- Comparable sales increased nearly 13% for the quarter, both
globally and across each segment
- Digital Systemwide sales* in our top six markets were nearly
$7.5 billion for the quarter,
representing almost 40% of their Systemwide sales
CHICAGO, April 25,
2023 /PRNewswire/ -- McDonald's Corporation today
announced results for the first quarter ended March 31, 2023.
"Our strong first quarter results demonstrate that our
Accelerating the Arches strategy is working, as comparable
sales grew 12.6% through a healthy balance of strategic menu price
increases and positive traffic growth," said Chris Kempczinski, McDonald's President and
Chief Executive Officer. "Running great restaurants is fundamental
to our business momentum. We have refocused on operational
excellence through our global Performance and Customer Excellence
(PACE) initiative, and we've seen significant customer satisfaction
improvement around the world. Amidst a challenging operating
environment, customer demand for McDonald's Brand remains
strong."
First quarter financial performance:
- Global comparable sales increased 12.6%, reflecting strong
comparable sales of 12.6% across each segment.
- Consolidated revenues increased 4% (8% in constant
currencies).
- Systemwide sales increased 9% (13% in constant
currencies).
- Consolidated operating income increased 10% (14% in constant
currencies).
- Diluted earnings per share was $2.45, an increase of 66% (72% in constant
currencies). Excluding $0.18 per
share of current year restructuring charges related to the
Company's internal effort to modernize ways of working
(Accelerating the Organization), diluted earnings per share
was $2.63, an increase of 15% (19% in
constant currencies) when also excluding prior year charges.**
*Refer to page 3 for a definition of Systemwide sales.
**Refer to page 2 for additional details on charges for the first
quarter 2023 and 2022.
1
COMPARABLE SALES
|
|
Increase/(Decrease)
|
|
|
Quarters Ended March 31,
|
|
|
2023
|
|
2022
|
U.S.
|
|
12.6
|
%
|
|
3.5
|
%
|
International Operated
Markets
|
|
12.6
|
|
|
20.4
|
|
International
Developmental Licensed Markets & Corporate
|
|
12.6
|
|
|
14.7
|
|
Total
|
|
12.6
|
%
|
|
11.8
|
%
|
- U.S.: Comparable sales results benefited from strategic
menu price increases and positive comparable guest count growth.
Successful operational execution in McDonald's restaurants,
effective marketing campaigns featuring the core menu and continued
digital and delivery growth contributed to strong comparable sales
results.
- International Operated Markets: Segment performance was
led by strong comparable sales across the Big Five* and the
majority of other markets.
- International Developmental Licensed Markets: The
quarter reflected strong comparable sales across the segment, led
by Japan, along with all
geographic regions.
KEY FINANCIAL METRICS - CONSOLIDATED
Dollars in millions, except per share data
|
Quarters Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Inc/ (Dec)
|
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
5,897.8
|
|
|
$
|
5,665.6
|
|
|
4
|
|
%
|
|
8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
2,532.4
|
|
|
2,312.6
|
|
|
10
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
1,802.3
|
|
|
1,104.4
|
|
|
63
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share-diluted
|
$
|
2.45
|
|
|
$
|
1.48
|
|
|
66
|
|
%
|
|
72
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Results for 2023 included the following:
- Pre-tax restructuring charges of $180
million, or $0.18 per share,
related to Accelerating the Organization
Results for 2022 included the following:
- Pre-tax expenses of $127 million,
or $0.13 per share, primarily
incurred to support the Company's business in Russia
- $500 million, or $0.67 per share, 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.
NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION
Dollars in millions, except per share data
|
Quarters Ended March 31,
|
|
|
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
|
$
|
1,802.3
|
|
|
$
|
1,104.4
|
|
|
63
|
|
%
|
|
69
|
|
%
|
|
$
|
2.45
|
|
|
$
|
1.48
|
|
|
66
|
|
%
|
|
72
|
|
%
|
(Gains)/charges
|
134.4
|
|
|
102.1
|
|
|
|
|
|
|
|
|
0.18
|
|
|
0.13
|
|
|
|
|
|
|
|
Tax
settlement
|
—
|
|
|
500.0
|
|
|
|
|
|
|
|
|
—
|
|
|
0.67
|
|
|
|
|
|
|
|
Non-GAAP
|
$
|
1,936.7
|
|
|
$
|
1,706.5
|
|
|
13
|
|
%
|
|
17
|
|
%
|
|
$
|
2.63
|
|
|
$
|
2.28
|
|
|
15
|
|
%
|
|
19
|
|
%
|
|
*Australia, Canada,
France, Germany and the U.K. are collectively referred to as the
"Big Five" international markets.
|
2
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 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 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 ended
March 31, 2023.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 7:30 a.m. (Central Time) on April 25, 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 April 25, 2023. The Company
undertakes no obligation to update such forward-looking statements,
except as may otherwise be required by law.
3
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|
Dollars and shares in millions, except per share
data
|
|
|
|
|
|
Quarters Ended March 31,
|
2023
|
|
2022
|
|
Inc/ (Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
2,224.3
|
|
|
$
|
2,302.4
|
|
|
$
|
(78.1)
|
|
|
(3)
|
%
|
Revenues from
franchised restaurants
|
3,587.5
|
|
|
3,262.8
|
|
|
324.7
|
|
|
10
|
|
Other
revenues
|
86.0
|
|
|
100.4
|
|
|
(14.4)
|
|
|
(14)
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
5,897.8
|
|
|
5,665.6
|
|
|
232.2
|
|
|
4
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
1,923.1
|
|
|
1,959.2
|
|
|
(36.1)
|
|
|
(2)
|
|
Franchised
restaurants-occupancy expenses
|
598.3
|
|
|
584.0
|
|
|
14.3
|
|
|
2
|
|
Other restaurant
expenses
|
62.8
|
|
|
72.3
|
|
|
(9.5)
|
|
|
(13)
|
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
99.3
|
|
|
92.7
|
|
|
6.6
|
|
|
7
|
|
Other
|
553.3
|
|
|
584.3
|
|
|
(31.0)
|
|
|
(5)
|
|
Other operating
(income) expense, net
|
128.6
|
|
|
60.5
|
|
|
68.1
|
|
|
n/m
|
Total operating costs
and expenses
|
3,365.4
|
|
|
3,353.0
|
|
|
12.4
|
|
|
—
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,532.4
|
|
|
2,312.6
|
|
|
219.8
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
329.7
|
|
|
287.3
|
|
|
42.4
|
|
|
15
|
|
Nonoperating (income)
expense, net
|
(64.3)
|
|
|
484.1
|
|
|
(548.4)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
2,267.0
|
|
|
1,541.2
|
|
|
725.8
|
|
|
47
|
|
Provision for income
taxes
|
464.7
|
|
|
436.8
|
|
|
27.9
|
|
|
6
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,802.3
|
|
|
$
|
1,104.4
|
|
|
$
|
697.9
|
|
|
63
|
%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
2.45
|
|
|
$
|
1.48
|
|
|
$
|
0.97
|
|
|
66
|
%
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-diluted
|
735.5
|
|
|
747.6
|
|
|
(12.1)
|
|
|
(2)
|
%
|
4
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SOURCE McDonald's Corporation