OAK BROOK, Ill., April 30, 2018 /PRNewswire/ -- McDonald's
Corporation today announced results for the first quarter ended
March 31, 2018.
"We continued to build upon the broad-based momentum of our
business, marking 11 consecutive quarters of positive comparable
sales and our fifth consecutive quarter of positive guest counts,"
said McDonald's President and Chief Executive Officer Steve Easterbrook. "More customers are
recognising that we are becoming a better McDonald's, appreciating
our great tasting food, fast and friendly service and compelling
value as we execute our Velocity Growth Plan."
First quarter highlights:
- Global comparable sales increased 5.5% and global comparable
guest counts increased 0.8%
- Due to the impact of the Company's strategic refranchising
initiative, consolidated revenues decreased 9% (15% in constant
currencies)
- Systemwide sales increased 7% in constant currencies
- Consolidated operating income increased 5% (flat in constant
currencies) due to growth in franchised margin dollars, offset by
the impact of the Company's strategic refranchising initiative
- Diluted earnings per share of $1.72 increased 17% (12% in constant currencies),
reflecting $0.07 per share of
additional income tax expense associated with adjustments to the
provisional amounts recorded in December
2017 under the Tax Cuts and Jobs Act of 2017 ("Tax Act").
Excluding this impact, diluted earnings per share was $1.79, an increase of 22% (16% in constant
currencies)
- Returned $2.5 billion to
shareholders through share repurchases and dividends
In the U.S., first quarter comparable sales increased 2.9%
driven by growth in average check resulting from menu price
increases and product mix shifts. Operating income for the quarter
increased 5%, reflecting higher franchised margin dollars and
higher gains on sales of restaurant businesses, partly offset by
lower Company-operated margin dollars.
Comparable sales for the International Lead segment increased
7.8% for the quarter, reflecting positive results across all
markets, primarily driven by the U.K. and Germany. The segment's operating income
increased 21% (9% in constant currencies), fueled by sales-driven
improvements in franchised margin dollars.
In the High Growth segment, first quarter comparable sales
increased 4.7%, led by strong performance in China and Italy and positive results across most of the
segment, partly offset by continued challenges in South Korea.
In the Foundational markets, first quarter comparable sales rose
8.7%, reflecting positive sales performance across all geographic
regions.
Steve Easterbrook concluded,
"We're keeping the customer at the centre of everything we do as we
continue enhancing their McDonald's experience. Guided by our
Velocity Growth Plan, we are satisfying the rising expectations
customers have for the taste and quality of our food and greater
convenience as they visit our restaurants or enjoy meals delivered
to their homes and offices. We are confident in the strategies
guiding our business for today and for long-term sustained growth
into the future."
KEY HIGHLIGHTS -
CONSOLIDATED
|
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
March 31,
|
2018
|
|
2017
|
|
Inc/
(Dec)
|
|
Inc/
(Dec) Excluding Currency Translation
|
Revenues
|
$
|
5,138.9
|
|
$
|
5,675.9
|
|
(9)%
|
|
(15)%
|
Operating
income
|
2,143.1
|
|
2,034.0
|
|
5
|
|
0
|
Net income
|
1,375.4
|
|
1,214.8
|
|
13
|
|
8
|
Earnings per
share-diluted
|
$
|
1.72
|
|
$
|
1.47
|
|
17%
|
|
12%
|
Results for the quarter reflected an increase in sales-driven
franchised margin dollars and the benefit from a lower effective
tax rate, partly offset by lower Company-operated margin dollars
driven by refranchising.
Results included approximately $52
million, or $0.07 per share,
of additional income tax expense associated with adjustments to the
provisional amounts recorded in December
2017 under the Tax Act. Excluding these adjustments, net
income was $1,427.7 million, an
increase of 18% (12% in constant currencies), and diluted earnings
per share was $1.79, an increase of
22% (16% in constant currencies).
Foreign currency translation had a positive impact of
$0.08 for the quarter on diluted
earnings per share.
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED
THROUGHOUT THIS RELEASE
Comparable sales represent sales at all restaurants and
comparable guest counts represent the number of transactions 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 and
natural disasters. Comparable sales exclude the impact of currency
translation and sales from hyper-inflationary markets (currently
only Venezuela). Management
generally identifies hyper-inflationary markets as those markets
whose cumulative inflation rate over a three-year period exceeds
100%. Management believes that these exclusions more accurately
reflect the underlying business trends. Comparable sales are driven
by changes in guest counts and average check, which is affected by
changes in pricing and product mix. Typically, pricing has a
greater impact on average check than product mix. Management
reviews the increase or decrease in comparable sales and comparable
guest counts compared with the same period in the prior year to
assess business trends.
Systemwide sales include sales at all restaurants, whether
operated by the Company or by franchisees. 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.
Information in constant currency is 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 adjustments to the
provisional amounts recorded in December
2017 under the Tax Act, and bases incentive compensation
plans on these results, because the Company believes this better
represents underlying business trends.
RELATED COMMUNICATIONS
This press release should be read in conjunction with Exhibit
99.2 in the Company's Form 8-K filing for supplemental information
related to the Company's results for the quarter ended
March 31, 2018.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 10:00 a.m. (Central Time) on April 30, 2018.
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 plans
to use this website as a primary channel for publishing 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 37,000 locations in over 100 countries. Over 90% of
McDonald's restaurants worldwide are owned and operated by
independent local business men and women.
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. The factors that could cause actual results to
differ materially from our expectations are detailed in the
Company's filings with the Securities and Exchange Commission,
including the risk factors discussed in Exhibit 99.2 in the
Company's Form 8-K filing on April 30, 2018. The Company
undertakes no obligation to update such forward-looking statements,
except as may otherwise be required by law.
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
|
|
|
Quarters Ended
March 31,
|
2018
|
|
2017
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
2,535.6
|
|
$
|
3,411.9
|
|
$
|
(876.3)
|
|
(26)%
|
Revenues from
franchised restaurants
|
2,603.3
|
|
2,264.0
|
|
339.3
|
|
15
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
5,138.9
|
|
5,675.9
|
|
(537.0)
|
|
(9)
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
2,130.9
|
|
2,816.4
|
|
(685.5)
|
|
(24)
|
Franchised
restaurants-occupancy expenses
|
480.3
|
|
430.1
|
|
50.2
|
|
12
|
Selling,
general & administrative expenses
|
533.1
|
|
521.3
|
|
11.8
|
|
2
|
Other operating
(income) expense, net
|
(148.5)
|
|
(125.9)
|
|
(22.6)
|
|
(18)
|
Total operating costs
and expenses
|
2,995.8
|
|
3,641.9
|
|
(646.1)
|
|
(18)
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,143.1
|
|
2,034.0
|
|
109.1
|
|
5
|
|
|
|
|
|
|
|
|
Interest
expense
|
236.8
|
|
218.6
|
|
18.2
|
|
8
|
Nonoperating (income)
expense, net
|
18.4
|
|
7.9
|
|
10.5
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
1,887.9
|
|
1,807.5
|
|
80.4
|
|
4
|
Provision for income
taxes
|
512.5
|
|
592.7
|
|
(80.2)
|
|
(14)
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,375.4
|
|
$
|
1,214.8
|
|
$
|
160.6
|
|
13%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.72
|
|
$
|
1.47
|
|
$
|
0.25
|
|
17%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
798.7
|
|
825.2
|
|
(26.5)
|
|
(3)%
|
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SOURCE McDonald's Corporation