CHICAGO, Oct. 22, 2019 /PRNewswire/ -- McDonald's
Corporation today announced results for the third quarter ended
September 30, 2019.
"Our third quarter performance was strong, and broad-based
momentum continued with our 17th consecutive
quarter of global comparable sales growth," said McDonald's
President and Chief Executive Officer Steve
Easterbrook. "Globally, our customers are rewarding our
commitment of running better restaurants and executing our Velocity
Growth Plan by visiting more often."
Third quarter highlights:
- Strong, global comparable sales of 5.9% demonstrated
broad-based strength with the International Operated segment
increase of 5.6%, the U.S. increase of 4.8%, and the International
Developmental Licensed segment increase of 8.1%.
- Consolidated revenues increased $61.2
million or 1% (3% in constant currencies) to $5.4 billion.
- Systemwide sales increased $1.3
billion or 5% (7% in constant currencies) to $26.0 billion.*
- GAAP diluted earnings per share of $2.11 was relatively flat with the prior year
(increased 2% in constant currencies).**
- The Company returned $2.4 billion
to shareholders through share repurchases and dividends. This
brings the cumulative return to shareholders to $22.5 billion against our targeted return of
about $25 billion for the three-year
period ending 2019. In addition, the Company announced an 8%
increase in its quarterly dividend to $1.25 per share beginning in the third quarter
2019.
Steve Easterbrook concluded, "As
we work to build an even better McDonald's experience for customers
by providing convenience on their terms, we continue to embrace the
culture of innovation that helped launch our company over 60 years
ago. That culture is rooted in a mission to provide delicious food,
served with hospitality, to over 65 million customers who honour us
with their business every day."
*
|
Refer to page 3 for a
definition of Systemwide sales.
|
|
|
**
|
Refer to page 2 for
additional details.
|
|
|
KEY HIGHLIGHTS -
CONSOLIDATED
Dollars in millions,
except per share data
|
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
Inc/
(Dec)
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
2019
|
|
2018
|
|
Inc/
(Dec)
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
Revenues
|
$
|
5,430.6
|
|
$
|
5,369.4
|
|
1%
|
|
3%
|
|
$
|
15,727.5
|
|
$
|
15,862.2
|
|
(1)%
|
|
3
|
Operating
income
|
2,409.3
|
|
2,417.7
|
|
0
|
|
2
|
|
6,777.2
|
|
6,823.1
|
|
(1)
|
|
3
|
Net income
|
1,607.9
|
|
1,637.3
|
|
(2)
|
|
0
|
|
4,453.2
|
|
4,509.0
|
|
(1)
|
|
2
|
Earnings per
share-diluted*
|
$
|
2.11
|
|
$
|
2.10
|
|
0%
|
|
2%
|
|
$
|
5.80
|
|
$
|
5.72
|
|
1%
|
|
5
|
|
|
|
*
See table below for additional
details.
|
|
Results for the quarter and nine months in constant currencies
reflected stronger operating performance primarily due to an
increase in sales-driven franchised margin dollars, partly offset
by lower gains on sales of restaurant businesses, mostly in the
U.S.
Results for the nine months 2019 included $80 million of pre-tax strategic charges, or
$0.07 per share, primarily related to
impairment associated with the purchase of our joint venture
partner's interest in the India Delhi market, partly offset by
gains on the sales of property at the former Corporate
headquarters. Results for 2018 reflected income tax costs
associated with adjustments to the provisional amounts recorded in
December 2017 under the Tax Act of
$47 million, or $0.06 per share, for the quarter and $99 million, or $0.12 per share, for the nine months. Results for
the nine months 2018 also included $94
million of pre-tax strategic restructuring charges, or
$0.09 per share.
Excluding the above items, net income for the quarter decreased
4% (3% in constant currencies) and diluted earnings per share
decreased 2% (1% in constant currencies), and for the nine months
net income decreased 4% (flat in constant currencies) and diluted
earnings per share decreased 1% (increased 2% in constant
currencies).
Foreign currency translation had a negative impact of
$0.03 and $0.19 on diluted earnings per share for the
quarter and nine months, respectively.
EARNINGS PER
SHARE-DILUTED RECONCILIATION
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
2018
|
|
Inc/
(Dec)
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
2019
|
|
2018
|
|
Inc/
(Dec)
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
GAAP earnings per
share-diluted
|
$
|
2.11
|
|
$
|
2.10
|
|
0%
|
|
2%
|
|
$
|
5.80
|
|
$
|
5.72
|
|
1%
|
|
5%
|
Income tax
costs
|
—
|
|
0.06
|
|
|
|
—
|
|
0.12
|
|
|
|
Strategic
charges
|
—
|
|
—
|
|
|
|
0.07
|
|
0.09
|
|
|
|
Non-GAAP earnings per
share-diluted
|
$
|
2.11
|
|
$
|
2.16
|
|
(2)%
|
|
(1)%
|
|
$
|
5.87
|
|
$
|
5.93
|
|
(1)%
|
|
2%
|
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 and sales from hyper-inflationary markets (currently,
only Venezuela). Management
generally identifies hyper-inflationary markets as those markets
whose cumulative inflation rate over a three-year period exceeds
100%. Management believes that these exclusions more accurately
reflect the underlying business trends. Comparable sales are driven
by changes in guest counts and average check, which is affected by
changes in pricing and 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. The
Company's revenues consist solely of sales by Company-operated
restaurants and fees from franchised restaurants operated by
conventional franchisees, developmental licensees and foreign
affiliates.
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, impairment and other
strategic charges and gains, as well as income tax provision
adjustments related to the Tax Act, and bases incentive
compensation plans on these results, because the Company believes
this better represents 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 nine months
ended September 30, 2019.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 10:00 a.m. (Central Time) on October 22,
2019. 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
For important news and information regarding McDonald's,
including the timing of future investor conferences and earnings
calls, visit the Investor Relations section of the Company's
Internet home page at www.investor.mcdonalds.com. McDonald's uses
this website as a primary channel for disclosing key information to
its investors, some of which may contain material and previously
non-public information.
ABOUT McDONALD'S
McDonald's is the world's leading global foodservice retailer
with over 38,000 locations in over 100 countries. Approximately 93%
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. 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 October 22, 2019. 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
September 30,
|
2019
|
|
2018
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
2,416.6
|
|
$
|
2,511.0
|
|
$
|
(94.4)
|
|
(4)%
|
Revenues from
franchised restaurants
|
3,014.0
|
|
2,858.4
|
|
155.6
|
|
5
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
5,430.6
|
|
5,369.4
|
|
61.2
|
|
1
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
1,967.7
|
|
2,047.9
|
|
(80.2)
|
|
(4)
|
Franchised
restaurants-occupancy expenses
|
559.5
|
|
499.4
|
|
60.1
|
|
12
|
Selling,
general & administrative expenses
|
543.6
|
|
515.2
|
|
28.4
|
|
6
|
Other operating
(income) expense, net
|
(49.5)
|
|
(110.8)
|
|
61.3
|
|
55
|
Total operating costs
and expenses
|
3,021.3
|
|
2,951.7
|
|
69.6
|
|
2
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,409.3
|
|
2,417.7
|
|
(8.4)
|
|
0
|
|
|
|
|
|
|
|
|
Interest
expense
|
280.6
|
|
250.1
|
|
30.5
|
|
12
|
Nonoperating (income)
expense, net
|
(23.5)
|
|
8.9
|
|
(32.4)
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
2,152.2
|
|
2,158.7
|
|
(6.5)
|
|
0
|
Provision for income
taxes
|
544.3
|
|
521.4
|
|
22.9
|
|
4
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,607.9
|
|
$
|
1,637.3
|
|
$
|
(29.4)
|
|
(2)%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
2.11
|
|
$
|
2.10
|
|
$
|
0.01
|
|
0%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
763.9
|
|
779.6
|
|
(15.7)
|
|
(2)%
|
n/m Not
meaningful
|
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Nine Months Ended
September 30,
|
2019
|
|
2018
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
7,057.5
|
|
$
|
7,641.5
|
|
$
|
(584.0)
|
|
(8)%
|
Revenues from
franchised restaurants
|
8,670.0
|
|
8,220.7
|
|
449.3
|
|
5
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
15,727.5
|
|
15,862.2
|
|
(134.7)
|
|
(1)
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
5,821.0
|
|
6,309.3
|
|
(488.3)
|
|
(8)
|
Franchised
restaurants-occupancy expenses
|
1,637.3
|
|
1,463.6
|
|
173.7
|
|
12
|
Selling,
general & administrative expenses
|
1,575.8
|
|
1,590.4
|
|
(14.6)
|
|
(1)
|
Other operating
(income) expense, net
|
(83.8)
|
|
(324.2)
|
|
240.4
|
|
74
|
Total operating costs
and expenses
|
8,950.3
|
|
9,039.1
|
|
(88.8)
|
|
(1)
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
6,777.2
|
|
6,823.1
|
|
(45.9)
|
|
(1)
|
|
|
|
|
|
|
|
|
Interest
expense
|
838.9
|
|
727.1
|
|
111.8
|
|
15
|
Nonoperating (income)
expense, net
|
(53.0)
|
|
31.3
|
|
(84.3)
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
5,991.3
|
|
6,064.7
|
|
(73.4)
|
|
(1)
|
Provision for income
taxes
|
1,538.1
|
|
1,555.7
|
|
(17.6)
|
|
(1)
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
4,453.2
|
|
$
|
4,509.0
|
|
$
|
(55.8)
|
|
(1)%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
5.80
|
|
$
|
5.72
|
|
$
|
0.08
|
|
1%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
768.1
|
|
788.5
|
|
(20.4)
|
|
(3)%
|
n/m Not
meaningful
|
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SOURCE McDonald's Corporation