Arcos Dorados: Reports Q4-2019 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 fourth quarter and audited results for the full year ended December 31, 2019.

Fourth Quarter 2019 Highlights – Excluding Venezuela

  • Consolidated revenues totaled USD 752.3 million, a 1.0 percent increase in USD versus fourth quarter 2018, despite the depreciation of the Argentine peso and some other local currencies. On a constant currency basis, consolidated revenues grew 12.9 percent.
  • Systemwide comparable sales rose 10.4 percent versus the prior-year quarter and were solidly above Arcos Dorados’ blended inflation rate.
  • Consolidated Adjusted Ebitda in USD reached USD 101.7 million, a 16.8 percent increase year-over-year, and 24.8 percent higher on a constant currency basis. The result included a USD 10 million non-cash bad-debt reserve reversal in Puerto Rico. Excluding the reversal, Adjusted Ebitda increased 5.3 percent in USD.
  • Consolidated Adjusted Ebitda margin expanded 180 basis points year-over-year to 13.5 percent, or 50 basis points to 12.2 percent, excluding the bad debt reserve reversal.
  • General and Administrative (G+A) expenses decreased 10.0 percent in USD versus the year-ago quarter and were down 90 basis points as a percentage of revenue.
  • Net income in USD increased 96.7 percent to USD 37.2 million, from USD 18.9 million, in the year ago quarter.

Chief Executive’s Remarks

«The disciplined execution of our three-pillar strategy generated strong results in 2019. First, the EOTF restaurant format is the most modern, tech-enabled experience in the QSR sector and continues to generate significant volume and sales lifts. Second, our menu is the most relevant in the industry, with compelling offerings across our premium Signature line and our affordability platform. Finally, we are enhancing the customer experience through programs like Cooltura de Servicio that support higher levels of both customer and employee satisfaction.

The revenue growth arising from this robust strategy combined with operating efficiencies and a leaner cost structure to generate a full-year Adjusted Ebitda margin of 10.0 percent in 2019; our highest since becoming a public company in April of 2011. We are proud of these results, which make clear that we are capturing the potential of our brand’s value proposition.

We are pleased to have reached an agreement with McDonald’s Corporation on an ambitious restaurant openings and reinvestment plan for 2020-2022, designed to generate stockholder value by profitably capturing the full growth potential of the McDonald’s brand in Latin America and the Caribbean. McDonald’s Corporation will continue providing growth support during the three-year period, which we see as a strong endorsement of our strategic approach to growth in the region.

In summary, we have built an undeniably strong foundation. In addition to our significant balance sheet strength and already lean cost structure, we operate an extensive network of Drive-Thru restaurants, an industry-leading Digital platform and enjoy robust Delivery penetration to help us navigate market disruptions stemming from the ongoing spread of the Coronavirus in our region. Once this crisis has passed, we are confident that the investments and operational improvements of the last several years has provided a solid base for our Company to enter a new phase of growth in the coming years,» said Marcelo Rabach, Chief Executive Officer of Arcos Dorados.