OAK BROOK, Ill., July 25, 2017 /PRNewswire/ -- McDonald's
Corporation today announced results for the second quarter ended
June 30, 2017.
"We're building a better McDonald's and more customers are
noticing," said McDonald's President and Chief Executive Officer
Steve Easterbrook. "Our
relentless commitment to running great restaurants and keeping the
customer at the center of everything we do is generating
broad-based strength and momentum across our entire business.
For the quarter, we delivered our strongest global comparable
sales and guest count results in more than five years. We're
now introducing our Velocity Growth Plan accelerators in more
restaurants around the world, bringing meaningful benefits to more
customers through digital, delivery and our Experience of the
Future."
Second quarter highlights:
- Global comparable sales increased 6.6%, reflecting positive
guest counts in all segments
- Consolidated revenues decreased 3% (2% in constant currencies),
due to the impact of the Company's strategic refranchising
initiative
- Systemwide sales increased 8% in constant currencies, due to
strong comparable sales performance and restaurant expansion
- Consolidated operating income increased 24% (26% in constant
currencies), which included a benefit from the prior year's
strategic charges of approximately $230
million
- Diluted earnings per share of $1.70 increased 36% (38% in constant currencies).
Excluding the impact of the current quarter and prior year
strategic charges of $0.03 and
$0.20 per share, respectively,
diluted earnings per share increased 19% (21% in constant
currencies)
- Returned $1.8 billion to
shareholders through share repurchases and dividends
In the U.S., second quarter comparable sales increased 3.9%,
reflecting the national cold beverage value promotion and the
launch of the Signature Crafted premium sandwich platform. The U.S.
continues to build momentum as it executes strategies to enhance
convenience, strengthen value and innovate around the menu to bring
more customers to McDonald's more often. Operating income for the
quarter increased 5%, reflecting higher sales-driven franchised
margin dollars, G&A savings and higher gains on sales of
restaurants.
Comparable sales for the International Lead segment increased
6.3% for the quarter, led by continued momentum in the U.K., strong
performance in Canada and
Germany and positive results
across all other markets. The segment's operating income increased
8% (13% in constant currencies), fueled primarily by sales-driven
improvements in franchised margin dollars.
In the High Growth segment, second quarter comparable sales
increased 7.0%, led by strong performance in China and positive results across the entire
segment. The segment's operating income rose 28% (28% in constant
currencies), with about half of the increase resulting from lower
depreciation expense due to the accounting treatment related to the
pending sale of the China and
Hong Kong businesses.
In the Foundational Markets & Corporate segment, second
quarter comparable sales rose 13.0% and operating income increased
significantly, led by very strong performance in Japan as well as strong results across the
segment's other geographic regions. The segment also benefited from
comparison to the prior year's strategic charges.
Steve Easterbrook concluded,
"Whilst we're encouraged by our results from the first half of
2017, we're not complacent. Today, we're acting like a
leadership brand, taking on new challenges and opportunities and
moving with a greater sense of purpose and urgency. We're
building on our momentum, leveraging our size and scale and
executing with greater precision against our priorities to retain,
regain and convert customers by giving them even more reasons to
visit and enjoy McDonald's. I'm confident that we're on the
right path to continue positively impacting sales, guest traffic
and customer satisfaction as we work to bring the biggest benefit
to the most people in the shortest possible time."
KEY HIGHLIGHTS -
CONSOLIDATED
|
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
|
Inc/
(Dec)
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
2017
|
|
2016
|
|
Inc/
(Dec)
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
Revenues
|
$
|
6,049.7
|
|
$
|
6,265.0
|
|
(3)%
|
|
(2)%
|
|
$
|
11,725.6
|
|
$
|
12,168.9
|
|
(4)%
|
|
(3)%
|
Operating
income
|
2,295.1
|
|
1,857.9
|
|
24
|
|
26
|
|
4,329.1
|
|
3,638.2
|
|
19
|
|
21
|
Net income
|
1,395.1
|
|
1,092.9
|
|
28
|
|
30
|
|
2,609.9
|
|
2,217.7
|
|
18
|
|
20
|
Earnings per
share-diluted
|
$
|
1.70
|
|
$
|
1.25
|
|
36%
|
|
38%
|
|
$
|
3.17
|
|
$
|
2.51
|
|
26%
|
|
29%
|
Results for the quarter and six months reflected stronger
operating performance and G&A savings across all segments and
improved performance in Japan.
Both periods also benefited from lower depreciation expense,
primarily in China and
Hong Kong, that in accordance with
Held for Sale accounting rules, ceased recording depreciation.
Additionally, the six months benefited from a gain on the strategic
sale of a restaurant property in the U.S.
Results for both periods also benefited from comparison to the
prior year's strategic charges of approximately $230 million, consisting primarily of non-cash
impairment charges related to the Company's ongoing refranchising
initiatives, as well as the decision to relocate the Company's
headquarters. Excluding the impact of the current quarter and prior
year strategic charges, diluted earnings per share increased 19%
(21% in constant currencies) for the quarter, and 19% (20% in
constant currencies) for the six months.
Foreign currency translation had a negative impact of
$0.03 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.
Systemwide sales include sales at all restaurants, whether
operated by the Company or by franchisees. While franchised sales
are not recorded as revenues by the Company, management believes
the information is important in understanding the Company's
financial performance, because these sales are the basis on which
the Company calculates and records franchised revenues and are
indicative of the financial health of the franchisee base.
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 and six months
ended June 30, 2017.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 10:00 a.m. (Central Time) on July 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.
McDonald's plans to release third quarter results before the
market opens on October 24, 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 37,000 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 July 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
June 30,
|
2017
|
|
2016
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
3,569.6
|
|
$
|
3,916.6
|
|
$
|
(347.0)
|
|
(9)%
|
Revenues from
franchised restaurants
|
2,480.1
|
|
2,348.4
|
|
131.7
|
|
6
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,049.7
|
|
6,265.0
|
|
(215.3)
|
|
(3)
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
2,903.3
|
|
3,248.1
|
|
(344.8)
|
|
(11)
|
Franchised
restaurants-occupancy expenses
|
438.0
|
|
430.9
|
|
7.1
|
|
2
|
Selling,
general & administrative expenses
|
525.4
|
|
596.1
|
|
(70.7)
|
|
(12)
|
Other operating
(income) expense, net
|
(112.1)
|
|
132.0
|
|
(244.1)
|
|
n/m
|
Total operating costs
and expenses
|
3,754.6
|
|
4,407.1
|
|
(652.5)
|
|
(15)
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,295.1
|
|
1,857.9
|
|
437.2
|
|
24
|
|
|
|
|
|
|
|
|
Interest
expense
|
230.9
|
|
223.9
|
|
7.0
|
|
3
|
Nonoperating (income)
expense, net
|
2.8
|
|
(16.2)
|
|
19.0
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
2,061.4
|
|
1,650.2
|
|
411.2
|
|
25
|
Provision for income
taxes
|
666.3
|
|
557.3
|
|
109.0
|
|
20
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,395.1
|
|
$
|
1,092.9
|
|
$
|
302.2
|
|
28%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.70
|
|
$
|
1.25
|
|
$
|
0.45
|
|
36%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
819.2
|
|
871.2
|
|
(52.0)
|
|
(6)%
|
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Six Months Ended
June 30,
|
2017
|
|
2016
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
6,981.5
|
|
$
|
7,670.1
|
|
$
|
(688.6)
|
|
(9)%
|
Revenues from
franchised restaurants
|
4,744.1
|
|
4,498.8
|
|
245.3
|
|
5
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
11,725.6
|
|
12,168.9
|
|
(443.3)
|
|
(4)
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
5,719.7
|
|
6,423.4
|
|
(703.7)
|
|
(11)
|
Franchised
restaurants-occupancy expenses
|
868.1
|
|
846.0
|
|
22.1
|
|
3
|
Selling,
general & administrative expenses
|
1,046.7
|
|
1,174.1
|
|
(127.4)
|
|
(11)
|
Other operating
(income) expense, net
|
(238.0)
|
|
87.2
|
|
(325.2)
|
|
n/m
|
Total operating costs
and expenses
|
7,396.5
|
|
8,530.7
|
|
(1,134.2)
|
|
(13)
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
4,329.1
|
|
3,638.2
|
|
690.9
|
|
19
|
|
|
|
|
|
|
|
|
Interest
expense
|
449.5
|
|
442.2
|
|
7.3
|
|
2
|
Nonoperating (income)
expense, net
|
10.7
|
|
(30.6)
|
|
41.3
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
3,868.9
|
|
3,226.6
|
|
642.3
|
|
20
|
Provision for income
taxes
|
1,259.0
|
|
1,008.9
|
|
250.1
|
|
25
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
2,609.9
|
|
$
|
2,217.7
|
|
$
|
392.2
|
|
18%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
3.17
|
|
$
|
2.51
|
|
$
|
0.66
|
|
26%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
822.3
|
|
883.8
|
|
(61.5)
|
|
(7)%
|
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SOURCE McDonald's Corporation