Release Date: November 14, 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 7% growth in EBITDA despite a flat revenue scenario.
- The company successfully reduced corporate G&A expenses by 6.5%, contributing to improved profitability.
- Digital sales grew by almost 60% year-on-year, accounting for 57% of sales for KFC, Frango Assado, and others, showcasing successful digital transformation efforts.
- Frango Assado's profitability improved due to cost control and operational efficiency, with self-checkout transactions accounting for 75% of total transactions.
- Operating cash flow increased by 27.7% compared to the same period last year, driven by efficient cost management and working capital management.
Negative Points
- Revenue remained flat year-on-year, impacted by the closure of 13 stores and underperformance in the United States.
- Same-store sales growth was flat, with KFC and U.S. operations underperforming, particularly due to a 12% decline in the U.S.
- The closure of high-revenue stores, including three Frango Assado and two U.S. stores, negatively impacted overall revenue.
- The U.S. operations faced challenges with longer-than-expected maturation curves for new stores and a tough market environment.
- Leverage remains a concern, with net debt increasing by 2% to BRL351 million, and the company maintaining a leverage ratio of 2.3x net debt/EBITDA.
Q & A Highlights
Q: Can you provide more details on the investments currently underway?
A: Alexandre de Jesus Santoro, CEO: IMC is a multi-brand platform, and part of our strategy involves periodically assessing our portfolio. We've invested in regions like Central America, Panama, Colombia, Brazil, and the USA. We continue to explore opportunities that align with our vision and add value to the company.
Q: Is there a forecast for when IMC will pay dividends to shareholders?
A: Alexandre de Jesus Santoro, CEO: Currently, our focus is on growth and expanding our iconic brands. We believe investing in brand expansion offers the best return for shareholders. Our strategy is to deleverage the company and ensure further growth through high-return businesses.
Q: What is the company's target leverage in the mid and long term?
A: Alexandre de Jesus Santoro, CEO: While our covenant limit is 3x, our operational target is to maintain leverage between 2x and 2.5x. This range allows us to grow sustainably without significant risk exposure, prioritizing financial discipline and cash preservation.
Q: Will there be a slowdown in expansion to focus on profitable operations?
A: Alexandre de Jesus Santoro, CEO: Our priority is optimizing existing operations and focusing on cash generation. While we will continue to expand, particularly through franchises, our strategy emphasizes disciplined growth and profitability.
Q: Can you explain the reversal of contingencies in other operational revenues?
A: Unidentified Company Representative: In Q2, we reversed provisions for contingencies from 2019 related to our Pizza Hut and KFC licenses, as they did not materialize. This quarter, there were no similar reversals impacting results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
