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McDonald’s Corporation Reports on Q3 FY 2023

10/31/2023

In a release dated October 30th McDonald’s Corporation, a bellwether for the QSR segment of the restaurant industry, reported results for Q3 of FY 2023 ended September 30th beating anticipated revenue and stated earnings For the period, the Company earned $2,317 million on total revenue of $6,692 million with a diluted EPS of $3.17.  Comparable figures for Q3 of fiscal 2022 were net income of $1,982 million on total revenue of $5,872 million with a diluted EPS of $2.88. Revenue increased by 14.0 percent and operating margin advanced from 47.1 percent in Q3 of 2022 to 47.9 percent for the most recent quarter. Gross margin for Company-operated stores rose from 16.2 percent in the Q3 of 2022 to 16.5 percent for the most recent quarter attributed to lower costs for food ingredients and packaging, rationalization of menus, the Accelerating the Arches efficiency initiative, increased traffic and promotions. The Company may be benefitting from trade-down from restaurant dining in the demographic with an annual income of $100,000.

 

In commenting on results, Chris Kempczinski, president and CEO stated, “With global system-wide sales growth of 11%, our third quarter results reflect our position of strength as the industry leader,” He added “The macroeconomic environment is unfolding in line with our expectations for the year, and we continued to deliver convenience and value for our customers. Thanks to the entire McDonald's System's outstanding execution of Accelerating the Arches, we remain confident in our future and the strategic direction of our business.”

 

 For Q3 FY 2023, McDonald’s posted comparable sales growth in the U.S. of 8.1 percent compared to sales growth for the international operated markets segment of 8.3 percent and with global sales growth of 8.8 percent During Q3 system-wide digital sales in the six top markets accounted for 40 percent of sales and attained $9 billion.

 

Projections for 2023 in the SEC 8-K report included net restaurant expansion contributing 1.5 percent to global system-wide sales with an operating margin of 45 percent. On October 30th 2023 there were 41,198 McDonald’s locations including 4,288 Company-owned restaurants. During 2023 the Company will expend $2.3 Billion to open a net 1,500 new restaurants globally.

 

McDonald’s Corporation had a market capitalization of $189,590 million on October 31st 2023.  Total assets on December 31st 2022 amounted to $50,436 million of which 42.1 percent comprised lease right-of-use assets, goodwill and intangibles.  Long-term debt and lease obligation were $50,638 million. MCD has ranged over the past 52-weeks from $245.73 to $299.35 with a 50-day moving average of $267.55. MCD trades with a forward P/E ratio of 21.1.  The 12-month trailing operating margin was 47.6 percent and profit margin, 33.3 percent. Prior to the release MCD closed on Friday October 27th at $255.30 but opened higher post-release on Tuesday 31st at $260.76.