SEC Form 10-Q filed by McDonald's Corporation

5/12/25 1:15:39 PM ET

$MCD

Restaurants

Consumer Discretionary

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mcd-20250331

Q1false202512/310000063908

Subsequent Events

The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission 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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to


Delaware		36-2361282
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

110 North Carpenter Street		60607
Chicago,	Illinois
(Address of Principal Executive Offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	MCD	New York Stock Exchange


			Page Reference
Part I. Financial Information

Item 1 – Financial Statements

Condensed Consolidated Balance Sheet, March 31, 202 5 (unaudited) and December 31, 20 24			3

Condensed Consolidated Statement of Income (unaudited), quarters ended March 31, 202 5 and 20 24			4

Condensed Consolidated Statement of Comprehensive Income (unaudited), quarters ended March 31, 202 5 and 20 24			5

Condensed Consolidated Statement of Cash Flows (unaudited), quarters ended March 31, 202 5 and 20 2 4			6

Condensed Consolidated Statement of Shareholders' Equity (unaudited), quarters ended March 31, 202 5 and 202 4			7

Notes to Condensed Consolidated Financial Statements (unaudited)			8

Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations			15

Item 3 – Quantitative and Qualitative Disclosures About Market Risk			35

Item 4 – Controls and Procedures			35

Part II. Other Information

Item 1 – Legal Proceedings			36

Item 1A – Risk Factors			36

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			36

Item 5 – Other Information			37

Item 6 – Exhibits			38

Signature			39


CONDENSED CONSOLIDATED BALANCE SHEET

	(unaudited)
In millions, except per share data	March 31, 2025		December 31, 2024
Assets
Current assets
Cash and equivalents	$	1,238	$	1,085
Accounts and notes receivable	2,387		2,383
Inventories, at cost, not in excess of market	51		56
Prepaid expenses and other current assets	1,060		1,074

Total current assets	4,735		4,599
Other assets
Investments in affiliates	2,751		2,710
Goodwill	3,186		3,145
Miscellaneous	6,265		6,095
Total other assets	12,202		11,950
Lease right-of-use asset, net	13,642		13,339
Property and equipment
Property and equipment, at cost	45,258		44,177
Accumulated depreciation and amortization	(19,509)		(18,882)
Net property and equipment	25,749		25,295
Total assets	$	56,329	$	55,182
Liabilities and shareholders’ equity (deficit)
Current liabilities
Short-term borrowings and current maturities of long-term debt	$	80	$	—
Accounts payable	882		1,029
Lease liability	663		636
Income taxes	556		361
Other taxes	235		224
Accrued interest	401		482
Accrued payroll and other liabilities	1,191		1,129


Total current liabilities	4,008		3,861
Long-term debt	38,845		38,424
Long-term lease liability	13,175		12,888
Long-term income taxes	365		344
Deferred revenues - initial franchise fees	914		778
Other long-term liabilities	755		771
Deferred income taxes	1,721		1,914
Shareholders’ equity (deficit)
Preferred stock, no par value; authorized – 165.0 million shares; issued – none	—		—
Common stock, $0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares	17		17
Additional paid-in capital	9,423		9,281
Retained earnings	67,436		66,834
Accumulated other comprehensive income (loss)	(2,557)		(2,553)
Common stock in treasury, at cost; 945.6 and 945.4 million shares	(77,773)		(77,375)
Total shareholders’ equity (deficit)	(3,454)		(3,797)
Total liabilities and shareholders’ equity (deficit)	$	56,329	$	55,182


CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

	Quarters Ended
	March 31,
In millions, except per share data	2025		2024
Revenues
Revenues from franchised restaurants	$	3,661	$	3,723
Sales by Company-owned and operated restaurants	2,132		2,355
Other revenues	162		91
Total revenues	5,956		6,169
Operating costs and expenses
Franchised restaurants-occupancy expenses	620		627
Company-owned and operated restaurant expenses	1,859		2,035
Other restaurant expenses	140		68
Selling, general & administrative expenses
Depreciation and amortization	107		99
Other	575		622
Other operating (income) expense, net	7		(17)
Total operating costs and expenses	3,308		3,433
Operating income	2,648		2,736
Interest expense	376		372
Nonoperating (income) expense, net	(57)		(45)
Income before provision for income taxes	2,330		2,409
Provision for income taxes	461		479
Net income	$	1,868	$	1,929
Earnings per common share-basic	$	2.61	$	2.67
Earnings per common share-diluted	$	2.60	$	2.66
Dividends declared per common share	$	1.77	$	1.67
Weighted-average shares outstanding-basic	714.9		721.8
Weighted-average shares outstanding-diluted	718.2		725.9


CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
For the quarter ended March 31, 2024
	Common stock issued										Accumulated other comprehensive income (loss)								Common stock in treasury			Total shareholders’ equity (deficit)
					Additional paid-in capital			Retained earnings		Pensions			Cash flow hedges			Foreign currency translation
In millions, except per share data	Shares	Amount																	Shares	Amount
Balance at December 31, 2023	1,660.6		$	17		$	8,893	$	63,480		$	(367)		$	(6)		$	(2,083)	(937.9)	$	(74,640)		$	(4,707)
Net income								1,929															1,929
Other comprehensive income (loss), net of tax											1			37			(115)						(77)
Comprehensive income																							1,852
Common stock cash dividends ($1.67 per share)								(1,206)															(1,206)
Treasury stock purchases																			(3.2)	(921)			(921)
Share-based compensation						50																	50
Stock option exercises and other						58													1.2	41			99
Balance at March 31, 2024	1,660.6		$	17		$	9,001	$	64,203		$	(367)		$	32		$	(2,198)	(939.9)	$	(75,520)		$	(4,833)




For the quarter ended March 31, 2025
	Common stock issued										Accumulated other comprehensive income (loss)								Common stock in treasury			Total shareholders’ equity (deficit)
					Additional paid-in capital			Retained earnings		Pensions			Cash flow hedges			Foreign currency translation
In millions, except per share data	Shares	Amount																	Shares	Amount
Balance at December 31, 2024	1,660.6		$	17		$	9,281	$	66,834		$	(393)		$	119		$	(2,279)	(945.4)	$	(77,375)		$	(3,797)
Net income								1,868															1,868
Other comprehensive income (loss), net of tax											(7)			(67)			70						(4)
Comprehensive income																							1,864
Common stock cash dividends ($1.77 per share)								(1,266)															(1,266)
Treasury stock purchases																			(1.5)	(447)			(447)
Share-based compensation						45																	45
Stock option exercises and other						98													1.4	49			147
Balance at March 31, 2025	1,660.6		$	17		$	9,423	$	67,436		$	(400)		$	52		$	(2,209)	(945.6)	$	(77,773)		$	(3,454)


Restaurants at March 31,	2025	2024
Conventional franchised	22,126	21,841
Developmental licensed	9,300	8,741
Foreign affiliated	10,294	9,283
Total Franchised	41,720	39,865
Company-owned and operated	2,036	2,153
Total Systemwide restaurants	43,756	42,018


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	Employee Termination Benefits		Costs to Terminate Contracts		Professional Services and Other Costs		Total
2025
Accrued Balance at Beginning of Year	$	23	$	4	$	15	$	42
Restructuring Costs Incurred	17		—		49		66
Cash Payments	(5)		—		(31)		(36)
Other Non-Cash Items	—		—		1		1
Accrued Balance at March 31, 2025	$	35	$	4	$	34	$	73


	March 31, 2025						December 31, 2024
In Millions	Percentage Ownership		Fair Value (Level 1)		Carrying Amount		Percentage Ownership		Fair Value (Level 1)		Carrying Amount
Grand Foods Holding	48	%	N/A		$	2,005	48	%	N/A		$	1,973
McDonald's Japan Holdings Co., Ltd	35	%	$	1,788	$	625	35	%	$	1,849	$	590


	Quarters Ended
	March 31,
In millions	2025		2024
U.S.	$	2,494	$	2,560
International Operated Markets	2,916		2,987
International Developmental Licensed Markets & Corporate	546		621
Total Revenues	$	5,956	$	6,169
U.S.	$	319	$	324
International Operated Markets	301		298
International Developmental Licensed Markets & Corporate	—		4
Total Franchised restaurants-occupancy expenses	$	620	$	627
U.S.	$	645	$	674
International Operated Markets	1,123		1,158
International Developmental Licensed Markets & Corporate	91		203
Total Company-operated restaurant expenses	$	1,859	$	2,035
U.S.	$	143	$	141
International Operated Markets	161		161
International Developmental Licensed Markets & Corporate	378		418
Total Selling, general, & administrative expenses	$	682	$	720
U.S.	$	85	$	26
International Operated Markets	42		5
International Developmental Licensed Markets & Corporate	20		21
Total Other segment items*	$	147	$	51
U.S.	$	1,302	$	1,395
International Operated Markets	1,289		1,365
International Developmental Licensed Markets & Corporate	57		(25)
Total Operating income	$	2,648	$	2,736
U.S.	$	22,638	$	22,333
International Operated Markets	24,723		23,521
International Developmental Licensed Markets & Corporate	8,968		7,659
Total Assets	$	56,329	$	53,513
U.S.	$	225	$	210
International Operated Markets	322		311
International Developmental Licensed Markets & Corporate	4		25
Total Capital expenditures	$	551	$	547
U.S.	$	241	$	247
International Operated Markets	182		177
International Developmental Licensed Markets & Corporate	98		86
Total Depreciation & amortization**	$	520	$	510


	Quarters Ended March 31,
In Millions	2025		2024
Revenue	$	139	$	134
Equity in Earnings	$	51	$	34
Accounts Receivable	$	114	$	112
Dividends Received	$	15	$	13


	Derivative Assets					Derivative Liabilities
In millions	Balance Sheet Classification	March 31, 2025		December 31, 2024		Balance Sheet Classification	March 31, 2025		December 31, 2024
Derivatives designated as hedging instruments
Foreign currency	Prepaid expenses and other current assets	$	33	$	125	Accrued payroll and other liabilities	$	(62)	$	(1)
Interest rate	Prepaid expenses and other current assets	—		34		Accrued payroll and other liabilities	(5)		(6)
Foreign currency	Miscellaneous other assets	7		40		Other long-term liabilities	(29)		—
Interest rate	Miscellaneous other assets	—		—		Other long-term liabilities	(27)		(34)
Total derivatives designated as hedging instruments		$	40	$	199		$	(123)	$	(41)
Derivatives not designated as hedging instruments
Equity	Prepaid expenses and other current assets	$	146	$	135	Accrued payroll and other liabilities	$	—	$	—
Foreign currency	Prepaid expenses and other current assets	—		—		Accrued payroll and other liabilities	—		—

Total derivatives not designated as hedging instruments		$	146	$	135		$	—	$	—
Total derivatives		$	186	$	334		$	(123)	$	(41)


	Location of gain or loss recognized in income on derivative	Gain (loss) recognized in AOCI				Gain (loss) reclassified into income from AOCI					Gain (loss) recognized in income on derivative


In millions		2025		2024			2025		2024			2025		2024
Foreign currency	Nonoperating income/expense	$	(51)	$	43		$	20	$	(2)
Interest rate	Interest expense	(16)		4			—		—
Cash flow hedges		$	(67)	$	47		$	20	$	(2)

Foreign currency denominated debt	Nonoperating income/expense	$	(504)	$	349
Foreign currency derivatives	Nonoperating income/expense	(86)		37
Foreign currency derivatives(1)	Interest expense											$	15	$	7
Net investment hedges		$	(590)	$	386				$	—		$	15	$	7


Foreign currency	Nonoperating income/expense											$	(5)	$	1
Equity	Selling, general & administrative expenses											11		(9)

Undesignated derivatives												$	6	$	(8)
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.


CONSOLIDATED OPERATING RESULTS
Dollars in millions, except per share data

Quarters Ended March 31,	2025		2024		Inc/(Dec)
Revenues
Revenues from franchised restaurants	$	3,661	$	3,723	(2)	%
Sales by Company-owned and operated restaurants	2,132		2,355		(9)
Other revenues	162		91		78
Total revenues	5,956		6,169		(3)
Operating costs and expenses
Franchised restaurants-occupancy expenses	620		627		(1)
Company-owned and operated restaurant expenses	1,859		2,035		(9)
Other restaurant expenses	140		68		n/m
Selling, general & administrative expenses
Depreciation and amortization	107		99		9
Other	575		622		(7)
Other operating (income) expense, net	7		(17)		n/m
Total operating costs and expenses	3,308		3,433		(4)
Operating income	2,648		2,736		(3)
Interest expense	376		372		1
Nonoperating (income) expense, net	(57)		(45)		27
Income before provision for income taxes	2,330		2,409		(3)
Provision for income taxes	461		479		(4)
Net income	$	1,868	$	1,929	(3)	%
Earnings per common share-basic	$	2.61	$	2.67	(2)	%
Earnings per common share-diluted	$	2.60	$	2.66	(2)	%


IMPACT OF FOREIGN CURRENCY TRANSLATION
Dollars in millions, except per share data
					Currency Translation Benefit/ (Cost)
Quarters Ended March 31,	2025		2024			2025
Revenues	$	5,956	$	6,169		$	(114)
Franchised margins	3,041		3,096			(55)
Company-owned and operated margins	273		320			(7)
Selling, general & administrative expenses	682		720			5
Operating income	2,648		2,736			(59)
Net income	1,868		1,929			(30)
Earnings per share-diluted	$	2.60	$	2.66		$	(0.04)


	Quarters Ended March 31,
	Net Income								Earnings per share - diluted
	2025		2024		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation		2025		2024		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
GAAP	$	1,868	$	1,929	(3)	%	(2)	%	$	2.60	$	2.66	(2)	%	(1)	%
(Gains)/Charges	51		27						0.07		0.04

Non-GAAP	$	1,919	$	1,957	(2)	%	—	%	$	2.67	$	2.70	(1)	%	1	%


REVENUES
Dollars in millions
Quarters Ended March 31,	2025		2024		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
Franchised revenues
U.S.	$	1,679	$	1,728	(3)	%	(3)	%
International Operated Markets	1,554		1,585		(2)		1
International Developmental Licensed Markets & Corporate	429		409		5		9
Total	$	3,661	$	3,723	(2)	%	—	%
Company-owned and operated sales
U.S.	$	724	$	781	(7)	%	(7)	%
International Operated Markets	1,309		1,362		(4)		—
International Developmental Licensed Markets & Corporate	99		212		(53)		n/m
Total	$	2,132	$	2,355	(9)	%	(7)	%
Total Franchised revenues and Company-owned and operated sales
U.S.	$	2,403	$	2,509	(4)	%	(4)	%
International Operated Markets	2,862		2,947		(3)		—
International Developmental Licensed Markets & Corporate	528		621		(15)		(13)
Total	$	5,793	$	6,078	(5)	%	(3)	%

Total Other revenues	$	162	$	91	78	%	81	%

Total Revenues	$	5,956	$	6,169	(3)	%	(2)	%


	Increase/(Decrease)
	Quarters Ended March 31,
	2025		2024
U.S.	(3.6)	%	2.5	%
International Operated Markets	(1.0)		2.7
International Developmental Licensed Markets	3.5		(0.2)
Total	(1.0)	%	1.9	%


SYSTEMWIDE SALES*
	Quarter Ended March 31, 2025
	Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
U.S.	(3)	%	(3)	%
International Operated Markets	(2)		1
International Developmental Licensed Markets	5		9
Total	(1)	%	1	%


FRANCHISED SALES
Dollars in millions
Quarters Ended March 31,	2025		2024		Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
U.S.	$	11,771	$	12,086	(3)	%	(3)	%
International Operated Markets	8,984		9,166		(2)		1
International Developmental Licensed Markets	8,048		7,565		6		10
Total	$	28,804	$	28,816	—	%	2	%

Ownership type
Conventional franchised	$	20,632	$	21,165	(3)	%	(1)	%
Developmental licensed	4,944		4,611		7		13
Foreign affiliated	3,227		3,040		6		8
Total	$	28,804	$	28,816	—	%	2	%

SEC Form 10-Q filed by McDonald's Corporation

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RESTAURANT MARGINS
Dollars in millions
			Inc/ (Dec)			Inc/ (Dec) Excluding Currency Translation
Quarters Ended March 31,	2025				2024
Franchised
U.S.	$	1,360	$	1,405		(3)	%	(3)	%
International Operated Markets	1,252		1,287			(3)		—
International Developmental Licensed Markets & Corporate	429		405			6		10
Total	$	3,041	$	3,096		(2)	%	—	%
Company-owned and operated
U.S.	$	79	$	107		(26)	%	(26)	%
International Operated Markets	186		203			(8)		(5)
International Developmental Licensed Markets & Corporate	n/m		n/m			n/m		n/m
Total	$	273	$	320		(15)	%	(12)	%
Total restaurant margins
U.S.	$	1,440	$	1,512		(5)	%	(5)	%
International Operated Markets	1,438		1,490			(3)		—
International Developmental Licensed Markets & Corporate	n/m		n/m			n/m		n/m
Total	$	3,314	$	3,416		(3)	%	(1)	%


OPERATING INCOME & OPERATING MARGIN
Dollars in millions
Quarters Ended March 31,	2025			2024			Inc/ (Dec)		Inc/ (Dec) Excluding Currency Translation
U.S.	$	1,302		$	1,395		(7)	%	(7)	%
International Operated Markets	1,289			1,365			(6)		(2)
International Developmental Licensed Markets & Corporate	57			(25)			n/m		n/m
Total	$	2,648		$	2,736		(3)	%	(1)	%


Operating margin	44.5		%	44.3		%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)



January 1-31, 2025	797,922	$	287.94	797,922	$	14,770,243,410
February 1-28, 2025	389,627	299.80		389,627	14,653,432,226
March 1-31, 2025	326,548	306.27		326,548	14,553,420,121
Total	1,514,097	$	294.95	1,514,097

Date	Price Target	Rating	Analyst
5/6/2025		Buy → Neutral	Northcoast
3/27/2025	$335.00 → $340.00	Overweight	KeyBanc Capital Markets
1/10/2025	$311.00 → $334.00	Neutral → Buy	Citigroup
10/23/2024	$290.00 → $285.00	Buy → Neutral	Guggenheim
10/23/2024	$320.00 → $290.00	Outperform → Neutral	Robert W. Baird
10/15/2024	$295.00 → $350.00	Buy	Truist
10/8/2024		Hold → Buy	Argus
9/9/2024	$310.00 → $330.00	Buy	Jefferies