Arcos Dorados Holdings Inc. - Q2 2026 Financial Summary
Business Context and Reporting Period
This Form 6-K filing reports unaudited financial results for Arcos Dorados Holdings Inc. (NYSE: ARCO), the world's largest independent McDonald's franchisee, for the three and six months ended June 30, 2026. The report was issued on August 13, 2026. The Company operates over 2,500 restaurants across 21 Latin American and Caribbean countries.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | Change (YoY) |
|---|---|---|---|
| Total Revenues | $1.31 billion | $1.14 billion | +14.3% |
| Systemwide Comparable Sales | 15.3% growth | 12.1% growth | N/A |
| Adjusted EBITDA | $126.8 million | $110.1 million | +15.2% |
| Adjusted EBITDA Margin | 9.7% | 9.6% | +10 bps |
| Net Income (Attributable to AD) | $45.0 million | $22.6 million | +99.3% |
| Diluted EPS | $0.22 | $0.11 | +100% |
| Net Income Margin | 3.4% | 2.0% | +150 bps |
| Adjusted Free Cash Flow (LTM) | $143.4 million | $16.1 million | Significant Increase |
Liquidity and Debt: As of June 30, 2026, Total Financial Debt was $962.5 million, and Net Financial Debt was $692.5 million. The Net Financial Debt to LTM Adjusted EBITDA ratio improved to 1.1x from 1.2x at year-end 2025. Cash and cash equivalents totaled $270.0 million.
Material Changes vs. Prior Period
- Revenue Growth: Total revenues reached a record $1.3 billion, driven by a 15.3% increase in systemwide comparable sales. This was supported by the best guest volume performance in six quarters and higher average checks in Brazil and SLAD (South Latin America and Dominican Republic).
- Profitability Expansion: Adjusted EBITDA margin expanded 10 basis points year-over-year (70 basis points excluding a one-time gain in Q2 2025). Net income margin expanded 150 basis points, primarily due to lower effective tax rates, improved foreign currency exchange results, and reduced net interest expense.
- Digital and Loyalty: Digital channel sales rose approximately 25%, representing 66% of systemwide sales. The Loyalty Program grew to 34.3 million registered members.
- Divisional Performance: Brazil revenues grew 25.3% (11.7% constant currency). SLAD revenues grew 7.0% reported but 38.1% on a constant currency basis. NOLAD (North Latin America and Dominican Republic) revenues grew 9.3% reported but only 2.4% constant currency.
Outlook, Commentary, and Risks
Management Commentary: CEO Luis Raganato highlighted improved business model resilience and monetization of market share. The exclusive global sponsorship of the FIFA World Cup drove significant marketing activations and incremental sales. Management noted that digital sales penetration and identified sales were at record highs.
Recent Developments: On July 16, 2026, the Company redeemed all remaining 2029 Sustainability-Linked Senior Notes at 103.063% plus accrued interest. The Company also published its 2025 Social Impact and Sustainable Development Report.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers regarding business prospects, consumer dynamics, and economic conditions in Latin America. The Company faces risks related to currency fluctuations, as evidenced by the significant variance between reported and constant currency growth in certain divisions.
Investor Verification Checklist
- Currency Impact: Verify the divergence between reported growth and constant currency growth, particularly in the SLAD and NOLAD divisions, to assess underlying operational performance versus exchange rate effects.
- One-Time Items: Confirm the exclusion of the $6.9 million gain from sub-franchisee transactions in Mexico recorded in Q2 2025 when analyzing year-over-year Adjusted EBITDA trends.
- Debt Structure: Review the impact of the July 2026 redemption of 2029 Senior Notes on future interest expense and liquidity projections.
- Digital Sustainability: Assess the sustainability of the 66% digital sales penetration rate and the associated cost structure for delivery and self-order kiosks.
- Margin Drivers: Analyze the specific components of the 10 basis point margin expansion to determine if lower Food & Paper costs are sustainable or temporary.