McDonald's Q1 Results Beat View; Stock Up

(RTTNews) - McDonald's Corp. (MCD) posted a profit for the first-quarter that increased 13 percent from last year, reflecting an increase in sales-driven franchised margin dollars and the benefit from a lower effective tax rate, partly offset by lower Company-operated margin dollars driven by refranchising. But, Quarterly revenues decreased 9% or 15% in constant currencies, due to the impact of the Company's strategic refranchising initiative. Global comparable sales increased 5.5% and global comparable guest counts increased 0.8%.

However, Both revenue and adjusted earnings beat analysts' estimates.

In the Monday pre-market trade, MCD is trading at $165.08, up $6.78 or 4.28%.

"We're keeping the customer at the centre of everything we do as we continue enhancing their McDonald's experience. Guided by our Velocity Growth Plan, we are satisfying the rising expectations customers have for the taste and quality of our food and greater convenience as they visit our restaurants or enjoy meals delivered to their homes and offices. We are confident in the strategies guiding our business for today and for long-term sustained growth into the future," said McDonald's President and Chief Executive Officer Steve Easterbrook.

Net income for the first-quarter grew about 13% to $1.38 billion from $1.21 billion last year. Earnings per share of $1.72 increased 17% or 12% in constant currencies, reflecting $0.07 per share of additional income tax expense associated with adjustments to the provisional amounts recorded in December 2017 under the Tax Cuts and Jobs Act of 2017.

Excluding these adjustments, net income was $1.43 billion, an increase of 18% or 12% in constant currencies, and earnings per share was $1.79, an increase of 22% or 16% in constant currencies. Analysts polled by Thomson Reuters expected the company to report earnings of $1.67 per share for the quarter. Analysts' estimates typically exclude special items.

Foreign currency translation had a positive impact of $0.08 for the quarter on earnings per share.

Total revenue for the quarter declined 9% to $5.14 billion from $5.68 billion last year. Wall Street expected revenues of $4.97 billion. Global comparable sales increased 5.5% and global comparable guest counts increased 0.8%. Systemwide sales increased 7% in constant currencies.

In the U.S., first quarter comparable sales increased 2.9% driven by growth in average check resulting from menu price increases and product mix shifts. Operating income for the quarter increased 5%, reflecting higher franchised margin dollars and higher gains on sales of restaurant businesses, partly offset by lower Company-operated margin dollars.

Comparable sales for the International Lead segment increased 7.8% for the quarter, reflecting positive results across all markets, primarily driven by the U.K. and Germany. The segment's operating income increased 21% or 9% in constant currencies, fueled by sales-driven improvements in franchised margin dollars.

In the High Growth segment, first quarter comparable sales increased 4.7%, led by strong performance in China and Italy and positive results across most of the segment, partly offset by continued challenges in South Korea.

In the Foundational markets, first quarter comparable sales rose 8.7%, reflecting positive sales performance across all geographic regions.