Arcos Dorados Holdings Inc. (NYSE:ARCO) Q3 2023 Earnings Call Transcript
Arcos Dorados Holdings Inc. (NYSE:ARCO) Q3 2023 Earnings Call Transcript November 18, 2023
Daniel Schleiniger: Good morning, everyone, and thank you for joining our Third Quarter 2023 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. As a reminder, to better view the presentation on the webcast platform, please scroll over the upper left-hand part of the screen and click on the arrows to maximize the slides. After we conclude our opening remarks, we will answer your questions, which you can submit using the chat function on the left-hand side of the screen.
You will need to minimize the slides to access that chat function. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. In addition to reporting financial results in accordance with generally accepted accounting principles, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial results as compared with GAAP results, which can be found in the press release and unaudited financial statements filed today with the SEC on Form 6-K. Marcelo, over to you.
Marcelo Rabach: Thank you, Dan. Good morning, everyone, and thank you for joining us today. We are very pleased to report strong results for the third quarter 2023. McDonald's brand strength, structural competitive advantages and unparalleled execution continued to drive sales growth and market share gains across the Arcos Dorados footprint. We have articulated and are executing a clear strategy, designed to drive sustainable sales growth supported by both restaurant volume and average check to generate operating leverage and long-term profitability growth. Among the most important elements of this strategy is value. Guests measure value based on more than price. Their value perception includes quality, service, convenience and optionality as well.
This is where the region's largest freestanding restaurant portfolio and our 3D's strategy of Digital, Delivery and Drive-thru boost guests' value perceptions. Perhaps the best indicator the strategy is working is that comparable sales continued growing well above inflation across our business, with strong guest volume growth in nearly all main markets. Even as consumption moderated in the region, sales growth remained strong, delivering cost and expense leverage to generate improved profitability. We are reinvesting our cash generation to expand the restaurant footprint in a highly underpenetrated industry. First year returns on investment for new restaurants remain well above historical average, proving that penetration continues to generate demand in our region.
New restaurants also bring significant economic benefit to the communities we serve, especially through the creation of first-time jobs and long-term career opportunities for young people. Let's take a look at consolidated results for the third quarter of 2023. Total revenue surpassed $1.1 billion, rising 22.1% in U.S. dollars versus the prior-year period. Guest traffic grew in the mid to high single-digits in most markets, in-line with our sales growth strategy. Adjusted EBITDA rose with revenue growth, reaching $129.1 million. U.S. dollar EBITDA growth was driven mainly by higher sales, but we also managed to expand margins, thanks to better food and paper costs and some fixed cost leverage in the quarter. Net income of $59.7 million, or $0.28 per share, rose 27.4% over last year's strong results.
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