- Global comparable sales increased 11.7% for the quarter,
with double-digit growth across each segment
- Digital Systemwide sales* in our top six markets were over
$8 billion for the quarter,
representing nearly 40% of their Systemwide sales
CHICAGO, July 27,
2023 /PRNewswire/ -- McDonald's Corporation today
announced results for the second quarter ended June 30, 2023.
"Our second quarter results reflect consistently strong
execution of our Accelerating the Arches strategy, with
global comparable sales growth of 11.7% and double-digit comparable
sales growth across each of our segments," said McDonald's
President and Chief Executive Officer, Chris Kempczinski. "The McDonald's brand has
never been stronger and I remain inspired by the ability of the
McDonald's System to create cultural conversations and develop
industry-leading innovations. While global macroeconomic challenges
persist, we continue to invest in our growth drivers and our brand
to meet the customer needs of tomorrow."
Second quarter financial performance:
- Global comparable sales increased 11.7%, reflecting strong
comparable sales across all segments:
-
- U.S. increased 10.3%
- International Operated Markets segment increased 11.9%
- International Developmental Licensed Markets segment increased
14.0%
- Consolidated revenues increased 14% (14% in constant
currencies).
- Systemwide sales increased 12% (13% in constant
currencies).
- Consolidated operating income increased 81% (82% in constant
currencies). Results included $18
million of pre-tax restructuring charges related to the
Company's internal effort to modernize ways of working
(Accelerating the Organization). Excluding these current
year charges, as well as prior year pre-tax charges and gains of
$1.2 billion and $271 million, respectively, consolidated
operating income increased 20% (21% in constant currencies).**
- Diluted earnings per share was $3.15, an increase of 97% (98% in constant
currencies). Excluding the current year restructuring charges
described above of $0.02 per share,
diluted earnings per share was $3.17,
an increase of 24% (25% in constant currencies) when also excluding
prior year charges and gains and a tax settlement.**
*Refer to page 4 for a definition of Systemwide sales.
**Refer to page 2 for additional details on the second quarter 2023
and 2022.
1
COMPARABLE SALES
|
|
Increase/(Decrease)
|
|
|
Quarters Ended June
30,
|
|
|
2023
|
|
2022
|
U.S.
|
|
10.3 %
|
|
3.7 %
|
International Operated
Markets
|
|
11.9
|
|
13.0
|
International
Developmental Licensed Markets & Corporate
|
|
14.0
|
|
16.0
|
Total
|
|
11.7 %
|
|
9.7 %
|
- U.S.: Comparable sales results benefited from strategic
menu price increases and positive guest counts. Successful
restaurant level execution, culturally relevant brand and marketing
campaigns and continued digital and delivery growth contributed to
strong comparable sales results.
- International Operated Markets: Segment performance was
driven by strong comparable sales in most markets, led by the U.K.
and Germany.
- International Developmental Licensed Markets: The
quarter reflected strong comparable sales in all geographic
regions, led by China.
KEY FINANCIAL METRICS - CONSOLIDATED
Dollars in millions, except per share data
|
Quarters Ended June
30,
|
|
Six Months Ended
June 30,
|
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
Revenues
|
$
6,497.5
|
|
$
5,718.4
|
|
14
|
%
|
|
14
|
%
|
|
$ 12,395.3
|
|
$ 11,384.0
|
|
9
|
%
|
|
11
|
%
|
Operating
income
|
3,104.1
|
|
1,711.8
|
|
81
|
|
|
82
|
|
|
5,636.5
|
|
4,024.4
|
|
40
|
|
|
43
|
|
Net income
|
2,310.4
|
|
1,188.0
|
|
94
|
|
|
95
|
|
|
4,112.7
|
|
2,292.4
|
|
79
|
|
|
83
|
|
Earnings per
share-diluted
|
$ 3.15
|
|
$ 1.60
|
|
97
|
%
|
|
98
|
%
|
|
$
5.60
|
|
$
3.08
|
|
82
|
%
|
|
85
|
%
|
Results for 2023 included the following:
- Pre-tax restructuring charges of $18
million, or $0.02 per share,
for the quarter and $198 million, or
$0.20 per share, for the six months,
primarily related to Accelerating the Organization
Results for 2022 included the following:
- Pre-tax charges of $1,153
million, or $1.30 per share,
for the quarter and $1,281 million,
or $1.43 per share, for the six
months, related to the sale of the Company's business in
Russia
- Pre-tax gain of $271 million, or
$0.40 per share, for the quarter and
six months, related to the Company's sale of its Dynamic Yield
business
- $37 million, or $0.05 per share, for the quarter and $537 million, or $0.72 per share, for the six months, of
nonoperating expense related to the settlement of a tax audit in
France
Excluding the above items, results reflected strong operating
performance driven primarily by higher sales-driven Franchised
margins.
2
NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION
Dollars in millions, except per share data
|
Quarters Ended June
30,
|
|
|
Net
Income
|
|
Earnings per share -
diluted
|
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
GAAP
|
$
2,310.4
|
|
$
1,188.0
|
|
94
|
%
|
|
95
|
%
|
|
$ 3.15
|
|
$ 1.60
|
|
97
|
%
|
|
98
|
%
|
(Gains)/charges
|
13.7
|
|
668.6
|
|
|
|
|
|
|
|
0.02
|
|
0.90
|
|
|
|
|
|
|
Tax
Settlement
|
—
|
|
37.2
|
|
|
|
|
|
|
|
—
|
|
0.05
|
|
|
|
|
|
|
Non-GAAP
|
$
2,324.1
|
|
$
1,893.8
|
|
23
|
%
|
|
23
|
%
|
|
$ 3.17
|
|
$ 2.55
|
|
24
|
%
|
|
25
|
%
|
|
Six Months Ended
June 30,
|
|
Net
Income
|
|
Earnings per share -
diluted
|
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
GAAP
|
$
4,112.7
|
|
$
2,292.4
|
|
79
|
%
|
|
83
|
%
|
|
$ 5.60
|
|
$ 3.08
|
|
82
|
%
|
|
85
|
%
|
(Gains)/charges
|
148.1
|
|
770.7
|
|
|
|
|
|
|
|
0.20
|
|
1.03
|
|
|
|
|
|
|
Tax
Settlement
|
—
|
|
537.2
|
|
|
|
|
|
|
|
—
|
|
0.72
|
|
|
|
|
|
|
Non-GAAP
|
$
4,260.8
|
|
$
3,600.3
|
|
18
|
%
|
|
21
|
%
|
|
$ 5.80
|
|
$ 4.83
|
|
20
|
%
|
|
21
|
%
|
3
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 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 and comparable guest counts are compared
to the same period in the prior year and represent sales and
transactions, respectively, 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, natural disasters,
pandemics and acts of war, terrorism or other hostilities.
Restaurants in Russia were treated
as permanently closed as of April 1,
2022 and therefore excluded from the calculation of
comparable sales and comparable guest counts beginning in the
second quarter of 2022. Comparable sales exclude the impact of
currency translation and the sales of any market considered
hyperinflationary (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. Beginning in the first quarter of 2023, McDonald's
excluded results from Argentina
and Lebanon in the calculation of
comparable sales due to hyperinflation (Venezuela continues to be excluded).
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.
Systemwide sales include sales at all restaurants, whether
operated by the Company or by franchisees. This includes sales from
digital channels, which are comprised of the mobile app, delivery
and kiosk at both Company-operated and franchised restaurants.
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, 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, 2023.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 7:30 a.m. (Central Time) on July 27, 2023. 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 40,000 locations in over 100 countries. Approximately 95%
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 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 27, 2023. The Company
undertakes no obligation to update such forward-looking statements,
except as may otherwise be required by law.
4
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Quarters Ended June
30,
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$ 2,487.0
|
|
$ 2,112.8
|
|
$
374.2
|
|
18 %
|
Revenues from
franchised restaurants
|
3,933.3
|
|
3,526.8
|
|
406.5
|
|
12
|
Other
revenues
|
77.2
|
|
78.8
|
|
(1.6)
|
|
(2)
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,497.5
|
|
5,718.4
|
|
779.1
|
|
14
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
2,091.3
|
|
1,769.8
|
|
321.5
|
|
18
|
Franchised
restaurants-occupancy expenses
|
618.2
|
|
588.6
|
|
29.6
|
|
5
|
Other restaurant
expenses
|
57.0
|
|
57.9
|
|
(0.9)
|
|
(2)
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
95.2
|
|
93.0
|
|
2.2
|
|
2
|
Other
|
567.5
|
|
611.2
|
|
(43.7)
|
|
(7)
|
Other operating
(income) expense, net
|
(35.8)
|
|
886.1
|
|
(921.9)
|
|
n/m
|
Total operating costs
and expenses
|
3,393.4
|
|
4,006.6
|
|
(613.2)
|
|
(15)
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
3,104.1
|
|
1,711.8
|
|
1,392.3
|
|
81
|
|
|
|
|
|
|
|
|
Interest
expense
|
330.2
|
|
290.6
|
|
39.6
|
|
14
|
Nonoperating (income)
expense, net
|
(42.8)
|
|
12.1
|
|
(54.9)
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
2,816.7
|
|
1,409.1
|
|
1,407.6
|
|
100
|
Provision for income
taxes
|
506.3
|
|
221.1
|
|
285.2
|
|
n/m
|
|
|
|
|
|
|
|
|
NET INCOME
|
$ 2,310.4
|
|
$ 1,188.0
|
|
$ 1,122.4
|
|
94 %
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
3.15
|
|
$
1.60
|
|
$
1.55
|
|
97 %
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
734.3
|
|
742.0
|
|
(7.7)
|
|
(1) %
|
5
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Six Months Ended
June 30,
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$ 4,711.3
|
|
$ 4,415.2
|
|
$
296.1
|
|
7 %
|
Revenues from
franchised restaurants
|
7,520.8
|
|
6,789.6
|
|
731.2
|
|
11
|
Other
revenues
|
163.2
|
|
179.2
|
|
(16.0)
|
|
(9)
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
12,395.3
|
|
11,384.0
|
|
1,011.3
|
|
9
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
4,014.4
|
|
3,729.0
|
|
285.4
|
|
8
|
Franchised
restaurants-occupancy expenses
|
1,216.5
|
|
1,172.6
|
|
43.9
|
|
4
|
Other restaurant
expenses
|
119.8
|
|
130.2
|
|
(10.4)
|
|
(8)
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
194.5
|
|
185.7
|
|
8.8
|
|
5
|
Other
|
1,120.8
|
|
1,195.5
|
|
(74.7)
|
|
(6)
|
Other operating
(income) expense, net
|
92.8
|
|
946.6
|
|
(853.8)
|
|
(90)
|
Total operating costs
and expenses
|
6,758.8
|
|
7,359.6
|
|
(600.8)
|
|
(8)
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
5,636.5
|
|
4,024.4
|
|
1,612.1
|
|
40
|
|
|
|
|
|
|
|
|
Interest
expense
|
659.9
|
|
577.9
|
|
82.0
|
|
14
|
Nonoperating (income)
expense, net
|
(107.1)
|
|
496.2
|
|
(603.3)
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
5,083.7
|
|
2,950.3
|
|
2,133.4
|
|
72
|
Provision for income
taxes
|
971.0
|
|
657.9
|
|
313.1
|
|
48
|
|
|
|
|
|
|
|
|
NET INCOME
|
$ 4,112.7
|
|
$ 2,292.4
|
|
$ 1,820.3
|
|
79 %
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
5.60
|
|
$
3.08
|
|
$
2.52
|
|
82 %
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
734.9
|
|
744.8
|
|
(9.9)
|
|
(1) %
|
6
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SOURCE McDonald's Corporation