- Systemwide comparable sales¹ grew 47.9% year-over-year,
driven primarily by higher sales volume across all
divisions
- Digital channels (Delivery, Mobile App and Self-order
Kiosks) set a new quarterly sales record, generating 41% of
systemwide sales, with Delivery sales up over 23% in constant
currency
- Consolidated Adjusted EBITDA¹ in US dollars reached a
second-quarter record of $92.4 million
- Net Income¹ reached $15.6 million, or $0.07 per share, up
from $0.03 per share in the prior year quarter
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 and six months ended June
30, 2022.
Second Quarter 2022 Highlights – Excluding Venezuela
- Systemwide comparable sales² increased 47.9% versus the prior
year quarter, rising more than three times blended inflation on the
back of robust volume growth in all divisions.
- Consolidated¹ revenues totaled $883.9 million, rising 49.5%, or
54.3% in constant currency², versus the prior year period.
- Consolidated¹ Adjusted EBITDA of $92.4 million almost doubled
versus the prior year.
- Consolidated¹ Adjusted EBITDA margin reached 10.5% in the
quarter, exceeding pre-pandemic EBITDA margin in all
divisions.
- Basic net income per share¹ was $0.07, compared to basic net
income per share of $0.03 in the prior year quarter.
- Net Debt to Adjusted EBITDA leverage ratio improved to 1.1x at
the end of the second quarter of 2022.
- Gross restaurant openings reached 14 new units in the quarter,
including 12 freestanding units and 9 new restaurants in
Brazil.
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
We have recaptured the operating momentum we built before the
pandemic and leveraged the strength of the McDonald’s Brand, our
unmatched free-standing restaurant portfolio and the Three D’s
Strategy to sustain strong sales and profitability trends over the
last several quarters.
We started building the foundation for these results fifteen
years ago, when Arcos Dorados began operating on August 3, 2007.
Since then, our restaurant foot print has grown to almost 2,300
locations across twenty countries and territories. We have
generated consistent unit sales growth in local currency, navigated
some very challenging economic periods and improved operating
results, even in the face of stiffer competition in the region’s
underpenetrated QSR industry.
Today we have the industry’s leading Digital platform, which
generated more than 40% of our sales in the most recent quarter. It
includes the most downloaded and used Mobile App, almost 900
Experience of the Future locations offering guests the convenience
of self-order kiosks and a Delivery segment that continues to grow,
despite the normalization of on-premise channels.
The McDonald’s Brand is as strong as it has ever been, with more
than double the market share of the nearest competitor brands in
our operating footprint. Both Favorite Brand and Top of Mind
indicators also place the McDonald’s Brand at the top of the list,
including an expanding favorable gap versus our nearest competitor
in Brazil.
There were no shortcuts to getting here, and keeping the
momentum going will require us to further improve our execution. We
have a saying that “It’s not real, if it’s not real in the
restaurants.” In my view, that is what it means to execute well –
making it real in the restaurants. Today we offer the best
restaurant experience in Latin America and the Caribbean with great
service, delicious food and plenty of options for guests to order
and enjoy their favorite McDonald’s menu items.
We have always believed in operating responsibly for the benefit
of Latin American and Caribbean societies. This includes the
current menu price architecture we are using to avoid contributing
to the problem of high consumer inflation in the region. Instead of
significant price increases, we chose to offer our guests a good
value proposition to build long-term loyalty while using other
tools to manage through a challenging cost environment.
Our Recipe for the Future ESG platform consolidates all our
efforts to have a positive impact on the environment and the
communities we serve. During the second quarter, we were recognized
for initiatives and workplaces that promote diversity and inclusion
in Argentina, Ecuador and Uruguay. During the quarter, we also
became the first QSR operator in the world to issue a
Sustainability Linked Bond, aligning our financial strategy with
our long-term targets for greenhouse gas emission reduction in our
business and that of our suppliers.
We remain confident about the future growth of our business
because we believe there are still many opportunities to improve
execution and generate additional value for our people, communities
and shareholders for years to come.
Consolidated Results
Consolidated
Figure 1. AD Holdings Inc Consolidated: Key Financial
Results (In millions of U.S. dollars, except as noted)
2Q21(a) CurrencyTranslation -Excl.Venezuela (b)
ConstantCurrencyGrowth - Excl.Venezuela(c)
Venezuela(d) 2Q22(a+b+c+d) % AsReported
Total Restaurants (Units)
2,255
2,286
Sales by Company-operated Restaurants
566.1
(29.4
)
309.4
2.3
848.4
49.9
%
Revenues from franchised restaurants
26.6
0.9
11.8
0.3
39.5
48.6
%
Total Revenues
592.7
(28.5
)
321.1
2.6
887.9
49.8
%
Adjusted EBITDA
47.2
(2.2
)
46.3
0.1
91.4
93.7
%
Adjusted EBITDA Margin
8.0
%
10.3
%
2.3
%
Net income (loss) attributable to AD
4.9
(5.7
)
16.0
(0.7
)
14.5
193.6
%
No. of shares outstanding (thousands)
210,360
210,540
EPS (US$/Share)
0.02
0.07
2Q22 = 2Q21 + 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.
Second quarter net income attributable to the Company totaled
$14.5 million, compared to net income of $4.9 million in the same
period of 2021. Arcos Dorados’ recorded earnings of $0.07 per share
in the second quarter of 2022 compared to $0.02 per share in the
corresponding 2021 period. Total weighted average shares for the
second quarter of 2022 amounted to 210,539,537 compared to
210,359,930 in the prior year’s quarter.
Consolidated - excluding Venezuela
Figure 2. AD Holdings Inc Consolidated - Excluding Venezuela:
Key Financial Results (In millions of U.S. dollars, except as
noted)
2Q21(a) CurrencyTranslation(b)
ConstantCurrencyGrowth(c) 2Q22(a+b+c) %
AsReported % ConstantCurrency Total Restaurants
(Units)
2,151
2,186
Sales by Company-operated Restaurants
564.9
(29.4
)
309.4
844.8
49.6
%
54.8
%
Revenues from franchised restaurants
26.4
0.9
11.8
39.1
48.0
%
44.6
%
Total Revenues
591.3
(28.5
)
321.1
883.9
49.5
%
54.3
%
Systemwide Comparable Sales
47.9
%
Adjusted EBITDA
48.3
(2.2
)
46.3
92.4
91.3
%
95.8
%
Adjusted EBITDA Margin
8.2
%
10.5
%
2.3
%
Net income (loss) attributable to AD
5.3
(5.7
)
16.0
15.6
193.5
%
300.5
%
No. of shares outstanding (thousands)
210,360
210,540
EPS (US$/Share)
0.03
0.07
Total revenues rose 49.5% in US dollars, or 54.3% in constant
currency, versus the prior year period, reaching $883.9 million.
Systemwide comparable sales grew over three times blended inflation
in all divisions, increasing 47.9% year-over-year, and the
Company’s Three D’s Strategy across Digital, Delivery and
Drive-thru channels continued to support strong top-line
growth.
Digital channels generated 41% of systemwide sales in the
quarter, growing 62% versus the prior year and reaching their
highest-ever quarterly sales in US dollars. As of the end of June,
the Company’ Mobile App had accumulated over 70 million downloads
and sales generated through the App also reached a new quarterly
record. Self-Order Kiosks captured between 60% and 90% of
on-premise sales volume in the Company’s Experience of the Future
(EOTF) restaurants, depending on the market.
Delivery sales set a new US dollar record for a single quarter,
which included 23% growth in constant currency, on top of robust
growth in the prior two years. Drive-thru also remained sticky,
especially in NOLAD and SLAD, with sales up 13% in constant
currency, demonstrating the resiliency of the off-premise channels
even as on-premise segments continue normalizing. Together, the
off-premise channels contributed 45% of systemwide sales in the
quarter.
On-premise sales at the front counter, dessert centers and
McCafé, doubled prior year sales in constant currency, generating
55% of systemwide sales in the quarter.
Importantly, the strong revenue growth was driven primarily by
higher restaurant volume with a responsible menu price architecture
and the industry’s best restaurant experience offering a compelling
value to the Company’s guests.
Adjusted EBITDA – Excluding Venezuela ($million)
Breakdown of main variations contributing to 2Q22 Adjusted
EBITDA
Consolidated Adjusted EBITDA excluding Venezuela reached $92.4
million, a record for a second quarter, with strong contributions
from all divisions. Notably, the trailing-four-quarter Adjusted
EBITDA now includes the highest result for a third, fourth, first
and second quarter in the Company’s history.
Sales growth across all divisions was supported primarily by
higher guest traffic and, together with effective cost and expense
management, generated significant operating leverage in the period.
As a result, consolidated Adjusted EBITDA margin was up 230 basis
points versus the prior year quarter, or 430 basis points excluding
a tax credit in Brazil from the prior year result.
Strong revenue growth diluted consolidated General &
Administrative (G&A) expenses, which were 190 basis points
lower as a percentage of revenue versus the prior year quarter.
Notable items in the Adjusted EBITDA reconciliation
Included in Adjusted EBITDA: The
negative variation in other operating income / (expense) is mainly
explained by an $11.9 million net tax credit in Brazil in the prior
year period.
Excluded from Adjusted EBITDA:
There were no material variations.
Non-operating Results - excluding Venezuela
Arcos Dorados’ non-operating results for the second quarter
included non-cash foreign currency exchange loss of $7.5 million,
related to the depreciation of the Brazilian Real in the period,
and a $1.1 million loss from Derivative Instruments.
Net interest expense totaled $21.9 million in the quarter. This
included $10.6 million in expenses related to the liability
management transaction executed during the quarter when the Company
issued the QSR industry’s first Sustainability Linked Bond (SLB).
The Company recorded an income tax expense of $15.6 million in the
second quarter, compared to an income tax expense of $10.3 million
in the prior-year period.
Second quarter net income attributable to the Company totaled
$15.6 million, compared to net income of $5.3 million in the
prior-year period. Earnings per share were $0.07 in the second
quarter of 2022, up from $0.03 per share in the prior year
quarter.
Divisional Results
Brazil Division
Figure 3. Brazil Division: Key
Financial Results
(In millions of U.S. dollars, except as
noted)
2Q21(a) CurrencyTranslation(b)
ConstantCurrencyGrowth(c) 2Q22(a+b+c) %
AsReported % ConstantCurrency Total Restaurants
(Units)
1,044
1,070
Total Revenues
225.7
26.2
106.1
358.1
58.6
%
47.0
%
Systemwide Comparable Sales
37.4
%
Adjusted EBITDA
33.8
4.1
14.7
52.7
55.8
%
43.6
%
Adjusted EBITDA Margin
15.0
%
14.7
%
-0.3
%
As reported revenue reached $358.1 million, increasing 58.6%
year-over-year. Guest traffic rose strongly compared with the prior
year quarter when government-imposed operating restrictions
impacted results, primarily in April 2021. The appreciation of the
Brazilian real versus the US dollar also contributed to US dollar
revenue growth in the period. On a constant currency basis,
revenues grew 47.0%, supported by 37.4% higher systemwide
comparable sales.
Second quarter marketing activities focused on investments to
strengthen the McDonald’s brand, including the continuity of the
“Méquizices” campaign, featuring some of Brazil’s most popular
celebrities and influencers describing their favorite McDonald’s
orders. The Company also launched the McCrispy Chicken lineup in
Brazil with very encouraging early results. Among the marketing
initatives to support Three D sales channels was the “Méqui Fest”,
a temporary couponing campaign available exclusively via the
McDonald’s Mobile App. Notably, both Top of Mind and Favorite Brand
measurements3 have expanded significantly since the beginning of
2021, standing at more than double the nearest competitor’s levels
in the second quarter of 2022. This brand preference is also
reflected in the McDonald’s brand’s consistent market share gains
within a consolidating restaurant industry in the country.
Digital channels generated 52% of systemwide sales in Brazil,
while Delivery set a new quarterly sales record in absolute terms,
increasing 25% in constant currency versus the prior year quarter.
Strong operational execution, including lower delivery service
times and improved order accuracy, leveraged Arcos Dorados’
structural competitive advantages and brand preference among
guests.
As reported Adjusted EBITDA in the division reached $52.7
million in the quarter. Adjusted EBITDA margin in the second
quarter 2021 benefited from an $11.9 million net tax credit due to
the exclusion of ICMS from the Pis/Cofins calculation base.
Excluding this effect, Brazil’s Adjusted EBIDTA margin in the
second quarter 2022 rose 500 basis points versus the prior year
quarter.
Food & Paper costs in the division were lower as a
percentage of sales versus the prior year despite ongoing cost
pressures. The margin improvement reflects operating leverage
generated by a favorable sales mix and strong volume growth.
North Latin American Division (NOLAD)
Figure 4. NOLAD Division: Key Financial
Results
(In millions of U.S. dollars, except as
noted)
2Q21(a) CurrencyTranslation(b)
ConstantCurrencyGrowth(c) 2Q22(a+b+c) %
AsReported % ConstantCurrency Total Restaurants
(Units)
626
628
Total Revenues
193.3
(6.4
)
35.8
222.7
15.2
%
18.5
%
Systemwide Comparable Sales
20.9
%
Adjusted EBITDA
19.0
(1.0
)
5.2
23.3
22.2
%
27.6
%
Adjusted EBITDA Margin
9.9
%
10.4
%
0.6
%
As reported revenues were $222.7 million, up 15.2% in US dollars
and 18.5% in constant currency versus the prior year quarter.
Systemwide comparable sales rose 20.9%, more than three times the
division’s blended inflation, thanks mostly to higher guest traffic
versus the prior year. Mexico, Costa Rica and the French West
Indies markets delivered the strongest comparable sales growth.
NOLAD’s sales performance also reflects the increase of on-premise
sales in most markets as well as sustained Drive-thru sales volume
growth.
Marketing activities in Mexico included the “Más sabor, más
diversión” campaign that drove guest excitement by leveraging the
iconic Big Mac, while in Costa Rica the McCrispy Chicken line-up
was launched in its three versions (Classic, Spicy and Deluxe) to
boost the chicken category. The family business registered a very
solid sales quarter for the Company and in NOLAD, driven by the
exclusive rights to Disney properties in the Happy Meal. Finally,
the Company took another step toward increasing Digital channel
penetration in the division by rolling-out the Order Ahead
functionality across NOLAD markets.
As reported Adjusted EBITDA reached $23.3 million in the second
quarter compared with $19.0 million in the prior year quarter,
representing a year-over-year increase of 22.2%, or 27.6% on a
constant currency basis. Adjusted EBITDA margin rose by 50 basis
points against 2021, with lower Occupancy & Other operating and
G&A expenses offsetting higher Food & Paper costs as a
percentage of sales.
South Latin American Division (SLAD)
Figure 5. SLAD Division: Key Financial Results (In millions
of U.S. dollars, except as noted)
2Q21(a)
CurrencyTranslation -Excl.Venezuela(b)
ConstantCurrencyGrowth - Excl.Venezuela(c)
Venezuela(d) 2Q22(a+b+c+d) % AsReported
Total Restaurants (Units)
585
588
Total Revenues
173.7
(48.4
)
179.2
2.6
307.1
76.8
%
Adjusted EBITDA
11.1
(7.5
)
29.3
0.1
32.9
197.1
%
Adjusted EBITDA Margin
6.4
%
10.7
%
4.3
%
Figure 6. SLAD Division - Excluding Venezuela: Key Financial
Results (In millions of U.S. dollars, except as noted)
2Q21(a) CurrencyTranslation(b)
ConstantCurrencyGrowth(c) 2Q22(a+b+c) %
AsReported % ConstantCurrency Total Restaurants
(Units)
481
488
Total Revenues
172.3
(48.4
)
179.2
303.1
75.9
%
104.0
%
Systemwide Comparable Sales
98.8
%
Adjusted EBITDA
12.2
(7.5
)
29.3
34.0
177.6
%
239.2
%
Adjusted EBITDA Margin
7.1
%
11.2
%
4.1
%
Revenues in SLAD, excluding Venezuela, increased 75.9% in US
dollars, driven by a 98.8% increase in systemwide comparable sales.
Systemwide comparable sales more than tripled the division’s
blended inflation in the period. Argentina, Colombia and Chile were
among the main contributors to topline growth in the quarter.
Drive-thru and Delivery sales rose 59% and 22% in constant
currency, respectively, despite strong normalization trends in
on-premise sales channels.
Second quarter marketing activities were a key factor in
building sales and traffic growth in the division. SLAD’s
initiatives centered on strong, premium menu innovations including
the “Grand Tasty Turbo Bacon” in Argentina, the “Signature American
BBQ” in Chile and the “Signature Premium Tasty” in Uruguay. The
Company strengthened its chicken credentials in Colombia, Ecuador
and Peru, with the launch of the delicious, craveable and juicy
Spicy McNuggets.
As reported Adjusted EBITDA reached $34.0 million, compared with
$12.2 million in the prior-year quarter. Adjusted EBITDA margin was
11.2%, or 410 basis points higher than the prior year quarter,
benefiting from sales growth above inflation and significant
operating leverage.
New Unit Development Figure 7. Total Restaurants
(eop)* June2022 March2022 December2021
September2021 June2021 Brazil
1,070
1,061
1,051
1,052
1,044
NOLAD
628
625
625
626
626
SLAD
588
587
585
585
585
TOTAL
2,286
2,273
2,261
2,263
2,255
* Considers Company-operated and franchised restaurants at
period-end
Figure 8. Footprint as of June 30, 2022 Store
Type* TotalRestaurants Ownership McCafes
DessertCenters FS & IS MS & FC
CompanyOperated Franchised Brazil
610
460
1,070
644
426
109
1,971
NOLAD
434
194
628
458
170
15
532
SLAD
365
223
588
500
88
163
703
TOTAL
1,409
877
2,286
1,602
684
287
3,206
* FS: Free-Standing; IS: In-Store; MS: Mall Store; FC: Food Court.
Arcos Dorados opened 14 restaurants during the second quarter of
2022, including 12 free-standing units. In Brazil, the Company
opened 9 restaurants, including 8 free-standing locations in the
period. For the year-to-date, the Company opened 30 new
restaurants, including 26 free-standing units. This included 21
restaurant openings in Brazil, with 18 free-standing units opened
during the first half of 2022 in that division.
As of the end of June 2022, there were 871 Experience of the
Future Restaurants across the Company’s footprint.
Balance Sheet & Cash Flow Highlights
Figure 9. Consolidated Financial Ratios (In thousands of
U.S. dollars, except ratios)
June 30,
December 31,
2022
2021
Cash & cash equivalents (i)
289,418
278,830
Total Financial Debt (ii)
691,561
657,896
Net Financial Debt (iii)
402,143
379,066
Total Financial Debt / LTM Adjusted EBITDA ratio
1.9
2.4
Net Financial Debt / LTM Adjusted EBITDA ratio
1.1
1.4
(i)
Cash & cash equivalents includes short-term investment
(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 $99.3 million and $120.4
million as a reduction of financial debt as of June 30, 2022 and
December 31, 2021, respectively).
(iii)
Total financial debt less cash and cash equivalents.
Cash and cash equivalents were $289.4 million and total
financial debt (including the value of derivative instruments) was
$691.6 million, as of June 30, 2022. Net debt was $402.1 million,
up from $379.1 million at the end of 2021, largely due to a
decrease in the value of Brazilian real linked derivative
instruments.
As mentioned in its first quarter 2022 earnings release, on
April 27, 2022, the Company issued a Sustainability-Linked Bond for
an aggregate principal amount of $350 million, maturing on May 27,
2029. The proceeds of this liability management transaction were
used to re-purchase most of the Company’s outstanding 2023 Senior
Notes and to fund a tender offer of $150 million of its outstanding
2027 Senior Notes.
The net debt to Adjusted EBITDA leverage ratio ended the quarter
at a healthy 1.1x as record trailing-twelve-month Adjusted EBITDA
more than offset the modest increase in net debt.
Net cash generated from operating activities for the six months
ended June 30 totaled $121.9 million, up from $34.6 million last
year, while cash used in net investing activities totaled $84.0
million, with capital expenditures of $69.0 million. Net cash used
in financing activities was $25.6 million, which included $16.8
million corresponding to the payment of the first two installments
of the 2022 dividend declared by the Company’s Board of
Directors.
Recent Developments
Appointment of New Divisional President for Brazil
Effective July 1, 2022, Rogerio Barreira became President of the
Brazil Division, replacing Paulo Camargo who decided to leave the
Company to pursue another opportunity. Mr. Barreira was serving as
the Brazil Division’s Vice President of Operations since April 2021
and has more than thirty-eight years of experience with the
Company. He began his career in 1984 as a crew member in São Paulo,
Brazil, and has held various leadership positions in operations,
including five years as the President of the NOLAD Division from
2015 to 2020.
Second Quarter 2022 Earnings Webcast
A webcast to discuss the information contained in this press
release will be held today, August 10, 2022, at 10:00 a.m. ET. In
order to access the webcast, members of the investment community
should follow this link Arcos Dorados Second Quarter 2022 Results
Webcast.
A replay of the webcast will be available later today through
November 2022 in the investor section of the Company’s website:
www.arcosdorados.com/ir.
Definitions
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
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 06/30/2022). 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 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.
Second Quarter 2022 Consolidated Results
Figure 10. Second Quarter 2022 Consolidated Results (In
thousands of U.S. dollars, except per share data)
For Three-Months ended
For Six-Months ended
June 30,
June 30,
2022
2021
2022
2021
REVENUES Sales by Company-operated restaurants
848,350
566,092
1,603,644
1,103,981
Revenues from franchised restaurants
39,545
26,604
74,932
49,831
Total Revenues
887,895
592,696
1,678,576
1,153,812
OPERATING COSTS AND EXPENSES Company-operated restaurant expenses:
Food and paper
(301,028
)
(203,355
)
(564,436
)
(396,014
)
Payroll and employee benefits
(169,441
)
(109,845
)
(321,669
)
(224,265
)
Occupancy and other operating expenses
(244,747
)
(182,740
)
(464,874
)
(360,933
)
Royalty fees
(44,061
)
(29,236
)
(82,677
)
(56,898
)
Franchised restaurants - occupancy expenses
(16,855
)
(12,152
)
(32,863
)
(23,979
)
General and administrative expenses
(54,996
)
(49,352
)
(110,534
)
(94,318
)
Other operating income
3,879
11,801
7,470
13,604
Total operating costs and expenses
(827,249
)
(574,879
)
(1,569,583
)
(1,142,803
)
Operating income
60,646
17,817
108,993
11,009
Net interest expense
(21,923
)
(13,425
)
(32,582
)
(25,707
)
Loss from derivative instruments
(1,144
)
(4,232
)
(12,836
)
(5,381
)
Foreign currency exchange results
(7,283
)
15,167
8,544
5,819
Other non-operating (expenses)
(83
)
(77
)
(108
)
(220
)
Income / (loss) before income taxes
30,213
15,250
72,011
(14,480
)
Income tax expense
(15,638
)
(10,259
)
(32,807
)
(10,188
)
Net income / (loss)
14,575
4,991
39,204
(24,668
)
Less: Net income attributable to non-controlling interests
(94
)
(58
)
(220
)
(112
)
Net income / (loss) attributable to Arcos Dorados Holdings
Inc.
14,481
4,933
38,984
(24,780
)
Earnings per share information ($ per share): Basic net
income / (loss) per common share
$
0.07
$
0.02
$
0.19
$
(0.12
)
Weighted-average number of common shares outstanding-Basic
210,539,537
210,359,930
210,509,099
210,293,682
Adjusted EBITDA Reconciliation Operating income
60,646
17,817
108,993
11,009
Depreciation and amortization
30,504
29,796
60,640
60,162
Operating charges excluded from EBITDA computation
212
(457
)
227
(84
)
Adjusted EBITDA
91,362
47,156
169,860
71,087
Adjusted EBITDA Margin as % of total revenues
10.3
%
8.0
%
10.1
%
6.2
%
Second Quarter 2022 Consolidated Results Excluding
Venezuela
Figure 11. Second Quarter 2022 Consolidated Results - Excluding
Venezuela (In thousands of U.S. dollars, except per share data)
For Three-Months ended
For Six-Months ended
June 30,
June 30,
2022
2021
2022
2021
REVENUES Sales by Company-operated restaurants
844,781
564,852
1,597,060
1,101,618
Revenues from franchised restaurants
39,097
26,424
74,119
49,495
Total Revenues
883,878
591,276
1,671,179
1,151,113
OPERATING COSTS AND EXPENSES Company-operated restaurant expenses:
Food and paper
(299,769
)
(203,029
)
(562,083
)
(395,500
)
Payroll and employee benefits
(168,716
)
(109,642
)
(320,062
)
(223,828
)
Occupancy and other operating expenses
(243,036
)
(182,004
)
(461,571
)
(359,413
)
Royalty fees
(44,061
)
(29,236
)
(82,677
)
(56,898
)
Franchised restaurants - occupancy expenses
(16,764
)
(12,115
)
(32,643
)
(23,841
)
General and administrative expenses
(53,913
)
(48,573
)
(108,367
)
(92,854
)
Other operating income
4,367
11,638
7,968
14,604
Total operating costs and expenses
(821,892
)
(572,961
)
(1,559,435
)
(1,137,730
)
Operating income
61,986
18,315
111,744
13,383
Net interest expense
(21,924
)
(13,426
)
(32,583
)
(25,708
)
Loss from derivative instruments
(1,144
)
(4,232
)
(12,836
)
(5,381
)
Foreign currency exchange results
(7,518
)
15,047
8,245
5,487
Other non-operating (expenses)
(83
)
(77
)
(106
)
(220
)
Income / (loss) before income taxes
31,317
15,627
74,464
(12,439
)
Income tax expense
(15,643
)
(10,260
)
(32,812
)
(10,172
)
Net income / (loss)
15,674
5,367
41,652
(22,611
)
Less: Net income attributable to non-controlling interests
(94
)
(58
)
(220
)
(112
)
Net income / (loss) attributable to Arcos Dorados Holdings
Inc.
15,580
5,309
41,432
(22,723
)
Earnings per share information ($ per share): Basic net
income / (loss) per common share
$
0.07
$
0.03
$
0.20
$
(0.11
)
Weighted-average number of common shares outstanding-Basic
210,539,537
210,359,930
210,509,099
210,293,682
Adjusted EBITDA Reconciliation Operating income
61,986
18,315
111,744
13,383
Depreciation and amortization
30,245
29,809
60,114
59,825
Operating charges excluded from EBITDA computation
155
179
170
(159
)
Adjusted EBITDA
92,386
48,303
172,028
73,049
Adjusted EBITDA Margin as % of total revenues
10.5
%
8.2
%
10.3
%
6.3
%
Second Quarter 2022 Results by Division
Figure 12. Second Quarter 2022 Consolidated Results by
Division (In thousands of U.S. dollars)
2Q
YTD
Three-Months ended
As
Constant
Six-Months ended
As
Constant
June 30,
reported
Currency
June 30,
reported
Currency
2022
2021
Incr/(Decr)%
Incr/(Decr)%
2022
2021
Incr/(Decr)%
Incr/(Decr)%
Revenues Brazil
358,069
225,740
58.6
%
47.0
%
670,048
428,990
56.2
%
46.6
%
NOLAD
222,726
193,272
15.2
%
18.5
%
426,578
367,026
16.2
%
19.0
%
SLAD
307,100
173,685
76.8
%
106.3
%
581,950
357,796
62.6
%
88.7
%
SLAD - Excl. Venezuela
303,083
172,265
75.9
%
104.0
%
574,553
355,097
61.8
%
85.6
%
TOTAL
887,895
592,697
49.8
%
55.1
%
1,678,576
1,153,812
45.5
%
50.9
%
TOTAL - Excl. Venezuela
883,878
591,277
49.5
%
54.3
%
1,671,179
1,151,113
45.2
%
49.9
%
Operating Income (loss)
Brazil
38,024
19,995
90.2
%
74.7
%
70,045
20,174
247.2
%
223.6
%
NOLAD
14,854
8,921
66.5
%
75.1
%
28,087
14,061
99.8
%
108.5
%
SLAD
26,845
5,626
377.2
%
515.3
%
50,671
7,478
577.6
%
738.6
%
SLAD - Excl. Venezuela
28,185
6,124
360.2
%
486.7
%
53,422
9,852
442.2
%
580.1
%
Corporate and Other
(19,077
)
(16,724
)
-14.1
%
-28.8
%
(39,810
)
(30,706
)
-29.6
%
-43.6
%
TOTAL
60,646
17,818
240.4
%
257.3
%
108,993
11,007
890.2
%
928.8
%
TOTAL - Excl. Venezuela
61,986
18,316
238.4
%
254.7
%
111,744
13,381
735.1
%
778.4
%
Adjusted EBITDA Brazil
52,706
33,819
55.8
%
43.6
%
98,744
47,357
108.5
%
94.9
%
NOLAD
23,258
19,039
22.2
%
27.6
%
44,660
32,874
35.9
%
40.9
%
SLAD
32,937
11,085
197.1
%
262.8
%
63,253
20,690
205.7
%
257.9
%
SLAD - Excl. Venezuela
33,961
12,232
177.6
%
239.3
%
65,421
22,652
188.8
%
245.5
%
Corporate and Other
(17,539
)
(16,785
)
-4.5
%
-17.8
%
(36,797
)
(29,834
)
-23.3
%
-36.4
%
TOTAL
91,362
47,158
93.7
%
97.8
%
169,860
71,087
138.9
%
141.9
%
TOTAL - Excl. Venezuela
92,386
48,305
91.3
%
95.8
%
172,028
73,049
135.5
%
141.2
%
Figure 13. Average Exchange Rate per Quarter* Brazil
Mexico Argentina
2Q22
4.92
20.02
117.88
2Q21
5.30
20.03
94.02
* Local $ per 1 US$
Summarized Consolidated Balance Sheets
Figure 14. Summarized Consolidated Balance Sheets (In
thousands of U.S. dollars)
June 30,
December 31,
2022
2021
ASSETS
Current assets Cash and cash equivalents
276,078
278,830
Short-term investment
13,340
-
Accounts and notes receivable, net
86,668
82,180
Other current assets (1)
165,737
179,106
Total current assets
541,823
540,116
Non-current assets Property and equipment, net
767,445
743,533
Net intangible assets and goodwill
42,935
38,808
Deferred income taxes
77,892
67,802
Derivative instruments
99,265
120,371
Equity method investments
13,887
13,105
Leases right of use assets, net
778,116
763,580
Other non-current assets (2)
81,328
73,942
Total non-current assets
1,860,868
1,821,141
Total assets
2,402,691
2,361,257
LIABILITIES AND EQUITY
Current liabilities Accounts payable
257,651
269,215
Taxes payable (3)
138,853
137,362
Accrued payroll and other liabilities
114,431
89,923
Other current liabilities (4)
22,533
27,316
Provision for contingencies
2,109
2,140
Financial debt (5)
13,334
12,787
Operating lease liabilities
79,197
79,120
Total current liabilities
628,108
617,863
Non-current liabilities Accrued payroll and other
liabilities
24,908
21,900
Provision for contingencies
38,088
31,946
Financial debt (6)
767,739
754,097
Deferred income taxes
5,136
7,170
Operating lease liabilities
724,474
707,119
Total non-current liabilities
1,560,345
1,522,232
Total liabilities
2,188,453
2,140,095
Equity Class A shares of common stock
389,393
388,369
Class B shares of common stock
132,915
132,915
Additional paid-in capital
9,174
10,101
Retained earnings
323,577
316,180
Accumulated other comprehensive losses
(621,957
)
(607,768
)
Common stock in treasury
(19,367
)
(19,367
)
Total Arcos Dorados Holdings Inc shareholders’ equity
213,735
220,430
Non-controlling interest in subsidiaries
503
732
Total equity
214,238
221,162
Total liabilities and equity
2,402,691
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".
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220810005196/en/
Investor Relations Contact Dan Schleiniger VP of Investor
Relations Arcos Dorados daniel.schleiniger@mcd.com.uy
Media Contact David Grinberg VP of Corporate
Communications Arcos Dorados david.grinberg@mcd.com.uy
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