McDonald's(MCD) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenues for Q1 2025 were $5,956 million, a decrease of 3.4$6,169 million in Q1 2024[10]. - Net income for Q1 2025 was $1,868 million, down 3.2$1,929 million in Q1 2024[12]. - Earnings per common share (diluted) for Q1 2025 were $2.60, compared to$2.66 in Q1 2024, reflecting a decrease of 2.3%[10]. - Total operating income decreased to $2,648 million from$2,736 million, reflecting a decline of 3.2% year-over-year[52]. - Net income decreased 3% to $1,868 million, with diluted earnings per share down 2$2.60[87]. - Consolidated revenues decreased 3% to $5,956 million, with a 2$2,428 million, an increase of 1.6% from $2,390 million in Q1 2024[14]. - Total assets increased to$56,329 million as of March 31, 2025, up from $55,182 million at the end of 2024[9]. - Cash and equivalents at the end of Q1 2025 were$1,238 million, an increase from $838 million at the end of Q1 2024[14]. - The fair value of the company's debt obligations was estimated at$37.2 billion, compared to a carrying amount of $38.9 billion[38]. Dividends and Share Repurchase - The company declared dividends of$1.77 per common share in Q1 2025, compared to $1.67 in Q1 2024, representing a 6$1.77 per share, totaling $1,266 million, an increase from$1.67 per share in the previous year[21]. - The company repurchased 1.5 million shares for $447 million and paid a quarterly dividend of$1.77 per share, totaling $1.3 billion[89]. - The total value of shares that may yet be purchased under the repurchase program is approximately$14.55 billion[185]. - The company's Board of Directors approved a share repurchase program on November 21, 2024, authorizing the purchase of up to $15.0 billion of outstanding common stock[186]. Restaurant Operations and Growth - Total Systemwide restaurants increased to 43,756 as of March 31, 2025, up from 42,018 in 2024, representing a growth of about 4.1$551 million, slightly up from $547 million in the previous year[52]. - The company reported total selling, general, and administrative expenses of$682 million, down from $720 million, indicating a reduction of 5.3$38 million or 5%, reflecting investments in digital and technology[102]. Market and Economic Conditions - Global comparable sales decreased 1.0%, with U.S. sales down 3.6% and International Operated Markets down 1.0%[77]. - The war in the Middle East is expected to continue negatively impacting Systemwide sales and revenue until conditions improve[83]. - Economic conditions, including inflationary pressures, can significantly impact consumer disposable income levels and spending habits, affecting the company's financial results[163]. - Labor challenges, including availability and cost, could adversely impact the company's operations and customer satisfaction levels[142]. - Supply chain interruptions could lead to increased costs or reduced revenues, impacting the overall business performance[136]. Strategic Initiatives - The company is focused on enhancing its digital experience, with plans to increase mobile app delivery sales to 30% by the end of 2027[73]. - The company is implementing a "Best Burger" initiative to improve its burger offerings, aiming for rollout in nearly all markets by the end of 2026[71]. - The company aims to increase its 90-day active loyalty users to 250 million by the end of 2027, with a target of $45.0 billion in annual Systemwide sales to loyalty members[73]. - The company is undergoing a multi-year transformation of its technology and operating model to modernize processes and create efficiencies[179]. Risks and Challenges - The company faces intense competition in the "informal eating out" segment, which may affect its market share and financial performance[128]. - The company acknowledges the need to effectively anticipate and respond to industry trends and evolving consumer preferences to avoid adverse impacts on financial results[124]. - The company is under increasing scrutiny regarding environmental and social impact matters, which could affect brand perception and operational costs[171]. - Changes in commodity costs, including food and labor, can adversely affect restaurant profitability and overall operating results[166]. - The company is subject to fluctuations in currency exchange rates, which could negatively impact reported earnings[164]. Internal Controls and Governance - There were no material changes to the company's internal control over financial reporting during the fiscal quarter ended March 31, 2025[181]. - The company's management confirmed the effectiveness of its disclosure controls and procedures as of March 31, 2025[178]. - The company has implemented modifications to enhance the quality of internal control over financial reporting as part of its technology transformation[180].