Consolidated revenue growth of 8.3%, on a
constant currency basis, supported by a 7.4% increase in comparable
sales1.
Adjusted EBITDA margin expanded 340 basis
points to 12.3%1.
Net income increased 68% to $42.7
million1.
Arcos Dorados Holdings, Inc. (NYSE:ARCO) (“Arcos Dorados” or the
“Company”), Latin America’s largest restaurant chain and the
world’s largest independent McDonald’s franchisee, today reported
unaudited results for the third quarter ended September 30,
2018.
Third Quarter 2018 Highlights – Excluding Venezuela
- On a constant currency basis2,
consolidated revenues grew 8.3%. As reported, consolidated revenues
decreased 12.9% to $720.3 million versus the third quarter of
2017.
- Systemwide comparable sales2 rose 7.4%
year-over-year.
- As reported, Adjusted EBITDA2 increased
19.7% to $88.2 million compared with the prior-year quarter.
- Consolidated Adjusted EBITDA margin
expanded 340 basis points year-over-year to 12.3%.
- As reported, General and Administrative
(G&A) expenses decreased 16.2% versus the prior-year
quarter.
- As reported, net income increased 68%
to $42.7 million, from $25.3 million in the third quarter of
2017.
_______________
1 Excluding Venezuela. 2 For definitions please refer to
page 14 of this document.
“Systemwide comparable sales grew 7.4% on top of the 10.4%
achieved last year, with strong contributions from most of our
markets throughout Latin America and the Caribbean. Our operating
structure and disciplined approach to growth was supported by
restaurant level, bottom line profitability and cash flow
generation. In Brazil, sales grew over 2% in constant currency
terms as we focused on consistently growing in a profitable manner.
We achieved adjusted EBITDA margin expansion of 130 basis points,
excluding other operating income mostly related to a tax credit, as
we effectively managed food and paper as well as labor costs.
Our investments in innovative marketing and digital initiatives
and in enhancing the guest experience also contributed to
comparable sales growth, as guest traffic continued rising in
increasingly important markets, such as Mexico and the Andean
markets within the SLAD division. Comparable sales in our NOLAD
division grew 6.7% in the quarter.
With the uncertainty about Mexico’s presidential election and
the US trade agreement behind us and the choice of Brazil’s
president decided, we are more optimistic about the macro
environments of these two important markets. However, even under
improving market conditions, we will remain vigilant, protecting
and expanding our customer base across our markets while seeking to
preserve and enhance our margins.
We are strong in a number of ways that support Arcos Dorados’
long-term, financial sustainability. Through leveraging our scale,
vast geographic footprint, compelling line-up of menu items, and
obsession with elevating our guests’ dining experience, we will
successfully execute on our strategic plan,” said Sergio Alonso,
Chief Executive Officer of Arcos Dorados.
Third Quarter 2018
Results
Consolidated
Figure 1. AD Holdings Inc Consolidated:
Key Financial Results(In millions of U.S. dollars, except as
noted)
3Q17(a)
CurrencyTranslation-
Excl.Venezuela(b)
ConstantCurrencyGrowth
-Excl.Venezuela(c)
Venezuela(d)
3Q18(a+b+c+d)
% AsReported
% ConstantCurrency
Total Restaurants (Units) 2,160
2,195 1.6% Sales
by Company-operated Restaurants 803.4 (167.4) 65.2 (9.9) 691.3
-14.0% 684.6% Revenues from franchised restaurants 39.1 (8.3) 3.4
(1.0) 33.1 -15.4% 1832.1%
Total Revenues 842.5
(175.8) 68.6 (11.0) 724.4 -14.0%
737.9% Systemwide Comparable Sales 942.2%
Adjusted
EBITDA 74.2 (22.5) 37.0 (0.9)
87.9 18.4% 4672.6% Adjusted EBITDA Margin 8.8%
12.1%
Net income (loss) attributable to AD 23.4
(9.7) 27.0 (14.7) 26.0 11.2%
-19580.6% No. of shares outstanding (thousands) 211,072
208,628
EPS (US$/Share) 0.11
0.12
(3Q18 = 3Q17 + Currency Translation Excl. Venezuela + Constant
Currency Growth Excl. Venezuela + Venezuela). Refer to
“Definitions” section for further detail.
Arcos Dorados’ consolidated results continue to be heavily
impacted by Venezuela’s macroeconomic volatility, including the
ongoing hyperinflationary environment and the country’s heavily
regulated currency. As such, reported results may contain
significant non-cash accounting charges to operations in this
market. In this quarter, we recorded a long-lived asset impairment
charge of $11.1 million. Accordingly, the discussion of the
Company’s operating performance is focused on consolidated results
that exclude Venezuela.
Consolidated – excluding
Venezuela
Figure 2. AD Holdings Inc Consolidated
- Excluding Venezuela: Key Financial Results(In millions of
U.S. dollars, except as noted)
3Q17(a)
CurrencyTranslation(b)
ConstantCurrencyGrowth(c)
3Q18(a+b+c)
% AsReported
% ConstantCurrency
Total Restaurants (Units) 2,030
2,067 1.8% Sales by
Company-operated Restaurants 789.8 (167.4) 65.2 687.7 -12.9% 8.3%
Revenues from franchised restaurants 37.6 (8.3) 3.4 32.6 -13.2%
9.0%
Total Revenues 827.4 (175.8) 68.6
720.3 -12.9% 8.3% Systemwide Comparable Sales
7.4%
Adjusted EBITDA 73.7 (22.5) 37.0
88.2 19.7% 50.1% Adjusted EBITDA Margin 8.9%
12.3%
Net income (loss) attributable to AD 25.3
(9.7) 27.0 42.7 68.4% 106.7% No.
of shares outstanding (thousands) 211,072 208,628
EPS
(US$/Share) 0.12
0.20
Excluding the Company’s Venezuelan operation, as reported
revenues decreased 12.9% year-over-year, primarily due to the
negative impact of the 85% and 25% year-over-year average
depreciations against the US dollar of the Argentine peso and the
Brazilian real, respectively. This impact was partially offset by
constant currency revenue growth of 8.3%. Constant currency revenue
growth was supported by a 7.4% increase in systemwide comparable
sales, largely driven by average check growth.
Adjusted EBITDA ($ million)
Third quarter consolidated as reported Adjusted EBITDA,
excluding Venezuela, increased 19.7%, or 50.1% in constant currency
terms. Adjusted EBITDA included a one-time amount of $23.2 million
in other operating income, mostly related to a tax credit in the
Brazil division. The Adjusted EBITDA margin expanded by 340 basis
points to 12.3%. Excluding the aforementioned one-time other income
amount, the Adjusted EBITDA margin would have expanded 10 basis
points year-over-year, mainly driven by efficiencies in Payroll and
G&A offset by a step up in Royalty Fees.
As reported, consolidated G&A decreased by 30 basis points
as a percentage of revenues and was 16.2% lower year-over-year. On
a constant currency basis, G&A increased 6.2%, below the
blended inflation for the Company’s G&A.
Main variations in other operating income (expenses),
net
Included in Adjusted EBITDA: In the
third quarter of 2018, the Company recorded a one-time income of
$23.2 million, mostly related to a tax credit in the Brazil
division. Proceeds from refranchising were $2.2 million in the
third quarter of 2018, compared to $1.7 million in the prior-year
quarter.
Excluded from Adjusted EBITDA: In
the third quarter of 2018, the Company recorded an impairment
charge of $11.1 million related to its operations in Venezuela.
Non-operating Results
Non-operating results for the third quarter, excluding
Venezuela, contain a $10.5 million non-cash foreign currency
exchange gain, versus a non-cash gain of $6.0 million in 2017. Net
interest expense was $2.8 million lower year-over-year.
The Company reported an income tax expense, excluding Venezuela,
of $21.4 million in the quarter, compared to an income tax expense
of $15.5 million in the prior year period.
Third quarter net income attributable to the Company totaled
$42.7 million ($26.0 million, including Venezuela), compared to net
income of $25.3 million ($23.4 million, including Venezuela) in the
same period of 2017. This year’s higher operating income, which
included the $23.2 million one-time income, combined with lower net
interest expenses and a positive variance in foreign exchange
results, was partially offset by higher income tax expenses.
The Company reported earnings per share of $0.20 ($0.12,
including Venezuela) in the third quarter of 2018, compared to
earnings per share of $0.12 ($0.11, including Venezuela) in the
previous corresponding period. Due to share repurchases, total
weighted average shares for the third quarter of 2018 decreased to
208,628,186 from 211,072,340 in the prior-year quarter.
Analysis by
Division:
Brazil Division
Figure 3. Brazil Division: Key
Financial Results(In millions of U.S. dollars, except as
noted)
3Q17(a)
CurrencyTranslation(b)
ConstantCurrencyGrowth(c)
3Q18(a+b+c)
% AsReported
%ConstantCurrency
Total Restaurants (Units) 910
939 3.2% Total
Revenues 378.4 (76.1) 7.8 310.1
-18.0% 2.1% Systemwide Comparable Sales 1.0%
Adjusted EBITDA 49.3 (17.7) 36.0
67.5 37.0% 73.0% Adjusted EBITDA Margin
13.0% 21.8%
Brazil’s as reported revenues decreased 18.0%, impacted by the
25% year-over-year average depreciation of the Brazilian real.
Excluding currency translation, constant currency revenues grew
2.1%, supported by systemwide comparable sales growth of 1.0%.
Marketing activities in the quarter included the launch of
Triplo Quarterão and Egg Quarterão sandwiches, among others. Other
marketing campaigns in the quarter included the launch of McFlurry
Laka & Black Diamond in the dessert category, and My Little
Pony and Transformers in the Happy Meal. Also, in the quarter, the
Company commemorated 50 years of the Big Mac with a McCoin campaign
and hosted McDia, which helps raise funds for the Ronald McDonald
House and the Ayrton Senna Institute.
As reported Adjusted EBITDA increased 37.0% year-over-year and
73.0% on a constant currency basis. Adjusted EBITDA was positively
impacted by a one-time amount in other operating income of $23.2
million, mostly related to a tax credit resulting from the
exclusion of ICMS from the Pis/Cofins calculation base. The
Adjusted EBITDA margin expanded from 13.0% to 21.8%, positively
impacted by this one-time tax credit. Excluding the tax credit, the
Adjusted EBITDA margin would have expanded 130 basis points
year-over-year to 14.3%, mainly driven by efficiencies in Payroll
and Food and Paper (F&P) costs.
NOLAD
Figure 4. NOLAD Division: Key Financial Results
(In millions of U.S. dollars, except as
noted)
3Q17(a)
CurrencyTranslation(b)
ConstantCurrencyGrowth(c)
3Q18(a+b+c)
% AsReported
% ConstantCurrency
Total Restaurants (Units) 514
521 1.4% Total Revenues
102.3 (3.0) 6.8 106.1 3.7%
6.7% Systemwide Comparable Sales 6.7%
Adjusted EBITDA
9.9 (0.0) (1.1) 8.8 -11.2%
-10.9% Adjusted EBITDA Margin 9.7%
8.3%
NOLAD’s as reported revenues increased 3.7% year-over-year,
supported by constant currency growth of 6.7%, partially offset by
a negative currency translation impact resulting from the Mexican
peso’s 6% year-over-year average depreciation against the US
dollar. Systemwide comparable sales increased 6.7%, driven by
growth in guest traffic. Mexico traffic continues to perform
strongly, recording a sixth consecutive quarter of positive
comparable sales growth. The Company’s compelling menu, innovative
marketing initiatives, as well as its focus on delivering an
enhanced guest experience, continue to drive this improved
performance.
Third quarter movie tie-in promotions for the Happy Meal
included Hotel Transylvania 3, My Little Pony, Transformers and
Super Mario. A new phase of the affordability platform “McTrío 3x3”
continued in Mexico with Hamburguesa Gourmet. Also during the
quarter, the Company launched Chipotle Ranch in the Signature Line
and McFlurry Choco Roles in the dessert category.
As reported Adjusted EBITDA decreased 11.2%, or 10.9% on a
constant currency basis. The Adjusted EBITDA margin contracted by
140 basis points to 8.3%, or by 30 basis points when excluding
refranchising inflows recorded in the same quarter of last year.
The margin contraction mainly reflects an increase in Royalty Fees,
which accounted for 40 basis points of the decrease in the
quarter’s margin.
SLAD
Figure 5. SLAD Division: Key Financial
Results(In millions of U.S. dollars, except as noted)
3Q17(a)
CurrencyTranslation(b)
ConstantCurrencyGrowth(c)
3Q18(a+b+c)
% AsReported
% ConstantCurrency
Total Restaurants (Units) 386
390 1.0% Total
Revenues 252.3 (96.6) 45.6 201.4
-20.2% 18.1% Systemwide Comparable Sales 18.1%
Adjusted EBITDA 26.3 (10.4) 1.5
17.3 -34.1% 5.6% Adjusted EBITDA Margin
10.4% 8.6%
SLAD’s as reported revenues decreased 20.2%, as constant
currency growth of 18.1% was more than offset by negative currency
translation effects resulting from the 85% year-over-year average
depreciation of the Argentine peso against the US dollar.
Systemwide comparable sales increased 18.1%, driven by average
check growth.
Marketing activities in the quarter included the introduction of
an Egg & Bacon premium burger in the Signature Line and the
continuation of the McCombo of the Day in the affordability
platform. The Happy Meal performed well with Hotel Transylvania 3
and Super Mario movie tie-ins. Also during the quarter, the Company
launched Chicken Sticks, the first product in its new Snacks
platform.
Adjusted EBITDA decreased 34.1% on an as reported basis and rose
5.6% in constant currency terms. The Adjusted EBITDA margin
contracted 180 basis points to 8.6%, as efficiencies in Payroll
costs were more than offset by higher F&P costs, Occupancy and
Other Operating Expenses, and Royalty Fees as a percentage of
revenues.
Caribbean Division
Figure 6. Caribbean Division: Key
Financial Results(In millions of U.S. dollars, except as
noted)
3Q17(a)
CurrencyTranslation(b)
ConstantCurrencyGrowth(c)
3Q18(a+b+c)
% AsReported
% ConstantCurrency
Total Restaurants (Units) 350
345 -1.4% Total
Revenues 109.4 (6,158.6) 6,155.9
106.7 -2.4% 5625.7% Systemwide Comparable
Sales 8297.0%
Adjusted EBITDA 5.6 (3,432.7)
3,433.7 6.6 17.5% 61151.6% Adjusted
EBITDA Margin 5.1% 6.2%
The Caribbean division’s results continue to be heavily impacted
by Venezuela’s macroeconomic volatility, including the ongoing
hyperinflationary environment and the country’s heavily regulated
currency. As such, reported results may contain significant
non-cash accounting charges to operations in this market. In this
quarter we recorded a long-lived asset impairment charge of $11.1
million Due to the distortive effects that Venezuela represents,
the discussion of the Caribbean division’s operating performance is
focused on results that exclude the Company’s operations in this
country.
Caribbean Division – excluding
Venezuela
Figure 7. Caribbean Division -
Excluding Venezuela: Key Financial Results(In millions of U.S.
dollars, except as noted)
3Q17(a)
CurrencyTranslation(b)
ConstantCurrencyGrowth(c)
3Q18(a+b+c)
% AsReported
% ConstantCurrency
Total Restaurants (Units) 220
217 -1.4% Total
Revenues 94.4 (0.1) 8.4 102.7
8.8% 8.9% Systemwide Comparable Sales 12.7%
Adjusted EBITDA 5.1 (0.0) 1.9
7.0 35.8% 36.2% Adjusted EBITDA Margin
5.4% 6.8%
As reported revenues in the Caribbean division, excluding
Venezuela, increased 8.8%, or 8.9% in constant currency terms.
Comparable sales increased 12.7%, well above the division’s blended
inflation, driven by guest traffic and average check growth. The
division’s comparable base positively benefitted from prior year
impacts from natural disasters in Puerto Rico and the USVI.
Marketing activities in the quarter included Hotel Transylvania 3
and My Little Pony for the Happy Meal and the launch of the
McFlurry Pirulin Coco in the dessert category, among others. In
addition, the 50th anniversary of the Big Mac was celebrated in
Colombia with a McCoin campaign.
Adjusted EBITDA totaled $7.0 million, compared to $5.1 million
in the same period of 2017. The Adjusted EBITDA margin expanded 140
basis points to 6.8%, mainly driven by efficiencies in G&A,
F&P and Payroll costs.
New Unit Development
Figure 8. Total Restaurants (eop)*
September2018
June2018
March2018
December2017
September2017
Brazil 939 933 929 929 910 NOLAD
521 522 522 519 514 SLAD 390 390 391 390 386 Caribbean 345 346 348
350 350
TOTAL 2,195 2,191
2,190 2,188 2,160 * Considers
Company-operated and franchised restaurants at period-end
The Company opened 54 new restaurants during the twelve-month
period ended September 30, 2018, resulting in a total of 2,195
restaurants. Also during the period, the Company added 285 Dessert
Centers, bringing the total to 2,951 units. McCafés totaled 285, as
of September 30, 2018.
Balance Sheet & Cash Flow Highlights
Cash and cash equivalents were $207.6 million at September 30,
2018. The Company’s total financial debt (including derivative
instruments) was $566.8 million. Net debt (Total Financial Debt
minus Cash and cash equivalents) was $359.2 million and the Net
Debt/Adjusted EBITDA ratio was 1.3x at September 30, 2018.
Figure 9. Consolidated Financial
Ratios(In thousands of U.S. dollars, except ratios)
September 30 December 31
2018 2017 Cash & cash equivalents (i)
207,553 328,079 Total Financial Debt (ii) 566,757 621,460 Net
Financial Debt (iii) 359,204 293,381 Total Financial Debt / LTM
Adjusted EBITDA ratio 2.0 2.0 Net Financial Debt / LTM Adjusted
EBITDA ratio 1.3 1.0 (i) Cash & cash equivalents
includes Short-term investment
(ii) Total financial debt includes
long-term debt and derivative instruments (including the asset
portion of derivatives amounting to $70.7 million and $35.1 million
as a reduction of financial debt as of September 30, 2018 and
December 31, 2017, respectively).
(iii) Total financial debt less cash and cash equivalents.
Net cash provided by operating activities totaled $52.8 million
in the third quarter, while cash used in net investing activities
totaled $40.8 million, which included capital expenditures of $55.9
million, compared to $43.4 million in the previous year’s quarter.
Cash used in financing activities amounted to $9.3 million,
including $8.3 million of treasury stock purchases.
First Nine Months of
2018
Excluding the Venezuelan operation and for the nine months ended
September 30, 2018, the Company’s as reported revenues decreased
4.6% to $2,257.6 million, as constant currency growth of 8.6% was
offset by negative currency translation.
As reported Adjusted EBITDA was $205.1 million, a 6.2% increase
compared to the same period of last year. On a constant currency
basis, Adjusted EBITDA increased 21.3%. The reported Adjusted
EBITDA margin expanded by 90 basis points to 9.1%, mainly driven by
the tax credit. Excluding the tax credit, the Adjusted EBITDA
margin would have declined by 40 basis points, mostly a result of
higher Royalty Fees and Occupancy and other operating expenses as a
percentage of revenues.
Year-to-date consolidated net income amounted to $66.9 million,
compared to net income of $67.4 million in the first nine months of
2017. The prior year’s result included $56.1 million from the
Company’s re-development initiative compared to $0.2 million this
year. The nine-month result also reflects lower net interest
expenses, lower losses from derivative instruments, a positive
variance in foreign currency exchange results, and higher income
tax.
During the first nine months of 2018, capital expenditures
totaled $119.0 million versus $108.6 million in the comparable
period.
Other Third Quarter Highlights &
Recent Developments
Share Repurchase Program
On May 22, 2018, the Board of Directors approved the adoption of
a share repurchase program, pursuant to which the Company may
repurchase from time to time up to $60 million of issued and
outstanding Class A shares of no par value of the Company. The
repurchase program began on this date and will expire at the close
of business on May 22, 2019. As of September 30, 2018, the Company
had purchased 3,900,103 shares at a total cost of $28.3
million.
Definitions:
Systemwide comparable sales growth:
refers to the change, measured in constant currency, in our
Company-operated and franchised restaurant sales in one period from
a comparable period for restaurants that have been open for
thirteen months or longer. While sales by our franchisees are not
recorded as revenues by us, we believe the information is important
in understanding our financial performance because these sales are
the basis on which we calculate and record franchised revenues and
are indicative of the financial health of our franchisee base.
Constant currency basis: refers to
amounts calculated using the same exchange rate over the periods
under comparison to remove the effects of currency fluctuations
from this trend analysis. To better discern underlying business
trends, this release uses non-GAAP financial measures that
segregate year-over-year growth into two categories: (i) currency
translation, (ii) constant currency growth. (i) Currency
translation reflects the impact on growth of the appreciation or
depreciation of the local currencies in which we conduct our
business against the US dollar (the currency in which our financial
statements are prepared). (ii) Constant currency growth reflects
the underlying growth of the business excluding the effect from
currency translation.
Excluding Venezuela basis: due to
the ongoing political and macroeconomic uncertainty prevailing in
Venezuela, and in order to provide greater clarity and visibility
on the Company’s financial and operating overall performance, this
release focuses on the results on an “Excluding-Venezuela” basis,
which is non-GAAP measure.
Adjusted EBITDA: In addition to
financial measures prepared in accordance with the general accepted
accounting principles (GAAP), within this press release and the
accompanying tables, we use a non-GAAP financial measure titled
‘Adjusted EBITDA’. We use Adjusted EBITDA to facilitate operating
performance comparisons from period to period.
Adjusted EBITDA is defined as our operating income plus
depreciation and amortization plus/minus the following losses/gains
included within other operating income (expenses), net, and within
general and administrative expenses in our statement of income:
gains from sale or insurance recovery of property and equipment;
write-offs of property and equipment; impairment of long-lived
assets and goodwill; and incremental compensation related to the
modification of our 2008 long-term incentive plan.
We believe Adjusted EBITDA facilitates company-to-company
operating performance comparisons by backing out potential
differences caused by variations such as capital structures
(affecting net interest expense and other financial charges),
taxation (affecting income tax expense) and the age and book
depreciation of facilities and equipment (affecting relative
depreciation expense), which may vary for different companies for
reasons unrelated to operating performance. Figure 10 of this
earnings release include a reconciliation for Adjusted EBITDA. For
more information, please see Adjusted EBITDA reconciliation in Note
9 of our quarterly financial statements (6-K Form) filed today with
the S.E.C.
About Arcos Dorados
Arcos Dorados is the world’s largest independent McDonald’s
franchisee in terms of systemwide sales and number of restaurants,
operating the largest quick service restaurant chain in Latin
America and the Caribbean. It has the exclusive right to own,
operate and grant franchises of McDonald’s restaurants in 20 Latin
American and Caribbean countries and territories, including
Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao,
Ecuador, French Guyana, Guadeloupe, Martinique, Mexico, Panama,
Peru, Puerto Rico, St. Croix, St. Thomas, Trinidad & Tobago,
Uruguay and Venezuela. The Company operates or franchises over
2,190 McDonald’s-branded restaurants with over 90,000 employees and
is recognized as one of the best companies to work for in Latin
America. Arcos Dorados is traded on the New York Stock Exchange
(NYSE: ARCO). To learn more about the Company, please visit the
Investors section of our website: www.arcosdorados.com/ir
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements. The
forward-looking statements contained herein include statements
about the Company’s business prospects, its ability to attract
customers, its affordable platform, its expectation for revenue
generation and its outlook and guidance for 2018. These statements
are subject to the general risks inherent in Arcos Dorados'
business. These expectations may or may not be realized. Some of
these expectations may be based upon assumptions or judgments that
prove to be incorrect. In addition, Arcos Dorados' business and
operations involve numerous risks and uncertainties, many of which
are beyond the control of Arcos Dorados, which could result in
Arcos Dorados' expectations not being realized or otherwise
materially affect the financial condition, results of operations
and cash flows of Arcos Dorados. Additional information relating to
the uncertainties affecting Arcos Dorados' business is contained in
its filings with the Securities and Exchange Commission. The
forward-looking statements are made only as of the date hereof, and
Arcos Dorados does not undertake any obligation to (and expressly
disclaims any obligation to) update any forward-looking statements
to reflect events or circumstances after the date such statements
were made, or to reflect the occurrence of unanticipated
events.
Third Quarter 2018 Consolidated
Results(In thousands of U.S. dollars, except per share
data)
Figure 10. Third Quarter & First
Nine Months of 2018 Consolidated Results(In thousands of U.S.
dollars, except per share data)
For Three-Months ended For Nine-Months
ended September 30, September 30,
2018 2017 2018 2017
REVENUES Sales by Company-operated restaurants
691,270 803,351 2,216,785 2,310,980 Revenues from franchised
restaurants 33,102 39,115
111,444 111,664
Total Revenues
724,372 842,466 2,328,229
2,422,644 OPERATING COSTS AND EXPENSES
Company-operated restaurant expenses: Food and paper (245,141)
(283,892) (779,977) (820,097) Payroll and employee benefits
(141,439) (174,023) (470,703) (508,914) Occupancy and other
operating expenses (190,964) (213,467) (607,509) (623,215) Royalty
fees (37,851) (40,092) (118,625) (117,450) Franchised restaurants -
occupancy expenses (15,382) (17,000) (50,324) (49,651) General and
administrative expenses (50,155) (60,203) (167,073) (175,950) Other
operating (expenses) income, net 9,959
(6,021) (49,415) 45,314
Total operating
costs and expenses (670,973)
(794,698) (2,243,626)
(2,249,963) Operating income
53,399 47,768 84,603
172,681 Net interest expense (12,229) (15,045)
(39,326) (54,503) Loss from derivative instruments 140 195 (191)
(7,036) Foreign currency exchange results 10,523 5,635 15,651
(18,476) Other non-operating expenses, net 53
517 (9) (607)
Income (expense)
before income taxes 51,886
39,070 60,728 92,059
Income tax (expense) benefit (25,805)
(15,537) (32,978) (31,888)
Net income
(loss) 26,081 23,533
27,750 60,171 (Less): Net income
attributable to non-controlling interests (55)
(128) (140) (277)
Net income (loss)
attributable to Arcos Dorados Holdings Inc.
26,026 23,405 27,610
59,894 Earnings per share information ($
per share): Basic net income per common share
$
0.12 $ 0.11 $ 0.13 $
0.28 Weighted-average number of common shares
outstanding-Basic 208,628,186
211,072,340 210,084,482 210,889,576
Adjusted EBITDA Reconciliation
Operating income 53,399 47,768 84,603 172,681
Depreciation and amortization 25,195 25,298 77,285 73,190 Operating
charges excluded from EBITDA computation 9,293
1,170 10,009 (52,354)
Adjusted
EBITDA 87,887 74,236
171,897 193,517 Adjusted
EBITDA Margin as % of total revenues 12.1%
8.8% 7.4%
8.0%
Third Quarter 2018 Consolidated Results
– Excluding Venezuela(In thousands of U.S. dollars, except per
share data)
Figure 11. Third Quarter & First
Nine Months of 2018 Consolidated Results - Excluding
Venezuela(In thousands of U.S. dollars, except per share
data)
For Three-Months ended For Nine-Months
ended September 30, September 30,
2018 2017 2018 2017
REVENUES Sales by Company-operated restaurants
687,679 789,836 2,153,929 2,261,106 Revenues from franchised
restaurants 32,628 37,604
103,667 106,072
Total Revenues
720,307 827,440 2,257,596
2,367,178 OPERATING COSTS AND EXPENSES
Company-operated restaurant expenses: Food and paper (244,453)
(276,184) (754,869) (794,145) Payroll and employee benefits
(141,262) (173,008) (466,599) (503,246) Occupancy and other
operating expenses (189,279) (208,885) (591,609) (607,995) Royalty
fees (37,897) (39,884) (120,087) (115,888) Franchised restaurants -
occupancy expenses (15,194) (16,444) (48,123) (47,728) General and
administrative expenses (49,115) (58,592) (162,607) (170,378) Other
operating (expenses) income, net 22,567
(5,203) 19,787 49,677
Total operating costs
and expenses (654,633)
(778,200) (2,124,107)
(2,189,703) Operating income
65,674 49,240 133,489
177,475 Net interest expense (12,240) (15,052)
(39,306) (54,537) Loss from derivative instruments 140 195 (191)
(7,036) Foreign currency exchange results 10,521 6,033 9,451
(15,009) Other non-operating expenses, net 53
537 (11) (587)
Income (expense)
before income taxes 64,148
40,953 103,432 100,306
Income tax (expense) benefit (21,437)
(15,491) (36,367) (32,625)
Net income
42,711 25,462
67,065 67,681 (Less): Net income
attributable to non-controlling interests (55)
(128) (140) (277)
Net income
attributable to Arcos Dorados Holdings Inc.
42,656 25,334 66,925
67,404 Earnings per share information ($
per share): Basic net income per common share
$
0.20 $ 0.12 $ 0.32 $
0.32 Weighted-average number of common shares
outstanding-Basic 208,628,186
211,072,340 210,084,482 210,889,576
Adjusted EBITDA Reconciliation
Operating income 65,674 49,240 133,489 177,475
Depreciation and amortization 24,047 23,346 73,370 67,988 Operating
charges excluded from EBITDA computation (1,479)
1,154 (1,770) (52,365)
Adjusted EBITDA 88,242
73,740 205,089 193,098
Adjusted EBITDA Margin as % of total revenues
12.3% 8.9% 9.1%
8.2%
Third Quarter 2018 Results by
Division(In thousands of U.S. dollars)
Figure 12. Third Quarter & First
Nine Months of 2018 Consolidated Results by Division(In
thousands of U.S. dollars)
3Q YTD Three-Months ended
% Incr. Constant Nine-Months ended
% Incr. Constant September 30,
/ Currency September 30,
/ Currency 2018
2017 (Decr) Incr/(Decr)%
2018 2017 (Decr)
Incr/(Decr)%
Revenues
Brazil 310,129 378,404 -18.0% 2.1% 991,785 1,093,338
-9.3% 2.2% Caribbean 106,747 109,426 -2.4% 5625.7% 375,190 331,941
13.0% 2721.1% Caribbean - Excl. Venezuela 102,682 94,400 8.8% 8.9%
304,557 276,475 10.2% 7.9% NOLAD 106,122 102,301 3.7% 6.7% 302,282
282,770 6.9% 7.6% SLAD 201,374 252,335 -20.2% 18.1% 658,972 714,595
-7.8% 19.1%
TOTAL 724,372 842,466
-14.0% 737.9% 2,328,229 2,422,644
-3.9% 380.4% TOTAL - Excl. Venezuela
720,307 827,440 -12.9% 8.3%
2,257,596 2,367,178 -4.6% 8.6%
Operating Income
(loss)
Brazil 54,740 35,073 56.1% 97.6% 111,726 99,032 12.8% 31.1%
Caribbean (8,804) (448) -1865.2% 765096.0% (43,693) (4,754) -819.1%
114482.0% Caribbean - Excl. Venezuela 3,471 1,024 239.0% 233.6%
5,193 40 12882.5% 11757.5% NOLAD 3,762 4,396 -14.4% -17.3% 7,715
62,606 -87.7% -87.6% SLAD 13,793 22,684 -39.2% 5.7% 43,800 53,625
-18.3% 12.9% Corporate and Other (10,092) (13,937) 27.6% -19.4%
(34,945) (37,828) 7.6% -28.8%
TOTAL 53,399
47,768 11.8% 7242.7% 84,603
172,681 -51.0% 3135.5% TOTAL - Excl.
Venezuela 65,674 49,240 33.4% 70.0%
133,489 177,475 -24.8% -13.1%
Adjusted
EBITDA
Brazil 67,508 49,258 37.0% 73.0% 150,736 139,912 7.7% 24.3%
Caribbean 6,599 5,615 17.5% 61151.6% (15,508) 13,372 -216.0%
40738.2% Caribbean - Excl. Venezuela 6,954 5,119 35.8% 36.2% 17,684
12,953 36.5% 31.8% NOLAD 8,774 9,879 -11.2% -10.9% 23,319 23,456
-0.6% -0.2% SLAD 17,328 26,290 -34.1% 5.6% 57,112 64,790 -11.9%
16.6% Corporate and Other (12,322) (16,806) 26.7% -7.5% (43,762)
(48,013) 8.9% -16.3%
TOTAL 87,887 74,236
18.4% 4672.6% 171,897 193,517
-11.2% 2834.1% TOTAL - Excl. Venezuela
88,242 73,740 19.7%
50.1% 205,089 193,098
6.2% 21.3% Figure 13. Average
Exchange Rate per Quarter*
Brazil Mexico Argentina
Venezuela 3Q18 3.95 18.94
32.05 3Q17 3.16
17.81 17.27 * Local $ per 1 US$
Summarized Consolidated Balance
Sheets(In thousands of U.S. dollars)
Figure 14. Summarized Consolidated
Balance Sheets(In thousands of U.S. dollars)
September 30 December 31
2018 2017 ASSETS
Current
assets Cash and cash equivalents 207,553 308,491 Short-term
investment 0 19,588 Accounts and notes receivable, net 72,565
111,302 Other current assets (1) 164,861
213,656
Total current assets 444,979
653,037 Non-current assets Property and
equipment, net 806,061 890,736 Net intangible assets and goodwill
38,208 47,729 Deferred income taxes 61,566 74,299 Other non-current
assets (2) 175,015 137,942
Total
non-current assets 1,080,850
1,150,706 Total assets 1,525,829
1,803,743 LIABILITIES AND EQUITY
Current
liabilities Accounts payable 189,370 303,452 Taxes payable (3)
92,793 136,918 Accrued payroll and other liabilities 105,285
119,088 Other current liabilities (4) 17,115 23,715 Provision for
contingencies 2,028 2,529 Financial debt (5) 13,310
19,881
Total current liabilities
419,901 605,583 Non-current liabilities
Accrued payroll and other liabilities 33,890 29,366 Provision for
contingencies 31,284 25,427 Financial debt (6) 624,194 636,648
Deferred income taxes 9,315 10,577
Total
non-current liabilities 698,683
702,018 Total liabilities
1,118,584 1,307,601 Equity Class A
shares of common stock 379,697 376,732 Class B shares of common
stock 132,915 132,915 Additional paid-in capital 14,190 14,216
Retained earnings 403,837 401,134 Accumulated other comprehensive
losses (495,554) (429,347) Common stock in treasury
(28,255) 0
Total Arcos Dorados Holdings Inc shareholders’
equity 406,830 495,650
Non-controlling interest in subsidiaries 415
492
Total equity 407,245
496,142 Total liabilities and equity
1,525,829 1,803,743 (1) Includes "Other
receivables", "Inventories", "Prepaid expenses and other current
assets", and "McDonald's Corporation's indemnification for
contingencies". (2) Includes "Miscellaneous", "Collateral
deposits", "Derivative Instruments", and "McDonald´s Corporation
indemnification for contingencies". (3) Includes "Income taxes
payable" and "Other taxes payable". (4) Includes "Royalties payable
to McDonald´s Corporation" and "Interest payable". (5) Includes
"Short-term debt", "Current portion of long-term debt" and
"Derivative instruments". (6) Includes "Long-term debt, excluding
current portion" and "Derivative instruments".
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181114005109/en/
Investor RelationsArcos DoradosPatricio Iñaki Esnaola,
+54 11 4711 2561Director of Investor
Relationspatricio.esnaola@ar.mcd.comorMediaInspIR
GroupBarbara Cano, +1 646 452
2334barbara@inspirgroup.comwww.arcosdorados.com/ir
Arcos Dorados (NYSE:ARCO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Arcos Dorados (NYSE:ARCO)
Historical Stock Chart
From Sep 2023 to Sep 2024