Arcos Dorados Holdings Inc (NYSE:ARCO) Q3 2019 Earnings Conference Call - Final Transcript

Nov 13, 2019 • 10:00 am ET


Arcos Dorados Holdings Inc (NYSE:ARCO) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning, everyone and welcome to the Arcos Dorados Third Quarter 2019 Earnings Call. A slide presentation will accompany today's webcast, which will be available on the Investors section of the company's website [Operator Instructions]

At this time, I'd like to turn the conference call over to Patricio Esnaola, Director of Investor Relations. Please go ahead.

Patricio Inaki Esnaola

Thank you. Good morning, everyone, and thank you for joining our earnings call. With me on today's call are Marcelo Rabach, Arcos Dorados Chief Executive Officer and Mariano Tannenbaum, Chief Financial Officer.

Please turn to slide 2. Before we proceed, I would like to make the following Safe Harbor statement. 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 audited financial statements filed today with the SEC on Form 6-K.

Our discussion today excludes the results of the Venezuelan operation, both at the consolidated level, as well as for the Caribbean division due to the country's ongoing macroeconomic volatility. For your reference, we include a full income statement excluding Venezuela with our earnings release.

I would now like to turn the call over to our CEO, Marcelo Rabach, who will begin his remarks with slide 3.

Marcelo Rabach

Thank you, Inaki, and good day everyone. We delivered another quarter of strong volume and sales growth. Our nearly 13% increase in comparable sales was stronger than it was in the second quarter, well above blended inflation. In a scenario where GDP growth has been revised downward in many key markets, we drove traffic levels higher and so our check growth across most of our countries. Even in dollar terms, consolidated sales increased nearly 4% despite significant FX pressure during the quarter. Our performance was particularly strong in Brazil where we delivered 10.8% comparable sales growth, which was more than three times local inflation. Again, we gained additional market share and outpaced the food service sector.

Importantly, we are maintaining this momentum into the fourth quarter. Our NOLAD division also performed well. We are very pleased that Mexico produced its 10th consecutive quarter of sales growth and its third year above inflation, a result of a combination of initiatives that have gained traction in that country. As we noted during the previous earnings call, our performance is more about sharp and disciplined execution of our three pillar strategy and leveraging our market-leading brand than about market conditions.

Our investments in EOTF restaurants continue paying off, with sales lift in the high single digits. As of the end of the third quarter, we had 510 EOTF restaurants. By the