McDONALD'S REPORTS FOURTH QUARTER AND FULL YEAR 2022 RESULTS
- Global comparable sales increased over 12% for the quarter, with double-digit growth across all segments
-
Digital Systemwide sales* in our top six markets were over
$7 billion for the quarter, representing more than 35% of their Systemwide sales - Full year comparable sales grew over 10%, and comparable guest counts grew 5%
"Our Accelerating the
Fourth quarter financial performance:
- Global comparable sales increased 12.6%, reflecting strong comparable sales across all segments:
-
U.S. increased 10.3% - International Operated Markets segment increased 12.6%
- International Developmental Licensed Markets segment increased 16.5%
- Consolidated revenues decreased 1% (increased 5% in constant currencies).
- Systemwide sales increased 5% (13% in constant currencies).
- Consolidated operating income increased 8% (16% in constant currencies). Excluding
$54 million of prior year charges primarily related to the 2021 sale ofMcD Tech Labs , consolidated operating income increased 5% (14% in constant currencies).** - Diluted earnings per share was
$2.59 , an increase of 19% (26% in constant currencies). Excluding the prior year charges described above, diluted earnings per share increased 16% (23% in constant currencies).**
Full year financial performance:
- Global comparable sales increased 10.9%, reflecting strong comparable sales across all segments:
-
U.S. increased 5.9% - International Operated Markets segment increased 13.3%
- International Developmental Licensed Markets segment increased 16.0%
- Consolidated revenues were flat (increased 6% in constant currencies).
- Systemwide sales increased 5% (11% in constant currencies).
- Consolidated operating income decreased 10% (3% in constant currencies). 2022 results included
$1.3 billion of charges related to the sale of the Company's business inRussia and a gain of$271 million related to the Company's sale of its Dynamic Yield business. Excluding these items along with net gains in 2021, consolidated operating income increased 3% (10% in constant currencies).**
1
- Diluted earnings per share was
$8.33 , a decrease of 17% (12% in constant currencies). Excluding the current year charges and gains described above of$1.04 per share and additional nonoperating expense of$0.73 per share related to the settlement of a tax audit inFrance , diluted earnings per share was$10.10 , an increase of 9% (15% in constant currencies), when also excluding prior year net gains and income tax benefits.**
*Refer to page 5 for a definition of Systemwide sales.
**Refer to pages 3 and 4 for additional details on fourth quarter and full year gains and charges for 2022 and 2021.
2
COMPARABLE SALES
|
|
Increase/(Decrease) |
||||||||||||
|
|
Quarters Ended |
||||||||||||
|
|
2022 |
|
2021 |
||||||||||
|
|
10.3 % |
|
|
7.5 % |
|
||||||||
International Operated Markets |
|
12.6 |
|
|
16.8 |
|
||||||||
International Developmental Licensed Markets & Corporate |
|
16.5 |
|
|
14.2 |
|
||||||||
Total |
|
12.6 % |
|
|
12.3 % |
|
-
U.S. : Comparable sales results benefited from strategic menu price increases and positive guest counts. Successful menu and marketing campaigns, such as theCactus Plant Flea Market promotion and McRib, and continued digital and delivery growth contributed to strong comparable sales results. -
International Operated Markets: Strong operating performance drove positive comparable sales across the segment, led by strong comparable sales in
Germany , theU.K. andFrance . -
International Developmental Licensed Markets: The quarter reflected strong comparable sales across the segment, led by
Japan andBrazil , partly offset by negative comparable sales inChina due to continued COVID-19 related government restrictions.
KEY FINANCIAL METRICS - CONSOLIDATED
Dollars in millions, except per share data
|
Quarters Ended |
|
Years Ended |
|||||||||||||||||||||||||||||||||||||||||||||
|
2022 |
|
2021 |
|
Inc/ (Dec) |
|
Inc/ (Dec) |
|
|
2022 |
|
2021 |
|
Inc/ (Dec) |
|
Inc/ (Dec) |
|
|||||||||||||||||||||||||||||||
Revenues |
$ |
5,926.5 |
|
|
$ |
6,009.1 |
|
|
(1) % |
|
|
5 % |
|
|
|
$ |
23,182.6 |
|
|
$ |
23,222.9 |
|
|
— % |
|
|
6 % |
|
|
|||||||||||||||||||
Operating income |
2,582.7 |
|
|
2,397.1 |
|
|
8 |
|
|
16 |
|
|
|
9,371.0 |
|
|
10,356.0 |
|
|
(10) |
|
|
(3) |
|
|
|||||||||||||||||||||||
Net income |
1,903.4 |
|
|
1,638.8 |
|
|
16 |
|
|
24 |
|
|
|
6,177.4 |
|
|
7,545.2 |
|
|
(18) |
|
|
(13) |
|
|
|||||||||||||||||||||||
Earnings per share-diluted |
$ |
2.59 |
|
|
$ |
2.18 |
|
|
19 % |
|
|
26 % |
|
|
|
$ |
8.33 |
|
|
$ |
10.04 |
|
|
(17) % |
|
|
(12) % |
|
|
Results for the quarter and year were negatively impacted by foreign currency translation due to the weakening of all major currencies against the
Results for 2022 included the following:
- Pre-tax charges of
$1,281 million , or$1.44 per share, for the year, related to the sale of the Company's business inRussia - Pre-tax gain of
$271 million , or$0.40 per share, for the year, related to the Company's sale of its Dynamic Yield business -
$537 million , or$0.73 per share, for the year, of nonoperating expense related to the settlement of a tax audit inFrance
Results for 2021 included the following:
- Pre-tax charges of
$54 million , or$0.05 per share, for the quarter and the year, primarily related to the sale ofMcD Tech Labs - Net pre-tax gains of
$339 million , or$0.33 per share, for the year, primarily related to the sale ofMcDonald's Japan stock -
$364 million , or$0.48 per share, for the year, of income tax benefit, related to the remeasurement of deferred taxes as a result of a change in theU.K. statutory income tax rate
3
NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION
Dollars in millions, except per share data
|
Quarters Ended |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Net Income |
|
Earnings per share - diluted |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2022 |
|
2021 |
|
Inc/ (Dec) |
|
|
Inc/ (Dec) |
|
|
2022 |
|
2021 |
|
Inc/ (Dec) |
|
|
Inc/ (Dec) |
|
||||||||||||||||||||||||||||||||||||||||
GAAP |
$ |
1,903.4 |
|
|
$ |
1,638.8 |
|
|
16 % |
|
|
24 % |
|
|
$ |
2.59 |
|
|
$ |
2.18 |
|
|
19 % |
|
|
26 % |
|
||||||||||||||||||||||||||||||||
(Gains)/charges |
— |
|
|
40.7 |
|
|
|
|
|
|
|
|
— |
|
|
0.05 |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Change in |
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Non-GAAP |
$ |
1,903.4 |
|
|
$ |
1,679.5 |
|
|
13 % |
|
|
21 % |
|
|
$ |
2.59 |
|
|
$ |
2.23 |
|
|
16 % |
|
|
23 % |
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Years Ended |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Net Income |
|
Earnings per share - diluted |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2022 |
|
2021 |
|
Inc/ (Dec) |
|
|
Inc/ (Dec) |
|
|
2022 |
|
2021 |
|
Inc/ (Dec) |
|
|
Inc/ (Dec) |
|
||||||||||||||||||||||||||||||||||||||||
GAAP |
$ |
6,177.4 |
|
|
$ |
7,545.2 |
|
|
(18) % |
|
|
(13) % |
|
|
$ |
8.33 |
|
|
$ |
10.04 |
|
|
(17) % |
|
|
(12) % |
|
||||||||||||||||||||||||||||||||
(Gains)/charges |
770.7 |
|
|
(202.7) |
|
|
|
|
|
|
|
|
1.04 |
|
|
(0.28) |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Change in |
— |
|
|
(363.7) |
|
|
|
|
|
|
|
|
— |
|
|
(0.48) |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
537.2 |
|
|
— |
|
|
|
|
|
|
|
|
0.73 |
|
|
— |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Non-GAAP |
$ |
7,485.3 |
|
|
$ |
6,978.8 |
|
|
7 % |
|
|
13 % |
|
|
$ |
10.10 |
|
|
$ |
9.28 |
|
|
9 % |
|
|
15 % |
|
In constant currencies, results for both periods reflected strong operating performance driven by higher sales-driven Franchised margins. Company-operated margins were negatively impacted for both periods by the permanent restaurant closures as a result of the sale of the Company's business in
4
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 and acts of war, terrorism or other hostilities (including restaurants temporarily closed due to COVID-19, as well as those that remain closed in
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, 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
UPCOMING COMMUNICATIONS
For important news and information regarding
ABOUT
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
5
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|||||||||||||||||||||||
Dollars and shares in millions, except per share data |
|
|
|
|
|
||||||||||||||||||
Quarters Ended |
2022 |
|
2021 |
|
Inc/ (Dec) |
||||||||||||||||||
Revenues |
|
|
|
|
|
|
|
||||||||||||||||
Sales by Company-operated restaurants |
$ |
2,208.4 |
|
|
$ |
2,538.8 |
|
|
$ |
(330.4) |
|
|
(13) % |
|
|||||||||
Revenues from franchised restaurants |
3,645.0 |
|
|
3,391.6 |
|
|
253.4 |
|
|
7 |
|
||||||||||||
Other revenues |
73.1 |
|
|
78.7 |
|
|
(5.6) |
|
|
(7) |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
TOTAL REVENUES |
5,926.5 |
|
|
6,009.1 |
|
|
(82.6) |
|
|
(1) |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Operating costs and expenses |
|
|
|
|
|
|
|
||||||||||||||||
Company-operated restaurant expenses |
1,872.3 |
|
|
2,100.3 |
|
|
(228.0) |
|
|
(11) |
|
||||||||||||
Franchised restaurants-occupancy expenses |
588.1 |
|
|
591.8 |
|
|
(3.7) |
|
|
(1) |
|
||||||||||||
Other restaurant expenses |
57.2 |
|
|
56.0 |
|
|
1.2 |
|
|
2 |
|
||||||||||||
Selling, general & administrative expenses |
|
|
|
|
|
|
|
||||||||||||||||
Depreciation and amortization |
91.4 |
|
|
86.5 |
|
|
4.9 |
|
|
6 |
|
||||||||||||
Other |
720.3 |
|
|
755.4 |
|
|
(35.1) |
|
|
(5) |
|
||||||||||||
Other operating (income) expense, net |
14.5 |
|
|
22.0 |
|
|
(7.5) |
|
|
(34) |
|
||||||||||||
Total operating costs and expenses |
3,343.8 |
|
|
3,612.0 |
|
|
(268.2) |
|
|
(7) |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
OPERATING INCOME |
2,582.7 |
|
|
2,397.1 |
|
|
185.6 |
|
|
8 |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Interest expense |
322.9 |
|
|
295.6 |
|
|
27.3 |
|
|
9 |
|
||||||||||||
Nonoperating (income) expense, net |
(79.1) |
|
|
(6.3) |
|
|
(72.8) |
|
|
n/m |
|||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Income before provision for income taxes |
2,338.9 |
|
|
2,107.8 |
|
|
231.1 |
|
|
11 |
|
||||||||||||
Provision for income taxes |
435.5 |
|
|
469.0 |
|
|
(33.5) |
|
|
(7) |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
NET INCOME |
$ |
1,903.4 |
|
|
$ |
1,638.8 |
|
|
$ |
264.6 |
|
|
16 % |
|
|||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
EARNINGS PER SHARE-DILUTED |
$ |
2.59 |
|
|
$ |
2.18 |
|
|
$ |
0.41 |
|
|
19 % |
|
|||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Weighted average shares outstanding-diluted |
736.0 |
|
|
751.6 |
|
|
(15.6) |
|
|
(2) % |
|
|
n/m Not meaningful |
6
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
|
|||||||||||||||||||||||
Dollars and shares in millions, except per share data |
|
|
|
|
|
||||||||||||||||||
Years Ended |
2022 |
|
2021 |
|
Inc/ (Dec) |
||||||||||||||||||
Revenues |
|
|
|
|
|
|
|
||||||||||||||||
Sales by Company-operated restaurants |
$ |
8,748.4 |
|
|
$ |
9,787.4 |
|
|
$ |
(1,039.0) |
|
|
(11) % |
|
|||||||||
Revenues from franchised restaurants |
14,105.8 |
|
|
13,085.4 |
|
|
1,020.4 |
|
|
8 |
|
||||||||||||
Other revenues |
328.4 |
|
|
350.1 |
|
|
(21.7) |
|
|
(6) |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
TOTAL REVENUES |
23,182.6 |
|
|
23,222.9 |
|
|
(40.3) |
|
|
— |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Operating costs and expenses |
|
|
|
|
|
|
|
||||||||||||||||
Company-operated restaurant expenses |
7,380.9 |
|
|
8,047.3 |
|
|
(666.4) |
|
|
(8) |
|
||||||||||||
Franchised restaurants-occupancy expenses |
2,349.7 |
|
|
2,335.0 |
|
|
14.7 |
|
|
1 |
|
||||||||||||
Other restaurant expenses |
244.8 |
|
|
260.4 |
|
|
(15.6) |
|
|
(6) |
|
||||||||||||
Selling, general & administrative expenses |
|
|
|
|
|
|
|
||||||||||||||||
Depreciation and amortization |
370.4 |
|
|
329.7 |
|
|
40.7 |
|
|
12 |
|
||||||||||||
Other |
2,492.2 |
|
|
2,377.8 |
|
|
114.4 |
|
|
5 |
|
||||||||||||
Other operating (income) expense, net |
973.6 |
|
|
(483.3) |
|
|
1,456.9 |
|
|
n/m |
|||||||||||||
Total operating costs and expenses |
13,811.6 |
|
|
12,866.9 |
|
|
944.7 |
|
|
7 |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
OPERATING INCOME |
9,371.0 |
|
|
10,356.0 |
|
|
(985.0) |
|
|
(10) |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Interest expense |
1,207.0 |
|
|
1,185.8 |
|
|
21.2 |
|
|
2 |
|
||||||||||||
Nonoperating (income) expense, net |
338.6 |
|
|
42.3 |
|
|
296.3 |
|
|
n/m |
|||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Income before provision for income taxes |
7,825.4 |
|
|
9,127.9 |
|
|
(1,302.5) |
|
|
(14) |
|
||||||||||||
Provision for income taxes |
1,648.0 |
|
|
1,582.7 |
|
|
65.3 |
|
|
4 |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
NET INCOME |
$ |
6,177.4 |
|
|
$ |
7,545.2 |
|
|
$ |
(1,367.8) |
|
|
(18) % |
|
|||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
EARNINGS PER SHARE-DILUTED |
$ |
8.33 |
|
|
$ |
10.04 |
|
|
$ |
(1.71) |
|
|
(17) % |
|
|||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
Weighted average shares outstanding-diluted |
741.3 |
|
|
751.8 |
|
|
(10.5) |
|
|
(1) % |
|
|
n/m Not meaningful |
7
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
|
||||||||||||||
In millions |
|
2022 |
|
2021 |
||||||||||
Current assets |
|
|
|
|
|
|
||||||||
Cash and equivalents |
|
$ |
2,583.8 |
|
|
$ |
4,709.2 |
|
||||||
Accounts and notes receivable |
|
2,115.0 |
|
|
1,872.4 |
|
||||||||
Other current assets |
|
725.4 |
|
|
566.9 |
|
||||||||
|
|
|
|
|
||||||||||
TOTAL CURRENT ASSETS |
|
5,424.2 |
|
|
7,148.5 |
|
||||||||
|
|
|
|
|
||||||||||
TOTAL OTHER ASSETS |
|
8,672.1 |
|
|
8,433.2 |
|
||||||||
|
|
|
|
|
||||||||||
LEASE RIGHT-OF-USE ASSET, NET |
|
12,565.7 |
|
|
13,552.0 |
|
||||||||
|
|
|
|
|
||||||||||
NET PROPERTY AND EQUIPMENT |
|
23,773.6 |
|
|
24,720.6 |
|
||||||||
|
|
|
|
|
||||||||||
TOTAL ASSETS |
|
$ |
50,435.6 |
|
|
$ |
53,854.3 |
|
||||||
|
|
|
|
|
||||||||||
TOTAL CURRENT LIABILITIES |
|
$ |
3,802.1 |
|
|
$ |
4,020.0 |
|
||||||
|
|
|
|
|
||||||||||
Long-term debt |
|
35,903.5 |
|
|
35,622.7 |
|
||||||||
Long-term lease liability |
|
12,134.4 |
|
|
13,020.9 |
|
||||||||
Other long-term liabilities |
|
2,601.5 |
|
|
3,716.1 |
|
||||||||
Deferred income taxes |
|
1,997.5 |
|
|
2,075.6 |
|
||||||||
|
|
|
|
|
||||||||||
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) |
|
(6,003.4) |
|
|
(4,601.0) |
|
||||||||
|
|
|
|
|
||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |
|
$ |
50,435.6 |
|
|
$ |
53,854.3 |
|
8
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
|
|||||||||||
In millions |
Years ended |
2022 |
2021 |
||||||||
Operating activities |
|
|
|
||||||||
Net income |
|
$ |
6,177.4 |
|
$ |
7,545.2 |
|
||||
Changes in working capital items |
|
(644.6) |
|
454.2 |
|
||||||
Other |
|
1,853.9 |
|
1,142.1 |
|
||||||
CASH PROVIDED BY OPERATIONS |
|
7,386.7 |
|
9,141.5 |
|
||||||
|
|
|
|
||||||||
Investing activities |
|
|
|
||||||||
Capital expenditures |
|
(1,899.2) |
|
(2,040.0) |
|
||||||
Sales and purchases of restaurant and other businesses and property sales |
(322.2) |
|
(71.8) |
|
|||||||
Other |
|
(456.7) |
|
(53.9) |
|
||||||
CASH USED FOR INVESTING ACTIVITIES |
|
(2,678.1) |
|
(2,165.7) |
|
||||||
|
|
|
|
||||||||
Financing activities |
|
|
|
||||||||
Net short-term borrowings and long-term financing issuances and payments |
1,197.6 |
|
(1,070.5) |
|
|||||||
|
|
(3,896.0) |
|
(845.5) |
|
||||||
Common stock dividends |
|
(4,168.2) |
|
(3,918.6) |
|
||||||
Proceeds from stock option exercises and other |
|
286.4 |
|
239.0 |
|
||||||
CASH USED FOR FINANCING ACTIVITIES |
|
(6,580.2) |
|
(5,595.6) |
|
||||||
|
|
|
|
||||||||
EFFECT OF EXCHANGE RATES ON CASH AND EQUIVALENTS |
(253.8) |
|
(120.1) |
|
|||||||
|
|
|
|
||||||||
CASH AND EQUIVALENTS INCREASE (DECREASE) |
|
(2,125.4) |
|
1,260.1 |
|
||||||
|
|
|
|
||||||||
Cash and equivalents at beginning of year |
|
4,709.2 |
|
3,449.1 |
|
||||||
|
|
|
|
||||||||
CASH AND EQUIVALENTS AT END OF YEAR |
|
$ |
2,583.8 |
|
$ |
4,709.2 |
|
||||
|
|
|
|
||||||||
Supplemental cash flow disclosures |
|
|
|
||||||||
Cash provided by operations |
|
$ |
7,386.7 |
|
$ |
9,141.5 |
|
||||
Less: Capital expenditures |
|
(1,899.2) |
|
(2,040.0) |
|
||||||
|
|
|
|
||||||||
FREE CASH FLOW |
|
$ |
5,487.5 |
|
$ |
7,101.5 |
|
9
View original content:https://www.prnewswire.com/news-releases/mcdonalds-reports-fourth-quarter-and-full-year-2022-results-301734277.html
SOURCE