agenda arcos dorados · agenda arcos dorados 3q 2015 conference call presentation november 4, 2015....
Post on 04-Jun-2020
4 Views
Preview:
TRANSCRIPT
Agenda ARCOS DORADOS
3Q 2015 Conference Call Presentation
November 4, 2015
Disclaimer
This presentation contains forward-looking statements that represent our beliefs, projections and predictions
about future events or our future performance. Forward-looking statements can be identified by terminology
such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,”
“predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases.
These forward-looking statements are necessarily subjective and involve known and unknown risks,
uncertainties and other important factors that could cause our actual results, performance or achievements
or industry results to differ materially from any future results, performance or achievement described in or
implied by such 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. 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.
1
3Q15: CEO’s Opening Remarks
2
We completed the roll-out of the scheduling and forecasting system in Brazil, which will
increase restaurant level margins over the medium-term
We implemented a restructuring plan across the Company, which will lower our total
G&A by more than $20 million on an annualized basis in today’s dollars
Asset Monetization: we signed our first agreement to sell and relocate one of our
restaurant locations in Mexico
Re-franchising: we have already reached agreements on the re-franchising of more
than twenty of our Company-operated restaurants in Brazil
We have advanced in our plans to address the maturity of our BRL denominated bond
Our 3-year plan will strengthen ARCO’s leadership position and capture
the long-term potential of the QSR industry in Latin America
3Q 2015 Results & Highlights
Achieved high single-digit comparable sales growth
3
3Q15 as reported revenues declined 16.6%
o Impacted by significant currency headwinds across the region
Organic revenues increased 11.4% and comparable sales grew 9.4%,
driven by average check growth
o Despite a weak economic backdrop and softer consumer spending
in our largest markets
Adjusted EBITDA margin contracted by 50 basis points as gains in three divisions were
offset by a decline in Brazil’s Adjusted EBITDA margin
65 new restaurants (TTM), bringing restaurant count to 2,122 (September 2015)
CUSTOMERS ARE RESPONDING WELL TO OUR PROMOTIONAL
STRATEGIES, BUT TRAFFIC TRENDS REMAIN CHALLENGING
3Q15 Performance: Brazil
Significant BRL depreciation and weak consumption environment
continue to impact Brazil’s results
4
Traffic levels were impacted by further deterioration in the challenging consumption
environment
o As reflected in all-time lows in consumer confidence
o Consumers trading down to local offers
o Marketing and promotional activities to support restaurant traffic levels and
provide more value to our customers
As reported revenues decreased 32.3%
o Impacted by the 56% y-o-y average
depreciation of the BRL
+4.3% organic revenue growth
o Comparable sales rose 1.2%
o Average check growth partially offset by negative traffic
Key marketing drivers:
o Super/Mega/Grand Big Mac
o Minions
o Triple Cheeseburger in GPPP
3Q15 Performance: NOLAD
Implemented marketing promotions targeted at protecting traffic
5
New personalized menu in Mexico, McMio, is now fully implemented in Company-
operated restaurants
Continue to see traction in our family business
As reported revenues declined 4.1%
o Impacted by the 25% y-o-y average
depreciation of the Mexican peso
+ 7.3% organic revenue growth
o Comparable sales rose 4.7%
Average check growth and flat traffic
Average check supported by inflation
and more favorable mix
Key marketing drivers:
o Minions vertigration
o “Transformers” & “My Little Pony”
in Happy Meal
3Q15 Performance: SLAD
Marketing initiatives were designed to stimulate traffic
6
Currency headwinds from key markets
As reported revenues were up 12.1%
o Impacted by the 11% y-o-y average depreciation
of the Argentine peso
o Depreciation in the rest of the region’s currencies
+26.2% organic revenue growth
o Comparable sales growth of 26.3%
Inflation-driven average check growth
Modest traffic decline, primarily impacted by the
challenging macroeconomic environment in Argentina
Key marketing drivers:
o Monopoly campaign
o Minions vertigration
o Triple Bacon in GPPP
3Q15 Performance: Caribbean
Ongoing challenging conditions in key markets
7
As reported results impacted by the use of a weaker y-o-y average FX rate in
Venezuela for re-measurement purposes
+14.5% organic revenue growth
o Comparable sales grew 19.9%
Inflation-driven average check growth
more than offset a decline in traffic
Excluding Venezuela:
o As reported revenues impacted by the
depreciation of the Colombian peso and the Euro
o Organic revenues increased 2.8%
o Comparable sales rose 1.8%
Higher average check and traffic gains
Key marketing drivers:
o “Almuerzo Colombiano”
o Big Mac in GPPP (limited time offer)
Mexico
Colombia
Brazil
Argentina
NOLAD
Costa Rica, Mexico,
Panama
BRAZIL
SLAD
Argentina, Chile,
Ecuador, Peru,
Uruguay
CARIBBEAN
Aruba, Colombia, Curaçao, French Guyana,
Guadeloupe, Martinique, Puerto Rico, St.
Croix, St. Thomas, Trinidad & Tobago,
Venezuela
36 Restaurant Additions LTM (net)
29 Re-imagings LTM
3 Restaurant Additions LTM (net)
8 Re-imagings LTM
3 Restaurant Additions LTM (net)
5 Re-imagings LTM
-6 Restaurant Additions LTM (net)
3 Re-imagings LTM
3Q15 New Unit Development & Re-imaging
SLAD
Brazil
Caribbean
NOLAD
Number of systemwide
restaurants(1)
383
869
356
514
18%
41%
17%
24%
2,122 100%
8(1) As of September 30, 2015; does not include McCafé units (328) & Dessert Centers (2,574)
3Q15 Adjusted EBITDA Bridge
As reported Adjusted EBITDA variations ($ Million)
9
*Net impact of: Special Items ($1.7 million), Currency Translation (-$6.6 million) and Organic Growth ($5.5 million).
$ 66.1 $ 0.6 $ 1.3 $ 17.5
$ 3.0 $ 50.9
0
10
20
30
40
50
60
70
80
EBITDA 3Q2014 Venezuela ConsolidatedImpacts*
Organic Growth - Excl.Venezuela
Currency Translation -Excl. Venezuela
Special Items - Excl.Venezuela
EBITDA 3Q2015
0
10
20
30
40
50
60
Brazil NOLAD SLAD Caribbean
Ex.Vza
US
$ M
illi
on
3Q14 3Q15
51.6%
-17.7%
0
50
100
150
200
250
300
350
400
450
500
Brazil NOLAD SLAD Caribbean
Ex.Vza
US
$ M
illion
3Q14 3Q15
4.3%
7.3%
26.2%56.5%
*Excludes currency variations and special items10
Revenues
US$: As reported% growth: Organic basis*
Adjusted EBITDA
US$: As reported% growth: Organic basis*
Consolidated (Ex-Vza) 3Q15 Revenues: +10.0% Consolidated (Ex-Vza) 3Q15 Adj. EBITDA: -1.8%
3Q15 Divisional Results
31.9%
2.8%
EBITDA MARGIN 3Q15 vs 3Q14
Consolidated Brazil NOLAD SLAD Caribbean
-50bps -240bps +356bps +246bps +155bps
3Q15 Non-Operating Results
11
$27.9 million foreign currency exchange loss, versus a loss of $7.2 million in 3Q14
o FX loss mainly due to the depreciation of the Brazilian Real from the prior
quarter-end, which generated:
A loss related to intercompany balances, partially offset by a
A gain on BRL-denominated long-term debt
Net interest expense declined $4.7 million to $14.5 million, also partly due to the
impact of a weaker Brazilian real on our BRL-denominated bond
Income tax expense of $14.1 million for the quarter, compared to $7.7 million in the
prior year period
Net loss of $35.9 million, compared to net income of $240 thousand in 3Q14
o Mainly explained by lower operating results coupled with increased foreign
exchange losses, as well as a higher income tax expense
o Partially offset by lower net interest expenses
1Total financial debt includes short-term debt, long-term debt and derivative instruments (including the
asset portion of derivatives amounting to $28.2 million and $9.5 million as a reduction of financial debt as
of September 30, 2015 and December 31, 2014, respectively).2Total financial debt less cash and cash equivalents.3McDonald’s granted an extension of the limited waiver through and including December 31, 2015.
3Q15: Financial Indicators
Plan to bring the Net Debt to EBITDA ratio to within target of 2.0x to
2.5x by 2016 year end
12
As of As of
September 30, December 31,
(In millions of U.S. dollars, except ratios) 2015 2014
Cash & cash equivalents 90.5 139.0
Total Financial Debt1 676.6 801.2
Net Financial Debt2 586.1 662.2
Total Financial Debt / LTM Adjusted EBITDA ratio 3.0x 3.2x
Net Financial Debt / LTM Adjusted EBITDA ratio 2.6x 2.6x
Covenants under the Master Franchise Agreement (MFA)3
Fixed Charge Coverage ratio (>1.50x) 1.48x 1.42x
Leverage ratio (<4.25x) 4.56x 4.65x
13
3Q15: CEO’s Closing Remarks
We made progress on our strategic plan and are on track to achieve our targets
We completed the implementation of our new forecasting and scheduling system in
Brazil
We have taken the necessary steps to deliver the promised absolute reduction of our
G&A expenses
We are following an organized and disciplined process to maximize the value of a
strong asset monetization pipeline
o We believe this can represent a significant proportion of our total $250 million
target for 2017
We have advanced on the refinancing of the BRL bond and expect to communicate
some progress within the next few months
WE ARE REINFORCING THE CUSTOMER EXPERIENCE AS THE LONG-TERM MARKET FUNDAMENTALS ARE STILL IN PLACE
14
IR Contact
For additional information:
Daniel Schleiniger
IR Director
+1.305.961.2856
+54.11.4711.2287
daniel.schleiniger@ar.mcd.com
Patricio Iñaki Esnaola
IR Manager
patricio.esnaola@ar.mcd.com
+54.11.4711.2561
www.arcosdorados.com/ir
top related