Financial Data and Key Metrics Changes - Full-year systemwide comparable sales grew by 1.7% adjusted for blended inflation, excluding Argentina, supported by growth in average check and guest volumes across all divisions [8] - Adjusted EBITDA reached $500 million for the first time in company history, with an all-time high EBITDA margin of 11.2% [9][29] - Full-year EBITDA margin also reached an all-time high, reflecting strong operating efficiencies despite challenging macroeconomic conditions [10][29] Business Line Data and Key Metrics Changes - Digital sales grew by 18% in U.S. dollars, with mobile app sales up 25% and delivery sales rising 17% [13] - Brazil's total revenue in constant currency grew by 9.2% in Q4, with comparable sales up by 5.5% [15] - NOLAD's total revenue rose by 5.5% in constant currency, driven by a 4.1% increase in comparable sales [18] - SLAD's comparable sales increased by 5.1% in Q4 and 9.8% for the year, excluding Argentina [22] Market Data and Key Metrics Changes - Digital channels accounted for nearly 70% of sales in Brazil, with significant contributions from the loyalty program [16] - EOTF restaurant penetration reached 67% of the total footprint, with plans to increase to at least 90% by the end of 2027 [14] - Argentina's U.S. dollar revenue was flat year-over-year, with volumes down only mid-single digits in December [25] Company Strategy and Development Direction - The Four D's Strategy (Digital, Delivery, Drive-thru, and Development) continues to leverage structural competitive advantages [6] - The company aims to maintain a disciplined opening process for new stores, targeting a 20% return on investment for new openings [58] - The company is focused on modernizing its restaurant portfolio and enhancing digital capabilities to drive sales growth and profitability [52][108] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding Argentina's economic stabilization, expecting improvements in operating conditions [78] - The company anticipates comparable sales growth to be at or above inflation for the full year 2025 in most markets, despite potential challenges in Q1 [62] - Management emphasized the resilience of the business model and the ability to adapt to changing consumer preferences and macroeconomic conditions [54] Other Important Information - Total debt decreased, but net debt rose due to capital expenditures, maintaining a net debt-to-adjusted EBITDA ratio of 1.1% [45] - Moody's upgraded the company's debt rating to Ba1 with a stable outlook, marking the highest combined rating in its history [46] Q&A Session Summary Question: Update on ROI for new free-standing stores - The company targets a 20% return on investment for new openings and has maintained this historical average [58] Question: Sales trends in the first quarter across markets - Comparable sales growth is expected to be at or above inflation for 2025, but Q1 may be a low point due to various factors [62] Question: Impact of anti-U.S. sentiment in Mexico - The company does not see significant impact, as McDonald's is well-regarded in the region [67] Question: Expectations for food and paper costs - Main pressure is from Brazil's beef costs, but improvements in other divisions are expected to offset this [71][73] Question: Traffic evolution in Argentina - Consumption was down for most of 2024, but there was a strong recovery at the end of the year, leading to optimism for 2025 [76][78] Question: Driving SLAD market expansion - Argentina, Chile, Colombia, and Uruguay are performing well, contributing to market expansion [82] Question: Breakdown of NOLAD's same-store sales - NOLAD's growth was driven by a strong affordability platform and solid marketing strategies [84] Question: Consumption trends in Mexico and Panama - Consumption is slowing due to currency concerns and inflation, but the company remains optimistic about its strategies [89] Question: Net income margin pickup in Q4 - The EBITDA margin expanded by 160 basis points, with contributions from various cost improvements [91] Question: Continued success of the loyalty program - The loyalty program has increased visit frequency by 30% and is expected to positively impact margins [99] Question: Raw materials prices and menu pricing outlook - The company will continue to be prudent with price increases, aiming to align with or below general inflation [102][106] Question: Comparison of digital strategy with competitors - The company is a leader in digitalization, which is a core part of its strategy and contributes to operational efficiencies [108] Question: Comp sales breakdown in Brazil - Growth in Brazil was driven by both traffic and average check, with a focus on maintaining market share [111] Question: Performance by channel in Brazil - Positive performance was noted in front counter and delivery, while drive-thru showed moderation in volume [115] Question: Additional cost pressure outlook - Main pressure is from Brazil's beef costs, but the company is working to offset these with improvements in other divisions [119]

分组1 - Arcos Dorados reported quarterly earnings of $0.28 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, and showing an increase from $0.27 per share a year ago, resulting in an earnings surprise of 27.27% [1] - The company posted revenues of $1.14 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.79%, although this represents a decrease from year-ago revenues of $1.16 billion [2] - Over the last four quarters, Arcos Dorados has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] 分组2 - The stock has increased approximately 7.1% since the beginning of the year, contrasting with the S&P 500's decline of -5.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.13 on revenues of $1.08 billion, and for the current fiscal year, it is $0.73 on revenues of $4.72 billion [7] - The Zacks Industry Rank indicates that the Retail - Restaurants sector is currently in the bottom 49% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Performance - Total revenues for Arcos Dorados Holdings Inc. increased to $4,470,162 thousand in 2024, up 3.2% from $4,331,878 thousand in 2023[24] - Net income attributable to Arcos Dorados Holdings Inc. decreased to $148,759 thousand in 2024, down 18.0% from $181,274 thousand in 2023[24] - Operating income rose to $324,515 thousand in 2024, compared to $314,039 thousand in 2023, reflecting a 3.9% increase[24] - Earnings per share attributable to Arcos Dorados Holdings Inc. were $0.71 in 2024, down from $0.86 in 2023[24] - Comprehensive income attributable to Arcos Dorados Holdings Inc. was $43,356 thousand in 2024, a decrease from $231,653 thousand in 2023[27] - The company reported a foreign currency exchange loss of $15,063 thousand in 2024, contrasting with a gain of $10,774 thousand in 2023[24] - Pre-tax income for 2024 was $259,282, a decrease of 6.8% from $278,117 in 2023[157] Assets and Liabilities - Total assets decreased from $3,019,238 in 2023 to $2,892,654 in 2024, a decline of approximately 4.2%[30] - Total current liabilities decreased from $841,670 in 2023 to $765,924 in 2024, a reduction of approximately 9.0%[30] - Total liabilities decreased from $2,502,399 in 2023 to $2,383,225 in 2024, a decline of about 4.8%[30] - Cash and cash equivalents decreased from $196,661 in 2023 to $135,064 in 2024, representing a decline of 31.2%[32] - The company reported a decrease in cash and cash equivalents at the end of the year, from $196,661 in 2023 to $135,064 in 2024, a decline of 31.2%[32] - The accumulated other comprehensive loss increased to $668.484 million in 2024 from $563.081 million in 2023, indicating a worsening of approximately 18.7%[35] Cash Flow and Investments - Net cash provided by operating activities was $266,847 in 2024, down from $381,965 in 2023, a decrease of 30.1%[32] - Property and equipment expenditures were $327,636 in 2024, compared to $360,097 in 2023, indicating a decrease of 8.9%[32] - The total net cash paid at acquisition date for restaurant businesses in 2024 was $6,083, compared to $2,081 in 2023[96] - The company reported cash paid for operating leases of $152,267 in 2024, an increase from $146,816 in 2023[144] Shareholder Information - The company declared cash dividends of $0.24 per share for 2024, totaling $50.557 million, compared to $0.19 per share in 2023, which amounted to $40.022 million, indicating a 26% increase in dividends paid[35] - As of December 31, 2024, total shareholders' equity was $509.429 million, up from $516.839 million in 2023, reflecting a decrease of about 1.6%[35] - The total number of Class A shares increased to 132,972,119 by December 31, 2024, from 132,964,031 in 2023, reflecting a slight increase[35] Tax and Compliance - The company's current income tax expense for 2024 was $121,292, up from $100,012 in 2023, representing a year-over-year increase of 21.9%[155] - The weighted-average statutory income tax rate increased to 38.7% in 2024 from 36.1% in 2023[157] - The Company is subject to potential tax assessments amounting to $165 million for the fiscal years 2009 to 2017[165] Franchise Operations - Brazil accounted for 39.6% of the group's revenues in 2024, with tax contingencies in Brazil representing 73% of the total provision for contingencies[21] - The company operates McDonald's restaurants in 20 territories, including Argentina, Brazil, and Mexico, with a significant presence in Latin America and the Caribbean[38] - Effective January 1, 2025, Arcos Dorados entered into new Master Franchise Agreements with McDonald's Corporation, extending the term to 20 years for most territories[39] Sustainability and Future Plans - The Company has sustainability performance targets to reduce greenhouse gas emissions by 15% in restaurants and offices and by 10% in the supply chain by December 31, 2025[120] - The company plans to open at least 200 new restaurants and modernize at least 400 restaurants, with capital expenditures of approximately $650 million from 2022 to 2024[181] Derivative Instruments and Debt - The Company has entered into various derivative instruments classified as cash flow hedges, with total notional amounts of $48,799,000 for forward contracts and $80,000,000 for cross-currency interest rate swaps as of December 31, 2024[136] - The fair value of the company's short and long-term debt was estimated at $766,897,000, compared to a carrying amount of $786,647,000[202] - The net interest expense and other financing results for 2024 showed a loss of $1,419, a significant increase from a loss of $181 in 2023[138]

Core Insights - ARCO has implemented Oracle Textura Payment Management to enhance collaboration with subcontractors and streamline construction payment processes [1][2] - The platform has managed payments for construction projects valued at over $1.5 trillion, showcasing its extensive use in the industry [2] - The integration with existing Vista Construction Accounting Software has facilitated a smooth onboarding process for ARCO's employees and subcontractors [3] Company Overview - ARCO is recognized as a leader in the construction industry, specializing in various industrial project types such as cold storage warehouses and light industrial distribution [5] - The company offers turn-key design-build services, ensuring cost savings and efficient communication through a single point of contact [5] - ARCO is 100% associate-owned as an Employee Stock Ownership Plan (ESOP), which aligns employee interests with company performance [5] Technology Implementation - The implementation of Oracle Textura has improved lien waiver management, providing a complete audit trail and reducing the risk of lost documents [3][4] - The platform has enabled better visibility for subcontractors regarding their invoices and payments, fostering improved collaboration [3] - The transition to a cloud-based payment management system has enhanced efficiency and risk management for ARCO [4]

Group 1 - The company's operations are experiencing growth, with the exception of challenges faced in Argentina due to a deep recession [1] - Despite the growth, margins do not appear to be improving any further [1] Group 2 - The investment approach focuses on long-only strategies, evaluating companies from an operational and buy-and-hold perspective [2] - The emphasis is on understanding the long-term earnings potential and competitive dynamics of the industries involved [2] - Most recommendations are expected to be holds, with only a small fraction of companies deemed suitable for buy at any given time [2]

Core Viewpoint - Arcos Dorados Holdings Inc. (ARCO) reported third-quarter 2024 results with earnings and revenues exceeding expectations, although the bottom line showed a significant decline year over year [1][2]. Financial Performance - Adjusted earnings per share (EPS) for Q3 were 17 cents, surpassing the Zacks Consensus Estimate of 16 cents, but down 39.3% from 28 cents in the same quarter last year [2]. - Revenues reached $1.13 billion, beating the consensus mark of $1.09 billion, reflecting a year-over-year increase of 0.8% [2]. Sales and Growth Metrics - Digital channel sales grew by 16% year over year, accounting for 58% of systemwide sales, driven by strong performance in Mobile App and Delivery services, as well as the expansion of the Loyalty Program [3]. - Comparable restaurant sales increased by 32.1% year over year, attributed to a significant rise in guest volume [3]. Operating Highlights - Operating income for the quarter was $79.8 million, down from $91.1 million in the prior-year quarter [4]. - Food and paper costs were reported at $381.2 million, slightly up from $376 million in the previous year [4]. - General and administrative expenses increased to $68.1 million from $67.8 million year over year [4]. EBITDA and Cash Flow - Adjusted EBITDA for Q3 was $125 million, compared to $129.1 million in the same quarter last year [5]. - Total cash and cash equivalents as of September 30, 2024, were $115.9 million, down from $196.7 million at the end of 2023 [6]. - Net debt increased to $598.3 million from $481.3 million at the end of 2023 [6]. Store Developments - The company opened 19 Experience of the Future (EOTF) restaurants during the third quarter, with 11 located in Brazil [7].

Financial Data and Key Metrics Changes - Third quarter 2024 revenue reached a new high in US dollars, with systemwide comparable sales increasing by over 32% despite a challenging economic environment [5][12] - US dollar EBITDA was the second highest for a third quarter, although there was a 50-basis point margin contraction due to currency devaluations, particularly in SLAD [5][12] - Cash flow from operating activities in the third quarter was approximately $96 million, with expectations for continued seasonal strength in the fourth quarter [19] Business Line Data and Key Metrics Changes - Brazil's third quarter comparable sales increased by 6.8%, building on last year's double-digit growth, driven by guest count growth and higher average checks [7] - NOLAD's comparable sales rose by 6.2%, with digital channels accounting for 40% of sales, up from 30% last year [9] - SLAD experienced a remarkable 90.4% growth in comparable sales, largely influenced by Argentina's high inflation, while digital sales accounted for 57% of the division's sales [10] Market Data and Key Metrics Changes - The McDonald's brand gained five points of value share across its footprint in the third quarter, with significant market share gains in Brazil [11] - Digital sales grew by 16%, contributing to 58% of systemwide sales, with delivery and drive-thru channels generating 43% of total sales [15][16] - The loyalty program has seen robust membership growth, reaching about 14 million registered members across Brazil, Costa Rica, and Uruguay [17] Company Strategy and Development Direction - The company is focusing on a four D strategy: Digital, Delivery, Drive-thru, and Development, with plans to expand its restaurant footprint significantly [4][24] - The modernization of the restaurant portfolio and the digitalization of operations are seen as key competitive advantages that will drive long-term growth [15][23] - The company aims to maintain healthy market share levels and capitalize on the under-penetrated QSR market in Latin America [11][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year 2024 EBITDA that exceeds last year's results in US dollar terms, despite ongoing economic challenges [12][13] - The company is optimistic about the potential for growth in Argentina as the economy is expected to recover in the near future [43][44] - Management highlighted the importance of digital tools and operational efficiencies in improving profitability margins over time [14][15] Other Important Information - The company received an upgrade in its debt rating to Ba1 from Moody's, reflecting strong operating performance and geographic diversification [18] - The net debt-to-adjusted EBITDA ratio remained steady at 1.2x, indicating a strong balance sheet [18] Q&A Session Summary Question: How does the competitive environment look in Brazil? - The competitive landscape remains similar, with a focus on value platforms and promotional activities. The company gained significant market share and continues to offer a compelling value proposition [26][27][28] Question: How did the post-elections macroenvironment in Mexico impact the consumer environment? - The company is pleased with trends in Mexico, noting strong growth and positive guest responses to their value proposition and improved execution [29] Question: Regarding food and paper cost pressures in Brazil, what are the expectations? - The modest increase in food and paper costs was not specifically related to protein prices but general cost increases. The company is confident in managing pricing to mitigate impacts [30][31] Question: What are the expectations regarding labor cost pressures in NOLAD? - There have been increases in minimum salaries, but the company does not expect these to continue at the same pace in 2025 [33] Question: Can you provide an update on digital and delivery investments? - Digital sales were up 16%, with home delivery representing 12% of total delivery sales. The company is working on scalable logistics models [34] Question: What are the prospects for Venezuela and Argentina? - Venezuela remains a small business with no significant impact on financial results, while Argentina has shown resilience and market share gains despite negative consumption trends [42][43]

Financial Performance - Arcos Dorados reported quarterly earnings of $0.17 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, but down from $0.30 per share a year ago, representing an earnings surprise of 6.25% [1] - The company posted revenues of $1.13 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 3.97%, compared to revenues of $1.12 billion in the same quarter last year [2] - The current consensus EPS estimate for the upcoming quarter is $0.14 on revenues of $1.16 billion, and for the current fiscal year, it is $0.66 on revenues of $4.4 billion [7] Market Performance - Arcos Dorados shares have declined approximately 33.8% since the beginning of the year, contrasting with the S&P 500's gain of 25.5% [3] - The company has surpassed consensus EPS estimates only once in the last four quarters, while it has topped consensus revenue estimates three times during the same period [2] Earnings Outlook - The estimate revisions trend for Arcos Dorados is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The sustainability of the stock's price movement will largely depend on management's commentary during the earnings call [3][4] Industry Context - The Retail - Restaurants industry, to which Arcos Dorados belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Performance - Total revenues for the nine-month period ended September 30, 2024, increased to $3,325,942, up 5.4% from $3,156,423 in 2023[10] - Net income attributable to Arcos Dorados Holdings Inc. for the same period was $90,355, a decrease of 28.1% compared to $125,496 in 2023[10] - Basic and diluted net income per common share attributable to Arcos Dorados Holdings Inc. was $0.43, down from $0.60 in 2023[10] - Total operating costs and expenses rose to $3,104,347, an increase of 6.2% from $2,924,171 in 2023[10] - Comprehensive income attributable to Arcos Dorados Holdings Inc. was $47,479, significantly lower than $158,135 in 2023[13] - Adjusted EBITDA for the same period was $352,716, up from $339,680 in 2023, reflecting a growth of 3.05%[94] Cash Flow and Liquidity - Cash and cash equivalents decreased to $115,908 as of September 30, 2024, from $196,661 at the end of 2023[16] - Net cash provided by operating activities for the nine-month period was $159,794, down from $232,277 in 2023[18] - The company maintained a provision for contingencies of $36,151 as of September 30, 2024, down from $50,619 at the end of 2023[87] - The fair value of cash equivalents as of September 30, 2024, was $57,381,000, compared to $113,726,000 at December 31, 2023, reflecting a decrease of 49.5%[121] Assets and Liabilities - Total assets decreased to $2,961,117 as of September 30, 2024, from $3,019,238 at the end of 2023[16] - Total liabilities decreased to $2,447,643 as of September 30, 2024, from $2,502,399 at the end of 2023[16] - The company reported a retained earnings balance of $510,410 thousand at the end of the period, up from $424,936 thousand at the beginning of the fiscal year[23] - Long-term debt totaled $719,307 thousand as of September 30, 2024, slightly up from $714,841 thousand as of December 31, 2023, reflecting a marginal increase of approximately 0.65%[53] Shareholder Information - The company declared cash dividends of $0.19 per share, totaling $40,022 thousand to shareholders during the nine-month period[23] - The company plans to distribute a cash dividend of $0.24 per share in four installments throughout 2024, with $37,917 paid as of September 30, 2024[104] - As of September 30, 2023, total shareholders' equity amounted to $442,681 thousand, reflecting an increase from $441,763 thousand at the beginning of the fiscal year[23] Market Presence and Operations - The company operates and franchises McDonald's restaurants across 20 territories in Latin America and the Caribbean, indicating a strong market presence[27] - The company plans to finalize a new 20-year Master Franchise Agreement with McDonald's Corporation, effective January 1, 2025, which will enhance its operational framework[26] - The company plans to open at least 200 new restaurants and modernize at least 400 restaurants, with capital expenditures of approximately $650 million from 2022 to 2024[80] Foreign Currency and Derivatives - The company reported a foreign currency translation loss of $51,044 for the nine-month period ended September 30, 2024[13] - The Company has implemented measures to mitigate foreign currency fluctuations through various derivative instruments, including cross-currency interest rate swaps and foreign currency forwards[56] - The total fair value of derivative instruments was $70,176,000, compared to $46,605,000 as of December 31, 2023, representing a significant increase[58] Debt and Financing - The Company renewed its revolving credit facility with J.P. Morgan for $25 million, maturing on February 17, 2026, and signed additional revolving credit facilities totaling $50 million with Itaú Unibanco S.A. and Banco Santander (Brasil) S.A.[47] - The net indebtedness to EBITDA ratio was reported at 1.23x as of September 30, 2024, well below the covenant requirement of 3.00x[49] - The maximum leverage ratio required by the banks was 4.25, while the actual ratios were significantly lower at 0.27 for Itaú and 0.46 for both Credit Suisse and J.P. Morgan as of September 30, 2024[85] Other Comprehensive Income - The company reported a net current-period other comprehensive loss of $42,876,000 for the nine-month period ended September 30, 2024[106] - As of September 30, 2024, total accumulated other comprehensive loss was $605,957,000, compared to $563,081,000 at December 31, 2023, indicating an increase of 7.6%[106] Expenses - For the nine-month period ended September 30, 2024, food and paper expenses amounted to $255,469,000, an increase of 9.7% from $232,755,000 in 2023[110] - The company reported property and equipment expenditures of $239,169 for the nine-month period, compared to $227,753 in 2023, indicating an increase of 5.88%[96]

Core Viewpoint - Arcos Dorados Holdings Inc. (ARCO) is expected to report a decline in earnings and revenues for Q3 2024, primarily due to high costs and weakened consumer demand, particularly in Argentina [2][3]. Group 1: Earnings and Revenue Estimates - The Zacks Consensus Estimate for ARCO's earnings is 16 cents per share, reflecting a 46.7% decrease year over year [2]. - The consensus revenue estimate is $1.11 billion, which represents a 0.4% decline compared to the previous year [2]. Group 2: Factors Impacting Performance - High operational costs, including labor, utilities, and IT, are likely to have negatively affected margins across ARCO's key markets, with Mexico facing increased payroll expenses due to wage inflation [3][4]. - The company's significant investments in digital and IT infrastructure, aimed at enhancing long-term efficiency and customer experience, may have led to increased short-term operational expenses [3]. Group 3: Positive Indicators - Despite challenges, ARCO is expected to benefit from robust comparable sales, expansion efforts, and strong performance in Brazil and North Latin America, which may have contributed to positive guest traffic during the quarter [5]. - Strong digital sales are anticipated to have supported ARCO's quarterly performance [5]. Group 4: Earnings Prediction Model - Current analysis indicates that ARCO's model does not predict an earnings beat, as the Earnings ESP stands at 0.00% and the Zacks Rank is 4 (Sell) [6][7].