Release Date: March 27, 2025
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) reported a 14% growth in adjusted EBITDA with a margin of 3.6%, marking the fourth consecutive year of growth.
- The company successfully reduced its G&A expenses by 8.3% compared to 2023, contributing to improved financial performance.
- A joint venture was created to accelerate KFC's growth in Brazil, involving a strategic partner with extensive experience and financial strength.
- Frango Assado network saw significant profitability improvements, with a focus on enhancing customer experience and expanding digital sales.
- The company maintained a controlled level of indebtedness with a leverage ratio of 2.4 times net debt, indicating sound financial management.
Negative Points
- Revenues for 2024 were below expectations, with a 2% growth impacted by store closures and supply chain issues.
- The US operations experienced a 5% revenue decline due to store closures and challenging market conditions.
- Same-store sales growth was limited to 3%, affected by selective promotions and a drop in delivery sales.
- The company faced operational challenges with KFC's rapid growth, impacting same-store sales performance.
- Adverse market conditions in the US, including the impact of non-recurring events, negatively affected sales performance.
Q & A Highlights
Q: Emerson, an investor, asked about the company's plans for dividend payouts given the cash generation and debt situation.
A: Alexandre Santoro, CEO, explained that while the company generates cash, it also has debt obligations and CapEx needs. The recent KFC joint venture will help reduce debt and financial expenses, enhancing IMC's financial foundation. The focus remains on capital allocation for higher returns rather than immediate dividend payouts.
Q: Ricardo inquired about the expansion plans for Frango Assado, including store size and location priorities.
A: Santoro highlighted the potential for Frango Assado, particularly in São Paulo and major highways. The strategy focuses on large stores in key areas, prioritizing quality and efficiency over the number of stores. The goal is to double revenue and profit by opening strategically located large stores.
Q: Bruno asked about the timeline for the KFC joint venture with Clave Capital.
A: Santoro stated that the closing is expected at the beginning of the third quarter. The company will receive $12.5 million in cash initially, with an additional $22.5 million due in 2027. The funds will be used to reduce debt and leverage.
Q: Matteus questioned whether there are plans to introduce new brands to Brazil and the possibility of a share buyback.
A: Santoro clarified that there are no current plans to introduce new brands. The focus is on maximizing the potential of existing brands. A share buyback is not being considered as the priority is reducing leverage and debt.
Q: Eduardo Timoteo from Titan Capital asked about the JV's impact on store openings and back-office services.
A: Santoro explained that the JV will maintain a similar growth curve for store openings, with a shift towards street and drive-through locations. IMC will provide back-office services like procurement and accounting, which will be reimbursed by the JV. The dilution impact will be minimal as the business grows.
Q: Luis asked about strategies to enhance margins and measures being taken.
A: Santoro emphasized increasing store traffic and consumer frequency through new product offerings and promotions. Operational leverage, cost control, and product innovation are key strategies across brands like KFC and Pizza Hut to improve margins without compromising quality.
Q: Roberto Duke from ABC inquired about the JV's capital contributions and CapEx implications.
A: Santoro confirmed that the new partner will contribute capital for growth, reducing IMC's CapEx needs. Historically, KFC accounted for a significant portion of CapEx, which will now be managed by the JV, allowing IMC to focus on other brands.
Q: Leo from BC Capital asked about the EBITDA impact and future dilutions in the JV.
A: Santoro noted that the EBITDA impact will be less than 10% post-IFRS adjustments. Future dilutions will depend on capital contributions, but the economic value of IMC's stake is expected to grow as the JV expands.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
