• Systemwide comparable sales¹ grew 42.0% year-over-year, driven primarily by higher guest volume across all divisions
  • Digital channels (Delivery, Mobile App and Self-order Kiosks) generated 38% of systemwide sales in the quarter, with record Delivery, Self-order Kiosk and Order Ahead sales
  • Consolidated Adjusted EBITDA¹ in US dollars reached a first-quarter record of $79.6 million, and trailing twelve month Adjusted EBITDA was the highest in the Company’s history
  • Net Income¹ reached $25.9 million, or $0.12 per share, compared with net loss of $(0.13) per share in the prior year quarter

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 financial results for the three months ended March 31, 2022.

First Quarter 2022 Highlights – Excluding Venezuela

  • Systemwide comparable sales² increased 42.0% versus the prior year quarter, with strong results in all divisions.
  • Consolidated¹ revenues totaled $787.3 million, rising 40.6% in US dollars, or 45.2% in constant currency², versus the prior year period.
  • Consolidated¹ Adjusted EBITDA of $79.6 million was the highest-ever for a first quarter and trailing twelve month Adjusted EBITDA was the highest in the Company’s history.
  • Consolidated¹ Adjusted EBITDA margin reached 10.1% in the quarter, with strong sales growth driving operating leverage in all line items versus 2021.
  • Basic net income per share¹ was $0.12, compared to basic net loss per share of $(0.13) in the prior year quarter.
  • Net Debt to Adjusted EBITDA leverage ratio was 1.3x at the end of the first quarter 2022.

¹Excluding the results of the Venezuelan operation except Balance Sheet and Debt Ratio information.

²For definitions, please refer to page 16 of this document.

Message from Marcelo Rabach, Chief Executive Officer

Today we are reporting another quarter of record sales and profitability. These broad-based and sustainable results are a testament to the structural competitive advantages we have been building for years and the focused execution of our Three-D’s (Digital, Delivery and Drive-thru) strategy. Revenue reached nearly $790 million in the quarter, with systemwide comparable sales up 42% on the back of strong volume growth and continued market share gains within a consolidating marketplace. Digital sales (Delivery, Mobile App and Self-order Kiosks) contributed 38% of the quarter’s sales and included the highest-ever US dollar sales totals for Delivery, Self-order Kiosks and Order Ahead.

Revenue management (including pricing, product mix and segmentation) plus a highly-localized supply chain and efficient operation drove significant operating leverage across all cost and expense line items. Adjusted EBITDA was a record for a first quarter and the trailing twelve month result is now the highest in our history.

The Company’s balance sheet and cash generation are very strong. After the quarter ended, we became the first quick-service restaurant operator in the world to issue a Sustainability-Linked Bond (SLB). As a result, the average maturity of our long-term debt has been extended to 6.0 years, with no major maturities until September of 2027.

We are proud of the Recipe of the Future ESG platform we developed several years ago and this SLB proves once-again that we are committed to the targets we established to have a positive influence on the communities we serve and the planet as a whole. These commitments are good for business, as demonstrated by the lowest spread over US Treasuries ever for an Arcos Dorados long-term debt instrument. But, more importantly, tying our financial strategy to our long-term climate change commitments is the right thing to do.

We began 2022 with a strong pace of growth, opening 16 restaurants, including 14 free-standing units and 10 restaurants in Brazil. We have worked hard to increase the size and accelerate the pace of the openings pipeline. Based on the current run-rate, we expect to exceed restaurant opening and capital expenditure guidance for 2022.

We are very encouraged by the results we are reporting today and strongly believe they will be sustainable over time. Both Arcos Dorados and the McDonald’s brand in Latin America and the Caribbean are in a very strong competitive position.

Consolidated Results

Consolidated

Figure 1. AD Holdings Inc Consolidated: Key Financial Results(In millions of U.S. dollars, except as noted)

1Q21 (a)

Currency

Translation -

Excl. Venezuela (b)

Constant Currency Growth -

Excl. Venezuela (c)

Venezuela (d)

1Q22 (a+b+c+d)

% As Reported

Total Restaurants (Units)

2,242

 

2,273

 

  Sales by Company-operated Restaurants

537.9

 

(25.8

)

241.3

1.9

 

755.3

 

40.4

%

Revenues from franchised restaurants

23.2

 

0.4

 

11.5

0.2

 

35.4

 

52.4

%

Total Revenues

561.1

 

(25.3

)

252.8

2.1

 

790.7

 

40.9

%

  Adjusted EBITDA

23.9

 

(2.0

)

56.9

(0.3

)

78.5

 

228.0

%

Adjusted EBITDA Margin

4.3

%

9.9

%

5.7

%

Net income (loss) attributable to AD

(29.7

)

(2.7

)

56.6

0.3

 

24.5

 

NM

 

No. of shares outstanding (thousands)

210,227

 

210,478

 

EPS (US$/Share)

(0.14

)

0.12

 

1Q22 = 1Q21 + Currency Translation Excl. Venezuela + Constant Currency Growth Excl. Venezuela + Venezuela). Refer to “Definitions” section for further detail.

Arcos Dorados’ consolidated results may continue to be impacted by Venezuela’s macroeconomic volatility, including the ongoing hyperinflationary environment, which has historically led the Company to record significant non-cash accounting charges to operations in this market. As such, the discussion of the Company’s operating performance continues to be focused on consolidated results that exclude Venezuela both at the Consolidated level as well as for the South Latin American Division.

First quarter net income attributable to the Company totaled $24.5 million, compared to net loss of $29.7 million in the same period of 2021. Arcos Dorados’ recorded earnings of $0.12 per share in the first quarter of 2022 compared to a net loss of $(0.14) per share in the corresponding 2021 period. Total weighted average shares for the first quarter of 2022 amounted to 210,478,322 compared to 210,226,699 in the prior year’s quarter.

Consolidated - excluding Venezuela

Figure 2. AD Holdings Inc Consolidated - Excluding Venezuela: Key Financial Results(In millions of U.S. dollars, except as noted)

1Q21 (a)

Currency

Translation (b)

Constant Currency Growth (c)

1Q22 (a+b+c)

% As

Reported

% Constant

Currency

Total Restaurants (Units)

2,136

 

2,172

 

  Sales by Company-operated Restaurants

536.8

 

(25.8

)

241.3

752.3

 

40.2

%

45.0

%

Revenues from franchised restaurants

23.1

 

0.4

 

11.5

35.0

 

51.8

%

49.9

%

Total Revenues

559.8

 

(25.3

)

252.8

787.3

 

40.6

%

45.2

%

Systemwide Comparable Sales

42.0

%

Adjusted EBITDA

24.7

 

(2.0

)

56.9

79.6

 

221.9

%

230.0

%

Adjusted EBITDA Margin

4.4

%

10.1

%

5.7

%

Net income (loss) attributable to AD

(28.0

)

(2.7

)

56.6

25.9

 

NM

 

NM

 

No. of shares outstanding (thousands)

210,227

 

210,478.3

 

EPS (US$/Share)

(0.13

)

0.12

 

Total revenues in US dollars increased 40.2%, or 45.0% in constant currency, versus the prior year period. Systemwide comparable sales rose 42% in the quarter, with strong sales growth in all divisions. Drive-thru and Delivery sales continued to support top-line growth, increasing 13% and 29% in constant currency, respectively, on top of robust growth in the prior year and despite the recovery of on-premise sales segments: front counter, dessert centers and McCafé.

On-premise sales continued to recover, growing 81% versus the prior year in constant currency. With that, 46% of systemwide sales were generated in off-premise channels and 54% in the on-premise segments in the first quarter 2022. Digital, which includes sales from Delivery, Mobile App and Self-order kiosks generated 38% of systemwide sales in the quarter, with a 54% growth versus the prior year, reaching 40% of the Company’s total sales in March 2022, its highest monthly sales in absolute terms.

By the end of March, the Company’ Mobile App registered 69 million downloads and was, by far, the leader in monthly active users among quick service restaurant operators. Increasingly personalized digital marketing initiatives generated greater guest frequency and helped drive sales growth in the quarter.

Finally, results in the quarter were supported by strong consumer preference for the McDonald’s Brand experience. Guest perception of key brand attributes, including favorite brand, improved across the Company’s footprint, with market share growth ahead of all other chained quick service restaurant brands.

Adjusted EBITDA – Excluding Venezuela ($million)

Breakdown of main variations contributing to 1Q22 Adjusted EBITDA

First quarter consolidated Adjusted EBITDA, excluding Venezuela, reached $79.6 million. Trailing twelve month Adjusted EBITDA was $329.9 million, the highest in the Company’s history. Strong, traffic-driven sales growth generated operating leverage in all divisions. Consolidated Adjusted EBITDA margin was up 5.7 percentage points versus the first quarter of 2021, with all divisions exceeding pre-pandemic margin levels, reflecting successful revenue and cost management. Importantly, all divisions also exceeded pre-pandemic Adjusted EBITDA levels in US dollar terms.

Consolidated G&A expenses declined by 90 basis points as a percentage of sales versus the prior year quarter as a result of strong revenue growth.

Notable items in the Adjusted EBITDA reconciliation

Included in Adjusted EBITDA: There were no material variations.

Excluded from Adjusted EBITDA: There were no material variations.

Non-operating Results - excluding Venezuela

Arcos Dorados’ non-operating results for the first quarter included a non-cash foreign currency exchange gain of $15.8 million and an $11.7 million loss from Derivative Instruments, both due to the appreciation of the Brazilian Real in the period. Net interest expense was $1.6 million lower year-over-year. The Company recorded an income tax expense of $17.2 million in the first quarter, compared to an income tax benefit of $0.1 million in the prior-year period.

First quarter net income attributable to the Company totaled $25.9 million, compared to net loss of $28.0 million in the prior-year period. Earnings per share were $0.12 in the first quarter 2022 compared to net loss per share of $(0.13) in the prior year quarter.

Divisional Results

Brazil Division

Figure 3. Brazil Division: Key Financial Results(In millions of U.S. dollars, except as noted)

1Q21 (a)

Currency

Translation (b)

Constant Currency Growth (c)

1Q22 (a+b+c)

% As

Reported

% Constant

Currency

Total Restaurants (Units)

1,030

 

1,061

 

  Total Revenues

203.3

 

14.9

93.8

312.0

 

53.5

%

46.1

%

Systemwide Comparable Sales

39.0

%

Adjusted EBITDA

13.5

 

2.3

30.2

46.0

 

240.0

%

223.2

%

Adjusted EBITDA Margin

6.7

%

14.8

%

8.1

%

As reported revenues increased 53.5% versus the first quarter 2021, reaching $312.0 million. Traffic rose strongly year-over-year, partly due to the impact of renewed government restrictions on the prior year period’s sales volume in March. The appreciation of the Brazilian real also helped improve US dollar revenue growth. On a constant currency basis, revenues grew 46.1%, supported by 39.0% higher systemwide comparable sales.

First quarter marketing activities in Brazil built sales and traffic growth momentum, with important campaigns designed to boost brand affinity among younger guests. The “Méquizices” campaign featured some of Brazil’s top music celebrities describing their favorite McDonald’s orders. The sponsorship of Big Brother Brazil, the country’s most popular reality television show, fueled sales across the Three D’s: Digital, Delivery and Drive Thru. Families enjoyed the exclusive “Disney 50th Anniversary” collection in the Happy Meal, driving unit sales growth in the quarter.

As reported Adjusted EBITDA in the division reached $46.0 million in the quarter, benefitting from an 8.1 percentage point improvement in Adjusted EBITDA margin versus the prior year quarter, or 1.0 percentage point higher versus the pre-pandemic first quarter 2019. Margins benefitted from operating leverage generated by the strong growth in sales. This included gross margin expansion despite cost pressures.

North Latin American Division (NOLAD)

Figure 4. NOLAD Division: Key Financial Results(In millions of U.S. dollars, except as noted)

1Q21 (a)

Currency

Translation (b)

Constant Currency Growth (c)

1Q22 (a+b+c)

% As

Reported

% Constant

Currency

Total Restaurants (Units)

629

 

625

 

  Total Revenues

173.8

 

(4.0

)

34.1

203.9

 

17.3

%

19.6

%

Systemwide Comparable Sales

24.1

%

Adjusted EBITDA

13.8

 

(0.6

)

8.2

21.4

 

54.7

%

59.2

%

Adjusted EBITDA Margin

8.0

%

10.5

%

2.5

%

As reported revenues were $203.9 million, up 17.3% in US dollars and 19.6% in constant currency versus the prior year quarter. Notably, this US dollar result was almost 30% higher than the pre-pandemic first quarter of 2019. NOLAD markets maintained the strong performance trends established in 2021 thanks mostly to the continuing recovery in guest volume. Systemwide comparable sales rose 24.1% year-over-year, driven primarily by Mexico and Panama.

Marketing activities in NOLAD mostly focused on core menu items in the quarter. Mexico reinforced the chicken category with the introduction of “Spicy Chicken McNuggets” and the “McCrispy Spicy Deluxe”. Costa Rica drove customer excitement with the “El Incomparable Big Mac” campaign and, after a 2-year hiatus, we successfully re-introduced a seasonal favorite, the Filet-o-Fish, in Costa Rica, Panama and Puerto Rico.

As reported Adjusted EBITDA reached $21.4 million in the first quarter compared with $13.8 million in the prior year quarter, representing a year-over-year increase of 54.7%, or 59.2% on a constant currency basis. Similar to revenue, the US dollar Adjusted EBITDA result was higher than the pre-pandemic first quarter of 2019. First quarter 2022 Adjusted EBITDA margin rose by 2.5 percentage points against 2021, including efficiencies in all line items.

South Latin American Division (SLAD)

Figure 5. SLAD Division: Key Financial Results(In millions of U.S. dollars, except as noted)

1Q21 (a)

Currency

Translation -

Excl.

Venezuela (b)

Constant Currency Growth -

Excl.

Venezuela (c)

Venezuela (d)

1Q22 (a+b+c+d)

% As

Reported

Total Restaurants (Units)

583

 

587

 

  Total Revenues

184.1

 

(36.3

)

124.9

2.1

 

274.9

 

49.3

%

  Adjusted EBITDA

9.6

 

(5.3

)

26.3

(0.3

)

30.3

 

215.7

%

Adjusted EBITDA Margin

5.2

%

11.0

%

5.8

%

Figure 6. SLAD Division - Excluding Venezuela: Key Financial Results(In millions of U.S. dollars, except as noted)

1Q21 (a)

Currency

Translation (b)

Constant Currency Growth (c)

1Q22 (a+b+c)

% As

Reported

% Constant

Currency

Total Restaurants (Units)

477

 

486

 

  Total Revenues

182.8

 

(36.3

)

124.9

271.5

 

48.5

%

68.3

%

Systemwide Comparable Sales

64.3

%

Adjusted EBITDA

10.4

 

(5.3

)

26.3

31.5

 

202.0

%

252.9

%

Adjusted EBITDA Margin

5.7

%

11.6

%

5.9

%

Revenues in SLAD, excluding Venezuela, increased 48.5% in US dollars, or 68.3% in constant currency terms. Systemwide comparable sales rose 64.3%, more than double the blended inflation in the period. Performance was strong across the division, especially in Argentina, Chile and Colombia where volume growth was robust.

First quarter marketing activities in SLAD also centered on core offerings. In Argentina, the “Más Sabor, Más Fun” campaign drove an increase in Big Mac sales while markets like Chile and Colombia focused on strengthening the chicken category. Most markets’ family business benefitted from the Company’s exclusive licensing agreement with Disney. Finally, Drive-thru and Delivery remained very strong in the Division, reaching all time sales records in many markets.

As reported Adjusted EBITDA reached $31.5 million, compared with $10.4 million in the prior-year quarter. Adjusted EBITDA margin was 11.6%, or 5.9 percentage points higher than the prior year quarter. Food & Paper costs remained stable, with all other cost and expense line items declining as a percentage of sales in the period.

New Unit Development

Figure 7. Total Restaurants (eop)*

March 2022

December 2021

September 2021

June 2021

March 2021

Brazil

1,061

1,051

1,052

1,044

1,030

NOLAD

625

625

626

626

629

SLAD

587

585

585

585

583

TOTAL

2,273

2,261

2,263

2,255

2,242

* Considers Company-operated and franchised restaurants at period-end   Figure 8. Footprint as of March 31, 2022

Store Type*

Total

Restaurants

Ownership

McCafes

Dessert

Centers

FS & IS

MS & FC

Company

Operated

Franchised

Brazil

601

460

1,061

639

422

104

1,977

NOLAD

432

193

625

456

169

14

533

SLAD

364

223

587

497

90

162

715

TOTAL

1,397

876

2,273

1,592

681

280

3,225

* FS: Free-Standing; IS: In-Store; MS: Mall Store; FC: Food Court.

During the first quarter of 2022, Arcos Dorados opened 16 restaurants, including 14 new free-standing units and 10 new restaurants in Brazil. As of the end of March 2022 there were 828 Experience of the Future Restaurants across the Company’s footprint.

Balance Sheet & Cash Flow Highlights

Figure 9. Consolidated Financial Ratios(In thousands of U.S. dollars, except ratios)

March 31,

December 31,

2021

2021

Cash & cash equivalents (i)

279,749

278,830

Total Financial Debt (ii)

705,871

657,896

Net Financial Debt (iii)

426,122

379,066

Total Financial Debt / LTM Adjusted EBITDA ratio

2.2

2.4

Net Financial Debt / LTM Adjusted EBITDA ratio

1.3

1.4

(i) Cash & cash equivalents includes short-term investment (ii)Total Financial Debt includes short-term debt, long-term debt, accrued interest payable and derivative instruments (including the asset portion of derivatives amounting to $90.7 million and $120.4 million as a reduction of financial debt as of March 31, 2021 and December 2021, respectively). (iii) Net Financial Debt equals Total Financial Debt less Cash & cash equivalents.

Cash and cash equivalents were $279.7 million and total financial debt (including the value of derivative instruments) was $705.9 million, as of March 31, 2022. Net debt was $426.1 million, up from $379.1 million at the end of 2021 due to a decline in the value of Brazilian real linked derivative instruments.

The Net Debt to Adjusted EBITDA leverage ratio ended the quarter at a healthy 1.3x as record trailing-twelve-month Adjusted EBITDA more than offset the increase in net debt.

Net cash generated from operating activities for the three months ended March 31 totaled $35.2 million, up from just $7.0 million last year. Cash used in net investing activities totaled $40.9 million, with capital expenditures of $24.8 million. Net cash used in financing activities was $11.8 million, including the first installment of the 2022 dividend.

Recent Developments

Sustainability-Linked Bond

On April 27, 2022, the Company became the first quick service restaurant operator in the world to link its financial strategy to its environmental objectives when its subsidiary, Arcos Dorados B.V., issued a Sustainability-Linked Bond (SLB) for an aggregate principal amount of $350 million. Maturing on May 27, 2029 the SLB bears interest of 6.125% per year, representing the lowest spread over US Treasuries in the Company’s history. The proceeds of this liability management transaction are being used to re-purchase most of the Company’s outstanding 2023 bond and to fund a tender offer of $150 million of its outstanding 2027 bond.

The bond includes Sustainability Performance Targets (SPT) that must be achieved by 2025 against a 2021 baseline. SPT 1 is for a 15% absolute reduction of Scope 1 and 2 greenhouse gas (GHG) emissions. SPT 2 is for a 10% reduction in the intensity of Scope 3 GHG emissions. Both SPT 1 and SPT 2 will be measured and reported by a third-party expert, South Pole Carbon Asset Management Ltd.

If one of the SPT’s is not achieved, then the interest rate on the SLB will increase by 12.5 basis points. If neither SPT is achieved, then the interest rate will increase by 25 basis points.

First Quarter 2022 Earnings Webcast

A webcast to discuss the information contained in this press release will be held today, May 18, 2022, at 10:00 a.m. ET. In order to access the webcast, members of the investment community should follow this link Arcos Dorados First Quarter 2022 Results Webcast.

A replay of the webcast will be available later today through August 2022 in the investor section of the Company’s website: www.arcosdorados.com/ir.

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 (year-over-year basis). 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, equity method investments, or insurance recovery of property and equipment; write-offs of property and equipment; impairment of long-lived assets and goodwill; and reorganization and optimization plan expenses.

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. Figures 10 and 11 of this earnings release include a reconciliation for Adjusted EBITDA. For more information, please see Adjusted EBITDA reconciliation in Note 9 – Segment and geographic information – of our 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, 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 with more than 2,250 restaurants, operated by the Company or by its sub-franchisees, that together employ over 90 thousand people (as of 03/31/2022). The Company is also committed to the development of the communities in which it operates, to providing young people their first formal job opportunities and to utilize its Recipe for the Future to achieve a positive environmental impact. Arcos Dorados is listed for trading 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 growth and investments in 2022. 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.

First Quarter 2022  Consolidated Results

Figure 10. First Quarter 2022 Consolidated Results(In thousands of U.S. dollars, except per share data) For Three-Months ended March 31,

 

2022

 

 

2021

 

REVENUES Sales by Company-operated restaurants

 

755,294

 

 

537,889

 

Revenues from franchised restaurants

 

35,387

 

 

23,227

 

Total Revenues

 

790,681

 

 

561,116

 

OPERATING COSTS AND EXPENSES Company-operated restaurant expenses: Food and paper

 

(263,408

)

 

(192,659

)

Payroll and employee benefits

 

(152,228

)

 

(114,421

)

Occupancy and other operating expenses

 

(220,127

)

 

(178,193

)

Royalty fees

 

(38,616

)

 

(27,661

)

Franchised restaurants - occupancy expenses

 

(16,008

)

 

(11,827

)

General and administrative expenses

 

(55,538

)

 

(44,966

)

Other operating income

 

3,591

 

 

1,803

 

Total operating costs and expenses

 

(742,334

)

 

(567,924

)

Operating income / (loss)

 

48,347

 

 

(6,808

)

Net interest expense

 

(10,659

)

 

(12,282

)

Loss from derivative instruments

 

(11,692

)

 

(1,149

)

Foreign currency exchange results

 

15,827

 

 

(9,348

)

Other non-operating (expenses), net

 

(25

)

 

(142

)

Income / (loss) before income taxes

 

41,798

 

 

(29,729

)

Income tax expense

 

(17,169

)

 

70

 

Net income / (loss)

 

24,629

 

 

(29,659

)

Less: Net income attributable to non-controlling interests

 

(126

)

 

(54

)

Net income / (loss) attributable to Arcos Dorados Holdings Inc.

 

24,503

 

 

(29,713

)

Earnings per share information ($ per share): Basic net income / (loss) per common share

$

0.12

 

$

(0.14

)

Weighted-average number of common shares outstanding-Basic

 

210,478,322

 

 

210,226,699

 

Adjusted EBITDA Reconciliation Operating income / (loss)

 

48,347

 

 

(6,808

)

Depreciation and amortization

 

30,136

 

 

30,366

 

Operating charges excluded from EBITDA computation

 

15

 

 

372

 

Adjusted EBITDA

 

78,498

 

 

23,930

 

Adjusted EBITDA Margin as % of total revenues

 

9.9

%

 

4.3

%

 

First Quarter 2022 Consolidated Results Excluding Venezuela

 

Figure 11. First Quarter 2022 Consolidated Results - Excluding Venezuela (In thousands of U.S. dollars, except per share data)

For Three-Months ended March 31,

 

2022

 

 

2021

 

REVENUES Sales by Company-operated restaurants

 

752,279

 

 

536,766

 

Revenues from franchised restaurants

 

35,022

 

 

23,070

 

Total Revenues

 

787,301

 

 

559,836

 

OPERATING COSTS AND EXPENSES Company-operated restaurant expenses: Food and paper

 

(262,314

)

 

(192,471

)

Payroll and employee benefits

 

(151,346

)

 

(114,187

)

Occupancy and other operating expenses

 

(218,535

)

 

(177,409

)

Royalty fees

 

(38,616

)

 

(27,661

)

Franchised restaurants - occupancy expenses

 

(15,879

)

 

(11,726

)

General and administrative expenses

 

(54,454

)

 

(44,281

)

Other operating income

 

3,601

 

 

2,965

 

Total operating costs and expenses

 

(737,543

)

 

(564,769

)

Operating income / (loss)

 

49,758

 

 

(4,933

)

Net interest expense

 

(10,659

)

 

(12,282

)

Loss from derivative instruments

 

(11,692

)

 

(1,149

)

Foreign currency exchange results

 

15,763

 

 

(9,560

)

Other non-operating (expenses), net

 

(23

)

 

(142

)

Income / (loss) before income taxes

 

43,147

 

 

(28,066

)

Income tax expense

 

(17,169

)

 

87

 

Net income / (loss)

 

25,978

 

 

(27,979

)

Less: Net income attributable to non-controlling interests

 

(126

)

 

(54

)

Net income / (loss) attributable to Arcos Dorados Holdings Inc.

 

25,852

 

 

(28,033

)

Earnings per share information ($ per share): Basic net income / (loss) per common share

$

0.12

 

$

(0.13

)

Weighted-average number of common shares outstanding-Basic

 

210,478,322

 

 

210,226,699

 

Adjusted EBITDA Reconciliation Operating income / (loss)

 

49,758

 

 

(4,933

)

Depreciation and amortization

 

29,869

 

 

30,016

 

Operating charges excluded from EBITDA computation

 

15

 

 

(339

)

Adjusted EBITDA

 

79,642

 

 

24,744

 

Adjusted EBITDA Margin as % of total revenues

 

10.1

%

 

4.4

%

First Quarter 2022  Results by Division

Figure 12. First Quarter 2022 Consolidated Results by Division(In thousands of U.S. dollars) 1Q Three-Months ended as Constant March 31, reported Currency

2022

 

2021

 

Incr/(Decr)%

Incr/(Decr)%

Revenues Brazil

311,979

 

203,251

 

53.5

%

46.1

%

NOLAD

203,852

 

173,754

 

17.3

%

19.6

%

SLAD

274,850

 

184,111

 

49.3

%

72.0

%

SLAD - Excl. Venezuela

271,470

 

182,832

 

48.5

%

68.3

%

TOTAL

790,681

 

561,116

 

40.9

%

46.4

%

TOTAL - Excl. Venezuela

787,301

 

559,837

 

40.6

%

45.2

%

  Operating Income (loss) Brazil

32,021

 

180

 

NM

 

NM

 

NOLAD

13,233

 

5,141

 

157.4

%

166.7

%

SLAD

23,826

 

1,852

 

NM

 

NM

 

SLAD - Excl. Venezuela

25,237

 

3,727

 

NM

 

NM

 

Corporate and Other

(20,733

)

(13,981

)

48.3

%

61.3

%

TOTAL

48,347

 

(6,808

)

NM

 

NM

 

TOTAL - Excl. Venezuela

49,758

 

(4,933

)

NM

 

NM

 

  Adjusted EBITDA Brazil

46,038

 

13,540

 

240.0

%

223.2

%

NOLAD

21,402

 

13,836

 

54.7

%

59.2

%

SLAD

30,316

 

9,604

 

215.7

%

252.1

%

SLAD - Excl. Venezuela

31,460

 

10,418

 

202.0

%

252.9

%

Corporate and Other

(19,258

)

(13,050

)

47.6

%

60.2

%

TOTAL

78,498

 

23,930

 

228.0

%

228.8

%

TOTAL - Excl. Venezuela

79,642

 

24,744

 

221.9

%

230.0

%

    Figure 13. Average Exchange Rate per Quarter* Brazil Mexico Argentina

1Q22

5.23

 

20.50

 

106.56

 

1Q21

5.47

 

20.34

 

88.56

 

* Local $ per 1 US$

 Summarized Consolidated Balance Sheets

  Figure 14. Summarized Consolidated Balance Sheets(In thousands of U.S. dollars)  

March 31,

December 31,

 

2022

 

2021

 

  ASSETS     Current assets       Cash and cash equivalents 

                        267,326

 

                        278,830

 

  Short-term investment

                          12,423

 

                                 -

 

  Accounts and notes receivable, net

                          89,387

 

                          82,180

 

  Other current assets (1)

                        165,354

 

                        179,106

 

  Total current assets 

                        534,490

 

                        540,116

 

  Non-current assets       Property and equipment, net 

                        801,172

 

                        743,533

 

  Net intangible assets and goodwill 

                          42,087

 

                          38,808

 

  Deferred income taxes 

                          81,341

 

                          67,802

 

  Derivative instruments

                          90,680

 

                        120,371

 

  Equity method investments

                          13,583

 

                          13,105

 

  Leases right of use assets, net

                        832,948

 

                        763,580

 

  Other non-current assets (2)

                          85,543

 

                          73,942

 

  Total non-current assets 

                     1,947,354

 

                     1,821,141

 

  Total assets  

                     2,481,844

 

                     2,361,257

 

  LIABILITIES AND EQUITY       Current liabilities       Accounts payable

                        250,977

 

                        269,215

 

  Taxes payable (3)

                        132,035

 

                        137,362

 

  Accrued payroll and other liabilities 

                        121,061

 

                          89,923

 

  Other current liabilities (4)

                          30,165

 

                          27,316

 

  Provision for contingencies 

                            2,120

 

                            2,140

 

  Financial debt (5)

                          15,510

 

                          12,787

 

  Operating lease liabilities

                          83,846

 

                          79,120

 

  Total current liabilities 

                        635,714

 

                        617,863

 

  Non-current liabilities       Accrued payroll and other liabilities  

                          26,144

 

                          21,900

 

  Provision for contingencies 

                          39,118

 

                          31,946

 

  Financial debt (6)

                        765,194

 

                        754,097

 

  Deferred income taxes 

                            3,492

 

                            7,170

 

  Operating lease liabilities

                        772,655

 

                        707,119

 

  Total non-current liabilities 

                     1,606,603

 

                     1,522,232

 

  Total liabilities  

                     2,242,317

 

                     2,140,095

 

  Equity       Class A shares of common stock

                        388,369

 

                        388,369

 

  Class B shares of common stock

                        132,915

 

                        132,915

 

  Additional paid-in capital 

                          10,147

 

                          10,101

 

  Retained earnings

                        309,096

 

                        316,180

 

  Accumulated other comprehensive losses

                      (582,375

)

                      (607,768

)

  Common stock in treasury

                        (19,367

)

                        (19,367

)

  Total Arcos Dorados Holdings Inc shareholders’ equity

                        238,785

 

                        220,430

 

  Non-controlling interest in subsidiaries

                               742

 

                               732

 

  Total equity 

                        239,527

 

                        221,162

 

  Total liabilities and equity 

                     2,481,844

 

                     2,361,257

 

(1) Includes "Other receivables", "Inventories", "Prepaid expenses and other current assets", "McDonald's Corporation's indemnification for contingencies", and "Derivative Intruments". (2) Includes "Miscellaneous", "Collateral deposits", 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 "Current portion of long-term debt" and "Derivative instruments". (6) Includes "Long-term debt, excluding current portion" and "Derivative instruments".

 

Investor Relations Contact Dan Schleiniger VP of Investor Relations Arcos Dorados daniel.schleiniger@ar.mcd.com Media Contact David Grinberg VP of Corporate Communications Arcos Dorados david.grinberg@mcd.com.uy Follow us on: LinkedIn Twitter

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