Good morning and welcome to the Arcos Dorados Second Quarter 2014 Earnings Call. With us today are Woods Staton, Chairman and Chief Executive Officer; Sergio Alonso, Chief Operating Officer; The company’s Chief Financial Officer, Germán Lemonnier; and Daniel Schleiniger, Investor Relations Director. A slide presentation accompanies today’s webcast, which is also available in the Investor Relations 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. (Operator Instructions) Today’s conference call is being recorded. At this time, I would like to turn the call over to Mr. Staton. Please go ahead.

This will be Daniel Schleiniger speaking first. Thank you and hello everyone. Before we proceed, I would like to make the following Safe Harbor statement. Today’s call will contain forward-looking statements, and I’d 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 Chairman, Woods Staton. Woods, please proceed.

Thank you, Dan. Hello everyone, and thank you for joining us today. Everyday, McDonald’s is a destination for approximately 4.3 million customers in the Latin America and Caribbean markets. And our top priority is to serve them great tasting, high-quality food in a contemporary setting. This focus on our customers is particularly important in today’s economic environment, for weak economic growth, and rise, and inflation continued to dampen consumer sentiment and buying power in some of our largest markets. While we anticipated much of the decline in traffic have resulted the FIFA World Cup, and a tough year-over-year comparison in our largest market, Brazil. we have also faced that we couldn’t expect in the consumer environment in the second quarter. given this backdrop, I’m pleased to announce that we achieved another quarter of double-digit organic revenue growth, supported by a high single-digit increase in comparable sales. The result demonstrates our ability to continue to grow sales, even in challenging market conditions and underscores our operational and brand strength. On the topic of branding, the second quarter marked a once-in-a-lifetime marketing opportunity for the McDonald’s brand in Latin America. The World Cup is the most widely watched sporting event in the world, exceeding even the Olympic Games. as an official sponsor, McDonald’s is the only restaurant brand visible across the event, venues during all 64 games. and based on a GlobalWebIndex survey to track awareness levels among people watching the UK, USA and Brazil, McDonald’s is the second most recognized official sponsor of the event. This visibility will no doubt increase the dominance in McDonald’s brand in the region over the long-term. We were successful in leveraging the brand sponsorship of the World Cup to exciting marketing activities, including new product introductions and event-related promotions, which positively impacted sales in the…

Thank you, Woods and hello everyone. Please turn to Slide 3, as Woods mentioned the working capital percentage as one of our kind marketing opportunity for the McDonald’s brand in the region. On the final week of the tournament McDonald’s was the second most recognized sponsor of the event, achieving recognition levels of 49% according to our market (indiscernible) index. I am confident that this improvement of recognition levels will have a positive long-lasting impact on the brand on our business in the region. Please turn to Slide 4, taking into account an 8% year-over-year depreciation in the Brazilian Real, reported revenues were unchanged versus the prior year period. Comparable sales were relatively stable year-over-year, whereas organic revenues increased 7.7% in the second quarter. Quarterly revenue growth in Brazil was mainly impacted by our calendar shift in the Monopoly promotion, which run in the first quarter of this year versus the second quarter on 2013. The promotion inclusion in the year-ago period drove comparable sales growth of 10% in that quarter, resulting in a strong year-over-year comparison. In addition, continued soft consumer spending strikes the disruptive transportation prior to the World Cup and sharp declines in traffic during World Cup matches, which by the way took place during our lunch time mainly on top line growth. Key quarterly marketing activities including the World Cup Sandwiches. The launch of the McFlurry Kit Kat in the Dessert category and the addition of the Crispy Tasty sandwich into the GPPP value platform. The net addition of 78 restaurants during the last 12-month period, of which half were free-standing units, contributed $34.2 million to revenues in constant currency during the quarter. As you can see on Slide 5, NOLAD reported revenues decline 4.8% year-over-year, but was stable on an organic basis. Systemwide comparable sales…

Thank you, Germán. Our team has made up of seasoned professionals each with decades of experience operating in Latin America. So we understand first hand that our businesses long-term growth path will not be without it cycles. The current challenges we face are considerable, weak economic growth, soft consumer trends, foreign exchange, volatility as well as geopolitical and stability in several key markets, are all impacting our business and reported numbers. In response, we are focused on those factors within our control, such as continuing to streamline our business to targeted cost savings, ensuring that in this way we can provide a compelling value proposition to our customers. We’re also refocusing our marketing efforts on the family and our iconic McDonald’s menu. We’ve already taken the steps required to achieve $20 million in annualized G&A cost reductions. And year-to-date we have identified an additional $7 million in annualized cost savings to our non-product purchasing processes. These include such strategies as implementing reverse auctions, as well as utilizing our scale to lower costs across the various countries. We are beginning our planning cycle and as part of this process we will continue to review all areas across the organization for opportunities, to extract further savings. I expect to be able to provide you with further information on this ongoing process by the end of the year. I would like to conclude by reminding you that economic growth in this region is inherently cyclical. And the QSR industry in particular is backed by strong, long-term demographic trends including population growth of budgeting middle class, a preference of convince and untapped demand for our products. In the future, as it has done in the past, I’m sure that economic growth will rebound. And to ensure you we are at the forefront of this recovery, in addition to the cost saving opportunities we mentioned already. We are taking steps to improve the efficiency of our operations to system wide advances in technology. These initiatives will capitalize on the scale and competitive advantages that we derived from being a single brand with single cooking system which no other regional QSR player can leverage. Thank you for your attention. I would now like to open the call up to questions.

We will now begin the question-and-answer session. (Operator Instructions) Our first question is from John Glass of Morgan Stanley. Please go ahead. John S. Glass – Morgan Stanley & Co. LLC: Thanks. Couple on Brazil, first, if I missed it, I’m sorry, did you quantify the traffic decline in Brazil in a more broad terms, can you talk about how you are now modifying your marketing calendar in Brazil in the second half, if it’s more value sensitive consumer and the macro is not where you thought it would be. What are you going to do differently specifically in the back half of the – that traffic back?

Yes, hi John. Look, we’ll answer this in two parts, first part is, for the second semester, we will do total focus on value propositions and our value platform, affordability is the standard of McDonald’s and we’re going to focus much more on that than we have. And with that, let me pass you to Sergio Alonso for the first part of your question.

Sure, I think. Hi, John. What I’ve been – and particularly, as you maybe aware, and particularly in June, we are in the weeks immediately before the World Cup starts, we have some raise on transport price – sorry, thank you for that, that actually affected a bit on the volume in our restaurant mainly, in São Paulo city. And then on June 13, the World Cup started, and the reality is that even though, we’re not expecting to have additional traffic as we discussed previously, the reality is that we’re sort of supervised by additional loss or decline in volumes, particularly on the days where the national teams played. And on top of that, be aware that most of the Latin American teams made up to the quarter final. So the reality is that that affect extended mostly, all length of the tournament. So all those effects compounded really led us to have, we’re not taking about a big decline in traffic, was a low single-digit I would say, and but on the other part of the question for the second half was already covered I guess.

Our second question is from Roy Yackulic from Bank of America. Please go ahead. Roy Yackulic – Bank of America Merrill Lynch: Thanks. Can you talk about your expectations on increasing prices this year to make up for the – if I guess the change of the SICAD II in Venezuela, and what kind of leverage guidance can you give us for year-end?

I’ll answer the first part Roy, welcome and I’ll let Germán answer the second part. We can make up some of the pricing in Venezuela. We are not controlled in prices there, but take in mind – keep in mind also we already are at high prices. So we can’t make it all up. What we’re doing also in Venezuela, which is important, is we’re substituting as many imports as we can. We are substituting and we’re bringing in substitutions for french fries, the yucca, which is a very good product, which is local. So we’re trying to reduce our food cost as well and our dependence on buying dollars, which is difficult to find today in this environment. And with that, let me pass to Germán. Germán Lemonnier: Hi, Roy. Based on our projections, we – remember that we got a healthy balance sheet; our business is very long-term perspective. In the past some other time we target our net debt levels around two times. And at the end of this quarter, we reached the number 2.6 times, but that’s what mainly as a result of the company decision to move the figure to FX rates for investment purpose in Venezuela and that’s obviously reduced the EBITDA and created a series of one-off impact in litigate number. We next year eliminate this impact, basically we were around 2.3 times net debt EBITDA, and we feel comfortable at this level of leverage. We don’t see any reason to change that number.

Our next question is from John Ivankoe from JP Morgan. Please go ahead. John W. Ivankoe – JPMorgan Securities LLC.: Hi, thank you. The question is on your credit profile and CapEx. Firstly, could you, you kind of talk about how much comfort that you have with your current debt in terms of where your EBITDA is, in other words how much flexibility there is for changes in EBITDA, relative to the forecast? And secondly, in 2014 of the $180 million in CapEx, how much of that is discretionary versus non-discretionary, non-discretionary in terms of what McDonald’s requires you to build or I guess McDonald’s Corporation requires you to build, versus what is maintenance CapEx? And of course where I’m going with this question and in terms of like what the minimal amount of CapEx would be in 2015, based on contractual obligations and what you perceived as required maintenance? Thank you.

Hi, John, let me pass it to Germán, so he can answer you. Germán Lemonnier: John could you repeat the first part of your question? John W. Ivankoe – JPMorgan Securities LLC.: Of course, so the question was regarding your current debt I mean I think your rated investment grade, just in terms of how much flexibility you have in terms of continuing to achieve your covenants relative to where your current EBITDA, or cash flow, or, however, those covenants are written? Germán Lemonnier: Okay, basically in the long-term debt we don’t have any covenants. We already have and there was an update which maintaining our investor rating. So have flexibility to increase our debt in the long-term if we like. But as I mentioned before, today we feel comfortable 2.3 around two times in net debt EBITDA ratio. So we are not expecting to increase that right now. Obviously we are entering the planning process, we will decide what we want to do next year and the following years. But today we are not planning to increase the debt. But in any case, we got the flexibility to do that, and we believe that today we are totally committed to achieve the number of obligations that we have this year. So…

Yes, John, we have several variables that we can control in order to meet our expansion plans, including the timing of openings, we’re committed to 250 in this three-year cycle of 2014 to 2015. The restaurant formats also we’ve been focusing on drive two sources which are considerably more expensive than others. And ownership structure, I mean we’re looking at ways of may be gaining – putting in more franchisees as a percentage of our restaurants. And we’re now in the process of looking at all of this and all the ramifications of that. Germán Lemonnier: And John, another question that you asked is about how much is the amount that McDonald’s Corporation requires to maintain our survey. We basically have $60 million per year and in the McDonald’s commitments is in fact $180 million for a three-year period.

Our next question is from Jeronimo De Guzman from Morgan Stanley. Please go ahead. Jeronimo De Guzman – Morgan Stanley & Co. LLC: Hi, just had a follow-up and then a question. The follow-up was just in Brazil, you mentioned that there is a one off effects from the World Cup I just wanted to see how the trends are looking in – are looked in July, did you see any pickup there without the traffic impact? And then the other question was in Argentina, just wanted to hear your views on the outlook there, given that you did see weaker traffic trends in the second quarter? And kind of given the current macro situation, just kind of wanted to see how you’re thinking about the operation for the second half.

Hi, Jeronimo. Today I’ll start with Argentina part. I’ll pass to Brazil with plenty of that. In Argentina today’s comparable sales have remained pretty solid. The brand is very strong and we have been able to effectively drive average check this year. As we said, traffic in the second quarter declined. A lot of that is due to the World Cup, but also to macro environment. We are right now monitoring the currency depreciation, the mounting inflation, lack of the resolution of this debt situation with in with (indiscernible) and the Argentine. But we feel that the situation is going to continue to dampen consumer sentiment in spending. Analysts came out predicting that there’s going to be decline in the GDP of Argentina of minus 1.5 from flat prediction earlier. On the good side, we have commodity exports remain strong and the government is taking measures to create economic activity. They’re pumping money into the systems sold. We don’t think that they’re going to be effect this year. And to sort of round that, we have a strong brand in Argentina and we saw good rebound in traffic after the World Cup. And with that, let me pass to Sergio so he can talk about...

Hi, Jeronimo, how are you? Well, on top of what we said about the dealing part of the World Cup and the strides before the World Cup, the reality is that the traffic in Brazil continuous to be impacted by, I would say, a top consumer environment and the shape. As a consequence of that the shape is still the informal sector. So without adding mind and, I’d say, response to our sort of challenging environment, we’ll what’s focus on growth in traffic and market share and the remaining part of the year with an enhancement or overvalue proposition and platforms. And we’re focusing our marketing efforts towards the family business and we conceded iconic properties. Nevertheless, the actual situation on volumes and sales is already considered in the margin and EBITA projection that we just...

(Operator Instructions) Our next question is from Rachel Chong of Hartford Investment Management. Please go ahead. Rachel Chong – Hartford Investment Management Co.: Hi. Thank you for the call. Since you have not yet provided your cash flow statements, I would like to ask you for more color in cash items. Your net debt rose by about $72 million, but if you take EBITDA, subtract CapEx, interest income taxes, dividends and book networking capital, your net debt should really only go up by about $33 million. So again, where your large additional cash flow items, actual derivatives for the cash losses and working capital? And finally are these recurring?

Hi, Rachel, this is Woods. Let me pass you to Germán. Germán Lemonnier: Rachel, obviously we are in the planning process or entering the planning process. So it’s too early to say it’d be $72 million, $100 million, but you are right. The cash flow high level is led from this year about how we expect to finish this year. But we have different ways to adequate our capital structure to our plans, we remember we have different options like that that we don’t want to touch significantly, dividends that we can reduce or cap if we need it. We can balance a type of personnel we are developing with CapEx, and basically, we have another alternative like page lining this year to build restaurant in local currency. So it’s too early to say and we have a lot of opportunities, and viable to define how much cash flow we have to deploy in CapEx, in dividends or whatever other purpose that we decide.

Our next question is from Robert Schweich from Burnham Securities. Please go ahead. Robert J. Schweich – Burnham Securities Inc.: Thank you. It appears in general that you were dealing with what I would call a perfect storm in terms of the South American political circumstances, that isn’t to say, it can’t get still worse. I think it would be helpful if you could go through the three key countries and discuss this, and talk in terms also of elections and possibilities of change, particularly Brazil, Argentina and Venezuela?

Hi Bob, thanks for joining us. I guess you want a macro, sort of a macro-political view of this right, of these three countries. Robert J. Schweich – Burnham Securities Inc.: Absolutely.

Yeah. Well they happen to be close to 90% of our EBITDA base. So that’s your question is a good one. Let me start with Venezuela, Venezuela is a country that is going through a lot of issues, they don’t have enough money, they’re basically not very additional cash, very difficult to import. So what we’re doing there is what any sane person will do it, we’re trying to substitute imports with local products. And we’re trying to maintain as much of a market share as we can and keep the group of people together. And if you go there, Bob, you will go and you will see McDonald’s, which are absolutely fantastic. They are in great shape and they are doing very well. So it’s a very good McDonald’s experience, but we have to say of course. We’ve had some decreases in traffic, as a result of social, political and economic turmoil there. And it’s difficult to project things in Venezuela, because it’s a dynamic situation. But we don’t plan on injecting any capital into Venezuela, it’s – we can sustain ourselves there and we’re getting enough dollars for our royalties and some imports that we’re making still. And so it’s a strong brand. I mean if all the countries McDonald’s brand has measured by third parties and brand awareness, and brand attributes, it’s the best in all of Latin America. Brazil. Brazil is by far the largest country. It’s going through a down cycle in its economy. at the beginning of the year, growth was expected to be 1.8%. It was just restated today at 0.37%, I believe. So in half of the year, it goes down to half and that’s difficult. Consumer sentiment depends on who we’ve talked about I think it’s pretty difficult, most of the…

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

Thank you. And thank you for your questions and attention today. We look forward to speaking with you next quarter. And in the interim the team remains available to meet with you and answer any questions you may have. Thank you for being with us.

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