Part I. Financial Information This section presents McDonald's financial statements, management's discussion and analysis of performance, market risk disclosures, and internal controls Financial Statements McDonald's reported Q3 2024 revenues of $6.87 billion and net income of $2.26 billion, with nine-month revenues at $19.53 billion and net income at $6.21 billion Condensed Consolidated Statement of Income (in millions) | Indicator | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,873 | $6,692 | $19,532 | $19,088 | | Operating Income | $3,188 | $3,208 | $8,844 | $8,845 | | Net Income | $2,255 | $2,317 | $6,207 | $6,430 | | Diluted EPS | $3.13 | $3.17 | $8.59 | $8.76 | Condensed Consolidated Balance Sheet (in millions) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and equivalents | $1,221 | $4,579 | | Total Assets | $56,172 | $56,147 | | Long-term debt | $38,990 | $37,153 | | Total Liabilities | $61,349 | $60,854 | | Total shareholders' equity (deficit) | ($5,177) | ($4,707) | Condensed Consolidated Statement of Cash Flows (9 Months Ended, in millions) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Cash provided by operations | $6,816 | $7,123 | | Cash used for investing activities | ($4,604) | ($2,345) | | Cash used for financing activities | ($5,617) | ($3,788) | | Cash and equivalents at end of period | $1,221 | $3,496 | - On January 30, 2024, the Company acquired an additional 28% ownership stake in Grand Foods Holding (China) for $1.8 billion in cash, increasing its total equity ownership to 48%33 - As of September 30, 2024, there were 42,819 systemwide restaurants, of which 40,755 (approximately 95%) were franchised25 Management's Discussion and Analysis (MD&A) Management discusses Q3 2024 global comparable sales decline of 1.5%, strategic focus on "Accelerating the Arches," and provides a 2024 financial outlook Strategic Direction The "Accelerating the Arches" strategy focuses on marketing, core menu, and the 4D's (Digital, Delivery, Drive Thru, Restaurant Development) to drive growth - The "Accelerating the Arches" growth strategy is centered on three pillars: Maximize Marketing, Commit to the Core, and Double Down on the 4D's (Digital, Delivery, Drive Thru, and Restaurant Development)5960 - Strategic goals include expanding the McCrispy sandwich to nearly all markets by 2025, growing 90-day active loyalty users to 250 million by 2027, and reaching 50,000 total restaurants by the end of 20275960 Financial Performance Q3 2024 global comparable sales decreased by 1.5%, primarily due to declines in international markets, while consolidated revenues increased by 3% to $6.87 billion Comparable Sales Growth (vs. Prior Year) | Segment | Q3 2024 | 9 Months 2024 | | :--- | :--- | :--- | | U.S. | 0.3% | 0.7% | | International Operated Markets | (2.1)% | (0.3)% | | International Developmental Licensed Markets | (3.5)% | (1.7)% | | Total | (1.5)% | (0.2)% | - Performance in the International Developmental Licensed Markets was negatively impacted by the war in the Middle East and negative comparable sales in China6368 - 2024 results included pre-tax charges of $146 million (9 months) for "Accelerating the Organization" restructuring and $142 million (9 months) for transaction costs and impairments related to the sale of the South Korea business and acquisition of the Israel business7392 Operating Income by Segment (in millions) | Segment | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | U.S. | $1,493 | $1,478 | $4,400 | $4,268 | | International Operated Markets | $1,602 | $1,585 | $4,459 | $4,295 | | Intl. Dev. Licensed Markets & Corp. | $93 | $146 | ($15) | $282 | | Total Operating Income | $3,188 | $3,208 | $8,844 | $8,845 | Cash Flows Cash provided by operations for the first nine months of 2024 was $6.8 billion, with a significant increase in cash used for investing activities - Cash provided by operations for the first nine months of 2024 was $6.8 billion, slightly down from $7.1 billion in 2023100 - Cash used for investing activities increased by $2.3 billion year-over-year, driven by the increased ownership stake in McDonald's China and the acquisition of the business in Israel100 2024 Outlook The company projects full-year 2024 capital expenditures between $2.5 and $2.7 billion, with over 1,600 net new restaurant openings and strong operating margins - Expects over 1,600 net restaurant additions in 2024, contributing nearly 2% to systemwide sales growth103 - Full-year 2024 capital expenditures are forecasted to be $2.5 to $2.7 billion103 - The company anticipates a full-year operating margin in the mid-to-high 40% range and a free cash flow conversion rate in the 90% range103 Market Risk Disclosures No material changes were reported in the company's quantitative and qualitative disclosures about market risk compared to the 2023 Annual Report - There were no material changes to the market risk disclosures from the 2023 Annual Report on Form 10-K131 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2024, despite ongoing technology and operating model transformations - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2024132 - The company is in the process of a multi-year technology and operating model transformation, which involves implementing new systems and modifying internal controls over financial reporting133 Part II. Other Information This section details significant risks to the business, including strategic, operational, technological, legal, and macroeconomic factors, and reports on share repurchase activities Risk Factors The company faces strategic, operational, technological, legal, and macroeconomic risks, including competition, supply chain issues, and regulatory complexities - Strategic Risks: Include failure to successfully execute business strategies, preserve brand value, and manage intense competition from traditional and non-traditional players108111 - Operational Risks: Stem from the global scope of business, potential supply chain interruptions, reliance on franchisee success, labor cost and availability, and food safety concerns, including a noted E. coli outbreak investigation in October 2024113114119 - Technology & Legal Risks: Include IT system failures, cybersecurity breaches, increasing regulatory complexity, and litigation related to employment, franchising, and product claims120122123 - Macroeconomic Risks: Arise from unfavorable economic conditions, currency fluctuations, health pandemics, commodity price volatility, and an increasing focus on environmental and social matters126127128 Share Repurchases McDonald's repurchased approximately 1.65 million shares for $444 million in Q3 2024 under its $15 billion share repurchase program Issuer Purchases of Equity Securities (Q3 2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2024 | 874,297 | $254.87 | | August 2024 | 293,752 | $270.52 | | September 2024 | 485,199 | $291.20 | | Total | 1,653,248 | $268.31 |
McDonald's(MCD) - 2024 Q3 - Quarterly Report