Core Viewpoint - Arcos Dorados reported quarterly earnings of $0.07 per share, missing the Zacks Consensus Estimate of $0.13 per share, representing a 46.15% earnings surprise [1] - The company posted revenues of $1.08 billion for the quarter, matching year-ago revenues and surpassing the Zacks Consensus Estimate by 0.86% [2] Financial Performance - The earnings of $0.07 per share compare to $0.14 per share a year ago, indicating a decline in profitability [1] - Over the last four quarters, Arcos Dorados has surpassed consensus EPS estimates two times and topped revenue estimates four times [2] Stock Performance - Arcos Dorados shares have increased approximately 12.1% since the beginning of the year, outperforming the S&P 500's gain of 0.1% [3] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the coming quarter is $0.22 on revenues of $1.12 billion, and for the current fiscal year, it is $0.71 on revenues of $4.69 billion [7] - The outlook for the Retail - Restaurants industry is currently in the bottom 20% of Zacks industries, which may impact stock performance [8]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of May, 2025 Commission File Number: 001-35129 Arcos Dorados Holdings Inc. (Exact name of registrant as specified in its charter) Río Negro 1338, First Floor Montevideo, Uruguay, 11100 (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports und ...

Core Viewpoint - Arcos Dorados Holdings Inc. (ARCO) is expected to report first-quarter 2025 results on May 14, 2025, with earnings anticipated to be below the previous year's performance due to various macroeconomic challenges and increased operational costs [1][3][5]. Group 1: Earnings Estimates - The Zacks Consensus Estimate for ARCO's earnings is set at 13 cents per share, reflecting a 7.1% decline year over year [2]. - Revenue estimates for the quarter are pegged at $1.07 billion, indicating a 1.3% decrease compared to the previous year [2]. Group 2: Factors Impacting Performance - The expected softness in comparable sales growth is attributed to macroeconomic headwinds and shifts in consumer sentiment, particularly affecting consumer-facing businesses in Latin America [3]. - A tougher year-over-year benchmark due to a leap year and weaker currency levels in core markets are anticipated to negatively impact performance [4]. - High operational costs, driven by investments in digital and IT infrastructure, are likely to have further pressured the bottom line [5]. Group 3: Earnings Prediction Model - The current model does not predict an earnings beat for ARCO, as it has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [6][7].

PART I [Key Information](index=11&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section presents selected financial data, discusses currency risks in key markets, and outlines principal business risk factors [Selected Financial Data](index=11&type=section&id=A.%20Selected%20Financial%20Data) This subsection provides selected financial data, operational metrics, and details on currency exchange rate movements Selected Income Statement Data (2022-2024) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | | (in thousands of U.S. dollars) | | | | **Total revenues** | $4,470,162 | $4,331,878 | $3,618,902 | | **Operating income** | $324,515 | $314,039 | $264,422 | | **Net income attributable to Arcos Dorados Holdings Inc.** | $148,759 | $181,274 | $140,343 | | **Basic net income per common share** | $0.71 | $0.86 | $0.67 | | **Diluted net income per common share** | $0.71 | $0.86 | $0.67 | Selected Balance Sheet Data (As of Dec 31, 2022-2024) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | | (in thousands of U.S. dollars) | | | | **Total assets** | $2,892,654 | $3,019,238 | $2,636,630 | | **Total liabilities** | $2,383,225 | $2,502,399 | $2,312,203 | | **Total equity** | $509,429 | $516,839 | $324,427 | Adjusted EBITDA (2022-2024) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | | (in thousands of U.S. dollars) | | | | **Total Adjusted EBITDA** | $500,100 | $472,304 | $386,564 | Systemwide Restaurant Count (As of Dec 31, 2022-2024) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Brazil** | 1,173 | 1,130 | 1,084 | | **NOLAD** | 654 | 647 | 638 | | **SLAD** | 601 | 584 | 590 | | **Total** | **2,428** | **2,361** | **2,312** | - The Argentine peso experienced **significant depreciation** against the U.S. dollar, with rates of **72.4% in 2022**, **357.4% in 2023**, and **27.5% in 2024**, while currency controls limit capital flows[60](index=60&type=chunk)[61](index=61&type=chunk) [Risk Factors](index=21&type=section&id=D.%20Risk%20Factors) This subsection details various risks affecting the company's business, financial condition, and operations - The company's rights to operate are entirely dependent on the **Master Franchise Agreements (MFAs) with McDonald's**, which expire in 2044[97](index=97&type=chunk) - McDonald's has the right to acquire the company's non-public shares at **80% of fair market value** in the event of a material breach of the MFAs[107](index=107&type=chunk)[109](index=109&type=chunk) - Digital channels accounted for **57.0% of systemwide sales in 2024**, representing **$3.3 billion**, making growth dependent on these initiatives[115](index=115&type=chunk)[294](index=294&type=chunk) - **Inflation and exchange rate fluctuations** in Latin America pose significant risks to costs, consumer spending, and reported results[147](index=147&type=chunk)[150](index=150&type=chunk) - The company faces **intense competition** from international and local QSR chains like Burger King, KFC, and Subway[178](index=178&type=chunk) - The Executive Chairman, Mr. Woods Staton, controls **75.38% of the company's voting interests**, enabling control over shareholder votes[217](index=217&type=chunk) [Information on the Company](index=45&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides an overview of the company's history, business model, operational structure, and property portfolio [History and Development of the Company](index=45&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) This subsection outlines the company's corporate history, key acquisitions, and capital expenditure plans - The company commenced operations on August 3, 2007, after **acquiring McDonald's Latin American business**[232](index=232&type=chunk) - In March 2011, the company completed a **split-off of its logistics and distribution operations**, Axionlog, to its existing shareholders[234](index=234&type=chunk) - The company plans to open **90-100 new restaurants in 2025**, with expected capital expenditures between **$300 million and $350 million**[236](index=236&type=chunk) Recent Restaurant Openings and Reimaging | Year | Restaurants Opened | Restaurants Reimagined | Dessert Centers Opened | | :--- | :--- | :--- | :--- | | 2024 | 85 | 160 | 164 | | 2023 | 81 | 241 | 117 | | 2022 | 66 | 114 | 107 | [Business Overview](index=46&type=section&id=B.%20Business%20Overview) This subsection details the company's market position, operational divisions, growth drivers, and ESG initiatives - Arcos Dorados is the **world's largest independent McDonald's franchisee**, with 2,428 restaurants representing 4.4% of McDonald's global sales in 2024[238](index=238&type=chunk) Restaurant Portfolio by Division (as of Dec 31, 2024) | Division | Company-Operated | Franchised | Total | % of Total | | :--- | :--- | :--- | :--- | :--- | | Brazil | 723 | 450 | 1,173 | 48.3% | | NOLAD | 497 | 157 | 654 | 26.9% | | SLAD | 505 | 96 | 601 | 24.8% | | **Total** | **1,725** | **703** | **2,428** | **100.0%** | - Digital channels comprised **57.0% of systemwide sales in 2024**, totaling **$3.3 billion**, with the mobile app exceeding 147 million downloads[294](index=294&type=chunk) - As of year-end 2024, there were **377 McCafé locations and 3,268 Dessert Centers**, which are significant transaction generators[263](index=263&type=chunk)[270](index=270&type=chunk) - The company is committed to ESG initiatives through its **'Recipe for the Future' platform**, focusing on key sustainability pillars[349](index=349&type=chunk)[356](index=356&type=chunk)[365](index=365&type=chunk)[376](index=376&type=chunk)[386](index=386&type=chunk) - By the end of 2024, **99% of primary fiber-based guest packaging** was sourced from certified or recycled sources[373](index=373&type=chunk) [Organizational Structure](index=70&type=section&id=C.%20Organizational%20Structure) This subsection describes the company's corporate structure and controlling shareholder arrangement - The company conducts substantially all business through its **wholly-owned Dutch subsidiary, Arcos Dorados B.V.**[401](index=401&type=chunk) - The controlling shareholder, Los Laureles Ltd., is beneficially owned by Executive Chairman Mr. Woods Staton and holds **75.38% of the voting interest**[401](index=401&type=chunk)[699](index=699&type=chunk) [Property, Plants and Equipment](index=71&type=section&id=D.%20Property,%20Plants%20and%20Equipment) This subsection details the company's real estate portfolio of owned and leased properties - As of December 31, 2024, the company **owned the land for 472 of its 2,428 restaurants**[406](index=406&type=chunk) - The company owns a total of **528 properties**, including restaurants, corporate offices, and training centers[408](index=408&type=chunk) [Operating and Financial Review and Prospects](index=71&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section provides management's discussion and analysis of financial results, liquidity, and business trends [Operating Results](index=71&type=section&id=A.%20Operating%20Results) This subsection presents a detailed analysis of operating results by geographic division for 2024 versus 2023 Consolidated Results of Operations (2024 vs. 2023) | | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | | (in thousands of U.S. dollars) | | | | **Total revenues** | $4,470,162 | $4,331,878 | 3.2% | | **Operating income** | $324,515 | $314,039 | 3.3% | | **Net income attributable to Arcos Dorados** | $148,759 | $181,274 | (17.9)% | - In 2024, total revenues increased by **3.2% to $4.47 billion**, driven by **32.8% systemwide comparable sales growth**, offset by currency depreciation[460](index=460&type=chunk)[464](index=464&type=chunk)[468](index=468&type=chunk) - **Food and paper costs as a percentage of sales decreased to 35.1%** in 2024 due to pricing and waste management efficiencies[476](index=476&type=chunk) - **Payroll costs as a percentage of sales decreased to 18.7%** in 2024, driven by a social security recovery in Brazil and crew efficiencies[480](index=480&type=chunk) - **Net income for 2024 decreased by 17.9% to $148.8 million**, primarily due to negative foreign currency exchange results and higher income tax[506](index=506&type=chunk)[508](index=508&type=chunk)[511](index=511&type=chunk) Systemwide Comparable Sales Growth (2023-2024) | Division | 2024 | 2023 | | :--- | :--- | :--- | | Brazil | 7.9% | 9.9% | | NOLAD | 6.5% | 10.6% | | SLAD | 91.6% | 90.9% | | **Total** | **32.8%** | **34.6%** | [Liquidity and Capital Resources](index=94&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) This subsection details the company's financial strategy, cash position, debt profile, and contractual obligations - As of December 31, 2024, the company had a cash and short-term investments position of **$138.6 million** and **$75 million in committed credit lines**[565](index=565&type=chunk)[566](index=566&type=chunk) Consolidated Cash Flows (2022-2024) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | | (in thousands of U.S. dollars) | | | | **Net cash provided by operating activities** | $266,847 | $381,965 | $345,437 | | **Net cash used in investing activities** | ($280,331) | ($380,349) | ($259,649) | | **Net cash used in financing activities** | ($37,162) | ($11,823) | ($59,978) | - In January 2025, the company issued **$600 million in notes due 2032** and redeemed its 2027 notes, extending its debt maturity profile[568](index=568&type=chunk)[608](index=608&type=chunk)[625](index=625&type=chunk) - The company's **$350 million 2029 notes are sustainability-linked**, with interest rates tied to greenhouse gas emission reduction targets[611](index=611&type=chunk)[614](index=614&type=chunk) Contractual Obligations as of Dec 31, 2024 | Obligation Type | Total | Due in 2025 | Due in 2026-2027 | Due Thereafter | | :--- | :--- | :--- | :--- | :--- | | | (in thousands of U.S. dollars) | | | | | **Operating lease obligations** | $1,874,969 | $149,581 | $280,446 | $1,444,942 | | **2027 and 2029 notes** | $861,283 | $42,750 | $453,628 | $364,905 | | **Contractual purchase obligations** | $222,148 | $122,915 | $59,831 | $39,402 | | **Total (selected)** | **$2,958,400** | **$315,246** | **$793,905** | **$1,849,249** | [Trend Information](index=104&type=section&id=D.%20Trend%20Information) This subsection identifies key positive, challenging, and emerging trends affecting the company's business - Key positive trends include **social upward mobility in Latin America**, demand for healthier products, and the popularity of value menus[635](index=635&type=chunk) - Significant challenges include **increased competition, persistent inflation, foreign exchange volatility**, and social unrest in key markets[635](index=635&type=chunk) - Emerging trends shaping the business are a growing consumer focus on **sustainability and diversity**, and the adoption of **Artificial Intelligence**[635](index=635&type=chunk)[638](index=638&type=chunk) [Directors, Senior Management and Employees](index=105&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section provides information on the company's leadership, compensation structure, and workforce composition [Directors and Senior Management](index=105&type=section&id=A.%20Directors%20and%20Senior%20Management) This subsection introduces the Board of Directors and senior management team, highlighting their experience - The Board of Directors consists of **eleven members, seven of whom are independent**, serving staggered three-year terms[636](index=636&type=chunk)[637](index=637&type=chunk) - The leadership team is led by founder and Executive Chairman **Woods Staton** and CEO **Marcelo Rabach**, both with long careers in the McDonald's system[642](index=642&type=chunk)[643](index=643&type=chunk) [Compensation](index=112&type=section&id=B.%20Compensation) This subsection details the compensation structure and long-term incentive plans for directors and officers - In 2024, the aggregate annual total cash compensation was **$13.4 million for executive officers** and **$1.1 million for directors**[680](index=680&type=chunk) - The company uses a **Phantom RSU Plan** for long-term incentives, which provides cash payments based on share price upon vesting[676](index=676&type=chunk)[680](index=680&type=chunk) Phantom RSU Compensation Expense (2022-2024) | Year | Compensation Expense (in millions) | | :--- | :--- | | 2024 | $1.0 | | 2023 | $15.6 | | 2022 | $7.4 | [Employees](index=114&type=section&id=D.%20Employees) This subsection provides an overview of the company's workforce distribution and composition Employee Distribution by Division (as of Dec 31, 2024) | Division | Crew | Restaurant Managers | Professional Staff | Total | | :--- | :--- | :--- | :--- | :--- | | Brazil | 32,942 | 6,923 | 992 | 40,857 | | NOLAD | 17,394 | 3,165 | 674 | 21,233 | | SLAD | 31,084 | 4,027 | 963 | 36,074 | | Corporate and other | 0 | 0 | 451 | 451 | | **Total** | **81,420** | **14,115** | **3,080** | **98,615** | - Approximately **41% of the company's total employees are located in Brazil**, with the workforce composed of **83% crew**[685](index=685&type=chunk) [Share Ownership](index=116&type=section&id=E.%20Share%20Ownership) This subsection details the beneficial ownership of the company's shares by directors and senior management - Executive Chairman Woods Staton, through Los Laureles Ltd., beneficially owns 100% of the Class B shares, granting him **75.38% of the total voting power**[695](index=695&type=chunk)[696](index=696&type=chunk) [Major Shareholders and Related Party Transactions](index=117&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's ownership structure and significant transactions with related parties [Major Shareholders](index=117&type=section&id=A.%20Major%20Shareholders) This subsection provides a breakdown of the company's major institutional and controlling shareholders Major Shareholders' Ownership | Shareholder | % of Outstanding Class A Shares | % of Outstanding Class B Shares | Total Economic Interest | Total Voting Interest | | :--- | :--- | :--- | :--- | :--- | | Los Laureles Ltd. (Woods Staton) | — | 100.0% | 37.98% | 75.38% | | TIAA Board of Overseers | 10.50% | — | 6.52% | 2.59% | | T. Rowe Price Associates, Inc. | 10.46% | — | 6.49% | 2.58% | [Related Party Transactions](index=118&type=section&id=B.%20Related%20Party%20Transactions) This subsection describes the company's transactions with related parties, primarily its logistics provider Axionlog - In 2011, the company split off its logistics business, **Axionlog**, which is now controlled by the company's controlling shareholder, Mr. Woods Staton[705](index=705&type=chunk) - In 2024, Arcos Dorados incurred **$67.3 million in distribution fees** payable to Axionlog, representing 4.5% of total food and paper costs[708](index=708&type=chunk) - The company is a minority stakeholder in a **joint venture with a Mexican sub-franchisee** formed in November 2021[711](index=711&type=chunk) [Financial Information](index=119&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section addresses key financial disclosures, including legal proceedings, contingency provisions, and dividend policy [Consolidated Statements and Other Financial Information](index=119&type=section&id=A.%20Consolidated%20Statements%20and%20Other%20Financial%20Information) This subsection covers significant legal proceedings and the company's dividend policy and declarations - The company is facing a lawsuit from a coalition of **labor unions in Brazil** alleging inadequate working conditions, with appeals pending[715](index=715&type=chunk)[717](index=717&type=chunk) - An administrative investigation by the **Labor Prosecutor's Office in Brazil** regarding harassment allegations was archived in January 2025[721](index=721&type=chunk)[722](index=722&type=chunk) - As of December 31, 2024, the company had a **provision for contingencies of $36.7 million** for various legal proceedings[725](index=725&type=chunk) - The Board of Directors declared a cash dividend of **$0.24 per share for 2024** and approved the same amount for 2025[732](index=732&type=chunk) [Additional Information](index=123&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section provides supplementary corporate information on governing documents, material contracts, and taxation [Memorandum and Articles of Association](index=123&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) This subsection details the company's governing documents, share structure, and key differences in corporate law - The company is authorized to issue 420,000,000 Class A shares (**one vote per share**) and 80,000,000 Class B shares (**five votes per share**)[742](index=742&type=chunk) - **Class B shares are convertible into Class A shares** and will automatically convert if aggregate ownership falls below 20%[746](index=746&type=chunk) - Unlike Delaware law, **British Virgin Islands law** allows for the removal of directors with or without cause by shareholder resolution[760](index=760&type=chunk)[766](index=766&type=chunk) [Material Contracts](index=132&type=section&id=C.%20Material%20Contracts) This subsection summarizes the company's material contracts, focusing on the Master Franchise Agreements with McDonald's - The **Master Franchise Agreements (MFAs) grant exclusive rights through 2044**, with a new 20-year term starting January 1, 2025[791](index=791&type=chunk)[793](index=793&type=chunk) - **Royalty fees payable to McDonald's are set at 6.0% of gross sales** for the first ten years of the new MFA, escalating thereafter[799](index=799&type=chunk) - The company is required to spend at least **5% of its gross sales on advertising** and has committed to opening 90-100 new restaurants in 2025[813](index=813&type=chunk)[814](index=814&type=chunk) - McDonald's holds a **call option to acquire non-public shares at 80% of fair market value** in the event of a material breach[816](index=816&type=chunk)[819](index=819&type=chunk) [Taxation](index=138&type=section&id=E.%20Taxation) This subsection outlines the tax considerations for the company and its U.S. shareholders - As a British Virgin Islands (BVI) company, Arcos Dorados is **not liable for corporate taxation in the BVI**[835](index=835&type=chunk) - For U.S. Holders, distributions on Class A shares are generally treated as **foreign-source dividend income**[851](index=851&type=chunk) - The company believes it was **not a Passive Foreign Investment Company (PFIC)** for the 2024 taxable year[853](index=853&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=141&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details the company's exposure to foreign currency, commodity price, and interest rate risks - The company is exposed to **foreign currency risk** as revenues are in local currencies while debt is largely U.S. dollar-denominated[868](index=868&type=chunk)[869](index=869&type=chunk) - To mitigate foreign exchange risk, the company uses **derivative instruments**, including forward contracts and cross-currency swaps[868](index=868&type=chunk)[869](index=869&type=chunk)[870](index=870&type=chunk) - A sensitivity analysis shows a 10% appreciation of the Euro against the USD would result in an **$8.4 million foreign exchange loss**[871](index=871&type=chunk) - A 10% depreciation of the Brazilian real against the USD would result in a net **foreign exchange loss of $1.7 million**[874](index=874&type=chunk) - **Commodity price risk** for key supplies is managed through supplier hedging programs and pricing agreements[887](index=887&type=chunk) PART II [Controls and Procedures](index=145&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) This section addresses the effectiveness of the company's internal controls over financial reporting and disclosure - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2024[900](index=900&type=chunk)[901](index=901&type=chunk) - Management's annual report concluded that the company's **internal control over financial reporting was effective** as of December 31, 2024[905](index=905&type=chunk)[906](index=906&type=chunk) - The independent registered public accounting firm issued an **unqualified opinion on the effectiveness of internal controls**[907](index=907&type=chunk)[908](index=908&type=chunk) [Corporate Governance and Other Disclosures](index=148&type=section&id=ITEM%2016.%20Corporate%20Governance%20and%20Other%20Disclosures) This section covers corporate governance practices, accountant fees, and cybersecurity risk management Principal Accountant Fees (2023-2024) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | | (in thousands of U.S. dollars) | | | Audit fees | $3,272 | $2,574 | | Audit-related fees | $4 | $10 | | Tax fees | $507 | $440 | | All other fees | $29 | $48 | | **Total** | **$3,812** | **$3,072** | - As a foreign private issuer, the company **follows home country practices** in lieu of certain NYSE governance standards[931](index=931&type=chunk)[932](index=932&type=chunk) - The company has a **cybersecurity risk management program** aligned with the NIST framework, with no material threats identified in 2024[941](index=941&type=chunk)[942](index=942&type=chunk)[943](index=943&type=chunk) PART III [Financial Statements](index=152&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains the company's audited consolidated financial statements and accompanying notes for fiscal years 2022-2024 [Notes to the Consolidated Financial Statements](index=167&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This subsection provides detailed notes on accounting policies, segment performance, debt, and contingencies - The company applies **hyperinflationary accounting** for its Venezuelan and Argentine subsidiaries, remeasuring financials to the U.S. dollar[992](index=992&type=chunk) - In 2024, the company recorded an **impairment charge of $1.1 million** on long-lived assets in several smaller markets[1013](index=1013&type=chunk) Long-Term Debt Composition (as of Dec 31, 2024) | Debt Instrument | Principal Amount (in thousands) | | :--- | :--- | | 2029 Notes | $334,200 | | 2027 Notes | $379,265 | | Finance lease obligations | $9,087 | | Other long-term borrowings | $2,791 | | **Total (before discounts/premiums)** | **$725,343** | - The company uses various **derivative instruments** to hedge foreign exchange risk, with a net fair value asset of **$81.1 million** as of Dec 31, 2024[1078](index=1078&type=chunk)[1079](index=1079&type=chunk)[1080](index=1080&type=chunk) - As of December 31, 2024, the company had a **provision for contingencies of $36.7 million**, primarily for tax and labor claims in Brazil[1135](index=1135&type=chunk)[1136](index=1136&type=chunk) - Subsequent to year-end, the company **issued $600 million in new notes due 2032** to redeem its 2027 notes and approved a dividend[1181](index=1181&type=chunk)[1183](index=1183&type=chunk)[1187](index=1187&type=chunk)

Company Overview - Arcos Dorados (ARCO) shares increased by 6.4% to close at $7.46, following a notable trading volume, contrasting with a 17.3% loss over the past four weeks [1] - The company is benefiting from digital transformation, loyalty program expansion, and the Experience of the Future (EOTF) restaurant modernization [1] Earnings Expectations - Arcos Dorados is expected to report quarterly earnings of $0.13 per share, reflecting a year-over-year decline of 7.1%, with revenues projected at $1.08 billion, a slight increase of 0.3% from the previous year [2] - The consensus EPS estimate for Arcos Dorados has remained unchanged over the last 30 days, indicating a lack of upward momentum in earnings estimate revisions [3] Industry Context - Arcos Dorados operates within the Zacks Retail - Restaurants industry, where another company, GEN Restaurant Group, Inc. (GENK), saw a 4.7% increase in its stock price, closing at $4.25, despite a significant decline of 35.6% over the past month [3] - GEN Restaurant Group's consensus EPS estimate has also remained unchanged at $0, representing a 100% decline from the previous year, and it currently holds a Zacks Rank of 4 (Sell) [4]

Core Insights - Arcos Dorados Holdings Inc. (ARCO) is positioned to benefit from digital transformation, loyalty program expansion, and restaurant modernization initiatives, despite facing challenging macroeconomic conditions [1] Growth Catalysts for ARCO Stock - The strategic "Four D's" — Digital, Delivery, Drive-thru, and Development — are key growth drivers, with digital sales increasing by 18% year-over-year in 2024 [2] - In 2024, ARCO opened 85 Experience of the Future (EOTF) restaurants and upgraded over 150 existing ones, achieving a 67% penetration of EOTF in its portfolio, with plans to open 90-100 new EOTF restaurants in 2025 [3] - Digital channels in Brazil accounted for nearly 70% of sales in Q4 2024, driven by app-based ordering and loyalty rewards, alongside successful marketing campaigns [4] Loyalty Program Expansion - The loyalty program added 12.6 million new members in 2024, totaling 15.8 million registered users, contributing 18% of Q4 sales in Brazil, Costa Rica, and Uruguay [5] - The program is set to expand into Argentina and Colombia in early 2025, with plans for broader rollout across all markets by late 2025 or early 2026 [5] Concerns for Arcos Dorados Stock - ARCO's shares have declined by 24.9% over the past six months, compared to a 4.6% decline in the industry, attributed to macroeconomic headwinds and shifts in consumer sentiment [7] - Anticipated softness in comparable sales growth for Q1 is linked to challenging year-over-year comparisons and weaker currency levels in core markets [8][9]

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]