Arcos Dorados Holdings Inc.

Good morning, everyone, and thank you for joining our fourth quarter and full year 2023 earnings webcast. With us today are Marcelo Raba, our Chief Executive Officer, Luis Raganato, our Chief Operating Officer, and Mariana Zanenbaum, 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, 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 audited financial statements filed today for the SEC on Form 6K. Marcelo, over to you.

Thank you, Dan. Good morning, everyone, and thank you for joining us today. I am very pleased to confirm that we have a very strong year in 2023. Our 3D strategy of digital delivery and drive-through continues to evolve while leveraging the industry's largest freestanding restaurant portfolio. Digital sales include mobile app, delivery, and self-order kiosk transactions. The penetration of these channels is expanding throughout our footprint, thanks to a mobile app that has evolved into an e-commerce platform, offering incentives and convenience to increase guest loyalty and visit frequency. A delivery sales channel which continues to grow strongly in a segment where we are the established industry leaders. and self-order kiosks that are capturing an increasing share of on-premise orders, with about 60% of Arcos Dorados restaurants already modernized to the experience of the future format. Our 3D strategy continues to drive sustainable sales growth, supported by both restaurant volume and average check. Importantly, we are implementing the strategy in a way we believe will deliver above inflation growth in system-wide compatible sales to then drive operating leverage and profitability growth. Our balance sheet is very strong, which allows us to accelerate restaurant openings and capture significant growth opportunities for years to come. all while operating responsibly and supporting the communities we serve. Let's turn to our consolidated results for the fourth quarter and full year 2023. Total revenue surpassed $1.2 billion in the quarter and $4.3 billion for the full year, which was the highest US dollar total in our history for each period. Guest volumes were up mid-single digits in each division this year, helping to drive the 19.7% increase in U.S. dollar revenue in 2023. In line with our strategic approach, adjusted EBITDA grew with revenue, reaching almost $133 million in the quarter and more than $472 million for the full year. These results were also the highest U.S. dollar total in our history for each period. U.S. dollar adjusted EBITDA grew 16.3% in the fourth quarter and 22.2% for the full year, on top of the prior year's record results. This included incremental margin improvements in both periods, thanks mainly to better food and paper costs and G&A expenses. Net income for the quarter was almost $56 million, or 26 cents per share. We generated the best-ever full-year net income of more than $181 million, or 86 cents per share last year. System-wide compatible sales grew 32.4% in the fourth quarter, rising with or above inflation in all divisions, and above 1.1 times the company's blended inflation, demonstrating the strength of the 3D strategy. Our restaurant pipeline continues to demonstrate the growth opportunity that lies ahead of us. During the fourth quarter, we opened 36 restaurants, bringing the full year total to 81 new restaurants across our footprint. This included 72 new freestanding locations. In Brazil, we opened 50 total restaurants last year, including 44 freestanding units. Importantly, first-year return on investment for the restaurants we opened in each of the last three years have been in the mid to high 20s, which supports our outlook for long-term unit growth potential. Our market share in all main markets is a testament to the strong brand positioning we have built and the significant consumer preference we enjoy versus our nearest competitors. According to our research, we gained more market share on average than our main competitors in the fourth quarter, further strengthening our leadership position. Notably, these gains came in markets where McDonald's brand share is already two to almost four times that of our main competitors. Luis, over to you for divisional sales performance.

Thanks, Marcelo, and good morning, everyone. Brazil's comparable sales rose 6.2% in the quarter and 9.9% for the full year. Comparable sales rose 1.3 times inflation in the quarter and 2.1 times inflation for the year, with about equal contribution from guest values and average check over the course of full year 2023. About 63% of sales came through digital channels in Brazil. with identified sales representing 26% of the total. The loyalty program we launched at the end of October helped improve performance on both fronts, especially after Black Friday. As Marcelo just showed you, McDonald's brand market share in Brazil remained at more than twice that of our nearest competitor. The quarter included 12 of the top 20 strongest sales days of the year, driving market share gains in both guest visits and sales. We introduced the McRispy Chicken Elite Sandwich in October, combining crispy and juicy breaded chicken with the new honey and fire sauce. The sandwich is already one of the best sellers in a country where we are committed to growing the chicken category. In November, we reinforced the beef platform, bringing back the famous Big Mac jingle with the launch of two limited-time offers, the Double Big Mac and the Big Mac Bacon. As of the end of 2023, we had more than 3 million registered members in the loyalty program across 100% of restaurants in Brazil, including also franchisees. The Divisor's traditional Make it Friday campaign in November helped generate record mobile app downloads and active users. NOLAX comparable sales grew 5.4% in the quarter and 10.6% for the full year, which was 2.1 times and 2.9 times the division's blended inflation, respectively. Volume growth accounted for about two-thirds of comparable sales growth last year. The division reinforced its market leadership in the fourth quarter, achieving its highest level of business share while growing key brand attributes such as top of mind, favorite brand, and high-quality food. Mexico's sales momentum remains strong, with meat teams year-over-year growth in the quarter. Marketing activities were key to support this growth with the launch of Grants, Tasty and Bacon, a new platform focused on large and indulgent burgers to engage guests. In Puerto Rico, we continued gaining market share, leading the island's highly competitive QSR industry. The brand campaign, Saca tu Encanto, supported brand-loving that market. Finally, we're making good progress with the digitalization of NOLAT, where 34% of sales came from digital channels in the quarter, up from just 22% last year. SLAT's comparable sales grew in line with the division's blended inflation rate for the quarter, and 1.2 times blended inflation for the year. Gas volume growth in 2023 was in the mid to high single-digit range, while comparable sales were impacted by inflation-aided growth in Argentina all year. Brand strength has been a consistent contributor to market share gains and sales growth for the entire company, including in SLAT, where we added significant market share in the period. The fourth quarter included the launch of brand affinity campaigns such as Pasan Cosas Lindas in Argentina and Me Gustas Así in Chile. The results were important sequential improvements in key brand attributes such as favorite brand and brand I trust in both markets. Product innovation included new large sandwiches such as the Grand Tasty Spice in Argentina and the Bacon Cheddar McMelt in Chile and Colombia to boost the beef platform. We also supported the dessert category, taking advantage of local flavors with new McFlurry options in several slab markets. After Mariano takes you through divisional profitability, I will come back to tell you about the performance of the 3D strategy. Thanks, Luis.