- Global comparable sales increased nearly 10%, with growth
across all segments
- Digital Systemwide sales* in our top six markets exceeded
$6 billion for the quarter,
representing nearly a third of their total Systemwide
sales
CHICAGO, July 26,
2022 /PRNewswire/ -- McDonald's Corporation today
announced results for the second quarter ended June 30, 2022.
"The McDonald's System continues to demonstrate strength and
resiliency," said McDonald's President and Chief Executive Officer,
Chris Kempczinski. "Our second
quarter performance reflects outstanding execution against our
Accelerating the Arches strategy. By focusing on our customers and
crew, enabled by a rapidly growing digital capability, we delivered
global comparable sales growth of nearly 10%. Nonetheless, the
operating environment across the competitive landscape remains
challenging. While we are planning for a wide range of scenarios, I
am confident that our plans and people position McDonald's to
weather this environment better than others."
Second quarter financial performance:
- Global comparable sales increased 9.7%, reflecting positive
comparable sales across all segments:
-
- U.S. increased 3.7%
- International Operated Markets segment increased 13.0%
- International Developmental Licensed Markets segment increased
16.0%
- Consolidated revenues decreased 3% (increased 3% in constant
currencies).
- Systemwide sales increased 4% (10% in constant
currencies).
- Consolidated operating income decreased 36% (30% in constant
currencies). Results included $1.2
billion of charges related to the sale of the Company's
business in Russia and a gain of
$271 million related to the Company's
sale of its Dynamic Yield business. Excluding these current year
net charges and prior year net gains of $98
million, primarily related to the sale of McDonald's
Japan stock, consolidated
operating income was flat (increased 7% in constant
currencies).
- Diluted earnings per share was $1.60, a decrease of 46% (41% in constant
currencies). Excluding the net charges described above of
$0.90 per share and nonoperating
expense of $0.05 per share related to
the settlement of a tax audit in France, diluted earnings per share for the
quarter was $2.55, an increase of 8%
(14% in constant currencies), when also excluding prior year net
pre-tax gains of $0.10 per share and
income tax benefits of $0.48 per
share.**
* Refer to page 4 for a definition of Systemwide sales.
** Refer to page 2 for additional details.
COMPARABLE SALES*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|
Quarters Ended June
30,
|
|
|
2022
|
|
2021
|
U.S.
|
|
3.7 %
|
|
25.9 %
|
International Operated
Markets
|
|
13.0
|
|
75.1
|
International
Developmental Licensed Markets & Corporate
|
|
16.0
|
|
32.3
|
Total
|
|
9.7 %
|
|
40.5 %
|
|
|
*
|
For both International
Operated Markets and Total comparable sales calculations for the
second quarter 2022, restaurants in Russia were treated as
permanently closed starting April 1, 2022 and therefore excluded
from the calculations, and restaurants in Ukraine were treated as
temporarily closed and therefore included in the
calculations.
|
- U.S.: Comparable sales growth was driven by strategic
menu price increases and value offerings across both our everyday
menu and digital offerings.
- International Operated Markets: Strong operating
performance drove positive comparable sales across the segment, led
by very strong comparable sales in France and Germany.
- International Developmental Licensed Markets: The
quarter reflected strong comparable sales driven by Brazil and Japan, partly offset by negative comparable
sales in China due to continued
COVID-19 resurgences and related government restrictions.
KEY FINANCIAL METRICS - CONSOLIDATED
Dollars in millions, except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended June
30,
|
|
Six Months Ended June
30,
|
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
Revenues
|
$
|
5,718.4
|
|
$
|
5,887.9
|
|
(3) %
|
|
|
3 %
|
|
|
$
|
11,384.0
|
|
$
|
11,012.5
|
|
3 %
|
|
|
8 %
|
|
Operating
income
|
1,711.8
|
|
2,691.1
|
|
(36)
|
|
|
(30)
|
|
|
4,024.4
|
|
4,972.4
|
|
(19)
|
|
|
(15)
|
|
Net income
|
1,188.0
|
|
2,219.3
|
|
(46)
|
|
|
(42)
|
|
|
2,292.4
|
|
3,756.5
|
|
(39)
|
|
|
(36)
|
|
Earnings per
share-diluted
|
$
|
1.60
|
|
$
|
2.95
|
|
(46) %
|
|
|
(41) %
|
|
|
$
|
3.08
|
|
$
|
5.00
|
|
(38) %
|
|
|
(35) %
|
|
Results for the quarter and six months reflected strong
operating performance driven by higher sales-driven Franchised
margins. Company-operated margins were negatively impacted for both
periods by the restaurant closures in Russia and Ukraine, as well as by inflationary pressures
on labor and commodities. The quarter and six months also reflected
an income tax benefit associated with global tax audit
progression.
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
|
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
GAAP
|
$
|
1,188.0
|
|
$
|
2,219.3
|
|
(46) %
|
|
(42) %
|
|
$
|
1.60
|
|
$
|
2.95
|
|
(46) %
|
|
(41) %
|
|
|
(Gains)/charges
|
668.6
|
|
(70.8)
|
|
|
|
|
|
0.90
|
|
(0.10)
|
|
|
|
|
|
Change in U.K.
statutory tax rate
|
—
|
|
(363.7)
|
|
|
|
|
|
—
|
|
(0.48)
|
|
|
|
|
|
France tax
settlement
|
37.2
|
|
—
|
|
|
|
|
|
0.05
|
|
—
|
|
|
|
|
|
Non-GAAP
|
$
|
1,893.8
|
|
$
|
1,784.8
|
|
6 %
|
|
13 %
|
|
$
|
2.55
|
|
$
|
2.37
|
|
8 %
|
|
14 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
Net Income
|
|
|
Earnings per share -
diluted
|
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
GAAP
|
$
|
2,292.4
|
|
$
|
3,756.5
|
|
(39) %
|
|
(36) %
|
|
$
|
3.08
|
|
$
|
5.00
|
|
(38) %
|
|
(35) %
|
|
(Gains)/charges
|
770.7
|
|
(169.7)
|
|
|
|
|
|
1.03
|
|
(0.23)
|
|
|
|
|
|
Change in U.K.
statutory tax rate
|
—
|
|
(363.7)
|
|
|
|
|
|
—
|
|
(0.48)
|
|
|
|
|
|
France tax
settlement
|
537.2
|
|
—
|
|
|
|
|
|
0.72
|
|
—
|
|
|
|
|
|
Non-GAAP
|
$
|
3,600.3
|
|
$
|
3,223.1
|
|
12 %
|
|
17 %
|
|
$
|
4.83
|
|
$
|
4.29
|
|
13 %
|
|
18 %
|
|
Results for 2022 included the following:
- Pre-tax charges of $1.2 billion,
or $1.30 per share, for the quarter
and $1.3 billion, 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
Results for 2021 included the following:
- Net pre-tax gains of $98 million,
or $0.10 per share, for the quarter
and $233 million, or $0.23 per share, for the six months, primarily
related to the sale of McDonald's Japan stock
- $364 million, or $0.48 per share, for the quarter and six months
related to the remeasurement of deferred taxes as a result of a
change in the U.K. statutory income tax rate
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 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, natural disasters and
acts of war, terrorism or other hostilities (including restaurants
temporarily closed due to COVID-19, as well as those in
Ukraine). Restaurants in
Russia were treated as permanently
closed as of April 1, 2022 and
therefore excluded from the calculation of comparable sales for the
quarter. 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.
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, 2022.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 7:30 a.m. (Central Time) on July 26, 2022. 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 nearly 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 26, 2022. 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,
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
2,112.8
|
|
$
|
2,488.7
|
|
$
|
(375.9)
|
|
(15) %
|
Revenues from
franchised restaurants
|
3,526.8
|
|
3,306.2
|
|
220.6
|
|
7
|
Other
revenues
|
78.8
|
|
93.0
|
|
(14.2)
|
|
(15)
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
5,718.4
|
|
5,887.9
|
|
(169.5)
|
|
(3)
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
1,769.8
|
|
2,021.0
|
|
(251.2)
|
|
(12)
|
Franchised
restaurants-occupancy expenses
|
588.6
|
|
579.1
|
|
9.5
|
|
2
|
Other restaurant
expenses
|
57.9
|
|
68.3
|
|
(10.4)
|
|
(15)
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
93.0
|
|
83.1
|
|
9.9
|
|
12
|
Other
|
611.2
|
|
572.4
|
|
38.8
|
|
7
|
Other operating
(income) expense, net
|
886.1
|
|
(127.1)
|
|
1,013.2
|
|
n/m
|
Total operating costs
and expenses
|
4,006.6
|
|
3,196.8
|
|
809.8
|
|
25
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
1,711.8
|
|
2,691.1
|
|
(979.3)
|
|
(36)
|
|
|
|
|
|
|
|
|
Interest
expense
|
290.6
|
|
296.5
|
|
(5.9)
|
|
(2)
|
Nonoperating (income)
expense, net
|
12.1
|
|
18.6
|
|
(6.5)
|
|
(36)
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
1,409.1
|
|
2,376.0
|
|
(966.9)
|
|
(41)
|
Provision for income
taxes
|
221.1
|
|
156.7
|
|
64.4
|
|
41
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,188.0
|
|
$
|
2,219.3
|
|
$
|
(1,031.3)
|
|
(46) %
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.60
|
|
$
|
2.95
|
|
$
|
(1.35)
|
|
(46) %
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
742.0
|
|
752.1
|
|
(10.1)
|
|
(1) %
|
n/m Not meaningful
5
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares in millions, except per share
data
|
|
Six Months Ended June 30,
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
4,415.2
|
|
$
|
4,650.2
|
|
$
|
(235.0)
|
|
(5) %
|
Revenues from
franchised restaurants
|
6,789.6
|
|
6,183.6
|
|
606.0
|
|
10
|
Other
revenues
|
179.2
|
|
178.7
|
|
0.5
|
|
—
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
11,384.0
|
|
11,012.5
|
|
371.5
|
|
3
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
3,729.0
|
|
3,838.6
|
|
(109.6)
|
|
(3)
|
Franchised
restaurants-occupancy expenses
|
1,172.6
|
|
1,150.6
|
|
22.0
|
|
2
|
Other restaurant
expenses
|
130.2
|
|
135.5
|
|
(5.3)
|
|
(4)
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
185.7
|
|
159.1
|
|
26.6
|
|
17
|
Other
|
1,195.5
|
|
1,062.8
|
|
132.7
|
|
12
|
Other operating
(income) expense, net
|
946.6
|
|
(306.5)
|
|
1,253.1
|
|
n/m
|
Total operating costs
and expenses
|
7,359.6
|
|
6,040.1
|
|
1,319.5
|
|
22
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
4,024.4
|
|
4,972.4
|
|
(948.0)
|
|
(19)
|
|
|
|
|
|
|
|
|
Interest
expense
|
577.9
|
|
596.5
|
|
(18.6)
|
|
(3)
|
Nonoperating (income)
expense, net
|
496.2
|
|
47.2
|
|
449.0
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
2,950.3
|
|
4,328.7
|
|
(1,378.4)
|
|
(32)
|
Provision for income
taxes
|
657.9
|
|
572.2
|
|
85.7
|
|
15
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
2,292.4
|
|
$
|
3,756.5
|
|
$
|
(1,464.1)
|
|
(39) %
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
3.08
|
|
$
|
5.00
|
|
$
|
(1.92)
|
|
(38) %
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
744.8
|
|
751.6
|
|
(6.8)
|
|
(1) %
|
n/m Not meaningful
View original
content:https://www.prnewswire.com/news-releases/mcdonalds-reports-second-quarter-2022-results-301592990.html
SOURCE McDonald's Corporation