Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- International Meal Co Alimentacao SA (BSP:MEAL3, Financial) achieved a 10% growth in recurring EBITDA, reaching BRL66 million in the quarter.
- Digital sales grew significantly by 60% year-on-year, with Pizza Hut's new app accounting for 16% of all delivery sales.
- The company maintained a net debt EBITDA leverage of 2.1 times, indicating controlled financial discipline.
- KFC reached the milestone of 200 stores, with system sales growing 9% in the quarter.
- Operating cash generation increased by 97.5% compared to the same period last year, driven by efficient management of working capital and monetization of tax credits.
Negative Points
- The quarter was challenging in terms of sales, with flat sales compared to the previous year.
- A significant disruption in the supply chain in April led to temporary store closures and limited service capacity.
- The company faced a 10% negative same-store sales in April due to external factors, impacting overall quarterly performance.
- There was a significant loss in delivery sales due to changes in the delivery strategy, particularly at KFC.
- In the USA, the company experienced an 18% drop in total restaurant revenue, partly due to the sale of Pigeon Forge Tennessee and closure of the Las Vegas store.
Q & A Highlights
Q: Can you explain the logistics disruption and the closure of the Las Vegas restaurant? Also, what are your expectations for the new stores in New York, Miami, and Boston?
A: The logistics disruption was due to a problem with a logistics operator's distribution center, which affected product delivery to stores. This issue was resolved by May. Regarding the Las Vegas restaurant, it was closed due to a change in strategy by the new owners of the hotel where it was located. New stores in New York have been open for over two years, while Miami and Boston opened recently. Despite a challenging quarter, we are confident in the potential of these locations.
Q: Does the company plan to introduce new brands in Brazil to enhance profitability and margins?
A: Currently, there are no plans to introduce new brands in Brazil. We are focusing on maximizing the potential of our existing brands, which have significant growth opportunities.
Q: With a 10% increase in marketing expenses but only a 1% revenue growth, what is the company's marketing strategy to compete in the market?
A: The increase in marketing expenses was due to campaigns for new product launches, which coincided with the logistics disruption. This mismatch affected sales, but we are working on aligning marketing efforts with sales growth more effectively.
Q: Is there an outlook for dividend payouts given the current financial performance?
A: Currently, the focus is on enhancing operating cash generation to support expansion and strategic projects. There is no forecast for dividend payouts at this time.
Q: What are the main efficiency indicators the company is focusing on?
A: Key indicators include same-store sales growth, cost of merchandise sold, personnel costs, and EBITDA. Operating cash generation is crucial for funding expansion and is a primary focus.
Q: Are there plans for restaurant closures or modifications as part of the company's strategy?
A: We continuously evaluate store performance and make decisions based on profitability and strategic fit. Underperforming stores may be closed or modified, while others may undergo renovations to enhance customer experience.
Q: Is there a need for a follow-on offering to support expansion plans?
A: There are no plans for a follow-on offering. The company's expansion is aligned with its financial performance and strategic objectives, maintaining financial discipline and sufficient liquidity.
Q: Can you provide more details on the reversal of MFA fines for Pizza Hut and the logic behind tax credits?
A: We renegotiated our master franchise agreement with Pizza Hut, eliminating penalties. Regarding tax credits, we actively optimize taxes and monetize credits from previous years, contributing positively to our financial results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
