McDonald’s: Reports Third Quarter 2019 Results

Chicago / IL. (mdc) McDonald’s Corporation announced results for the third quarter ended September 30, 2019. «Our third quarter performance was strong, and broad-based momentum continued with our 17th consecutive quarter of global comparable sales growth,» said McDonald’s President and Chief Executive Officer Steve Easterbrook. «Globally, our customers are rewarding our commitment of running better restaurants and executing our Velocity Growth Plan by visiting more often.»

Third quarter highlights

• Strong, global comparable sales of 5.9 percent demonstrated broad-based strength with the International Operated segment increase of 5.6 percent, the U.S. increase of 4.8 percent, and the International Developmental Licensed segment increase of 8.1 percent.
• Consolidated revenues increased USD 61.2 million or 1 percent (3 percent in constant currencies) to USD 5.4 billion.
• Systemwide sales increased USD 1.3 billion or 5 percent (7 percent in constant currencies) to USD 26.0 billion.*
• GAAP diluted earnings per share of USD 2.11 was relatively flat with the prior year (increased 2 percent in constant currencies).**
• The Company returned USD 2.4 billion to shareholders through share repurchases and dividends. This brings the cumulative return to shareholders to USD 22.5 billion against our targeted return of about USD 25 billion for the three-year period ending 2019. In addition, the Company announced an 8 percent increase in its quarterly dividend to USD 1.25 per share beginning in the third quarter 2019.

Steve Easterbrook concluded, «As we work to build an even better McDonald’s experience for customers by providing convenience on their terms, we continue to embrace the culture of innovation that helped launch our company over 60 years ago. That culture is rooted in a mission to provide delicious food, served with hospitality, to over 65 million customers who honour us with their business every day.»

(*) Refer to page 3 for a definition of Systemwide sales (not available here …).
(**) Refer to page 2 for additional details (not available here …).

Consolidated Key Highlights

USD in millions, except per share data	Quarters Ended September 30,										Nine Months Ended September 30,
	2019			2018			Change		Change In Constant Currency		2019			2018			Change		Change In Constant Currency
Revenues	USD	5,430.6		USD	5,369.4		1%		3%		USD	15,727.5		USD	15,862.2		(1)%		3
Operating income	2,409.3			2,417.7			0		2		6,777.2			6,823.1			(1)		3
Net income	1,607.9			1,637.3			(2)		0		4,453.2			4,509.0			(1)		2
Earnings per share-diluted*	USD	2.11		USD	2.10		0%		2%		USD	5.80		USD	5.72		1%		5

(*) See table below for additional details.

Results for the quarter and nine months in constant currencies reflected stronger operating performance primarily due to an increase in sales-driven franchised margin dollars, partly offset by lower gains on sales of restaurant businesses, mostly in the U.S.

Results for the nine months 2019 included USD 80 million of pre-tax strategic charges, or USD 0.07 per share, primarily related to impairment associated with the purchase of our joint venture partner’s interest in the India Delhi market, partly offset by gains on the sales of property at the former Corporate headquarters. Results for 2018 reflected income tax costs associated with adjustments to the provisional amounts recorded in December 2017 under the Tax Act of USD 47 million, or USD 0.06 per share, for the quarter and USD 99 million, or USD 0.12 per share, for the nine months. Results for the nine months 2018 also included USD 94 million of pre-tax strategic restructuring charges, or USD 0.09 per share.

Excluding the above items, net income for the quarter decreased 4 percent (3 percent in constant currencies) and diluted earnings per share decreased 2 percent (1 percent in constant currencies), and for the nine months net income decreased 4 percent (flat in constant currencies) and diluted earnings per share decreased 1 percent (increased 2 percent in constant currencies).

Foreign currency translation had a negative impact of USD 0.03 and USD 0.19 on diluted earnings per share for the quarter and nine months, respectively.

Earnings Per Share-Diluted Reconciliation

	Quarters Ended September 30,										Nine Months Ended September 30,
	2019			2018			Change		Change In Constant Currency		2019			2018			Change		Change In Constant Currency
GAAP earnings per share-diluted	USD	2.11		USD	2.10		0%		2%		USD	5.80		USD	5.72		1%		5%
Income tax costs	—			0.06							—			0.12
Strategic charges	—			—							0.07			0.09
Non-GAAP earnings per share-diluted	USD	2.11		USD	2.16		(2)%		(1)%		USD	5.87		USD	5.93		(1)%		2%