Summary
McDonald's Corporation's first quarter 2020 results, filed on May 7, 2020, were significantly impacted by the onset of the COVID-19 pandemic. While the first two months of the quarter showed robust comparable sales growth, the latter half of March saw a marked decline due to widespread restaurant closures and stay-at-home orders. This led to a consolidated revenue decrease of 6% and a 19% drop in operating income year-over-year. Despite these challenges, the company demonstrated resilience through its heavily franchised model, which provides a stable revenue stream based on franchisee sales. McDonald's is leveraging its strong drive-thru presence and accelerating investments in delivery and digital capabilities to navigate the pandemic. The company also took proactive steps to preserve financial flexibility, including suspending its share repurchase program and securing significant new financing.
Financial Highlights
50 data points| Revenue | $4.71B |
| Cost of Revenue | $554.20M |
| Gross Profit | $4.16B |
| Operating Expenses | $3.02B |
| Operating Income | $1.69B |
| Interest Expense | $280.00M |
| Net Income | $1.11B |
| EPS (Basic) | $1.49 |
| EPS (Diluted) | $1.47 |
| Shares Outstanding (Basic) | 744.80M |
| Shares Outstanding (Diluted) | 750.70M |
Key Highlights
- 1Consolidated revenues decreased by 6% to $4.71 billion, primarily due to the impact of COVID-19 on sales performance in the latter half of March.
- 2Diluted earnings per share (EPS) declined by 15% to $1.47, reflecting the challenging operating environment.
- 3Comparable sales decreased by 3.4% for the quarter, with a significant drop of 22.2% in March, while the first two months showed a positive 7.2% increase.
- 4The company significantly increased its cash position by drawing on a new $1 billion line of credit and issuing $5.5 billion in long-term debt to bolster financial flexibility during the pandemic.
- 5McDonald's suspended its share repurchase program in early March to preserve cash, though it had repurchased $868.9 million worth of stock during the quarter.
- 6The company is actively supporting franchisees by deferring collection of approximately $300 million in rental income and royalties for the first quarter, with further deferrals expected in the second quarter.
- 7Investments in delivery and digital platforms are being accelerated as critical assets for serving customers during the crisis and for future growth.