Arcos Dorados Holdings Inc.

Good morning, everyone, and thank you for joining our fourth quarter and full year 2024 earnings webcast. With us today are Marcelo Rabach, our Chief Executive Officer, Luis Faganato, 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, ir.acrosdorados.com. To better follow the presentation, please note that you can set your view to full screen on the webcast platform. Additionally, you can submit your questions at any time during the presentation using the Q&A function on the bottom of the screen. After we conclude our opening remarks, we will answer your questions. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent finance 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 today's earnings press release and conference call presentation. as well as the audited financial statements filed today with the SEC on form 6K. I will now turn the call over to our CEO, Marcelo Rao.

Thank you, Dan. Good morning, everyone, and thank you for joining us. We have talked a lot about the resilience of the ARCO Dorados business model over the last couple of years. In my opinion, 2024 is the best example of how the company's geography Economic and operating diversity allow us to outperform in just about any environment. Last year's sales were strong and profitability has never been higher, despite a more discerning consumer and challenging macroeconomic conditions in many of our largest markets. Before this strategy of digital delivery, drive-through and development, leveraged our structural competitive advantages. And each pillar of this strategy still has a lot of potential to drive sales and operating efficiencies into the future. All of this is supported by a strong and stable balance sheet with a healthy leverage ratio and no significant debt maturities in the next four years. Let's get into the details of our results. I will focus my comments on the full year, while Luis and Mariano will take you through performance in the fourth quarter. Full-year system-wide comparable sales grew 1.7 times blended inflation last year, excluding Argentina. Higher common sales were supported by growth in both average check and guest volumes in all three divisions. benefited from improved product mix and increasing the number of items per order and pricing. As of the end of 2024, comp guest counts had risen for the fourth consecutive year, boosting market share and providing future strategic flexibility as we head into 2025. Adjusted EBITDA for the full year reached $500 million, for the first time in Arco Dorado's history. This is a notable achievement, given the challenging macroeconomic environment, especially in the second half of the year, when two of the most important currencies in our footprint, the Brazilian real and Mexican peso, depreciated strongly. Not to mention the material reduction in US dollar EBITDA generated in Argentina, due to that country's significant economic correction. We are very proud to have reached this important milestone. Full-year EBITDA margin also reached an all-time high for Arcos Dorados in 2024. Food and paper costs were flat or lower as a percentage of sales in all three divisions. Additionally, we generated operating efficiencies and recovered some expenses in Brazil, mostly related to payroll contributions. Total G&A, including corporate expenses, were also lower compared with 2023, benefiting from the natural hedge created by keeping most of our corporate finance and digital factory teams based in Argentina. All these factors more than offset tighter margins in NOLA and SLAT where macroeconomic conditions were more challenging. The digital delivery and driver platforms built on the success of the last several years with even stronger results in 2024. Full year digital sales grew 18% in US dollars versus 2023. made up of mobile app, delivery, and self-order kiosk sales. Notably, mobile app sales were up 25%, including a growing contribution from the loyalty program. Delivery sales continued to surpass expectations, rising 17% in U.S. dollars last year. And off-premise sales through delivery and drive-through contributed about 44% of total sales last year, demonstrating how the industry has permanently changed since 2020. The 85 Experience of the Future, or EODF, restaurant openings were within the guidance range for 2024. This included 79 new freestanding locations. that together with more than 150 modernizations brought EODF restaurant penetration to 67% of the total footprint. We are working to reach at least 90% EODF penetration by year-end 2027. I will now turn it over to Luis for a look at fourth quarter sales performance in each division.

Thanks, Marcelo, and good morning, everyone. Brazil's total revenue in constant currency grew 9.2% in the fourth quarter, benefiting from a consistent restaurant unit growth and 5.5% higher-income sales. This included solid sales performance in October and November, with a record-setting Make It Friday campaign. In December, consumption slowed across Brazil's retail segment due to concerns over the weakening currency and higher than expected inflation, leading to softer sales growth in demand. US dollar revenue declined in the quarter due to the depreciation of the Brazilian real. Digital channels generated nearly 70% of sales in Brazil. boosted by the growth in the loyalty program. The Brazil division operates the country's largest freestanding restaurant portfolio by a factor of two, nearly all of which have been modernized to the EOTF format. Brazil's marketing initiatives included the November-May-Friday campaign that used mobile app promotions to drive digital and identified sales while capturing new users and new loyalty program members. We also partnered with local celebrities who sang the famous Big Mac jingle to show how icons are recognizable even when we don't see them. We brought back favorites in the burger category with a relaunch of the Tasty Turbo platform and in the dessert category in collaboration with Kit Kat. Finally, the Happy Meal offered attractive properties such as Sonic and Wiltopia to support the family business. Nolet's total revenue in constant currency rose 5.5%, driven by 4.1% higher con sales in the quarter. The division's con sales growth was generated mainly through higher guest counts. U.S. dollar revenue growth was negatively impacted by the depreciation of the Mexican peso in the quarter. Digital channels accounted for about 40% of sales in the fourth quarter and full year 2024. NOLAB currently has the lowest EOTF penetration of the three divisions. As of the end of the year, EOTF restaurants accounted for 40% of the footprint in Mexico and just under 50% in Costa Rica and Panama. This year, we will continue rolling out the loyalty program to these markets. And over the next three years, the pace of modernization will also pick up across the division. This should boost digital sales penetration in the coming years, helping to drive engagement, frequency, and offer a check with guests in these markets. Nolet's marketing included the launch of the Shedder Jalapeno campaign in Mexico. offering a bowl of melted cheddar cheese with jalapeno together with many favorites in the burger and chicken categories. Panama also innovated in the chicken and burger categories with the McWhiskey Legend and Cheddar McMelt to help drive strong traffic and sales growth. In Puerto Rico, we focused on brand strength with the introduction of the Quarter Pounder Western Barbecue. and value, with a new chicken sandwich on the MyCombo platform, as well as a new burrito for the breakfast value platform. Slat scone sales rose 5.1% in the fourth quarter and 9.8% for the year, excluding Argentina. The full year benefited from balanced average check and guest volume growth. Digital channel contribution to total sales improved from 51% at the end of 2023 to 57% at the end of 2024. EOTF penetration in the division stood at 55% at year end, with the most modernized markets being Argentina, Chile, Ecuador, and Uruguay. Argentina's performance improved sequentially throughout 2024, with the most pronounced improvement taking place over the course of the fourth quarter. In fact, Argentina's US dollar revenue was flat against the prior year period, with volumes down only mid-single digits in December. Mariano will give you the good news on what this meant for profitability. Marketing initiatives focused on promotions and limited time offers to strengthen the uniqueness of the brand, as well as attributes such as quality and taste perception. This included the launch of the McRispy Chicken Legend sandwich in Chile, a Big Mac platform section in Colombia, and the introduction of new cone or McFlurry flavors in Argentina, Chile, Colombia, Peru, and Venezuela. We also paired special editions of the Quarter Pounder with the regional sponsorship of Formula One to strengthen the core menu. Finally, Argentina and Colombia introduced a new affordability platform, reinforcing the value for money perception. Based on internal research for the full year 2024, we added the most market share of the top three QSR operators on average across the region. According to third party research, this trend also held in Brazil, where we added more share than the main competitor when the second largest competitor saw a decline in share. a focus on providing the most consistent guest experience and the best value proposition in the QSR industry supported this shared leadership, which was 1.8 times the share of the nearest competitor on average in the region and 2.2 times our nearest competitor in Brazil. Mariano, over to you.