Good morning, everyone, and thank you for joining our Third Quarter 2022 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 in the Investors section of our website, www.arcosdorados.com/ir. [Operator Instructions] 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 and unaudited financial statements filed today with the SEC on Form 6-K. Our discussion today excludes the results of the Venezuelan operation, both at the consolidated level as well as for the SLAD division. For your reference, we included a full income statement, excluding Venezuela with today’s earnings release. Marcelo, over to you.

Thank you, Dan. Good morning, everyone, and thank you for joining us this morning. Today, Luis, Mariano and I will take you through the highlights of our consolidated and divisional results for the third quarter of 2022. Mariano will also cover our balance sheet and growth metrics, and Luis will provide an update on the 3D strategy of digital, Delivery and Drive-thru that has been driving the strongest operating and financial results in our history. I’ll wrap up with the Recipe for the Future and some final thoughts on 2022 and beyond. In our discussion of a third quarter results, you will see that we were able to maintain the strong trends of the last several quarters and build on what we told you was a better-than-expected month of July. This means business momentum was very strong as we headed into the year’s most important quarter and that's why we finalized our plans for next year as well. Total revenue in the third quarter reached $916 million, comparable sales grew more than 34% versus the prior year boosted by higher guest volumes and market share gains throughout the Arcos’ footprint. We leveraged our structural competitive advantages, with a continued focus on our winning Three D’s strategy. Digital Sales contributed 42% of the quarter systemwide sales reaching almost $500 million. This new three-month record included all-time highs in mobile app, Self-order Kiosks and Mobile Order and Pay. Delivery and drive-thru sales grew 34% and 11% in constant currency respectively. These increases came from gains in both guest volume and average check and far outperformed many other restaurant chains, even on-premise sales continued normalizing. We have been able to sustain growth on these channels, thanks to the structure and competitive advantage offered by our freestanding restaurant portfolio and discipline operational execution. Luis, we'll take a closer look at these results in a few minutes. Although, we were facing a comparison with last year's record third quarter result, adjusted EBITDA in US dollars rose another 15% this year. By focusing on sustainable sales growth, we generated operating leverage to help offset some of the headwinds we knew we would face in the quarter. Last year's reported result was helped by a tax credit in Brazil, as well as government payroll support programs in SLAD. This year, food and paper cost remain elevated. And we also have the final step up in our royalty rate. Despite all these factors, EBITDA margin remained solidly in double digits, and net income almost double versus last year. Now let's dig into the results by division, starting with Luis who will run us through divisional sales performance.

Thanks Marcelo. Comparable sales growth remained strong in the third quarter, increasing at a rate of about two times blended inflation for the period. This is about execution. Here we say that it's not real, unless it's real in the restaurant. We attract guests through marketing and digital initiatives. But guests keep coming back because they have a great experience each time they interact with a McDonald's brand. It doesn't matter if it's a physical visit or a digital interaction. Their experience must be great. Brazil's comparable sales rose 21.8% in the quarter, about 2.5x inflation in the period. Digital Sales penetration rate in Brazil is the highest of all Arcos market, generating 52% of systemwide sales in the quarter. As Marcelo already mentioned, off-premise sales growth was strong in the quarter, even as on-premise sales normalized. This sustained the recent trend of industry leading market share gains as QSR took additional share from informal players in the country's restaurant industry. Brazil's marketing activities in the quarter focused on programs and investments designed to reinforce the brand's core strengths. For example, leveraging its cultural relevance by partnering with Thiaguinho, one of Brazil's pop artists for the latest installment of their successful Famous Orders campaign. To drive further digital adoption, we invested in a 360-degree campaign to promote the Mobile Order and Pay feature of the app. This omnichannel approach to the digital strategy is strengthening brand perception related to convenience and generating significant sales growth in this channel. After the quarter ended, we shifted gears in Brazil to leverage the McDonald's global sponsorship of the FIFA World Cup. We introduced a highly anticipated lineup of eight sandwiches. Each day of the week features a specific country themed sandwich, including Argentina, France, Germany, and Mexico. The Mac Brazil, which was available…

Thanks, Luis. As you've already heard, today, we are reporting another quarter of strong adjusted EBITDA growth and the performance remains broad based, with all three divisions generating solid profitability in the quarter. Starting with consolidated EBITDA margin, we improved occupancy and other operating expenses, thanks to well above inflation sales growth. Payroll expenses were only higher versus 2021 because of the government support programs that helped last year's result. Excluding the support from last year's number. payroll expenses were lower this year and are solid below 20% of company operated sales. As we told you to expect on our last couple of course, we experienced gross margin pressure in the third quarter. Brazil's gross margin improved, but this was offset by higher food and paper costs in the other two divisions, especially NOLAD. We continue to expect full year 2022 food and paper costs to about equal to full year 2021 as a percentage of sales. Finally, G&A expenses remained relatively flat in margin terms. Turning to the divisions and starting with Brazil, EBITDA grew more than 20% in constant currency, even though last year's result, included a nonrecurring tax credit. Healthy revenue growth generated an improvement in gross margin, and operating leverage in restaurant expenses that more than offset the final step up in the royalty rate. In NOLAD, EBITDA margin remained at nearly double digits as strong revenue growth generated operating leverage to partially offset a tougher cost environment and the final step up in the royalty rate. Results were also negatively impacted by Hurricane Fiona that hit Puerto Rico in September. Importantly, however, EBITDA in US dollars still grew versus last year. SLAD’s revenue growth successfully generated operating leverage in the quarter offsetting some cost pressures to expand EBITDA margin and deliver strong US dollar EBITDA…

Digital now accounts for 42% of total sales. And it's not just delivery driving growth in digital. In the third quarter, we also set new records in Self-order Kiosks sales, which were available in more than 900 ELTF restaurants, Mobile Order and Pay sales supported by enhance functionality, and it rolled out to a growing number of markets, and sales generated through the Mobile App, which has been downloaded almost 80 million times and is the main digital communication platform with guests. In the third quarter identified sales grew by 67% versus the prior year. As a result, 17% of total sales were identified, including 21% in Brazil. These are sales from guests who have opted in to allow their data to be used in our marketing activities, which enables us to enhance their McDonald's experience and maximize profitability. This is all part of the omnichannel approach we started telling you about in 2019. Guests today have never had so many choices and how they interact with us. Ease of use drives higher frequency, which explains the increasingly higher revenue per guest within the Arcos Dorados digital ecosystem. Among the newest functionalities is a WhatsApp bot that takes delivery orders in Colombia and Mexico. The bot is fully integrated with our kitchens, helping guarantee speed and accuracy. We plan a rollout to more markets in the coming months to capture the potential of a much larger addressable market since WhatsApp is widely used in Latin America. On the logistic side on delivery is operating in almost 600 restaurants in six countries. Solutions include restaurant crew members delivering orders over very short distances, and third-party last-minute operators executing the delivery. This will help us further develop and monetize these new consumptionication in our markets. The unmatched physical presence of freestanding restaurants in the Arcos Dorados footprint has undoubtedly been the foundation of the last five consecutive record quarters. But it should also be a testament to the significant competitive advantage we have with our digital ecosystem. The junction of these two platforms into a seamless free digital experience is fueling our market share leadership. Using Brazil as a proxy, there has been a permanent shift in guest volume to off-premise channels. Meanwhile, on- premise traffic has improved steadily since 2020, which contributed to a moderation in Drive-Thru traffic growth this year, month delivery volume and total sales are both up this year, driving 29% sales growth in Brazil, despite a relatively flat industry trend. Our strategy to drive revenue through volume growth is clearly reflected in the quarter’s visit share metrics. Total visit share increased by 3.1 percentage points versus the prior year quarter, while delivery visit share rose by four percentage points. Even with the results we are generating, there are still so many opportunities to improve operational performance. And that's why I am excited about what is yet to come. Marcelo, back to you.

As you know by now, we have a robust ESG platform we call Recipe for the Future. This is such an important part of our overall strategy that 10% of the variable compensation for every bonus eligible employee is tied to ESG metrics. Our financing strategy is also linked to certain ESG objectives. And we are the only QSR operator in the world to publish an annual ESG report that includes audited content. We are on a journey to increase the use of renewable energy sources which jumped from 4% in 2020 to 12% in 2021. And we'll be at least 50% by 2025. This year, we have signed new renewable energy deals, including with EDP in Brazil, and [inaudible] in Colombia. These agreements are expected to bring millions of dollars in renewable energy infrastructure investments by our partners. In addition to supporting the development of these critical alternatives to fossil fuels, the restaurants they supply will have reduced energy costs. The latest deal with id . 0:23:45.9Vulcan Columbia involves installing solar panels on the roofs of several restaurants. They are also installing elevated solar panels in the parking lots that will generate energy for the restaurants while also providing shade for guest vehicles. Our commitments are not just about reducing carbon emissions; however, we are also leveraging the nature of our business to support youth opportunity in the region. The 65 restaurants we intend to open this year will generate 3,000 to 3,500 new formal job opportunities for young people. They will receive training and practical experience with everything from food safety, teamwork and process to customer service, leadership skills, and sustainability. Generating jobs is not good enough if the work environment is not attractive. This is why we are proud of how our workplace has been recognized by…

[Operator Instructions]

Our first question comes from juggler Bartolucci from Goldman Sachs. He says hi, Marcelo, and Arcos team, congrats on the results. And thanks for taking my questions. My first question is on underlying operating performance. How should we think about the net impact from the World Cup to volumes in Brazil? I'll start with you, Marcelo.

Okay, thank you. Good morning, Thiago. We have taken steps to minimize as much as possible, any sales team, but during World Cup games. And most importantly, we have developed multiple initiatives to maximize sales leading up to the tournament. All of these will give our fourth quarter performance very strong versus last year. In fact, we had the best ever month of October both in terms of sales and profitability. And sales in the first half of November have also been very strong. So I've been around for more than 30 years in the business so I know, history demonstrates that our guests enjoy watching the games with family and friends, often at home and in many Latin American countries, all activity almost stops during a national team game. But if you go to the details for this coming World Cup and we did that country by country, to take the best decision and to have any specific plan for every day in every country. If you take a look, 75% of the games will happen in the first two weeks, for the group stage part of the tournament. And in those two weeks, there are only two markets, Arcos’ markets, which are Argentina, Mexico, that have games on weekends. That's very good news for us, because most of the games will be on weekdays. And since the last World Cup, we have made a lot of progress and improvements, we have developed new capabilities that for sure will enable us to capitalize on our sponsorship of the event. Four years ago for example, delivery only accounted for 2% of sales, today it is 15% of sales. And we have very strong partnerships with three POS, which will allow us to capture business before, during and after the games through the delivery segment. Four years ago, on top of that, our digital platform, and our digital penetration was much lower was less than 10%. Today is more than 40%. And this platform will allow us to engage at scale with guests again before during and especially after the matches when we expect to see a significant uptick in sales. Because you have to remember that unlike many other players who are over indexed to malls, our last freestanding restaurant portfolio positions Arcos Dorados and the McDonald's brand to capitalize on post much activity. So this will be key in these coming weeks. Overall, it will be a lot of teamwork between operations, marketing, digital and all the team in the company that will be making the difference in a positive way during this global event. And I think that all these efforts and all this work will allow us to have a very strong fourth quarter to close a record year in terms of sales and profitability to close the year on a high note building momentum on to the beginning of 2023.

Great, thanks. Marcelo. Chago has a follow up which is and to the extent that we can comment, how are the discussions around the renewal of the MFA agreement with McDonald's evolving?

Okay, well, let me begin remembering that the MFA is a 20-year contract that started on August the 3rd, 2007 and goes through August the 2nd, 2027 with a renewal option of afford 10 additional years pursuant to the MFA. We have already indicated to McDonald's that we would like to renew the agreement, and McDonald's will determine whether to grant us the option to renew by August 2024. If McDonald's grants us the option, then we will amend The MFA to reflect any changes to the current terms of the agreement. We are already engaged in conversations with McDonald's related to this topic, under jurisdiction of the MFA term and expect to have the process concluded by August of 2024 for us, it is stipulated in the MFA. Any announcements related to this topic will be made as appropriate in coming months.

Okay, so let's move now to Marcela Recchia from Credit Suisse, who says hi, team, congratulations on the results. And thank you for taking my questions. And she asked what are the main regions in Brazil, that management still sees opportunities for new openings, and I'll turn it over to you to Luis.

Hey, thanks, Dan. And hello, Marcela. Good morning. We still see opportunities of growth in all the Brazilian region. We have opened recently in Sao Paulo with excellent results, but we see great options of openings all across the country. Dan?

Great. Luis, Marcela has a follow up or a second question, and she asked if we could elaborate more about the market share gains across all divisions. Is it driven more by market consolidation, or are we gaining market share from it -- from any specific player?

All right. The QSR is expanding its share of the total [inaudible] in our industry, and within QSR the McDonald's brand is gaining share in all three divisions, not just Brazil, and let me give you at least numbers to a better understanding. And our visit share rose across the region in the third quarter up 3.1 percentage points. In Brazil according to our research visit share increased by 1.8 percentage points with an increase in the gap to the nearest competitor. This gap rose from 16.8 to 20 percentage points. In SLAD, visit share gains 4.6 percentage points, and almost doubled the gap versus the main competitor from 7 to 14.9 percentage points. In NOLAD, visit share increased 1.6 percentage points, increase in the gap versus the main competitor by five percentage points came from 2.5 to 7.5 percentage points. And I would say that it's important to say that the revenue growth was driven mostly by higher restaurant volume with modest price increases. And of course with a restaurant experience that is valued by our guests. Dan?

Thanks again, Luis. Our next question comes from Bob Ford and Ulies from Bank of America. And Ulies says, Aleis Orgothe from JP Morgan has a similar question. Bob says congratulations on the quarter. Can you comment on your food and paper costs and expectations going into next year? And similar to that Ulies who also says congrats on the amazing results, asked what is the cost outlook on how should we think about sequential evolution of costs into the last part of the year and early 2023. So let's start with that one Mariano.

Perfect. Thank you, Dan. And thank you Bob and Ulies for the questions. First, on the gross margin side, what we are seeing and we have been saying is that this year, we are expecting gross margin or food and paper cost to be about the same as last year as a percentage of sales. Keep in mind that in terms of penny profit, our gross margin increased this year by $120 million compared with last year. So that's really relevant for us. In terms of expectations on gross margin for next year, what we are seeing is that we see an opportunity there, we are going to follow and continue the proven pricing architecture, we're not going to increase pricing well above inflation. We think that this strategy has yield incredible results for us so far. We will continue with digital investments and trying to identify a higher portion of our sales. And we are convinced that will improve our product mix and improve in that way, the gross margin. And finally, we are also expecting a reduction in cost pressures. We are seeing in many of our markets, deceleration of inflation pressures. And there we also see that we have an opportunity. So that's so far about gross margin this year and what we are expecting for next year. In terms of overall costs that was part of Ulies’ question. We continue to expect full year EBITDA margin from 2019. That was remember around 10%, in 2021 that was around 10.4% to be the base off of which we will expand margins in the medium to long term. As we already mentioned, we think that continuing increasing sales above inflation will give us leverage or no fixed costs that we have at the restaurant level and also with our G&A structure. Payroll expenses, for example, are now well below 20%. We think this new model where we have delivery growing and drive-thru also growing are giving us benefit of deadline, occupancy and other expenses that have a high portion of fixed costs also, is we are obtaining leverage there. And we also expect to obtain leverage on the G&A and the fixed part of our G&A as we continue to focus on increasing sales. So that's the outlook for the overall cost and EBITDA margin for next year.

Perfect. And let's stay with Mariano and also stay with Bob and Ulies who have a similar overlapping question. Bob asks, and be a couple parts here on the increase in the 10-year growth plan, which I think is more of a potential than a plan at this point. Can you comment on CapEx and unit growth for 2023 and 2024, as well as future periods? To whatever extent but he has some definition? He asked what are we thinking about in terms of models, the split between corporate and franchisee and kind of the overall market holding capacity. Ulies had a similar question where he says in the release, we mentioned 1,000, restaurant opening opportunity. And we describe it at the start of the year. And now it seems conservative. So can we elaborate more on the markets where we're seeing the larger opportunity? And what could this imply and potential number of additional stores? So yes, lot of concepts there, but back to you, Mariano.

Okay, I will try to summarize all the questions in one answer. When we provide the guidance of the current three-year growth cycle, we said we would open at least 200 restaurants in this period. And around 90% of those would be freestanding units. We also mentioned that we will modernize at least 400 restaurants to the EOTF format. We are not planning to change or to revise that guidance at this point. We are going to held this Investor Day that I mentioned in the beginning of next year, and we will give more information there. But it's, even though we're not planning to revise this guidance, we said at least for both items, and again, we will give you more information for this three-year period cycle in the investor update that we will hold in 2023. Now going to the outlook, looking forward and to the 1,000 restaurants that we mentioned that we could we have the potential to open in the next 10 years. When we reorganized the company to three divisions instead of four. That was in October of last year, we mentioned that we will reallocate our G&A to reinforce the team that will help drive future growth. There we have advanced and all the digital capabilities, but also the development team. And that's what we have been doing so far. This year, at the beginning of the year we gave guidance for 55 restaurants, were going to open 65 about 65. And with the modernizations was the same case, we announced 75 modernizations. And this year, we are going to end about 100 EOTF modernizations. And we mentioned that the potential openings for McDonald's restaurants to be about 1,000 new locations over the next 10 years. But based on the performance that we have seen on the recent openings, more sales per unit all the segment's growing without compensation among them, higher than average ROIs, we now need that these 1,000 new restaurants are on the low end of that range. We're not going to revise at this point, again, this 1,000. But we think now that to be those 1,000 restaurants to be the base. Regarding both questions how many units the market can sustain. What again, for us is now at least 1,000 McDonald's units. We think that the QSR segment is highly and penetrated in Latin America. We believe that around 60% of those could be placed or opened in Brazil. And then we have several opportunities in many of our other markets that also are showing very, very good results such as Chile, Costa Rica, Panama, French West Indies and several others Mexico as well. Being of course 90% of those freestanding units. I think that covered –

Yes, let me add just some color in terms of the mix between company operated and sub franchise restaurants. I do not see that mix changing materially going forward. So we should keep more or less the same mix that we have today. I think that with that we cover all the different parts that the two questions had coming from Ulies and Bob.

And actually Ulies had one more which is leverage, different topic leverages now at 1x, how does this fit in the strategy? And what are our plans going forward? Can we expect for example a step up in the dividend? So back to you, Mariano.

Perfect, thanks Lises for the second part of the question. At this point, we feel very comfortable with our capital structure. We have high cash balance; we have lower leverage. And that's for us is a nice problem to have. Two years ago, we could not have imagined being in this position. The good news is that all options are on the table, we just -- I just walk you through the CapEx opportunities that we have. And of course, that will mean a deployment of cash, our priority is always investing in the business, which of course, as I already mentioned, we have accelerated openings, our 10 additional openings 2022 and we will have the investor update in for guidance of 2023 and 2024. We will continue with modernizations. And we are planning to do all this without issuing new debt for next year. We will fund the investment plan using our own cash plus the operating cash flow that of course we are planning to generate during next year. Regarding dividends, in 2022, we will resume to the cash dividend payments with a $0.15 per share dividend. We already paid three of them, we are going to pay the fourth installment at the end of December. And looking forward we do not have a dividend policy. But our board of directors makes the decision on dividend distributions at the beginning of each year. So we will communicate their decision with respect to a 2023 dividend, if and when it is approved by the board. So I think that covers that last part of the question.

Perfect. A couple of final questions here. One from Antonio Fernandez from Barclays, says good morning. Are we seeing any type of deceleration or underperformance in recent weeks in any of our different types of restaurants? So back to you Marcelo.

Okay, thank you. Good morning, Antonia, and thanks for the question. No, as I mentioned before, the fourth quarter started really very strong. It's important to know that we have -- we are the only player that have the exclusive rights to use the FIFA World Cup in our marketing activities. And that's thanks to McDonald's global sponsorship of the event. And this is the most important sporting event in Latin America by far. Among many marketing activities we design related with World Cup, where the World Cup Sandwiches that we introduced early in October, in all our markets. In the past, we executed with high success, this initiative only in Brazil, this time, we brought this idea and this initiative to the whole company with incredible success. So behind October and the first two weeks of November sales results is the impact, the positive impact of this initiative. On top of that, we have also signed local sponsorships. Very important ones for example, with Tite, Brazil's head coach and with the soccer Federations of Argentina and Uruguay. So those agreements are bringing more and more activities that are being executed in the markets related with World Cup and leveraging this asset in our restaurants. As we mentioned before, it's important to mention that all three divisions are performing extremely well and McDonald's brand preference has strengthened over the last few years, which demonstrates in our opinion that [inaudible] remains an aspirational experience for our guest. And our plan is to continue yielding revenue through volume growth in order to drive profitability by generating operating leverage.

Excellent. Last question in the queue here from [inaudible] and he asked, how is the smaller size footprint deployment going? And how has it been performing with respect to the three D’s, and he congratulate us on the very strong results.

Okay. Thank you, Joe for the question. We continue to look for lots for spaces where we can offer the full McDonald's experience. That's why our recent openings are around 90% freestanding units, and that's the preferred format going forward. But in some cases, there are some constraints, especially in big cities like Sao Paulo, for example. And sometimes the size of the plot is below the ideal that we need to build a full restaurant. So in those cases, we introduced this optimized layout, in order to be able to offer the best possible experience in a reduced space. And for example, the restaurant that we open with the format in [inaudible] venue in Sao Paulo is doing extremely well. In says profitability, and its operating in a very high note. The two off-premise segments, drive-thru and delivery. So this is, again, an alternative that we can use when we have some constraints in terms of space, but we still are looking for the full restaurant, which is the best experience that we can offer to your customers.

Great, Marcelo. I know you have some final thoughts for us. But that's the end of the Q&A session. And once again, back to you, Marcelo.

Okay. Thank you very much, Dan. And yes, before we end the communication. I would like to thank everyone for joining us in today's call. And I think that it is worth putting this quarter’s results into historical context. We have clearly turned the page with respect to the pre pandemic performance, since the industry itself has undergone structural changes in how we build revenue and how we drive profitability. And as we have mentioned several times, we came out of the pandemic with some of our strongest ever brand metrics with unstructured competitive advantages. And all of these have consolidated our leadership in the industry. A testament to this superior position is the results we generated in the third quarter of 2022 when compared with the third quarter of 2019. Revenues and EBITDA in the quarter are up 22% and 35% in US dollars, respectively. Despite the significant devaluation of several local currencies, such as the Brazilian rial, the Colombian peso, the Chilean peso and even the euro and EBITDA margin is up 100 basis points for the same period third quarter 2022 when compared with third quarter 2019 even with the impact of the final step up of the effective royalty rate. So this performance is the result of the disciplined execution of our strategy at the restaurant level. But let me be clear with this, there is still a lot of potential to unlock moving forward. We look forward to speaking with you in the coming weeks and months. Stay safe and have a great day.