Arcos Dorados Holdings Inc.

Good morning, everyone. Thank you for joining our first quarter 2021 earnings webcast. With us today are Marcelo Raba, our Chief Executive Officer, Luis Granato, our Chief Operating Officer, and Mariana Tannenbaum, our Chief Financial Officer. Today's webcast, which is being recorded, will consist of prepared remarks from our leadership team, which will be accompanied by a slide presentation, also available in the investor section of our website, www.arcosdorados.com.ir. As a reminder, to better view the presentation on the webcast platform, we suggest you scroll over the upper left-hand part of the screen and click on the arrows to maximize the slides. After our speakers conclude their opening remarks, we will answer your questions, which you can submit using the chat function on the left-hand side of the screen. Before turning the call over to Marcelo, 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-gap financial results investors are encouraged to review the reconciliation of these non-gap financial results as compared with gap 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. Marcelo, over to you.

Thank you, Don. And thanks to all of you for joining us on today's webcast. I will start with an overview of our first quarter 2021 results. And given how dynamic the operating conditions continue to be, I will also comment on more recent trends in the business. Luis will take you through the divisional sales results and other important operating highlights from the quarter. Then Mariano will review our profitability by division, as well as growth investments and capital structure. Finally, before we take your questions, I will review our priorities for the rest of 2021. To understand our performance in the first quarter of 2021, we think it is important to remember how we began 2020. through February, comparable sales were up 10.9% last year, and profitability was strong in the first two months of the year as well. The pandemic did not have a material impact on our results until the middle of March, when the quickly spreading virus led governments across the region to implement curfews, lockdowns, and other restrictions. As you know from our 2020 results, we took proactive and decisive action that successfully minimized the impact of the first wave on our business. We saw a steady normalization in the market after the pandemic peaked in April of last year. In fact, our system-wide comparable sales were down just single digits by the fourth quarter of 2020 and turned positive in the first quarter of this year. With that context and background, let's take a closer look at our first quarter 2021 results. System-wide compatible sales were up 2.1% for the first time since the fourth quarter of 2019, despite ongoing government-imposed restrictions on our ability to operate all our restaurants at full capacity. There are several differences between last year's performance, which included two weeks of pandemic impact, and this year's first quarter, which saw operating restrictions throughout the period. I will highlight three. First, government restrictions are more targeted. In nearly every market, dining room capacity is still severely limited. Most markets also impose operating hour restrictions that require restaurants to close as early as 6 p.m., meaning we cannot take full advantage of the important dinner and late night day parts. Still, we have been able to operate at least 91% of all restaurants this year, whereas last year we were forced to close 50%. as well as 100% of dining rooms at the peak of the crisis. By the way, currently around 98% of our restaurants are operating at least one sales segment, and two-thirds are operating all segments. Second, we have adapted the business to the realities on the ground and focused on the core menu and 3Ds of drive-through, delivery, and digital. we enjoy a significant competitive advantage across all three pillars, which has ensured that guests are finding more ways to enjoy McDonald's with each passing day. Our drive-through service times are much faster and more efficient than ever without sacrificing customer satisfaction and hit new volume records in the last several months. Delivery volumes have also grown significantly thanks to extraordinary operational improvements and reduced delivery times. And the digital platform continues adding capabilities and sophistication to our marketing and e-commerce efforts. Finally, our guests trust the McDonald's brand more than any other. With the most extensive freestanding restaurant footprint and largest delivery market share, supported by the industry benchmark MAC Protegidos program, guest surveys confirmed that we offer the safest restaurant experience in Latin America and the Caribbean. When we built the plan for this year, we assumed the first half would remain challenging and that we could see a return of tighter restrictions in some markets. But, as I just explained, the duration and impact of these restrictions has been much lower this year. We are still hopeful that by the middle of the year, there will be enough progress in vaccinations to support a full revival in the operating environment in the second half. Even if our assumption is off by a month or two, Recent underlying trends in the business give us confidence in the direction of the plan. In the case of Brazil, we are seeing how quickly sales levels recover once government restrictions are relaxed. Compared with 2019, sales in the first week of April were down 40%. By the last week of the month, sales had recovered to down 20%. And in the first week of May, SAIFs are already back to within 10% of the same period in 2019. This is what we mean when we say that this year's restrictions should be shorter-lived and less impactful on our results this year, even though the operating environment is still far from normalized. I will now turn it over to Luis. for a look at divisional top-line results and other operating highlights in the first quarter.

Thanks, Marcelo. All four Arcos Dorados divisions generated another sequential improvement in comparable sales despite ongoing operating restrictions in all markets. Results were the strongest in two divisions. The Caribbean, where Puerto Rico and the French West Indies drove the positive result after being the hardest-hit division in last year's first quarter. And SLAD, where comparable sales exceeded the division's blended inflation rate by about 4 percentage points, mostly thanks to strong results in Chile and Argentina. NOLA continued on its path of gradual sequential improvements in comparable sales across all three of its markets. Brazil started the quarter well, but finished in line with its fourth quarter result due to tighter government restrictions throughout the month of March. As you just heard from Marcelo, those restrictions continued into April, but in the first week of May, we were already at 90% of 2019 comparable sales. Importantly, according to Crest, the McDonald's brand gained four percentage points of market share in the quarter, reaching its highest level ever in the Crest study. We believe this is a tremendous vote of confidence and demonstrates the trust we have earned from Brazilian consumers through this period. These results show the long-term benefits of operating a single brand across a vast geographic footprint. We are able to focus on operational excellence by sharing best practices and learnings from market to market while building the region's best restaurant portfolio, and without diluting management's attention or the company's resources among competing brands. By operating the brand throughout Latin America and the Caribbean, we have also been able to mitigate the impact of the pandemic, given the diverse economies, currencies, and consumer environments in the regions. The 3Ds are the main business drivers with no signs of slowing down in the quarter. Drive-thru sales were up more than 55% in constant currency and contributed 39% of system-wide sales. Throughout the quarter and in response to the modern way people are traveling today, we encouraged guests to visit our drive-through lanes any way they like, by car, motorcycle, bicycle, or any other means of transportation. As a result, awareness of the versatility of the drive-through segment among consumers rose from an average of around 25% to more than 45% across many of our most important markets. Delivery growth remains strong as well, rising more than 200% in constant currency and contributing 17% of system-wide sales in the quarter. As a central pillar of our 3D strategy, the delivery segment is benefiting from at least three factors. Strong volume growth from sustained consumer demand, targeted marketing and digital initiatives to leverage group orders, and higher average check, which supported our highest-ever quarterly delivery sales. The business model for this sales segment, which has seen significant gains in popularity with consumers, is evolving. There are now 93 restaurants in Argentina and 45 restaurants in Brazil running self-delivery pilots. we're on the right track with self-delivery. But before we can expand this capability and take it to other markets, we need to offer the best consumer experience and ensure it is seamless, no matter who is executing the delivery. The advanced team continues driving sales with about 37% of sales coming through digital channels in the quarter. The McDonald's mobile app has the highest user rating in the industry, and it has surpassed 52 million downloads as of last week, with mobile order and paid sales starting to gain momentum as well. According to App Annie, at the end of the first quarter of 2021, we had more than two times the number of active users as our closest competitor in our key markets. including a 30 percentage point expansion in the gap since last year. As we continue our journey from mass marketing to mass personalization, we are exploring different avenues to increase guest visit frequency. Latin America's growth potential is not limited to just opening restaurants. In fact, organic growth through an increase in visit frequency can be just as powerful a growth engine. One lever we are using to increase frequency is the drive-through VIP club loyalty program. I already told you about the increased awareness of the versatility of the segment. This helped the loyalty program, which was available in 10 countries during the first quarter, already reach 1.1 million registered members. In April, we launched the program in Brazil to leverage the competitive advantage provided by more than 470 freestanding restaurants in that market. So far, visit frequency is much higher than the average mobile app user. Visit frequency will also increase as we move to mass personalization. Our CRM capabilities are already starting to interact with guests on an individual basis, using their past orders and other mobile app usage data to send personalized messages and offers. We will soon roll out customized mobile app home screens. further strengthening each guest's personal connection with the brand. Finally, guests will continue choosing the brands and experiences they trust and where they feel the safest. To that end, we're keeping a strong focus on the Mac Protegidos program and protocols to ensure that consumers choose the McDonald's experience more often than any other restaurant in the region. Mariano, over to you.