SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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Arcos Dorados Holdings Inc. |
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By: |
/s/ Juan David Bastidas |
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Name: |
Juan David Bastidas |
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Title: |
Chief Legal Counsel |
Date:
May 18, 2022
Item 1
FOR IMMEDIATE RELEASE
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ARCOS DORADOS REPORTS FIRST QUARTER
2022 FINANCIAL RESULTS
| • | Systemwide comparable sales¹ grew 42.0% year-over-year, driven primarily by higher guest
volume across all divisions |
| • | Digital channels (Delivery, Mobile App and Self-order Kiosks) generated 38% of systemwide sales
in the quarter, with record Delivery, Self-order Kiosk and Order Ahead sales |
| • | Consolidated Adjusted EBITDA¹ in US dollars reached a first-quarter record of $79.6 million,
and trailing twelve month Adjusted EBITDA was the highest in the Company’s history |
| • | Net Income¹ reached $25.9 million, or $0.12 per share, compared with net loss of $(0.13)
per share in the prior year quarter |
Montevideo, Uruguay,
May 18, 2022 – Arcos Dorados Holdings, Inc. (NYSE: ARCO) (“Arcos Dorados” or the “Company”), Latin America’s
largest restaurant chain and the world’s largest independent McDonald’s franchisee, today reported unaudited financial results
for the three months ended March 31, 2022.
First Quarter 2022 Highlights –
Excluding Venezuela
| • | Systemwide comparable sales² increased 42.0% versus the prior year quarter, with strong results
in all divisions. |
| • | Consolidated¹ revenues totaled $787.3 million, rising 40.6% in US dollars, or 45.2% in constant
currency², versus the prior year period. |
| • | Consolidated¹ Adjusted EBITDA of $79.6 million was the highest-ever for a first quarter and trailing
twelve month Adjusted EBITDA was the highest in the Company’s history. |
| • | Consolidated¹ Adjusted EBITDA margin reached 10.1% in the quarter, with strong sales growth driving
operating leverage in all line items versus 2021. |
| • | Basic net income per share¹ was $0.12, compared to basic net loss per share of $(0.13) in the prior
year quarter. |
| • | Net Debt to Adjusted EBITDA leverage ratio was 1.3x at the end of the first quarter 2022. |
¹Excluding
the results of the Venezuelan operation except Balance Sheet and Debt Ratio information.
²For definitions, please refer to page 16 of this
document.
Message from Marcelo Rabach, Chief
Executive Officer
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Today we are reporting another quarter
of record sales and profitability. These broad-based and sustainable results are a testament to the structural competitive advantages
we have been building for years and the focused execution of our Three-D’s (Digital, Delivery and Drive-thru) strategy. Revenue
reached nearly $790 million in the quarter, with systemwide comparable sales up 42% on the back of strong volume growth and continued
market share gains within a consolidating marketplace. Digital sales (Delivery, Mobile App and Self-order Kiosks) contributed 38% of the
quarter’s sales and included the highest-ever US dollar sales totals for Delivery, Self-order Kiosks and Order Ahead.
Revenue management (including pricing,
product mix and segmentation) plus a highly-localized supply chain and efficient operation drove significant operating leverage across
all cost and expense line items. Adjusted EBITDA was a record for a first quarter and the trailing twelve month result is now the highest
in our history.
The Company’s balance sheet and
cash generation are very strong. After the quarter ended, we became the first quick-service restaurant operator in the world to issue
a Sustainability-Linked Bond (SLB). As a result, the average maturity of our long-term debt has been extended to 6.0 years, with no major
maturities until September of 2027.
We are proud of the Recipe of the Future
ESG platform we developed several years ago and this SLB proves once-again that we are committed to the targets we established to have
a positive influence on the communities we serve and the planet as a whole. These commitments are good for business, as demonstrated by
the lowest spread over US Treasuries ever for an Arcos Dorados long-term debt instrument. But, more importantly, tying our financial strategy
to our long-term climate change commitments is the right thing to do.
We began 2022 with a strong pace of
growth, opening 16 restaurants, including 14 free-standing units and 10 restaurants in Brazil. We have worked hard to increase the size
and accelerate the pace of the openings pipeline. Based on the current run-rate, we expect to exceed restaurant opening and capital expenditure
guidance for 2022.
We are very encouraged by the results
we are reporting today and strongly believe they will be sustainable over time. Both Arcos Dorados and the McDonald’s brand in Latin
America and the Caribbean are in a very strong competitive position.
Consolidated
Results
Consolidated
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Figure
1. AD Holdings Inc Consolidated: Key Financial Results
(In
millions of U.S. dollars, except as noted)
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1Q21
(a) |
Currency
Translation - Excl. Venezuela (b)
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Constant
Currency
Growth - Excl. Venezuela
(c) |
Venezuela
(d) |
1Q22
(a+b+c+d) |
% As Reported |
Total Restaurants (Units) |
2,242 |
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2,273 |
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Sales by Company-operated Restaurants |
537.9 |
(25.8) |
241.3 |
1.9 |
755.3 |
40.4% |
Revenues from franchised restaurants |
23.2 |
0.4 |
11.5 |
0.2 |
35.4 |
52.4% |
Total Revenues |
561.1 |
(25.3) |
252.8 |
2.1 |
790.7 |
40.9% |
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Adjusted EBITDA |
23.9 |
(2.0) |
56.9 |
(0.3) |
78.5 |
228.0% |
Adjusted EBITDA Margin |
4.3% |
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9.9% |
5.7% |
Net income (loss) attributable to AD |
(29.7) |
(2.7) |
56.6 |
0.3 |
24.5 |
NM |
No. of shares outstanding (thousands) |
210,227 |
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210,478 |
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EPS (US$/Share) |
(0.14) |
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0.12 |
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1Q22 = 1Q21 + Currency Translation
Excl. Venezuela + Constant Currency Growth Excl. Venezuela + Venezuela). Refer to “Definitions” section for further detail.
Arcos Dorados’ consolidated results
may continue to be impacted by Venezuela’s macroeconomic volatility, including the ongoing hyperinflationary environment, which
has historically led the Company to record significant non-cash accounting charges to operations in this market. As such, the discussion
of the Company’s operating performance continues to be focused on consolidated results that exclude Venezuela both at the Consolidated
level as well as for the South Latin American Division.
First quarter net income attributable
to the Company totaled $24.5 million, compared to net loss of $29.7 million in the same period of 2021. Arcos Dorados’ recorded
earnings of $0.12 per share in the first quarter of 2022 compared to a net loss of $(0.14) per share in the corresponding 2021 period.
Total weighted average shares for the first quarter of 2022 amounted to 210,478,322 compared to 210,226,699 in the prior year’s
quarter.
Consolidated
- excluding Venezuela
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Figure 2. AD Holdings Inc Consolidated
- Excluding Venezuela: Key Financial Results
(In millions of U.S. dollars, except as
noted)
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1Q21
(a) |
Currency
Translation
(b) |
Constant
Currency
Growth
(c) |
1Q22
(a+b+c) |
% As Reported |
% Constant Currency |
Total Restaurants (Units) |
2,136 |
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2,172 |
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Sales by Company-operated Restaurants |
536.8 |
(25.8) |
241.3 |
752.3 |
40.2% |
45.0% |
Revenues from franchised restaurants |
23.1 |
0.4 |
11.5 |
35.0 |
51.8% |
49.9% |
Total Revenues |
559.8 |
(25.3) |
252.8 |
787.3 |
40.6% |
45.2% |
Systemwide Comparable Sales |
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42.0% |
Adjusted EBITDA |
24.7 |
(2.0) |
56.9 |
79.6 |
221.9% |
230.0% |
Adjusted EBITDA Margin |
4.4% |
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10.1% |
5.7% |
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Net income (loss) attributable to AD |
(28.0) |
(2.7) |
56.6 |
25.9 |
NM |
NM |
No. of shares outstanding (thousands) |
210,227 |
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210,478.3 |
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EPS (US$/Share) |
(0.13) |
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0.12 |
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Total revenues in US dollars increased
40.2%, or 45.0% in constant currency, versus the prior year period. Systemwide comparable sales rose 42% in the quarter, with strong sales
growth in all divisions. Drive-thru and Delivery sales continued to support top-line growth, increasing 13% and 29% in constant currency,
respectively, on top of robust growth in the prior year and despite the recovery of on-premise sales segments: front counter, dessert
centers and McCafé.
On-premise sales continued
to recover, growing 81% versus the prior year in constant currency. With that, 46% of systemwide sales were generated in off-premise channels
and 54% in the on-premise segments in the first quarter 2022. Digital, which includes sales from Delivery, Mobile App and Self-order
kiosks generated 38% of systemwide sales in the quarter, with a 54% growth versus the prior year, reaching 40% of the Company’s
total sales in March 2022, its highest monthly sales in absolute terms.
By the end of March, the Company’ Mobile App
registered 69 million downloads and was, by far, the leader in monthly active users among quick service restaurant operators. Increasingly
personalized digital marketing initiatives generated greater guest frequency and helped drive sales growth in the quarter.
Finally, results in the quarter were supported by strong
consumer preference for the McDonald’s Brand experience. Guest perception of key brand attributes, including favorite brand, improved
across the Company’s footprint, with market share growth ahead of all other chained quick service restaurant brands.
Adjusted EBITDA –
Excluding Venezuela ($million)
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Breakdown of main variations contributing
to 1Q22 Adjusted EBITDA
First quarter consolidated Adjusted
EBITDA, excluding Venezuela, reached $79.6 million. Trailing twelve month Adjusted EBITDA was $329.9 million, the highest in the Company’s
history. Strong, traffic-driven sales growth generated operating leverage in all divisions. Consolidated Adjusted EBITDA margin was up
5.7 percentage points versus the first quarter of 2021, with all divisions exceeding pre-pandemic margin levels, reflecting successful
revenue and cost management. Importantly, all divisions also exceeded pre-pandemic Adjusted EBITDA levels in US dollar terms.
Consolidated G&A expenses declined
by 90 basis points as a percentage of sales versus the prior year quarter as a result of strong revenue growth.
Notable items in the Adjusted EBITDA
reconciliation
Included in Adjusted EBITDA:
There were no material variations.
Excluded from Adjusted EBITDA:
There were no material variations.
Non-operating Results - excluding Venezuela
Arcos Dorados’ non-operating
results for the first quarter included a non-cash foreign currency exchange gain of $15.8 million and an $11.7 million loss from Derivative
Instruments, both due to the appreciation of the Brazilian Real in the period. Net interest expense was $1.6 million lower year-over-year.
The Company recorded an income tax expense of $17.2 million in the first quarter, compared to an income tax benefit of $0.1 million in
the prior-year period.
First quarter net income
attributable to the Company totaled $25.9 million, compared to net loss of $28.0 million in the prior-year period. Earnings per share
were $0.12 in the first quarter 2022 compared to net loss per share of $(0.13) in the prior year quarter.
Divisional
Results
Brazil Division
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Figure 3. Brazil Division: Key Financial
Results
(In millions of U.S. dollars, except as
noted)
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1Q21
(a) |
Currency
Translation (b) |
Constant
Currency
Growth
(c) |
1Q22
(a+b+c) |
% As Reported |
% Constant Currency |
Total Restaurants (Units) |
1,030 |
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1,061 |
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Total Revenues |
203.3 |
14.9 |
93.8 |
312.0 |
53.5% |
46.1% |
Systemwide Comparable Sales |
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39.0% |
Adjusted EBITDA |
13.5 |
2.3 |
30.2 |
46.0 |
240.0% |
223.2% |
Adjusted EBITDA Margin |
6.7% |
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14.8% |
8.1% |
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As reported revenues increased 53.5%
versus the first quarter 2021, reaching $312.0 million. Traffic rose strongly year-over-year, partly due to the impact of renewed government
restrictions on the prior year period’s sales volume in March. The appreciation of the Brazilian real also helped improve US dollar
revenue growth. On a constant currency basis, revenues grew 46.1%, supported by 39.0% higher systemwide comparable sales.
First quarter marketing activities in Brazil built sales
and traffic growth momentum, with important campaigns designed to boost brand affinity among younger guests. The “Méquizices”
campaign featured some of Brazil’s top music celebrities describing their favorite McDonald’s orders. The sponsorship of Big
Brother Brazil, the country’s most popular reality television show, fueled sales across the Three D’s: Digital, Delivery and
Drive Thru. Families enjoyed the exclusive “Disney 50th Anniversary” collection in the Happy Meal, driving unit sales growth
in the quarter.
As reported Adjusted EBITDA in the division reached
$46.0 million in the quarter, benefitting from an 8.1 percentage point improvement in Adjusted EBITDA margin versus the prior year quarter,
or 1.0 percentage point higher versus the pre-pandemic first quarter 2019. Margins benefitted from operating leverage generated by the
strong growth in sales. This included gross margin expansion despite cost pressures.
North Latin American Division (NOLAD)
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Figure
4. NOLAD Division: Key Financial Results
(In millions of U.S. dollars, except as
noted)
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1Q21
(a) |
Currency
Translation
(b) |
Constant
Currency
Growth
(c) |
1Q22
(a+b+c) |
% As Reported |
% Constant Currency |
Total Restaurants (Units) |
629 |
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625 |
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Total Revenues |
173.8 |
(4.0) |
34.1 |
203.9 |
17.3% |
19.6% |
Systemwide Comparable Sales |
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24.1% |
Adjusted EBITDA |
13.8 |
(0.6) |
8.2 |
21.4 |
54.7% |
59.2% |
Adjusted EBITDA Margin |
8.0% |
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10.5% |
2.5% |
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As reported revenues were $203.9 million, up 17.3% in
US dollars and 19.6% in constant currency versus the prior year quarter. Notably, this US dollar result was almost 30% higher than the
pre-pandemic first quarter of 2019. NOLAD markets maintained the strong performance trends established in 2021 thanks mostly to the continuing
recovery in guest volume. Systemwide comparable sales rose 24.1% year-over-year, driven primarily by Mexico and Panama.
Marketing activities in NOLAD mostly focused on core
menu items in the quarter. Mexico reinforced the chicken category with the introduction of “Spicy Chicken McNuggets” and the
“McCrispy Spicy Deluxe”. Costa Rica drove customer excitement with the “El Incomparable Big Mac” campaign and,
after a 2-year hiatus, we successfully re-introduced a seasonal favorite, the Filet-o-Fish, in Costa Rica, Panama and Puerto Rico.
As reported Adjusted EBITDA reached $21.4 million in
the first quarter compared with $13.8 million in the prior year quarter, representing a year-over-year increase of 54.7%, or 59.2% on
a constant currency basis. Similar to revenue, the US dollar Adjusted EBITDA result was higher than the pre-pandemic first quarter of
2019. First quarter 2022 Adjusted EBITDA margin rose by 2.5 percentage points against 2021, including efficiencies in all line items.
South Latin American Division (SLAD)
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Figure
5. SLAD Division: Key Financial Results
(In
millions of U.S. dollars, except as noted)
|
1Q21
(a) |
Currency
Translation - Excl. Venezuela
(b) |
Constant
Currency
Growth - Excl. Venezuela
(c) |
Venezuela
(d) |
1Q22
(a+b+c+d) |
% As Reported |
Total Restaurants (Units) |
583 |
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|
587 |
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Total Revenues |
184.1 |
(36.3) |
124.9 |
2.1 |
274.9 |
49.3% |
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Adjusted EBITDA |
9.6 |
(5.3) |
26.3 |
(0.3) |
30.3 |
215.7% |
Adjusted EBITDA Margin |
5.2% |
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11.0% |
5.8% |
Figure
6. SLAD Division – Excluding Venezuela: Key Financial Results
(In
millions of U.S. dollars, except as noted)
|
1Q21
(a) |
Currency
Translation
(b) |
Constant
Currency
Growth
(c) |
1Q22
(a+b+c) |
% As Reported |
% Constant Currency |
Total Restaurants (Units) |
477 |
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486 |
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Total Revenues |
182.8 |
(36.3) |
124.9 |
271.5 |
48.5% |
68.3% |
Systemwide Comparable Sales |
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64.3% |
Adjusted EBITDA |
10.4 |
(5.3) |
26.3 |
31.5 |
202.0% |
252.9% |
Adjusted EBITDA Margin |
5.7% |
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11.6% |
5.9% |
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Revenues in SLAD, excluding Venezuela,
increased 48.5% in US dollars, or 68.3% in constant currency terms. Systemwide comparable sales rose 64.3%, more than double the blended
inflation in the period. Performance was strong across the division, especially in Argentina, Chile and Colombia where volume growth was
robust.
First quarter marketing activities in SLAD also centered
on core offerings. In Argentina, the “Más Sabor, Más Fun” campaign drove an increase in Big Mac sales while
markets like Chile and Colombia focused on strengthening the chicken category. Most markets’ family business benefitted from the
Company’s exclusive licensing agreement with Disney. Finally, Drive-thru and Delivery remained very strong in the Division, reaching
all time sales records in many markets.
As reported Adjusted EBITDA reached
$31.5 million, compared with $10.4 million in the prior-year quarter. Adjusted EBITDA margin was 11.6%, or 5.9 percentage points higher
than the prior year quarter. Food & Paper costs remained stable, with all other cost and expense line items declining as a percentage
of sales in the period.
New Unit Development
Figure 7. Total Restaurants (eop)*
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March
2022 |
December
2021 |
September
2021 |
June
2021 |
March
2021 |
Brazil |
1,061 |
1,051 |
1,052 |
1,044 |
1,030 |
NOLAD |
625 |
625 |
626 |
626 |
629 |
SLAD |
587 |
585 |
585 |
585 |
583 |
TOTAL |
2,273 |
2,261 |
2,263 |
2,255 |
2,242 |
*Considers Company-operated and franchised
restaurants at period-end
Figure
8. Footprint as of March 31, 2022
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Store Type* |
Total
Restaurants |
Ownership |
McCafes |
Dessert
Centers |
|
FS
& IS |
MS
& FC |
Company
Operated |
Franchised |
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Brazil |
601 |
460 |
1,061 |
639 |
422 |
104 |
1,977 |
NOLAD |
432 |
193 |
625 |
456 |
169 |
14 |
533 |
SLAD |
364 |
223 |
587 |
497 |
90 |
162 |
715 |
TOTAL |
1,397 |
876 |
2,273 |
1,592 |
681 |
280 |
3,225 |
FS: Free-Standing; IS: In-Store; MS: Mall
Store; FC: Food Court.
During the first quarter of 2022, Arcos
Dorados opened 16 restaurants, including 14 new free-standing units and 10 new restaurants in Brazil. As of the end of March 2022 there
were 828 Experience of the Future Restaurants across the Company’s footprint.
Balance Sheet & Cash Flow Highlights
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Figure 9. Consolidated Debt and Financial
Ratios
(In
thousands of U.S. dollars, except ratios)
|
March 31, |
December 31, |
|
2021 |
2021 |
Cash & cash equivalents (i) |
279,749 |
278,830 |
Total Financial Debt (ii) |
705,871 |
657,896 |
Net Financial Debt (iii) |
426,122 |
379,066 |
Total Financial Debt / LTM Adjusted EBITDA ratio |
2.2 |
2.4 |
Net Financial Debt / LTM Adjusted EBITDA ratio |
1.3 |
1.4 |
(i) | Cash & cash equivalents includes short-term investments |
(ii) | Total financial debt includes long-term debt, short-term debt, accrued interest payable and derivative
instruments (including the asset portion of derivatives amounting to $90.7 million and $120.4 million as a reduction of financial debt
as of March 31, 2022 and December 31, 2021, respectively). |
(iii) | Total financial debt less cash and cash equivalents. |
Cash and cash equivalents were $279.7 million and total
financial debt (including the value of derivative instruments) was $705.9 million, as of March 31, 2022. Net debt was $426.1 million,
up from $379.1 million at the end of 2021 due to a decline in the value of Brazilian real linked derivative instruments.
The Net Debt to Adjusted EBITDA leverage ratio ended
the quarter at a healthy 1.3x as record trailing-twelve-month Adjusted EBITDA more than offset the increase in net debt.
Net cash generated from operating activities for the
three months ended March 31 totaled $35.2 million, up from just $7.0 million last year. Cash used in net investing activities totaled
$40.9 million, with capital expenditures of $24.8 million. Net cash used in financing activities was $11.8 million, including the first
installment of the 2022 dividend.
Recent
Developments
Sustainability-Linked
Bond
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On
April 27, 2022, the Company became the first quick service restaurant operator in the world to link its financial strategy to its environmental
objectives when its subsidiary, Arcos Dorados B.V., issued a Sustainability-Linked Bond (SLB) for an aggregate principal amount
of $350 million. Maturing on May 27, 2029 the SLB bears interest of 6.125% per year, representing the lowest spread over US Treasuries
in the Company’s history. The proceeds of this liability management transaction are being used to re-purchase most of the Company’s
outstanding 2023 bond and to fund a tender offer of $150 million of its outstanding 2027 bond.
The
bond includes Sustainability Performance Targets (SPT) that must be achieved by 2025 against a 2021 baseline. SPT 1 is for a 15% absolute
reduction of Scope 1 and 2 greenhouse gas (GHG) emissions. SPT 2 is for a 10% reduction in the intensity of Scope 3 GHG emissions. Both
SPT 1 and SPT 2 will be measured and reported by a third-party expert, South Pole Carbon Asset Management Ltd.
If
one of the SPT’s is not achieved, then the interest rate on the SLB will increase by 12.5 basis points. If neither SPT is achieved,
then the interest rate will increase by 25 basis points.
First
Quarter 2022 Earnings Webcast
A webcast to discuss the information
contained in this press release will be held today, May 18, 2022, at 10:00 a.m. ET. In order to access the webcast, members of the investment
community should follow this link Arcos Dorados First
Quarter 2022 Results Webcast (https://webcastlite.mziq.com/cover.html?webcastId=5dee1e55-0f60-452d-98f2-272d70440e83).
A
replay of the webcast will be available later today through August 2022 in the investor section of the Company’s website: www.arcosdorados.com/ir.
Investor
Relations Contact
Dan
Schleiniger
VP
of Investor Relations
Arcos
Dorados
daniel.schleiniger@ar.mcd.com
|
Media
Contact
David
Grinberg
VP
of Corporate Communications
Arcos
Dorados
david.grinberg@mcd.com.uy
|
Follow us on: |
|
Definitions
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|
Systemwide
comparable sales growth: refers to the change, measured in constant currency, in our Company-operated and franchised restaurant
sales in one period from a comparable period for restaurants that have been open for thirteen months or longer (year-over-year basis).
While sales by our franchisees are not recorded as revenues by us, we believe the information is important in understanding our financial
performance because these sales are the basis on which we calculate and record franchised revenues and are indicative of the financial
health of our franchisee base.
Constant
currency basis: refers to amounts calculated using the same exchange rate over the periods under comparison to remove the effects
of currency fluctuations from this trend analysis. To better discern underlying business trends, this release uses non-GAAP financial
measures that segregate year-over-year growth into two categories: (i) currency translation, (ii) constant currency growth. (i) Currency
translation reflects the impact on growth of the appreciation or depreciation of the local currencies in which we conduct our business
against the US dollar (the currency in which our financial statements are prepared). (ii) Constant currency growth reflects the underlying
growth of the business excluding the effect from currency translation.
Excluding
Venezuela basis: due to the ongoing political and macroeconomic uncertainty prevailing in Venezuela, and in order to provide
greater clarity and visibility on the Company’s financial and operating overall performance, this release focuses on the results
on an “Excluding-Venezuela” basis, which is non-GAAP measure.
Adjusted
EBITDA: In addition to financial measures prepared in accordance with the general accepted accounting principles (GAAP), within
this press release and the accompanying tables, we use a non-GAAP financial measure titled ‘Adjusted EBITDA’. We use Adjusted
EBITDA to facilitate operating performance comparisons from period to period.
Adjusted EBITDA is defined as our operating
income plus depreciation and amortization plus/minus the following losses/gains included within other operating income (expenses), net,
and within general and administrative expenses in our statement of income: gains from sale, equity method investments, or insurance recovery
of property and equipment; write-offs of property and equipment; impairment of long-lived assets and goodwill; and reorganization and
optimization plan expenses.
We
believe Adjusted EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused
by variations such as capital structures (affecting net interest expense and other financial charges), taxation (affecting income tax
expense) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different
companies for reasons unrelated to operating performance. Figures 10 and 11 of this earnings release include a reconciliation for Adjusted
EBITDA. For more information, please see Adjusted EBITDA reconciliation in Note 9 – Segment and geographic information – of
our financial statements (6-K Form) filed today with the S.E.C.
About
Arcos Dorados
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|
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 2,250 restaurants, operated by the Company or by its sub-franchisees,
that together employ over 90 thousand people (as of 03/31/2022). 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 (https://recipeforthefuture.com/) to achieve a positive environmental impact. Arcos Dorados is listed for trading
on the New York Stock Exchange (NYSE: ARCO). To learn more about the Company, please visit the Investors section of our website: www.arcosdorados.com/ir.
Cautionary Statement on Forward-Looking
Statements
This
press release contains forward-looking statements. The forward-looking statements contained herein include statements about the Company’s
business prospects, its ability to attract customers, its affordable platform, its expectation for revenue generation and its outlook
and guidance for growth and investments in 2022. These statements are subject to the general risks inherent in Arcos Dorados' business.
These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be
incorrect. In addition, Arcos Dorados' business and operations involve numerous risks and uncertainties, many of which are beyond the
control of Arcos Dorados, which could result in Arcos Dorados' expectations not being realized or otherwise materially affect the financial
condition, results of operations and cash flows of Arcos Dorados. Additional information relating to the uncertainties affecting Arcos
Dorados' business is contained in its filings with the Securities and Exchange Commission. The forward-looking statements are made only
as of the date hereof, and Arcos Dorados does not undertake any obligation to (and expressly disclaims any obligation to) update any
forward-looking statements to reflect events or circumstances after the date such statements were made, or to reflect the occurrence
of unanticipated events.
First
Quarter 2022 Consolidated Results
|
|
Figure
10. First Quarter 2022 Consolidated Results
(In thousands of U.S. dollars, except
per share data)
|
For
Three-Months ended |
|
March
31, |
|
2022 |
2021 |
REVENUES |
|
|
Sales by Company-operated restaurants |
755,294 |
537,889 |
Revenues from franchised restaurants |
35,387 |
23,227 |
Total
Revenues |
790,681 |
561,116 |
OPERATING COSTS AND EXPENSES |
|
|
Company-operated restaurant expenses: |
|
|
Food and paper |
(263,408) |
(192,659) |
Payroll and employee benefits |
(152,228) |
(114,421) |
Occupancy and other operating expenses |
(220,127) |
(178,193) |
Royalty fees |
(38,616) |
(27,661) |
Franchised restaurants - occupancy expenses |
(16,008) |
(11,827) |
General and administrative expenses |
(55,538) |
(44,966) |
Other operating income |
3,591 |
1,803 |
Total
operating costs and expenses |
(742,334) |
(567,924) |
Operating
income / (loss) |
48,347 |
(6,808) |
Net interest expense |
(10,659) |
(12,282) |
Loss from derivative instruments |
(11,692) |
(1,149) |
Foreign currency exchange results |
15,827 |
(9,348) |
Other non-operating (expenses), net |
(25) |
(142) |
Income / (loss)
before income taxes |
41,798 |
(29,729) |
Income
tax expense |
(17,169) |
70 |
Net
income / (loss) |
24,629 |
(29,659) |
Less:
Net income attributable to non-controlling interests |
(126) |
(54) |
Net income
/ (loss) attributable to Arcos Dorados Holdings Inc. |
24,503 |
(29,713) |
Earnings per share information ($ per share): |
|
|
Basic net income / (loss) per common share |
$ 0.12 |
$ (0.14) |
Weighted-average number of common shares outstanding-Basic |
210,478,322 |
210,226,699 |
Adjusted
EBITDA Reconciliation |
|
|
Operating income / (loss) |
48,347 |
(6,808) |
Depreciation and amortization |
30,136 |
30,366 |
Operating charges excluded from EBITDA computation |
15 |
372 |
Adjusted
EBITDA |
78,498 |
23,930 |
Adjusted EBITDA Margin as % of total
revenues |
9.9% |
4.3% |
First
Quarter 2022 Consolidated Results Excluding Venezuela
|
|
Figure 11. First Quarter 2022 Consolidated
Results - Excluding Venezuela
(In thousands of U.S. dollars, except
per share data)
|
For
Three-Months ended |
|
March
31, |
|
2022 |
2021 |
REVENUES |
|
|
Sales by Company-operated restaurants |
752,279 |
536,766 |
Revenues from franchised restaurants |
35,022 |
23,070 |
Total
Revenues |
787,301 |
559,836 |
OPERATING COSTS AND EXPENSES |
|
|
Company-operated restaurant expenses: |
|
|
Food and paper |
(262,314) |
(192,471) |
Payroll and employee benefits |
(151,346) |
(114,187) |
Occupancy and other operating expenses |
(218,535) |
(177,409) |
Royalty fees |
(38,616) |
(27,661) |
Franchised restaurants - occupancy expenses |
(15,879) |
(11,726) |
General and administrative expenses |
(54,454) |
(44,281) |
Other operating income |
3,601 |
2,965 |
Total
operating costs and expenses |
(737,543) |
(564,769) |
Operating
income / (loss) |
49,758 |
(4,933) |
Net interest expense |
(10,659) |
(12,282) |
Loss from derivative instruments |
(11,692) |
(1,149) |
Foreign currency exchange results |
15,763 |
(9,560) |
Other non-operating (expenses), net |
(23) |
(142) |
Income / (loss)
before income taxes |
43,147 |
(28,066) |
Income
tax expense |
(17,169) |
87 |
Net
income / (loss) |
25,978 |
(27,979) |
Less:
Net income attributable to non-controlling interests |
(126) |
(54) |
Net income
/ (loss) attributable to Arcos Dorados Holdings Inc. |
25,852 |
(28,033) |
Earnings per share information ($ per share): |
|
|
Basic net income / (loss) per common share |
$ 0.12 |
$ (0.13) |
Weighted-average number of common shares outstanding-Basic |
210,478,322 |
210,226,699 |
Adjusted
EBITDA Reconciliation |
|
|
Operating income / (loss) |
49,758 |
(4,933) |
Depreciation and amortization |
29,869 |
30,016 |
Operating charges excluded from EBITDA computation |
15 |
(339) |
Adjusted
EBITDA |
79,642 |
24,744 |
Adjusted EBITDA Margin as % of total
revenues |
10.1% |
4.4% |
First
Quarter 2022 Results by Division
|
|
Figure 12. First Quarter 2022 Consolidated
Results by Division
(In
thousands of U.S. dollars)
|
1Q |
|
Three-Months
ended |
as |
Constant |
|
March
31, |
reported |
Currency |
|
2022 |
2021 |
Incr/(Decr)% |
Incr/(Decr)% |
Revenues |
|
|
|
|
Brazil |
311,979 |
203,251 |
53.5% |
46.1% |
NOLAD |
203,852 |
173,754 |
17.3% |
19.6% |
SLAD |
274,850 |
184,111 |
49.3% |
72.0% |
SLAD - Excl. Venezuela |
271,470 |
182,832 |
48.5% |
68.3% |
TOTAL |
790,681 |
561,116 |
40.9% |
46.4% |
TOTAL - Excl. Venezuela |
787,301 |
559,837 |
40.6% |
45.2% |
|
|
|
|
|
Operating Income (loss) |
|
|
|
|
Brazil |
32,021 |
180 |
NM |
NM |
NOLAD |
13,233 |
5,141 |
157.4% |
166.7% |
SLAD |
23,826 |
1,852 |
NM |
NM |
SLAD - Excl. Venezuela |
25,237 |
3,727 |
NM |
NM |
Corporate and Other |
(20,733) |
(13,981) |
48.3% |
61.3% |
TOTAL |
48,347 |
(6,808) |
NM |
NM |
TOTAL - Excl. Venezuela |
49,758 |
(4,933) |
NM |
NM |
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
Brazil |
46,038 |
13,540 |
240.0% |
223.2% |
NOLAD |
21,402 |
13,836 |
54.7% |
59.2% |
SLAD |
30,316 |
9,604 |
215.7% |
252.1% |
SLAD - Excl. Venezuela |
31,460 |
10,418 |
202.0% |
252.9% |
Corporate and Other |
(19,258) |
(13,050) |
47.6% |
60.2% |
TOTAL |
78,498 |
23,930 |
228.0% |
228.8% |
TOTAL - Excl. Venezuela |
79,642 |
24,744 |
221.9% |
230.0% |
Figure 13. Average Exchange Rate per
Quarter*
|
Brazil |
Mexico |
Argentina |
1Q22 |
5.23 |
20.50 |
106.56 |
1Q21 |
5.47 |
20.34 |
88.56 |
Summarized
Consolidated Balance Sheets
|
|
Figure 14. Summarized Consolidated
Balance Sheets
(In
thousands of U.S. dollars)
|
|
March 31, |
December 31, |
|
|
2022 |
2021 |
ASSETS |
|
Current assets |
|
|
|
Cash and cash equivalents |
267,326 |
278,830 |
Short-term investment |
12,423 |
- |
Accounts and notes receivable, net |
89,387 |
82,180 |
Other current assets (1) |
165,354 |
179,106 |
Total
current assets |
534,490 |
540,116 |
Non-current assets |
|
|
Property and equipment, net |
801,172 |
743,533 |
Net intangible assets and goodwill |
42,087 |
38,808 |
Deferred income taxes |
81,341 |
67,802 |
Derivative instruments |
90,680 |
120,371 |
Equity method investments |
13,583 |
13,105 |
Leases right of use assets, net |
832,948 |
763,580 |
Other non-current assets (2) |
85,543 |
73,942 |
Total
non-current assets |
1,947,354 |
1,821,141 |
Total
assets |
|
2,481,844 |
2,361,257 |
LIABILITIES AND EQUITY |
|
|
Current liabilities |
|
|
Accounts payable |
250,977 |
269,215 |
Taxes payable (3) |
132,035 |
137,362 |
Accrued payroll and other liabilities |
121,061 |
89,923 |
Other current liabilities (4) |
30,165 |
27,316 |
Provision for contingencies |
2,120 |
2,140 |
Financial debt (5) |
15,510 |
12,787 |
Operating lease liabilities |
83,846 |
79,120 |
Total
current liabilities |
635,714 |
617,863 |
Non-current liabilities |
|
|
Accrued payroll and other liabilities |
26,144 |
21,900 |
Provision for contingencies |
39,118 |
31,946 |
Financial debt (6) |
765,194 |
754,097 |
Deferred income taxes |
3,492 |
7,170 |
Operating lease liabilities |
772,655 |
707,119 |
Total
non-current liabilities |
1,606,603 |
1,522,232 |
Total
liabilities |
2,242,317 |
2,140,095 |
Equity |
|
|
|
Class A shares of common stock |
388,369 |
388,369 |
Class B shares of common stock |
132,915 |
132,915 |
Additional paid-in capital |
10,147 |
10,101 |
Retained earnings |
309,096 |
316,180 |
Accumulated other comprehensive losses |
(582,375) |
(607,768) |
Common stock in treasury |
(19,367) |
(19,367) |
Total
Arcos Dorados Holdings Inc shareholders’ equity |
238,785 |
220,430 |
Non-controlling
interest in subsidiaries |
742 |
732 |
Total
equity |
|
239,527 |
221,162 |
Total
liabilities and equity |
2,481,844 |
2,361,257 |
| (1) | Includes "Other receivables", "Inventories",
"Prepaid expenses and other current assets", "McDonald's Corporation's indemnification for contingencies", and "Derivative
Instruments”. |
| (2) | Includes
"Miscellaneous", "Collateral deposits", and "McDonald’s Corporation indemnification for contingencies". |
| (3) | Includes
"Income taxes payable" and "Other taxes payable". |
| (4) | Includes
"Royalties payable to McDonald’s Corporation" and "Interest payable". |
| (5) | Includes
"Current portion of long-term debt" and "Derivative instruments”. |
| (6) | Includes
"Long-term debt, excluding current portion" and "Derivative instruments". |