CHICAGO, Oct. 27, 2021 /PRNewswire/ -- McDonald's
Corporation today announced results for the third quarter ended
September 30, 2021.
"Our third quarter results are a testament to our unparalleled
scale and agility," said McDonald's President and Chief Executive
Officer, Chris Kempczinski. "Our
global comparable sales increased 10% over 2019, which was
delivered across an omnichannel experience that is focused on
meeting the needs of our customers. We continue to execute our
strategic growth plan and run great restaurants so that we can
drive long-term, sustainable growth for all of our
stakeholders."
Third quarter financial performance:
- Global comparable sales increased 12.7% (10.2% on a 2-year
basis), reflecting positive comparable sales across all
segments:
-
- U.S. increased 9.6% (14.6% on a 2-year basis)
- International Operated Markets segment increased 13.9% (8.9% on
a 2-year basis)
- International Developmental Licensed Markets segment increased
16.7% (4.9% on a 2-year basis)
- Consolidated revenues increased 14% (13% in constant
currencies) to $6,201 million.
- Systemwide sales increased 16% (14% in constant currencies) to
$29,948 million.
- Consolidated operating income increased 18% (17% in constant
currencies) to $2,987 million and
included $106 million of strategic
gains related to the sale of McDonald's Japan stock.
- Diluted earnings per share was $2.86. Excluding strategic gains of $0.10 per share in 2021 and $0.13 per share in 2020, diluted earnings per
share for the quarter was $2.76, an
increase of 24% (23% in constant currencies).
- The Company declared a 7% increase in its quarterly cash
dividend to $1.38 per share and also
announced the resumption of its share repurchase program.
*Refer to page 4 for a definition of Systemwide sales.
COMPARABLE
SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|
Quarters Ended
September 30,
|
|
|
2021
|
|
2020
|
U.S.
|
|
9.6%
|
|
4.6%
|
International
Operated Markets
|
|
13.9
|
|
(4.4)
|
International
Developmental Licensed Markets & Corporate
|
|
16.7
|
|
(10.1)
|
Total
|
|
12.7%
|
|
(2.2)%
|
- Comparable Sales: Quarterly comparable sales and guest
counts were positive across all segments. Comparable sales were
impacted in both periods (to a greater extent in 2020) by
COVID-19.
-
- U.S.: Comparable sales benefited from strong average
check growth driven by larger order sizes and menu price increases.
Strong menu and marketing promotions, such as the Crispy Chicken
Sandwich and the Famous Orders platform, contributed to the
comparable sales growth, as well as growth in digital channels,
which benefited from the launch of the Company's loyalty program —
"MyMcDonald's Rewards." Comparable sales increased 14.6% on a
2-year basis.
- International Operated Markets: Segment performance was
led by very strong positive comparable sales in the U.K. as well as
positive comparable sales in Canada, France and Germany driven by strong operating performance
and significantly fewer restaurant closures with the easing of
COVID-19 restrictions. Restrictions in the quarter muted comparable
sales in Australia. Comparable
sales increased 8.9% on a 2-year basis.
- International Developmental Licensed Markets: The
quarter reflected strong comparable sales across most regions, led
by Japan and Latin America, partly offset by negative
comparable sales in China due to
COVID-19 resurgences. Comparable sales increased 4.9% on a 2-year
basis.
COVID-19 continued to result in some instances of government
restrictions on restaurant operating hours, limited dine-in
capacity and, in some cases, dining room closures. The Company has
continued to apply appropriate precautionary measures, including
following the guidance of expert health authorities, to protect the
health and safety of its people and customers and expects some
operating restrictions in various markets so long as the COVID-19
pandemic continues.
KEY FINANCIAL METRICS
- CONSOLIDATED
|
Dollars in millions,
except per share data
|
|
|
Quarters Ended
September 30,
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
|
Inc/
(Dec) Excluding Currency Translation
|
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
|
Inc/
(Dec) Excluding Currency Translation
|
Revenues
|
$
|
6,201.3
|
|
$
|
5,418.1
|
|
14%
|
|
13%
|
|
$
|
17,213.8
|
|
$
|
13,894.0
|
|
24%
|
|
20%
|
Operating
income
|
2,986.5
|
|
2,526.4
|
|
18
|
|
17
|
|
7,958.9
|
|
5,181.1
|
|
54
|
|
49
|
Net income
|
2,149.9
|
|
1,762.6
|
|
22
|
|
21
|
|
5,906.4
|
|
3,353.3
|
|
76
|
|
71
|
Earnings per
share-diluted
|
$
|
2.86
|
|
$
|
2.35
|
|
22%
|
|
20%
|
|
$
|
7.86
|
|
$
|
4.47
|
|
76%
|
|
71%
|
Results for the quarter and nine months reflected stronger
operating performance across all segments due to higher
sales-driven restaurant margins as a result of fewer restaurant
closures and the easing of COVID-19 restrictions compared with the
prior year.
Results for 2021 included the following:
- Net pre-tax strategic 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, which completed the planned
partial divestiture of the Company's ownership in McDonald's
Japan
- $364 million, or $0.48 per share, for the nine months of income
tax benefits related to the remeasurement of deferred taxes as a
result of a change in the U.K. statutory income tax rate
Results for 2020 included the following:
- Net pre-tax strategic gains of $139
million, or $0.13 per share,
for the quarter and $125 million, or
$0.12 per share, for the nine months,
primarily related to the sale of McDonald's Japan stock
Foreign currency translation benefited diluted earnings per
share by $0.04 for the quarter and
$0.23 for the nine months.
EARNINGS PER
SHARE-DILUTED RECONCILIATION
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
|
Inc/
(Dec)
Excluding Currency Translation
|
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
|
Inc/ (Dec)
Excluding
Currency
Translation
|
GAAP earnings per
share-diluted
|
$
|
2.86
|
|
$
|
2.35
|
|
22%
|
|
20%
|
|
$
|
7.86
|
|
$
|
4.47
|
|
76%
|
|
71%
|
Strategic
gains
|
(0.10)
|
|
(0.13)
|
|
|
|
|
|
|
(0.33)
|
|
(0.12)
|
|
|
|
|
Income tax
benefits
|
—
|
|
—
|
|
|
|
|
|
|
(0.48)
|
|
—
|
|
|
|
|
Non-GAAP earnings per
share-diluted
|
$
|
2.76
|
|
$
|
2.22
|
|
24%
|
|
23%
|
|
$
|
7.05
|
|
$
|
4.35
|
|
62%
|
|
57%
|
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 and natural disasters
(including restaurants temporarily closed due to COVID-19).
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.
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.
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 (excluding the effect of
impairment and other strategic charges and gains, as well as
material regulatory and other income tax impacts), 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, 2021.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 7:30 a.m. (Central Time) on October 27,
2021. 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
93% 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, 2021. 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
September 30,
|
2021
|
|
2020
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
2,598.4
|
|
$
|
2,286.4
|
|
$
|
312.0
|
|
14%
|
Revenues from
franchised restaurants
|
3,510.2
|
|
3,044.8
|
|
465.4
|
|
15
|
Other
revenues
|
92.7
|
|
86.9
|
|
5.8
|
|
7
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,201.3
|
|
5,418.1
|
|
783.2
|
|
14
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
2,108.4
|
|
1,876.3
|
|
232.1
|
|
12
|
Franchised
restaurants-occupancy expenses
|
592.6
|
|
567.9
|
|
24.7
|
|
4
|
Other restaurant
expenses
|
68.9
|
|
69.2
|
|
(0.3)
|
|
0
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
84.1
|
|
75.8
|
|
8.3
|
|
11
|
Other
|
559.6
|
|
454.7
|
|
104.9
|
|
23
|
Other operating
(income) expense, net
|
(198.8)
|
|
(152.2)
|
|
(46.6)
|
|
(31)
|
Total operating costs
and expenses
|
3,214.8
|
|
2,891.7
|
|
323.1
|
|
11
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,986.5
|
|
2,526.4
|
|
460.1
|
|
18
|
|
|
|
|
|
|
|
|
Interest
expense
|
293.7
|
|
310.1
|
|
(16.4)
|
|
(5)
|
Nonoperating (income)
expense, net
|
1.4
|
|
(0.8)
|
|
2.2
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
2,691.4
|
|
2,217.1
|
|
474.3
|
|
21
|
Provision for income
taxes
|
541.5
|
|
454.5
|
|
87.0
|
|
19
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
2,149.9
|
|
$
|
1,762.6
|
|
$
|
387.3
|
|
22%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
2.86
|
|
$
|
2.35
|
|
$
|
0.51
|
|
22%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
752.6
|
|
750.0
|
|
2.6
|
|
0%
|
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Nine Months Ended
September 30,
|
2021
|
|
|
2020
|
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
7,248.6
|
|
|
$
|
5,905.9
|
|
|
$
|
1,342.7
|
|
|
23%
|
Revenues from
franchised restaurants
|
9,693.8
|
|
|
7,740.8
|
|
|
1,953.0
|
|
|
25
|
Other
revenues
|
271.4
|
|
|
247.3
|
|
|
24.1
|
|
|
10
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
17,213.8
|
|
|
13,894.0
|
|
|
3,319.8
|
|
|
24
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
5,947.0
|
|
|
5,077.5
|
|
|
869.5
|
|
|
17
|
Franchised
restaurants-occupancy expenses
|
1,743.2
|
|
|
1,646.6
|
|
|
96.6
|
|
|
6
|
Other restaurant
expenses
|
204.4
|
|
|
198.0
|
|
|
6.4
|
|
|
3
|
Selling,
general & administrative expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
243.2
|
|
|
220.3
|
|
|
22.9
|
|
|
10
|
Other
|
1,622.4
|
|
|
1,547.0
|
|
|
75.4
|
|
|
5
|
Other operating
(income) expense, net
|
(505.3)
|
|
|
23.5
|
|
|
(528.8)
|
|
|
n/m
|
Total operating costs
and expenses
|
9,254.9
|
|
|
8,712.9
|
|
|
542.0
|
|
|
6
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
7,958.9
|
|
|
5,181.1
|
|
|
2,777.8
|
|
|
54
|
|
|
|
|
|
|
|
|
Interest
expense
|
890.2
|
|
|
909.2
|
|
|
(19.0)
|
|
|
(2)
|
Nonoperating (income)
expense, net
|
48.6
|
|
|
(38.8)
|
|
|
87.4
|
|
|
n/m
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
7,020.1
|
|
|
4,310.7
|
|
|
2,709.4
|
|
|
63
|
Provision for income
taxes
|
1,113.7
|
|
|
957.4
|
|
|
156.3
|
|
|
16
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
5,906.4
|
|
|
$
|
3,353.3
|
|
|
$
|
2,553.1
|
|
|
76%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
7.86
|
|
|
$
|
4.47
|
|
|
$
|
3.39
|
|
|
76%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
751.9
|
|
|
749.8
|
|
|
2.1
|
|
|
0%
|
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SOURCE McDonald's Corporation