PR Newswire
CHICAGO, Feb. 5, 2024
CHICAGO, Feb. 5, 2024 /PRNewswire/ -- McDonald's Corporation today announced results for the fourth quarter and year ended December 31, 2023.
"Our global comparable sales growth of 9% for the year is a testament to the tremendous dedication of the entire McDonald's System," said McDonald's President and CEO Chris Kempczinski. "Strong execution of our Accelerating the Arches strategy has driven over 30% comparable sales growth since 2019 as our talented crew members, and the industry's best franchisees and suppliers have demonstrated proven agility with a relentless focus on the customer. By evolving the way we work across the System, we remain confident in the resilience of our business amid macro challenges that will persist in 2024."
Fourth quarter financial performance:
Full year financial performance:
1
*Refer to page 5 for a definition of Systemwide sales.
**Refer to pages 3 and 4 for additional details on our results for the fourth quarter and full year 2023 and 2022.
2
COMPARABLE SALES
| ||||
Increase/(Decrease) | ||||
Quarters Ended December 31, | ||||
2023 | 2022 | |||
U.S. | 4.3 % | 10.3 % | ||
International Operated Markets | 4.4 | 12.6 | ||
International Developmental Licensed Markets & Corporate | 0.7 | 16.5 | ||
Total | 3.4 % | 12.6 % |
KEY FINANCIAL METRICS - CONSOLIDATED Dollars in millions, except per share data
| ||||||||||||||||||||
Quarters Ended December 31, | Years Ended December 31, | |||||||||||||||||||
2023 | 2022 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | 2023 | 2022 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | |||||||||||||
Revenues | $ 6,406.2 | $ 5,926.5 | 8 | % | 6 | % | $ 25,493.7 | $ 23,182.6 | 10 | % | 10 | % | ||||||||
Operating income | 2,801.9 | 2,582.7 | 8 | 6 | 11,646.7 | 9,371.0 | 24 | 24 | ||||||||||||
Net income | 2,039.0 | 1,903.4 | 7 | 5 | 8,468.8 | 6,177.4 | 37 | 37 | ||||||||||||
Earnings per share-diluted | $ 2.80 | $ 2.59 | 8 | % | 5 | % | $ 11.56 | $ 8.33 | 39 | % | 38 | % |
Results for 2023 included the following:
Results for 2022 included the following:
Excluding the above items, results for both periods reflected strong operating performance driven primarily by higher sales-driven Franchised margins.
3
NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION Dollars in millions, except per share data
| |||||||||||||||||||
Quarters Ended December 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 | $ 2,039.0 | $ 1,903.4 | 7 | % | 5 | % | $ 2.80 | $ 2.59 | 8 | % | 5 | % | |||||||
(Gains)/charges | 105.6 | — | 0.15 | — | |||||||||||||||
Tax Settlement | — | — | — | — | |||||||||||||||
Non-GAAP | $ 2,144.6 | $ 1,903.4 | 13 | % | 10 | % | $ 2.95 | $ 2.59 | 14 | % | 11 | % | |||||||
Years Ended December 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 | $ 8,468.8 | $ 6,177.4 | 37 | % | 37 | % | $ 11.56 | $ 8.33 | 39 | % | 38 | % | |||||||
(Gains)/charges | 273.7 | 770.7 | 0.38 | 1.04 | |||||||||||||||
Tax Settlement | — | 537.2 | — | 0.73 | |||||||||||||||
Non-GAAP | $ 8,742.5 | $ 7,485.3 | 17 | % | 16 | % | $ 11.94 | $ 10.10 | 18 | % | 18 | % |
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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, pandemics and acts of war, terrorism or other hostilities. 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. Systemwide sales to loyalty members is comprised of all sales to customers who self-identify as a loyalty member when transacting with both Company-operated and franchised restaurants. Systemwide sales to loyalty members are measured across approximately 50 markets with loyalty programs globally. Full year Systemwide sales to loyalty members represents an annual aggregation of quarterly sales to loyalty members active in the last 90 days. 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 and year ended December 31, 2023.
McDonald's Corporation will broadcast its investor earnings conference call live over the Internet at 7:30 a.m. (Central Time) on February 5, 2024. 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 February 5, 2024. The Company undertakes no obligation to update such forward-looking statements, except as may otherwise be required by law.
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McDONALD'S CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
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Dollars and shares in millions, except per share data | |||||||
Quarters Ended December 31, | 2023 | 2022 | Inc/ (Dec) | ||||
Revenues | |||||||
Sales by Company-operated restaurants | $ 2,474.1 | $ 2,208.4 | $ 265.7 | 12 % | |||
Revenues from franchised restaurants | 3,868.6 | 3,645.0 | 223.6 | 6 | |||
Other revenues | 63.5 | 73.1 | (9.6) | (13) | |||
TOTAL REVENUES | 6,406.2 | 5,926.5 | 479.7 | 8 | |||
Operating costs and expenses | |||||||
Company-operated restaurant expenses | 2,074.7 | 1,872.3 | 202.4 | 11 | |||
Franchised restaurants-occupancy expenses | 632.7 | 588.1 | 44.6 | 8 | |||
Other restaurant expenses | 44.6 | 57.2 | (12.6) | (22) | |||
Selling, general & administrative expenses | |||||||
Depreciation and amortization | 90.5 | 91.4 | (0.9) | (1) | |||
Other | 730.9 | 720.3 | 10.6 | 1 | |||
Other operating (income) expense, net | 30.9 | 14.5 | 16.4 | n/m | |||
Total operating costs and expenses | 3,604.3 | 3,343.8 | 260.5 | 8 | |||
OPERATING INCOME | 2,801.9 | 2,582.7 | 219.2 | 8 | |||
Interest expense | 360.2 | 322.9 | 37.3 | 12 | |||
Nonoperating (income) expense, net | (73.3) | (79.1) | 5.8 | (7) | |||
Income before provision for income taxes | 2,515.0 | 2,338.9 | 176.1 | 8 | |||
Provision for income taxes | 476.0 | 435.5 | 40.5 | 9 | |||
NET INCOME | $ 2,039.0 | $ 1,903.4 | $ 135.6 | 7 % | |||
EARNINGS PER SHARE-DILUTED | $ 2.80 | $ 2.59 | $ 0.21 | 8 % | |||
Weighted average shares outstanding-diluted | 727.8 | 736.0 | (8.2) | (1) % |
n/m Not meaningful |
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McDONALD'S CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
| |||||||
Dollars and shares in millions, except per share data | |||||||
Years Ended December 31, | 2023 | 2022 | Inc/ (Dec) | ||||
Revenues | |||||||
Sales by Company-operated restaurants | $ 9,741.6 | $ 8,748.4 | $ 993.2 | 11 % | |||
Revenues from franchised restaurants | 15,436.5 | 14,105.8 | 1,330.7 | 9 | |||
Other revenues | 315.6 | 328.4 | (12.8) | (4) | |||
TOTAL REVENUES | 25,493.7 | 23,182.6 | 2,311.1 | 10 | |||
Operating costs and expenses | |||||||
Company-operated restaurant expenses | 8,224.1 | 7,380.9 | 843.2 | 11 | |||
Franchised restaurants-occupancy expenses | 2,474.6 | 2,349.7 | 124.9 | 5 | |||
Other restaurant expenses | 232.5 | 244.8 | (12.3) | (5) | |||
Selling, general & administrative expenses | |||||||
Depreciation and amortization | 381.7 | 370.4 | 11.3 | 3 | |||
Other | 2,435.2 | 2,492.2 | (57.0) | (2) | |||
Other operating (income) expense, net | 98.9 | 973.6 | (874.7) | (90) | |||
Total operating costs and expenses | 13,847.0 | 13,811.6 | 35.4 | — | |||
OPERATING INCOME | 11,646.7 | 9,371.0 | 2,275.7 | 24 | |||
Interest expense | 1,360.8 | 1,207.0 | 153.8 | 13 | |||
Nonoperating (income) expense, net | (236.3) | 338.6 | (574.9) | n/m | |||
Income before provision for income taxes | 10,522.2 | 7,825.4 | 2,696.8 | 34 | |||
Provision for income taxes | 2,053.4 | 1,648.0 | 405.4 | 25 | |||
NET INCOME | $ 8,468.8 | $ 6,177.4 | $ 2,291.4 | 37 % | |||
EARNINGS PER SHARE-DILUTED | $ 11.56 | $ 8.33 | $ 3.23 | 39 % | |||
Weighted average shares outstanding-diluted | 732.3 | 741.3 | (9.0) | (1) % |
n/m Not meaningful |
7
McDONALD'S CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
| ||||
In millions | December 31, | 2023 | 2022 | |
Current assets | ||||
Cash and equivalents | $ 4,579.3 | $ 2,583.8 | ||
Accounts and notes receivable | 2,488.0 | 2,115.0 | ||
Other current assets | 919.1 | 725.4 | ||
TOTAL CURRENT ASSETS | 7,986.4 | 5,424.2 | ||
TOTAL OTHER ASSETS | 9,738.4 | 8,672.1 | ||
LEASE RIGHT-OF-USE ASSET, NET | 13,514.4 | 12,565.7 | ||
NET PROPERTY AND EQUIPMENT | 24,907.6 | 23,773.6 | ||
TOTAL ASSETS | $ 56,146.8 | $ 50,435.6 | ||
TOTAL CURRENT LIABILITIES | $ 6,859.0 | $ 3,802.1 | ||
Long-term debt | 37,152.9 | 35,903.5 | ||
Long-term lease liability | 13,057.7 | 12,134.4 | ||
Other long-term liabilities | 2,103.0 | 2,601.5 | ||
Deferred income taxes | 1,680.9 | 1,997.5 | ||
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) | (4,706.7) | (6,003.4) | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | $ 56,146.8 | $ 50,435.6 |
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McDONALD'S CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| |||
In millions | Years ended December 31, | 2023 | 2022 |
Operating activities | |||
Net income | $ 8,468.8 | $ 6,177.4 | |
Changes in working capital items | (108.0) | (644.6) | |
Other | 1,251.1 | 1,853.9 | |
CASH PROVIDED BY OPERATIONS | 9,611.9 | 7,386.7 | |
Investing activities | |||
Capital expenditures | (2,357.4) | (1,899.2) | |
Sales and purchases of restaurant and other businesses and property sales | (151.0) | (322.2) | |
Other | (676.1) | (456.7) | |
CASH USED FOR INVESTING ACTIVITIES | (3,184.5) | (2,678.1) | |
Financing activities | |||
Net short-term borrowings and long-term financing issuances and payments | 2,992.8 | 1,197.6 | |
Treasury stock purchases | (3,054.3) | (3,896.0) | |
Common stock dividends | (4,532.8) | (4,168.2) | |
Proceeds from stock option exercises and other | 220.2 | 286.4 | |
CASH USED FOR FINANCING ACTIVITIES | (4,374.1) | (6,580.2) | |
EFFECT OF EXCHANGE RATES ON CASH AND EQUIVALENTS | (57.8) | (253.8) | |
CASH AND EQUIVALENTS INCREASE (DECREASE) | 1,995.5 | (2,125.4) | |
Cash and equivalents at beginning of year | 2,583.8 | 4,709.2 | |
CASH AND EQUIVALENTS AT END OF YEAR | $ 4,579.3 | $ 2,583.8 | |
Supplemental cash flow disclosures | |||
Cash provided by operations | $ 9,611.9 | $ 7,386.7 | |
Less: Capital expenditures | (2,357.4) | (1,899.2) | |
FREE CASH FLOW | $ 7,254.5 | $ 5,487.5 |
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SOURCE McDonald's Corporation
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