McDonald's(US:MCD)2020-11-09 18:03Financial Performance - Total revenues for the quarter ended September 30, 2020, were $5,418.1 million, a decrease of 1.5% compared to $5,502.3 million in the same quarter of 2019[7]. - Net income for the quarter was $1,762.6 million, representing an increase of 9.6% from $1,607.9 million in the prior year[9]. - Earnings per share (diluted) for the quarter were $2.35, up from $2.11 in the same quarter of 2019, reflecting a 11.4% increase[7]. - Operating income for the quarter was $2,526.4 million, an increase of 4.9% compared to $2,409.3 million in the same quarter of 2019[7]. - Total revenues for the company amounted to $5,418.1 million in Q3 2020, slightly down from $5,502.3 million in Q3 2019, a decline of 1.5%[45]. - Net income for the quarter increased by 10% to $1,762.6 million, while diluted earnings per share rose by 11% to $2.35[66]. - For the nine months ended September 30, 2020, total revenues decreased by 13% to $13,894.0 million, and net income decreased by 25% to $3,353.3 million[64]. - Total revenues decreased by 2% to $5,418.1 million for the quarter and by 13% to $13,894.0 million for the nine months ended September 30, 2020[72][73]. Assets and Liabilities - Total assets increased to $50,699.3 million as of September 30, 2020, compared to $47,510.8 million at the end of 2019, marking a growth of 4.6%[6]. - Current liabilities rose to $6,280.2 million, significantly higher than $3,621.0 million reported at the end of 2019, indicating a 73.3% increase[5]. - Total liabilities increased to $59,143.4 million, up from $56,118.1 million at the end of 2019, reflecting a growth of 3.6%[5]. - Long-term debt rose to $35,143.4 million from $34,118.1 million, indicating a growth of approximately 3.0%[5]. - Shareholders' equity showed a deficit of $8,472.1 million, worsening from a deficit of $8,210.3 million, reflecting a decline of about 3.2%[5]. Cash Flow and Investments - Cash provided by operations for the nine months ended September 30, 2020, was $4,272.4 million, down from $6,232.8 million in the same period of 2019, reflecting a decrease of 31.5%[12]. - Capital expenditures for the quarter were $390.2 million, a decrease from $548.7 million in the same quarter of 2019, indicating a reduction of 29%[12]. - Cash and equivalents at the end of the period were $3,683.8 million, significantly up from $1,177.3 million at the end of September 30, 2019, marking an increase of 213%[12]. - Cash used for investing activities was $1.2 billion, a decrease of $1.1 billion compared to the nine months of 2019[95]. Sales and Revenue Breakdown - The company-operated restaurant sales for the quarter were $2,286.4 million, down from $2,416.6 million in the same quarter of 2019, a decline of 5.4%[7]. - Revenues from franchised restaurants were $3,044.8 million, slightly up from $3,014.0 million in the prior year, showing a growth of 1.0%[7]. - Total restaurant margins decreased by 1% for the quarter and by 16% for the nine months, reflecting the impact of COVID-19[83]. - U.S. comparable sales increased by 4.6% for the quarter, benefiting from strong average check growth and strategic marketing investments[55]. - International Operated Markets segment comparable sales decreased by 4.4% for the quarter and 17.6% for the nine months, with significant improvement from the second quarter[55]. Strategic Initiatives and Future Outlook - The new growth strategy, "Accelerating the Arches," focuses on enhancing digital capabilities and customer experience[50]. - The company plans to introduce a new Crispy Chicken Sandwich in the U.S. in early 2021, prioritizing chicken and beef offerings[52]. - The Company expects capital expenditures of approximately $1.6 billion for 2020, with about $850 million dedicated to the U.S. business[97]. - The Company plans to open roughly 1,300 restaurants globally in 2021, with about 500 in the U.S. and International Operated Markets segments[98]. - The Company expects to achieve a free cash flow conversion rate greater than 90%[98]. COVID-19 Impact - The company continues to monitor the impact of the COVID-19 pandemic on expected losses and overall financial performance[22]. - COVID-19 restrictions have impacted operations, particularly in key markets outside the U.S., affecting sales performance[69]. - The company reported a significant impact from COVID-19 on sales across all segments, with recovery being mixed and dependent on local market conditions[74]. - The company expects ongoing restrictions in various markets due to COVID-19, impacting customer sentiment and operational capacity[69]. Shareholder Returns - The company declared dividends of $1.25 per common share for the quarter, down from $2.41 in the same quarter of 2019[7]. - Common stock cash dividends for the nine months ended September 30, 2020, totaled $2,791.3 million, compared to $2,646.7 million in the same period of 2019, an increase of 5.5%[12]. - The company repurchased 4.3 million shares of stock for $872.0 million during the nine months, with a quarterly dividend of $1.25 per share totaling $930.9 million[68]. Risks and Challenges - Unfavorable general economic conditions could adversely affect the company's business and financial results, impacting consumer disposable income and spending habits[105]. - Labor challenges, including availability and cost, could negatively impact the company's operating margins and those of its franchisees[107]. - Changes in commodity prices, particularly for food and labor, could adversely affect the profitability of company-operated restaurants[114]. - The company faces risks related to privacy and data collection laws, with potential legal proceedings and penalties that could impact financial results[111].