10-QPeriod: Q1 FY2021

MCDONALDS CORP Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 5, 2021For Securities:MCD

Summary

McDonald's Corporation's first quarter 2021 filing shows a robust recovery and strong performance, with total revenues increasing by 9% year-over-year to $5.12 billion. This growth was driven by a significant 13.6% increase in comparable sales in the U.S. and solid performance in developmental licensed markets, particularly China and Japan, offsetting more modest growth in international operated markets which faced varied COVID-19 restrictions. Net income surged by 39% to $1.54 billion, or $2.05 per diluted share, boosted by improved operating income and a strategic gain from the sale of McDonald's Japan stock. Excluding this gain, adjusted diluted EPS still showed a substantial 31% increase, underscoring the underlying strength of the business. The company is strategically focusing on digital, delivery, and drive-thru channels, alongside core menu offerings, to drive future growth, and forecasts mid-teens systemwide sales growth for the full year 2021.

Financial Highlights

50 data points
Beta

Revenue

$5.12B

88.8% Gross Margin

Net Income

$1.54B

30.0% Net Margin

EPS (Diluted)

$2.05

Total Assets

$51.10B

Cash & Equivalents

$3.02B

Free Cash Flow

$1.76B

Financial Statements
Beta
Revenue$5.12B
Cost of Revenue$571.50M
Gross Profit$4.55B
Operating Expenses$2.84B
Operating Income$2.28B
Interest Expense$300.00M
Net Income$1.54B
EPS (Basic)$2.06
EPS (Diluted)$2.05
Shares Outstanding (Basic)745.80M
Shares Outstanding (Diluted)751.00M

Key Highlights

  • 1Total revenues increased 9% to $5.12 billion, driven by a strong recovery in comparable sales.
  • 2U.S. comparable sales saw a significant increase of 13.6%, indicating a robust domestic market.
  • 3Net income grew 39% to $1.54 billion, with diluted earnings per share rising to $2.05.
  • 4Strategic gains from the sale of McDonald's Japan stock ($135 million pre-tax) positively impacted results, though underlying operational performance showed significant year-over-year improvement.
  • 5The company is actively investing in its 'Accelerating the Arches' strategy, with a focus on Digital, Delivery, and Drive-Thru (the '3Ds'), anticipating strong future growth.
  • 6Full-year 2021 systemwide sales growth is projected in the mid-teens (in constant currencies), with net restaurant unit expansion expected to contribute 1-2%.
  • 7The company declared a quarterly dividend of $1.29 per share, demonstrating a continued commitment to shareholder returns.

Frequently Asked Questions

The primary driver of McDonald's revenue growth in Q1 2021 was the strong recovery in comparable sales, particularly a significant 13.6% increase in the U.S. market. This was complemented by solid performance in international developmental licensed markets, such as China and Japan.

While the overall performance showed a strong recovery, COVID-19 restrictions continued to impact certain international operated markets, particularly in Europe (e.g., France and Germany), due to varying levels of government mandates on operating hours and dine-in capacity. The company expects some level of restrictions to persist as long as the pandemic continues.

McDonald's projects mid-teens systemwide sales growth (in constant currencies) for 2021, with net restaurant unit expansion contributing an additional 1-2%. They also anticipate an operating margin in the low-to-mid 40% range and free cash flow conversion exceeding 90%.

Yes, the sale of McDonald's Japan stock resulted in $135 million in pre-tax strategic gains, which positively impacted the reported operating income and diluted earnings per share for the quarter. Excluding these gains, the underlying business performance still showed substantial year-over-year growth.