1q17 conference call presentation...1q17 conference call presentation may 3, 2017. disclaimer this...
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Agenda ARCOS DORADOS
1Q17 Conference Call Presentation
May 3, 2017
Disclaimer
This presentation contains forward-looking statements that represent our beliefs, projections and predictions
about future events or our future performance. Forward-looking statements can be identified by terminology
such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,”
“predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases.
These forward-looking statements are necessarily subjective and involve known and unknown risks,
uncertainties and other important factors that could cause our actual results, performance or achievements
or industry results to differ materially from any future results, performance or achievement described in or
implied by such 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. 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.
1
1Q17 CEO’s Opening Remarks
2
We had a strong start to the year, achieving improved financial results supported by positive
traffic and solid average check growth in all divisions excluding Venezuela
Marketing and promotional activities showcasing McDonald’s core menu items successfully
attracted more guests to our restaurants
Sales growth helped us to capture operational leverage in our business and drove higher
EBITDA margins
We continued the process of optimizing our long-term debt structure and have successfully
placed a new corporate bond
Our strategic focus continues to be driving additional customers to our restaurants through
offering compelling value across our menu board, while modernizing and expanding our
restaurant base
We are beginning to see signs of improved consumer behavior in many of our markets
We achieved improved financial results and early progress on key
initiatives included in our updated long-term strategic vision
1Q17 Results & Highlights
We captured traffic growth with core classics and strong value offerings
3
1Q17 as reported revenues grew 18.7%, supported by the appreciation
of the Brazilian real, which more than offset the depreciation of the
Venezuelan bolivar, Argentine peso, and Mexican peso
Constant currency revenue growth of 17.0% reflected the 19.4%
expansion in comparable sales, mainly driven by average check growth
and also positive traffic
Excluding Venezuela, as reported revenues increased 18.3%
year-over-year, while constant currency growth was 9.2%
Excluding Venezuela, comparable sales outpaced inflation and we recorded our
second consecutive quarter of positive total volume growth
36 new restaurants (LTM), bringing restaurant count to 2,156 (March 2017)
Our redesigned affordability platform continued to generate positive momentum in our
major markets, driving improved volume trends and margin expansion
1Q17 Performance: Brazil
Brazil comparative results were positive, with slightly positive traffic despite
a challenging year-over-year comparison
4
As reported revenues increased 24.7%, supported by the
19.0% year-over-year appreciation of the Brazilian real
Constant currency revenues increased by 0.7%
Comparable sales growth of 3.7%
o Average check growth
o Slightly positive traffic
o Tough comp versus 1Q16
Key marketing drivers
o Clássicos do Dia
o Original Mex
o McFlurry Laka Diamante Negro
1Q17 Performance: NOLAD
Positive traffic performance despite a tough year-over-year comparison
5
As reported revenues declined 1.1% year-over-year
o Constant currency growth of 5.2% was more than offset by
the impact of currency translation
o 13.0% year-over-year depreciation of the Mexican peso
3.7% comparable sales growth
o Average check growth
o Traffic increase
Key marketing drivers
o McTrío 3x3
o Martes de McDonald’s
o Club House
o Valentine-themed cone
1Q17 Performance: SLAD
Driving traffic and protecting market share while delivering more value
to our customers during a weak economic environment
6
As reported revenues grew 22.9%
o More than offset 9.0% year-over-year
average depreciation of the Argentine peso
Constant currency revenue growth of 27.0%
o Comparable sales growth of 27.7%
Average check growth
Traffic increase
Key marketing drivers
o Combo del Día
o Cheddar & Bacon fries
o McFlurry Milka Oreo
1Q17 Performance: Caribbean
Continued strong performance in our Colombian operations supported
the divisional result
7
56.2% constant currency growth
o As reported revenues increased 9.9%
o Comparable sales rose 72.4%
o Inflation-driven average check growth,
more than offset a decrease in traffic
Excluding Venezuela:
o As reported revenues rose by 5.2%
o Constant currency revenues increased 2.8%
o Comparable sales rose 1.5%,
mainly driven by traffic growth
Key marketing drivers
o Crispy Onion BBQ
o Almuerzos Colombianos
o Silvestre burger
Mexico
Colombia
Brazil
Argentina
NOLAD
Costa Rica, Mexico,
Panama
BRAZIL
SLAD
Argentina, Chile,
Ecuador, Peru,
Uruguay
CARIBBEAN
Aruba, Colombia, Curaçao, French Guyana,
Guadeloupe, Martinique, Puerto Rico, St.
Croix, St. Thomas, Trinidad & Tobago,
Venezuela
21 Restaurant Additions LTM (net)
3 Restaurant Additions LTM (net)
1 Restaurant Addition LTM (net)
-5 Restaurant Additions LTM (net)
1Q17 New Unit Development
SLAD
Brazil
Caribbean
NOLAD
Number of systemwide
restaurants(1)
385
904
350
517
18%
42%
16%
24%
2,156 100%
8(1) As of March 31, 2017; does not include McCafé units (316) & Dessert Centers (2,777)
1Q17 Adjusted EBITDA Bridge
As reported Adjusted EBITDA variations ($ Million)
9
*Net impact of: Constant Currency Growth ($10.9 million) and Currency Translation (-$8.8 million).
$ 48.2 $ 2.1
$ 4.0
$ 8.4 $ 62.7
0
10
20
30
40
50
60
70
EBITDA 1Q2016 Venezuela ConsolidatedImpacts*
Organic Growth - Excl.Venezuela
Currency Translation - Excl.Venezuela
EBITDA 1Q2017
0
5
10
15
20
25
30
35
40
45
50
Brazil NOLAD SLAD CaribbeanEx.Vza
US
$ M
illio
n
1Q16 1Q17
2.6%
0
50
100
150
200
250
300
350
400
Brazil NOLAD SLAD CaribbeanEx.Vza
US
$ M
illio
n
1Q16 1Q17
5.2%
0.7%
27.0%
27.9%
1Excludes currency variations 10
Revenues
US$: As reported% growth: Constant Currency basis1
Adjusted EBITDA
US$: As reported% growth: Constant Currency basis1
Constant Currency Consolidated (Ex-Vza) 1Q17 Revenues: +9.2% Constant Currency Consolidated (Ex-Vza) 1Q17 Adj. EBITDA: +8.4%
1Q17 Divisional Results
50.5%2.8%
EBITDA MARGIN 1Q17 vs 1Q16
Consolidated Ex. Vza Brazil NOLAD SLAD Caribbean Ex. Vza
+40bps +20bps -280bps +20bps +110bps
-33.2%
1Q17 Non-Operating Results
11
$8.6 million dollar foreign currency exchange loss, versus a gain of $16.7 million
dollars in 1Q16, resulting from:
o Appreciation of the Brazilian real
o Appreciation of the Mexican peso from the previous quarter end generated a
loss related to intercompany balances
Lower interest expense on the 2023 USD notes was more than offset by higher
interest expenses on the BRL-denominated debt
Net income of $40.6 million, compared to net income of $16.1 million in 1Q16
o Stronger operating results including $52.5 million from asset monetization
initiatives
o Partially offset by negative variance in foreign exchange results, coupled with
higher net interest and income tax expenses
1Total financial debt includes short-term debt, long-term debt and derivative instruments.2Total financial debt less cash and cash equivalents.
1Q17 Financial Indicators
Healthy financial indicators
12
As of As of
March 31, December 31,
(In millions of U.S. dollars, except ratios) 2017 2016
Cash & Cash Equivalents 187.7 194.8
Total Financial Debt1 620.5 610.2
Net Financial Debt2 432.8 415.4
Total Financial Debt / LTM Adjusted EBITDA ratio 2.5x 2.6x
Net Financial Debt / LTM Adjusted EBITDA ratio 1.7x 1.7x
Covenants under the Master Franchise Agreement (MFA)
Fixed Charge Coverage ratio (>1.50x) 1.65x 1.64x
Leverage ratio (<4.25x) 4.12x 4.21x
13
1Q17 CEO’s Closing Remarks
Our long-term strategic outlook builds on the achievements of the past two years
Expanding our footprint throughout the region
Modernizing our restaurant base
We believe that our marketing and investment plans for the next several years will deliver:
Further growth in our business
Value to our shareholders
Highlights from our ongoing social engagement initiatives:
Largest provider of first employment in Latin America
Continued investments in training and education for our employees
Dean of our McDonald’s University recognized by Global Council of Corporate
Universities
We are on the right path to generating significant value for our shareholders by capturing the
full potential of the McDonald’s brand in Latin America
PLAN TO GENERATE SIGNIFICANT VALUE BY CAPTURING THE FULL POTENTIAL OF THE MCDONALD'S BRAND
14
IR Contact
For additional information:
Daniel Schleiniger
VP of Corporate Communications & IR
+54.11.4711.2675
Patricio Iñaki Esnaola
IR Sr. Manager
+54.11.4711.2561
www.arcosdorados.com/ir