Arcos Dorados Holdings Inc.

Good morning and welcome to the Arcos Dorados second quarter 2020 earnings call. A slide presentation will accompany today's webcast, which will also be available in the investor 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 Dan Schleininger, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining our earnings call. With me on today's call are Marcela Rabach, our Chief Executive Officer, and Marianne Tonnenbaum, our Chief Financial Officer. Please turn to slide two. 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 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. 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.

Thanks, Dan, and good morning, everyone. I hope you and your families have remained healthy and safe during this very challenging time. Today, Mariano and I will cover the discussion topics on slide three, starting with highlights of our second quarter results, an update on recent trends, and a discussion of our strategic priorities. As expected, our second quarter results were materially worse than the first quarter. particularly due to the impact of the COVID-19 pandemic on our April results. But, as you will hear today, there are a number of reasons to be confident in the recovery and outperformance of our business in the months and years to come. The most important reason is the strength of the Arcos Dorados system and the McDonald's brand. The continued dedication, collaboration, and hard work of our entire system has been second to none. We have come together to ensure that our guests are served the highest quality food while enjoying the best service and safest restaurant experience in Latin America and the Caribbean. So, before I go on, let me just say thank you to all our collaborators. Let's keep up the great work. Turning to our second quarter results on slide four, our system-wide comparable sales, which include all restaurants in our system for more than 13 months, whether open or temporarily closed, were heavily impacted by restaurant closures in April. However, with each passing month, the strength of our restaurant portfolio became evident, as our comparable sales had a strong recovery throughout the quarter. Leveraging the region's largest freestanding restaurant footprint and in line with McDonald's globally, we focused on the three Ds, drive-through, delivery, and digital, to drive improved sales and customer engagement. The significant sales downturn in April also drove more than half of the negative EBITDA results for the quarter. We were able to quickly recover from this trend, however, with divisional EBITDA at almost breakeven in June. In fact, eight markets generated positive EBITDA results in the month, including Brazil and several hard currency, cash-generating markets such as Costa Rica, Puerto Rico, Martinique, and Panama. I am pleased to report that this improving trend continues and consolidated EBITDA already returned to positive territory in the month of July. We expect this recovery in profitability to accelerate through the third and fourth quarters of this year. Let me also remind you that our cash flows have been stable since about April the 20th. I'm immensely proud of our entire team for this important accomplishment, given all the challenges we are facing during this pandemic. We began the quarter with barely 55% of our restaurants operating at least one sales segment. On slide five, you can see the steady pace of reopenings that began in mid-April and took us to 88% of our restaurants open at the end of the quarter. Today, we are operating about 91% of our total restaurant base. The restaurants that remain closed are mostly in shopping malls that have not reopened or are not generating enough traffic for reopening to make business sense. One important trend to monitor going forward is the gradual return of fully open restaurants. As of June the 30th, only 17% of our restaurants have resumed operating all sales segments, including many freestanding locations offering dine-in service with reduced capacity. As of this morning, this figure has grown to 40%. This is good news. given the historical importance of the front counter and self-ordering kiosk sales segment to our business, which will be key contributors to the current recovery and the long-term growth of our business as well. People across Latin America and the Caribbean remain concerned with the health risk associated with COVID-19. The MAC Protegidos or MAC Safe program we implemented shortly after the start of the pandemic has successfully addressed this issue. Our employees have expressed their appreciation for the steps we've taken to protect them, and our guests have recognized McDonald's restaurants as the safest place to eat out across the region. I'll tell you more about this in a few minutes. I'll turn the call over to Mariano now for a deeper dive into our sales trends and EBITDA performance in the quarter.