Arcos Dorados Holdings Inc (ARCO) 2017 Q4 法說會逐字稿

Good morning, and welcome to the Arcos Dorados Fourth Quarter and Full Year 2017 Earnings Call.

A slide presentation will accompany today's webcast, which will also be available in the Investors section of the company's website, www.arcosdorados.com/ir.

(Operator Instructions) Today's conference call is also being recorded.

At this time, I would like to turn the conference call over to Daniel Schleiniger, Vice President of Corporate Communications and Investor Relations.

Please go ahead.

Thank you.

Good morning, everyone, and thank you for joining us today.

With me on today's call are Sergio Alonso, our Chief Executive Officer; Marcelo Rabach, our Chief Operating Officer; and Mariano Tannenbaum, our Chief Financial Officer.

Before we proceed, I would like to read 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 the 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 reports -- 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 audited financial statements filed today with the SEC on Form 6-K.

Additionally, we would like to note that unless otherwise indicated, all results referenced today exclude Venezuela.

I would now like to turn the call over to our CEO, Sergio Alonso.

Thank you, Dan.

Hello, everyone, and thank you for joining us today.

Please turn to Slide 2.

We had a very solid end to a strong year.

We achieved high single-digit comparable sales in the fourth quarter and volume increases in every quarter of the year.

Our successful strategy to drive top line growth combined with the work we have done to optimize our cost structure generated adjusted EBITDA margins for the fourth quarter and the full year that were our highest since 2011.

We achieved our primary goal for 2017, which was to serve more customers more often.

Notably, we more than tripled as-reported net income in the quarter with reported net income for the full year more than doubling as compared to 2016.

Comparable sales gained 9.1% in the fourth quarter of 2017 on top of the particularly strong growth we experienced in the prior year quarter when constant currency revenues grew 9%, supported by our compelling menu offerings.

Our customer satisfaction scores also continued to improve across the region.

Strong top line growth as well as healthy margins in the Brazil and SLAD divisions drove operating profitability at the divisional as well as consolidated level during the quarter.

And finally, the improved operating results and our successful redevelopment plan helped increase net income in the quarter to $62.7 million.

On a full year basis, we achieved comparable sales growth of 10.6% and total revenue growth of 11.9%.

Consolidated adjusted EBITDA expanded by 18.6%, which led to a 50 basis point margin expansion in 2017.

The improvement in our results is a testament to the strategic plan we initiated 2 years ago to drive top line growth, capture efficiencies in our restaurant operations, streamline our cost structure and reduce our debt levels.

Although I am very pleased with our progress so far, there is more work to be done to continue to capture the tremendous potential of the McDonald's brand in the region.

We're leveraging our leading market share, size and scale to capture the opportunity in front of us.

We ended 2017 with more than 120 Experience of the Future restaurants.

We also opened 50 new restaurants, which was at the top end of our guidance for the year.

Thanks to the disciplined execution of our strategy over the last few years, we are leaner, more efficient and have a stronger balance sheet.

We have built a sizable cash balance with strong operating cash generation as well as funds from our asset monetization initiatives.

And importantly, we are accelerating our investment plan, which includes adding more restaurant openings and upgrading existing restaurants with EOTF concept in some of our main markets over the coming years.

Last year, we announced our 2017 to 2019 growth plan, which was aligned with the minimum commitment that we made to McDonald's Corporation.

Strategically, our plan was to open a minimum of 180 new restaurants, reinvest at least $292 million in our existing restaurant base and invest a total amount of $500 million in CapEx to be funded with cash from operations.

We have now built a significant cash balance and are ahead of schedule on our plans of the current 3-year period.

As a result, I am very happy to tell you that we are revising our targets to open at least 200 new restaurants with the increased goal primarily to building additional freestanding units in Brazil; reinvest at least $390 million in existing restaurants to accelerate the deployment of EOTF; and invest around $660 million in total CapEx to, among other things, further support the acceleration of our EOTF rollout.

So specifically for 2018, we plan to open between 65 and 70 new restaurants and invest between $200 million and $230 million in total CapEx.

We plan to fully fund our reinvestment plans with currently available cash as well as cash from operations.

So in other words, we do not expect to increase gross debt to achieve these new targets.

Additionally, management recommended on March 20, 2018, our Board of Directors approved the resumption of dividend payments.

For 2018, the company will pay a dividend of $0.10 per share to all Class A and Class B shareholders in 2 equal installments of $0.05 per share on April 5, 2018, and October 5, 2018.

The dividend will be paid to shareholders of record as of April 2, 2018 and October 2, 2018, respectively.

As we look forward, I am confident that we have the right strategy to leverage our strong restaurant portfolio, locally favorite menu items and best people to continue on the path to sustainable growth and significant shareholder creation.

I will now hand the call over to Marcelo for a review of the key drivers of fourth quarter top line results.

Thank you, Sergio.

Please turn to Slide 3. As Dan mentioned, all of my comments on our consolidated and Caribbean division results exclude Venezuela.

The momentum we saw earlier in the year continued into the fourth quarter, resulting in strong sales performance even on top of a particularly solid final quarter in 2016.

Throughout 2017, our guests responded to the compelling value that we offer at every tier of our menu board.

We have also worked hard to revolutionize our Service Culture to enhance our second-to-none restaurant experience.

As a result of these efforts, we generated restaurant volume growth in each quarter of the year.

Please turn to Slide 4 for more details on our divisional results.

The Brazilian consumption environment in 2017 improved over prior years.

GDP growth rate fell short of analyst forecasts, but retail consumption grew quarter-over-quarter for the final 9 months of the year.

With this improved backdrop, our advantage in elevating the customer experience and strong marketing activities, we were able to drive solid revenue growth.

Reported revenues grew 6.6%, supported by constant currency growth of 5.1% and a 1.4% year-over-year average appreciation of the Brazilian real.

As was the case throughout 2017, our constant currency revenue growth was reduced by refranchising as our company operated sales are replaced by the rental income that we receive from our franchisees.

For the quarter, total systemwide sales grew 9.2% in constant currency.

The Brazil division's comparable sales grew faster than the average for the members of the Brazilian Food Service Institute in both the fourth quarter and full year 2017, expanding our leading market share position.

Our balanced approach to growth led to 6.7% higher comparable sales versus the prior year quarter.

Comparable sales benefited from a favorable shift in mix as well as our fourth consecutive quarter of positive traffic in Brazil.

Moving to Slide 5. NOLAD's revenues increased 8.7% year-over-year supported by constant currency growth of 7.6% and a 4% year-over-year average appreciation of the Mexican peso.

The combination of an increase in traffic across all the division's markets combined with a favorable shift in mix resulted in a 7.2% increase in comparable sales.

We are particularly pleased with the results that we are achieving in Mexico.

Volumes grew in each quarter of the year, and comparable sales grew significantly above inflation.

Our new affordability platform, innovative marketing and digital initiatives as well as our focus on delivering a better guest experience are driving the improved performance.

Let's turn to Slide 6. In Argentina, we saw some deceleration in economic activity in the fourth quarter as well as a 14% depreciation of the Argentine peso versus the prior year quarter.

However, this did not have a significant impact on Argentine consumption, which continued to increase through the end of the year and fueled our results in SLAD.

Reported revenue for the division increased 11.3% or 20.2% in constant currency.

The division's comparable sales rose by 20.5% due to both a favorable shift in mix and restaurant traffic growth.

Please turn to Slide 7. During the fourth quarter, the Caribbean division's revenues grew 2.1%, primarily as a result of positive currency translation.

While results in the rest of the division, particularly Colombia and the French West Indies, remains strong, the effect of the hurricanes in Puerto Rico and the U.S. Virgin Islands impacted traffic in the fourth quarter.

Despite an improvement in mix, comparable sales declined 3.5%.

As you can see on Slide 8, for full year 2017, we opened 50 new restaurants, which was at the top end of our guidance for the year.

Most openings took place in Brazil, which remains the focus of additions to our footprint.

We ended the year with 2,188 restaurants, which included more than 120 EOTF locations.

We also added 223 Dessert Centers bringing the total to 2,877.

McCafés totaled 316 as of December 31, 2017.

Across the region, we are prioritizing the highest impact initiatives that are the most appealing to our customers.

Our redesigned affordability platform, with a wide selection of core products at accessible prices, is proving a powerful draw for both our most loyal customers as well as a key driver for converting our casual customers into more frequent visitors.

We are very pleased that overall customer satisfaction scores, as measured by both internal and external sources, are on the rise throughout the region.

These metrics are telling us that our employees have fully embraced the Cooltura de Servicio program and are bringing greater energy and passion to their interactions with our customers.

Mariano will now take you through a discussion of our adjusted EBITDA and the balance sheet metrics.

Thanks, Marcelo.

Please turn to Slide 9.

As Sergio mentioned, we delivered strong results in 2017.

Our adjusted EBITDA margins for the fourth quarter and the full year were our highest since 2011 despite the increase in our royalty fees.

We also achieved the main targets of our 3-year plan in terms of margin expansion, G&A reduction and balance sheet optimization.

Please turn to Slide 10.

As you can see, our adjusted EBITDA increased 6.3% or $5.3 million versus the prior year quarter.

Brazil and SLAD profitability expanded.

NOLAD was essentially flat, and the Caribbean division was lower in the quarter.

Our adjusted EBITDA margin was essentially flat in the quarter.

Operating and G&A leverage were offset by the higher royalty fee as well as higher franchisee occupancy expenses as a percentage of revenues.

Moving to Brazil.

The adjusted EBITDA grew a robust 24%, and margin expanded by 270 basis points to 19.4%.

We achieved these results by taking a balanced approach to growing top line without sacrificing gross margins.

Notably, we reduced our Food and Paper cost as a percentage of sales.

In addition, we achieved both G&A and other operating income leverage in the quarter.

These efficiencies more than offset higher labor costs, occupancy and other expenses.

During the quarter, we also received growth support from McDonald's Corporation, which partially reduced the royalty fee increase in Brazil.

For NOLAD, adjusted EBITDA margin contracted 90 basis points to 9.9%, primarily due to higher royalty fees.

In SLAD, adjusted EBITDA expanded by 3.9% versus the prior year quarter.

The 70 basis points margin contraction came mainly from the higher royalty fees.

The SLAD division also received growth support from McDonald's Corporation in the quarter.

The Caribbean division saw its adjusted EBITDA margin contract 40 basis points to 5.4%, mainly due to higher Food and Paper costs and royalty fees, which were partially offset by efficiencies in payroll costs, occupancy and other operating expenses and G&A expenses as a percentage of revenues.

As a reminder, we have sufficient insurance to cover the property damage and business interruption losses suffered from hurricanes Irma and Maria in Puerto Rico and the U.S. Virgin Islands.

As you have already heard, we have explained our consolidated and Caribbean division results excluding Venezuela.

Our 2017 reported results reflected the materially positive impact from the uneven relationship between Venezuela's high inflation and less substantial exchange rate devaluation.

Recent devaluations generated a significant noncash negative accounting impact, which will be reflected in the company's first quarter of 2018 consolidated results.

Given the ongoing volatile nature of the situation in Venezuela and its noncash accounting impact, the discussion of the company's performance will continue to focus on consolidated results, excluding Venezuela.

Turning to Slide 11.

Nonoperating results reflected a noncash $4.2 million foreign currency exchange gain versus a noncash gain of $3.5 million last year.

Net interest expense remained stable year-over-year at $13.9 million in the quarter.

Moving to the bottom line.

In this quarter, we generated $69.3 million of net income compared to $21.2 million in the same period last year.

This reflects higher year-over-year operating results combined with a net positive variance below the operating line.

On Slide 12, you can see that we continued to strengthen our balance sheet during the quarter.

As of December 31, 2017, cash and equivalents were $328.1 million, and our net leverage ratio was 1x adjusted EBITDA.

We continue balancing the FX exposure of our long-term debt.

As of the end of December, the FX exposure of our long-term debt stood at approximately 50% U.S. dollars and 50% Brazilian real.

Finally, we are very pleased with the strong results we have delivered this year, focusing on sustainable top line growth drivers to support operating leverage and more importantly, increased cash flow generation.

As Sergio noted, with our solid cash flow generation and healthy balance sheet, we are well positioned to accelerate our expansion and reinvestment plans and continue on this sustainable path to growth.

I will now hand the call back to Sergio.

Thank you, Mariano.

Please turn to Slide 13.

Looking back over the last 3 years, we had to contend with a deeper-than-anticipated recession in our key markets as well as the more recent natural disasters.

Despite these challenges, we substantially met the goals we've set for ourselves through our focused execution of our strategic plans.

And our most important achievement has been attracting more customers more often to our restaurants by continuing to offer compelling value and great food, rolling out the Experience of the Future and changing our Service Culture.

We're looking to build on 2017's four consecutive quarters of restaurant traffic growth and strong comparable sales performance.

As the clear market leader in most of our major markets, we're also taking a leadership role in the industry when it comes to being socially and environmentally responsible.

We're aligned with the announcement you have seen recently from McDonald's Corporation with respect to packaging and recycling, kids' nutrition, as well as yesterday's groundbreaking announcement on climate change.

Arcos Dorados is also leading the effort to be part of the solution to youth unemployment in our region.

In 2017, many of our markets partnered with local NGOs to raise funds during our Gran Dia.

This successful campaign drove strong results allowing us to continue backing Ronald McDonald House Charities as well as support young people through our new NGO partnerships.

So thank you for your attention, and I would now like to open the call to questions.

(Operator Instructions) The first question comes from Robert Ford with Bank of America Merrill Lynch.

And congratulations for the traffic and mix improvements across the markets.

I was hoping you could focus a little bit or provide some detail on the other income line.

It's a big number.

It's $23.3 million in the fourth quarter.

And in the press release, you referenced refranchising revenues, tax credits, growth support.

The language suggest that there could also be a tax charge in there in the periods, so I was curious if there are other charges.

And then from a cash flow perspective, there's a reference to $21.8 million in asset monetization, but I'm not sure if any of that is in the other income line.

And then if -- further on that theme, if you could just give us a sense for what your expectations are in terms of other income over the foreseeable future?

Okay.

And I'll pass to Mariano for the answer.

Yes.

Bob, as we mentioned in previous calls, the redevelopment process, actually, we are not proceeding with that process during 2018.

We have seen results in the fourth quarter '17 of -- in the income statement of $35.6 million.

And actually, $17.3 million of them were cash.

And regarding the tax credit, as we also have mentioned, the redevelopment process is efficient from a tax perspective for us.

So going to the part of your question of looking forward, we are not expecting to see more redevelopment proceeds in the near future.

Refranchising, as we also -- what we are doing with refranchising, we're taking that as a normal part of our business.

So you will see also refranchising proceeds as we see the opportunity during 2018.

And basically, I think that would answer your question.

What I'm trying to do, Mariano, is understand how you get to the 22.3 -- or $23.3 million in other income.

You mentioned that there was $35.6 million in redevelopment income in the fourth quarter.

Of that, $17.3 million was cash, but then how do we get to $23.3 million?

And then there's also tax credits and growth support in that line item so there must be charges as well.

The growth support actually is -- yes, the growth support, Bob, is not in that line.

The growth support is in the -- it's expressed in the service fee line, so it's not part of that.

So in the operating income, yes, we have -- we operate in 20 different markets so we have different charges in that line.

We can reconcile that for you if you want.

But the majority -- the positive number will be the redevelopment.

Then of course, we have impairment in the financial statements as well for operations in some markets so we can give you a full reconciliation of that line.

Your next question comes from Ravi Jain with HSBC.

I had a question on the EOTF.

It's now in 120 restaurants.

Could you give us some color on the initial impact that you are seeing on the [sensor] sales line from this initiative?

And on that theme, could you give us an update of your plan?

How you would expect to rollout the EOTF in all your restaurants?

Should we take the increase in CapEx in your existing restaurants as a sign that you're going to accelerate the EOTF?

Could you just give us some guidance and color on that, please?

Sure, Ravi.

I'll take this one.

We started the EOTF rollout last year.

And as we mentioned back then, the idea was, first, to develop different decor packages with the need of these decor packages to be developed locally.

That is to keep the cost within our control and minimizing the exposure to FX or other external factors, one.

Second, so we opened the first one in Argentina, actually, at the end of 2016 and then Brazil -- then we started.

We had 120 at the end of 2017.

Of course, that does continue.

We have over 150 as of today.

And this process obviously will continue.

As we referred previously, we're focusing our efforts in Brazil, mostly, where around 70% of the restaurants that we will deploy in this period, this cycle, just 2017-2019, will be in Brazil.

Argentina and Uruguay are following.

The average cost that we are expecting is not significantly higher than the one we used to incur when we were doing the traditional, the old, the previous (inaudible) restaurant.

Keep in mind that this is pretty much a standard process that is going through all McDonald's systems, something that we are creating for ourselves.

We're bringing in all the digital package to the (inaudible) and the change in decor in restaurants.

The results that we're getting so far are also in line with what is found in McDonald's systems, that is to say, in the mid-single-digit sales lift.

So with all that said, we have to say that only 1 year ago, we just had just a handful of restaurants.

So it's really very early to say what is going to be the full impact of the rollout of EOTF in the company.

But the reality is, as I said before, we're focused on bringing it out in Argentina -- Brazil, then Argentina and Uruguay for this 2017-2019 cycle.

Of course, we're doing some other things, basically (inaudible) at the restaurant level to get the company ready to continue the deployment of the EOTF in 2020 and beyond.

Ravi, I would like -- it's Marcelo.

I would like to add a couple of points to Sergio's answer.

First of all, one of the key elements in order to keep the cost pretty much at the same level that we had for the core packages at the previous (inaudible) process is that we are taking advantage of our scale since we are running out this in a very aggressive manner in countries like Brazil or Argentina.

We are leveraging our scale and at the same time, we are leveraging all these investments with our Cooltura de Servicio program where we are trying to make a big differentiation between us and the rest of the QSR players in our region through our people.

So I think that the kind of results we are seeing in volumes are validating that we are in the right path in order to differentiate us and obtain a sustainable growth in terms of volume, sales and, obviously, profitability.

That's helpful.

Just to clarify, did you mention that it was 70% of all restaurants will be EOTF or will it be 70% of the Brazilian and Argentine restaurants will be EOTF by 2019?

Well, I'll say 70% of Brazilian restaurants will be EOTF [really] by the end of 2019.

(Operator Instructions) The next question comes from Robert Schweich with RMB Capital.

I'm very pleased to see that you've established a dividend.

I have several questions.

What do you think other operating income might run in 2018 since it was a total of $68 million in 2017 and a very small number, actually, in 2015 before you began the redevelopment?

That's the first question.

The second question, could you please tell us the effective royalty fees for 2017, 2018 and 2019, the royalty fees you pay McDonald's?

And finally, what do you think your close -- store closings will be in 2018?

Bob, I will pass to Mariano for the first question.

And then, I'll take the royalty one.

Bob, this is Mariano.

Actually, if you follow our net income, of course, during 2017, it was impacted by 2 main reasons.

First, our EBITDA 2017 compared to 2016 grew considerably.

So there's an operating part of that EBITDA that, of course, translates into a much better net income.

And then we have the redevelopment piece that also is contributing to our net income results.

So you know that we don't give guidance on our EBITDA, but we already mentioned that we're not going to have the redevelopment proceeds that we had in the past couple of years.

So next year, we should expect a net income more related to our growth in EBITDA than to one-off developments like the one I mentioned before.

Okay.

Thank you.

For the royalty piece, Bob, the reality is, on a consolidated basis and for the fourth quarter, royalty fees as a percentage of company sales increased by 40 basis points.

On a consolidated basis for the full year, royalty fees as a percentage of company average sales increased by 10 basis points, and that is because the step-up, as you know, was effective on August 3, 2017.

So we only had 3-plus months of a step-up in royalties.

And may we call your attention that we have different percentages in SLAD and Brazil compared to NOLAD and Caribbean.

That is because the broad support we -- and McDonald's is providing us has been redirected to both Brazil division and SLAD division.

But as we mentioned before and we explained, this growth support, it's a fixed amount but it's linked to investment that will be reflected in the royalty fee line in that division where we're actually deploying the resources that, as I've said, were Brazil and SLAD.

Your next question comes from Richard Cathcart with Bradesco.

I just wanted to ask a question about one of the comments you made on Brazil during your opening remarks.

You mentioned you were trying to strike a decent balance between driving the top line same-store sales growing kind of mid-single-digit but also managing to preserve gross margin and the results are a very big expansion to EBITDA margin as well.

So I was just wanting to ask kind of what we can expect for 2018.

Are you still looking to kind of play this balance between the 2?

Or do you think your margins have now got back to a decent enough level for you to perhaps begin focusing a little bit more on same-store sales growth?

Okay.

Richard, look, the momentum we had, actually, in the last quarters since the end of 2016 continued all the way in 2017 and continues these first months of 2018.

So our strategy continues to be the same, which is bringing in additional traffic but in a sustainable way that will ensure that our profitability will continue to grow as we move forward, right?

We are focused and concentrated, as I said before, to increase the number of customers that we serve in our restaurants but without compromising margins and, particularly, Food and Paper cost because we want to drive the business in a positive way but also it has to be sustainable.

So with that said, we expect our volumes to continue to grow in the market this year.

And then, we may get some additional gains in margins as a consequence of the increase in total volumes as we did, by the way, in 2017.

Okay.

And maybe just 1 follow-up, if I may, just about pricing in 2018.

Will you be looking at kind of toughing through inflation broadly in line with kind of the overall index inflation of around 3% to 4% in Brazil in 2018?

I'm not sure I get the question very well.

It's about pricing?

Yes, I think that's -- it's the operating...

Okay, look.

Richard, we always manage -- I mean, our check rather than pricing on product mix separately.

We believe that managing our check is the best way, it's the safer way to drive sales up on top of volumes.

As we mentioned before, we were able to grow comp sales in Brazil last year as a combination of positive traffic and also positive average check in spite of our pricing which is growing slightly below inflation.

That is because the marketing change that we have led us to increase average check on top of price increases, which we think is the right place to be, by the way.

The next question comes from Robert Ford with Bank of America Merrill Lynch.

I just wanted to ask one follow-up.

And in the press release, you mentioned that your occupancy costs and some of the other operating expenses rose in terms of sales in Brazil.

And given the low inflation, it came as a bit of a surprise.

Could you tell us, what's behind some of the expense pressures that you're seeing in Brazil?

Yes.

Mariano?

Yes.

Actually, in terms of occupancy expenses, we have some franchisee operating costs -- sorry, franchisee occupancy costs that went up, and that's related to the highest franchisee -- the refranchising process that we are following in Brazil.

So that line -- that's in line with that process of refranchising rather than that our occupancy in the stores we are operating is coming up.

So we have more franchise restaurants than we do in the previous periods, that is what explains the increase in that line.

Exactly.

It's not an absolute -- an increase in absolute terms.

It's a consequence of the refranchising process.

Okay?

Okay.

But that's just passed through to the franchisee, correct?

Yes.

Yes.

We compensate (inaudible).

Or is there a delay in that and that's what causes the expense in the period?

Exactly, exactly.

You have 2 lines.

You have the income in one line and the cost in other line.

Okay.

So I guess, what I would -- I just want to make sure that the cost isn't exceeding the income.

Is that fair that the cost (inaudible)?

No, no, no.

That's not happening.

The next question comes from Robert Schweich with RMB Capital.

I didn't hear the answer to my question about the effective royalty fee, that -- the increase that's going to incur in 2018, nor did I hear an answer as to your expected number of store closings for 2018.

No.

I mean, I'm not sure I get the question on the royalty.

But the reality is, as I said before...

Royalty fee to McDonald's, how much -- what percentage increase will it be over 2017?

On August 3, 2017, the royalty fee to McDonald's was stepped up from 5% to 6%.

The effective impact in 2017 was only 10 basis points because we only had the remaining part of August plus September, October, November and December, okay?

The consolidated effective royalty rate was 5.2% for 2017.

It's expected to be 5.7% in 2018 and 5.9% in 2019, respectively, just because we are recording the growth support that we get from McDonald's in this same line.

That is partially offset, the 6.7 royalty that we have effective for 2018 and 2019.

Do I make myself clear?

And store closings for 2018?

Look, Bob, we don't have a number to provide you today, but the reality is that closing some restaurants is part of the normal way of running a business like ours.

We have some places where the leases expire, and we don't have the chance to renew it.

Or we have one case in one of the markets where there's a huge roadwork, a bridge is being built.

So it wouldn't make any sense to have a restaurant below the bridge.

So -- but what I can tell you is that you should not expect any number that is out of norm compared to what happened in the years before.

The next question comes from Ravi Jain with HSBC.

In the South Latin American division, the same store sales was 20.5% this quarter.

How does that compare to blended inflation there?

And could you give us some color how much was traffic and are you pricing in line or below inflation in those countries, please?

So yes, those comparable sales were above the blended inflation in that division, and that was a result of pricing going a little bit behind inflation.

But in SLAD, we had the same type of -- the same kind of shift in mix, a favorable one, to more premium products that we had in our country.

So that's why the combination of additional traffic and a better mix brought the comp sales above inflation.

And that happened not only in Argentina, which is obviously the main country in that division, but in most of the countries of SLAD and in most of the countries of the company.

Would the blended inflation be mid-teens, you would say?

No.

The blended inflation is around 22%, 23%.

Even in the fourth quarter?

In Argentina.

In Argentina.

We're talking about Argentina, right?

No, no.

I was mentioning about the South LatAm division.

What would be the blended...

19%.

For the division, it's 19%.

(Operator Instructions) And this concludes our question-and-answer session.

I would like to turn the conference back over to Sergio Alonso for any closing remarks.

Sure.

Thank you, for your questions, and thank you for your attention today.

I have one additional announcement to make.

There is, unfortunately, due to the weather conditions in the Northeast of the United States, we recently learned that our flight from Buenos Aires to New York tonight has been canceled.

So we're now in the process of rescheduling our Investor Day that will happen in the first half of April, and we will be announcing the new date very shortly.

So we really apologize for any inconvenience that this change could generate, but it was obviously beyond our control.

So in the meantime, the team always remains available to meet with you and to answer any questions that you may have.

So thank you very much, and enjoy the rest of the day.

The conference has now concluded.

Thank you for attending today's presentation.

You may now disconnect.