Arcos Dorados Results

Arcos Dorados Reports First Quarter 2018 Financial Results

Comparable Sales growth of 9.8% supports 12.5% growth in Adjusted EBITDA and 60 basis point expansion in Adjusted EBITDA Margin (excluding Venezuela).

Arcos Dorados

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 first quarter ended March 31, 2018.

First Quarter 2018 Key Results – Excluding Venezuela

  • As reported consolidated revenues increased 5.5% to $802.8 million versus the first quarter of 2017. On a constant currency basis1, consolidated revenues grew 10.7%.
  • Systemwide comparable sales1 rose 9.8% year-over-year.
  • As reported Adjusted EBITDA1 increased 12.5% to $68.0 million compared with the prior-year quarter.
  • Consolidated Adjusted EBITDA margin expanded 60 basis points to 8.5%.
  • As reported General and Administrative (G&A) expenses remained flat as a percentage of revenues.
  • As reported net income decreased to $13.6 million, from $41.0 million in the first quarter of 2017, primarily due to re-development proceeds of $51.9 million in the year ago period.

“The positive momentum continued in the first quarter of 2018 as Arcos Dorados posted strong operating results. An improved macroeconomic environment, favorable consumer trends, and compelling product offerings across our menu contributed to an important shift in mix and increased traffic, driving top line growth, profitability and gains in market share throughout Latin America.

We are leveraging our leading market share, streamlined cost structure and unmatched scale to capture the opportunity in front of us. We are deriving additional margin and cash generation by maintaining our focus on bringing more guests to our restaurants more often. I am confident that our strong restaurant portfolio, popular menu items and outstanding team will continue to deliver sustainable growth and significant shareholder value creation," said Sergio Alonso, Chief Executive Officer of Arcos Dorados.

 

First Quarter 2018 Results

Consolidated

Figure 1. AD Holdings Inc Consolidated: Key Financial Results

(In millions of U.S. dollars, except as noted)

   

1Q17

(a)

 

Currency

Translation

- Excl.

Venezuela

(b)

 

Constant

Currency

Growth -

Excl.

Venezuela

(c)

 

Venezuela

(d)

 

1Q18

(a+b+c+d)

 

% As

Reported

 

% Constant

Currency

Total Restaurants (Units)   2,156  

 

 

  2,190   1.6%  

 
Sales by Company-operated Restaurants

745.4

(37.5)

75.4

23.7

807.1

8.3%

92.0%
Revenues from franchised restaurants

36.1

(1.7)

5.6

2.9

42.8

18.7%

219.5%
Total Revenues

781.5

(39.2)

81.0

26.6

849.9

8.8%

97.9%
Systemwide Comparable Sales

122.0%
Adjusted EBITDA

62.7

(2.0)

9.6

(31.7)

38.6

-38.4%

635.6%
Adjusted EBITDA Margin

8.0%

4.5%

Net income (loss) attributable to AD

40.6

(0.6)

(26.8)

(12.7)

0.5

-98.7%

708.0%
No. of shares outstanding (thousands)

210,711

211,073

EPS (US$/Share)   0.19               0.00        

(1Q18 = 1Q17 + Currency Translation Excl. Venezuela + Constant Currency Growth Excl. Venezuela + Venezuela). Refer to “Definitions” section for further detail.

 

Arcos Dorados’ consolidated results continue to be heavily impacted by Venezuela’s macroeconomic volatility, including the ongoing hyperinflationary environment and the country’s heavily regulated currency. As such, reported results in the quarter reflect significant non-cash accounting impacts from operations in that market. Thus, the discussion of the Company’s operating performance is focused on consolidated results, excluding Venezuela.

Consolidated – excluding Venezuela

Figure 2. AD Holdings Inc Consolidated - Excluding Venezuela: Key Financial Results

(In millions of U.S. dollars, except as noted)

   

1Q17

(a)

 

Currency

Translation

(b)

 

Constant

Currency

Growth

(c)

 

1Q18

(a+b+c)

 

% As

Reported

 

% Constant

Currency

Total Restaurants (Units)   2,025  

 

  2,060   1.7%  

 
Sales by Company-operated Restaurants

727.0

(37.5)

75.4

765.0

5.2%

10.4%
Revenues from franchised restaurants

33.9

(1.7)

5.6

37.8

11.4%

16.5%
Total Revenues

760.9

(39.2)

81.0

802.8

5.5%

10.7%
Systemwide Comparable Sales

9.8%
Adjusted EBITDA

60.4

(2.0)

9.6

68.0

12.5%

15.9%
Adjusted EBITDA Margin

7.9%

8.5%

Net income (loss) attributable to AD

41.0

(0.6)

(26.8)

13.6

-66.9%

-65.5%
No. of shares outstanding (thousands)

210,711

211,073

EPS (US$/Share)   0.19           0.06        

 

Excluding the Company’s Venezuelan operation, as reported revenues increased 5.5% year-over-year. The result primarily reflects constant currency revenue growth of 10.7%, partially offset by a negative impact from currency translation, which mainly resulted from the 25.7% and 3.3% year-over-year average depreciation of the Argentine peso and the Brazilian real, respectively. Constant currency revenue growth was supported by a 9.8% increase in systemwide comparable sales, supported by a favorable shift in mix and positive traffic in all divisions.

First quarter consolidated as reported Adjusted EBITDA, excluding Venezuela, increased 12.5% or 15.9% in constant currency terms, with revenue growth and margin expansion in all divisions, except for the Caribbean. The Adjusted EBITDA margin expanded by 60 basis points to 8.5%, driven by efficiencies in Food and Paper (F&P), Payroll, and Occupancy and Other Operating Expenses, partially offset by higher Royalty Fees.

As reported, consolidated G&A increased by 5.1% year-over-year, and remained flat as a percentage of revenues.

Main variations in other operating income (expenses), net

Included in Adjusted EBITDA: In the first quarter of 2018, the Company recorded an inventory write down of $41.3 million, related to the devaluation in Venezuela, compared to an inventory write down of $0.1 million in the first quarter of 2017. Proceeds from refranchising were less than $0.9 million in the first quarter of 2018 as well as in the prior year comparable quarter.

Excluded from Adjusted EBITDA: In the first quarter of 2018, the Company recorded $0.2 million from its re-development initiative, compared with $51.9 million in the first quarter of 2017.

Non-operating Results

Non-operating results for the first quarter reflected a non-cash $1.8 million foreign currency exchange loss, versus a non-cash loss of $8.4 million last year. Net interest expense was $1.8 million lower year-over-year.

The Company reported an income tax expense of $12.9 million in the quarter, compared to an income tax expense of $21.4 million in the prior year period.

First quarter net income attributable to the Company totaled $13.6 million ($0.5 million, including Venezuela), compared to net income of $41.0 million ($40.6 million, including Venezuela) in the same period of 2017. The prior year result included $51.9 million from the Company’s re-development initiative compared with $0.2 million this year. The Company concluded the redevelopment program in 2017.

The Company reported earnings per share of $0.06 ($0.00, including Venezuela) in the first quarter of 2018, compared to earnings per share of $0.19 (also $0.19, including Venezuela) in the previous corresponding period. Total weighted average shares for the first quarter of 2018 were 211,072,508, as compared to 210,711,224 in the prior year quarter.

Analysis by Division:

Brazil Division

Figure 3. Brazil Division: Key Financial Results

(In millions of U.S. dollars, except as noted)

   

1Q17

(a)

 

Currency

Translation

(b)

 

Constant

Currency

Growth

(c)

 

1Q18

(a+b+c)

 

% As

Reported

 

% Constant

Currency

Total Restaurants (Units)   904  

 

  929   2.8%  

 
Total Revenues

360.0

(11.7)

16.3

364.7

1.3%

4.5%
Systemwide Comparable Sales

4.6%
Adjusted EBITDA

44.8

(1.4)

5.4

48.7

8.9%

12.1%
Adjusted EBITDA Margin   12.4%           13.4%        

 

Brazil’s as reported revenues increased by 1.3%, supported by constant currency growth outpacing a negative currency translation impact from the 3.3% average depreciation of the Brazilian real. Excluding currency translation, constant currency revenues grew 4.5% year-over-year, while total systemwide sales grew 7.4% in constant currency. This reflects the impact of the refranchising of certain company-operated restaurants during the last twelve months. An increase in the number of franchised restaurants reduces the Company’s total revenue comparisons, as company-operated restaurant sales are replaced by rental income received from the Company’s franchisees. In the quarter, systemwide comparable sales rose 4.6%, driven by a higher average check and continued restaurant traffic growth.

Marketing activities in the quarter, which were designed to sustainably stimulate top-line growth without negatively impacting gross margins, included the launch of the Batata Rústica campaign and the introduction of the Big Tasty Duplo & Chicken Bacon sandwiches, among others. Also in the quarter, the Company launched the McFlurry “Alpino” and “Triplo Chocolate Kopenhagen” in the Dessert category and included “Snoopy” in the Happy Meal.

As reported Adjusted EBITDA increased 8.9% year-over-year and 12.1% on a constant currency basis. The Adjusted EBITDA margin expanded 100 basis points to 13.4%, mainly through capturing efficiencies in F&P costs. Brazil Royalty Fee was partially offset by Growth Support received from McDonald’s Corporation during the quarter.

NOLAD

Figure 4. NOLAD Division: Key Financial Results

(In millions of U.S. dollars, except as noted)

   

1Q17

(a)

 

Currency

Translation

(b)

 

Constant

Currency

Growth

(c)

 

1Q18

(a+b+c)

 

% As

Reported

 

% Constant

Currency

Total Restaurants (Units)   517  

 

  522   1.0%  

 
Total Revenues

84.3

2.7

10.1

97.2

15.2%

11.9%
Systemwide Comparable Sales

11.4%
Adjusted EBITDA

5.2

(0.1)

2.2

7.3

40.1%

41.9%
Adjusted EBITDA Margin   6.2%           7.5%        

 

NOLAD’s as reported revenues increased 15.2% year-over-year, supported by constant currency growth of 11.9% and an 8% year-over-year average appreciation of the Mexican peso. Systemwide comparable sales increased 11.4%, mainly driven by an increase in traffic across all the division’s markets, combined with a favorable shift in mix. Notably, Mexico guest traffic continues to perform strongly, having recorded the highest comparable growth rate since the formation of Arcos Dorados in 2007. In addition to the positive Easter calendar shift, the Company’s innovative marketing and digital initiatives as well as its focus on delivering a better guest experience are driving the improved performance.

Marketing activities in the quarter included a new phase of the affordability platform “McTrío 3x3” in Mexico and the introduction of the “Caprese” premium burger in the Signature Line. The dessert category performed well with the launch of the McFlurry Crunch Rocks. Also in the quarter, the Company included “Ty Beanie Boos” and “Snoopy” in the Happy Meal.

As reported Adjusted EBITDA increased by 40.1%, or by 41.9% on a constant currency basis. The Adjusted EBITDA margin expansion of 130 basis points to 7.5% in the first quarter reflects efficiencies in all cost line items, except Royalty Fees.

SLAD

Figure 5. SLAD Division: Key Financial Results

(In millions of U.S. dollars, except as noted)

   

1Q17

(a)

 

Currency

Translation

(b)

 

Constant

Currency

Growth

(c)

 

1Q18

(a+b+c)

 

% As

Reported

 

% Constant

Currency

Total Restaurants (Units)   385  

 

  391   1.6%  

 
Total Revenues

229.9

(34.0)

45.3

241.2

4.9%

19.7%
Systemwide Comparable Sales

19.7%
Adjusted EBITDA

20.6

(3.0)

5.4

23.0

11.5%

26.1%
Adjusted EBITDA Margin   9.0%           9.5%        

 

SLAD’s as reported revenues increased 4.9% as constant currency growth of 19.7% more than offset negative currency translation impacts resulting from the 25.7% year-over-year average depreciation of the Argentine peso. Systemwide comparable sales increased 19.7%, driven by the combination of a favorable shift in mix and an increase in traffic.

Marketing activities in the quarter included the introduction of the Blue Cheese & Bacon premium burger in the Signature Line. Also in the quarter, the Company launched the “Papas Blue Cheese” and “Papas Cheddar Bacon” campaigns. The dessert category performed well with the introduction of the McFlurry Hershey’s and the launch of the McColoso. The Happy Meal featured “Ty Beanie Boos” and “Snoopy” during the quarter.

Adjusted EBITDA increased 11.5% on an as reported basis and rose 26.1% in constant currency terms. The Adjusted EBITDA margin expanded 50 basis points to 9.5%, due to efficiencies in all cost line items, except Royalty Fees. SLAD’s Royalty Fee increase was partially offset by Growth Support received from McDonald’s Corporation during the quarter.

Caribbean Division

Figure 6. Caribbean Division: Key Financial Results

(In millions of U.S. dollars, except as noted)

   

1Q17

(a)

 

Currency

Translation

(b)

 

Constant

Currency

Growth

(c)

 

1Q18

(a+b+c)

 

% As

Reported

 

% Constant

Currency

Total Restaurants (Units)   350  

 

  348   -0.6%  

 
Total Revenues

107.2

(653.6)

693.3

146.9

37.0%

646.6%
Systemwide Comparable Sales

892.0%
Adjusted EBITDA

5.6

(420.1)

388.8

(25.7)

-555.0%

6896.5%
Adjusted EBITDA Margin   5.3%           -17.5%        

 

The Caribbean division’s results continue to be heavily impacted by Venezuela’s macroeconomic volatility, including the ongoing hyperinflationary environment and the country’s heavily regulated currency. As such, reported results in the quarter reflect significant non-cash accounting impacts from operations in that market. Thus, the discussion of the Caribbean division’s operating performance is focused on results, excluding Venezuela.

Caribbean Division – excluding Venezuela

Figure 7. Caribbean Division - Excluding Venezuela: Key Financial Results

(In millions of U.S. dollars, except as noted)

   

1Q17

(a)

 

Currency

Translation

(b)

 

Constant

Currency

Growth

(c)

 

1Q18

(a+b+c)

 

% As

Reported

 

% Constant

Currency

Total Restaurants (Units)   219  

 

  218   -0.5%  

 
Total Revenues

86.7

3.7

9.4

99.7

15.1%

10.8%
Systemwide Comparable Sales

10.3%
Adjusted EBITDA

3.4

0.4

(0.0)

3.8

10.9%

-0.9%
Adjusted EBITDA Margin   3.9%           3.8%        

 

As reported revenues in the Caribbean division, excluding Venezuela, increased 15.1%, driven by constant currency growth of 10.8% and a positive currency translation impact. Comparable sales increased by 10.3%, driven by average check growth and positive traffic, including another quarter of solid results in Colombia. Marketing activities in the quarter included the continuation of the MyCombo campaign and the launch of the Mozzarella Melt burger. Also in the quarter, the Company introduced the Chokis Chocobase Cone in the dessert category, and included “Snoopy” in the Happy Meal.

Adjusted EBITDA totaled $3.8 million, compared to $3.4 million in the same period of 2017. The Adjusted EBITDA margin contracted 10 basis points to 3.8%. Lower Payroll costs, Occupancy and Other Operating expenses as well as G&A largely offset higher F&P expenses and Royalty Fees as a percentage of revenues.

New Unit Development

Figure 8. Total Restaurants (eop)*

  March   December   September   June   March
    2018   2017   2017   2017   2017
Brazil

929

929

910

910

904
NOLAD

522

519

514

515

517
SLAD

391

390

386

386

385
Caribbean

348

350

350

349

350
TOTAL   2,190   2,188   2,160   2,160   2,156
* Considers Company-operated and franchised restaurants at period-end
 

The Company opened 51 new restaurants during the twelve-month period ended March 31, 2018, resulting in a total of 2,190 restaurants. Also during the period, the Company added 232 Dessert Centers, bringing the total to 2,920. McCafés totaled 316 as of March 31, 2018.

Balance Sheet & Cash Flow Highlights

Cash and cash equivalents, including short-term investments, were $256.8 million at March 31, 2018. The Company’s total financial debt (including derivative instruments) was $638.6 million. Net debt (Total Financial Debt minus Cash and cash equivalents) was $381.8 million and the Net Debt/Adjusted EBITDA ratio was 1.4x at March 31, 2018.

Figure 9. Consolidated Financial Ratios

(In thousands of U.S. dollars, except ratios)

  March 31   December 31
    2018   2017
Cash & cash equivalents (i)

256,824

328,079
Total Financial Debt (ii)

638,643

621,460
Net Financial Debt (iii)

381,819

293,381
Total Financial Debt / LTM Adjusted EBITDA ratio

2.3

2.0
Net Financial Debt / LTM Adjusted EBITDA ratio   1.4   1.0
(i) Cash & cash equivalents includes Short-term investment
(ii)Total financial debt includes long-term debt and derivative instruments (including the asset portion of derivatives amounting to $20.3 million and $35.1 million as a reduction of financial debt as of March 31, 2018 and December 31, 2017, respectively).
(iii) Total financial debt less cash and cash equivalents.
 

Net cash used in operating activities totaled $25.9 million for the quarter, and cash used in net investing activities totaled $21.5 million, which included capital expenditures of $23.8 million. Cash used in financing activities amounted to $1.7 million.

Quarter Highlights & Recent Developments

Recent accounting pronouncements – Revenue recognition

Effective January 1, 2018, the Company adopted the guidance issued in Accounting Standards Codification 606, "Revenue Recognition - Revenue from Contracts with Customers." This standard changed the way initial fees from franchisees for new restaurant openings and new franchise terms are recognized. Under the new guidance, initial franchise fees are being recognized evenly over the franchise term rather than immediately upon receipt. For further information, please refer to Note #3 of our quarterly financial statements (Form 6-K), filed today with the SEC.

Annual General Shareholders Meeting

The Company held its Annual Shareholders’ Meeting on April 24, 2018. All proposals were approved.

Election of Class I Directors

Mr. Woods Staton, Mr. Ricardo Gutiérrez, Mr. Sergio Alonso and Mr. Francisco Staton have been duly elected as Class I Directors of the Board of Directors of the Company, to hold office until the conclusion of the Annual General Shareholders’ Meeting held in the calendar year 2021. Mr. Francisco Staton was elected to the Board of Directors for the first time. Mr. Staton graduated with a Bachelor’s Degree from Princeton University and an MBA from Columbia University, and is currently the Managing Director of Arcos Dorados’ Colombia, Aruba, Curaçao, and Trinidad markets.

Definitions:

Systemwide comparable sales growth: refers to the change, measured in constant currency, in our Company-operated and franchised restaurant sales in one period from a comparable period for restaurants that have been open for thirteen months or longer. While sales by our franchisees are not recorded as revenues by us, we believe the information is important in understanding our financial performance because these sales are the basis on which we calculate and record franchised revenues, and are indicative of the financial health of our franchisee base.

Constant currency basis: refers to amounts calculated using the same exchange rate over the periods under comparison to remove the effects of currency fluctuations from this trend analysis.

To better discern underlying business trends, this release uses non-GAAP financial measures that segregate year-over-year growth into two categories: (i) currency translation, (ii) constant currency growth. (i) Currency translation reflects the impact on growth of the appreciation or depreciation of the local currencies in which we conduct our business against the US dollar (the currency in which our financial statements are prepared). (ii) Constant currency growth reflects the underlying growth of the business excluding the effect from currency translation.

Adjusted EBITDA: In addition to financial measures prepared in accordance with the general accepted accounting principles (GAAP), within this press release and the accompanying tables, we use a non-GAAP financial measure titled ‘Adjusted EBITDA’. We use Adjusted EBITDA to facilitate operating performance comparisons from period to period.

Adjusted EBITDA is defined as our operating income plus depreciation and amortization plus/minus the following losses/gains included within other operating income (expenses), net, and within general and administrative expenses in our statement of income: gains from sale or insurance recovery of property and equipment; write-offs of property and equipment; impairment of long-lived assets and goodwill; and incremental compensation related to the modification of our 2008 long-term incentive plan.

We believe Adjusted EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations such as capital structures (affecting net interest expense and other financial charges), taxation (affecting income tax expense) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense), which may vary for different companies for reasons unrelated to operating performance. Figure 10 of this earnings release include a reconciliation for Adjusted EBITDA. For more information, please see Adjusted EBITDA reconciliation in Note 9 of our quarterly financial statements (6-K Form) filed today with the S.E.C.

About Arcos Dorados

Arcos Dorados is the world’s largest independent McDonald’s franchisee in terms of systemwide sales and number of restaurants, 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, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao, Ecuador, French Guyana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, St. Croix, St. Thomas, Trinidad & Tobago, Uruguay and Venezuela. The Company operates or franchises over 2,190 McDonald’s-branded restaurants with over 90,000 employees and is recognized as one of the best companies to work for in Latin America. Arcos Dorados is traded on the New York Stock Exchange (NYSE: ARCO).

 
First Quarter 2018 Consolidated Results

(In thousands of U.S. dollars, except per share data)

 
Figure 10. First Quarter 2018 Consolidated Results

(In thousands of U.S. dollars, except per share data)

  For Three-Months ended

March 31,
      2018       2017  
REVENUES

 

Sales by Company-operated restaurants

807,061

745,408

Revenues from franchised restaurants     42,826       36,072  
Total Revenues     849,887       781,480  
OPERATING COSTS AND EXPENSES

Company-operated restaurant expenses:

Food and paper

(285,267 )

(263,464 )
Payroll and employee benefits

(173,114 )

(166,276 )
Occupancy and other operating expenses

(216,622 )

(202,803 )
Royalty fees

(42,171 )

(38,512 )
Franchised restaurants - occupancy expenses

(19,155 )

(16,111 )
General and administrative expenses

(57,650 )

(54,903 )
Other operating (expenses) income, net     (43,837 )     49,919  
Total operating costs and expenses     (837,816 )     (692,150 )
Operating income     12,071       89,330  
Net interest expense

(14,640 )

(16,415 )
Loss from derivative instruments

(98 )

(642 )
Foreign currency exchange results

8,177

(8,560 )
Other non-operating income (expense), net     16       (695 )
Income before income taxes     5,526       63,018  
Income tax expense     (4,963 )     (22,339 )
Net income     563       40,679  
Less: Net income attributable to non-controlling interests     (45 )     (77 )
Net income attributable to Arcos Dorados Holdings Inc.     518       40,602  
Earnings per share information ($ per share):

Basic net income per common share

$ 0.00

$ 0.19

Weighted-average number of common shares outstanding-Basic     211,072,508       210,711,224  
Adjusted EBITDA Reconciliation        
Operating income

12,071

89,330

Depreciation and amortization

26,517

23,452

Operating charges excluded from EBITDA computation     18       (50,098 )
Adjusted EBITDA     38,606       62,684  
Adjusted EBITDA Margin as % of total revenues     4.5 %     8.0 %

 
 
First Quarter 2018 Consolidated Results – Excluding Venezuela

(In thousands of U.S. dollars, except per share data)

 
Figure 11. First Quarter 2018 Consolidated Results - Excluding Venezuela

(In thousands of U.S. dollars, except per share data)

  For Three-Months ended

March 31,
      2018       2017  
REVENUES

 

Sales by Company-operated restaurants

764,956

727,018

Revenues from franchised restaurants     37,799       33,922  
Total Revenues     802,755       760,940  
OPERATING COSTS AND EXPENSES

Company-operated restaurant expenses:

Food and paper

(264,110 )

(255,863 )
Payroll and employee benefits

(169,644 )

(163,612 )
Occupancy and other operating expenses

(207,260 )

(197,416 )
Royalty fees

(43,108 )

(37,598 )
Franchised restaurants - occupancy expenses

(17,779 )

(15,480 )
General and administrative expenses

(55,574 )

(52,853 )
Other operating (expenses) income, net     (2,225 )     50,492  
Total operating costs and expenses     (759,700 )     (672,330 )
Operating income     43,055       88,610  
Net interest expense

(14,640 )

(16,437 )
Loss from derivative instruments

(98 )

(642 )
Foreign currency exchange results

(1,825 )

(8,364 )
Other non-operating income (expense), net     14       (686 )
Income before income taxes     26,506       62,481  
Income tax expense     (12,896 )     (21,400 )
Net income     13,610       41,081  
Less: Net income attributable to non-controlling interests     (45 )     (77 )
Net income attributable to Arcos Dorados Holdings Inc.     13,565       41,004  
Earnings per share information ($ per share):

Basic net income per common share

$ 0.06

$ 0.19

Weighted-average number of common shares outstanding-Basic     211,072,508       210,711,224  
Adjusted EBITDA Reconciliation        
Operating income

43,055

88,610

Depreciation and amortization

24,956

21,920

Operating charges excluded from EBITDA computation     10       (50,091 )
Adjusted EBITDA     68,021       60,439  
Adjusted EBITDA Margin as % of total revenues     8.5 %     7.9 %

 
 
First Quarter 2018 Results by Division

(In thousands of U.S. dollars)

 
Figure 12. First Quarter 2018 Consolidated Results by Division

(In thousands of U.S. dollars)

  1Q

Three-Months ended   % Incr.   Constant

March 31,   /   Currency
    2018   2017   (Decr)   Incr/(Decr)%

Revenues

 

Brazil

364,683

359,995

1.3 %

4.5 %
Caribbean

146,874

107,218

37.0 %

646.6 %
NOLAD

97,151

84,343

15.2 %

11.9 %
SLAD

241,179

229,924

4.9 %

19.7 %
TOTAL

849,887

781,480

8.8 %

97.9 %

 

 

Operating Income (loss)

Brazil

35,061

31,307

12.0 %

15.2 %
Caribbean

(31,767 )

(266 )

-11842.5 %

146436.1 %
NOLAD

1,950

51,157

-96.2 %

-95.6 %
SLAD

17,870

16,857

6.0 %

21.5 %
Corporate and Other

(11,043 )

(9,725 )

-13.6 %

-39.0 %
TOTAL

12,071

89,330

-86.5 %

386.4 %

 

 

Adjusted EBITDA

Brazil

48,727

44,762

8.9 %

12.1 %
Caribbean

(25,651 )

5,638

-555.0 %

6896.5 %
NOLAD

7,295

5,207

40.1 %

41.9 %
SLAD

22,985

20,619

11.5 %

26.1 %
Corporate and Other

(14,750 )

(13,542 )

-8.9 %

-24.7 %
TOTAL   38,606     62,684     -38.4 %   635.6 %
 
Figure 13. Average Exchange Rate per Quarter*
         

Brazil

 

Mexico

 

Argentina

1Q18         3.25   18.71   19.70
1Q17         3.14   20.29   15.67
* Local $ per 1 US$

 
 
Summarized Consolidated Balance Sheets

(In thousands of U.S. dollars)

 
Figure 14. Summarized Consolidated Balance Sheets

(In thousands of U.S. dollars)

  March 31   December 31
    2018   2017
ASSETS

Current assets

Cash and cash equivalents

237,041

308,491

Short-term investment

19,783

19,588

Accounts and notes receivable, net

90,554

111,302

Other current assets (1)   173,407     213,656  
Total current assets   520,785     653,037  
Non-current assets

Property and equipment, net

897,261

890,736

Net intangible assets and goodwill

45,697

47,729

Deferred income taxes

84,054

74,299

Other non-current assets (2)   121,142     137,942  
Total non-current assets   1,148,154     1,150,706  
Total assets   1,668,939     1,803,743  
LIABILITIES AND EQUITY

Current liabilities

Accounts payable

227,265

303,452

Taxes payable (3)

101,806

136,918

Accrued payroll and other liabilities

117,565

119,088

Other current liabilities (4)

22,490

23,715

Provision for contingencies

2,549

2,529

Financial debt (5)   20,031     19,881  
Total current liabilities   491,706     605,583  
Non-current liabilities

Accrued payroll and other liabilities

34,368

29,366

Provision for contingencies

28,863

25,427

Financial debt (6)

638,877

636,648

Deferred income taxes   10,978     10,577  
Total non-current liabilities   713,086     702,018  
Total liabilities   1,204,792     1,307,601  
Equity

Class A shares of common stock

376,732

376,732

Class B shares of common stock

132,915

132,915

Additional paid-in capital

15,215

14,216

Retained earnings

376,575

401,134

Accumulated other comprehensive losses   (437,819 )   (429,347 )
Total Arcos Dorados Holdings Inc shareholders’ equity   463,618     495,650  
Non-controlling interest in subsidiaries   529     492  
Total equity   464,147     496,142  
Total liabilities and equity   1,668,939     1,803,743  

(1) Includes "Other receivables", "Inventories", "Prepaid expenses and other current assets", and "McDonald's Corporation's indemnification for contingencies".

(2) Includes "Miscellaneous", "Collateral deposits", "Derivative Instruments", and "McDonald's Corporation indemnification for contingencies".

(3) Includes "Income taxes payable" and "Other taxes payable".

(4) Includes "Royalties payable to McDonald's Corporation" and "Interest payable".

(5) Includes "Short-term debt", "Current portion of long-term debt" and "Derivative instruments".
(6) Includes "Long-term debt, excluding current portion" and "Derivative instruments".
 



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