Good morning, everyone and welcome to the Arcos Dorados’ Fourth Quarter and Full Year 2013 Earnings Conference Call. With us today are Woods Staton, Chairman and Chief Executive Officer; Sergio Alonso, Chief Operating Officer; Germán Lemonnier, Chief Financial Officer; and Daniel Schleiniger, Investor Relations Director. A slide presentation accompanies today's webcast and this is available at the Investors' section of the company's Web site, www.arcosdorados.com. 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. (Operator Instructions) Today's conference is being recorded. At this time, I would like to turn the conference call over to Daniel Schleiniger. Please go ahead.

Thank you. Hello, everybody. Before we proceed, I would 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 measures to comparable 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 Chairman, Woods Staton. Woods, please proceed.

Thank you, Dan. Hello everyone and thank you so much for joining us today. We had a very good quarter and a strong year, turning in double-digit growth on our consolidated operating results for both the full year and for the fourth quarter of 2013. For the quarter, organic revenue grew 15.8%, supported by an increase of 10.6% in comparable sales. On an annual basis, growth in comparable sales of 11.2% drove organic revenue growth of 16.7%, which puts us solidly at the midpoint of our guidance range for 2013. Year-over-year organic EBITDA grew 18.7%, capped off by a 20% year-over-year increase in the fourth quarter. The full year result was well ahead of guidance and a solid result given economic deceleration in a number of our key markets. The execution of a strong marketing calendar, successful and compelling value platforms within an inflationary environment and the opening of 130 restaurants during the year drove strong top line growth as well as an expansion of our market share leadership in most of our markets. In fact, during the fourth quarter of 2013 we achieved a milestone, the opening of our 2000th store. Marketing highlights for the year include the introduction of the Monopoly promotion in Brazil and Argentina, which contributed to comparable sales growth in a softer market. The launch of Chicken McBites was also a key driver of sales, as we were able to quickly scale the product throughout the company. Our results reflect strong revenue growth and cost management. Proactive currency hedging, particularly in Brazil and increased reliance on local suppliers and inputs in Venezuela, mitigated pressure on food and paper costs caused by the appreciation of local currency. At the same time, favorable rulings on employee benefits in Brazil and our ongoing focus on productivity through the…

Thank you, Woods, and hello everyone. Let's turn to Slide 3 for a discussion of our quarterly marketing activities. During the quarter we developed a number of marketing activities which drove comparable sales growth. This includes strong promotions in our active value platform combined with the successful launch of premium products like the Cheddar Bacon Onion and campaigns such as Tabasco and Dijon. Value is a key McDonald's brand pillar and remains at the core of our strategy despite operating in an inflationary environment. Turning to Slide 4. Brazil's revenues declined 1.1% in the fourth quarter primarily due to the depreciation of the Real. Excluding an 11% decline in its currency, we achieved organic revenue growth of 9.5%. The Brazilian economic and retail sales environment was relatively weak in the fourth quarter, resulting in lower consumption across the board. Product mix management and menu board adjustment drove system wide comparable sales growth of 2.2%. Marketing activities in the fourth quarter included a Tabasco campaign and the addition of the Double Bacon sandwich in our GPPP platform. The net addition of 81 restaurants during the last 12-month period contributed $32.8 million to revenues in constant currency. As you can see on Slide 5, revenues in the NOLAD division grew 0.9% or 1.2% on an organic basis year-over-year. System wide comparable sales declined 2.3%, primarily due to the weak consumer environment in both Mexico and Costa Rica. Our turnaround strategy in Mexico is ongoing and we are working hard to identify the optimal balance between product offerings and value in this market. And in Costa Rica, we have been able to outgrow our direct competitors despite challenges in the country. For the region, the net addition of four restaurants during the last 12-month period contributed $3.6 million of revenue in constant currency.…

Thank you very much, Germán. Please turn to Slide 14. Our fourth quarter and full year results demonstrate the continued strength in McDonald's brand in Latin America and our ability to draw on tested strategies to grow market share and operating results during challenging times. During the year, we delivered double-digit comparable sales growth, expanded our market share leadership in key markets, implemented impactful marketing initiatives and opened 130 new restaurants. We achieved G&A leverage, managed currency volatility with appropriate hedging and executed refinancing initiatives. These actions are in direct alignment with our guiding strategy (indiscernible) or the recipe to win. My modulating the pace of unit growth in 2014, we expect to achieve a higher baseline level of profitability as we advance on another of the key factors of the recipe to win, namely cost control. To this end, we have formulated internal task force to identify further cost reduction opportunities so we can improve our profitability even in the fact of today's challenging operating environment. We believe that streamlining our business would not only help us to navigate these choppy waters, but it will also prepare us to capitalize on growth prospects when our markets reaccelerate. We are taking proactive steps to protect earnings in 2014, including hedging the vast majority of our dollar-linked imports this year. We expect less payroll cost pressures throughout our business and we expect to continue to achieve G&A leverage in 2014. Our partner, McDonald's continues to strongly support our efforts in the region as well as our commitment to our markets. We have targeted marketing initiatives in place to capitalize the McDonald's sponsorship of the World Cup, including new product introductions and events related promotions. These promotions will serve to strengthen our brand well before the World Cup begins in June, including…

(Operator Instructions) Our first question is from John Ivankoe with J.P. Morgan. Please go ahead.

Thank you, and I do apologize if I may have missed this. Could you walk through how the consumer has responded to a lot of the economic news that’s been happening around Argentina, specifically around the currency. I mean has there been a material change in your business, say for example, from the beginning of the fourth quarter to where we are right now? And just given the fact that it's such a big market, could you give a specific outlook for what you think traffic might be in the market as I know it's, generally, I think been fairly strong.

Hi, John. Look there was some foreign exchange volatility in late January but, however, from a business standpoint, our operations were going very well and we are maintaining strong margins in that division. Consumption continues to be strong. To date comparable sales have remain solid. So we have great momentum from the campaigns we had last year. They were either the Dijon campaign, Happy Meal and the McFlurry Vauquita. So the brand is strong and we have been able to effectively drive average check and traffic. As you know, most of our inputs in Argentina are Argentines so it's a natural hedge there as well. And we are going to have a strong Monopoly campaign very soon.

Our next question is from Lore Serra with Morgan Stanley. Please go ahead.

Maybe I could ask two questions, although I will ask some separately. I wonder if you could just clarify what change in terms of the rent you are talking about in Venezuela. And I wonder -- I understand that there is a lot of uncertainty about where the exchange rate might go in Venezuela. I wonder if you could give us any sense of where your operation starts to see more pressures in terms of breakeven or kind of what -- because there are some people that the currency could go 25 or 40. I mean these are just numbers but in that scenario, what kind of action plans do you have together with the McDonald's to preserve the profitability of the business. Maybe I could ask that first.

Let me get the rent question answered, I will have Sergio address that and then we will have Germán address the foreign exchange that you asked there.

Sure. Hi, Lore. Basically the change that was introduced for the rent regulation administration establishes that any landlord can charge 250 bolívares fuertes per square meter. That rule applies to -- for instance, the rent that we pay to the landlord where we have residence but also applies to the rent that we collect from the franchisees. Okay. And of course it's a general rule, it applies to square meter regardless if it is parking lot or if it is a part of the building, or the restaurant itself. Right. So it's a fixed amount of bolívares per square meter.

And then on the currency thing, the question you have, I will pass you to Germán so he can answer that. Germán Lemonnier: Hi, Lore. Basically, Lore, I mentioned in the speech, there are lot of new things coming into the market since the beginning of the year. One of the things that you mentioned, basically a new exchange rate market. It got to, started to operate yesterday. So there is no information coming from the market. It's very difficult to project about exchange rate going forward. So basically we try to make a strategy at the company that we don’t want to inject cash in this market based on our working scenario, we are not injecting cash into the market. At the same time, basically, we are monitoring every day the market to see what really happened which is, if this works, we have access to this market, that would be good for the country, obviously, for our business. But we need to see what happens.

Our next question is from John Glass with Morgan Stanley. Please go ahead.

In the fourth quarter, the Brazil EBITDA margin expanded despite [comps] (ph) being very modest. Is this is a sustainable level? In other words, if you design the cost structure now to be able to see modest amount of margin expansion in the low-single digit comp. And will restaurant actually improve, you cited reduced payroll cost and G&A, so I am not sure which played a bigger role. Was it much more about the G&A savings in the fourth quarter or was there actually restaurant level margin expansion in Brazil.

Hi, John. Let me pass you over to Sergio who will address the question.

Yes, hi, John. What I will say, it's a combination of both factors. We get leverage on the level line in our P&L in Q4 and also from G&A as well. Regarding how sustainable is this going forward, as we discussed before, we know that that the minimum wage increases for 2014 are currently below the levels that were in the last years. So of course we expect to get some additional leverage out of the productivity at the restaurant level in Brazil. You will recall, I mean, we went through a minimum wage increases of over 30% in the last years, we expect 6.8% to 7% for this year. So that will give us some space for further margin gains.

Yes, I think, Sergio, to the point that is some talk also about perhaps lowering the utility -- electricity levels. So that could be helpful as well going forward.

Yes.

The next question is from Mr. Bob Ford with Bank of America Merrill Lynch. Please go ahead.

I was hoping if you could just round up the conversation on Venezuela a little bit with respect to some of the pricing controls that have been instituted. And then maybe expand on the mention of the real estate purchase. And if you could, I was hoping that you could give us a sense of how traffic and ticket trends were developing in Brazil. I was a little bit surprised by the deceleration in same stores at the end of the year.

Okay. Let me pass the first part of the question to Sergio and the second part to Germán.

Okay. Just taking off Venezuela. Of course, as you may be aware, in Venezuela we agreed to revise some prices for [five] (ph) more product portfolio. But the real thing is, by doing that we are affirming our long year commitment with the country. The reality is that we have a very very strong brand in the market. Of course our products and pricing policy in Venezuela is very dynamic. We have to. You know our (indiscernible) brand, every business these days in the market. So we need to balance permanently costs and pricing cost and offers to provide the best service and retain traffic as much as we can in this particular environment. Of course we are always evaluating and re-evaluating the prices to remain competitive but at the same time to protect margins because as we discussed before, (indiscernible) prices are increasing significantly. So we need to protect margins. That is the Venezuela part. And in the Brazil, the top comps in Brazil -- you want me to take it?

Yes.

Now, don’t forget in last year, we had actually a very very tough comp because in 2012, we were running Big Mac promotion and that action ended well into Q4. So of course we got some impact in terms of making Q4 2013 a tough comp when compared to the prior year. Of course, there is also a less, I would say dynamic environment in the market at the end of last year that also contributed to a more, I would say difficult environment.

And Venezuela, Germán? Germán Lemonnier: Yes, as we mentioned several times in other calls, we try to look on ways to protect the excess in Venezuela. On last quarter we -- this quarter, fourth quarter, we decided to invest in a real estate property with the only purpose to avoid any risk of the impact in devaluation in the cash. So remember at that moment we have our own 350 million bolívares and we used this excess cash to invest in real estate to protect the cash from currency devaluation. And as of December 31, we have another 175 million bolivares in the market and then we are seeing different alternatives to protect the cash there.

The next question is from Martha Shelton with ITA.

It's Martha on behalf of Joaquin Ley at Itau. The question is regarding Mexico. The consumption environment in Mexico has obviously been very weak. I was keen to know if you had some color regarding the efforts that are underway in Mexico to gain market share. And also if you could just remind of, in Brazil, what your hedging situation is for 2014. Is it the case that you have already purchased all of your food and paper requirements for 2014? Thanks.

Yes. Hi, Martha. Let me pass the hedging question to Germán and then we will talk about the market share, what we are doing with market share in NOLAD. So with hedging. Germán Lemonnier: Hi. As you know we are proactive in trying to hedge in all the markets, particularly in Brazil in 2013, which had full year, all the important to impact the cost. This year we fixed 85% of the total cost for the year, basically try to protect again proactively to the market, to take decision about pricing. So we are well protected in Brazil this year and a exchange rate that is basically in line with what's happening in the market today.

Thanks. Sergio?

Okay. You said -- I mean the actual outlook environment for Mexico, it is less dynamic than what we would like to be. But given the overall competition for both formal or branded QSR and informal players, our value offering has been a key part of our growth strategy to remain competitive and to sustain traffic in the market. At the same time we introduced new products and new categories mainly in desserts, you know the Angus Tabasco Burger line, the new McFlurry product line, some other innovative products. The real thing is also, of course we always look in for balance between sustaining our traffic and gaining share, of course. In weaker environment people tend to move from branded QSR to informal side of it, other markets, it creates a more challenging environment for us and for all our branded competitors. But, overall, we do have a [growth] (ph) story in Mexico. It is ongoing. Of course we would like to move faster but as you said, as we all feel it, I mean the overall economic conditions are sort of slowing the pace of progress for us.

The next question is from Christopher Vandergrift with Hartford Investment Management. Please go ahead.

Would it be possible to quantify the reduction in annual lease expense from the land acquisition in Venezuela during the fourth quarter?

I will pass you to German. Germán Lemonnier: To quantify, the real estate investment was $57 million in the quarter and it's already done, so today we only have 175 million bolivares in the market, trying to reduce these cash, the fund in the market. But always we are thinking, analyzing ways to protect the cash. But we don’t have today any specific additional investment in real estate in Venezuela.

(Operator Instructions) Our next question is from John Ivankoe with J.P. Morgan. Please go ahead.

I've just got two quick follow-ups, if I may, on Brazil. Firstly, Brazil looked like it was helped by about 200 basis points or so because of the employee meals. How much is that carried forward as a benefit through the first three quarters of 2014, if you know that number? And secondly, it's kind of perceived from the outside or maybe from a U.S. perspective that QSR supply in the market, I'll just say Burger King and you, are kind of growing supply faster than demand. So if you could comment on kind of what's been happening from a competitive perspective, especially as you may co-occupy food courts in some of the, like some examples, to what extent the slowdown of comps may have to do with the significant QSR supply growth in the market relative to demand growth?

Hi, John, this is Woods. Look, this oversupply, if you will, of us in the market is not there. I think we have had some issues with some shopping centers that have not opened with all of their tenants because of this slowdown. So the shopping center might open without the movie theatre or some of the tenants. Being in that obviously has an impact, so we have to look at that. But if you look at, and as I said before, most of our store openings have been freestanding. So there, there is no slowdown. And as we look at, as you know they have revised the numbers for Brazil for the last year GDP growth and they are apparently going to revise it for this first quarter as well. Those number come in, I think, all the developers would be more prone to grow quickly. And as far as, your first question was employee benefits, I will pass it to Sergio.

Hi, John. Basically we are avoiding that provision of 1.2 million real per month. The last year was around $11 million. Obviously that depends on number of employee counts, but approximately $10 million, $9 million a year is the ongoing savings for this roll-in in the companies.

The next question is from Christopher Vandergrift with Hartford Investment Management. Please go ahead.

Yes. So the question I was trying to ask is, what type of piece of land did you buy? Did you buy the properties that your stores are located on so now you are not paying rent on that anymore? Or did you buy just a separate piece of land that's just to preserve value?

We have been actively looking for real estate. The problem with real estate in Venezuela has been that everybody has been trying to hedge the cash through real estate, so it's been expensive and not available by the way. So we were not able to buy something where we could put a McDonald's store, a restaurant, and we bought a space in a building just to hedge the value of that money.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Wood Staton for any closing remarks.

Yes. Well, thank you all for being with us and hope to be with you again in a few months. So thank you for being with us today. Bye bye.

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