- Global comparable sales increased nearly 10%, with growth
across all segments
- U.S. comparable sales increased more than 6% for the
quarter, marking the ninth consecutive quarter of comparable sales
growth for the segment
- Digital Systemwide sales* in our top six markets were nearly
$7 billion for the quarter,
representing over a third of total Systemwide sales in those
markets
CHICAGO, Oct. 27,
2022 /PRNewswire/ -- McDonald's Corporation today
announced results for the third quarter ended September 30, 2022.
"Our third quarter 2022 performance demonstrated broad-based
business momentum as global comparable sales increased nearly 10%.
I remain confident in our Accelerating the Arches strategy as our
teams around the world continue to execute at a high level," said
McDonald's President and Chief Executive Officer, Chris Kempczinski. "As the macroeconomic
landscape continues to evolve and uncertainties persist, we are
operating from a position of competitive strength. I also want to
thank our franchisees, who have done a tremendous job navigating
this environment, while providing great value to our
customers."
Third quarter financial performance:
- Global comparable sales increased 9.5%, reflecting positive
comparable sales across all segments:
-
- U.S. increased 6.1%
- International Operated Markets segment increased 8.5%
- International Developmental Licensed Markets segment increased
16.7%
- Consolidated revenues decreased 5% (increased 2% in constant
currencies).
- Systemwide sales increased 2% (9% in constant currencies).
- Consolidated operating income decreased 7% (increased 1% in
constant currencies). Excluding $106
million of prior year gains related to the sale of
McDonald's Japan stock,
consolidated operating income decreased 4% (increased 4% in
constant currencies).
- Diluted earnings per share was $2.68, a decrease of 6% (flat in constant
currencies). Excluding the prior year gains described above of
$0.10 per share, diluted earnings per
share decreased 3% (increased 4% in constant currencies).
- The Company declared a 10% increase in its quarterly cash
dividend to $1.52 per share.
*Refer to page 4 for a definition of Systemwide sales.
1
COMPARABLE SALES
|
|
Increase/(Decrease)
|
|
|
Quarters Ended
September 30,
|
|
|
2022
|
|
|
2021
|
|
U.S.
|
|
6.1 %
|
|
|
9.6 %
|
|
International Operated
Markets
|
|
8.5
|
|
|
13.9
|
|
International
Developmental Licensed Markets & Corporate
|
|
16.7
|
|
|
16.7
|
|
Total
|
|
9.5 %
|
|
|
12.7 %
|
|
- U.S.: Comparable sales results benefited from strategic
menu price increases and positive guest counts. Successful
marketing promotions featuring the core menu and continued digital
and delivery growth contributed to positive comparable sales
results.
- International Operated Markets: Strong operating
performance drove positive comparable sales across the segment, led
by strong comparable sales in Germany, Australia and France.
- 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 related government restrictions.
KEY FINANCIAL METRICS - CONSOLIDATED
Dollars in millions, except per share data
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
|
Inc/
(Dec)
|
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
|
2022
|
|
2021
|
|
Inc/
(Dec)
|
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
Revenues
|
$
|
5,872.1
|
|
|
$
|
6,201.3
|
|
|
(5) %
|
|
|
|
2 %
|
|
|
|
$
|
17,256.1
|
|
|
$
|
17,213.8
|
|
|
— %
|
|
|
|
6 %
|
|
|
Operating
income
|
2,763.9
|
|
|
2,986.5
|
|
|
(7)
|
|
|
|
1
|
|
|
|
6,788.3
|
|
|
7,958.9
|
|
|
(15)
|
|
|
|
(9)
|
|
|
Net income
|
1,981.6
|
|
|
2,149.9
|
|
|
(8)
|
|
|
|
(1)
|
|
|
|
4,274.0
|
|
|
5,906.4
|
|
|
(28)
|
|
|
|
(23)
|
|
|
Earnings per
share-diluted
|
$
|
2.68
|
|
|
$
|
2.86
|
|
|
(6) %
|
|
|
|
— %
|
|
|
|
$
|
5.75
|
|
|
$
|
7.86
|
|
|
(27) %
|
|
|
|
(22) %
|
|
|
Results for the quarter and nine months 2022 were negatively
impacted by foreign currency translation due to the weakening of
all major currencies against the U.S. Dollar.
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
Results for 2021 included the following:
- Net pre-tax gains of $106
million, or $0.10 per share,
for the quarter and $339 million, or
$0.33 per share, for the nine months,
primarily related to the sale of McDonald's Japan stock
- $364 million, or $0.48 per share, for the nine months related to
the remeasurement of deferred taxes as a result of a change in the
U.K. statutory income tax rate
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
|
|
2022
|
|
2021
|
|
Inc/
(Dec)
|
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
|
2022
|
|
2021
|
|
Inc/
(Dec)
|
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
GAAP
|
$
|
1,981.6
|
|
|
$
|
2,149.9
|
|
|
(8) %
|
|
|
(1) %
|
|
|
$
|
2.68
|
|
|
$
|
2.86
|
|
|
(6) %
|
|
|
$
|
— %
|
|
(Gains)/charges
|
—
|
|
|
(73.7)
|
|
|
|
|
|
|
|
|
—
|
|
|
(0.10)
|
|
|
|
|
|
|
|
Change in U.K.
statutory tax rate
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
France tax
settlement
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Non-GAAP
|
$
|
1,981.6
|
|
|
$
|
2,076.2
|
|
|
(5) %
|
|
|
2 %
|
|
|
$
|
2.68
|
|
|
$
|
2.76
|
|
|
(3) %
|
|
|
4 %
|
|
|
|
|
Nine Months Ended
September 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
|
$
|
4,274.0
|
|
|
$
|
5,906.4
|
|
|
(28) %
|
|
|
(23) %
|
|
|
$
|
5.75
|
|
|
$
|
7.86
|
|
|
(27) %
|
|
|
(22) %
|
|
(Gains)/charges
|
770.7
|
|
|
(243.4)
|
|
|
|
|
|
|
|
|
1.04
|
|
|
(0.33)
|
|
|
|
|
|
|
|
Change in U.K.
statutory tax rate
|
—
|
|
|
(363.7)
|
|
|
|
|
|
|
|
|
—
|
|
|
(0.48)
|
|
|
|
|
|
|
|
France tax
settlement
|
537.2
|
|
|
—
|
|
|
|
|
|
|
|
|
0.72
|
|
|
—
|
|
|
|
|
|
|
|
Non-GAAP
|
$
|
5,581.9
|
|
|
$
|
5,299.3
|
|
|
5 %
|
|
|
11 %
|
|
|
$
|
7.51
|
|
|
$
|
7.05
|
|
|
7 %
|
|
|
12 %
|
|
In constant currencies, results for both periods reflected
strong operating performance driven by higher sales-driven
Franchised margins. Company-operated margins were negatively
impacted for both periods by the permanent restaurant closures in
Russia and the temporary
restaurant closures in Ukraine, as
well as by inflationary cost pressures. The nine months also
reflected an income tax benefit associated with global tax audit
progression.
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 that remain
closed in Ukraine). Restaurants in
Russia were treated as permanently
closed as of April 1, 2022 and
therefore excluded from the calculation of comparable sales
beginning in the second quarter of 2022. 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 nine months
ended September 30, 2022.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 7:30 a.m. (Central Time) on October 27,
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 October 27, 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
September 30,
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
2,124.8
|
|
|
$
|
2,598.4
|
|
|
$
|
(473.6)
|
|
|
(18) %
|
Revenues from
franchised restaurants
|
3,671.2
|
|
|
3,510.2
|
|
|
161.0
|
|
|
5
|
|
Other
revenues
|
76.1
|
|
|
92.7
|
|
|
(16.6)
|
|
|
(18)
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
5,872.1
|
|
|
6,201.3
|
|
|
(329.2)
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
1,779.6
|
|
|
2,108.4
|
|
|
(328.8)
|
|
|
(16)
|
|
Franchised
restaurants-occupancy expenses
|
589.0
|
|
|
592.6
|
|
|
(3.6)
|
|
|
(1)
|
|
Other restaurant
expenses
|
57.4
|
|
|
68.9
|
|
|
(11.5)
|
|
|
(17)
|
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
93.3
|
|
|
84.1
|
|
|
9.2
|
|
|
11
|
|
Other
|
576.4
|
|
|
559.6
|
|
|
16.8
|
|
|
3
|
|
Other operating
(income) expense, net
|
12.5
|
|
|
(198.8)
|
|
|
211.3
|
|
|
n/m
|
|
Total operating costs
and expenses
|
3,108.2
|
|
|
3,214.8
|
|
|
(106.6)
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,763.9
|
|
|
2,986.5
|
|
|
(222.6)
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
306.2
|
|
|
293.7
|
|
|
12.5
|
|
|
4
|
|
Nonoperating (income)
expense, net
|
(78.5)
|
|
|
1.4
|
|
|
(79.9)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
2,536.2
|
|
|
2,691.4
|
|
|
(155.2)
|
|
|
(6)
|
|
Provision for income
taxes
|
554.6
|
|
|
541.5
|
|
|
13.1
|
|
|
2
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,981.6
|
|
|
$
|
2,149.9
|
|
|
$
|
(168.3)
|
|
|
(8) %
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
2.68
|
|
|
$
|
2.86
|
|
|
$
|
(0.18)
|
|
|
(6) %
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
739.5
|
|
|
752.6
|
|
|
(13.1)
|
|
|
(2) %
|
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,
|
2022
|
|
2021
|
|
Inc/ (Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
6,540.0
|
|
|
$
|
7,248.6
|
|
|
$
|
(708.6)
|
|
|
(10) %
|
Revenues from
franchised restaurants
|
10,460.8
|
|
|
9,693.8
|
|
|
767.0
|
|
|
8
|
|
Other
revenues
|
255.3
|
|
|
271.4
|
|
|
(16.1)
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
17,256.1
|
|
|
17,213.8
|
|
|
42.3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
5,508.6
|
|
|
5,947.0
|
|
|
(438.4)
|
|
|
(7)
|
|
Franchised
restaurants-occupancy expenses
|
1,761.6
|
|
|
1,743.2
|
|
|
18.4
|
|
|
1
|
|
Other restaurant
expenses
|
187.6
|
|
|
204.4
|
|
|
(16.8)
|
|
|
(8)
|
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
279.0
|
|
|
243.2
|
|
|
35.8
|
|
|
15
|
|
Other
|
1,771.9
|
|
|
1,622.4
|
|
|
149.5
|
|
|
9
|
|
Other operating
(income) expense, net
|
959.1
|
|
|
(505.3)
|
|
|
1,464.4
|
|
|
n/m
|
|
Total operating costs
and expenses
|
10,467.8
|
|
|
9,254.9
|
|
|
1,212.9
|
|
|
13
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
6,788.3
|
|
|
7,958.9
|
|
|
(1,170.6)
|
|
|
(15)
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
884.1
|
|
|
890.2
|
|
|
(6.1)
|
|
|
(1)
|
|
Nonoperating (income)
expense, net
|
417.7
|
|
|
48.6
|
|
|
369.1
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
5,486.5
|
|
|
7,020.1
|
|
|
(1,533.6)
|
|
|
(22)
|
|
Provision for income
taxes
|
1,212.5
|
|
|
1,113.7
|
|
|
98.8
|
|
|
9
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
4,274.0
|
|
|
$
|
5,906.4
|
|
|
$
|
(1,632.4)
|
|
|
(28) %
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
5.75
|
|
|
$
|
7.86
|
|
|
$
|
(2.11)
|
|
|
(27) %
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
743.0
|
|
|
751.9
|
|
|
(8.9)
|
|
|
(1) %
|
n/m Not meaningful
6
View original
content:https://www.prnewswire.com/news-releases/mcdonalds-reports-third-quarter-2022-results-301660652.html
SOURCE McDonald's Corporation