Good morning and welcome to the Arcos Dorados' Third Quarter 2015 Earnings Call. A slide presentation will accompany today's web cast, which will also be available in the Investors section of the company's website, www.arcosdorados.com/ir. As a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. As a reminder, today's conference call is being recorded. At this time, I would like to turn the call over to Daniel Schleiniger, Director of Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone and thank you for joining us today. With me on today's call are Sergio Alonso, our Chief Executive Officer; and José Carlos Alcantara, our Chief Financial Officer. We will provide you with an overview of our third quarter results, as well as an update on our three year plan. Before we proceed, I would to like to make the following Safe Harbor statement. 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 filed with the SEC on Form 6-K. I would now like to turn the call over to our CEO, Sergio Alonso.

Thank you, Dan. Hello everyone and thank you for joining us today. In March of this year, we announced our three plan to improve our operating efficiencies, reduce our cost structure, monetize the value of some of our real estate assets, and reduce our total debt levels. The ultimate goal of our plan is to strengthen Arco Dorados leadership position and capture the long term potential of the QSR industry in Latin America. With the progress that we have made so far, I have no doubt that we will generate significant shareholder value, as we continue to execute our plan. In fact, as of this week, we have already met our commitment of reducing the company's G&A in absolute terms by 10%. A key driver for improved operational efficiency in our restaurants is the implementation of our new scheduling and forecasting system in Brazil, which is intended to increase restaurant level margins over the medium term. Last month, we completed the rollout of a new system in line with our plan. The results in the restaurants in Brazil that have been running the system for a few months, continue to improve and are in line with our expectations given the current operating environment in the country. When we laid out our strategy to improve consolidated EBITDA margins, we expected to deliver a 10% reduction in our G&A in absolute U.S. dollar terms by the end of 2017. And since that time, we have taken definitive steps to accelerate the reduction of certain costs, that are under our control. As part of this effort, we will review our cost structure at the country, division, and corporate level and made a number of difficult, but necessary decisions. Last week, we implemented a restructuring plan across the company, which will lower our total…

Thank you, Jose Carlos. This was a difficult quarter to operate in. However, we made progress in our strategic plan. While there is still much to do, I am convinced that we are on track to achieve our target. We completed the implementation of our renewed forecasting ands scheduling system in Brazil, within the timeline. We have also taken the necessary steps to deliver the promise of absolute reduction of our G&A expenses, to further enhance our consolidated operating results. Importantly, we are continuing our evaluation of all aspects of our G&A to realize additional savings. We are following an organized and disciplined process, to maximize the value of our strong asset monetization pipeline, which we believe will represent a significant proportion of our $200 million redevelopment and $50 million refranchising targets for 2017, and as Jose Carlos mentioned, we expect to be able to tell you more about our plans to refinance our 2016 bond within the next few months. We are not expecting a material improvement in the economic condition next year. So we will continue to focus on streamlining our business, capturing operating efficiencies, extracting value from certain assets, generating cash flow and reducing our debt level. We are reinforcing the customer experience as the long term market fundamentals are still in place, and I firmly believe, Arcos Dorados will be well positioned to capture the opportunity when the next cycle of economic expansion comes to Latin America. Well thank you for your attention, and we now open the call for questions.

[Operator Instructions]. And our first question comes from Robert Ford of Bank of America Merrill Lynch. Please go ahead.

Hey, thank you and good day everyone. I had a couple of questions on the restructuring and a couple on Brazil. In terms of the restructuring, can you discuss the economics of some of those refranchising agreements? And I was curious if any of the units were loss making, and I wanted to know, how many units you currently operate which are loss making. And then the press release mentions eight closures, I believe in the Caribbean division, and I was curious, how many closures you may be contemplating for next year? And then, with respect to the Brazilian business, what was the proportion of Brazil sales last year that were made from the value menu, and how is that -- that mix evolving this year, and when you consider the hedge position, what kind of pricing do you feel you need for next year to offset the FX? And then with respect to the improvements in the scheduling, I was curious, what do you anticipate for wage increases for 2016, and if you will be able to offset that with some of the advancements you have made in scheduling? Thank you.

Okay. Jose will take one and well -- we [indiscernible] questions one by one. Number one is, about refranchising. We have reached already agreements to refranchise more than 20 of our company restaurants in Brazil. We are in the process of formalizing the agreements to contracts. We have some brokers, if you follow, that may take a few weeks to clinch all the process and pass the restaurants to franchises. The reality is that, we would not provide specific number of negotiations and conditions overall, because we have some other negotiations going on so far. But the reality, Bob, is, we are on target for our $50 million expectation out of the refranchising by the end of 2017. We are also starting to negotiate conditions in other markets like Argentina and Chile, where we believe we have opportunities. And finally on these -- we are not talking about only lossmaking restaurants, but we'd rather focus and concentrate on markets where it makes more sense to pass some of the restaurants that we have, into the hands of our franchisee. To give you a couple of examples, we are talking about typically tier 2 and 3 cities in Brazil, where we have like two restaurants and then we have -- as I said there, they have three different restaurants. Well obviously, if you look at the market in total, it makes a lot of sense to consolidate our operations, and that is the type of transactions that we [indiscernible]. On the closing question, the reality is well -- closing, as we have said, a part of the normal way of doing business in a company our size. We have over 2,100 restaurants, closed one restaurant. Each part of what we have to do, for a number of reasons, because of --…

And the other of course was regarding the scheduled [indiscernible] in Brazil. Well we finished right on time, according to the schedule that we had, at the end of October with implementation on 100% of the company operated restaurants. We got 60 restaurants that have more history with the system, already being used, those are the restaurants that we started implementation in the market, and that -- in those restaurants we are getting exactly the benefits that -- and we projected when we started to roll out this initiative. So we are confident, and we know that we are going to get the full benefit out of these new tools that we have in the restaurant for the year 2016.

And our next question comes from Martha Shelton of Itau BBVA.

Thanks for taking the question. Just regarding some of this decentralization of operations and the restructuring of -- it sounds like some of the company's infrastructure. If you could elaborate on that a bit more, what should we expect to see going forward? Are you going to have management based out of Argentina, are you going to have more of the management in the regions, in the regional offices? I'd just like a bit more color on that front please. Thanks.

Good morning Martha. How are you? Look, the decisions that we have made in terms of our structure in G&A reduction in some line with our efforts to continue the decentralization process of the decision making process that we have in the company. So while we will keep the -- sort of strategic frame at the center, the corporate level, the reality is what we are doing -- we are pushing down through the divisions of primary regions [ph] through the markets within countries, all the decision making processes. That obviously is giving us space to streamline our structure, and we have been moving down levels of management in the 40 divisions and countries. This is according to the process, is not something that we did one time. And we will continue next year to focus on -- looking for additional ways to increase our efficiency in the organization at the G&A level, and obviously with the progress we have -- linear kind of organization. We have enough focus -- the rationalization process in any particular geography, as I said with the consequence or the continuity of this process of decentralization that we have started last year.

And our next question comes from Jeronimo De Guzman of Morgan Stanley. Please go ahead.

Hi. Good morning. I had a couple of questions also; maybe starting in Brazil, wanted to see if you could tell us what the average ticket growth was, and then kind of more looking ahead, how you are thinking about profitability for next year? Kind of given the challenging top line and FX pressures, but some offsets from those scheduling system savings, just wanted to see if you still you can protect profitability next year, or how you are thinking about it? And then the separate question besides Brazil was on capital allocation; wanted to ask, with CapEx more skewed towards reimaging and systems rather than development, just wanted to get more sense on what kind of results you expect from this, and how do you think about kind of prioritizing the benefits from these investments, rather than kind of the benefits from a more accelerated cash flow generation?

Sure. Good morning Jeronimo. First, on the average check thing, the question in Brazil -- well average check, obviously, not at the pace of inflation. We grew at over 3%, that we believe is a consequence of people facing a challenging environment in terms of consumption, than they normally would look for lower priced tariffs [ph] in our menu. So that obviously leads to an increase in our total tariff below inflation. In terms of the market outlook for 2016; as you said it well, we do not expect any major change in the overall situation of the economy. But having said that, we know that we have in place, further initiatives to sustain the margin levels that we have today. We do not foresee any further deterioration in margins for 2016. We may of course, [indiscernible] some impact out of the FX, but we are still in the process of working on our plan, and we know what the market consensus will be at mid-April -- for the end of the year for 2015. Surely as we have said, the reschedule in 2015 [indiscernible] will help us big time, because we are going to get the full benefits since day one throughout the entire company operated restaurant base. And finally, on the company allocation fees, well this will be a continuation. We had focused on being better and something bigger [ph], and that means, we will focus the base part of our resources to reemerge and to improve the overall profile of our restaurant base. José Carlos Alcantara: Yeah just to complement the capital allocation question, obviously, we are going to focus on complying with our three year plan agreement with McDonalds. We committed to opening 150 restaurants over a three year period that tends in 2016, and reinvesting $180 million also for the same three year period.

Our next question comes from Roy Yackulic of Bank of America. Please go ahead.

Thanks. Can you tell me the dollar composition or the debt composition in terms of currencies? And what would be the year-over-year change in debt? I think if we look on the balance sheet, it went down about $187 million, and what would it have been in constant currencies? José Carlos Alcantara: Well the composition of our debt as of September 30 right now, of 2015, we have a total debt of approximately $676 million, of which $171 million is the BRL denominated bond that comes due July of next year. $470 million is the dollar 2023 bond, and we have a couple of other smaller lines, other obligation of about $23 million. We have a short term debt of about $35 million with Bank of America. 10% of our 2023 bond is swapped to BRL. Our approach is to have a 50-50 split between dollars and reais. Right now we are about 60-40, not because we have reduced the debt, but because of the devaluation of the real. As I mentioned in our opening remarks, we are working to refinance the BRL bond, which is into the -- $8 is about $171 million or 675 million reais. We are looking for an option in either denominated in real or swapped through reais.

So if I just look at the impact on the BRL bond, in the FX, and when you report it in U.S. dollars, and you say you hedge 10%, and if I exclude that, it looks like it went -- that changes in value by about $105 million year-over-year because of the depreciation of BRL. So there was about $70 million year-over-year that was actual debt reduction, is that correct? José Carlos Alcantara: I don't have the number in front of me right now, Roy. Probably we can do this offline, either Dan or Dan and I can talk to you and review these numbers in more details if that's okay.

Okay. Thank you.

And our next question comes from Mariela Anguiano of BCP Securities. Please go ahead.

Hi. Its actually Ben Hough from BCP. Just wanted to see if you could share any color on the various avenues you are considering for refinancing the BRL with this new instrument, perhaps the secured instrument? I wonder if you could share any color on that? José Carlos Alcantara: Yeah Ben; again, as I mentioned in the opening remarks, we are looking at an option that will be BRL exposed or BRL denominated. I can't -- we are advanced in the processes and our goal to finalize this structure within the next couple of months. I can't provide many details, because this is still being finalized and negotiating. We expect -- again we expect it to be either BRL denominated or a BRL swap, and again, we don't expect there would be a substantially higher cost on an after-tax basis. I mean, that's a lot -- the only thing I can share at this point.

Okay. And you mentioned you are underway on addressing this? You think we will have news of this in the coming few months, or what's the timing in your mind? José Carlos Alcantara: Yes. In the next couple of months, we should have news on this, for sure.

Okay. An unrelated question, can you help us think about your exposure to the Argentine official exchange rate, versus any potential weakening post election, which has been anticipated by some market participants? We think about two -- results over here. Thanks. José Carlos Alcantara: Yeah. As we mentioned before, we have a natural hedge in Argentina. The EBITDA that is generally from our operations, is mainly -- almost totally consumed by this corporate cost centers that we have here in Argentina and our shared service center [ph]. Again, when we look at the actual business in Argentina, only 10% to 12% of the food and paper is dollar denominated. So most of our suppliers in Argentina are local. So again, this is not a linear relationship, but again we don't think that devaluation there is sure to come, will substantially impact us. It obviously impacts our EBITDA that we generate in the country, but it will also reduce our dollar and our peso denominated corporate costs.

So far we have had access to the official effects 10% food and paper costs out of those [indiscernible].

And our next question comes from Robert Schweich of Burnham. Please go ahead.

I noticed in the release, that Woods purchased shares during August. I wonder if you would discuss any significance to this and has he purchased additional shares, subsequent to August?

Hi Bob, how are you? No, actually couldn't comment on that. It's on the release. So we don't really have anything to add to that.

Just what's in the release, that's all you can say?

Yes. Yes, actually.

Okay. The other question, financial officer made mention of the agreement with McDonalds, the commitments. My understand is that, because of the economic circumstances in Latin America, from a practical standpoint, there is an understanding that some of the investment in stores and other capital expenditures may not hit the original plans or the commitments. I wonder if you'd comment further on that?

We commit on investments with McDonalds on a three-year term, so we are right in the middle of the 2014-2016 period, and we have not made any change on these plans of our commitment to these cycles exactly where we were. Now we -- as Carlos mentioned a couple of minutes ago, in 2016, early 2015, we have to start talking about the 2017-2019 budget cycle, and of course, the overall economic outlook of the region will be considered for that.

[Operator Instructions]. Our next question comes from Ed [indiscernible] of Nomura. Please go ahead.

Hi. Just two questions. If I can just follow-up on the debt reduction, looks like from last quarter, the $79 million or so reduction in gross debt, there is a $12 million gain in derivatives. I am assuming that rest of the change was just due to FX, but was there any active repayments during the quarter? José Carlos Alcantara: Ed, there were no active repayments in the quarter.

Okay. And the second question, what do you think the run rate, annual rent expense will be, following the completion of the asset sale program?

There won't be a change in that, because the reality is that -- it’s a redevelopment. So what we do is, we will keep the property on that same site, where we have the rest of it located, so it won't be an increase in rent or a sale lease back. Not a sale lease back. So we do not foresee any debt -- additional rent, because of the redevelopment process.

And our next question comes from Andrew De Luca of Credit Suisse. Please go ahead.

Hi. Thank you for taking my questions. I was wondering if you could first of all just discuss what you are seeing in terms of traffic levels in Brazil, and specifically, if you can break it out into, what you are seeing in Rio, Sao Paulo and other markets. If you are seeing any sort of discrepancy internally? And then secondly, I was wondering if you could just briefly touch on upon the margins you are seeing at NOLAD and SLAD, you some very strong quarter-over-quarter and year-over-year improvements, and I wanted to see how sustainable you think that is going forward? And lastly, I was wondering if you could just confirm, I think you mentioned that you expect net leverage to remain between two times and 2.5 times by the end of full year 2016, so I was wondering if you could just confirm that. Thank you.

Good morning Andrew. I will take the first one, and secondly, you talk about on the debt leverage ratio. Level of activity in Brazil or traffic in Brazil, I'd rather -- I believe its more -- if we give you some more color, if we talk about what the difference are between less than four months more than on a geographic point of view. Even though we do have some markets that are performing better than other ones, we tend to do better in the interior of Sao Paulo. But those are, I would say -- you will get less color or less information on that. What I can say though is that, we did better, we are still doing better in the -- restaurants, where we mostly depend on ourselves, and we will provide the full McDonalds experience, rather than in shopping malls, where to some extent, we are depending on how much traffic go into those malls and food courts. That is I believe a better way of providing what is going on so far in the market. Among other things, that is why, in these particular times, we will talk you through on [indiscernible] our investments towards free selling units, because those are the capacity to -- number one, depend on themselves. Number two, grow over time, as the market conditions recover. Number three, margins on the other divisions; while we -- I believe there is some pressure on synergy levels and in the tier-2 release -- the results that we are getting, that we are seeing today, are not necessarily a consequence of what we have done in the previous results. But rather, as a consequence of a long term process that we will be going through, looking for productivity on all different lines and restaurants. If you see, we have leverage on label line, we have leverage on food control levels at the restaurant line, also on other services; cash collection, IT helpdesk, security, all kinds. And all those efforts are in line with our three year target of improvement and recouping the 200 basis points at the restaurant level. So yes, we expect to continue and to sustain these margin gains in big three divisions [ph]. José Carlos Alcantara: And Andrew, to your question on net debt to EBITDA ratio, yes, our target is to have that -- the ratio between 2 and 2.5 times by the end of 2016, and we expect to do that by one -- all the proceeds from the monetization of our real estate assets, and the refranchising will be used to reduce that, and obviously by improving our operating cash flows.

Great. Thank you very much.

Welcome.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Sergio Alonso for any closing remarks.

Well, thank you very much for your questions and your attention today. We certainly look forward to speaking with you again for next quarter. And in the meantime, our team remains available to meet you and answer any questions that you may have. So again, thank you, and enjoy the rest of your day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.