CHICAGO, July 28, 2021 /PRNewswire/ -- McDonald's
Corporation today announced results for the second quarter ended
June 30, 2021.
"Our performance is a continued demonstration of the broad-based
strength and resiliency of our business as global comp sales in the
second quarter increased nearly 7% over 2019. For 65 years, we've
created iconic experiences for billions of people around the world.
Along the way, we've always focused on following our customers'
needs, finding the most convenient and engaging ways for them to
enjoy McDonald's. It's clear that our next chapter will be driven
by our leadership in digital," said McDonald's President and Chief
Executive Officer Chris Kempczinski.
"As we build on our momentum and embed our digital capabilities
through the customer experience, I'm thrilled that Manu Steijaert
will be taking on the newly created role of Chief Customer Officer.
His team will deliver the seamless omnichannel experience that our
customers want and McDonald's can provide."
Second quarter financial performance:
- Global comparable sales increased 40.5% (6.9% on a 2-year
basis), reflecting positive comparable sales across all
segments:
-
- U.S. increased 25.9% (14.9% on a 2-year basis)
- International Operated Markets segment increased 75.1% (2.6% on
a 2-year basis)
- International Developmental Licensed Markets segment increased
32.3% (0.3% on a 2-year basis)
- Consolidated revenues increased 57% (49% in constant
currencies) to $5,888 million.
- Systemwide sales increased 48% (42% in constant currencies) to
$28,281 million.
- Consolidated operating income increased $1,730 million and included $98 million of strategic gains primarily related
to the sale of McDonald's Japan stock.
- Diluted earnings per share for the quarter was $2.95, or $2.37
excluding $0.48 per share of income
tax benefits as a result of a change in the U.K. statutory income
tax rate and $0.10 per share of
strategic gains.
*Refer to page 4 for a definition of Systemwide sales.
COMPARABLE SALES
|
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|
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Increase/(Decrease)
|
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Quarters Ended
June 30,
|
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2021
|
|
2020
|
U.S.
|
25.9%
|
|
|
(8.7)%
|
|
International
Operated Markets
|
75.1
|
|
|
(41.4)
|
|
International
Developmental Licensed Markets & Corporate
|
32.3
|
|
|
(24.2)
|
|
Total
|
40.5%
|
|
|
(23.9)%
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|
COVID-19 resurgences throughout the quarter and six months have
resulted in instances of government restrictions on restaurant
operating hours, limited dine-in capacity and, in some cases,
dining room closures. The Company has continued to follow the
guidance of expert health authorities to apply the appropriate
precautionary measures to protect the health and safety of our
people and our customers and expects some operating restrictions in
various markets so long as the COVID-19 pandemic continues.
- Comparable Sales: Quarterly comparable sales and guest
counts were positive across all segments. Comparable sales were
impacted in both periods (to a greater extent in 2020) by
COVID-19.
-
- U.S.: Comparable sales results benefited from strong
average check growth driven by larger order size and menu price
increases. The Crispy Chicken Sandwich and BTS Famous Order
promotion, as well as growth in delivery and digital platforms,
contributed to the comparable sales growth. Comparable sales
increased 14.9% on a 2-year basis, reflecting continued
momentum.
- International Operated Markets: Results reflected
strong positive comparable sales in the U.K. and France as well as positive comparable sales
across the entire segment due to significantly fewer restaurant
closures and the easing of COVID-19 restrictions. Comparable sales
increased 2.6% on a 2-year basis, reflecting positive 2-year
comparable sales in the U.K., Australia and Canada and negative 2-year comparable sales in
France and Germany.
- International Developmental Licensed Markets: The
strong quarterly comparable sales were primarily driven by
Brazil, Japan and China, along with positive comparable sales
across all regions. Comparable sales increased 0.3% on a 2-year
basis.
KEY FINANCIAL METRICS - CONSOLIDATED
Dollars in millions, except per share data
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|
Quarters Ended
June 30,
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Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
Revenues
|
$
|
5,887.9
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|
$
|
3,761.5
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|
57%
|
|
49%
|
|
$
|
11,012.5
|
|
$
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8,475.9
|
|
30%
|
|
25%
|
|
Operating
income
|
2,691.1
|
|
961.1
|
|
n/m
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|
n/m
|
|
4,972.4
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2,654.7
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87
|
|
79
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Net income
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2,219.3
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483.8
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n/m
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n/m
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3,756.5
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1,590.7
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n/m
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n/m
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|
Earnings per
share-diluted
|
$
|
2.95
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|
$
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0.65
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n/m%
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n/m%
|
|
$
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5.00
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|
$
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2.12
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n/m%
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n/m%
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|
n/m Not meaningful
Results for the quarter and six months reflected stronger
operating performance across all segments due to higher
sales-driven restaurant margins as a result of fewer restaurant
closures and the easing of COVID-19 restrictions compared with the
prior year.
Results for the quarter included the following:
- Net pre-tax strategic gains of $98
million, or $0.10 per share,
primarily related to the sale of McDonald's Japan stock
- $364 million, or $0.48 per share, of income tax benefits related
to deferred tax adjustments as a result of a change in the U.K.
statutory income tax rate
Results for the six months included the following:
- Net pre-tax strategic gains of $233
million, or $0.23 per share,
primarily related to the sale of McDonald's Japan stock
- $364 million, or $0.48 per share, of income tax benefits related
to deferred tax adjustments as a result of a change in the U.K.
statutory income tax rate
Foreign currency translation benefited diluted earnings per
share by $0.13 for the quarter and
$0.19 for the six months.
EARNINGS PER SHARE-DILUTED RECONCILIATION
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|
Quarters Ended
June 30,
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
Inc/ (Dec)
Excluding
Currency
Translation
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
Inc/ (Dec)
Excluding
Currency
Translation
|
GAAP earnings per
share-diluted
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$
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2.95
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$
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0.65
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n/m%
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n/m%
|
$
|
5.00
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$
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2.12
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n/m%
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n/m%
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Strategic (gains)
charges
|
(0.10)
|
|
0.01
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|
|
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(0.23)
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0.01
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|
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Income tax
benefits
|
(0.48)
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|
—
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(0.48)
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—
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Non-GAAP earnings per
share-diluted
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$
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2.37
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$
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0.66
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n/m%
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n/m%
|
$
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4.29
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$
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2.13
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n/m%
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n/m%
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n/m Not meaningful
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED
THROUGHOUT THIS RELEASE
Constant currency results exclude the effects of foreign
currency translation and are 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 material regulatory and other income tax impacts,
and bases incentive compensation plans on these results because the
Company believes this better represents underlying business
trends.
Comparable sales are compared to the same period in the prior
year and represent sales 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
(including restaurants temporarily closed due to COVID-19).
Comparable sales exclude the impact of currency translation and the
sales of any market considered hyper-inflationary (generally
identified as those markets whose cumulative inflation rate over a
three-year period exceeds 100%), which management believes more
accurately reflects the underlying business trends. Comparable
sales are driven by changes in guest counts and average check, the
latter of which is affected by changes in pricing and product
mix.
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.
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 of sales by Company-operated restaurants
and fees from franchised restaurants operated by conventional
franchisees, developmental licensees and affiliates. Changes in
Systemwide sales are primarily driven by comparable sales and net
restaurant unit expansion.
Free cash flow, defined as cash provided by operations less
capital expenditures, and free cash flow conversion rate, defined
as free cash flow divided by net income (excluding the effect of
impairment and other strategic charges and gains, as well as
material regulatory and other income tax impacts), are measures
reviewed by management in order to evaluate the Company's ability
to convert net profits into cash resources, after reinvesting in
the core business, that can be used to pursue opportunities to
enhance shareholder value.
RELATED COMMUNICATIONS
This press release should be read in conjunction with Exhibit
99.2 to 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, 2021.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 7:30 a.m. (Central Time) on July 28, 2021. 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 39,000 locations in over 100 countries. Approximately 93%
of McDonald's restaurants worldwide are owned and operated by
independent local business owners.
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 to the Company's Form
8-K filing on July 28, 2021. 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)
|
|
|
|
|
|
|
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Dollars and shares
in millions, except per share data
|
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|
Quarters Ended
June 30,
|
2021
|
|
2020
|
|
Inc/
(Dec)
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Revenues
|
|
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|
Sales by
Company-operated restaurants
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$
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2,488.7
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|
$
|
1,593.7
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|
$
|
895.0
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56%
|
|
Revenues from
franchised restaurants
|
3,306.2
|
|
2,088.0
|
|
1,218.2
|
|
58
|
|
Other
revenues
|
93.0
|
|
79.8
|
|
13.2
|
|
17
|
|
|
|
|
|
|
TOTAL
REVENUES
|
5,887.9
|
|
3,761.5
|
|
2,126.4
|
|
57
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
Company-operated
restaurant expenses
|
2,021.0
|
|
1,448.4
|
|
572.6
|
|
40
|
|
Franchised
restaurants-occupancy expenses
|
579.1
|
|
524.5
|
|
54.6
|
|
10
|
|
Other restaurant
expenses
|
68.3
|
|
63.3
|
|
5.0
|
|
8
|
|
Selling,
general & administrative expenses
|
|
|
|
|
Depreciation and
amortization
|
83.1
|
|
71.0
|
|
12.1
|
|
17
|
|
Other
|
572.4
|
|
576.0
|
|
(3.6)
|
|
(1)
|
|
Other operating
(income) expense, net
|
(127.1)
|
|
117.2
|
|
(244.3)
|
|
n/m
|
|
Total operating costs
and expenses
|
3,196.8
|
|
2,800.4
|
|
396.4
|
|
14
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,691.1
|
|
961.1
|
|
1,730.0
|
|
n/m
|
|
|
|
|
|
|
Interest
expense
|
296.5
|
|
319.1
|
|
(22.6)
|
|
(7)
|
|
Nonoperating (income)
expense, net
|
18.6
|
|
(6.7)
|
|
25.3
|
|
n/m
|
|
|
|
|
|
|
Income before
provision for income taxes
|
2,376.0
|
|
648.7
|
|
1,727.3
|
|
n/m
|
|
Provision for income
taxes
|
156.7
|
|
164.9
|
|
(8.2)
|
|
(5)
|
|
|
|
|
|
|
NET INCOME
|
$
|
2,219.3
|
|
$
|
483.8
|
|
$
|
1,735.5
|
|
n/m
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
2.95
|
|
$
|
0.65
|
|
$
|
2.30
|
|
n/m
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
752.1
|
|
748.6
|
|
3.5
|
|
0%
|
|
n/m Not meaningful
McDONALD'S CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
Six Months Ended
June 30,
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
4,650.2
|
|
$
|
3,619.5
|
|
$
|
1,030.7
|
|
28%
|
|
Revenues from
franchised restaurants
|
6,183.6
|
|
4,696.0
|
|
1,487.6
|
|
32
|
|
Other
revenues
|
178.7
|
|
160.4
|
|
18.3
|
|
11
|
|
|
|
|
|
|
TOTAL
REVENUES
|
11,012.5
|
|
8,475.9
|
|
2,536.6
|
|
30
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
Company-operated
restaurant expenses
|
3,838.6
|
|
3,201.2
|
|
637.4
|
|
20
|
|
Franchised
restaurants-occupancy expenses
|
1,150.6
|
|
1,078.7
|
|
71.9
|
|
7
|
|
Other restaurant
expenses
|
135.5
|
|
128.8
|
|
6.7
|
|
5
|
|
Selling,
general & administrative expenses
|
|
|
|
|
Depreciation and
amortization
|
159.1
|
|
144.5
|
|
14.6
|
|
10
|
|
Other
|
1,062.8
|
|
1,092.3
|
|
(29.5)
|
|
(3)
|
|
Other operating
(income) expense, net
|
(306.5)
|
|
175.7
|
|
(482.2)
|
|
n/m
|
|
Total operating costs
and expenses
|
6,040.1
|
|
5,821.2
|
|
218.9
|
|
4
|
|
|
|
|
|
|
OPERATING
INCOME
|
4,972.4
|
|
2,654.7
|
|
2,317.7
|
|
87
|
|
|
|
|
|
|
Interest
expense
|
596.5
|
|
599.1
|
|
(2.6)
|
|
0
|
|
Nonoperating (income)
expense, net
|
47.2
|
|
(38.0)
|
|
85.2
|
|
n/m
|
|
|
|
|
|
|
Income before
provision for income taxes
|
4,328.7
|
|
2,093.6
|
|
2,235.1
|
|
n/m
|
|
Provision for income
taxes
|
572.2
|
|
502.9
|
|
69.3
|
|
14
|
|
|
|
|
|
|
NET INCOME
|
$
|
3,756.5
|
|
$
|
1,590.7
|
|
$
|
2,165.8
|
|
n/m
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
5.00
|
|
$
|
2.12
|
|
$
|
2.88
|
|
n/m
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
751.6
|
|
749.6
|
|
2.0
|
|
0%
|
|
n/m Not meaningful
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SOURCE McDonald's Corporation