Arcos Dorados Reports Third Quarter 2023 Financial Results
Systemwide comparable sales grew 37.3% year-over-year, supported by strong sales volume across all divisions Total revenues reached $1.1 billion in the quarter, up 22.1% in US dollars and 42.9% in constant currency, versus the prior year period
Arcos Dorados Holdings, Inc. (NYSE: ARCO), Latin America’s largest restaurant chain and the world’s largest independent McDonald’s franchisee, yesterday reported unaudited results for the three and nine months ended September 30, 2023.
Third Quarter 2023 Highlights
- Systemwide comparable sales grew 37.3% versus the prior year quarter, rising 1.4 times the period’s blended inflation rate.
- Consolidated revenues reached $1.1 billion, rising 22.1% in US dollars and 42.9% in constant currency versus the prior year period.
- Disciplined execution of a long-term growth strategy is driving strong performance across all sales channels and geographies with an increasingly modernized restaurant portfolio.
- Consolidated Adjusted EBITDA of $129.1 million rose 25.8% in US dollars versus the prior year result, and 43.9% in constant currency.
- Consolidated Adjusted EBITDA margin reached 11.5% in the quarter, expanding by 40 basis points versus the prior year period.
- Basic net income per share was $0.28 in the quarter, compared to net income per share of $0.22 in the prior year quarter.
- The Company opened 27 restaurants in the quarter, including 25 free-standing locations.
Message from Marcelo Rabach, Chief Executive Officer
The broad-based momentum we captured in the first half of 2023 continued in the third quarter. McDonald’s Brand strength, structural competitive advantages and consistent execution continued driving sales growth and market share gains across the Arcos Dorados footprint, with the strongest performance in markets such as Brazil, Chile, Costa Rica and Mexico.
Our strategy is clear: drive sustainable sales growth, supported by both guest volume and average check growth, to generate operating leverage and long-term profitability growth. To achieve this objective, we are leaning on Value, which has always been a cornerstone of the McDonald’s business. Value includes quality, service, convenience and optionality, in addition to price. This is where our Three D’s strategy of Digital, Delivery and Drive-thru are leveraging Latin America’s largest free-standing restaurant portfolio and most robust digital platform to offer Value to our guests and to the communities we serve.
Systemwide comparable sales grew well above inflation again in the third quarter, with strong guest volume growth in all main markets. Even as consumption moderated in some countries, sales growth remained strong and helped generate operating leverage to improve profitability. This performance, which has been improving consistently over the last several years, allows us to continuously reinvest in the expansion, modernization and digitalization of the business. In turn, these investments bring significant economic benefit to local economies and create new, long-term career opportunities for young people.
Importantly, we continue to be recognized by Great Place to Work® as one of the best, if not the best, employers for young people, with the latest certifications coming in Brazil, Argentina, Chile and Uruguay. Youth Opportunity is one of the pillars of our Recipe for the Future ESG Platform, together with Diversity and Inclusion, Commitment to Families, Climate Change, Circular Economy and Sustainable Sourcing. During the quarter we made progress in and received recognition for our efforts across all these pillars. This includes the opening of our flagship sustainable restaurant in Brazil, with multiple ESG (Environmental, Social and Governance) initiatives, twenty of which have already been implemented in all of the country’s restaurants. ESG is truly in our DNA!
Arcos Dorados’ results for the third quarter 2023, and so far in the fourth quarter, demonstrate the importance of a consistent, long-term, strategic approach to delivering value and convenience to restaurant customers. This includes the effective management of our balance sheet, by maintaining a healthy cash balance and controlling both currency and interest rate risks on our long-term debt.
By consistently executing our strategy, we are capturing our opportunities and tackling our challenges from a position of strength. Brand strength and reputation are at an all-time high and our structural competitive advantages are widening as we open even more free-standing restaurants, modernize even more existing restaurants and develop even more digital capabilities. We are also working hard to normalize operations among markets to improve consolidated results. For these reasons, we are confident in our ability to sustain strong operating results and shareholder value generation for the foreseeable future.
Thank you for your ongoing support of Arcos Dorados.
Consolidated Results
|
Figure 1. AD Holdings Inc Consolidated: Key Financial Results (In millions of U.S. dollars, except as noted) |
||||||
| 3Q22 (a) |
Currency Translation (b) |
Constant Currency Growth (c) |
3Q23 (a+b+c) |
% As Reported |
% Constant Currency |
|
| Total Restaurants (Units) |
2,297 |
2,339 |
||||
| Sales by Company-operated Restaurants |
881.6 |
(186.9) |
380.6 |
1,075.3 |
22.0% |
43.2% |
| Revenues from franchised restaurants |
40.1 |
(5.1) |
14.8 |
49.8 |
24.1% |
36.9% |
| Total Revenues |
921.7 |
(192.0) |
395.4 |
1,125.1 |
22.1% |
42.9% |
| Systemwide Comparable Sales |
37.3% |
|||||
| Adjusted EBITDA |
102.6 |
(18.6) |
45.1 |
129.1 |
25.8% |
43.9% |
| Adjusted EBITDA Margin |
11.1% |
11.5% |
0.4 p.p. | |||
| Net income attributable to AD |
46.9 |
(30.4) |
43.3 |
59.7 |
27.4% |
92.4% |
| No. of shares outstanding (thousands) |
210,595 |
210,655 |
||||
| EPS (US$/Share) |
0.22 |
0.28 |
||||
Arcos Dorados’ total revenues reached $1.1 billion, up 22.1% in US dollars and 42.9% in constant currency versus the prior year quarter. Systemwide comparable sales grew 37.3% in the third quarter, or about 1.4 times blended inflation, with all three divisions growing above inflation, including 4.0x blended inflation in NOLAD and 2.3x inflation in Brazil.
Guest traffic and sales growth continue to benefit from the strong consumer preference for the McDonald’s Brand, with more than double the market share of the nearest competitor across all main markets.
Front counter sales, which include self-order kiosks, grew 41% in constant currency versus the prior year and generated 58% of systemwide sales. Third quarter results were also supported by continued outstanding performance in Delivery, which grew 48% in constant currency versus the prior year. Drive-thru sales grew 17% in constant currency, complementing the strong growth of front counter sales.
Digital channel sales reached $731.5 million and accounted for 50% of systemwide sales in the third quarter. As of the end of September, the Company’s Mobile App had over 107 million accumulated downloads, with about 17 million average monthly active users, and identified sales representing 20% of consolidated sales in the quarter.
The Company’s Customer Relationship Management (CRM) platform had almost 75 million unique registered users by the end of September 2023, which allows it to more efficiently invest its marketing spend to increase guest frequency and engagement.
Adjusted EBITDA
3Q23 Adjusted EBITDA Bridge
Third quarter consolidated Adjusted EBITDA reached $129.1 million, up 25.8% in US dollars and 43.9% in constant currency over the prior year quarter, with continued strong US dollar growth contribution from NOLAD and Brazil. Consolidated Adjusted EBITDA margin reached 11.5%, expanding 40 basis points versus the prior year.
Margin performance was highlighted by lower Food and Paper (F&P) costs as a percentage of revenue in all divisions compared with the prior year, coupled with an improvement in G&A and a slight improvement in Payroll expenses as a percentage of revenue. These more than offset moderately higher other operating expenses and the impact of the final step up of the Company’s royalty rate, which became effective as of August 3, 2022.
Notable items in the Adjusted EBITDA reconciliation
Included in Adjusted EBITDA: There were no notable items included in Adjusted EBITDA in either the third quarter of 2023 or the third quarter of 2022.
Excluded from Adjusted EBITDA: There were no notable items excluded from Adjusted EBITDA in either the third quarter of 2023 or the third quarter of 2022.
Non-operating Results
Arcos Dorados’ non-operating results for the third quarter included a $2.2 million gain from non-cash foreign exchange and derivative instruments.
Net interest expense and other financing results totaled $5.0 million in the quarter versus $7.9 million in the same period last year. The Company recorded an income tax expense of $28.1 million in the quarter, compared to an income tax expense of $32.6 million in the prior-year period.
Third quarter net income attributable to the Company totaled $59.7 million, compared to net income of $46.9 million in the same period of 2022. Earnings per share were $0.28 in the third quarter of 2023, compared to $0.22 per share in the corresponding 2022 period.
Total weighted average shares for the third quarter of 2023 amounted to 210,654,969 compared to 210,594,545 in the prior-year quarter.
For reference:
|
Figure 2. AD Holdings Inc Consolidated – Excluding Venezuela: Key Financial Results (In millions of U.S. dollars, except as noted) |
||||||
| 3Q22 (a) |
Currency Translation (b) |
Constant Currency Growth (c) |
3Q23 (a+b+c) |
% As Reported |
% Constant Currency |
|
| Total Restaurants (Units) |
2,197 |
2,251 |
||||
| Sales by Company-operated Restaurants |
876.8 |
(153.9) |
343.7 |
1,066.5 |
21.6% |
39.2% |
| Revenues from franchised restaurants |
39.5 |
(2.2) |
11.7 |
49.0 |
23.9% |
29.6% |
| Total Revenues |
916.3 |
(156.2) |
355.4 |
1,115.5 |
21.7% |
38.8% |
| Systemwide Comparable Sales |
32.6% |
|||||
| Adjusted EBITDA |
103.0 |
(18.5) |
45.2 |
129.8 |
26.0% |
43.9% |
| Adjusted EBITDA Margin |
11.2% |
11.6% |
0.4 p.p. | |||
| Net income attributable to AD |
47.7 |
(30.2) |
45.1 |
62.6 |
31.3% |
94.7% |
| No. of shares outstanding (thousands) |
210,595 |
210,655 |
||||
| EPS (US$/Share) |
0.23 |
0.30 |
||||
Divisional Results
Brazil Division
|
Figure 3. Brazil Division: Key Financial Results (In millions of U.S. dollars, except as noted) |
||||||
| 3Q22 (a) |
Currency Translation (b) |
Constant Currency Growth (c) |
3Q23 (a+b+c) |
% As Reported |
% Constant Currency |
|
| Total Restaurants (Units) |
1,077 |
1,113 |
||||
| Total Revenues |
352.8 |
30.5 |
55.9 |
439.2 |
24.5% |
15.9% |
| Systemwide Comparable Sales |
10.8% |
|||||
| Adjusted EBITDA |
62.4 |
5.6 |
9.9 |
77.8 |
24.8% |
15.8% |
| Adjusted EBITDA Margin |
17.7% |
17.7% |
0.0 p.p. | |||
Brazil’s revenues reached $439.2 million, increasing 24.5% year-over-year. On a constant currency basis, revenues grew 15.9% and systemwide comparable sales rose 10.8% year-over-year, or 2.3x inflation in the period. The McDonald’s brand fortified its leadership in the country with strong market share gains in the quarter within a consolidating restaurant industry.
Delivery sales increased 32% in constant currency versus the prior year and strongly contributed to sales and traffic growth in the quarter, representing 19% of systemwide sales in the period. Digital channel sales were up 43% versus the prior year and generated 61% of systemwide sales in Brazil, including 25% identified sales in the quarter.
Marketing initiatives in the quarter included strong brand experience campaigns. The highlight was the sponsorship of “The Town”, the biggest music festival in Brazil this year. In addition to building the largest McDonald’s restaurant in Latin America on festival grounds, the Company launched a limited edition of the “McMelt The Town” sandwich in all restaurants to bring a taste of the festival to the entire country. Maintaining its strong connection with sports, the Company also sponsored the FIFA Women’s World Cup online broadcast on “Cazé TV”, Brazil’s biggest streaming channel. Finally, the launches of “McFlurry Ovomaltine Mesclado” and “McFlurry Kit Kat” boosted traffic by bringing innovation to the dessert category.
As reported Adjusted EBITDA in the division reached $77.8 million in the quarter, rising 24.8% versus the prior year in US dollars. Adjusted EBITDA margin was 17.7%, in line with the prior year quarter. Better F&P costs as a percentage of revenue and operating leverage in both G&A and Payroll were offset by higher Occupancy & Other Operating expenses and a slightly higher effective royalty rate.
Following the end of the third quarter, on October 23, 2023, the Company launched its Loyalty Program “Meu Méqui” nationwide in Brazil. As part of the Company’s successful Digital strategy, the program boosts the power of the Mobile App by driving visit frequency while increasing the percentage of identified sales to provide a more personalized guest experience.
North Latin American Division (NOLAD)
|
Figure 4. NOLAD Division: Key Financial Results (In millions of U.S. dollars, except as noted) |
||||||
| 3Q22 (a) |
Currency Translation (b) |
Constant Currency Growth (c) |
3Q23 (a+b+c) |
% As Reported |
% Constant Currency |
|
| Total Restaurants (Units) |
631 |
638 |
||||
| Total Revenues |
232.9 |
27.7 |
35.1 |
295.6 |
27.0% |
15.1% |
| Systemwide Comparable Sales |
11.5% |
|||||
| Adjusted EBITDA |
22.7 |
3.3 |
6.2 |
32.3 |
42.0% |
27.4% |
| Adjusted EBITDA Margin |
9.8% |
10.9% |
1.1 p.p. | |||
As reported revenues totaled $295.6 million, up 27.0% in US dollars and 15.1% in constant currency versus the prior year quarter. Systemwide comparable sales rose 11.5% year-over-year, or 4.0x the division’s blended inflation in the period, with comparable sales increasing above inflation in all markets. Sales growth was supported by higher guest traffic across all markets as well, with particularly strong volume growth in Mexico, Costa Rica and the French West Indies markets.
The NOLAD division reached some of its highest ever market share levels, backed by positive brand attribute trends. Marketing activities featured menu innovations across the region, including the launch of “GRANDS” sandwiches, an indulgent and tasty platform. In Mexico, the #McDonaldsMéxicoMeEncanta brand campaign was endorsed by Sergio “Checo” Pérez, the popular Mexican Formula 1 driver, and included the “Menú Checo” famous order campaign. In Puerto Rico, the Company launched the “Saca tu Encanto” brand-building campaign partnered with Tommy Torres, a popular local musical artist.
NOLAD’s digital penetration is improving consistently as investments in both technology and restaurant modernizations bring the division closer to the Company average. As it closes this gap, NOLAD is already benefiting from improving digital trends. For example, the McDonald’s Mobile App is, by far, the leader in monthly active users among quick service restaurant operators in Mexico, where the sales growth rate remains one of the strongest in the Company’s footprint.
As reported Adjusted EBITDA reached $32.3 million in the third quarter compared with $22.7 million in the prior year quarter, representing a year-over-year increase of 42.0% versus the prior year in US dollars. Adjusted EBITDA margin expanded by 110 basis points versus the prior year period driven by better F&P costs and Occupancy & Other Operating expenses as a percentage of revenue that more than offset slightly higher Payroll and G&A expenses as well as the higher royalty rate.
South Latin American Division (SLAD)
|
Figure 5. SLAD Division: Key Financial Results (In millions of U.S. dollars, except as noted) |
||||||
| 3Q22 (a) |
Currency Translation (b) |
Constant Currency Growth (c) |
3Q23 (a+b+c) |
% As Reported |
% Constant Currency |
|
| Total Restaurants (Units) |
589 |
588 |
||||
| Total Revenues |
336.1 |
(250.2) |
304.4 |
390.3 |
16.1% |
90.6% |
| Systemwide Comparable Sales |
93.8% |
|||||
| Adjusted EBITDA |
39.7 |
(39.6) |
41.7 |
41.8 |
5.3% |
105.0% |
| Adjusted EBITDA Margin |
11.8% |
10.7% |
-1.1 p.p. | |||
Revenues in SLAD reached $390.3 million, rising 16.1% in US dollars. Systemwide comparable sales rose 93.8%, or 1.3x SLAD’s blended inflation rate. Chile, Ecuador and Uruguay delivered the strongest growth, more than double inflation in the quarter. Systemwide comparable sales growth also reflects the impact of Argentina and Venezuela’s high inflation rates.
SLAD’s markets captured additional market share in the quarter, with improved scores in brand attributes, reinforcing McDonald´s brand preference across the division. To continue strengthening its leadership in the beef segment, the Company launched the “Bacon Cheddar McMelt” sandwich and the “Pileta de Cheddar” in Argentina, Chile, Colombia and Ecuador with strong sales results in all four countries. The Company also continued the roll out of Best Burger, extending the platform to Aruba, Curaçao and Trinidad. The dessert platform produced excellent results with the launch of McFlurry products with locally relevant brands, including: Sahne-nuss in Chile, Nucita in Colombia, Chips Ahoy in Perú and Serenata de Amor in Uruguay.
Digital sales in SLAD continued to grow, supported by increased penetration of Mobile Order and Pay and Delivery functionalities in the Mobile App. The Company also continued the development of its own Delivery platform in SLAD markets.
As reported Adjusted EBITDA in the division totaled $41.8 million in the third quarter. The division generated restaurant level margin expansion, driven by lower F&P costs as well as better Payroll and Occupancy & Other Operating expenses as a percentage of revenue. These were offset by higher other operating expenses and a moderate increase in G&A as a percentage of revenue.
For reference:
|
Figure 6. SLAD Division – Excluding Venezuela: Key Financial Results (In millions of U.S. dollars, except as noted) |
||||||
| 3Q22 (a) |
Currency Translation (b) |
Constant Currency Growth (c) |
3Q23 (a+b+c) |
% As |
% Constant Currency |
|
| Total Restaurants (Units) |
489 |
500 |
||||
| Total Revenues |
330.7 |
(214.4) |
264.4 |
380.7 |
15.1% |
79.9% |
| Systemwide Comparable Sales |
79.9% |
|||||
| Adjusted EBITDA |
40.0 |
(39.5) |
41.8 |
42.4 |
6.0% |
104.5% |
| Adjusted EBITDA Margin |
12.1% |
11.1% |
-1.0 p.p. | |||
New Unit Development
| Figure 7. Total Restaurants (eop)* | |||||
|
September |
June |
March |
December |
September |
|
|
2023 |
2023 |
2023 |
2022 |
2022 |
|
| Brazil |
1,113 |
1,098 |
1,091 |
1,084 |
1,077 |
| NOLAD |
638 |
639 |
639 |
638 |
631 |
| SLAD |
588 |
580 |
582 |
590 |
589 |
| TOTAL |
2,339 |
2,317 |
2,312 |
2,312 |
2,297 |
| * Considers Company-operated and franchised restaurants at period-end | |||||
|
Figure 8. Footprint as of September 30, 2023 |
||||||||
| Store Type* | Total Restaurants | Ownership | McCafes | Dessert Centers | ||||
| FS | IS | MS & FC | Company Operated | Franchised | ||||
| Brazil |
564 |
92 |
457 |
1,113 |
674 |
439 |
137 |
1,993 |
| NOLAD |
392 |
51 |
195 |
638 |
484 |
154 |
13 |
519 |
| SLAD |
237 |
128 |
223 |
588 |
500 |
88 |
166 |
710 |
| TOTAL |
1,193 |
271 |
875 |
2,339 |
1,658 |
681 |
316 |
3,222 |
| * FS: Free-Standing; IS: In-Store; MS: Mall Store; FC: Food Court. | ||||||||
Arcos Dorados opened 27 restaurants during the third quarter of 2023, including 25 free-standing units. In Brazil, the Company opened 14 free-standing units in the quarter. For the first nine months of 2023, the Company opened 45 restaurants, 41 of which were free-standing restaurants. This included 32 restaurant openings in Brazil, with 29 free-standing units opened in the country in the period.
More than half the Company’s footprint is made up of free-standing locations, making it the region’s largest free-standing restaurant portfolio. As of the end of September, there were 1,214 Experience of the Future restaurants, composing 52% of the Company’s total restaurant base and offering guests the most modernized experience in the region’s quick service restaurant industry.
The restaurant development plan remains on track and the Company expects to meet its full year guidance of 75 to 80 restaurant openings.
Balance Sheet & Cash Flow Highlights
|
Figure 9. Consolidated Debt and Financial Ratios (In thousands of U.S. dollars, except ratios) |
||
|
September 30, |
December 31, |
|
|
2023 |
2022 |
|
| Total Cash & Cash equivalents (i) |
251,149 |
304,396 |
| Total Financial Debt (ii) |
709,335 |
674,401 |
| Net Financial Debt (iii) |
458,186 |
370,005 |
| LTM Adjusted EBITDA |
453,735 |
386,564 |
| Total Financial Debt / LTM Adjusted EBITDA ratio |
1.6 |
1.7 |
| Net Financial Debt / LTM Adjusted EBITDA ratio |
1.0 |
1.0 |
| (i) | Total cash & cash equivalents includes short-term investments. | ||
| (ii) | Total financial debt includes short-term debt, long-term debt, accrued interest payable and derivative instruments (including the asset portion of derivatives amounting to $50.3 million and $92.9 million as a reduction of financial debt as of September 30, 2023 and December 31, 2022, respectively). | ||
| (iii) | Net financial debt equals total financial debt less total cash & cash equivalents. | ||
On September 27, 2023, the Company paid off the outstanding $18.2 million balance of its 2023 Notes. As of September 30, 2023, total cash and cash equivalents were $251.1 million and total financial debt (including the net derivative instrument position) was $709.3 million.
Net debt (total financial debt minus total cash and cash equivalents) was $458.2 million, up from $370.0 million at the end of 2022, due to the lower cash balance and lower fair value of the derivative instruments. The net debt to Adjusted EBITDA leverage ratio ended the quarter at a healthy 1.0x, unchanged from year-end 2022.
Net cash generated from operating activities for the nine months ended September 30, totaled $232.3 million, compared with the $235.4 million cash from operations generated during the same period last year. Capital expenditures totaled $227.8 million in the first nine months of 2023. Net cash used in financing activities was $32.1 million, which included $31.6 million corresponding to the first three installments of the 2023 dividend.
About Arcos Dorados
Arcos Dorados is the world’s largest independent McDonald’s franchisee, operating the largest quick service restaurant chain in Latin America and the Caribbean. It has the exclusive right to own, operate and grant franchises of McDonald’s restaurants in 20 Latin American and Caribbean countries and territories with more than 2,300 restaurants, operated by the Company or by its sub-franchisees, that together employ over 95 thousand people (as of 09/30/2023). The Company is also committed to the development of the communities in which it operates, to providing young people their first formal job opportunities and to utilize its Recipe for the Future to achieve a positive environmental impact. Arcos Dorados is listed for trading on the New York Stock Exchange (NYSE: ARCO).
Third Quarter 2023 Consolidated Results
|
Figure 10. Third Quarter 2023 Consolidated Results (In thousands of U.S. dollars, except per share data) |
|||||
|
For Three-Months ended |
|
For Nine-Months ended |
|||
|
September 30, |
|
September 30, |
|||
|
2023 |
2022 |
|
2023 |
2022 |
|
| REVENUES | |||||
| Sales by Company-operated restaurants |
1,075,328 |
881,586 |
3,016,212 |
2,485,230 |
|
| Revenues from franchised restaurants |
49,782 |
40,117 |
140,211 |
115,049 |
|
| Total Revenues |
1,125,110 |
921,703 |
3,156,423 |
2,600,279 |
|
| OPERATING COSTS AND EXPENSES | |||||
| Company-operated restaurant expenses: | |||||
| Food and paper |
(376,023) |
(316,368) |
(1,061,634) |
(880,804) |
|
| Payroll and employee benefits |
(200,904) |
(165,362) |
(580,286) |
(487,031) |
|
| Occupancy and other operating expenses |
(300,456) |
(243,208) |
(843,176) |
(708,082) |
|
| Royalty fees |
(65,058) |
(51,076) |
(180,317) |
(133,753) |
|
| Franchised restaurants – occupancy expenses |
(21,424) |
(17,181) |
(60,053) |
(50,044) |
|
| General and administrative expenses |
(67,806) |
(58,638) |
(202,924) |
(169,172) |
|
| Other operating (expenses) / income, net |
(2,364) |
4,044 |
4,219 |
11,514 |
|
| Total operating costs and expenses |
(1,034,035) |
(847,789) |
(2,924,171) |
(2,417,372) |
|
| Operating income |
91,075 |
73,914 |
232,252 |
182,907 |
|
| Net interest expense and other financing results |
(4,973) |
(7,920) |
(26,960) |
(42,740) |
|
| Gain / (loss) from derivative instruments |
900 |
7,578 |
(13,220) |
(5,258) |
|
| Foreign currency exchange results |
1,286 |
6,016 |
22,231 |
16,798 |
|
| Other non-operating (expenses) / income, net |
(106) |
59 |
(100) |
(49) |
|
| Income before income taxes |
88,182 |
79,647 |
214,203 |
151,658 |
|
| Income tax expense |
(28,072) |
(32,604) |
(87,922) |
(65,411) |
|
| Net income |
60,110 |
47,043 |
126,281 |
86,247 |
|
| Net income attributable to non-controlling interests |
(389) |
(176) |
(785) |
(396) |
|
| Net income attributable to Arcos Dorados Holdings Inc. |
59,721 |
46,867 |
125,496 |
85,851 |
|
| Earnings per share information ($ per share): | |||||
| Basic net income per common share |
$ 0.28 |
$ 0.22 |
$ 0.60 |
$ 0.41 |
|
| Weighted-average number of common shares outstanding-Basic |
210,654,969 |
210,594,545 |
210,625,346 |
210,537,894 |
|
| Adjusted EBITDA Reconciliation | |||||
| Operating income |
91,075 |
73,914 |
232,252 |
182,907 |
|
| Depreciation and amortization |
37,286 |
28,294 |
105,806 |
88,934 |
|
| Operating charges excluded from EBITDA computation |
759 |
441 |
1,622 |
668 |
|
| Adjusted EBITDA |
129,120 |
102,649 |
339,680 |
272,509 |
|
| Adjusted EBITDA Margin as % of total revenues |
11.5 % |
11.1 % |
10.8 % |
10.5 % |
|
Third Quarter 2023 Results by Division
|
Figure 11. Third Quarter Consolidated Results by Division (In thousands of U.S. dollars) |
|||||||||
|
For Three-Months ended |
as |
Constant |
|
For Nine-Months ended |
as |
Constant |
|||
|
September 30, |
reported |
Currency |
|
September 30, |
reported |
Currency |
|||
|
2023 |
2022 |
Incr/(Decr)% |
Incr/(Decr)% |
|
2023 |
2022 |
Incr/(Decr)% |
Incr/(Decr)% |
|
| Revenues | |||||||||
| Brazil |
439,213 |
352,798 |
24.5 % |
15.9% |
1,218,610 |
1,022,846 |
19.1% |
16.2% |
|
| NOLAD |
295,641 |
232,852 |
27.0 % |
15.1% |
832,497 |
659,430 |
26.2% |
17.1% |
|
| SLAD |
390,256 |
336,053 |
16.1 % |
90.6% |
1,105,316 |
918,003 |
20.4% |
85.5% |
|
| SLAD – Excl. Venezuela |
380,657 |
330,688 |
15.1 % |
79.9% |
1,084,298 |
905,241 |
19.8% |
76.6% |
|
| TOTAL |
1,125,110 |
921,703 |
22.1 % |
42.9% |
3,156,423 |
2,600,279 |
21.4% |
40.9% |
|
| TOTAL – Excl. Venezuela |
1,115,511 |
916,338 |
21.7 % |
38.8 % |
3,135,405 |
2,587,517 |
21.2% |
37.6% |
|
| Operating Income (loss) | |||||||||
| Brazil |
59,374 |
49,498 |
20.0 % |
11.1% |
156,376 |
119,543 |
30.8% |
27.1% |
|
| NOLAD |
21,779 |
14,619 |
49.0 % |
32.9% |
54,136 |
42,706 |
26.8% |
16.4% |
|
| SLAD |
34,187 |
33,470 |
2.1 % |
125.4% |
97,101 |
84,141 |
15.4% |
112.2% |
|
| SLAD – Excl. Venezuela |
35,142 |
34,121 |
3.0 % |
123.3% |
101,364 |
87,543 |
15.8% |
116.4% |
|
| Corporate and Other |
(24,265) |
(23,673) |
-2.5% |
-55.4% |
(75,361) |
(63,483) |
-18.7% |
-63.8% |
|
| TOTAL |
91,075 |
73,914 |
23.2 % |
53.0% |
232,252 |
182,907 |
27.0% |
51.0% |
|
| TOTAL – Excl. Venezuela |
92,030 |
74,565 |
23.4 % |
52.6% |
236,515 |
186,309 |
26.9% |
54.1% |
|
| Adjusted EBITDA | |||||||||
| Brazil |
77,848 |
62,364 |
24.8 % |
15.8% |
206,450 |
161,108 |
28.1% |
24.6% |
|
| NOLAD |
32,308 |
22,748 |
42.0 % |
27.4% |
84,218 |
67,408 |
24.9% |
15.3% |
|
| SLAD |
41,780 |
39,683 |
5.3 % |
105.0% |
119,370 |
102,936 |
16.0% |
92.7% |
|
| SLAD – Excl. Venezuela |
42,428 |
40,045 |
6.0 % |
104.5% |
122,655 |
105,466 |
16.3% |
97.3% |
|
| Corporate and Other |
(22,816) |
(22,146) |
-3.0% |
-57.3% |
(70,358) |
(58,943) |
-19.4% |
-65.3% |
|
| TOTAL |
129,120 |
102,649 |
25.8 % |
43.9% |
339,680 |
272,509 |
24.6% |
39.2% |
|
| TOTAL – Excl. Venezuela |
129,768 |
103,011 |
26.0 % |
43.9% |
342,965 |
275,039 |
24.7% |
41.5% |
|
| Figure 12. Average Exchange Rate per Quarter* | |||||||||
| Brazil | Mexico | Argentina | |||||||
|
3Q23 |
4.88 |
17.07 |
312.54 |
||||||
|
3Q22 |
5.24 |
20.22 |
135.61 |
||||||
| * Local $ per 1 US$ | |||||||||
Summarized Consolidated Balance Sheets
|
Figure 13. Summarized Consolidated Balance Sheets (In thousands of U.S. dollars) |
|||
| September 30, | December 31, | ||
|
2023 |
2022 |
||
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents |
166,307 |
266,937 |
|
| Short-term investment |
84,842 |
37,459 |
|
| Accounts and notes receivable, net |
136,519 |
124,273 |
|
| Other current assets (1) |
220,475 |
196,873 |
|
| Derivative instruments |
— |
58,821 |
|
| Total current assets |
608,143 |
684,363 |
|
| Non-current assets | |||
| Property and equipment, net |
1,022,274 |
856,085 |
|
| Net intangible assets and goodwill |
59,106 |
54,569 |
|
| Deferred income taxes |
83,876 |
87,972 |
|
| Derivative instruments |
50,267 |
34,088 |
|
| Equity method investments |
17,709 |
14,708 |
|
| Leases right of use assets, net |
903,816 |
820,683 |
|
| Other non-current assets (2) |
101,142 |
84,162 |
|
| Total non-current assets |
2,238,190 |
1,952,267 |
|
| Total assets |
2,846,333 |
2,636,630 |
|
| LIABILITIES AND EQUITY | |||
| Current liabilities | |||
| Accounts payable |
324,453 |
353,468 |
|
| Taxes payable (3) |
178,355 |
146,682 |
|
| Accrued payroll and other liabilities |
146,775 |
115,327 |
|
| Royalties payable to McDonald’s Corporation |
14,453 |
21,280 |
|
| Provision for contingencies |
2,194 |
2,272 |
|
| Interest payable |
18,133 |
7,906 |
|
| Financial debt (4) |
10,697 |
29,566 |
|
| Operating lease liabilities |
89,737 |
82,911 |
|
| Total current liabilities |
784,797 |
759,412 |
|
| Non-current liabilities | |||
| Accrued payroll and other liabilities |
23,675 |
28,781 |
|
| Provision for contingencies |
48,382 |
42,567 |
|
| Financial debt (5) |
730,772 |
729,838 |
|
| Deferred income taxes |
5,057 |
3,931 |
|
| Operating lease liabilities |
810,969 |
747,674 |
|
| Total non-current liabilities |
1,618,855 |
1,552,791 |
|
| Total liabilities |
2,403,652 |
2,312,203 |
|
| Equity | |||
| Class A shares of common stock |
389,907 |
389,393 |
|
| Class B shares of common stock |
132,915 |
132,915 |
|
| Additional paid-in capital |
8,719 |
9,206 |
|
| Retained earnings |
510,410 |
424,936 |
|
| Accumulated other comprehensive losses |
(580,821) |
(613,460) |
|
| Common stock in treasury |
(19,367) |
(19,367) |
|
| Total Arcos Dorados Holdings Inc shareholders’ equity |
441,763 |
323,623 |
|
| Non-controlling interest in subsidiaries |
918 |
804 |
|
| Total equity |
442,681 |
324,427 |
|
| Total liabilities and equity |
2,846,333 |
2,636,630 |
|
|
(1) |
Includes “Other receivables”, “Inventories” and “Prepaid expenses and other current assets”. |
|
(2) |
Includes “Miscellaneous” and “Collateral deposits”. |
|
(3) |
Includes “Income taxes payable” and “Other taxes payable”. |
|
(4) |
Includes “Short-term debt”, “Current portion of long-term debt” and “Derivative instruments”. |
|
(5) |
Includes “Long-term debt, excluding current portion” and “Derivative instruments”. |