Arcos Dorados (NYSE: ARCO) reported Q3 EPS of ($0.14), $0.03 better than the analyst estimate of ($0.17). Revenue for the quarter came in at $466.8 million versus the consensus estimate of $432 million.

Third Quarter 2020 Highlights – Excluding Venezuela

• Consolidated revenues were 37.7% lower in US dollars and 24.5% on a constant currency basis1, versus the prior year.
• Systemwide comparable sales1 declined 27.2% versus the prior year, which included strong sequential monthly improvement throughout the quarter.
• All four Divisions contributed to a positive Consolidated Adjusted EBITDA1 margin of 5.5%, compared to (14.3)% in 2Q20 and 10.2% in 3Q19.
• Basic net loss was $(0.14) per share, compared to basic net income of $0.13 per share in the prior year quarter.
• Net Debt to Adjusted EBITDA ratio was 4.7x at the end of the third quarter, versus 3.4x and 1.6x at the end of June 2020 and December 2019, respectively.
• Approximately 99% of the Company’s systemwide restaurants were operating as of the date of this release, with approximately 70% operating all sales segments.

“By focusing on the Three D’s of our business – Drive-Thru, Delivery and Digital – and taking proactive management steps to reduce costs and stabilize cash flows, we quickly started rebuilding the momentum that marked the start of 2020. We are now solidly in the Recovery Phase of our plan and managing through the current crisis. Sales trends have improved sequentially and consistently in each of our markets while profitability, measured in US GAAP, also rebounded during the third quarter. Not only did we generate positive Adjusted EBITDA in each of our operating Divisions as well as at the consolidated level, but we also generated positive operating cash flows, especially in Brazil and our ‘hard currency’ markets in the Caribbean division,” said Marcelo Rabach, Chief Executive Officer of Arcos Dorados.

“We achieved this turnaround with the hard work of our people, the superiority of our Brand and restaurant portfolio and the return of our guests, who feel safe coming back to our restaurants thanks to our unmatched McProtegidos, or McSafe, program. We have only begun to scratch the surface of what we can do with our industry-leading work in the digital arena, which already contributed 40% of our systemwide sales in both the second and third quarters of this year. Our leadership in the Digital space has also supported important market share gains across the region. In other words, our long-term strategic approach to growth and brand building, which paid off last year and is getting us through the crisis this year, will also support the consolidation of our leadership position as we head into the Full Revival Phase of our plan next year,” he concluded.

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