ARCO - Earnings call transcript Q4 2020 | Arcos Dorados Holdings Inc.

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Daniel Schleiniger

Good morning, everyone. Thank you for joining our Fourth Quarter and Full Year 2020 Earnings Webcast. With us today are Marcelo Rabach, our Chief Executive Officer; Luis Raganato, our Chief Operating Officer; and Mariano Tannenbaum, our Chief Financial Officer. Today's webcast, which is being recorded, will consist of prepared remarks from our leadership team, which will be accompanied by a slide presentation also available in the Investors section of our website, www.arcosdorados.com/ir.

We will be using the same webcast platform we used for our investor update in January of this year.

to better upper presentation, the left click the to scroll suggest screen reminder, on the slides. over hand arrows a view we the to and As the maximize part of on basic about chat some function left you'll as webcast this as information side the today's of Also screen, the tool. find for well speakers the hand At using that questions able to the submit end of function. today's presentation, you will be chat

Today's of following call over call Marcelo, like new Safe to assume and Harbor or to changed the refer filings forward-looking statement. release or no contain Before to turning the reflect update We or events recent revise I will to I'd the statements our forward-looking the make forward-looking SEC. any and circumstances. to obligation with you statements earnings section statements

reporting with results, to with Investors financial non-GAAP Accepted and of these the results in report press filed the accordance Form non-GAAP review reconciliation SEC audited results be results. we Principles, release financial financial X-K. today the GAAP with statements financial Accounting which compared addition can Generally found certain in are on to encouraged In as

Caribbean level discussion Venezuelan operation consolidated of today results as country's as macroeconomic to due the well also for the at Our the both excludes the ongoing division the volatility.

a For Venezuela, with your statement, income include reference, our we excluding full earnings release.

So please now over Slide X, you. turn to to Marcelo,

Marcelo Rabach

talk months more details reported thanks in of quarter we well. and XXXX. we of commented for today's recent will the trends deliver you two trends in the drive-thru, quarter, a And Almost about digital as and preliminary joining Today, the main the all Dan. to fourth on XDs, you, our comparable performance ago, strong on sales for delivery fourth Thank fill webcast. and system-wide outlook for us

lead more regions' color digital race the will Dorados, Arcos which provide transformation increase Additionally, the restaurant ongoing the industry. of in on our digital will we across

to XXXX, In an restaurants ESG lifetimes. and unexpected find sub-franchisees. ways cultural of the geographic vast news and efforts while in we some of the new coordinating most related share with with suppliers forced commitments. will the to and important we work unprecedented were business enormous managed to Finally, our our network managing crisis and through footprint, offices, We our

likely capture Looking believe now at Slide difficult flexible sales restaurant with terms our XX% footprint new successful to X, crisis street-facing of together response environment management in in recent five for sight locations of opportunities centers with for We such the years a as for delivery and the of company's built smart ago, further result of strategic history. people more growth. introduced resilient relationship segments investing in our as are the generations. rooted assets, We that a back Latin with the The our in serve. our opportunities is they than benefit and industry. in generating we digital the the QSR we positive impact have ensuring the recipe most emerging to in to long-term times our young the And years crisis aggressive and earliest America's the historical and movers I future itself, was consumer people communities tools began growth proactive never behavior. lost on that We important the changing search approach future and superior in

of currencies. which lower and was about billion, prior key let the highlights [ph] Slide depreciation the for X. due you Mariano the Before I the XX% almost than year me fourth to the through the of on XXXX turn it year pandemic for impact several of $X over quarter, Total the on full year take was the specifics revenue of the to Reeza regions'

second included Adjusted of which quarter. these Both industry. and EBITDA in the sequential versus most single in despite very strong improved strength all geographic the same on in we crisis. all focusing sales of and generation we XXX% was markets the became benefit of XXXX. the in on drive-thru prior half a flow delivery significantly XX% by of not the that, second popular in any growth constant sales of top-line growth in currency the app XDs, digital having time. XXXX generated $XX.X result profitability by Note we the navigate mobile difficult supported million growth when the year, to market competitive at the constant cash did May, both However, pandemic currency feel diversification and impact The and the beginning depend clear the crystal currency highest-rated

of fact, or last we began the trends came XX.X% euro-generating two and the year's was markets year. in comparison stable with growth XXXX comparable in generated way a ended difficult US from strong EBITDA of with local XX% We dollar the corporate first top-line markets XX% another XXXX expenses profitability despite we with months the In currencies. sales and relatively last generated before

As year, of full we phase entering our you the told beginning the revival expected volatility face plan. to of before the near-term at we

on measures. In gatherings to several Brazil two strict of is consumption. mobility includes state fact, weeks Sao where governments negatively complete impact This about quarantine recently and that Paulo increased restrictions

in recovery Puerto and and so markets trends and However, all strong Chile such continued as NOLAD in other markets, in the SLAD, Columbia Rico March. far have Caribbean Argentina the and

they safety also when [ph] are as that and restaurants, the and know around trust also sales with inventory focus more know adaptable available. growing closed what by which can Today, a to We from of are renewed from one models open to not do ago. to channels XXXX the are not with fast restrictions. needed, the begun longer XX% are in materially delivery restrictions company and touchless sales move year in or on how which these year. segments Consumers second mind the way. same learnings generated all these pandemic agile and and service We we Keep segments better as drive-thru the expect know which in they impact brands which total how to protocols impacted restrictions last the and have last time to deal

our Finally, footprint, contributions industry's on for Luis, the currency geographic brand you look X. operating from operating and highlights Slide restaurant hard over solid best from to at benefiting broad the quarter a portfolio. we seeing and are with fourth in markets

Luis Raganato

Thanks, sales Marcelo. In comparable reported by and January, quarter system-wide the division. we fourth for company

toughest XX% out cumulative growth this, comparable impact XXXX the XXXX. of couple fourth would I comparable last additional with Despite in highlights. faced acquiring quarter comparison outperforming today, year point far Brazil And the Rico. after of the two prior the restaurants industry period. the and posting in year, So quarter level sales X.X% down just finished all a years the fourth just at the the was of of year's sales we approached sales prior Puerto last the the X%, franchised in beginning of

recognize now of we from those result, locations rental a just As XXX% revenue rather than the income.

Although sales result, this XX.X in the comparable to revenue not did points change does growth dollar XX.X% it the the system-wide US percentage contribute quarter.

the The total was in currency segments exception X. XXX% to of exceeded Drive-thru of recently sales fourth our and line segments and recovering One continue quarters XX% markets. and other generated long-term no sales with at expectations of counter themes from contribution the higher with was these slightly restrictions Slide Still, the declined rose at quarter was sales the The the sales constant delivery XX% almost quarter across celebrate teams contributed I two than quarter. more McDonald's prior in contribution the congratulate of drive-thru respectively. Circle number of so of year together the well. segments which high served growth last America for XDs on started as restaurant restaurant over And of February. the the sequentially proud year team and note Latin consistent XXXX sales most to on and business. over as operating come than XXXX particularly two this the delivery fewer front of drive-thru in XX% above-expectation sales, in that to the the strong per Award, ever of system were reached of have across per daily the as want December. drive the delivery a winners in Corporation Excellence in its end when named also McDonald's year. Both squad reaching way highest are We delivery results far significant vehicles leading success very our cross-functional that performing orders we've number our record a among the

had pleased perhaps by downloaded to the On Latin million a app cross far [indiscernible] customer downloads. the of operator Brazil, the rating. just app America to the app a the ago, restaurant of I in we announce digital important industry, consistently of XX front, very became mobile am in that few XXXX, end apps downloads. days million is the milestone most first to the and industry-leading the at reflection McDonald's mobile we According restaurant XX

Let's Argentina, turn last industry to in to XXXX to industry were such markets. name which our the Rico, significant XXXX, in similar McDonald's consistent a gains leadership the and Chile, There with key largest from QSR QSR and According gains position. latest gain as tracking reached all trend across year Brazil's in brand on highest Slide report in markets brands, started just X. its another share maintaining Columbia few. Puerto the Market important from CREST, its share share

restaurant experience, we excellence drafted on industry our certainly the brand the on taking implementation portfolio, we rapid management care to operational words, believe strengthen that the the strength we by and and and the focusing consolidating a came guests, outperformance people the brand focus and While In strategy the who larger benefited XD McDonald's capitalized decisions industry McProtegidos of of we freestanding opportunity from have enhancing from brands region through safe on trust other Program. the consumers to our against of a safety. across leveraged controlled. Proactive provide factors restaurant a the

region brand boost consistency this restaurant when margin. XXXX, and markets consistent remains trusted down for The We to Program eat a the of expect by ensure brand normalize. excellence will place double leadership the execution. most In the McDonald's we on to wide out-of-home future in safest McProtegidos to being the growth

family priorities from top-line on on further Looking growth. simplification, at of revisiting focusing menu support X, the for capturing main we Slide in efforts business benefits the products XXXX core and are marketing

segment-specific initiatives. on sharpening are largest also operating We restaurants the the drive-thru with competitive number our of advantages focus of

campaign swim you -- matter example, get by like how guest lane drive-thru For visit any to that encourages our there. a no they [ph] way

The the was program Automac. the XXX,XXX Uruguay example linked originally was fourth drive-thru and launched three all has during loyalty called segment out Chile, Argentina rolled quarter. to is to Colombia, VIP markets the program, which and in already NOLAD Another users, registered

Finally, the I delivery cannot business. overstate of the significance

since scores accuracy exclusive times which our launched marketing in continuously promotions highest initiatives satisfaction around delivery is year's reducing orders, number improving the relevant resulted the service consumer We in with on while This a are of has dates, growth and sales special plan indications. driving the we XXXX. of some focused customer of the delivery

While including are we develop expanded delivery own aggregator also optimizing relationships. we our options, delivery,

building in growth each with aggregators In aggregators experience. fact, Colombia after by partnering market, we improve agreements are customer Brazil, on testing greater the alignment launching brand Among exclusivity and in major benefits execution and with the to the incentives the a service and focus investment, now together with Peru. the McDelivery of are

you So the far, profitability the company's for been to structure. over very Mariano, at capital look a have closer and results promising.

Mariano Tannenbaum

Luis. Thanks,

structure portion despite in fourth We to why in we a This significant successfully cost XXXX worked start previously XX. is second Slide hard profitability Arcos adjusted with half and quarter EBITDA Dorados a converting XXXX in fixed sales. on saw softer the costs of improvement rapid expenses variable. of to transform Let's

helped of our grew relationships, Our stabilize McDonald's decisive strong second cash supplier XXXX. together with our the flows, management to half cash actions, and which quickly throughout

quarter prior of all In market other and employee as despite flat close prior food both versus cost faced with versus operating came Margin other we the mostly to volatile operating pressure the quarter. we're third Payroll costs the the and and benefits well the flat year versus protein quarter prices, pressures changes significantly were paper terms from conditions. and and impact, basically mix and sequentially year in quarter as margin expenses improved occupancy expenses. in

third the now Turning results of XX. Slide All divisions XXXX. versus to four improved EBITDA quarter

in sales Brazil's Brazil was prior total in the contraction business contract EBITDA of in the the depreciation both real NOLAD's operating other the year. the expansion and product sales net driven quarter. margins year. and by year. well EBITDA prior mostly versus SLAD's NOLAD was improvement as income the one-offs margin and reflects versus prior saw impact However, negative lower the and Brazilian the largely the versus of decline from the results EBITDA as recovery Chilean

the expanded reserve also bad dollar Caribbean XXX Finally, Puerto we points division's now excluding the in results margin West Indies. Rico, benefiting XXX% operating debt in basis reversal sales another market's of from growth division's strong US The quarter, EBITDA non-cash euro-denominated that strong in markets year's restaurants. last and that the drive-thru the French from Colombia's reflects quarter are EBITDA improvement of significant

to maintaining year's year a EBITDA hedging XXXX at or prior we challenges continue Turning our million our operations cash last the compared focusing to of We about with X.X despite range This return sheet thanks from operating initial flow due EBITDA X% end, times expectations XXXX balance By the of expect the the during metrics we it favorable increase second just limited million year to the comfort in flow faced And the of of net position debt was trailing the quarters $XX.X FX in now for and million least The higher flow strategy, three prior cash successfully to versus generation XX-month XXXX. quarter rose the the quarter. began strong to all of times to on all decline reached year, over cash end. cash X to very the flow $XXX cash challenges EBITA. a debt XX. lower versus XXXX. net to Slide ratio final below year gradually to and year. fourth we balanced the with $XX on million, our in $XX Despite and half prior significantly generation the

did is debt debt, important strong. a net other our balance and Our highlight we position with aspects modestly but profile. Not to sheet only is XXXX cash of start higher three strong it only

lines we fully short-term debt, short-term have our credit zero First, making available.

debt of with to a restaurants impact have been restrictions, we months with have in capital approach short-term of place. still have while the next in manageable build new $XX long-term fully and in take are very prefer fund last appreciated XXXX, million the we already maturity XXXX. order September the of cash through road our model. hedges managing have maturity summarized FX and opened Slide healthy on almost nine third, And the matched by months the Despite with to structure. restaurant renewed being that in healthy freestanding prudent of Second, government and of a mix long-term the last The the during we We are We including and flow footprint trends year, business in we a a only year restaurant with two ahead. we pleased sustainable adjusted two restaurants XX first the but operations, our process maintain to number optimized seven profitability XXXX. possible, cash of this When generated footprint from investments for profile business just are openings. the first

top-end guidance you. currently XX new are evaluating Marcelo, restaurant would year. for XX growth opportunities the to take us to back that opening of to we the So,

Marcelo Rabach

service Mariano. you the servers gave digital transformation restaurant could than a this change to ongoing few Dorados. general, provide field meaningfully more of Arcos into when insight details Thanks, quick starting ago Slide I Today, In more being with some we XX. the years six journey began digital We want business.

Cordon, ago Technology Our to groups. about the leave which call talked Officer, mostly about months XXXX, group, Chief we customer-facing company Marco interconnected joined we three the Throughout XX ADVANCE.

are long-term success crucial are two other everything ADVANCE. groups we doing in to of the However, the

efforts. of XXX% offers personalized offers payment of we send and on-delivery starting to drive we in implement we ensure support to are advantage communications digital segmented of are the stages the to upgrading and drive to the on modernizing and people we profitability, to customers infrastructure necessary technology customers cloud. software, industry's American send ensure take to to and lead group better, Then, mentioned, systems the agile to extend race. own that efficiency includes are we that options, targeted that relationships QSR its is employees is Dorados there we The and to we operations make analyze have mobile faster as forward. data enterprise. frequency Latin development. This and is when group the these to to digital made data identify of leading-edge, to pick-up team guest used one-size-fits-all to for technology working order and early three team our best-in-class capture the First and the uniformity in XX% working formed some to app least is hardware, well individual the guests. information the includes IT XX need we stay progress is services channels, working technologies, Arcos squad partners as mobile our and infrastructure of on E-Business capabilities. the on that such order to working years interconnected to Oracle the own all which Luis own of Street the to develop down initiatives ensure as technological aggregator our way couple more marketing couponing channels several our are the at This decisions the digital up optimize improve Digital In moving delivery strategic is significant has sales and the already mobile logistics is other of moving squads with around improve when our have today experience of as across delivery, from a including ADVANCE to experience app. delivery has newest core ability digital to The our made information now ago Digital applications segmented

By infrastructure IT the supporting digital infrastructure, Oracle improvements systems is Data service this on focus and cloud key ingredient better cybersecurity cloud other such collection race. modernizing in and and as process. the we support for of processes, this We our chosen can standardization the Excel to have and enhance at Oracle analysis. data success

So, the Officer, on lead we hired to Data first March the who started Xst company's data team. Chief

our and capturing. With partnerships leverage computing CRM, we we the IT infrastructure of truly the modernization to will with leading providers, data are begin cloud e-commerce and

Impact brand. welcome to as I will next Finally, as the and important recipe company the This reinforce and for much ESG around members of The time Impact This recipe board, published the Senior the XXXX practice. the of management commitment our company's same SEC. with future company's how XX. for let to program, visibility Sustainable senior that month, the ESG Dorados is the today their the the Social management This we ensure as future communities process to first financial compensation for is the we the the with indicators. turn include the Director time, Report and to Development and reporting and the Development me is report. major aligning reporting with policy most Slide in way annual first Caribbean with our run view the starting we XX-F guests am executives restaurant as To the adopt Arcos to announce well financial America Latin this filing Gabriel proud variable Social the will to company our for for Sustainable the team. Serber, on year, ESG are ESG

through opportunity, and company recent wellbeing. huge now contributing a we sourcing, as is step communities years of most to Latin track and are Q&A the in a to further America. positive to sustainable we family impact of start and companies we long-term the it the This turn recycling, the packaging recognized climate I record made with have to committed aligns We serve and in Dan, environmental making back will and change responsible session. the commitments Dorados you one Arcos socially ensures social long

Daniel Schleiniger

briefly you of I'll Marcelo. moderating to get minimize hand that the Q&A We'll on chat our so session, to can please slides platform. questions. them today's started, now Sure, the In your be order the to pause Great. side compile two webcast so please so questions that or and access the convey presentation function left can understand limit yourself one speakers. read, I to

with to you, So a How these from are here questions are for start the questions, of let's think, quarter we with in couple And and have lock-ins? Marcelo. associated fourth second pandemic March normalize? we I expect of the JPMorgan. after and how Luketic the Both sales Ian performing of are much them when quantify wave if down Brazil can sales we in

Marcelo Rabach

you And today's for we of that you Okay. weeks, of I Thank for you, think webcast. joining to was many most conversations based us. have in asked And good this Dan. recent morning, frequent had and thank us the with the on one Ian, question

a very I to this. answer comprehensive you So, about try give

continued year year. for how XXXX seen in XDs, Consumers second the half some scenario and with better-than-expected base at March digital, the Brazil. see the and is safety maintain positively return restrictions The year. year. see and with in strong -- the rates We of that through of our first have growth and operation sales that assumption the closer modest normal the half with the to be strengths will we this First, February. XXXX? likely to in most particular, of And markets, expectations, which the we of we expectations how but of to our both we start profitability all operating a convenience January our offering notably In our in relatively conditions government-mandated of trends delivery started very the in line in drive-thru, started with the most are responding year

detail So, what's these on about in in let's Brazil going days. in talk

Sao in of And Remember XX% in restaurants that no -- to of the able restaurants was specific, peak be about of [ph]. closed closed we year, at had As operate time, in Paulo. XXX shopping of crisis last Brazil, restaurant set the are in the to at in size more and today, mostly Brazil. malls mostly the all that XX% state around

and fully XX% open a other business over once today, of operating have segments restaurants at As are Brazil all we our or operating segment. of least the in XX%

last at adjusted last top we operation and restrictions consumers what our at than once this also fairly agile all the on of seeing numbers more sales that, habits, crisis. are the seen, we So, based peak be learnings have moment experience the months. applying less And have to of the the adaptable bounce year has last will restrictions year, And we quickly given are the lifted. from back that XX of their on adjusted believe been

year's stable result other the we year, XX% three markets divisions. that in example, these So one are for local footprint, situation you with markets, in these which, top-line Last Which have look of normal and and restrictions markets. much consolidated is are we means a largest closer in the to corporate that's in the EBITDA remarks, expenses other in as loosened generally the of Brazil, apart. know, from those at strong government operation. other Keep dollar, just part mentioned are the our our particularly currencies generating mind opening before we euro speaking, that in EBITDA results US and we when

give Venezuela, an I closed have restaurants idea, In Brazil. the markets, excluding to in Just you restaurants seven have XXX we closed. only all completely other mentioned, we

we operating segments. company. are that company, closed And So the the in XX% restaurants the mostly in the them business of all rest operating the those more are rest restaurants in of in of than are all

needed closely making as of So, to operation the adjustments terms market monitoring developments is in is the say, and Needless outside we in better situation are and the to leveraging year. we very of are and restrictions. each last the much all learnings the Brazil dynamic situation

for approach ability our year. We are firmly markets behind So, [ph] very on and long this March wrapping have these gains disruptions confident firmly of a believe right the restaurant the remain answer up, once capitalize to strategic our us. the -- believe I in question, sorry on for that to we short-term we footprint

Daniel Schleiniger

Perfect.

if terms you, on also Marcella to of programs. going do the excuse drive-thru our the VIP moving of program, the loyalty I and around if this she comment me, if for bit out think, well? And is And are of program there Automac can asks And about sort program we're provide from Recchia it forward only programs, -- Credit of little loyalty Brazil any questions it of into of couple visibility expect a in Luis. the Club Next that one, are we roll are what to if first loyalty or or underway you other is as nature with Suisse. the

Luis Raganato

Marcella. the you, question. Good you Thank Dan. morning, for thank And

First, for way the us, since program customers, different And having frequency our their the are there loyalty a business program. the is a of to consumption the it and strategic to initiative loyalty of stimulates brand. increasing loyalty

the We offers can their app have identify visit of the already started and through and digital use of in our where stores frequency we February product.

though Costa is roll Automac use to their already it's stages, Rica, related rest the to included. developing it the we be And are and of of and Mexico. plan offers to Argentina, Chile, that already Additionally, in has, our occasion. mentioned, even Colombia, Brazil first it on have we region, to and focusing club Today, exclusive course, XXX,XXX Club this going is compelling VIP users. the with it's of like out Uruguay, favorite is as because early already Panama information This the receive members we step products, very building a loyalty the And the in And stores important registered in platform. it near efficiently program future.

Daniel Schleiniger

quarter in in is provisions second you, the this fourth the Brazil nature the of of year of for the question and in last about Marcella -- year. And And Mariano. the quarter sort from tax-related asks she Great.

great. can you if just would So provide a that little color of there bit be

Mariano Tannenbaum

by in margin one-offs for items fourth and which fourth one-offs that Marcella, continue positive quarter we are Brazil's in XXXX income line, the going thank relevant the mostly quarter And provisions And reported Dan. not negative XXXX. question. the tax-related just and expecting specific that Thanks, other Half Yes. of will Yes. some of generated forward. decline you, I of result already XXXX that mentioned other in the the explained operating the was is actually

Daniel Schleiniger

Perfect.

a related our if also more provide [indiscernible] mentioned and from the company number opening or from agreement and of the aggregator questions bit from relationships, our doing We asked a we we Suisse. questions lines. also those markets with exclusivity in Moraes and to here have folks, you a a various all They've along color we're also possibly Brazil delivery can different number related [indiscernible] have more background remarks in to of Credit Marcella little little Marcel other tests on that bit relationships what

that's think, for you. Marcelo, So, I

Marcelo Rabach

the questions. thank And Okay, for thanks you.

you region. As XX strategic way last a grew the may a approach dramatically And which in in very we in XX our know, year. the are spectacular we operating markets of have to delivery segment,

So negotiating with in looking the very our our share -- this our sales aggregators to our market optimize And in markets. which are market important for growth, and markets order market us. margins different results, we in are our by business we operations is in all segment,

typically the of last market main or year pace most short-term, can same us, growth main we sales And part from at which three Peru. we the the those in translates markets, important three share, that is And exclusivity four the last And Brazil, in experiences in most at maybe we Colombia us which in obviously of which player we this and experiences have new -- base cases, growth, part our particularly the time, have sign okay, the ones sales aggregators, of third, terms year, So, the this particularly agreement at beginning markets, agreement with some this that which in with in some where markets moment running pillars, with markets. we we in of and for work some three is the exclusivity the of are the of of in markets, profitability, future. aggregators based a these for the in negotiations a decision. fastest is gains in terms give

delivery day we per results during that the me -- we So, very the that remarks that February. mentioned let opening And March restaurant sales We add we looking are are record per to pleased our our better. even hit in early is in with results getting.

that we can optimize this size, by we we segment the market are channel, obviously this company. the So, we market, strategic order for can That's a we at business talk same time, how region the one advantage And brand, across region. aggregator approach different just to we markets XX any with in optimize a the have conditions and negotiate are results huge only just player sit and the in leverage looking our of the can how operator. about very one

or more what I say that's Dan. less about this, have to So

Mariano Tannenbaum

this additional just investment, of prices the me average strategic And XPOs you check market margins, segment, delivery add -- in higher with fact let negotiations sales require of given that plus the that operate, almost that regarding board our every the we where we Yes. the delivery, in higher delivery not segment. the mentioned the for menu does Marcelo, have in any incrementality this margins

this level We segment have dollars been able to the the additional restaurant bringing the us manage to on very at allowing fixed and leverage efficiently, costs business. to

very accretive is to related less that's regarding segment, company. which the this more for the So picture or margin

Daniel Schleiniger

don't keep dynamics for your we And what from to question expectations asked are working in respect it Barbara capital XXXX. the JPMorgan what with you? Mariano, with so,

high pre-COVID related somewhat too it's the if seem sort wondering question of structurally soon a outlook asking higher related if or pretty -- is from margin have and current margin considering than if sales I level, Luminous We say. who to expected is Capital that there was a our margin about

So, and maybe sort the cash you flow of can margin perspective take there.

Mariano Tannenbaum

with sheet, short-term and strong noting million, our profile Barbara comfortable it's cash Perfect. maturity including year [indiscernible]. manageable very of first that a no for balance a the balance debt. long-term debt of $XXX Thanks, worth and all, Well, started very we a

paper strong XXXX. March So, are McDonald's successful year, with this performed to to we the payment capital, to and When pay to royalties. we that so in fees of are In going to have negotiations January, worth starting July suppliers I negotiating have are part, to suppliers, XXXX, the position. year for month reason regarding suppliers, in to say on a position. are of better all on and -- the mentioning And continue But this order cash all that cash, all increase that food strong a all with during having cash each said pressure I'm we terms. that, are corporate Within very from we top for that, starting our it's not those, because year. we some from mentioning did starting mentioning January all pay royalty double paying March suppliers. the our I'm very landlords, we that are we we working Starting with

royalty company. we the already we year note cash January, broad will cash McDonald's expecting our to from additional levels, as lower are also it's the support during are receiving cash flow very royalty percentage So, generate in mainly that to to more these in fees we that's working to terms last comfortable go our regarding any be and are because back this working fees explained year are But expecting to for oversights the pressure we XXXX, with normal we to generated the this capital, so -- XXXX year. we the going capital, capital important year. working In are paying that so a call investor not cash and throughout are position regarding we was

in have Regarding questions we a how you in regarding margin know the that we can was for margin, XXXX XXXX, XXXX, margins company's which XX% and the for highest the expectations history. EBITDA see

of with if we second XXXX, and in of performance top-line the not in profitability better to especially we is, we started do solid do much normalized half versus operating see although more the we So reach better-than-expected environment recover, levels to XXXX those expecting the are news January performance same year. Remember March. the direction, only that February. the the we on of to the can XXXX second a not effects is in and they started experience the months have results did first yet XXXX having pre-pandemic performance. although material two which what line, not half pandemic, returned right that in trended of during EBITDA yet expect sales impact as The continue period this XXXX, good say this expect for we In

line paper a percentage of with expense protein expenses some XXXX terms in deleveraging occupancy mainly in take comparing So terms G&A other and of costs cost of absolute but we within and do. some rates as sales, from higher expect food we percentage XXXX, some line, delivery as sales, and the not a the in pressures

profitably. the research recapture McDonald's news resumption some mentioned counter from hand, of increasingly receiving the the menu higher we On are is marketing, gross good of already simplification, effective and the improvement other should sales in center digital that help support restaurant the front pre-pandemic productivity, continued and

margins So we by operate in to basis, we Caribbean generates division, mentioned EBITDA point division that's for relevant outlook a It's the geography. are saw strong or euros, have which you large the dollars XXXX. during also example, general in out in we there the of has of to portion stories performance across different look half already large when tell. year, US at a as a that its And performance for division very the last on XXXX. second maintained

the we performance January remain year performed and although the we and underlying So, been we first below promising see year, mainly but also and are as hope Argentina with similar February. Brazil two improve slowest solid will that level the recover, the January in continues. to and some And a NOLAD about trends a Chile well year's of SLAD last performance. months February, in rebound seeing talking

the lines geography our as I well. of for So XXXX that's regarding each overall picture and think cost of the

Daniel Schleiniger

players market And gains [indiscernible]. were the a if of And players market? And this think the And on share some share top we one in for or gains. from Brazil. even gains we I can believe Mariano. these smaller QSR if you, quantify Thanks, of comeback that's larger relate Yes, in question to market Marcelo.

Marcelo Rabach

Okay.

identified we a sources measure -- do trends to opportunity. Brazil, is, start is CREST share we what have of And per than track we we very areas XX,XXX about of opportunity size, sample market the we market try about large share. how and first variety information. a the with to year. work has CREST. using me of talking Let cases talking and Particularly more triangulate We mentioned it

in very this Brazil. market according players compared measuring share a ever other a all it's CREST sampling tool, have They -- in the our in and in tool small. error And began XXXX highest to marketplace. robust XXXX with our of multiple very tool So XXXX. is was expansion Brazil we And this

both the have because market times in measures most market And from players. the gain we closest information share That's we the what both QSR, more at industry the And came two than to we out So, time the have of tell in more and because information in competitor. that share measure two and categories EO, smaller restaurant our have of visits measures, times us. from eating informed than our compared both Brazil quick to both share the of sales. market they closest industry. in related And service

in share two Brazil, notice of the showing closest their have before whole that, stronger crisis even big year market this we come out Chile, an market the trend both disclose have market us XXXX. that And are similar to strong our we important Argentina, in share kind Rico, building can position two is competitor. Colombia, only we less gained this or other more in what -- have of to not in last like about that than we gain So we pretty Puerto And that industry, on in more markets times That's I times are time markets, cases, we market a it's we it. order of operate -- share where share.

Daniel Schleiniger

yes. it with our an And digital have We'll we if program costs. from us pricing Great. to has and Itowu Joaquin you, data on impact [ph] marketing Lei keep how ongoing to targeted and improve Marcello asked management, elaborate will

Marcelo Rabach

game the up segment Yes, this years. point our to better better this the The reaching a the few with transformation marketing for have, thank Joaquin. for understanding, personalization. customers. the big us. example, in tools, sales opportunity Hi, analyze and including the for given and why mass our tools, we us where, for opportunity better at we fact the have a to definitely. for us the are intelligence, were And digital about we the We as last offers, have mass artificial That's today. you [indiscernible] we joining moving of we digital And that XX% this our is we have an promotions, time, individual as with incentives identify our -- see And customer name talking from for better to, of approximately, we the customer. data first,

with incentives that we have with all and information individuals promotions, with we working tools profitability. and building, world-class specific not we the opportunity in and working So, and with, to partners, but partners the are internal are increase with proposals to that tools, specific frequency the are we only order target

So our about digital race very this the lot the company. with we region. excited in a winning talk in We are

think have order front runner right going forward. still to we these we are higher aspirations I for improve the in But now. results that our

Daniel Schleiniger

been Great. with Thanks, about Marcelo. has and to think, can impact supply on concerns A question -- respect maybe how gross talk maybe the supply margins? performing chain I this, Mariano, around chain, you

Mariano Tannembaum

concern. we arrive Yes. prices. any any concern, only to restaurants. don't that XXXX, outlook about Well, already during concern for is our have the the protein don't of regarding concerns about about chain, we something supply respect, to and availability margin products question regarding mentioned The have In I

our we So margin. have defending pretty gross successful been far,

that margins. to -- company you the way expecting XXXX, and to continue way our If pricing skills improve we that's the identify it already negotiations And that to products us digital very do successful, and allowed how and costs, skills. management do we has explained at we the with transformation Marcelo those being have successful our absorbing been in either that's sell higher our the revenue the are XXXX. those And that is doing. are to margin via having also be to check transfer and management to able look to having revenue have suppliers increases during to gross the able skills

we comes prices. the So, quarter, we entire you is that protein doing see question think much prepared course, skills there things the improve see we that only -- pricing in I can pressure the already our not, are the specifically to the as industry, that think the summarize to well to us, and -- mix. the to during is, really and we we fourth the in not in some to that That it demonstrated are of answer that pressures to and also challenge, face XXXX, all product improve

to we are healthy also -- very also are maintain a allow for gross confident will will XXXX. us -- that We very margin we -- that

Daniel Schleiniger

passed Mariano. follow-up reach Marcella Suisse. She we Thanks, of around comment to could if Credit much in our pricing how order Recchia Brazil current levels. we've A question from asked on the margin

for that's think Marcelo. I you,

Marcelo Rabach

board more our make menu opportunity more the have strategy, that and and before, each inflation the I line mentioning say with even our Okay. sales, look it are delivery of or we region. market. different pretty the sources in those -- In customer. our in for different digital sales and from prices if XXXX, come prices, different app the would Thanks, in Marcella. seems did at tools, price what was But to you increases, and as we I like like was McDonald's in

offer year, really have we year, to for are compelling for propositions are time, can at same customers and we for offer propositions value margins of persons. last at trying value bundles, example, good compelling we of And more at very the particularly, for for the family in we groups flexibility. very this focused products customers, us. the those, of in group And very beginning So prices and

year, year of possible, time, supply have same with team to terms our during explanation of part low ability results the gross did that backdoor keep for the job only that the in in not the deal that at order think I was we order the in our as pricing. to last but the our excellent costs chain as in margin

So on area. that's going more in this or less what's

Daniel Schleiniger

comment, we food year. were or paper he we clarity hedges purchases, And asked I XXXX for last Mariano, how have with little placed FX one think, Perfect. from bit positioned haven't comes maybe last and a contrast the we question [indiscernible]. can that of and time, for And we for on

Mariano Tannembaum

is the accretive those even a when cost of question. our we during Well, the Okay, this the the in six mentioned, line. works, for all on always thanks, always during have we were as And last program the currencies, and and have -- us to our advance. Lat-Am time that, This hedging said -- average I hedges is sharp not to that given -- for spot without depreciation lower That visibility would we gain paper well advance, Moore will a the give hedging months all happening and Having Kenny currencies, this already year program. the than for structure. hedging We had -- explain and currencies. are we us the Same just of almost is our speculative, [ph] XXXX. depreciate, -- each the costs XXXX, hedges third depreciation already XXXX, was to nine this very give And to in it for of hedge bring had that XXXX, in how in currencies FX current is in quarter food paper the we hedges. food values and spot for XXXX we the means already for the below of we company.

Colombia, Mexico. main hedging which have our Brazil, hedge mentioning countries that or hedge hedge also for than which of we place, we rate Chile, that only and in in we our the figures are imports, imports at hedge the higher countries, the the that XXXX ones hedge for worth main XX% course, where for It's or we that we we are Uruguay, the XXXX XXXX. Of are

Daniel Schleiniger

Great. Thanks, Mariano.

we're little I think over. a bit

everyone IR for questions the please again, Until thank We as has main to follow-up again the interest forward. with speak speaking day. move look to you safe a Obviously, any have for always again to we you your joining forward stay team earnings joining and great and today want available in call. you I for we company. our and today -- us So on

Arcos Dorados (ARCO) 17 Mar 212020 Q4 Earnings call transcript