UNITED STATES  

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November, 2018

 

  Commission File Number: 001-35129

 

Arcos Dorados Holdings Inc.  

(Exact name of registrant as specified in its charter)

 

Dr. Luis Bonavita 1294, Office 501

Montevideo, Uruguay, 11300 WTC Free Zone

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F

X

  Form 40-F
     

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes   No

X

     

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes   No

X

     

 

 

 

 

 

 

ARCOS DORADOS HOLDINGS INC.

 

TABLE OF CONTENTS

 

ITEM  
1. Press Release dated November 14, 2018 titled “Arcos Dorados Reports Third Quarter 2018 Financial Results”
   

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    Arcos Dorados Holdings Inc.
     
     
      By: /s/ Juan David Bastidas
        Name: Juan David Bastidas
        Title: Chief Legal Counsel

Date: November 14, 2018

 

 

 

Item 1

 

 

 

 

FOR IMMEDIATE RELEASE

 

ARCOS DORADOS REPORTS THIRD QUARTER 2018 FINANCIAL RESULTS

 

 

Consolidated revenue growth of 8.3%, on a constant currency basis, supported by a 7.4% increase in comparable sales 1 .

Adjusted EBITDA margin expanded 340 basis points to 12.3% 1 .

Net income increased 68% to $42.7 million 1 .

 

Montevideo, Uruguay, November 14, 2018 – 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 basis 2 , consolidated revenues grew 8.3%. As reported, consolidated revenues decreased 12.9% to $720.3 million versus the third quarter of 2017.

 

• Systemwide comparable sales 2 rose 7.4% year-over-year.

 

• As reported, Adjusted EBITDA 2 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.

 

  2

 

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) 		Currency Translation - Excl. Venezuela
(b) 		Constant
Currency
Growth - Excl. Venezuela
(c)   		Venezuela
(d) 		3Q18
(a+b+c+d) 		% As Reported % Constant Currency
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)