OAK BROOK, Ill., July 26, 2016 /PRNewswire/ -- McDonald's
Corporation today announced results for the second quarter ended
June 30, 2016.
"At McDonald's, we are focused on meeting our customers' needs
for high quality, affordable food and beverage choices," said
McDonald's President and Chief Executive Officer Steve Easterbrook. "Our second quarter
performance, which marks our fourth consecutive quarter of positive
comparable sales across all business segments, provides a clear
indication that customers are responding to the steps we're taking
to deliver the menu and value options they want at the convenience
of McDonald's. We're making steady progress on transforming our
business to satisfy the needs of our customers around the world,
despite a challenging environment in several key markets."
Second quarter highlights:
- Global comparable sales increased 3.1%, reflecting positive
comparable sales in all segments
- Due to the impact of refranchising, consolidated revenues
decreased 4% (1% in constant currencies)
- Consolidated operating income was relatively flat (increased 3%
in constant currencies), which included approximately $230 million of previously announced strategic
charges, consisting primarily of non-cash impairment charges
related to the Company's ongoing refranchising and G&A
initiatives, as well as the decision to relocate the Company's
headquarters
- Diluted earnings per share of $1.25, decreased 1% (increased 1% in constant
currencies), which included strategic charges totaling $0.20 per share. Excluding the impact of these
strategic charges and prior year restructuring charges of
$0.04 per share, diluted earnings per
share increased 13% in constant currencies
- Returned $4.1 billion to
shareholders through share repurchases and dividends. This brings
the cumulative return to shareholders to $24.4 billion against our targeted return of
about $30 billion for the three-year
period ending 2016
In the U.S., second quarter comparable sales increased 1.8%,
with continued contributions from All Day Breakfast and McPick 2
despite softening industry growth during the quarter. Operating
income for the quarter rose 10%, reflecting higher sales-driven
franchised margins and higher gains from restaurant refranchising.
McDonald's U.S. begins the second half of the year focused on
adding more breakfast sandwich favorites - Biscuits, McMuffins and
McGriddles - to the All Day Breakfast menu this fall. This platform
extension will be complemented by initiatives around core menu
enhancements and restaurant operations designed to deliver an
outstanding customer experience.
Comparable sales for the International Lead segment increased
2.6% for the quarter, led by positive performance in the U.K.,
Canada and Australia, and slightly positive results in
Germany. Operating income for the
quarter increased 4% (7% in constant currencies), driven by
improved franchised margins.
In the High Growth segment, second quarter comparable sales
increased 1.6%, led by positive comparable sales performance in
China and Russia, along with solid performance across
various other markets. The segment's operating income rose 25% (32%
in constant currencies) fueled by improved results in China.
Second quarter comparable sales rose 7.7% in the Foundational
markets, reflecting very strong performance in Japan and many other markets. For the segment,
operating income for the quarter declined due to the impact of
strategic charges associated with the Company's ongoing
refranchising and G&A initiatives.
Steve Easterbrook concluded,
"Enhancing the customer experience, running great restaurants and
strengthening our competitive position to become a modern
progressive burger company takes discipline and dedication. I am
confident in our System's ability to stay the course and execute
our turnaround plan to achieve our goals. We are on the right path
to changing the way customers think about McDonald's by getting
closer to the communities we serve and harnessing one of our
System's key competitive strengths - the entrepreneurial spirit of
our dedicated franchisees - as we lay the foundation for future
growth."
KEY HIGHLIGHTS -
CONSOLIDATED
|
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
|
|
Inc/ (Dec)
Excluding Currency Translation
|
|
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
|
|
Inc/ (Dec)
Excluding Currency Translation
|
Revenues
|
$
|
6,265.0
|
|
|
$
|
6,497.7
|
|
|
(4)%
|
|
|
(1)%
|
|
|
$
|
12,168.9
|
|
|
$
|
12,456.6
|
|
|
(2)%
|
|
|
1%
|
Operating
income
|
1,857.9
|
|
|
1,849.3
|
|
|
0
|
|
|
3
|
|
|
3,638.2
|
|
|
3,234.8
|
|
|
12
|
|
|
16
|
Net income
|
1,092.9
|
|
|
1,202.4
|
|
|
(9)
|
|
|
(8)
|
|
|
2,217.7
|
|
|
2,013.9
|
|
|
10
|
|
|
13
|
Earnings per
share-diluted
|
$
|
1.25
|
|
|
$
|
1.26
|
|
|
(1)%
|
|
|
1%
|
|
|
$
|
2.51
|
|
|
$
|
2.09
|
|
|
20%
|
|
|
23%
|
Results for the quarter and six months benefited from stronger
operating performance and higher gains on sales of restaurant
businesses. Both periods were impacted by approximately
$230 million of strategic charges,
consisting primarily of non-cash impairment charges incurred in the
quarter related to the Company's ongoing refranchising and G&A
initiatives, as well as the decision to relocate the Company's
headquarters.
Results also benefited from comparison to the prior year's
charges of $45 million in the second
quarter 2015 and $240 million for the
six months 2015. Excluding the impact of the current and prior year
charges, diluted earnings per share increased 13% in constant
currencies for the quarter, with no significant impact for the six
months. This supplemental information is provided to help investors
understand the impact of the current and prior year charges on the
Company's results.
Foreign currency translation had a negative impact of
$0.02 and $0.06 on diluted earnings per share for the
quarter and six months, respectively.
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED
THROUGHOUT THIS RELEASE
Comparable sales represent sales at all restaurants and
comparable guest counts represent the number of transactions at all
restaurants, whether operated by the Company or by franchisees, in
operation at least thirteen months including those temporarily
closed. Some of the reasons restaurants may be temporarily closed
include reimaging or remodeling, rebuilding, road construction and
natural disasters. Comparable sales exclude the impact of currency
translation. Comparable sales are driven by changes in guest counts
and average check, which is affected by changes in pricing and
product mix. Typically, pricing has a greater impact on average
check than product mix. Management reviews the increase or decrease
in comparable sales and comparable guest counts compared with the
same period in the prior year to assess business trends.
Information in constant currency is calculated by translating
current year results at prior year average exchange rates.
Management reviews and analyzes business results excluding the
effect of foreign currency translation and bases incentive
compensation plans on these results because they believe this
better represents the Company's underlying business trends.
RELATED COMMUNICATIONS
This press release should be read in conjunction with Exhibit
99.2 in the Company's Form 8-K filing for supplemental information
related to the Company's results for the quarter ended
June 30, 2016.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 10:00 a.m. (Central Time) on July 26, 2016. A link to the live webcast will be
available at www.investor.mcdonalds.com. There will also be an
archived webcast available for a limited time.
McDonald's plans to release third quarter results before the
market opens on October 21, 2016 and
will host an investor webcast. This webcast will be broadcast live
and available for replay for a limited time thereafter at
www.investor.mcdonalds.com.
ABOUT McDONALD'S
McDonald's is the world's leading global foodservice retailer
with over 36,000 locations in over 100 countries. More than 80% of
McDonald's restaurants worldwide are owned and operated by
independent local business men and women.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements, which
reflect management's expectations regarding future events and
operating performance and speak only as of the date hereof. These
forward-looking statements involve a number of risks and
uncertainties. The factors that could cause actual results to
differ materially from our expectations are detailed in the
Company's filings with the Securities and Exchange Commission, such
as its annual and quarterly reports and current reports on Form
8-K. The Company undertakes no obligation to update such
forward-looking statements, except as may otherwise be required by
law.
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Quarters Ended
June 30,
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
3,916.6
|
|
|
$
|
4,261.1
|
|
|
$
|
(344.5)
|
|
|
(8)%
|
|
Revenues from
franchised restaurants
|
2,348.4
|
|
|
2,236.6
|
|
|
111.8
|
|
|
5
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,265.0
|
|
|
6,497.7
|
|
|
(232.7)
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
3,248.1
|
|
|
3,596.3
|
|
|
(348.2)
|
|
|
(10)
|
|
Franchised
restaurants—occupancy expenses
|
430.9
|
|
|
411.0
|
|
|
19.9
|
|
|
5
|
|
Selling,
general & administrative expenses
|
596.1
|
|
|
592.4
|
|
|
3.7
|
|
|
1
|
|
Other operating
(income) expense, net
|
132.0
|
|
|
48.7
|
|
|
83.3
|
|
|
n/m
|
|
Total operating costs
and expenses
|
4,407.1
|
|
|
4,648.4
|
|
|
(241.3)
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
1,857.9
|
|
|
1,849.3
|
|
|
8.6
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
223.9
|
|
|
149.2
|
|
|
74.7
|
|
|
50
|
|
Nonoperating (income)
expense, net
|
(16.2)
|
|
|
(12.3)
|
|
|
(3.9)
|
|
|
(33)
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
1,650.2
|
|
|
1,712.4
|
|
|
(62.2)
|
|
|
(4)
|
|
Provision for income
taxes
|
557.3
|
|
|
510.0
|
|
|
47.3
|
|
|
9
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,092.9
|
|
|
$
|
1,202.4
|
|
|
$
|
(109.5)
|
|
|
(9)%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.25
|
|
|
$
|
1.26
|
|
|
$
|
(0.01)
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
871.2
|
|
|
957.6
|
|
|
(86.4)
|
|
|
(9)%
|
|
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Six Months Ended
June 30,
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
7,670.1
|
|
|
$
|
8,175.2
|
|
|
$
|
(505.1)
|
|
|
(6)%
|
|
Revenues from
franchised restaurants
|
4,498.8
|
|
|
4,281.4
|
|
|
217.4
|
|
|
5
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
12,168.9
|
|
|
12,456.6
|
|
|
(287.7)
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
6,423.4
|
|
|
6,950.6
|
|
|
(527.2)
|
|
|
(8)
|
|
Franchised
restaurants—occupancy expenses
|
846.0
|
|
|
814.6
|
|
|
31.4
|
|
|
4
|
|
Selling,
general & administrative expenses
|
1,174.1
|
|
|
1,175.2
|
|
|
(1.1)
|
|
|
0
|
|
Other operating
(income) expense, net
|
87.2
|
|
|
281.4
|
|
|
(194.2)
|
|
|
(69)
|
|
Total operating costs
and expenses
|
8,530.7
|
|
|
9,221.8
|
|
|
(691.1)
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
3,638.2
|
|
|
3,234.8
|
|
|
403.4
|
|
|
12
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
442.2
|
|
|
296.5
|
|
|
145.7
|
|
|
49
|
|
Nonoperating (income)
expense, net
|
(30.6)
|
|
|
(28.2)
|
|
|
(2.4)
|
|
|
(9)
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
3,226.6
|
|
|
2,966.5
|
|
|
260.1
|
|
|
9
|
|
Provision for income
taxes
|
1,008.9
|
|
|
952.6
|
|
|
56.3
|
|
|
6
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
2,217.7
|
|
|
$
|
2,013.9
|
|
|
$
|
203.8
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
2.51
|
|
|
$
|
2.09
|
|
|
$
|
0.42
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
883.8
|
|
|
961.7
|
|
|
(77.9)
|
|
|
(8)%
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mcdonalds-reports-second-quarter-2016-results-300303538.html
SOURCE McDonald's Corporation