OAK BROOK, Ill., Oct. 21, 2016 /PRNewswire/ -- McDonald's
Corporation today announced results for the third quarter ended
September 30, 2016.
"Customers today are more informed and demand greater choice and
variety when they dine out. That's why we're evolving the
McDonald's experience to provide more high quality, affordable food
and beverage options and convenient solutions for customers on the
go," said McDonald's President and Chief Executive Officer
Steve Easterbrook. "Our third
quarter results, including our fifth consecutive quarter of
positive comparable sales across all segments as well as improved
restaurant profitability, are a testament to the progress we are
making to satisfy the needs of today's dynamic customers."
Third quarter highlights:
- Global comparable sales increased 3.5%, reflecting positive
comparable sales in all segments
- Due to the impact of refranchising, consolidated revenues
decreased 3% (1% in constant currencies)
- Consolidated operating income increased 5% (7% in constant
currencies), which included $128
million of previously announced strategic charges,
consisting of restructuring and non-cash impairment charges related
to the Company's global G&A and refranchising initiatives
- Diluted earnings per share of $1.50 increased 7% (9% in constant currencies),
which included strategic charges totaling $0.12 per share. Excluding the impact of these
charges, diluted earnings per share increased 16% (17% in constant
currencies)
- Returned $3.4 billion to
shareholders through share repurchases and dividends. This brings
the cumulative return to shareholders to $27.8 billion against our targeted return of
about $30 billion for the three-year
period ending 2016. In addition, the Company announced a 6%
increase in its dividend beginning in the fourth quarter
Amidst continued industry softness, third quarter comparable
sales increased 1.3% in the U.S. supported by All Day Breakfast,
everyday value under the McPick 2 platform and the introduction of
Chicken McNuggets with no artificial preservatives. U.S. operating
income for the quarter rose 8%, reflecting improved restaurant
profitability and higher gains from refranchising. McDonald's U.S.
begins the fourth quarter with an expanded All Day Breakfast menu
and continued emphasis on food quality and the customer
experience.
Comparable sales for the International Lead segment increased
3.3% for the quarter, reflecting strong sales in the U.K. and
positive results in Australia,
Canada and Germany. Third quarter operating income for
the segment increased 2% (5% in constant currencies) fueled by
sales-driven improvements in franchised margin dollars across most
markets.
Third quarter comparable sales increased 1.5% in the High Growth
segment as positive performance in nearly all markets was partially
offset by negative comparable sales in China due in part to temporary protests
related to events surrounding the South China Sea and comparison
against very strong prior year results. The segment's operating
income rose 8% (10% in constant currencies) driven by improved
restaurant profitability in China,
which benefited from recent VAT reform.
Third quarter comparable sales rose 10.1% in the Foundational
markets led by strong performance in Japan as well as solid results in each of the
segment's geographic regions. For the segment, which includes
Corporate G&A and other costs, operating income for the quarter
declined as Japan's contribution
to the segment's bottom-line profitability was more than offset by
the impact of strategic charges associated with the Company's
global G&A and refranchising initiatives.
Steve Easterbrook concluded, "We
are putting the customer at the center of everything we do and are
directing our resources towards those innovations and investments
that will strengthen our ability to deliver a better McDonald's
experience over time. Our customers, system, and shareholders are
best served when we direct our focus and energy towards executing
against these critical customer expectations. Looking ahead,
we are focused on growing global comparable sales and serving more
customers while being mindful of the near-term challenges in
several markets. We remain committed to driving long-term,
profitable results while pursuing our goal of being recognized by
our customers as a modern, progressive burger company."
KEY HIGHLIGHTS -
CONSOLIDATED
|
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec) Excluding Currency Translation
|
|
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
|
|
Inc/
(Dec) Excluding Currency Translation
|
|
Revenues
|
$
|
6,424.1
|
|
|
$
|
6,615.1
|
|
|
(3)%
|
|
|
(1)%
|
|
|
$
|
18,593.0
|
|
|
$
|
19,071.7
|
|
|
(3)%
|
|
|
0%
|
|
Operating
income
|
2,137.3
|
|
|
2,030.3
|
|
|
5
|
|
|
7
|
|
|
5,775.5
|
|
|
5,265.1
|
|
|
10
|
|
|
12
|
|
Net income
|
1,275.4
|
|
|
1,309.2
|
|
|
(3)
|
|
|
(1)
|
|
|
3,493.1
|
|
|
3,323.1
|
|
|
5
|
|
|
7
|
|
Earnings per
share-diluted
|
$
|
1.50
|
|
|
$
|
1.40
|
|
|
7%
|
|
|
9%
|
|
|
$
|
4.01
|
|
|
$
|
3.49
|
|
|
15%
|
|
|
17%
|
|
Results for the quarter and nine months benefited from stronger
operating performance and higher gains on sales of restaurant
businesses, partly offset by pre-tax restructuring and non-cash
impairment charges of $128 million in
the quarter and $357 million for the
nine months related to the Company's global G&A and
refranchising initiatives. The nine months of 2015 included pre-tax
strategic charges primarily related to store closing costs,
restructuring and other asset write-offs totaling $240 million.
Excluding the impact of the current and prior year charges,
diluted earnings per share increased 16% (17% in constant
currencies) for the quarter and 17% (19% in constant currencies)
for the nine months. This supplemental information is provided to
help investors understand the impact of the current and prior year
charges on the Company's results.
Foreign currency translation had a negative impact of
$0.03 and $0.08 on diluted earnings per share for the
quarter and nine months, respectively.
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. 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.
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 and bases incentive
compensation plans on these results because they believe this
better represents the Company's 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 and nine months
ended September 30, 2016.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 10:00 a.m. (Central Time) on October 21, 2016. 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.
McDonald's plans to release fourth quarter results before the
market opens on January 23, 2017 and
will host an investor webcast. This webcast will be broadcast live
and available for replay for a limited time thereafter at
www.investor.mcdonalds.com.
ABOUT McDONALD'S
McDonald's is the world's leading global foodservice retailer
with over 36,000 locations in over 100 countries. More than 80% 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 October 21,
2016. 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Quarters Ended
September 30,
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
3,972.1
|
|
|
$
|
4,282.9
|
|
|
$
|
(310.8)
|
|
|
(7)%
|
|
Revenues from
franchised restaurants
|
2,452.0
|
|
|
2,332.2
|
|
|
119.8
|
|
|
5
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,424.1
|
|
|
6,615.1
|
|
|
(191.0)
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
3,239.5
|
|
|
3,607.7
|
|
|
(368.2)
|
|
|
(10)
|
|
Franchised
restaurants—occupancy expenses
|
437.6
|
|
|
416.1
|
|
|
21.5
|
|
|
5
|
|
Selling,
general & administrative expenses
|
582.9
|
|
|
584.0
|
|
|
(1.1)
|
|
|
0
|
|
Other operating
(income) expense, net
|
26.8
|
|
|
(23.0)
|
|
|
49.8
|
|
|
n/m
|
|
Total operating costs
and expenses
|
4,286.8
|
|
|
4,584.8
|
|
|
(298.0)
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,137.3
|
|
|
2,030.3
|
|
|
107.0
|
|
|
5
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
221.4
|
|
|
160.9
|
|
|
60.5
|
|
|
38
|
|
Nonoperating (income)
expense, net
|
11.4
|
|
|
(9.0)
|
|
|
20.4
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
1,904.5
|
|
|
1,878.4
|
|
|
26.1
|
|
|
1
|
|
Provision for income
taxes
|
629.1
|
|
|
569.2
|
|
|
59.9
|
|
|
11
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,275.4
|
|
|
$
|
1,309.2
|
|
|
$
|
(33.8)
|
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.50
|
|
|
$
|
1.40
|
|
|
$
|
0.10
|
|
|
7%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
847.7
|
|
|
934.8
|
|
|
(87.1)
|
|
|
(9)%
|
|
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Nine Months Ended
September 30,
|
2016
|
|
|
2015
|
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
11,642.2
|
|
|
$
|
12,458.1
|
|
|
$
|
(815.9)
|
|
|
(7)%
|
|
Revenues from
franchised restaurants
|
6,950.8
|
|
|
6,613.6
|
|
|
337.2
|
|
|
5
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
18,593.0
|
|
|
19,071.7
|
|
|
(478.7)
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
9,662.9
|
|
|
10,558.3
|
|
|
(895.4)
|
|
|
(8)
|
|
Franchised
restaurants—occupancy expenses
|
1,283.6
|
|
|
1,230.7
|
|
|
52.9
|
|
|
4
|
|
Selling,
general & administrative expenses
|
1,757.0
|
|
|
1,759.2
|
|
|
(2.2)
|
|
|
0
|
|
Other operating
(income) expense, net
|
114.0
|
|
|
258.4
|
|
|
(144.4)
|
|
|
(56)
|
|
Total operating costs
and expenses
|
12,817.5
|
|
|
13,806.6
|
|
|
(989.1)
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
5,775.5
|
|
|
5,265.1
|
|
|
510.4
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
663.6
|
|
|
457.4
|
|
|
206.2
|
|
|
45
|
|
Nonoperating (income)
expense, net
|
(19.2)
|
|
|
(37.2)
|
|
|
18.0
|
|
|
48
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
5,131.1
|
|
|
4,844.9
|
|
|
286.2
|
|
|
6
|
|
Provision for income
taxes
|
1,638.0
|
|
|
1,521.8
|
|
|
116.2
|
|
|
8
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
3,493.1
|
|
|
$
|
3,323.1
|
|
|
$
|
170.0
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
4.01
|
|
|
$
|
3.49
|
|
|
$
|
0.52
|
|
|
15%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
871.8
|
|
|
952.7
|
|
|
(80.9)
|
|
|
(8)%
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mcdonalds-reports-third-quarter-2016-results-300348936.html
SOURCE McDonald's Corporation