Good morning, good afternoon, and thank you for waiting. We would like to welcome everyone to Ambev's First Quarter 2023 Results conference call. Today with us, we have Mr. Jean Jereissati, CEO for Ambev, and Mr. Lucas Lira, CFO and Investor Relations Officer. As a reminder, a live presentation is available for downloading on our website, ri.ambev.com.br, as well as through the webcast link of this call. We would like to inform you that this event is being recorded and all participants will be in a listen-only mode during the company's presentation. After Ambev's remarks are completed, there will be a Q&A section where we kindly ask that each participating analyst asks only one question. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. 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 percentages, 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 the first quarter 2022 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 will turn the conference over to Mr. Jean Jereissati. Mr. Jean Jereissati, you may begin your conference. Hello, everyone. Thank you for joining our Q1 earnings call. During our last call, I had two key messages. First, that I was starting 2023 more confident than I started 2022 because of our business momentum, because of overall costs and expenses inflation coming down, and because of our financial strength. Second, that in 2023, the plan was, and still is, to maintain top-line momentum and accelerate a bit the growth, with Brazil leading the way and international operations bouncing back as we continue to improve profitability, not only in terms of ROIC, but also gross and EBITDA margins. Well, I was happy to see that in this first quarter, we delivered on both fronts. Top line momentum persists, growing above 26% ahead of costs and expenses. EBITDA growth accelerated nearly 40% year-over-year, which by the way, was ahead of last year's growth with or without taking Argentina into account, with Brazil continuing to perform well while international operations are recovering. Profitability improved with gross margin expanding 290 basis points and EBITDA margin expanding 310 bips. In other words, a good start to the year. Let's see how we got there. In Brazil beer, according to our estimates, industry grew mid-single digit in the quarter backed by Carnival celebrations returning to the streets despite the rainy weather. Such growth, however, was partially offset by tough comps as masks mandate was lifted in March last year. With that, our volumes grew around 1% with flat market share versus last year, according to our estimates, as our sellout volumes were higher than sell-in, given a disciplined revenue management during the typically discounted Carnival season. Our premium and super premium brands such as Original, Spaten, Stella, and Corona grew almost 35% and the core segment remained resilient. Thanks to consistent investments behind our brands and capabilities, the health of our super premium and premium focus portfolio continued to improve. We estimate our brands added over 700,000 fans versus last year and almost 4 million since 2019. Also, relationship with our customers remain making progress with NPS reaching over 60 points. Net revenue per hectoliter increased above 13% versus last year and almost 3% sequentially following our revenue management strategy. Despite expected pressure on Cash COGS per hectoliter, EBITDA grew 24%, the highest increase since the first quarter of 2009, with margin expansion of 250 basis points, supported by a deceleration of distribution expenses growth, as well as savings initiatives on administrative expenses. In NAB, commercial momentum also continued. Volumes grew above 7%, thanks to a strong portfolio and a wider distribution boosted by BEES. Pepsi Black grew over 200%, now representing 14% of Pepsi Cola portfolio, and Guaraná Antarctica grew almost 7%, led by Guaraná Antarctica Zero. Net revenue per hectoliter increased almost 11%, following a consistent revenue management strategy and a positive brand and pack mix. EBITDA grew 47%, supported also by Cash COGS per hectoliter growth deceleration, leading to a 530 basis points margin expansion. Regarding our tech platforms, our marketplace in Brazil continues to go in the right direction. GMV grew by 36% versus last year, and cash gross margin increased 790 basis points. We have been working with our partners to expand the offering of their set of products as we still see room to improve SKUs per customer on top of continuing expanding the assortment of marketplace products. After the FIFA World Cup and Carnival activations, Zé Delivery's awareness continued to grow sequentially, and it is present in almost 450 cities in Brazil. As a result, Zé reached 5 million monthly active users, and GMV grew 5% versus last year. Turning to our international operations, in LAS, macro environment remains a challenge, bringing volatility to our operations and inflationary pressure on disposable incomes. Volumes decreased almost 8%, driven mostly by Argentina and Chile. Revenue grew 66%, driven by revenue management initiatives, especially in Argentina, which supported EBITDA margin expansions of 600 basis points. In Argentina, despite industry decline and our market share going slightly down, premium brands gained weight in our portfolio. Our plan to perform operational hedging continues evolving, and we are more agile in making decisions to protect our cash flow generation in dollars as macro conditions change. The decision to lower coverage of our financial hedge still stood this quarter and resulted in improvements in cash flow. The decision to lower coverage of our financial hedge still stood this quarter and resulted in improvements in cash flow. In Chile, volumes suffered mostly due to continued industry slowdown. Even with less volume, EBITDA improved, supported by expanded local production capacity, reducing imports levels. Bolivia, on the other hand, grew volumes as it continues on the recovery path after COVID-19 restrictions last year. In CAC, sequential improvement continued this quarter. Revenue is back to growth, driven by net revenue per hectoliter. Gross profit grew almost 9% after a year of decline. EBITDA declined by 2% as we lapped over a low base in SG&A. The Dominican Republic continues ahead in terms of recovery. Volumes grew by low single digits, led by Presidente brand family, which suffered from lack of bottles last year. In Canada, volume grew by 5%, driven by both industry lapping historically bad weather and COVID-19 restrictions in early 2022 and estimated market share gains in both beer and beyond beer. Our premium brands led the pack growing above 10%. In terms of brand health, our above core brands are healthier with highlight to Corona, the highest brand power in the country. Net revenue per hectoliter grew above 9% following revenue management strategy and favorable mix impacts, and EBITDA grew 3.5%. The numbers for the quarter were good. One thing that I would like to highlight today is that in order for Ambev to do well in a sustainable way, our ecosystem also has to do well. On the last call, I mentioned why I believe that the company is more and more solid from a cultural, operational, and financial perspective. What I did not mention was that it's not just about us, but it's about the whole ecosystem. Our platform serves a purpose that goes beyond the company itself. For instance, as I mentioned before, it has been great to see number of fans of our brands growing and our NPS with customers continuously improving. Another information is that the NPS with our suppliers also reached the highest level of the past six years as we have been collaborating more. We are also proud to see that as a result of our partnerships and relationships with different stakeholders of our ecosystem, we obtained significant results in terms of reputation. With Merco, the leading corporate reputation monitor in Latin America, ranking the company in the second place for the fifth consecutive year in Brazil and in the first position for the sixth consecutive year in Bolivia. In Argentina, we evolved from fifth to fourth place. Finally, in terms of value creation, the value that's being created is also being shared with our ecosystem. To illustrate this point, I wanted to share some data from our value-added statement contained in our financials. In the first quarter, we generated roughly BRL 30 billion in gross revenues, of which approximately BRL 14 billion were paid to suppliers. About BRL 8 billion in taxes were collected. Remuneration of our people and third-party capital were about BRL 1.8 billion each, and potential remuneration to shareholders correspond to about BRL 3.8 billion. What this all means is that as Ambev grows, the ecosystem also benefits. For Ambev to grow sustainably, the ecosystem also needs to thrive. This is important to us as we think about creating a future with more cheers. Looking ahead, we continue to expect 2023 to bring both challenges and opportunities. I remain confident that we are on the right track and the team is committed to deliver once again. We believe that our long-term strategy is sound, and we will continue to focus on the things we can control and on executing our plan to deliver our ambitions for the year, which is continuous and consistent growth with profitability. In terms of growth, we are talking about Brazil's momentum, and we are talking about international operations recovery leading to a consistent top and bottom line growth. In terms of profitability, we are talking about not only improving ROIC once again, but also looking to improve gross and EBITDA margins as top-line momentum remains while costs and expenses headwinds continues to ease. Having said all that, I would like to thank you all, and let me hand this over to Lucas. Thank you. Thanks, Jean. Hello, everyone. I would like to kick things off by putting our Q1 performance into perspective in terms of what we expected would be the same and what should change during this year as compared to 2022. Starting with what would be the same. First, top-line growth remains a key priority, with net revenue performance once again driven more by net revenue per hectoliter than volumes. The result, nearly 27% net revenue per hectoliter growth with consistent performance across our regions. Second, we expected a tougher Q1 given higher input cost pressures, but this time more from commodities than FX. The result, cash COGS per hectoliter increased about 20%, driven mainly by the timing of our barley and aluminum hedges. Third, our focus on value creation drivers such as return on invested capital, economic profit, and Free Cash Flow generation all remain. The result, cash flow from operating activities declined almost BRL 1 billion year-over-year, driven mostly by payables. Q1 payables are historically negative given the seasonality of our business, which has Q4 as our strongest quarter. Specifically with respect to Q1, 2023, the decline is mainly a result of three things. Number one, lower non-income tax payables in Brazil, given lower sales volumes versus March 2022. Number two, lower volumes in CAC. Number three, a tough comp on non-income tax in Canada, as H1, 2022 taxes were deferred to H2 given COVID-19 in Canada. For the full year, we expect cash generation to improve. Regarding what should change this year. First, we expected our cash COGS per hectoliter for Brazil beer, excluding non-Ambev marketplace products, to be significantly lower than the 16.6% growth in full year 2022. The result, cash COGS per hectoliter rose about 15%, and we expect this performance to improve materially during the remainder of the year as our aluminum hedges become a tailwind and the benefit from our FX hedges increase from Q2 onwards. Second, SG&A growth should improve given lower inflation overall, as well as the implementation of internal restructurings designed to streamline and optimize our B2B, D2C, and FinTech technology big bets. The result, cash SG&A grew 27%, with administrative expenses growing 17% as we begin to capture projected savings, particularly in Brazil. Third, CAC in Canada to deliver organic EBITDA growth. The result, CAC EBITDA was still about 2% below Q1 2022, but once again showed sequential improvements with a nearly flat EBITDA performance in the Dominican Republic. Canada EBITDA was back to growth, delivering 3.5% improvement year-over-year. Our EBITDA reached BRL 6.4 billion in the quarter, an organic growth of almost 40% year-over-year, and which is 8% above our compiled consensus that we now disclose on our website. We start the year definitely on track to deliver better organic EBITDA growth in 2023 than the 17% organic growth we delivered last year. Turning to our net income performance. Normalized profit totaled around BRL 3.8 billion in Q1, an organic growth of about 8% year-over-year, and which is 22% above our compiled consensus. This performance was driven mostly by the EBITDA growth we delivered, but also due to net finance results growing at a lower pace. Here, although on the one hand, interest expenses increased mainly due to fair value adjustments of payables pursuant to IFRS 13 and losses on non-derivative instruments that were mainly a result of non-cash losses on intercompany balance sheet consolidation and third-party payables increased, on the other hand, losses on derivative instruments were actually lower than last year because of lower carry cost expenses in Brazil and Argentina. As you may recall, starting in Q3 2022, we have gradually reduced our financial hedging in Argentina, and this decision led to a positive year-over-year impact this quarter. Before moving to Q&A, a quick update on tax litigation in Brazil. Since our full year 2022 earnings call, there have been new developments in some of our relevant cases that are worth mentioning. Accordingly, the Brazilian Supreme Court and the administrative tax courts recently issued rulings in connection with certain of our tax positions involving approximately BRL 9.5 billion that are classified as a possible, but not probable, chance of loss. The good news is that the results were mostly favorable to the company, some of which we've already reclassified from possible to remote chance of loss. For further details, please refer to items 26 and 28 in the notes to our financial statements. We expect the administrative and judicial courts to continue ruling on certain of our tax positions in the coming months, such as tax assessments received in connection with the deductibility of the IOC, the deductibility of goodwill amortization expense and the Manaus Free Trade Zone, as well as the case related to the ICMS substitute in the taxable basis of the PIS and the COFINS. We will keep the market updated accordingly. As we mentioned before, we believe in the merits of our legal position and that we will ultimately prevail. Finally, we will publish our 2022 ESG report on our website in the next few days. Stay tuned. That's it for me. Let's go to Q&A. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. We kindly ask that each analyst asks only one question. One moment please while we poll for questions. First question comes from Lucas Ferreira with J.P. Morgan. Please go ahead. Hi. Good morning, everybody. I hope you hear me well. My question is regarding your outlook for volumes in beer volumes in Brazil. From listening to your comments and also looking at some industry data, apparently March was a fairly weak month. I don't know if in all parts of Brazil, but just wondering if you have any views of why March was so weak and how if you see like already a rebound in volumes in April, eventually in May, and your overall expectations given the tough comps for second quarter and third quarter. If you think these comps are really tougher than the first quarter, like you said, it's tough. Your outlook for volumes for the reminder of the year. Thank you very much. Okay. Thank you very much, Lucas. I mentioned in my call that we are 7% in this quarter above the 2019 levels. This is an important number for us to keep follow because there were a lot of noise during the pandemic and back and forth. This quarter we were 7%. Something happened on this quarter too that our sellout volumes were ahead of our selling volumes. We kept our revenue management strategy discipline while we saw overall market competitors really intensifying promotional activities. That was one of the reasons why we couldn't put more products out in the trade. Overall market share with consumers, with sellout volumes, they were okay. They were in line. When we think about the performance compared with last year, in reality we did good in January, in February. Somehow it could be better in our view because of this promotional activity and our discipline on revenue management. We knew that March and April would be a tough comps because masks were lifted in the previous year. They were good months when we think on a broader de-seasonalized volume level of a given March and April in a historical level. In terms of de-seasonalize it was okay. We're gonna have to wait a little bit more to understand how it's gonna go, May and June, to really give a proper more color on the year. We are confident. Market share sequentially it is growing, it is going up. Our brands are strong. The minimum salary is coming. Somehow, we believe that it will be a good year in terms of volumes. Perfect. Thank you, Jean. Thank you. The next question comes from Camila Azevedo with UBS. Please go ahead. Hi, Jean and Lucas. Thank you for the space for questions. My question is about BEES. Could you give us more color on what drove the deceleration observed that sales coming from BEES? Thank you. Okay. Yeah. We, you're talking about probably about the marketplace, right? We are in reality talking a little bit, this is responsible overall for 88% of our customers and 75% of our volumes are really covered by BEES. We are very proud that we reached 1.1 million customers accessing BEES and making their orders at some point in time. Customers are spending more than 20 minutes in the app per week. 95% of them are registered in our reward program, the platform is in our NPS went to above 60 on the first quarter. All this is really related with BEES. Now, talking about the marketplace, the GMV of non-Ambev, non-Ambev products sold, we reached $400 million this year. It was 36% above last year's. Looking at our portfolio, there is some seasonality, right? When we think sequentially when Q4 compared with Q1. We have a part of our portfolio that we are trying to learn about how they perform in terms of seasonality. We have hard liquors, we have water, food. There is a seasonality that we are learning. But compared with last year, it was 36% above. Now we have more than 630 SKUs. There is this opportunity to increase and we are really working on get deeper alliances on that. We are learning with the GMVs and how each product perform month by month. I would say that I'm happy. Another thing it is that the gross margin of the products that we had in this quarter were much better than the gross profit that we had, you know, last year. Last year, we were with a lot of commodities. Now we have alliances and brands. Somehow, I'm confident with the potential of the marketplace platform. It will sweat our assets, low investment with good returns and increasing margins and consistent growth. Thank you. Very clear. Thank you. Next question comes from Thiago Duarte with BTG Pactual. Please go ahead. Thank you. Hello, Jean. Hello, Lucas. Hello, everybody. I have a question and a follow-up. I will start with a follow-up on the, on the Lucas remarks regarding working capital, in the beginning of the call. Lucas, and this actually circles back to discussion I think we had in this call last year, with regards to working capital consumption. I appreciate the one-offs that you, that you clarified to us. Still looking, you know, trying to think of the level of working capital of the business relative to sales or to cost, it looks like the cash conversion cycle of the business has worsened. I understand the seasonality, I understand the tax payables adjustments in Canada and so on, but just wondering, if there's something else that could be changing more, in a more structural way, the working capital intensity of the business so we can, you know, think of this, of this line going forward, that would be great to hear. And the question more on a big picture level, is with regards to top-line health and top line performance and the brand health. I mean, Jean, you mentioned in your remarks, and you guys put in the, in the earnings release that the brand health is improving, and particularly talking about Brazil beer. Just wondering, what kind of metrics you're looking at to think of brand health, which brands are performing better and which brands are performing not so well, and how that drives, in your view, going forward, the capacity of the portfolio to recompose margins via pricing, without jeopardizing share or jeopardizing the category, which is something that you guys have been putting a lot of effort into preserving in the last few years. Just if you could summarize a little bit how that impacts the capacity of the company to drive pricing, that would be great as well. Thank you. Go ahead, Jean. I will. Okay. I'll get the second one, Thiago, and then, Lucas, go back to the first one. Yes, when we present our strategy, the pillar number one and number two is really about having loved brands is the pillar number one. Pillar number two is really about our ability to innovate. These are the most important topics of our strategy. We follow a metric that we call number of lovers that I mentioned. The number of consumers that mention that they love one of our brands, and we've been growing this metric. This is more of a portfolio metric for us to understand if the overall portfolio is being more loved. We increased this metric in 4 million consumers when we compare to pre-pandemic levels. In the short term, we increased 700,000 lovers or fans of our brands that mention that one of our brands became one of brands that they love. Another one is really about the brand power. The brand power is a metric that we believe that brand power today is market share in the future. We are doing well in this metric. The brands that are... there is a up and down in this overall metric when you think about portfolio. The brands that are really performing well is, as I said, Corona is doing very well. Spaten is doing very well. Stella, group power, Budweiser is doing well, Brahma are brands that are doing very well. Original is doing very well too. The Long Tail, we suffer a little bit more, so we are suffering a little bit more with Bohemia. That's one example. The focus brands, the brands that we are, they are performing very well. If you look at our Duarte, at our net revenue per hectoliter this quarter, it was well ahead of the consumer pricing, the facing. A big chunk of it was really the high-end performance, the high-end and the premium performance, the brand mix. We are seeing these brands, really being able to grow and drive mix and even to sustain more price than we previous expected. For example, you know that when we designed the innovation strategy of the company, we brought Spaten with this view that the core plus segment, the entry premium, the core plus segment would be a wide space that we should bring an international brand with quality cues, heritage. It's performing so well that now we are seeing Spaten like growing and it went from like 125%, 130% price index to really 140%, 145%. As it goes, it's really been sustaining more price. This is one example. Yes, big part of our strategy on pricing, on brands is really to get strong brands to be able to gain market share and drive mix and price. This is working. Big part of this net revenue per hectoliter that you saw it was this strategy. Hi, Thiago. Lucas here. Thank you for the question. In terms of the cash conversion cycle kind of being structurally worse, I think the short answer is no. Okay. The reason for that is, I think as you know, we have, right, a negative working capital. Given the seasonality of our business, right, Q1 is typically a quarter of less cash generation, and Q4 is actually the quarter where, right, the bulk of our cash flow generation and our performance in terms of working capital really moves the needle. Okay. I think it's important not to necessarily draw any longer-term conclusions just based on Q1 performance. It's important to look at the full year. Speaking specifically about Q1, I ended up in my prepared remarks focusing more on payables, but I think it's important to break down and shed some light also on receivables and inventories. Okay. If you start looking at receivables, in Q1 2022, we actually had a monetization of tax credits of about BRL 600 million, that positively impacted our receivables performance last year, whereas this year we didn't have any relevant monetization of tax credits. Okay. That's an additional element that needs to be factored in when looking at the year-over-year performance of our working capital insofar as receivables are concerned. In terms of inventories, the performance was actually positive, okay, Thiago, because we continue to actively manage inventory planning, not only of raw materials but also finished goods. I mean, we continue to focus on the levers we control and having a lot of discipline to make sure that our cash conversion cycle, which historically has been one of our strongholds, obviously, it's a high threshold for us, but we're continuing to look at ways to sustain and/or improve our cash conversion cycle. Okay. Just to add a little bit more on the payable side, as I mentioned in my prepared remarks, the biggest impact came from Brazil, okay, this was mostly on non-income taxes payables because given the way tax collection mechanics for state VAT, for excise taxes work in Brazil, taxes that are owed given March volumes are actually paid in April. The higher the volumes are in March, the higher the payables, and the opposite is also true. This is exactly what happened this time around. March 2022 volumes were very high, as Jean mentioned, more payables. In March 2023, we had a tough comp, volumes declined, less payables. Okay? This is a temporary effect and should not be a relevant factor from a full year perspective. Okay? That's now issue number one that we faced this time around. Issue number two was a really CAC volume declining, leading to lower payables. Right? Generally speaking, lower production volumes lead to lower payables. Our payables for the region ended up being impacted by volume decline. As volumes continue to recover, this should translate into improvements here as well as we look ahead. Then last but not least, we also had an issue in Canada. It was a specific impact, also non-income tax related. Here this was a H1 2022 effect because payables then were impacted positively by tax deferrals in Ontario to cope with COVID-19 recovery, and this was not the case this quarter. Again, looking at the full year picture, these things should even themselves out. So again, I would invite everybody to focus more on the film, the full year picture, reminding everybody that Q4 is the needle driver, the needle mover for our cash generation and our working capital performance. Clear? Very clear. Thank you both. Thank you. The next question comes with Carlos Laboy with HSBC. Please go ahead. Hello, everyone. Jean, I was hoping we could go back to a conversation a couple of years ago. To drive a new culture, you modify the behavioral model and you emphasize three new core behaviors, right? Your active listening, collaboration, long-term thinking. As you reflect on recent events, right, in the ABI systems, are these behaviors? You know, how do you modify these behaviors to think about risk and risk vigilance? Are those behaviors maybe very geared toward revenue enhancement? I'm asking because, look, reputational risk can come from so many unexpected places. Sometimes they just happen to you, like the Lojas thing, right? Americana thing. Sometimes they come from within the organization too, unexpectedly. How do you think about mitigating reputational risk, and how do you bring that into the culture of the organization based on the reality of what you're looking at in your organization in Brazil? Thank you very much for the question, Laboy. Yeah, you know that we've been in a journey. Everything evolves. Biology evolves, culture have to evolve. We had this clear view that the growth matrix that we need for the future had to... We had to evolve on our culture to bring, to maintain first of all this great traits that I have in the company, that people that really think as owners, that thinks as the company, is, think as owners, act with integrity, accountability. This is a very important trait that we always had. This ability to dream in our company, it has to continue. We had to really bring more listening, more collaboration and more long-term vision. I think we are super happy with this journey. Of course it takes time for you to see the whole organization performing. Culture is really about habits. It's really about example. It's really about living every day and talking about the listening and the collaboration and the ability to think Horizon 2, Horizon 3 while taking the decision. We've been like living at this in our company. When it comes to reputation, company's reputation is my responsibility and is the responsibility of each person that work down here. We know that. We live with that. It's personal to us. We take it very seriously. And one thing that we are doing more and more is really to be able, first of all, to talk about everything that is happening inside the company, but to talk about our company to the outside world. We are so proud about the things that we are building, the things that we are doing down here. We are very confident about this transformation that we are living, this top line growth that we are having. We trust our management model. Somehow this is about taking responsibility, and this is about to being completely transparent inside the company and outside the company. Jean, if I may just add one thing, Carlos, to your question about managing reputational risks, especially, right, in the short term, given all that's happened, right, since the beginning of the year here in Brazil. I think Jean alluded to this on the last call, but I think it's important stressing it because one of the things that happened in 2020 when COVID hit was really a decision on our part, right, to be there for our ecosystem. That applies to consumers, that applies to customers, that applies to wholesalers, to suppliers, right, to local communities. This was, right, genuine, was intentional, was deliberate because we thought it was the right thing to do. We needed to be there given what was happening in the country at the time. Fast-forward, right, two, three years, one of the things that's really caught our attention, in Q1 was when this whole noise hit, the support that we got, right, from the ecosystem was really impactful for us. To see consumers standing by us, to see customers standing by us, to see suppliers, wholesalers really stepping up, former employees of the company, right, being vocal about the company, what we've been doing, why we've been doing it, and how we've been doing it, really struck a chord with us. I think is a good illustration of how our consistent focus around, right, building and improving on the cultural evolution and the reputation of the company is important as a matter of principle, okay? I think Q1 was a good example. This is very thoughtful and impressive. Thank you. Thank you. The next question comes with Isabella Simonato with Bank of America. Please go ahead. Thank you. Good afternoon, Jean, Lucas. Thank you for the call. I have two questions, mostly on the international division. Starting with LAS, I think this quarter showed a great focus, right, on pricing, even though volume suffered, right? Combined with the hedging strategy for, mainly for Argentina, right? Is this something that should continue to think for the upcoming quarters? I mean, even though macro conditions should be tough and volume elasticity should be higher, will pricing be the key focus here in a way to maximize this equation for the company? Just to come back and try to relate this with cash flow in any sense. I mean, Lucas, is there an impact on, in any way on working capital from this procurement strategy in Argentina or, nothing that we should, nothing that should be impactful? The second question is on Central American and Caribbean. I mean obviously it has been a tough recovery, you know, on the margin side and on the top line side. I wonder if you could give us more color on what are you looking in terms of recovery going forward, what will be the drivers and eventually the timing of a more normalized level of results. Thank you. Hi Isabella. Thanks for the question. Let's jump start off on- Let's start. On the top line aspect. Yes of Argentina, then I can co-complement. Yes. Thank you for the question, Isabella. LAS, talking about LAS, we have some countries over there. Of course, Argentina is representative, but we have Argentina, Chile, Paraguay, Bolivia. We are working for a while in LAS to really LAS shine. The truth it is that we LAS entered 2023 more productive overall, so we knew the macro scenario is it's a volatile. We really get more efficient over there, more productive. If you look at Chile, the capacity expansion made us much more agile to have supply, more supply capacity in Chile. If you look even at Argentina, we are really working with cost discipline over there. Overall, LAS is more productive, more efficient. Is lighter because somehow we were kind of overpaying for protection To feel protected over there. LAS is lighter. The discipline on pricing execution, it is a priority for us over there. That's why you saw the P&L that went very well. It's not just Argentina. Chile, we performed very well compared with the previous year. In Bolivia, we saw volumes going on the positive side. Paraguay overall has momentum in all the lines, doing well. This thing about the volumes that were we had a steep decline over there, I think it's the volatility, it's more the volatility of the country with big inflations that were rearranging. I would not say that this type of volume performance would stick around. There is the adjustments on salaries, everything. Even Chile that had a tough industry in Q1, we see it getting better month by month. Somehow LAS, we are very prepared for the volatility. We are more efficient, lighter. Discipline on pricing is really what matters for us now. The volumes, I think, that would be better than what we saw in Q1. Lucas on the financial hedging. Hi, Isabella. On the hedging side, to put things into perspective, it's also. I think it's important to remind everyone that since our decision in Q3 of last year to start reducing gradually our financial hedge, this came alongside a decision on our part to also elevate the focus of the organization around Free Cash Flow in U.S. dollars as a key KPI to define success in Argentina going forward, just given the environment that we're facing in the country. Okay. As a result of this decision to elevate Free Cash Flow in dollars as an important KPI, what this has translated into on the hedging side is to continue to have some protection in Argentina, but not to the same extent, right, we had historically the average 12 months of the hedging policy, as you well know. We continue to be, right, below 10 months, as I mentioned last time. That continues to be a reality. Just given the current conditions of temperature and pressure in the market, we actually are looking at this call on how much to hedge on a monthly basis. This is a monthly exercise that we do together with the local team to see what's the right, what's the optimal level of financial hedge that we should carry going forward, looking at currency performance, carry costs, and trying to optimize that balance. That's, I think, the important message on the financial hedge side. On the operational hedge side, which we decided to increase, and this speaks to your the working capital aspect of your question. On the operational side, we've made good progress in Q1, so we challenged ourselves to review the full suite of our agreements with suppliers to see what could should change and how to implement that in a dialogue with our suppliers. Okay? And that made good progress during Q1, slightly ahead of what we originally had planned for, so good progress there. Again, we're being very careful and disciplined to do things gradually. Okay? So that Just the environment requires a lot of, a lot of discipline and caution not to kind of jolt the business and the relationship with suppliers. Okay? On the working capital, which is also impacted, the challenge that we've been facing, and this is still work in progress, is to really find the optimal balance for the current environment. Right, the cash conversion cycle for Argentina, in today's world, in the short term, is going to be different, right, than the cash conversion cycle that we had last year or the year before. It's a constant effort on our part to see to what extent we need to revisit our payment terms with suppliers, payment terms with customers, level of inventories, be it raw materials, be it finished goods. Okay. This is work in progress. Again, Q1, so far so good. Since the short-term environment is so volatile, I think it's going to be a constant point of attention that we're gonna be actively managing going forward. Just the short-term reality requires us to be very nimble, flexible, and on our toes to manage all these aspects of the that impact Free Cash Flow generation. Again, so far so good. On CAC, I think overall we made okay progress in the quarter, okay overall. The highlight in terms of sequential improvement continues to be the Dominican Republic, which is good and important because it's our biggest market. Despite inflationary pressures locally, that continue to impact to some extent the volume recovery, the pace of volume recovery, but also cost pressures that still persisted in Q1 to some extent, sequentially, we continue to make steady progress. When you kind of look under the hood of the Dominican Republic kind of improvement drivers, what we continued to see in Q1 was the improvement of three very important KPIs that relate to the main SKU in the country, which was the 22 ounce Presidente bottle, which was the supply chain issue that kind of sparked the big challenge that we had last year. The level of coverage of the 22 ounce Presidente bottle continues to improve in Q1. The price, the suggested price adherence with customers, with clients continued to improve for a third quarter in a row. The inventory levels for this SKU also continued to improve sequentially, and that translates into better service level, that translates into better net promoter score. On top of that, we're investing in the market, we're investing behind our brands. The focus around the digital ecosystem, right, these and the marketplace continues to be front and center in our strategy in the DR. Again, there's no silver bullet for recovery, but we know what we have to do. We have to execute extremely well going forward. The team is confident in their ability to sequentially continue to recover. How much time it will take? I think ultimately time will tell, but I think we're talking more about it's a matter of months and quarters, not a matter of years, okay, just to give you a way to think about it. We really need to get the Dominican Republic back to where it was pre 2022, because since we did the combination with Cervecería Nacional Dominicana, right, the Dominican Republic has had a great ride up until 2022. We need to go back to that type of performance, and it's gonna be a lot about execution, top line, cost management, expense management. Everything's gonna have to work from an execution standpoint. Okay? Hope this helps. Sure. Thank you very much. Thank you. The next question comes with Ben Theurer with Barclays. Please go ahead. Yeah, good morning or good afternoon. Thank you very much for taking my question. Just, Jean, maybe following up a little bit on the development of BEES and the delivery just on the electronic platforms. You've obviously had a very much of a success story here in all markets, growing the penetration and depending on the region, somewhere between 70, 80, if not even more percent of like usage. Where do you see the potential to get this even higher? What do you need to do in order to get maybe those last customers converted as well, just as it feels like you have a better loyalty with those than maybe what you used to have in the past? Thank you. Thank you very much, Ben, for the question. BEES, our focus is to deliver the best solution to our clients and consumers we have there. Talking about BEES specifically. The majority of our customers, they are all there, we always have been true evolving in terms of users experience. Okay. UI, we are learning customer by customer, how can we deliver a better experience. Sometimes the customers has a big assortment, that they prefer to do in the computer, not in the cell phone. There is a lot of learning consumer by consumer for us to evolve and to set different services, overall products and categories in general. We still have the sales rep, the business representatives, helping the customers overall. And we are seeing that these two things combined, the platform and the business representative, they will help to bring more information to evolve the UI, to evolve services and to get a better usage. I would say that majorly, BEES is already the platform of our customers and they are majority using it. Thinking about the future and thinking about the growth of it, just to add a little bit more from the point we are, we continue to see a huge addressable market that BEES can address. There is this opportunity of increasing the number of SKU per clients, per customers, increasing overall distribution and frequency. We are learning a lot with the 3P partnerships that we are doing. How can really BEES go beyond the 1P where the logistics and I do the all the transaction, but it really becomes something that goes beyond and really have alliances on the 3P. Then other industries have access of the 1.1 billion customers that have the platform on their computers or on their cell phones. This is really something that. When we go this directions is really about understanding the pain points of the industry, understanding the pain points of customers, upgrading UI user experience, upgrading services. This is. We are just beginning. It's something that we are very, very confident. When we compare with the other platforms that we have in the market, we are confident that we are pretty much ahead. Thank you. Thank you. The next question comes with Gustavo Troyano with Itaú BBA. Please go ahead. Good afternoon, Jean, Lucas. Good afternoon, everyone. Jean mentioned that the goal for this year was to improve both gross margins and EBITDA margins. I'd like to explore your SG&A expenses for 2023, especially in Beer Brazil. From a COGS perspective, it seems that the upcoming quarter should be better than the 1st one as commodity prices decelerate. From the SG&A standpoint, I should expect EBITDA margins to increase ahead of gross margins. Specifically on commercial expenses, I'd like to hear from you about the strategy of the deployment curve of sales and marketing throughout the year. How do you see sales and marketing expenses in this 1st quarter and relative basis to the upcoming quarters, if you consider that this quarter was closer to a heavy quarter in terms of investment in sales and marketing? I was wondering if you could share an overall view for your SG&A perspectives as we move into the second half of 2023, if there are some efficiencies to be captured in these lines. Thank you very much. Okay. Let me get half of the question and then Lucas jump into the other half. Overall, we think what we're gonna see overall in Ambev P&L it is that there is an opportunity of SG&A transforming into EBITDA margins. We should improve that with time. We grew a lot in the company in the previous two or three years. We have been since last year doing a great assessment on a new way to operate our company, a new way of work. We really had a company that at some point in time was very siloed, that we have like, divisions and the NABs were one vertical and the Zé Delivery and the BEES, and everybody has their structures. We really moved into a company that understand itself more like a platform. There is a lot of change on our, the way we operate in our structures and how we think the business, how we can integrate more. There is a stream of value and efficiency that comes from this vision that you're gonna see in the next quarters that we have been working for six months, one year right now. On the distribution part too. So we got a lot of scale, and when we think about all these orders and these volumes and the distribution that we could do, so there is an opportunity to be more efficient and to synergize on the distribution too. And we're gonna see moving forward diesel prices going down. And in sales and market, we've been ramping up, so this is something that we wanna continue to invest so to support the portfolio, to support our brands. But it won't be to the extent of the top line, the top line growth. Top line will be ahead. So overall, this is Ambev as a whole. We're gonna see a part of the growth in EBITDA margin really coming from SG&A. Okay. This is a little bit the picture of Ambev. Going to Brazil Beer should be more or less this vision that should be replicated in Brazil overall. Not Brazil Beer, but Brazil overall that we are looking at NABs and beer together. Just to add, I think looking ahead, Gustavo, just to give you a way to think about it directionally. For the reasons Jean mentioned around the opportunities that we see to streamline, to optimize our structure, insofar as the technology platforms are concerned, right? Within the three of them, also with what we call the machine, the legacy business. If we continue to deliver as we did in Q1, this would translate into, right, into lower year-over-year growth for admin expenses, number one. Followed by distribution, lower growth in distribution, for the reasons that Jean mentioned. Then sales and marketing, it's ultimately gonna depend on how we execute our plan for the year. We want to continue to invest behind our brands. The portfolio has momentum. The health indicators, right, don't let me lie. We're not gonna compromise on the level of our sales and marketing investment because that helps the short term, and that builds the long term. That's the line within SG&A that we protect the most whenever we look to optimize SG&A. The good news is we're off to a good start on the admin side, we're off to a good start on the distribution side. To the extent we continue to deliver, these should grow at a lower pace than sales and marketing, but net-net, SG&A, hopefully will help us deliver better margin performance at the EBITDA level this year. Thank you, Jean and Lucas. It was clear. Thank you all very much. This concludes our question and answer session. I would like to turn the conference back over to Mr. Jean Jereissati for final remarks. You may proceed, sir. Thank you everybody, all analysts, everyone who joined the call, for your time and attention. First quarter of the year was solid. Strategically, operationally, and culturally, we are feeling very strong and solid. Brazil consistently, have been improving and getting better, and international operations are rebounding. Top line recovery, gross margin expansion and EBITDA margin expansion, happened already in Q1. Our ambitions for the year are top line growth remains a key priority with net revenue performance driven more by net revenue per hectoliter than volumes. Profitability, both in terms of ROIC as well as margins and Free Cash Flow generation improvement is what we want. EBITDA margin expansion with and without Argentina, it's a must for us. Thank you very much. See you in August, and have a great day. This conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Have a great day.