Good morning, everyone. Thank you for joining our first quarter 2021 earnings webcast. With us today are Marcelo Rabach, our Chief Executive Officer; Luis Raganato; our Chief Operating Officer; and Mariano 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 on the Investors section of our website, www.arcosdorados.com/ir. As a reminder, to better review the presentation on the webcast platform, we suggest you scroll over the upper left-hand part of the screen and click on the arrows to maximize the slides. After our speakers conclude their opening remarks, we will answer your questions, which you can submit using the chat function on the left-hand side of the screen.

Thank you, Dan, and thanks to all of you for joining us on today's webcast. I will start with an overview of our first quarter 2021 results. And given how dynamic the operating conditions continue to be, I will also comment on more recent trends in the business. Luis will take you through the divisional sales results and other important operating highlights from the quarter. Then Mariano will review our profitability by division as well as growth investments and capital structure. Finally, before we take your questions, I will review our priorities for the rest of 2021. To understand our performance in the first quarter of 2021, we think it is important to remember how we began 2020. Through February, comparable sales were up 10.9% last year, and profitability was strong in the first 2 months of the year as well. The pandemic did not have a material impact on our results until the middle of March when the quickly spreading virus led governments across the region to implement curfews, lockdowns and other restrictions. As you know, from our 2020 results, we took proactive and decisive action that successfully minimized the impact of the first wave on our business. We saw a steady normalization in the market after the pandemic peaked in April of last year. In fact, our system-wide comparable sales were down just single digits by the fourth quarter of 2020 and turned positive in the first quarter of this year. With that context and background, let's take a closer look at our first quarter 2021 results.

Thanks, Marcelo. All four Arcos Dorados divisions generated another sequential improvement in comparable sales despite ongoing operating restrictions in all markets. Results were the strongest in 2 divisions. The Caribbean where Puerto Rico and the French West Indies drove the positive result after being the hardest hit division in last year's first quarter. And at where comparable sales exceeded the division's blended inflation rate by about 4 percentage points, mostly thanks to strong results in Chile and Argentina. NOLAD continued on its path of gradual sequential improvements in comparable sales across all 3 of its markets. Brazil started the quarter well. But finished in line with its fourth quarter results due to tighter government restrictions throughout the month of March. As you just heard from Marcelo, those restrictions continued into April. But in the first week of May, we were already at 90% of 2019 comparable sales. Importantly, according to Crest, the McDonald's brand gained 4 percentage points of market share in the quarter, reaching its highest level ever in the study. We believe this is a tremendous vote of confidence and demonstrates the trust we have earned from Brazilian consumers through this period. These results show the long-term benefits of operating a single brand across a vast geographic footprint. We are able to focus on operational excellence by sharing best practices and learnings from market to market, while building the region's best restaurant portfolio and without diluting management's attention of the company's resources among competing brands. By operating the brand throughout Latin America and the Caribbean, we have also been able to mitigate the impact of the pandemic given the diverse economies, currencies and consumer environments in the region. The 3 Ds are the main business drivers with no signs of slowing down in the quarter. Drive-thru sales were up more than 55% in constant currency and contributed 39% of system-wide sales. Throughout the quarter and in response to the modern way people are traveling today, we encouraged guests to visit our drive-through lanes anyway they like by car, motorcycle, bicycle or any other means of transportation. As a result, awareness of the versatility of the Drive-thru segment among consumers, rose from an average of around 25% to more than 45% across many of our most important markets.

Thanks, Luis. On our last call, we told you that January and February results were roughly in line with our internal expectations. As Marcelo already explained, we assumed the first half of 2021 would remain challenging. That advances in vaccination programs and other measures, which support a more normalized operating environment and stronger results in the second half of the year. With that in mind, we came close to or exceeded our expectations in the Caribbean, SLAD and NOLAD. Brazil's results, which started off strongly, were impacted by increased government restrictions in March, and a weaker-than-expected currency throughout the quarter. Chile and Argentina drove the strong rebound in SLAD's profitability, and the Caribbean division result was even more impressive. EBITDA margin expanded by 840 basis points if we exclude the $4.7 million noncash item from last year's result. The 100% company-operated U.S. dollar and euro markets of Puerto Rico and the French West Indies, respectively, are generating strong cash flows to offset the temporary challenges we are facing in other markets. A clear benefit of operating in more than 1 market across the region. On a consolidated basis, the company's cost structure continues to respond well to the changing operating environment. Gross margin rose 20 basis points versus last year despite important cost pressures. In addition, better employee productivity and the resumption of growth support from McDonald's allowed us to offset higher occupancy, advertising and promotion, other operating and G&A expenses as a percentage of sales. Consolidated adjusted EBITDA reached $24.7 million and margin expanded by 30 basis points versus the prior year. Excluding last year's noncash item. We still expect full year profitability to be significantly better versus 2020, starting with the second quarter. The company's balance sheet remains strong, and we generated positive operating cash flows despite the challenges of renewed government restrictions. We had a very comfortable cash position of $148 million as of the end of the quarter, 0 short-term debt outstanding and no long-term debt maturities until 2023.

Thanks, Mariano. The strategy this year focuses on leveraging McDonald's menu favorites and reenergizing the family business. The pillars of that strategy are the 3 Ds plus ESG. And the keys to success are running great restaurants and keeping the McDonald's brand relevant to maximize sales, returns and market share. With that in mind, our brand focused marketing campaigns included the campaign in Brazil, focused on guest individual retails where enjoying their favorite McDonald's items. In Costa Rica, we celebrated the brand's 50th anniversary in the market by reconnecting guests with their memories of growing up with McDonald's. In Mexico, we brought back the popular MCRIB sandwich, which had not been sold in the market for at least 10 years. Guest response was better-than-expected to this limited time offer, and we sold out in just 3 weeks. Both Caribbean and SLAD ran the drive-through campaign that Luis described earlier and also boosted chicken sales by leveraging existing menu items such as the Chicken McBites, as well as introducing new menu items, like the crispy chicken sandwich line in Puerto Rico. This represents a multiyear journey into the chicken segment. And just 2 months after the introduction, the crispy chicken sandwiches continue exceeding our sales expectations. And quickly back to Brazil. We had a very successful sponsorship of Big Brother Brazil in the quarter. We chose this television program because of its 60% penetration in Brazilian households and 40% penetration among young consumers. It receives ratings that rival this Super Bowl every single week in the country. The results were 170 million consumers impacted by TV, record mobile app downloads and record mark delivery sales, among others. This shows McDonald's Pajama Party also generated the largest merchandising campaign in the history of Brazil's well-developed reality TV industry. Later this month, we…

Sure, Marcelo, in order to get started, please minimize the presentation slide so that you can access the chat function on the left-hand side of the webcast platform. Please limit yourself to 1 or 2 questions so that I can read, understand and convey in to our speakers. We will now pause briefly to compile your questions. So let's get started. We have a couple of questions here from Ian Luketic at JPMorgan. I think this is for you, Marcelo. Ian asks, is it fair to say that market share improved -- improvement is related to our large number of freestanding restaurants and also our higher exposure to delivery than competitors. In other words, he's wondering if this market share is sustainable once markets are fully reopened, and if the market share gains have been across all regions or just in Brazil.

Okay. Thank you, and good morning, Ian. Thanks for being with us in this call. First, we measure and track market share in all our markets, using a variety of sources that we try to triangulate in order to identify trends and opportunities. And based on all this information in the first quarter of 2021, we gained market share in most of our key markets. According to Crest, for example, during the first quarter of this year, we gained 4.2 percentage points of market share in Brazil's USR industry versus the prior year. And this is significantly more than any other brand in the market. In fact, we reached our highest share ever since Crest is available in the market. And our share today is more than 2x the share of our closest competitor. And I think that, obviously, as you mentioned in your question, we are benefiting from our footprint, particularly all the restaurants we have street facing, which includes, obviously, the industry's leading drive through network. We have almost 500 Drive-thrus in Brazil, and that's by far the highest amount of drive thoroughs in the country. And from those restaurants, obviously, is a very important operation of delivery because we have an easy access and we can capture more sales through this segment, too. But on top of that, we have another tools that we have leveraged in recent months that allowed us to increase market share. Everything around digital, our mobile app is the highest-rated in the industry, and it is capable of delivering segmented offers which are increasingly personalized and increased frequency. And we have the highest number of downloads of our app and more importantly, around 2.5x more active users than the closest competitor that's according to ANI official information. And we have the highest brand awareness and consumer preference in the industry that's supported by strong brand activations. For example, we mentioned in the first quarter of this year the huge success of our partnership with Big Brother in Brazil. And at the same time, in the base of everything we are doing, I think that the execution of our program provides a strong sense of safety and hygiene to both customers and employees, and that's driving our market share higher. I think that, for sure, we are the best positioned player in the market to capitalize on the acceleration of the recovery going forward.

Great. And Ian's follow-up question, Marcelo was related to May sales and profitability. Since we mentioned that May was already within 90% of 2019 levels, how are margins performing under this scenario.

Yes. We try to give you some color and more information about sales in the second quarter. But we cannot comment on short-term profitability trends. But what I can tell you is that there's a lot of operational leverage in the business. So with a quick rebound in sales, as we saw in recent weeks, we expect a stronger rebound in profitability.

Great. The next question is from Marcella Recchia from Crédit Suisse. Marcella says that once again, Arcos has been successful in managing input cost pressures and protecting gross margins on a consolidated level. She was wondering if we can comment on how that looked in Brazil and how she should think about gross margin moving forward. Considering that in both cost pressures are a reality. Mariano, I think that one's for you.

Perfect. And good morning to everybody, and thanks for your question, Marcella. Yes. So far, we have been able to manage the food and paper line or the gross margin, I think, very efficiently in 2020 with a minor impact versus a very good 2019. And we are very happy to say that in the first quarter of 2021, we achieved a gross margin expansion of 20 basis points during this first quarter against the same quarter of last year. Despite, of course, full inflation that we are seeing well above CPI in many of our markets, including Brazil, and that was part of your question how we are performing in Brazil. In this market, we are performing worse that at the consolidated level, market conditions, but it's, I think, very important to highlight that here is where we can see the benefits of the geography where Arcos Dorados operate and being or have a progression in '20 markets, allows the company to increase its margin dispatch pressures in some going forward, well, there are protein cost pressures. They are a reality in the entire food industry. Everybody is dealing with them, not just Arcos or not just the QSR or restaurant We are the biggest buyers of beef in our market. Also important to say by a factor many times of 3x with long-standing supplier relationships, and this gives us the ability to negotiate the best prices. But also it's important to -- that the gross margin affected by pricing product mix is not only about cost pressures. So this year, we will continue working on all the levers that form or comprise the gross margin, and they are under our control. Such as inventory management, operations, cost controls, pricing power and product mix. So in for of moving from mass marketing to mass personalization. And we are saying here is that we're trying to maximize our product mix. That's 1 of the components of the gross margin. So going forward, the evolution of the gross margin or the food and paper line will depend on how these 3 factors, the costs, the pricing and the product mix will play. But we feel very confident that we will be able to manage it as efficiently as during this first quarter of 2021.

Great. So the next question is from Thiago Bortoluci from Goldman Sachs. I believe for your Marcelo. He says, thanks for the presentation and the Q&A. In the first quarter of '21, we highlighted Chile and Argentina as the key drivers for our South Latin America division. Could we please share some recent system-wide sales trends for those countries.

Okay. Thank you, Thiago, for the question. We are very pleased with the sales trends in those markets and in slad division in general. And we saw a very strong momentum at the end of the first quarter, and that momentum continued in the second quarter despite some additional restrictions, we are particularly in Argentina, but it's important to mention that the restrictions we are facing this year are less and less -- more targeted than last year. So results in Argentina and Chile continue to be very strong, and we are very pleased with the trends in those markets.

Great. The next question is from Jim Sanderson of Northcoast Research. Yes, if we have any concerns with respect to supply availability for poultry, given grain trends and especially because of expected strong demand from the BTS meal promotion.

No. Really, we do not expect any issue with that. I think that we have a pretty strong supply chain, and we do not expect any

Okay. And then in terms of -- I have another question from Bob Ford of Bank of America. How is mix evolving in terms of higher margins, margin desserts, beverages and sandwiches? And also, how are we thinking about input cost pass-through and how our consumers and competition responding.

Okay. Thank you all for being with us today. Our industry and customers, in general, have seen a significant increase in food inflation. In most. So there has been room to increase prices in our markets. Food inflation, obviously, is happening not only at restaurant level, but in groceries, so people is very sensitive to that. Fortunately, in terms of input costs, we have agreements with our suppliers that allow us to plan time in the magnitude of the cost increases as well as for which products or platforms would be impact. And we were able to leverage, obviously, our scale to negotiate better than the rest of the industry. In this scenario, the competitive activity has been more rational during the last couple of quarters because everyone is facing the same kind of pressures. We have different tools to work with in order to improve our margins, particularly because prices is just 1 tool and for example, as we mentioned a couple of calls ago, we have simplified our menu in order to focus on the highest margin and most popular products, we have leveraged our digital capabilities to segment our customers and drive revenue towards more profitable product mixes, higher average checks and more intense per order. And we know that customers choose the best value, which is only -- it's also not only price, it's about service, quality, accuracy and safety. And that's where plays a role. A good indicator of that is the way the customers are responding. We are gaining -- and I think we are dealing very well in terms of gross margin levels. So that's the way we are dealing with all the things related with gross margin, including prices. In terms of desserts, I think that you mentioned that particularly part of our prologue mix in your question. We still are facing some restrictions, particularly in shopping malls that are affecting our footprint of dessert centers. But the good news in that sense is that once these restrictions are lifted, we immediately see the return of the customers to this important segment for us. So we expect some additional contribution coming from that part of our product mix, which is, for sure, 1 of the best in terms of gross margin.

Okay. So Bob has a follow-up question related to our self delivery as compared to the work today with the aggregators. And he wants to know how the economics and flow of the business compare for our delivery people versus the aggregators. How is the profitability and service level last mile versus aggregators and economics and flow of business for our delivery people. And I'll turn that over to Luis.

Yes. Thank you, Bob, for the question. We still don't have the economics because we are in the early stages. What I can tell you is that we think that self delivery is a strategic initiative. Because it gives us greater control over the sales and information of our customers. How it works is the process -- in the process to place the order is done through the McDonald's app, and logistics is done through expert home delivery companies in each country. I would say, even though we're in the first stages, we are piloting now running pilots in Argentina and Brazil, 93 restaurants in Argentina and 45 restaurants in Brazil. We think that we are in the right track but before we can expand this capability and take it to other markets, we need to offer the best customer experience and ensure excellence in execution. And this is today our focus.

Great. And we have a question here from Pierre. I'm going to put you a name star here Pierre from AV Securities. And he's asking if we can elaborate on our adjusted EBITDA margin contraction when compared quarter-over-quarter. In other words, the bridge between the first half, the first quarter and the fourth quarter, but maybe more of a trend in terms of margins. And how things are evolving. Mariano, I think that's for you.

Yes. Well, thanks again for the question. Well, in this case, our business is seasonal. Usually, the first quarter of each year, this has much lower margins than the fourth quarter of any year. The fourth quarter for our company is always the highest in terms of EBITDA. In this particular 6 months, what we can say as well on top of the seasonality is that in terms of the pandemic during March of this year, we had very strong January and February. But during March, we had additional restrictions that we didn't have by the end of last year, as we already mentioned. So I would say that it's not a fair comparison, fourth quarter of 2020 with first quarter of '21. That's why we prepare the bridge and the comparisons with the first quarter of 2020. And usually, we don't compare the sequential or consecutive quarters. In terms of the trends, what we are seeing and because exactly of what I'm talking about, about the seasonality and the effect of different quarters in our margins. We are expecting to see a sequential improvement in our margins throughout this year if things continue as we are seeing right now.

Okay. Great. Great. We actually don't have any more questions in the chat. So I can ask you to wait a couple of minutes to see or I'm at here to see if anybody wants to add another question. Okay. So it looks like we've reached the end of the Q&A session. We want to thank you once again for your interest in the company and for taking the time this morning to join us. We look forward to speaking with you again on our August earnings call. And to stay safe, and have a great day.