Arcos Dorados Reports Second Quarter 2023 Financial Results

Total revenues reached $1.04 billion in the quarter, up 17.2% in US dollars and 36.2% in constant currency, versus the prior year period

Aug 17, 2023 - 08:56
  • Systemwide comparable sales grew 31.5% year-over-year, with strong sales and market share performance in all divisions
  • Total revenues reached $1.04 billion in the quarter, up 17.2% in US dollars and 36.2% in constant currency, versus the prior year period
  • Digital channel sales (Delivery, Mobile App and Self-order Kiosks), reached $665.9 million, representing 49% of systemwide sales in the second quarter
  • Consolidated Adjusted EBITDA¹ was $110.1 million, up 20.5% in US dollars and 31.0% in constant currency
  • Net Income in the quarter grew to $28.4 million, or $0.13 per share, almost doubling the prior year result
Arcos Dorados Holdings, Inc. (NYSE: ARCO), Latin America’s largest restaurant chain and the world’s largest independent McDonald’s franchisee, today reported unaudited results for the three and six months ended June 30, 2023.

Second Quarter 2023 Highlights

  • Systemwide comparable sales¹ increased 31.5%, rising 1.3 times blended inflation.
  • Consolidated revenues reached $1.04 billion, growing 17.2% in US dollars and 36.2% in constant currency, versus the prior year period.
  • Consolidated Adjusted EBITDA¹ of $110.1 million rose 20.5% in US dollars versus the prior year result, and 31.0% in constant currency.
  • Consolidated Adjusted EBITDA margin reached 10.6% in the quarter, expanding by 30 basis points versus the prior year period.
  • Basic net income per share was $0.13 in the quarter, almost double the net income per share of $0.07 in the prior year quarter.
  • The Company opened 10 restaurants in the period, including 8 free-standing units.
  • Surpassed 100 million cumulative downloads of the Company’s Mobile App.

Message from Marcelo Rabach, Chief Executive Officer

For the last several years, Arcos Dorados has made the most of its unique position in the Latin American QSR industry. We are operating the industry’s favorite Brand and leveraging structural competitive advantages to capture the McDonald’s Brand’s full growth potential.

Our “Three D’s” strategy, of Digital, Delivery and Drive-thru, provides the framework and tools for strong, sustainable sales growth. Restaurant level execution has also been a key success factor. By offering guests an unmatched experience through a combination of value, quality and service, we are generating consistent transaction volume growth on a comparable basis.

This approach to building topline has led to sales growth well above inflation that, in turn, generates fixed cost leverage and improved profitability. Importantly, the strong performance has been consistent across all three divisions. The geographic diversification we envisioned when Arcos Dorados was formed sixteen years ago has been an important success factor in recent years.

There have been a series of actions and initiatives across the organization within a long-term, strategic framework that are driving these results. From restaurant operations to digital capabilities and investment decisions, we are working hard to generate value for all stakeholders.

We understand the importance of efficient capital allocation, which is why we have focused our investments on modernizing existing restaurants and opening primarily free-standing locations to capitalize on the flexibility and adaptability of this restaurant format. Fortunately, the investments of the last three years have delivered above average returns on openings, modernizations and digital capabilities, among others.

These investments provide more than just financial returns. They also make us the largest generators of first-time jobs for young people in the region. In addition to restaurant training, we offer personal and professional development opportunities that will serve them for the rest of their lives. In fact, more than 110 thousand people have enrolled for free certificate courses on a broad range of topics through Hamburger University’s MCampus online education platform.

I hope we can inspire even more young people to join the Arcos Dorados family and build a better future for their families, communities and the planet.

Consolidated Results

Figure 1. AD Holdings Inc Consolidated: Key Financial Results
(In millions of U.S. dollars, except as noted)

2Q22
(a)
Currency Translation
(b)
Constant
Currency
Growth
(c)
2Q23
(a+b+c)
% As Reported % Constant Currency
Total Restaurants (Units)

2,286



2,317









 
Sales by Company-operated Restaurants

848.4

(163.4)

309.6

994.5

17.2%

36.5%

Revenues from franchised restaurants

39.5

(5.6)

12.0

46.0

16.3%

30.3%

Total Revenues

887.9

(169.0)

321.6

1,040.5

17.2%

36.2%

Systemwide Comparable Sales




31.5%

Adjusted EBITDA

91.4

(9.6)

28.3

110.1

20.5%

31.0%

Adjusted EBITDA Margin

10.3%



10.6%

0.3 p.p.
Net income (loss) attributable to AD

14.5

(4.3)

18.2

28.4

95.9%

125.7%

No. of shares outstanding (thousands)

210,540



210,626



EPS (US$/Share)

0.07



0.13



Arcos Dorados’ total revenues reached $ 1.04 billion, up 17.2% in US dollars and 36.2% in constant currency versus the prior year quarter. Guest traffic and sales growth were driven mainly by a strong performance in front counter, dessert center and Delivery sales together with further Digital sales penetration. Systemwide comparable sales in the second quarter grew 31.5%, or about 1.3 times blended inflation, including 2.5x in Brazil and 2.8x in NOLAD.

Second quarter 2023 front counter sales, which includes self-order kiosks, grew 37% in constant currency versus the prior year and generated 57% of systemwide sales. Delivery sales also grew strongly, up 41% in constant currency on top of robust growth in the prior year, reflecting industry-leading operational execution and significant brand preference. Drive-thru sales grew 12% in constant currency, despite the continued normalization of front counter sales.

Digital channel sales, which includes Delivery, Mobile App and Self-order kiosks, grew 41% versus the prior year and reached $665.9 million, representing 49% of systemwide sales in the second quarter. The Company’s Mobile App surpassed 100 million cumulative downloads, with more than 16 million average monthly active users, and the Company’s customer relationship management (CRM) platform had over 70 million unique registered users at the end of June 2023.

The Mobile App leverages guest data and increases visit frequency, especially when the sale is identified to an individual guest. During the second quarter, identified sales represented about 20% of consolidated sales and 25% of total sales in Brazil.

Notable items in the Adjusted EBITDA reconciliation

Included in Adjusted EBITDA: The positive variation in other operating income / (expense) is mainly explained by a $4.0 million gain from the sale of restaurants to a sub-franchisee in Chile in the second quarter of 2023.

Excluded from Adjusted EBITDA: There were no notable items excluded from Adjusted EBITDA in either the second quarter of 2023 or the second quarter of 2022.

Adjusted EBITDA

2Q23 Adjusted EBITDA Bridge

($ million)

Second quarter consolidated Adjusted EBITDA reached $110.1 million, up 20.5% in US dollars and 31.0% in constant currency over the prior year quarter, with continued US dollar growth in all divisions. Consolidated Adjusted EBITDA margin reached 10.6%, expanding 30 basis points versus the prior year, but down 10 basis points when adjusted for the $4.0 million gain from the sale of restaurants to a sub-franchisee in Chile.

Margin performance was highlighted by significant operating leverage in both Payroll and Occupancy & Other Operating expenses due to strong sales growth across all divisions. Food and Paper (F&P) costs also declined as a percentage of revenue compared with the prior year due to a better gross margin in NOLAD and SLAD. These more than offset moderately higher G&A expenses and the impact of the final step up of the Company’s royalty rate, which became effective as of August 3, 2022.

Non-operating Results

Arcos Dorados’ non-operating results for the second quarter included a $4.5 million gain from non-cash foreign exchange and derivative instruments.

Net interest expense and other financing results totaled $12.1 million in the quarter versus $24.2 million in the same period last year. The second quarter 2022 result included $10.6 million in expenses related to the liability management transaction executed during that quarter when the Company issued its 2029 Senior Notes, the first Sustainability Linked Bond (SLB) in the QSR industry.

In the second quarter, the Company recorded an income tax expense of $38.8 million, compared to an income tax expense of $15.6 million in the prior-year period.

Second quarter net income attributable to the Company totaled $28.4 million, compared to net income of $14.5 million in the same period of 2022. Earnings per share were $0.13 in the second quarter of 2023, versus $0.07 per share generated in the prior year quarter.

Total weighted average shares for the second quarter of 2023 were 210,625,859 compared to 210,539,537 in the second quarter of 2022.

For reference:

Figure 2. AD Holdings Inc Consolidated - Excluding Venezuela: Key Financial Results
(In millions of U.S. dollars, except as noted)

2Q22
(a)
Currency Translation
(b)
Constant
Currency
Growth
(c)
2Q23
(a+b+c)
% As Reported % Constant Currency
Total Restaurants (Units)

2,186



2,227









 
Sales by Company-operated Restaurants

844.8

(139.3)

283.4

989.0

17.1%

33.6%

Revenues from franchised restaurants

39.1

(3.2)

9.6

45.5

16.3%

24.5%

Total Revenues

883.9

(142.5)

293.0

1,034.4

17.0%

33.2%

Systemwide Comparable Sales




27.7%

Adjusted EBITDA

92.4

(15.2)

34.4

111.6

20.8%

37.2%

Adjusted EBITDA Margin

10.5%



10.8%

0.3 p.p.
Net income (loss) attributable to AD

15.6

(10.3)

24.7

29.9

92.1%

158.4%

No. of shares outstanding (thousands)

210,540



210,626



EPS (US$/Share)

0.07



0.14



Divisional Results

Brazil Division

Figure 3. Brazil Division: Key Financial Results
(In millions of U.S. dollars, except as noted)

2Q22
(a)
Currency Translation
(b)
Constant
Currency
Growth
(c)
2Q23
(a+b+c)
% As Reported % Constant Currency
Total Restaurants (Units)

1,070



1,098









 
Total Revenues

358.1

(2.7)

49.9

405.2

13.2%

13.9%

Systemwide Comparable Sales




9.6%

Adjusted EBITDA

52.7

(0.3)

16.7

69.1

31.2%

31.7%

Adjusted EBITDA Margin

14.7%



17.1%

2.3 p.p.

Brazil’s revenues increased 13.2% year-over-year, reaching $405.2 million. Systemwide comparable sales rose 9.6% year-over-year, or 2.5x inflation in the period, with visit share more than double the market’s nearest competitor.

Digital channel sales were up 30% versus the prior year, boosted by the “Méqui Fest” campaign, with a "festival” of offers designed to generate mobile app downloads and usage. Total digital sales generated 61% of systemwide sales in Brazil, including 25% identified sales in the quarter. Delivery demonstrated its continued popularity among guests and the Company consolidated its market leadership in this channel. Delivery sales rose 25% in constant currency versus the prior year period, representing 19% of systemwide sales in the quarter.

The quarter also included a new menu item in the premium beef segment with the introduction of the “Big Tasty Bacon Barbecue”, while a campaign to celebrate the 40th anniversary of Chicken McNuggets strengthened the strategically important chicken category.

As reported Adjusted EBITDA in the division reached $69.1 million in the quarter, rising 31.2% versus the prior year in US dollars. Adjusted EBITDA margin was 17.1%, or 230 basis points higher than the prior year quarter. Sales growth above inflation and significant operating leverage more than offset moderately higher F&P costs as a percentage of revenue.

North Latin American Division (NOLAD)

Figure 4. NOLAD Division: Key Financial Results
(In millions of U.S. dollars, except as noted)

2Q22
(a)
Currency Translation
(b)
Constant
Currency
Growth
(c)
2Q23
(a+b+c)
% As Reported % Constant Currency
Total Restaurants (Units)

628



639









 
Total Revenues

222.7

20.8

34.1

277.6

24.6%

15.3%

Systemwide Comparable Sales




10.4%

Adjusted EBITDA

23.3

2.2

2.7

28.2

21.3%

11.7%

Adjusted EBITDA Margin

10.4%



10.2%

-0.2 p.p.

As reported revenues totaled $277.6 million, up 24.6% in US dollars and 15.3% in constant currency versus the prior year quarter. Systemwide comparable sales rose 10.4% year-over-year, or 2.8x the division’s blended inflation in the period, with sales increasing above inflation in most markets and particularly strong volume growth in Mexico.

NOLAD’s markets captured additional market share in the quarter with consistent, positive momentum in brand attributes across the division. In April, the Company continued the roll out of Best Burger, extending the platform to Puerto Rico, where sales responded strongly in May and June. New menu items included the launch of the McCrispy CBO sauce in Mexico, strengthening the chicken portfolio in the country. The 40th Anniversary of the Chicken McNuggets was also celebrated in most countries, highlighting this core menu favorite among guests.

As reported Adjusted EBITDA in the division reached $28.2 million in the quarter, rising 21.3% versus the prior year in US dollars. Adjusted EBITDA margin declined by 20 basis points versus the prior year period, primarily due to the impact of the final step-up in the Company’s royalty rate as well as higher Payroll and G&A expenses as a percentage of revenue. These were almost entirely offset by lower F&P costs as a percentage of revenue and operating leverage in other cost and expense line items.

Notably, NOLAD generates its results in hard or relatively stable currencies: US dollar, euro, Mexican peso and Costa Rican colón.

South Latin American Division (SLAD)

Figure 5. SLAD Division: Key Financial Results
(In millions of U.S. dollars, except as noted)

2Q22
(a)
Currency Translation
(b)
Constant
Currency
Growth
(c)
2Q23
(a+b+c)
% As Reported % Constant Currency
Total Restaurants (Units)

588



580









 
Total Revenues

307.1

(187.0)

237.6

357.7

16.5%

77.4%

Systemwide Comparable Sales




82.4%

Adjusted EBITDA

32.9

(17.3)

21.2

36.9

12.0%

64.4%

Adjusted EBITDA Margin

10.7%



10.3%

-0.4 p.p.

Revenues in SLAD reached $357.7 million, rising 16.5% in US dollars, driven by an 82.4% increase in systemwide comparable sales versus the prior year, or 1.2x the division’s blended inflation rate, with Argentina, Colombia and Chile driving topline growth.

SLAD reached some of its highest ever market share levels, backed by positive brand attribute trends. Menu innovations across the region, included the launch of flavorful and abundant products in the beef and chicken categories such as the “Signature Tasty Turbo Bacon” in Chile, “Bacon Cheddar McMelt” in Argentina and “McCrispy BLT” in Colombia with localized campaigns that contributed to improved scores in quality attributes and brand preference in these markets. Digital channel and identified sales penetration rose to record levels in the division, including strong growth in the Mobile Order and Pay functionality on the mobile app.

As reported Adjusted EBITDA in the division totaled $36.9 million in the second quarter and Adjusted EBITDA margin contracted 40 basis points versus the prior year quarter. Adjusted EBITDA margin in the quarter benefited from a $4.0 million gain from the sale of restaurants in Chile. Excluding this effect, the margin declined by 150 basis points versus the prior year.

The division’s Adjusted EBITDA was primarily impacted by the final step-up in the Company’s royalty rate, as well as a moderate increase in G&A and payroll expenses as a percentage of revenue. These were partially offset by lower F&P costs as a percentage of revenue generated by a favorable sales mix and strong sales growth.

For reference:

Figure 6. SLAD Division - Excluding Venezuela: Key Financial Results
(In millions of U.S. dollars, except as noted)

2Q22
(a)
Currency Translation
(b)
Constant
Currency
Growth
(c)
2Q23
(a+b+c)
% As Reported % Constant Currency
Total Restaurants (Units)

488



490









 
Total Revenues

303.1

(160.5)

209.0

351.6

16.0%

69.0%

Systemwide Comparable Sales




70.8%

Adjusted EBITDA

34.0

(22.9)

27.3

38.4

13.1%

80.4%

Adjusted EBITDA Margin

11.2%



10.9%

-0.3 p.p.

New Unit Development

Figure 7. Total Restaurants (eop)*

June
2023
March
2023
December
2022
September
2022
June
2022
Brazil

1,098

1,091

1,084

1,077

1,070

NOLAD

639

639

638

631

628

SLAD

580

582

590

589

588

TOTAL

2,317

2,312

2,312

2,297

2,286

* Considers Company-operated and franchised restaurants at period-end
Figure 8. Footprint as of June 30, 2023

Store Type* Total Restaurants Ownership McCafes Dessert Centers

FS IS MS & FC Company Operated Franchised

Brazil

550

91

457

1,098

662

436

137

1,975

NOLAD

392

51

196

639

484

155

13

519

SLAD

229

128

223

580

494

86

166

704

TOTAL

1,171

270

876

2,317

1,640

677

316

3,198

* FS: Free-Standing; IS: In-Store; MS: Mall Store; FC: Food Court.

During the second quarter of 2023, the Company opened 10 restaurants, including 9 restaurants in Brazil and 8 free-standing units. More than half the Company’s footprint is made up of free-standing units, the region’s largest free-standing portfolio, which provides a structural competitive advantage given the versatility of this format.

As of the end of June, there were 1,128 Experience of the Future restaurants, the most modern format in the global McDonald’s system, making up 49% of the Company’s total footprint.

The Company’s restaurant development plan remains on track, with a strong pipeline of restaurant openings and modernizations underway in the second semester of 2023. All ground breaks on new restaurant construction for 2023 have been made and the Company expects to meet its full year openings guidance of 75 to 80 restaurants and about 250 modernizations.

Balance Sheet & Cash Flow Highlights

Figure 9. Consolidated Financial Ratios
(In thousands of U.S. dollars, except ratios)

 

June 30, December 31,

 

2023

2022

Total Cash & cash equivalents (i)

223,953

304,396

Total Financial Debt (ii)

695,494

674,401

Net Financial Debt (iii)

471,541

370,005

LTM Adjusted EBITDA

427,264

386,564

Total Financial Debt / LTM Adjusted EBITDA ratio

1.6

1.7

Net Financial Debt / LTM Adjusted EBITDA ratio

1.1

1.0

(i)

Total cash & cash equivalents include short-term investment.

(ii)

Total financial debt includes short-term debt, long-term debt, accrued interest payable and derivative instruments (including the asset portion of derivatives amounting to $72.0 million and $92.9 million as a reduction of financial debt as of June 30, 2023 and December 31, 2022, respectively).

(iii)

Net financial debt equals total financial debt less total cash & cash equivalents.

As of June 30, 2023, total cash and cash equivalents were $224.0 million and total financial debt (including the net derivative instrument position) was $695.5 million. Net debt (total financial debt minus total cash and cash equivalents) was $471.5 million, up from $370.0 million at the end of 2022, due to lower cash balances and lower net value of the Brazilian-real linked derivative instruments used to hedge the US dollar debt.

The net debt to Adjusted EBITDA leverage ratio ended the quarter at a healthy 1.1x.

Net cash generated from operating activities for the six months ended June 30, totaled $84.3 million versus $121.9 million in the same period last year. Cash used in net investing activities totaled $109.0 million, with capital expenditures of $123.1 million. Net cash used in financing activities was $27.9 million, which included $21.1 million corresponding to the first two installments of the 2023 dividend.

About Arcos Dorados

Arcos Dorados is the world’s largest independent McDonald’s franchisee, operating the largest quick service restaurant chain in Latin America and the Caribbean. It has the exclusive right to own, operate and grant franchises of McDonald’s restaurants in 20 Latin American and Caribbean countries and territories with more than 2,300 restaurants, operated by the Company or by its sub-franchisees, that together employ over 95 thousand people (as of 06/30/2023). The Company is also committed to the development of the communities in which it operates, to providing young people their first formal job opportunities and to utilize its Recipe for the Future to achieve a positive environmental impact. Arcos Dorados is listed for trading on the New York Stock Exchange (NYSE: ARCO).

Second Quarter 2023 Consolidated Results

Figure 10. Second Quarter 2023 Consolidated Results
(In thousands of U.S. dollars, except per share data)

For Three-Months ended
For Six-Months ended

June 30,
June 30,

2023

2022


2023

2022

REVENUES




Sales by Company-operated restaurants

994,530

848,350


1,940,884

1,603,644

Revenues from franchised restaurants

45,991

39,545


90,429

74,932

Total Revenues

1,040,521

887,895


2,031,313

1,678,576

OPERATING COSTS AND EXPENSES




Company-operated restaurant expenses:




Food and paper

(351,745)

(301,028)


(685,611)

(564,436)

Payroll and employee benefits

(194,065)

(169,441)


(379,382)

(321,669)

Occupancy and other operating expenses

(278,997)

(244,747)


(542,720)

(464,874)

Royalty fees

(58,520)

(44,061)


(115,259)

(82,677)

Franchised restaurants - occupancy expenses

(20,420)

(16,855)


(38,629)

(32,863)

General and administrative expenses

(69,526)

(54,996)


(135,118)

(110,534)

Other operating income, net

7,644

3,879


6,583

7,470

Total operating costs and expenses

(965,629)

(827,249)


(1,890,136)

(1,569,583)

Operating income

74,892

60,646


141,177

108,993

Net interest expense and other financing results

(12,128)

(24,161)


(21,987)

(34,820)

Loss from derivative instruments

(9,191)

(1,144)


(14,120)

(12,836)

Foreign currency exchange results

13,662

(5,045)


20,945

10,782

Other non-operating income / (expenses), net

116

(83)


6

(108)

Income before income taxes

67,351

30,213


126,021

72,011

Income tax expense

(38,824)

(15,638)


(59,850)

(32,807)

Net income

28,527

14,575


66,171

39,204

Net income attributable to non-controlling interests

(159)

(94)


(396)

(220)

Net income attributable to Arcos Dorados Holdings Inc.

28,368

14,481


65,775

38,984

Earnings per share information ($ per share):




Basic net income per common share

$ 0.13

$ 0.07


$ 0.31

$ 0.19

Weighted-average number of common shares outstanding-Basic

210,625,859

210,539,537


210,610,288

210,509,099

Adjusted EBITDA Reconciliation




Operating income

74,892

60,646


141,177

108,993

Depreciation and amortization

35,000

30,504


68,520

60,640

Operating charges excluded from EBITDA computation

164

212


863

227

Adjusted EBITDA

110,056

91,362


210,560

169,860

Adjusted EBITDA Margin as % of total revenues

10.6 %

10.3 %


10.4 %

10.1 %

Second Quarter 2023 Results by Division

Figure 11. Second Quarter 2023 Consolidated Results by Division
(In thousands of U.S. dollars)

For Three-Months ended as Constant
For Six-Months ended as Constant

June 30, reported Currency
June 30, reported Currency

2023

2022

Incr/(Decr)% Incr/(Decr)%

2023

2022

Incr/(Decr)% Incr/(Decr)%
Revenues








Brazil

405,199

358,069

13.2 %

13.9%


779,397

670,048

16.3%

16.4%

NOLAD

277,590

222,726

24.6 %

15.3%


536,856

426,578

25.9%

18.2%

SLAD

357,732

307,100

16.5 %

77.4%


715,060

581,950

22.9%

82.6%

SLAD - Excl. Venezuela

351,615

303,083

16.0 %

69.0%


703,641

574,553

22.5%

74.6%

TOTAL

1,040,521

887,895

17.2 %

36.2%


2,031,313

1,678,576

21.0%

39.8%

TOTAL - Excl. Venezuela

1,034,404

883,878

17.0 %

33.2 %


2,019,894

1,671,179

20.9%

36.9%










 
Operating Income (loss)








Brazil

52,912

38,024

39.2 %

39.5%


97,002

70,045

38.5%

38.4%

NOLAD

18,410

14,854

23.9 %

13.6%


32,357

28,087

15.2%

7.9%

SLAD

29,452

26,845

9.7 %

75.4%


62,914

50,671

24.2%

103.5%

SLAD - Excl. Venezuela

31,345

28,185

11.2 %

95.1%


66,222

53,422

24.0%

112.0%

Corporate and Other

(25,882)

(19,077)

-35.7%

-68.3%


(51,096)

(39,810)

-28.3%

-68.8%

TOTAL

74,892

60,646

23.5 %

40.0%


141,177

108,993

29.5%

49.7%

TOTAL - Excl. Venezuela

76,785

61,986

23.9 %

49.7%


144,485

111,744

29.3%

55.0%










 
Adjusted EBITDA








Brazil

69,129

52,706

31.2 %

31.7%


128,602

98,744

30.2%

30.2%

NOLAD

28,210

23,258

21.3 %

11.7%


51,910

44,660

16.2%

9.1%

SLAD

36,874

32,937

12.0 %

64.4%


77,590

63,253

22.7%

85.0%

SLAD - Excl. Venezuela

38,402

33,961

13.1 %

80.4%


80,227

65,421

22.6%

92.9%

Corporate and Other

(24,157)

(17,539)

-37.7%

-70.1%


(47,542)

(36,797)

-29.2%

-70.1%

TOTAL

110,056

91,362

20.5 %

31.0%


210,560

169,860

24.0%

36.4%

TOTAL - Excl. Venezuela

111,584

92,386

20.8 %

37.2%


213,197

172,028

23.9%

40.0%

Figure 12. Average Exchange Rate per Quarter*  

Brazil Mexico Argentina  

2Q23

4.95

17.68

231.76

 

2Q22

4.92

20.02

117.88

 
* Local $ per 1 US$  

Summarized Consolidated Balance Sheets

Figure 13. Summarized Consolidated Balance Sheets
(In thousands of U.S. dollars)

June 30,

December 31,


2023

2022

ASSETS
Current assets

Cash and cash equivalents

201,492

266,937

Short-term investment

22,461

37,459

Accounts and notes receivable, net

127,856

124,273

Other current assets (1)

213,667

196,873

Derivative instruments

49,211

58,821

Total current assets

614,687

684,363

Non-current assets

Property and equipment, net

981,051

856,085

Net intangible assets and goodwill

65,706

54,569

Deferred income taxes

92,234

87,972

Derivative instruments

22,806

34,088

Equity method investments

17,566

14,708

Leases right of use assets, net

907,323

820,683

Other non-current assets (2)

101,351

84,162

Total non-current assets

2,188,037

1,952,267

Total assets

2,802,724

2,636,630

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

307,995

353,468

Taxes payable (3)

172,070

146,682

Accrued payroll and other liabilities

147,928

115,327

Royalties payable to McDonald´s Corporation

15,981

21,280

Provision for contingencies

2,299

2,272

Interest payable

7,788

7,906

Financial debt (4)

32,085

29,566

Operating lease liabilities

89,626

82,911

Total current liabilities

775,772

759,412

Non-current liabilities

Accrued payroll and other liabilities

23,291

28,781

Provision for contingencies

49,685

42,567

Financial debt (5)

727,638

729,838

Deferred income taxes

5,824

3,931

Operating lease liabilities

816,165

747,674

Total non-current liabilities

1,622,603

1,552,791

Total liabilities

2,398,375

2,312,203

Equity

Class A shares of common stock

389,907

389,393

Class B shares of common stock

132,915

132,915

Additional paid-in capital

8,719

9,206

Retained earnings

450,689

424,936

Accumulated other comprehensive loss

(559,229)

(613,460)

Common stock in treasury

(19,367)

(19,367)

Total Arcos Dorados Holdings Inc shareholders’ equity

403,634

323,623

Non-controlling interest in subsidiaries

715

804

Total equity

404,349

324,427

Total liabilities and equity

2,802,724

2,636,630

(1)

Includes "Other receivables", "Inventories" and "Prepaid expenses and other current assets”.

(2)

Includes "Miscellaneous", "Collateral deposits", and "McDonald’s Corporation indemnification for contingencies".

(3)

Includes "Income taxes payable" and "Other taxes payable".

(4)

Includes "Short-term debt”, “Current portion of long-term debt" and "Derivative instruments”.

(5)

Includes "Long-term debt, excluding current portion" and "Derivative instruments".