OAK BROOK, Ill., April 25, 2017 /PRNewswire/ -- McDonald's
Corporation today announced results for the first quarter ended
March 31, 2017.
"Our efforts to build a better McDonald's are yielding
meaningful results with continued positive momentum and a strong
start to 2017 that includes positive comparable sales across all
segments, higher global guest counts and enhanced profitability,"
said McDonald's President and Chief Executive Officer Steve Easterbrook. "There's a sense of urgency
across the business as we take actions to retain existing
customers, regain lapsed customers and convert casual customers to
committed customers. We're continuing to build a more personalized
and enjoyable visit, which delights customers with the taste and
quality of our food and offers the highest level of convenience, in
order to gain traffic in an increasingly competitive industry and
deliver profitable growth for our System and shareholders."
First quarter highlights:
- Global comparable sales increased 4.0%, reflecting positive
comparable sales in all segments while up against an extra day in
2016 due to leap year
- Consolidated revenues decreased 4% (3% in constant currencies),
due to the impact of refranchising
- Consolidated operating income increased 14% (16% in constant
currencies)
- Diluted earnings per share of $1.47 increased 18% (19% in constant
currencies)
- Returned $1.6 billion to
shareholders through share repurchases and dividends, in connection
with our target to return between $22 and
$24 billion to shareholders for the three-year period ending
2019
In the U.S., first quarter comparable sales increased 1.7%,
building upon strong prior year results that benefited from the
launch of All Day Breakfast. The U.S. continues to strengthen its
foundation as it executes strategic menu, value and convenience
initiatives, with first quarter performance benefiting from the
expansion of All Day Breakfast offerings, along with the Big Mac
and beverage value promotions. Operating income for the quarter
increased 13%, reflecting savings from the Company's recent G&A
and refranchising initiatives, a gain from the strategic sale of a
restaurant property and higher franchised margin dollars. The U.S.
continues to focus its efforts on driving guest count growth.
Comparable sales for the International Lead segment increased
2.8% for the quarter, primarily driven by continued momentum in the
U.K. and Canada's successful
launch of All Day Breakfast. The segment's operating income
increased 2% (6% in constant currencies), fueled by sales-driven
improvements in franchised margin dollars across most markets.
In the High Growth segment, first quarter comparable sales
increased 3.8%, led by strong performance in China and positive results across the entire
segment. The segment's operating income rose 36% (38% in constant
currencies), with about half of the increase resulting from lower
depreciation expense due to the accounting treatment of the pending
sale of the China and Hong Kong businesses. Results also benefited
from prior year VAT reform in China.
In the Foundational Markets & Corporate segment, first
quarter comparable sales rose 10.7% and operating income increased
significantly, led by very strong performance in Japan as well as strong results across the
segment's other geographic regions.
Steve Easterbrook concluded,
"Today, we're harnessing the strong execution of our fundamental
business drivers, a sharp focus on our customers, the benefits of
right-sizing our organization and the contributions of the talented
franchisees, suppliers and employees to seize the opportunities
before us. We're challenging ourselves to identify and pursue
initiatives that can bring the biggest benefit to the most
customers in the shortest possible time. I'm confident that we're
on the right path and well-positioned to unlock incremental growth
and deliver against our Velocity Growth Plan for 2017 and
beyond."
KEY HIGHLIGHTS -
CONSOLIDATED
|
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
March 31,
|
2017
|
|
|
2016
|
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
Revenues
|
$
|
5,675.9
|
|
|
$
|
5,903.9
|
|
|
(4)%
|
|
|
(3)%
|
|
Operating
income
|
2,034.0
|
|
|
1,780.3
|
|
|
14
|
|
|
16
|
|
Net income
|
1,214.8
|
|
|
1,124.8
|
|
|
8
|
|
|
10
|
|
Earnings per
share-diluted
|
$
|
1.47
|
|
|
$
|
1.25
|
|
|
18%
|
|
|
19%
|
|
Results for the quarter benefited from stronger operating
performance and G&A savings across all segments, a gain from
the strategic sale of a restaurant property in the U.S. and
improved performance in Japan. The
quarter also benefited from lower depreciation expense, primarily
in China and Hong Kong, that in accordance with accounting
rules, met Held for Sale criteria and ceased recording
depreciation.
Foreign currency translation had a negative impact of
$0.02 on diluted earnings per share
for the quarter.
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
March 31, 2017.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 10:00 a.m. (Central Time) on April 25, 2017. 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 thereafter.
UPCOMING COMMUNICATIONS
McDonald's Annual Shareholders' Meeting will be webcast live on
May 24, 2017 at 8:30 a.m. (Central Time) on
www.investor.mcdonalds.com. An archived replay of the meeting will
be available for a limited time.
Steve Easterbrook, President and
Chief Executive Officer, and Kevin
Ozan, Chief Financial Officer, will participate in
Bernstein's Strategic Decisions Conference at 8:00 a.m. (Eastern Time) on May 31, 2017. This presentation will be webcast
live and available for replay for a limited time thereafter at
www.investor.mcdonalds.com.
Kevin Ozan will participate in
the RBC Consumer & Retail Conference at 8:00 a.m. (Eastern Time) on June 1, 2017. This presentation will be webcast
live and available for replay for a limited time thereafter at
www.investor.mcdonalds.com.
McDonald's plans to release second quarter results before the
market opens on July 25, 2017 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. Approximately 85%
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,
including the risk factors discussed in Exhibit 99.2 in the
Company's Form 8-K filing on April 25,
2017. 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 (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Quarters Ended
March 31,
|
2017
|
|
|
2016
|
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
3,411.9
|
|
|
$
|
3,753.5
|
|
|
$
|
(341.6)
|
|
|
(9)%
|
|
Revenues from
franchised restaurants
|
2,264.0
|
|
|
2,150.4
|
|
|
113.6
|
|
|
5
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
5,675.9
|
|
|
5,903.9
|
|
|
(228.0)
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
2,816.4
|
|
|
3,175.3
|
|
|
(358.9)
|
|
|
(11)
|
|
Franchised
restaurants-occupancy expenses
|
430.1
|
|
|
415.1
|
|
|
15.0
|
|
|
4
|
|
Selling,
general & administrative expenses
|
521.3
|
|
|
578.0
|
|
|
(56.7)
|
|
|
(10)
|
|
Other operating
(income) expense, net
|
(125.9)
|
|
|
(44.8)
|
|
|
(81.1)
|
|
|
n/m
|
|
Total operating costs
and expenses
|
3,641.9
|
|
|
4,123.6
|
|
|
(481.7)
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,034.0
|
|
|
1,780.3
|
|
|
253.7
|
|
|
14
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
218.6
|
|
|
218.3
|
|
|
0.3
|
|
|
0
|
|
Nonoperating (income)
expense, net
|
7.9
|
|
|
(14.4)
|
|
|
22.3
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
1,807.5
|
|
|
1,576.4
|
|
|
231.1
|
|
|
15
|
|
Provision for income
taxes
|
592.7
|
|
|
451.6
|
|
|
141.1
|
|
|
31
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,214.8
|
|
|
$
|
1,124.8
|
|
|
$
|
90.0
|
|
|
8%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.47
|
|
|
$
|
1.25
|
|
|
$
|
0.22
|
|
|
18%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
825.2
|
|
|
896.3
|
|
|
(71.1)
|
|
|
(8)%
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mcdonalds-reports-first-quarter-2017-results-300444515.html
SOURCE McDonald's Corporation