ARCOS DORADOS 3Q 2016 Conference Call Presentation November 2, 2016

Transcription

1 Agenda ARCOS DORADOS 3Q 2016 Conference Call Presentation November 2, 2016

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 3Q16 CEO s Opening Remarks Results demonstrate continued progress against three-year strategic plan We are delivering solid sales performance, capturing efficiencies in our restaurants and maintaining G&A discipline We have advanced our asset monetization program, which has allowed us to significantly reduce our leverage levels Technology updates along with other management actions are driving improved restaurant level efficiency and operating margins We achieved 140 basis points of consolidated EBITDA margin expansion versus the prior year quarter We advanced our refranchising initiative, with more than 35 restaurant operations already transferred to sub-franchisees We have taken a leadership role in the industry with regards to sustainability and corporate citizenship 2

4 3Q16 Results & Highlights Third quarter results rebounded with solid topline performance leveraging the efficiencies built into our business 3Q16 as reported revenues grew 2.9%: o Constant currency growth more than offset the impact of currency depreciation in several of our key markets Excluding Venezuela, as reported revenues grew 2.8% Constant currency revenues increased 15.3% and comparable sales grew 15.6%, driven by: o Average check rose with pricing below inflation and a positive shift in mix o Traffic was slightly lower versus the prior year quarter 33 new restaurants (TTM), bringing restaurant count to 2,140 (September 2016) We continue to expand our footprint in key markets, while also delivering a better customer experience 3

5 3Q16 Performance: Brazil Improved revenues reflect constant currency growth and BRL appreciation We are optimistic that economist and central bank expectations for modest economic growth in 2017 will materialize in Brazil As reported revenues increased 14.5%, driven by: o Constant currency growth o BRL appreciation +5.8% constant currency revenue growth o Comparable sales rose 6.3% Mainly driven by average check growth Offset by a modest decline in traffic against a backdrop of continued weak consumer spending Key marketing drivers o Novinhos Cheddar o McShake Ovomaltine o McFlurry Kit Kat 4

6 3Q16 Performance: NOLAD Ongoing trend of solid performance Improved results driven by the Costa Rica and Panama operations As reported revenues increased 1.4% o Constant currency growth more than offset currency translation +8.6% constant currency revenue growth o Comparable sales rose 5.6% Average check growth Slight increase in traffic levels across the division Key marketing drivers o New affordability platform o McFlurry Snickers o Talking Tom 5

7 3Q16 Performance: SLAD Protecting customer traffic with competitive pricing and promotional activities Results were impacted by the continued weak consumption environment and economic recession in Argentina As reported revenues were down 12.0% o Heavily impacted by the 62% year-over-year average depreciation of the Argentine peso +24.5% constant currency revenue growth o Comparable sales growth of 25.3% Average check growth Traffic increase Key marketing drivers o Grand Big Mac campaign o Talking Tom o McFlurry Abuela Goye 6

8 3Q16 Performance: Caribbean Strong performance in a number of key markets supported the divisional result +28.7% constant currency revenue growth o Comparable sales grew 37.0% Inflation-driven average check growth more than offset a decrease in traffic Excluding Venezuela: o As reported revenues rose by 5.1% o Constant currency revenues increased 5.4% o Comparable sales rose 4.6%, mainly driven by traffic growth Key marketing drivers o Grand Big Mac campaign o Talking Tom o McFlurry Jet Cruji 7

9 3Q16 New Unit Development & Re-imaging Mexico NOLAD Costa Rica, Mexico, Panama 1 Restaurant Additions LTM (net) 6 Re-imagings LTM Colombia CARIBBEAN Aruba, Colombia, Curaçao, French Guyana, Guadeloupe, Martinique, Puerto Rico, St. Croix, St. Thomas, Trinidad & Tobago, Venezuela -4 Restaurant Additions LTM (net) 11 Re-imagings LTM BRAZIL Brazil 21 Restaurant Additions LTM (net) 35 Re-imagings LTM SLAD Argentina, Chile, Ecuador, Peru, Uruguay 0 Restaurant Additions LTM (net) 16 Re-imagings LTM Argentina Brazil Number of systemwide restaurants (1) SLAD NOLAD Caribbean % 18% 24% 16% 2, % (1) As of September 30, 2016; does not include McCafé units (315) & Dessert Centers (2,693) 8

10 3Q16 Adjusted EBITDA Bridge As reported Adjusted EBITDA variations ($ Million) *Net impact of: Currency Translation (-$7.2 million) and Constant Currency Growth ($8.2 million). 9

11 US$ Million US$ Million 3Q16 Divisional Results Revenues US$: As reported % growth: Constant Currency basis* Adjusted EBITDA US$: As reported % growth: Constant Currency basis* % 24.5% 8.6% 5.4% Brazil NOLAD 3Q15 SLAD 3Q16 Caribbean Ex.Vza % 8.4% 21.4% 80.0% Brazil NOLAD 3Q15 SLAD 3Q16 Caribbean Ex.Vza Consolidated (Ex-Vza) 3Q16 Revenues: +12.4% Consolidated (Ex-Vza) 3Q16 Adj. EBITDA: +29.5% EBITDA MARGIN 3Q16 vs 3Q15 Consolidated Brazil NOLAD SLAD Caribbean +140bps +260bps +150bps -200bps +330bps *Excludes currency variations 10

12 3Q16 Non-Operating Results $3.3 million FX loss compared with a loss of $27.9 million last year o Significantly stronger depreciation of the BRL in the third quarter of 2015 as compared with the slight depreciation in the third quarter of this year Net interest expense increased $3.7 million year-over-year to $18.2 million o Higher interest expenses on the Brazilian real denominated debt Net loss of $1.8 million, compared to net loss of $35.9 million in 3Q15 o o Stronger operating results coupled with lower FX losses Partially offset by higher net interest and income tax expenses 3Q16 operating results included $5.8 million related to the Company s refranchising initiative 11

13 3Q16 Financial Indicators Strong progress against our plan to reduce financial leverage As of As of September 30, December 31, (In millions of U.S. dollars, except ratios) Cash & Cash Equivalents Total Financial Debt Net Financial Debt Total Financial Debt / LTM Adjusted EBITDA ratio 2.5x 2.8x Net Financial Debt / LTM Adjusted EBITDA ratio 2.0x 2.3x Covenants under the Master Franchise Agreement (MFA) 3 Fixed Charge Coverage ratio (>1.50x) 1.67x 1.56x Leverage ratio (<4.25x) 4.08x 4.40x 1 Total financial debt includes short-term debt, long-term debt and derivative instruments (including the asset portion of derivatives amounting to $0.99 million and $6.7 million as a reduction of financial debt as of September 30, 2016 and December 31, 2015, respectively). 2 Total financial debt less cash and cash equivalents. 3 McDonald s granted a limited waiver through and including June 30,

14 3Q16 CEO s Closing Remarks We achieved positive topline and margin performance in the quarter thanks to the disciplined execution of our three-year strategic plan We are focused on enhancing the customer experience by updating restaurants and integrating technology to provide customers with a modern and progressive experience We are working side by side with McDonald s to develop our plan for the next threeyears in terms of openings and reinvestment This month marks the 30th anniversary of the opening of the first McDonald s restaurant in one of our key markets, Argentina We are proud of the business we have built, becoming the leading QSR brand in Latin America, with operations in twenty countries and territories OUR PERFORMANCE HAS IMPROVED DESPITE A CHALLENGING ECONOMIC ENVIRONMENT 13

15 IR Contact For additional information: Daniel Schleiniger Sr. Director of Corporate Communications & IR Patricio Iñaki Esnaola IR Sr. Manager