Summary of Arcos Dorados Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: Achieved a record $1.3 billion, up over 14% year-over-year in USD.

Adjusted EBITDA: Reached $126.8 million, a 20% increase from the previous year, with a margin expansion of 70 basis points.

Net Income: Doubled year-over-year, supported by strong operating performance and a lower effective tax rate.

Earnings Per Share: Increased significantly, reflecting the strong financial results.

Adjusted Free Cash Flow: Improved sequentially, driven by strong net cash from operating activities and lower capital expenditures.

2Strategic Updates and Business Highlights

Market Share Gains: McDonald's restaurants in the region gained approximately half a point in market share, remaining more than twice that of competitors.

Digital Sales: Grew over 25% year-over-year, accounting for 66% of total sales, driven by successful marketing campaigns and loyalty programs.

Restaurant Openings: 16 new restaurants opened in Q2, totaling 35 for the first half of 2026.

FIFA World Cup Sponsorship: Leveraged the event for marketing, leading to increased traffic and sales, particularly in key markets like Argentina, Brazil, Colombia, and Mexico.

3Forward Guidance and Outlook

Market Conditions: Expect dynamic conditions in the second half of 2026, but confident in the strength of operational plans and financial discipline.

Sustainability of Growth: Anticipate continued positive trends in Brazil and other markets, supported by strong marketing and operational execution.

Long-term Strategy: Focus on enhancing digital capabilities, loyalty programs, and cost efficiencies to drive future growth.

4Bad News, Challenges, or Points of Concern

Economic Headwinds: Consumer spending remains under pressure in several markets, particularly in Argentina, affecting overall retail performance.

NOLAD Performance: Despite positive traffic, comparable sales growth in NOLAD was modest due to a challenging comparison base and competitive pressures.

Inflation Impact: Inflationary pressures in SLAD markets, particularly Argentina, have limited margin gains, although the company remains optimistic about future performance.

5Notable Q&A Insights

Brazil's Same-Store Sales: Management expressed confidence in the sustainability of Brazil's sales rebound, attributing it to effective marketing and value platforms.

Market Share Dynamics: Despite a challenging environment, Arcos Dorados outperformed the broader QSR segment, maintaining strong market share.

Traffic and Pricing Strategy: The company employs a data-driven pricing strategy, balancing promotional activities with profitability to manage demand elasticity.

Operational Execution: Strong operational indicators were noted, with expectations for continued improvement in the second half of the year. Overall, Arcos Dorados reported strong financial results in Q2 2026, driven by effective marketing strategies and operational improvements, while navigating challenges in consumer spending and inflationary pressures. The company remains optimistic about sustaining growth and market share in the coming quarters.