McDonald's Corporation (MCD) Earnings
Slightly lower O.M. guidance F.X. headwinds and 2023 inflation pressures; SSS slowing to MSD in Q23 and FY2023.
4Q22 Non-GAAP EPS of $2.59 beats by $0.13 and Revenue of $5.93B (-1.2% Y/Y) beats by 180M. Global comparable sales increased 12.6% for the quarter, with double-digit growth across all segments. Digital Systemwide sales in our top six markets were over $7 billion for the quarter, representing more than 35% of their Systemwide sales. Full-year comparable sales grew by over 10%, and comparable guest counts grew by 5%. Systemwide sales increased by 5%.
CEO comment: "While we expect short-term inflationary pressures to continue in 2023, we remain h highly confident in Accelerating the Arches, which now includes a greater emphasis on new restaurant openings. The recently announced Accelerating the Organization initiative will complement this strategy to enable the McDonald's System to be faster, more innovative, and more efficient. We're proud of our continued strong performance but are not satisfied. That's the hallmark of McDonald's." This may b reflected in the guidance of an operating margin of 45% vs. 46.3% consensus but above the 2022 O.M. of 44.8%. Company-operated margin 15.2% vs. FS 15.9% and year-ago 17.3%; franchise margin 83.9% vs. FS 82.9% and year-ago 82.6% and SG&A of revenue 13.7% vs. StreetAccount 12.6% and year-ago 14%
Global SSS sales were up 12.6% vs. +8.0% consensus and against a solid comparable from a year ago of +12.3%. Notably, all segments showed positive growth during the quarter. U.S. comparable sales were up 10 3% vs. +7.8% consensus. The results benefited from strategic menu price increases and positive guest counts. Successful menu and marketing campaigns, such as the Cactus Plant Flea Market promotion and McRib, and continued digital and delivery growth contributed to strong comparable sales results. The International Operated Markets segment reported a 12.6% vs. estimates of a 7.6% strong operating performance led by strong comparable sales in Germany, the U.K., and France. The International Developmental Licensed Markets segment saw a 16.5% comparable sales increase VS estimate of 10%, reflecting strong comparable sales across the segment, led by Japan and Brazil, partly offset by negative comparable sales in China due to continued COVID-19-related government restrictions. Consolidated operating income increased 8% during the quarter and was 16% higher on a constant currency basis.
EAT Earnings & DIN BLACK BOOK
We will talk about our DIN short on Friday at 12:30 - one small element to the DIN short thesis is a bullish view of Chili's.
EAT is scheduled to report 2Q23 earnings tomorrow BMO, but this is not the quarter that will prove out our thesis. Current estimates for same-store sales are company-owned +6.8%; Chili's +5.6% Maggiano's +17.9%, with Revenues of $992.1M with Company revenues of $982.8M and Franchise revenues of $10.2M. Cost of sales of 28.9%; Restaurant margin of 10.6%; Operating margin of 3.6%, and EPS $0.52. Any potential upside in EAT's numbers will come with progress in reducing discounting and simplifying the business model to improve margins.
EVENT DETAILS:
- Date & Time: February 3rd at 12:30 PM ET.
- Webcast & Slides: CLICK HERE (Refresh shortly before the call).
- Add To Your Calendar: CLICK HERE
SYY Earnings
Volume growth slowing
SYY reports Q2 EPS $0.80 ex-items missing FactSet $0.84 on revenue in line with U.S. Foodservice Operations, which is softer than expected but is International Foodservice Operations above. Total U.S. Foodservice case volume +5.2% y/y (6.2% in 1Q23) and local case volume within U.S. Foodservice +3.2% (5.4% in 1Q23). Gross margin and operating margin beat by +10bps. Revenue of $18.59B (+13.9% Y/Y) in-line; U.S. Foodservice gross profit increased 15.9% to $3.3 billion YoY; Operating income increased 44.0% to $640.6 million, and adjusted operating income increased to $682.1 million YoY; EBITDA decreased 22.6% to $500.5 million, and adjusted EBITDA increased 23.9% to $831.3 million; During the quarter, GAAP earnings included a pension liability transfer, resulting in a non-cash charge of $315.4 million.
"We achieved solid financial results for the second quarter, including strong top-line growth and expanded "gross profit dollar" growth. "We remain focused on exceeding our customers' expectations while continuing to manage costs, and anticipate seeing additional benefit from our Recipe For Growth strategy in the second half of this fiscal year and into next fiscal year."
