ARCOS DORADOS 2Q2014 Conference Call Presentation August 5, 2014

Transcription

1 Agenda ARCOS DORADOS 2Q2014 Conference Call Presentation August 5, 2014

2 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

3 2Q14 Results & Highlights Achieved double-digit organic revenue growth and adjusted G&A leverage Double-digit organic revenue growth, despite weak economic growth in key markets o High single-digit increase in comparable sales o Brazil s topline growth impacted by the FIFA World Cup and tough year-over-year comparison Excluding Venezuela: o Organic revenue growth of 9.6% o As reported Adjusted EBITDA declined 1.7% o Organic Adjusted EBITDA was flat year-over-year o Adjusted EBITDA margin increased 15 bps, driven by lower labor and G&A expenses 46 bps of G&A leverage, excluding one-time expenses related to the G&A optimization Opened 12 new restaurants in 2Q14 (21 as of 1H14), expanding our portfolio to 2,075 units LENGTHY RUNWAY FOR FUTURE GROWTH, DESPITE SHORT-TERM CHALLENGES 2

4 Key Marketing Initiatives FIFA World Cup marked once-in-a-lifetime marketing opportunity FIFA World Cup, a long-term branding opportunity o McDonald s was the only restaurant brand visible across the event venues during all 64 games o New products and event-related promotions positively impacted sales in the lead up to the event o Second most recognized official sponsor FIFA World Cup promotions included: o World Cup Sandwiches in Brazil o Combo de la Copa in SLAD o Campeones Mundialistas in NOLAD High single-digit comparable sales growth underpinned by: o Promotions in the value platform designed to stimulate traffic o Monopoly promotion in Argentina Ongoing campaigns across the region continue to enhance the brand o Quality, Más allá de la cocina focus on high quality ingredients o Happy character 3

5 2Q14 Performance: Brazil As anticipated, traffic was impacted by the FIFA World Cup Topline growth impacted by a soft consumption environment, a tough y-o-y comp and a negative impact from the FIFA World Cup Reported revenues were flat due to the 8% y-o-y BRL depreciation +7.7% organic revenue growth o Comparable sales growth of 0.8%, driven by Average check, offset by Declines in traffic during World Cup matches Key marketing drivers: o World Cup Sandwiches o Crispy Tasty sandwich in the value platform o McFlurry Kit Kat 4

6 2Q14 Performance: NOLAD* Results reflect a weak consumer environment Turnaround plan in Mexico is ongoing as we continue to implement strategies that stimulates consumption Guest counts per store per month increased Decline of 0.2% in organic revenue o Comparable sales decreased 2.7% Declines in average check & traffic Negative shift in mix Negative impact from the FIFA World Cup Key marketing drivers: o Campeones Mundialistas o Desayuno de la Copa o McFlurry Milky Way * Costa Rica, Mexico and Panama 5

7 2Q14 Performance: SLAD* Topline growth remained strong, despite geopolitical tensions in Argentina and the short-term impact of the FIFA World Cup on traffic Continued strong contributor to organic revenue growth Reported revenues impacted by the depreciation of local currencies o 54% y-o-y average depreciation of the Argentine Peso +21.1% organic revenue growth o Comparable sales growth of 19.1% Driven by average check growth Traffic impacted by a soft macro environment in Argentina and the FIFA World Cup Key marketing drivers: o Re-edition of Monopoly o McCombo de la Copa o Triple Cheeseburger * Argentina, Chile, Ecuador, Peru and Uruguay 6

8 2Q14 Performance: Caribbean* Maintained leading market share despite ongoing challenging conditions in Venezuela Results impacted by the transition to the SICAD II exchange rate in Venezuela +15.8% organic revenue growth o Comparable sales grew 19.2% Driven by average check growth Excluding Venezuela: o +1.7% organic revenue growth o Comparable sales declined 5.4% Stable to slightly positive traffic Negative shift in mix Key marketing drivers: o Combos de la Copa o Bacon Clubhouse o Bone in Chicken * Colombia, Puerto Rico, Venezuela and Caribbean Islands 7

9 2Q14 & 1H New Unit Development & Reimaging Mexico NOLAD Costa Rica, Mexico, Panama 7 Restaurant Additions LTM (net) 9 Reimagings LTM Colombia CARIBBEAN Aruba, Colombia, Curaçao, French Guyana, Guadeloupe, Martinique, Puerto Rico, St. Croix, St. Thomas, Trinidad & Tobago, Venezuela 10 Restaurant Additions LTM (net) 4 Reimagings LTM BRAZIL Brazil 78 Restaurant Additions LTM (net) 23 Reimagings LTM SLAD Argentina, Chile, Ecuador, Peru, Uruguay 9 Restaurant Additions LTM (net) 6 Reimagings LTM Argentina Brazil Number of systemwide restaurants (1) SLAD NOLAD Caribbean % 18% 25% 17% 2, % (1) As of June 30, 2014; does not include McCafé units & Dessert Centers 8

10 2Q14 Adjusted EBITDA Bridge Adjusted EBITDA variations ($ Million) 80 $ 8.0 $ $ $ In constant currencies $ 4.7 $ EBITDA 2Q2013 Revenues 2Q2013 EBITDA Margin EBITDA Margin Variation excl. Special Items in CC Fluctuation of the local currencies Special Items EBITDA 2Q2014 9

11 2Q14 Non-Operating Results Largely driven by the losses in our Venezuela operation $22.7 million increase in foreign currency exchange losses o Mainly driven by the impact of the transition to the SICAD II exchange rate for remeasurement purposes in Venezuela $3.0 million increase in net interest expense o Mainly attributable to additional year-over-year debt and derivative instruments $5.7 million increase in Income tax expense The company registered a net loss of $99.0 million, compared to net income of $8.8 million in 2Q13 o Mainly due to the transition to the SICAD II FX rate in Venezuela, which included an impairment on Venezuelan fixed assets of $45.2 million 10

12 2Q14: Financial Indicators Solid financial ratios As of As of June 30, December 31, (In million of U.S. dollars, except ratios) Cash & cash equivalents Total Financial Debt Net Financial Debt Total Financial Debt / LTM Adjusted EBITDA ratio Net Financial Debt / LTM Adjusted EBITDA ratio (i) Total financial debt includes short-term debt, long-term debt and derivative instruments (including the asset portion of derivatives amounting to $0.5 million as a reduction of financial debt as of December 31, 2013). (ii) Total financial debt less cash and cash equivalents. 11

13 2014: Guidance Update Guidance revised due to lower than expected economic and consumption growth Revised 1 Consolidated Revenue Growth +13% to 16% +9% to 11% Consolidated Adj. EBITDA Growth +15% to 18% +5% to 8% Effective Tax Rate (ETR) 2 35% to 37% 35% to 37% (unchanged) Capital Expenditures (US$) $200 million approx $180 million approx Restaurant Openings (gross) App. 90 App On an organic basis (constant currency and excludes special items) and excluding Venezuela 2 Excluding any financing activities 12

14 2Q14: Closing Remarks Strong long-term growth prospects despite current challenges In the current environment we are focused on those factors within our control such as: o o o Continuing targeted cost savings Providing a compelling value proposition Re-focusing our marketing efforts on the family experience and McDonald s iconic properties Economic growth in our region is inherently cyclical The QSR industry is backed by strong, long-term demographic trends System wide advances in information technology to streamline the business Capitalize on scale and competitive advantages from being a single brand with a single cooking system TAKING STEPS TO IMPROVE THE EFFICIENCY OF OUR OPERATIONS 13

15 IR Contact For additional information: Daniel Schleiniger IR Director Patricio Iñaki Esnaola IR Manager