Arcos Dorados: Reports Q3-2019 Financial Results

Montevideo / UY. (arc) Arcos Dorados Holdings Inc., Latin America’s largest restaurant chain and the world’s largest independent McDonald’s franchisee, reported unaudited results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

• Consolidated revenues totaled USD 747.6 million, a 3.8 percent increase in USD versus the third quarter of 2018 and despite the depreciation of some local currencies. On a constant currency basis, consolidated revenues grew 14.1 percent.
• Systemwide comparable sales rose 12.7 percent year-over-year and were above blended inflation.
• Consolidated Adjusted Ebitda in USD decreased 13.7 percent year-over-year to USD 76.1 million, mainly as a result of a one-time tax credit of USD 23.2 million recorded in the same period of last year. On a constant currency basis, Adjusted Ebitda decreased 8.1 percent. When excluding the tax credit, Adjusted Ebitda increased 17.1 percent and 24.8 percent in USD and constant currency terms, respectively.
• Consolidated Adjusted Ebitda margin contracted 210 basis points year-over-year to 10.2 percent. Excluding last year’s tax credit, the Adjusted Ebitda margin expanded 120 basis points.
• General and Administrative (G+A) expenses increased 2.6 percent in USD versus the year-ago quarter and were down 10 basis points as a percentage of revenue.
• Net income in USD decreased 39.6 percent to USD 25.8 million, from USD 42.7 million, mainly due to last year’s one-time tax credit.

Chief Executive’s Remarks

«In light of the largely weak economic conditions in many of our markets, our strong revenue and margin performance validate once again the investments we continue making under our three-pillar strategy to drive profitable growth and extend our leadership position in Brazil and other markets. A combination of guest, volume and check growth accelerated comparable sales again and at a rate still above blended inflation.

«In Brazil, our largest market, we captured additional market share and continued outperforming our sector achieving 11 percent comparable sales growth, while in Mexico we delivered our tenth consecutive quarter of revenue growth, also above inflation. Given the operating leverage we have achieved with a leaner cost structure, the quarter’s robust top line growth drove our consolidated margin 120 basis points higher, excluding the tax benefit.

«With the significant sales lift that our EOTF restaurants continue generating, we are extending this format to six new markets, ending the year in 10 countries. Downloads of our mobile app nearly doubled last year’s level. Our popular app is a direct customer channel for marketing communications and promotions, many of which helped drive traffic in the quarter and now represents an increasingly valuable strategic asset for the company.

«Operating as the most sustainable and socially responsible restaurant company in Latin America and the Caribbean is another way that our market-leading brand stands apart. Whether it’s offering more balanced and nutritious Happy Meals, serving cage-free eggs or eliminating plastic waste, we are making our brand more relevant to consumers who increasingly chose products and services offered by companies that respect the environment and benefit the communities where they operate,» said Marcelo Rabach, Chief Executive Officer of Arcos Dorados.

20191113-ARCOS-Q3-2019.