- Global Systemwide sales* increased 11% for the quarter, with
global comparable sales of nearly 9% and strong growth across each
segment
- Digital Systemwide sales in our top six markets were nearly
$9 billion for the quarter,
representing over 40% of their Systemwide sales
CHICAGO, Oct. 30,
2023 /PRNewswire/ -- McDonald's Corporation today
announced results for the third quarter ended September 30, 2023.
"With global Systemwide sales growth of 11%, our third quarter
results reflect our position of strength as the industry leader,"
said McDonald's President and Chief Executive Officer, Chris Kempczinski. "The macroeconomic
environment is unfolding in line with our expectations for the
year, and we continued to deliver convenience and value for our
customers. Thanks to the entire McDonald's System's outstanding
execution of Accelerating the Arches, we remain confident in
our future and the strategic direction of our business."
Third quarter financial performance:
- Global comparable sales increased 8.8%, reflecting strong
comparable sales across all segments:
- U.S. increased 8.1%
- International Operated Markets segment increased 8.3%
- International Developmental Licensed Markets segment increased
10.5%
- Consolidated revenues increased 14% (11% in constant
currencies).
- Systemwide sales increased 11% (10% in constant
currencies).
- Consolidated operating income increased 16% (13% in constant
currencies) and included $26 million
of pre-tax charges, primarily related to restructuring costs
associated with the Company's internal effort to modernize ways of
working (Accelerating the Organization).
- Diluted earnings per share was $3.17, an increase of 18% (15% in constant
currencies).**
- The Company declared a 10% increase in its quarterly cash
dividend to $1.67 per share.
1
*Refer to page 4 for a definition of Systemwide sales.
**Refer to the table on page 3 for additional details on diluted
earnings per share.
COMPARABLE
SALES
|
|
|
|
Increase/(Decrease)
|
|
|
Quarters Ended
September 30,
|
|
|
2023
|
|
2022
|
U.S.
|
|
8.1 %
|
|
6.1 %
|
International Operated
Markets
|
|
8.3
|
|
8.5
|
International
Developmental Licensed Markets & Corporate
|
|
10.5
|
|
16.7
|
Total
|
|
8.8 %
|
|
9.5 %
|
- U.S.: Comparable sales results benefited from strong
average check growth driven by strategic menu price increases.
Successful restaurant level execution, effective 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.,
Germany and Canada.
- International Developmental Licensed Markets: The
quarter reflected strong comparable sales in all geographic
regions.
KEY FINANCIAL METRICS -
CONSOLIDATED
Dollars in millions,
except per share data
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec)
Excluding
Currency
Translation
|
|
Revenues
|
$
6,692.2
|
|
$
5,872.1
|
|
14
|
%
|
|
11
|
%
|
|
$ 19,087.5
|
|
$ 17,256.1
|
|
11
|
%
|
|
11
|
%
|
Operating
income
|
3,208.3
|
|
2,763.9
|
|
16
|
|
|
13
|
|
|
8,844.8
|
|
6,788.3
|
|
30
|
|
|
31
|
|
Net income
|
2,317.1
|
|
1,981.6
|
|
17
|
|
|
14
|
|
|
6,429.8
|
|
4,274.0
|
|
50
|
|
|
51
|
|
Earnings per
share-diluted
|
$ 3.17
|
|
$ 2.68
|
|
18
|
%
|
|
15
|
%
|
|
$
8.76
|
|
$
5.75
|
|
52
|
%
|
|
53
|
%
|
Results for 2023 included the following:
- Pre-tax charges of $26 million,
or $0.02 per share, for the quarter
and $224 million, or $0.23 per share, for the nine months, primarily
related to restructuring costs associated with Accelerating the
Organization
Results for 2022 included the following:
- Pre-tax charges of $1,281
million, or $1.44 per share,
for the nine 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 nine months,
related to the Company's sale of its Dynamic Yield business
- $537 million, or $0.72 per share, for the nine months, of
nonoperating expense related to the settlement of a tax audit in
France
Excluding the above items, results for both periods 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
September 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
|
$
2,317.1
|
|
$
1,981.6
|
|
17
|
%
|
|
14
|
%
|
|
$ 3.17
|
|
$ 2.68
|
|
18
|
%
|
|
15
|
%
|
(Gains)/charges
|
20.0
|
|
—
|
|
|
|
|
|
|
|
0.02
|
|
—
|
|
|
|
|
|
|
Tax
Settlement
|
—
|
|
—
|
|
|
|
|
|
|
|
—
|
|
—
|
|
|
|
|
|
|
Non-GAAP
|
$
2,337.1
|
|
$
1,981.6
|
|
18
|
%
|
|
15
|
%
|
|
$ 3.19
|
|
$ 2.68
|
|
19
|
%
|
|
16
|
%
|
|
|
Nine Months Ended
September 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
|
$
6,429.8
|
|
$
4,274.0
|
|
50
|
%
|
|
51
|
%
|
|
$ 8.76
|
|
$ 5.75
|
|
52
|
%
|
|
53
|
%
|
(Gains)/charges
|
168.1
|
|
770.7
|
|
|
|
|
|
|
|
0.23
|
|
1.04
|
|
|
|
|
|
|
Tax
Settlement
|
—
|
|
537.2
|
|
|
|
|
|
|
|
—
|
|
0.72
|
|
|
|
|
|
|
Non-GAAP
|
$
6,597.9
|
|
$
5,581.9
|
|
18
|
%
|
|
19
|
%
|
|
$ 8.99
|
|
$ 7.51
|
|
20
|
%
|
|
20
|
%
|
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 nine months
ended September 30, 2023.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 7:30 a.m. (Central Time) on October 30, 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 October 30, 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
September 30,
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$ 2,556.2
|
|
$ 2,124.8
|
|
$
431.4
|
|
20 %
|
Revenues from
franchised restaurants
|
4,047.1
|
|
3,671.2
|
|
375.9
|
|
10
|
Other
revenues
|
88.9
|
|
76.1
|
|
12.8
|
|
17
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,692.2
|
|
5,872.1
|
|
820.1
|
|
14
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
2,135.0
|
|
1,779.6
|
|
355.4
|
|
20
|
Franchised
restaurants-occupancy expenses
|
625.4
|
|
589.0
|
|
36.4
|
|
6
|
Other restaurant
expenses
|
68.1
|
|
57.4
|
|
10.7
|
|
19
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
96.7
|
|
93.3
|
|
3.4
|
|
4
|
Other
|
583.5
|
|
576.4
|
|
7.1
|
|
1
|
Other operating
(income) expense, net
|
(24.8)
|
|
12.5
|
|
(37.3)
|
|
n/m
|
Total operating costs
and expenses
|
3,483.9
|
|
3,108.2
|
|
375.7
|
|
12
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
3,208.3
|
|
2,763.9
|
|
444.4
|
|
16
|
|
|
|
|
|
|
|
|
Interest
expense
|
340.7
|
|
306.2
|
|
34.5
|
|
11
|
Nonoperating (income)
expense, net
|
(55.9)
|
|
(78.5)
|
|
22.6
|
|
(29)
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
2,923.5
|
|
2,536.2
|
|
387.3
|
|
15
|
Provision for income
taxes
|
606.4
|
|
554.6
|
|
51.8
|
|
9
|
|
|
|
|
|
|
|
|
NET INCOME
|
$ 2,317.1
|
|
$ 1,981.6
|
|
$
335.5
|
|
17 %
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
3.17
|
|
$
2.68
|
|
$
0.49
|
|
18 %
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
731.6
|
|
739.5
|
|
(7.9)
|
|
(1) %
|
n/m Not
meaningful
|
5
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Nine Months Ended
September 30,
|
2023
|
|
2022
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$ 7,267.5
|
|
$ 6,540.0
|
|
$
727.5
|
|
11 %
|
Revenues from
franchised restaurants
|
11,567.9
|
|
10,460.8
|
|
1,107.1
|
|
11
|
Other
revenues
|
252.1
|
|
255.3
|
|
(3.2)
|
|
(1)
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
19,087.5
|
|
17,256.1
|
|
1,831.4
|
|
11
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
6,149.4
|
|
5,508.6
|
|
640.8
|
|
12
|
Franchised
restaurants-occupancy expenses
|
1,841.9
|
|
1,761.6
|
|
80.3
|
|
5
|
Other restaurant
expenses
|
187.9
|
|
187.6
|
|
0.3
|
|
—
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
291.2
|
|
279.0
|
|
12.2
|
|
4
|
Other
|
1,704.3
|
|
1,771.9
|
|
(67.6)
|
|
(4)
|
Other operating
(income) expense, net
|
68.0
|
|
959.1
|
|
(891.1)
|
|
(93)
|
Total operating costs
and expenses
|
10,242.7
|
|
10,467.8
|
|
(225.1)
|
|
(2)
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
8,844.8
|
|
6,788.3
|
|
2,056.5
|
|
30
|
|
|
|
|
|
|
|
|
Interest
expense
|
1,000.6
|
|
884.1
|
|
116.5
|
|
13
|
Nonoperating (income)
expense, net
|
(163.0)
|
|
417.7
|
|
(580.7)
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
8,007.2
|
|
5,486.5
|
|
2,520.7
|
|
46
|
Provision for income
taxes
|
1,577.4
|
|
1,212.5
|
|
364.9
|
|
30
|
|
|
|
|
|
|
|
|
NET INCOME
|
$ 6,429.8
|
|
$ 4,274.0
|
|
$ 2,155.8
|
|
50 %
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
8.76
|
|
$
5.75
|
|
$
3.01
|
|
52 %
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
733.8
|
|
743.0
|
|
(9.2)
|
|
(1) %
|
n/m Not
meaningful
|
6
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SOURCE McDonald's Corporation