light Lime has been relaunched and Bud Light Orange (40:23) Budweiser line extensions coming in the second half and third – second quarter and third quarter. So I think all-in-all, we are more confident this year in terms of our brands, in terms of trends, I just spoke about, but also the innovation calendar we have which is more active than last year. And Michel again is a very strategic and commercially savvy person that did some interesting moves in terms of people and we feel the team is a very strong team to do what needs to be done in the U.S. So again, good start. Better than the industry.

Thank you.

Our next question comes from the line of Sanjeet Aujla of Credit Suisse. Sanjeet Aujla - Credit Suisse Securities (Europe) Ltd.: Yeah, hi, Brito, Felipe. A couple of questions, please. Firstly on, you use Argentina as a good example of how category expansion is working. Can you perhaps talk about some of the initiatives you have driving the growth in other markets like Mexico and Colombia, in particular with regards to category expansion? And also can you just talk a little about the weakness in South Africa? How much of that is perhaps due to the tax changes versus the competitive environment? Thank you. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Yeah, good point. On South Africa, the tax – there was a tax increase, excise tax increase that was 10% tax increase versus an average inflation of 5.5%. But, of course, that forced us to increase prices on March 1 compared to last year July 1. So there is little bit of a phasing there in South Africa. It's also true that in South Africa the High End segment like in many markets is growing ahead of the core segment and our participation in the High End segment has been always minimum because SAB did not have brands to compete in that segment, but now we do. We've just introduced Bud on a national basis, and we just introduced last week Budweiser, the bulk pack, the big bottle, which is where most of the growth in the High End is coming from, so now we're going to be competitive for the first time. And even with these initial steps, we already gain 600 basis points within that High End segment in South Africa, so we're going to be much more competitive. We're going to have all our brands…

Our next question comes from the line of Mitch Collett of Goldman Sachs. Mitch, your line is open. Make sure you're not on mute.

Hello. Hi, hopefully you can you hear me. You said that you expect sales to retailers and sales to wholesalers to converge for the full year, and sales to wholesalers have been below sales to retailers in three of the last four years. Are you able to elaborate on why you would expect this year to be better? And then maybe just a longer-term question on the U.S. You commented on why it was slightly worse this quarter and I think that's mainly weather. Longer term, do you think there's any chance that the market goes back to growth, and that your own positions within the market can stabilize? Thank you. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Good point, Mitch. I'll start with the second question. Again, I think category expansion framework taught us that there are many occasions where beer is just not present or very under-represented. And more importantly, taught us how to think about getting beer to expand into those occasions. So I just gave the example of Argentina in the question prior. And what we see is that, in the U.S., there are many opportunities and many occasions that have been growing like meal, the meal occasion, like women participation in our category, like the more high energy party occasion. So many occasions that are growing in which beer tends to be either totally absent or very under-represented, so I think now we have the tools and knowledge and insights to try to get beer to be more present, so I would think that this is not going to be overnight, but I think this gives us – this changed our mindset because in the old days we were just doing share of beer which is a zero-sum game, for me to gain somebody…

Thank you.

Our next question comes from the line of Mark Swartzberg of Stifel Financial. Mark David Swartzberg - Stifel, Nicolaus & Co., Inc.: Thanks. Good morning, gentlemen. Felipe, a few cash flow questions. We didn't get a net debt figure in the release, but based on your deck, it looks like net debt was about $100 billion at the end of March. So can you give us that number? And then more importantly, can you speak to your outlook for free cash flow growth this year and the scope for a dividend increase later this year? Luis Felipe Pedreira Dutra Leite - Anheuser-Busch InBev SA/NV: Okay. So in terms of debt and cash flow balance sheet, we do not publish on a quarterly basis. However, it is clear that due to seasonality, our cash flow generation is much stronger in the second half, as dividends are more concentrated in the first half, as well as some certain tax payments, as well as CapEx investments. So historically, cash flow is much stronger in the second half as compared to the first half. So that impacts the net debt to EBITDA upwards during the first half, before it goes down in the second half of the year. In terms of cash flow generation, deleveraging remains our priority, and capital allocation remains unchanged. We see dividends as a growing flow over time. However, in the short term, we don't see much room for that, given the leverage levels. But in terms of cash flow generation, the fact that we are already in the negative territory, that is, as we grow revenues, that helps to release funds from invested capital, and we continue to work to improve our working capital as a percentage of net revenue. It's not only in the former ABI but also in the former SAB as part of the synergies not quantified in the $3.2 billion. Mark David Swartzberg - Stifel, Nicolaus & Co., Inc.: Okay. And a more technical question. On slide 23, if we simply sum these blue bars and say they represent a little more than 95% of your total debt, that'll get us to your March debt level? Luis Felipe Pedreira Dutra Leite - Anheuser-Busch InBev SA/NV: Yeah, well, we have some local debt, for example, BNDES (50:29) in Brazil and things like that that is not included into this debt maturity profile. But they are very small in comparison to all of this. And the orange bars are actually the ones of the new issuances since December last year, which indicates that the debt maturity portfolio is not only a healthier one but become even healthier as we are proactively taking out some of the maturities already for 2019 and 2020. Mark David Swartzberg - Stifel, Nicolaus & Co., Inc.: Yeah, and we'd add those orange bars. Okay. Great. Thanks, Felipe. Luis Felipe Pedreira Dutra Leite - Anheuser-Busch InBev SA/NV: You're welcome.

Our next question comes from the line of James Edwardes Jones of RBC.

Good morning, all. Two questions again, please. Mexico and Colombia, can you expand a bit on why those markets were so strong in the quarter and how sustainable this sort of performance is? And secondly, other operating income was clearly a bit of a drag in the quarter. Can you give us any sort of idea of what trend we should expect for either operating income over the remainder of the year? Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Hi, James. It's Brito here. So Mexico has been an amazing market for us. And then it continues to grow very strongly. Volume's growing in the mid-teens during the first quarter. Even if you take Easter out, it would be still double-digit growth in Mexico and revenue in the high-teens. So, I mean, Corona is doing very well, grew double-digits. Victoria, the same thing, double-digits. Bud Light, more than 20% growth, especially in the north region. Michelob Ultra growing triple-digits. Summing, we have all cylinders in Mexico going well, and we see no reason why this should change. And we have the World Cup coming, right? So, I mean, that's important for both Mexico and Colombia as you asked. In Colombia, again, revenue growing 12% this quarter, beer volumes growing 8.3%. If you take the Easter effect, it would be 6.4%. So, again, very strong anyway, and momentum is there. Of course, we had – when you think about Colombia, of course, there was some easy comps in terms of volumes, because remember last year we had the tax increase from 16% to 19%, that affected the whole economy starting on January 1, 2017. And that, of course, put pressure on consumers and now we're cycling that period and again we have the World Cup. But, again, very strong in both markets with very strong margins as well. So great markets for us. Luis Felipe Pedreira Dutra Leite - Anheuser-Busch InBev SA/NV: On non-operating income, that line is usually connected to fiscal incentives in countries like Brazil, as well as China, although they're becoming less representative as a percentage of overall EBITDA and EBITDA growth. On this quarter, in particular, we have a tough comp, if I'm not mistaken, for a one-time gain recorded in the first quarter 2017 in Mexico that is connected to the sale of some assets. But aside from that, this is as normal.

Thank you.

And, ladies and gentlemen, we have time for one more question. Our final question will come from the line of Nik Oliver of UBS.

Hi, guys. Thanks for the question. And just one left from me. Back on the SAB synergies, I'm assuming some of those are coming from the centralizing of functions in a more zone level as opposed to the country level under SAB. Just interested how you're sort of balancing that with the risk of perhaps losing touch with some quite diverse country markets. I think in the past, you mentioned maybe when you first bought Anheuser-Busch, say, in China things became too centralized, which then got reversed. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Yeah, hi, Nik. Brito here. I mean, what we're centralizing in our company are functions that merit centralization. So, clearly, like procurement, right? You deal with global suppliers, so it makes sense to deal on a one-on-one-touchpoint-type basis. We centralized IT or solutions, right, because the backbone tends to be the same or it needs or it tends to be the same everywhere. We centralized global brands, because they are, by their very name, global in nature and should have the same look and feel everywhere. So we do centralize things that make sense. But when you think about our commercial activity, it's the center of gravity is the zone, not the global headquarters and, more important, the markets. Think about this, today with the country clusters, where we compare countries with similar maturity level in terms of beer and alcohol segment, it's much easier to compare notes within countries that are more similar, not linked to geography, but linked to similarity in terms of maturity model, maturity level. So those things are done at a country-by-country level and our people have a lot of autonomy to lead their business at each country market level. So, I mean, you're right. I think the beautiful thing about companies that are built to last is the capacity to do the and not the or, so, yes, you have to be centralized in many things and you have to be local in what matters and that's the balance we always try to strive. So our regional guys in the markets are very strong. They have a lot of autonomy, power, to conduct their business. What we do from a central location is to stimulate them to compare and learn from other markets that are in similar stages of development, so they can be even better at what they do in their local markets. So that's the idea.

Okay. That's very clear. Thank you. Carlos Alves de Brito - Anheuser-Busch InBev SA/NV: Thank you, Nik. Well, thank you, Maria. In summary, the first quarter was better than initially expected and we remain confident that growth will accelerate for the balance of the year, primarily in the second half. We continue to scale up our category expansion framework in a way that allows us to focus on organic growth in all segments across our geographic footprint. We remain committed to further enhancing our leadership position in the premium space with the support of our complementary global brand portfolio to fuel the growth of the global beer category. And finally, we're excited to be launching our biggest ever commercial activation for 2018 FIFA World Cup in Russia. And look forward to sharing the results with you soon. So again, thank you very much for your time. Thanks for joining the call today, and enjoy the rest of your day. See you next quarter. Bye, bye. Thank you.

Thank you, ladies and gentlemen. This does conclude today's earnings conference call and webcast. Please disconnect your lines at this time, and have a wonderful day.