Arcos Dorados (ARCO) Q2 2024 earnings summary

Executive summary

• Total revenue reached $1.1 billion in Q2 2024, up 6.8% year-over-year, marking the highest Q2 revenue in US dollars, with strong comparable sales growth above inflation and robust guest traffic supporting market share gains across all major markets.

• Systemwide comparable sales grew 2.4x blended inflation (excluding Argentina), with digital, delivery, and drive-thru channels driving operational excellence and brand leadership.

• Digital sales grew 24% year-over-year, now representing 57% of systemwide sales, and loyalty program membership reached over 11 million.

• Adjusted EBITDA rose 7.9% to $118.8 million, including a $16 million positive impact from a labor contingency reduction in Brazil, with a 10.7% margin.

• Net income for Q2 2024 was $26.6 million, or $0.13 per share.

Financial highlights

• Company-operated restaurant sales were $1.06 billion, up 6.7% year-over-year; franchised restaurant revenues were $50.2 million, up 9.1%.

• Adjusted EBITDA margin was 10.7%, nearly flat versus Q2 2023.

• Net leverage ratio stood at 1.2x at Q2 end.

• Net financial debt increased to $577.1 million from $481.3 million at year-end 2023 due to a lower cash balance.

• Net cash from operating activities for H1 2024 was $63.7 million; capital expenditures totaled $148.9 million through June 2024.

Outlook and guidance

• Expectation to generate the best full-year US dollar EBITDA in company history, with comparable sales growth projected to remain at or above inflation for 2024 in most markets.

• Restaurant expansion remains on track, with a strong pipeline of new openings and modernizations for the second half of 2024.

• Cash flow conversion anticipated to stay near historical levels for the full year.

• The company is positioned for continued growth, leveraging digital channels and a modernized restaurant footprint.

• Management expects to generate sustainable US dollar cash flow growth by leveraging digital, delivery, and drive-thru strategies.