McDonald's Reports Third Quarter 2020 Results - 09.11.20 - News

CHICAGO, Nov. 9, 2020

"The resilience of the McDonald's system was on display during the third quarter as the competitive strength of our business and the 3 D's – Digital, Delivery and Drive Thru – led to significant global comparable sales recovery," said McDonald's Chief Financial Officer Kevin Ozan. "Our franchisees and restaurant teams around the world remain focused on running great restaurants and continuing to provide a safe environment for customers to enjoy our great tasting food."

Third quarter financial performance:

Global comparable sales declined 2.2%. Monthly comparable sales results improved sequentially for all segments throughout the third quarter.
Consolidated revenues decreased 2% (2% in constant currencies).
Systemwide sales were flat with the prior year (decreased 1% in constant currencies).
Consolidated operating income increased 5% (3% in constant currencies) and included $139 million of strategic gains on the sale of McDonald's Japan stock. Excluding these gains, operating income decreased 1% (2% in constant currencies).
Diluted earnings per share of $2.35 increased 11% (10% in constant currencies). Excluding $0.13 per share of strategic gains related to the sale of McDonald's Japan stock, diluted earnings per share was $2.22 for the quarter, an increase of 5% (4% in constant currencies).
The Company declared a 3% increase in its quarterly cash dividend to $1.29 per share, payable on December 15, 2020.

THIRD QUARTER COMPARABLE SALES

Increase/(Decrease)

Quarters Ended September 30,

ARIVA.DE Börsen-Geflüster

Kurse

McDonald's Corp.

255,575 €

-0,07%

2020

2019

U.S.

4.6%

4.8%

International Operated Markets

(4.4)

5.6

International Developmental Licensed Markets & Corporate

(10.1)

8.1

Total

(2.2)%

5.9%

Comparable Sales: Monthly comparable sales results improved sequentially for all segments throughout the third quarter of 2020.

U.S.: Comparable sales were positive throughout the quarter, benefiting from strong average check growth from larger group orders as well as strong performance at the dinner daypart. The Company's strategic marketing investments and resulting promotional activity drove low double-digit comparable sales for the month of September, including positive comparable sales across all dayparts. Comparable guest counts remained negative for the quarter.
International Operated Markets: Comparable sales results improved throughout the quarter, with consumer sentiment and government regulations impacting the pace of recovery from COVID-19. Limited operations also remained in place for some markets. Comparable sales varied across markets with negative comparable sales in France, Spain, Germany and the U.K., partly offset by positive comparable sales in Australia.
International Developmental Licensed Markets: Comparable sales results were impacted by negative comparable sales in Latin America and China, partly offset by strong positive comparable sales in Japan.

KEY FINANCIAL METRICS - CONSOLIDATED Dollars in millions, except per share data

	Quarters Ended September 30,								Nine Months Ended September 30,
	2020		2019		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation		2020		2019		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
Revenues	$	5,418.1	$	5,502.3	(2)	%	(2)	%	$	13,894.0	$	15,936.2	(13)	%	(12)	%
Operating income	2,526.4		2,409.3		5		3		5,181.1		6,777.2		(24)		(23)
Net income	1,762.6		1,607.9		10		8		3,353.3		4,453.2		(25)		(25)
Earnings per share-diluted	$	2.35	$	2.11	11	%	10	%	$	4.47	$	5.80	(23)	%	(23)	%

Results for the quarter reflected stronger operating performance in the U.S. due to higher sales-driven restaurant margins, partly offset by sales performance declines in the International Operated Markets and International Developmental Licensed Markets segments as a result of COVID-19. The nine months reflected sales performance declines in all segments as a result of COVID-19.

Results for the quarter and nine months 2020 included $139 million of pre-tax strategic gains, or $0.13 per share, related to the sale of McDonald's Japan stock, which reduced the Company's ownership by about 3%. Results for the nine months also included $0.01 per share of pre-tax strategic charges primarily due to the write-off of impaired software that was no longer being used of $26 million, partly offset by $13 million of income primarily comprised of a reversal of a reserve associated with the Company's sale of its business in the India Delhi market in January 2020.

Results for the nine months 2019 included $80 million of pre-tax strategic charges, or $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 also included the following:

Lower incentive-based compensation expense for the quarter and nine months.
A net reduction of reserves for bad debts of $27 million for the quarter and an increase of reserves for bad debts of $66 million for the nine months, all related to rent and royalty deferrals.
The nine months included over $200 million of committed incremental franchisee support for marketing to accelerate recovery and drive growth across the U.S. and International Operated Markets.

About $100 million was recorded in the U.S. and the remaining support was recorded in the International Operated Markets segment.

Foreign currency translation had a positive impact of $0.03 on diluted earnings per share for the quarter and no impact on diluted earnings per share for the nine months.

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