Arcos Dorados Holdings Inc.

Good morning, everyone, and thank you for joining our third quarter 2022 earnings webcast. With us today are Marcelo Ravach, our chief executive officer, Luis Reganato, our chief operating officer, and Mariana Zanabam, 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. As a reminder, to better view the presentation on the webcast platform, please scroll over the upper left-hand part of the screen and click on the arrows to maximize the slides. After we conclude our opening remarks, we will answer your questions, which you can submit using the chat function on the left-hand side of the screen. You will need to minimize the slides to access the chat function. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements 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 on 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 SLAD division. For your reference, we included a full income statement excluding Venezuela with today's earnings release. Marcelo, over to you.

Thank you, Dan. Good morning, everyone, and thank you for joining us this morning. Today, Luis, Mariano, and I will take you through the key highlights of our consolidated and divisional results for the third quarter of 2022. Mariano will also cover our balance sheet and growth metrics. And Luis will provide an update on the 3D strategy of digital delivery and drive-through. that has been driving the strongest operating and financial results in our history. I will wrap up with the recipe for the future and some final thoughts on 2022 and beyond. In our discussion of third quarter results, you will see that we were able to maintain the strong trends of the last several quarters and build on what we told you was a better than expected month of July. This means business momentum was very strong as we headed into the year's most important quarter, and that's why we finalized our plans for next year as well. Total revenue in the third quarter reached $916 million. Compatible sales grew more than 34% versus the prior year. boosted by higher guest volumes and market share gains throughout the Arc of Dorados footprint. We leveraged our structural competitive advantages with a continued focus on our winning 3D strategy. Digital sales contributed 42% of the quarter's system-wide sales, reaching almost $500 million. This new three-month record included all-time highs in mobile app, self-order kiosk, and mobile order and pay sales. Delivery and drive-through sales grew 34% and 11% in constant currency, respectively. These increases came from gains in both guest volume and average check, and far outperformed many other restaurant chains. even as on-premise sales continued normalizing. We have been able to sustain growth on these channels thanks to the structural competitive advantage offered by our freestanding restaurant portfolio and disciplined operational execution. Luis will take a closer look at these results in a few minutes. Although we were facing a comparison with last year's record third quarter result, Adjusted EBITDA in US dollars rose another 15% this year. By focusing on sustainable sales growth, we generated operating leverage to help offset some of the headwinds we knew we would face in the quarter. Last year's reported result was helped by a tax credit in Brazil, as well as government payroll support programs in SLAB. This year, food and paper costs remain elevated, and we also had the final step up in our royalty rate. Despite all these factors, EBITDA margin remains solidly in double digits, and net income almost doubled versus last year. Now, let's dig into the results by division, starting with Luis, who will run us through divisional sales performance.

Thanks, Marcelo. Comparable sales growth remains strong in the third quarter, increasing at a rate of about two times blended inflation for the period. This is about execution. Here we say that it's not real unless it's real in the restaurants. We attract guests to marketing and digital initiatives, but guests keep coming back because they have a great experience each time they interact with the McDonald's brand. It doesn't matter if it's a physical visit or a digital interaction, their experience must be great. Brazil's comparable sales rose 21.8% in the quarter, about 2.5 times inflation in the period. Digital sales penetration rate in Brazil is the highest of all ARCOS markets, generating 52% of system-wide sales in the quarter. As Marcelo already mentioned, off-premise sales growth was strong in the quarter, even as on-premise sales normalized. This sustained the recent trend of industry leading market share gains as QSR took additional share from informal players in the country's restaurant industry. Brazil's marketing activities in the quarter focused on programs and investments designed to reinforce the brand's core strengths. For example, leveraging its cultural relevance by partnering with Thiaguinho, one of Brazil's hottest pop artists, for the latest installment of the successful Famous Artists campaign. To drive further digital adoption, we invested in a 360 degree campaign to promote the mobile order and pay feature of the app. This omni-channel approach to the digital strategy is strengthening brand perception related to convenience and generating significant sales growth in this channel. After the quarter ended, we shifted gears in Brazil. to leverage the McDonald's global sponsorship of the FIFA World Cup. We introduced a highly anticipated lineup of eight sandwiches. Each day of the week features a specific country-themed sandwich, including Argentina, France, Germany, and Mexico. The McBrazil, which was available every day, has already sold out. Clearly the campaign has been a resounding success and we just had our best ever month of October in terms of sales. Now let's stop line continue to be driven by Mexico, Costa Rica, and the French West Indies. Comparable sales grew at 2.6 times the division's blended inflation rate in the quarter, leading to additional market share gains in all main markets. Marketing in dollar featured many innovations such as the introduction of the ultra, hyper, mega tasty campaign that leverages the signature beef and crispy chicken platforms in Mexico. Costa Rica became the first market in the footprint to launch best burger. This ambitious global project provides an enhanced flavor profile and improved quality perception among guests, which is already showing strong results. Digital sales in Nolad grew around 200% versus the prior year quarter, aided by the continuous improvements in each market's mobile app functionality, including mobile order and pay, as well as a greater marketing investment to promote the digital platform. NOLAD also launched localized World Cup sandwich campaigns in all markets within the last three to four weeks, with excellent results so far. SLAT's comparable sales growth reflected strong top-line performance in all its main markets, rising at 1.8 times blended inflation in the period. This sales growth helped McDonald's brand market share expand in the division, driven by higher guest traffic, both on and off premise. Digital sales penetration also rose in the period, with 43% of Slabs' third quarter sales coming from digital channels, all of which grew sequentially versus the prior quarter. Marketing in Zlat continued building brand love with Generation Z guests, thanks to a famous author's campaign with the popular Latin artist Sebastian Yatra. During the quarter, we introduced the Mac Crispy Chicken Sandwich to the menu in Colombia and Chile, where it received strongest response. We also had great news in the dessert business with the launch of the McFlurry Chocorramo in Colombia. This locally relevant product generated guest excitement and drove unique sales to the highest level ever in that country. As in Brazil, I know that fourth quarter marketing slat is now focused on the FIFA World Cup. linking one of the region's most culturally important sporting events with the McDonald's brand provides us with an exclusive opportunity to connect with guests and drive sales leading into the month-long tournament. Over to Mariano for a look at how strong revenue growth drop record profitability.