Arcos Dorados Holdings Inc.

Good morning, everyone, and thank you for joining our second quarter 2023 earnings webcast. With us today are Marcelo Raba, our Chief Executive Officer, Luis Raganato, our Chief Operating Officer, and Mariano 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 review 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 in the press release and unaudited financial statements filed today with the SEC on Form 6-K. Marcelo, over to you.

Thank you, Dan. Good morning, everyone, and thank you for joining us today. For the last several years, Arcos Dorados has capitalized on its unique position in the Latin American QSR industry. We operate the industry's favorite brand and benefit from structural competitive advantages that position us to sustain recent trends for years to come as we capture the McDonald's brand full growth potential. By consistently executing our 3D strategy of digital delivery and drive-through, we are generating strong sales growth. Restaurant volumes continue to increase, largely because we offer guests an unmatched combination of quality, value, and convenience. This has led to sales growth well above inflation that in turn helps us leverage our fixed costs and sustainably grow our EBITDA in US dollars. We are also deploying capital better than ever, generating above average returns on restaurant openings. Importantly, these investments provide more than just financial returns. They also make us the largest generators of first-time job opportunities for young people in the region. These first-time jobs can lead to long-term opportunities, as they did for me and for so many other people across Arcos Dorados who began their careers in one of our restaurants. I hope we can inspire even more young people to join the Arcos Dorados family and build a better future for their families, communities, and the planet. Let's take a look at the consolidated results for the second quarter of 2023. You will see that the strong trends of the last several quarters continued into the second quarter of this year. Total revenue surpassed $1 billion for the first time in the second quarter, rising 17.2% in U.S. dollars versus the prior year period. This included gas traffic growth in the mid-single digits in all three divisions. even though last year's numbers were also very strong. Consistent with recent quarters, above-inflation top-line growth drove operating leverage and improved profitability. Adjusted EBITDA was up 20.5% in the quarter, with 30 basis points of margin expansion. Net income was also strong, nearly doubling last year's results. System-wide comparable sales grew 31.5%, or about 1.3 times blended inflation across the company. With traffic continuing to grow, we increased the visit share gap versus our closest competitors in our main markets. This is among our core goals. Continue to grow comparable sales above inflation in each market, gain market share, and leverage fixed costs to drive sustainable cash flow generation. Perhaps the most important key to our success has been the 3D strategy. Digital sales accounted for 49% of system-wide sales, with 20% identified sales across the business. Delivery continues to be an important sales driver as it captures a bigger and bigger share of the overall market. and drive-through sales have established a new baseline, even though growth has moderated, with guests returning to restaurant dining rooms. Finally, as we mentioned on our last call, we expect restaurant openings and modernizations to be back in waiting in 2023. For the year to date through June, we opened 18 restaurants, including 16 freestanding units. openings are beginning to accelerate. In fact, since the beginning of July, we have opened an additional 12 restaurants, and we have already made all the ground breaks required to meet our openings guidance for the full year 2023. We are expanding our footprint in a vastly under-penetrated region, which gives us confidence in our pipeline, and we expect these new locations to continue generating above average first-year returns on investment. I will turn it over to Luis now for an overview of sales performance in each division.

Thanks, Marcelo, and good morning, everyone. System-wide comparable sales growth remains strong across the board in the second quarter, with all divisions growing well above inflation. Over the last few years, we pursued a competitive marketing strategy avoiding the temptation to use price increases as the main tool to offset higher costs. We have learned from experience that while aggressive price increases can bring a short-term margin benefit, they can also have a long-lasting negative impact on guest volumes. Instead, by offering compelling value, unmatched quality, and great service, we have sustained volume growth and driven guest frequency. Soon we will further boost guest loyalty with a nationwide rollout of our loyalty program in Brazil and all other markets in the next couple of years. Taking a closer look at each division, Brazil's comparable sales rose 2.5 times inflation in the quarter. Guest volume was up in the mid-single digits, despite a very strong performance in the prior year quarter. Digital penetration continues to rise in Brazil. The Maky Fest campaign that provided guests with a festival of offers helped drive 26% growth in digital sales by encouraging consumers to download and use the mobile app. Digital sales are now responsible for 61% of total sales in the country, including 25% identified sales the highest penetration for both indicators across all markets. McDonald's brand market share remained very strong in the Brazilian QSR market during the second quarter and is more than two times the share of the nearest competitor. According to our internal research, brand health is at an all-time high with a top of mind score three times higher than the closest competitor. We also have some exciting news during the quarter with the addition of the big tasty bacon barbecue to the premium beef segment. Chicken sales are growing strongly across the region, adding even more relevance to this important category with great menu offerings and dedicated marketing campaigns, such as the celebration of the Chicken McNuggets 40th anniversary in all Arcos Dorados markets. Nolad's comparable sales grew 2.8 times the division's blended inflation in the quarter. Volume growth was robust across Nolad, with particularly strong volume growth in Mexico, where almost double-digit volume growth helped drive 16% higher comparable sales. Nolad's markets also captured market share in the quarter and have seen consistent positive momentum in brand attributes across the division. We expect to boost this momentum with a continued rollout of the Best Burger platform. In April, Puerto Rico became the latest Arcos Dorados market to implement Best Burger, with sales responding strongly in May and June. Digital sales are growing in NOLA, and we believe it is a matter of time before the division increases digital sales penetration to be more in line with the company average. SLAT's comparable sales grew 1.2 times the division's blended inflation rate. Inflation-aided growth in Argentina was complemented by comp sales growth of 19% and 25% in Colombia and Chile, respectively, thanks to strong volume performance in both markets. Slat's story in the second quarter was similar to the other two divisions, touching record market shares division and continuing its very positive brand attribute trends. Innovation in the beef and chicken platforms helped drive sales with introduction of new sandwiches in Chile, Argentina, and Colombia. Slat's digital sales penetration and identified sales were the highest ever in the quarter, supported by strong performance in key digital channels like mobile order and pay, which is generating robust growth across the entire region. Looking ahead, economists are calling for softer consumption in some of our main markets, and we are keeping an eye on macroeconomic pressures as well as political developments across the region. While this could cause consumption to soften and sales growth to moderate in the second half of 2023, we remain confident in our strategy. All restaurant formats are generating strong sales growth, and we are laser focused on growing sales above inflation, increasing operational efficiency, and delivering the best guest experience in the industry. This has always been the most successful combination and we expect to keep it up for many more years. Before I turn it over to Mariano, I'd like to share some great news. Our brand marketing campaigns recently received recognition on the world's biggest stage. In June, McDonald's earned an impressive 18 Lions across 10 markets at the Cannes Lions International Festival of Creativity. We're very proud to say that this included five lions from three Alcoderados markets. Over to you, Manero.