Arcos Dorados Holdings Inc.

Good morning and welcome to the Arcos Dorados third quarter 2018 earnings call. A slide presentation will accompany today's webcast, which will also be available in the investors section of the company's website, www.arcosdorados.com. And as a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. Today's conference call is being recorded. At this time, I would like to turn the call over to Patricio Enceola, Director of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today. With me on today's call are Sergio Alonso, our Chief Executive Officer, Marcelo Rabat, our Chief Operating Officer, and Mariano Tanemo, our Chief Financial Officer. Please turn to slide two. Before we proceed, I would like to make the following safe harbor statement. This call will contain forward-looking statements, and I refer you to the forward-looking statement 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 6K. The differences in exchange rate and inflation in Venezuela generate material accounting distortions impacting both the reported results of our Venezuelan operation as well as our consolidated results. For that reason, and unless otherwise indicated, all results referenced in our comments today are shown on the accompanying presentation exclude the results of our Venezuelan operations. both at the consolidated level as well as for the Caribbean division. 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, Sergio Alonso.

Thank you, Miyake. Hello, everyone, and thank you for joining us today. Let's turn to slide three. We have spent the last couple of years We will place the initiative necessary to drive long-term sustainable value creation for all shareholders. Our strategic plan is focused on attracting more guests to our restaurants more often in a consistently profitable manner. Today, we have a leaner, more efficient business structure along with a sound balance sheet. During the third quarter, we saw the benefits of our work as our team and operating structure were tested by volatile environments in our two largest markets, Brazil and Argentina. In this context, comparable sales increased 7.4% on top of the 10.4% achieved last year. Consolidated EBITDA margin expanded 340 basis points to 12.3%. And we deliver strong double-digit net income growth as well as cash generation. These results demonstrate our unique ability to attract customers to our restaurants by offering compelling value and to manage our costs and balance sheet effectively. Many of our markets are performing really well, and I'd just like to highlight some of the turnaround success stories. In NOLA, we saw very positive sales expansion above the blended inflation rate, driven by a continuation of volume and other growth, particularly in Mexico. Comparable sales growth in Colombia and Puerto Rico were substantially above inflation in these countries, and the division delivered a 140 basis point improvement in adjusted EBITDA margin. In this region as well, our initiatives around G&A, payroll, and food and paper are all paying off. While flat results are heavily impacted by Argentina, Volumes, sales, and margins are all improving in each of the Andean countries. We're taking the long view in Brazil. Our business is all about finding the right balance between protecting the customer base without compromising margins. This quarter in particular, we skewed more total margin by volume growth. Turning up our promotional machine allows us to increase volumes, and we are poised to do this going into 2019. Bottom line, offering continued value in modern, family-friendly environments with warm hospitality consistently brings more guests to our restaurants. We strongly believe that there is significant potential for the McDonald's brand to continue growing in the region. Resolvable profitability has been driven by labor productivity improvements from our Cultura de Servicio program. Additionally, our scale, scale procurement teams, and hedging practices delivered production and program paper as a percentage of sales in the third quarter. Our strategy of gaining G&A leverage has been successful. A leaner, highly dedicated team is continuing to deliver in an efficient manner, and in fact, these quotes as G&A costs were below our blended inflation rate. The EBITDA margin expanded 130 basis points as compared to the third quarter of 2017, and excluding a tax-related credit, despite the way that this tip-up, which accounted for 30 basis points, as compared to last year. There is no magic here. These are results based on peer productivity initiatives throughout the business. We expect to see much of the same through the end of the year, and we'll continue to focus on our strategies to drive top-line growth for well-going market initiatives, while strengthening our margins as we move into 2019. Regarding the $660 million CAPEX plan, which includes $390 million of our investment in and the opening of at least 200 restaurants between 2017 and 2019, we remain on track to deliver these investments across our markets. Now I will hand the call over to Marcelo for the review of our operating performance.