McDonald's Corporation Q1 2010 Earnings Call Transcript

McDonald’s Corporation

(

MCD

)

Q1 2010 Earnings Call Transcript

April 21, 2010 12:00 am ET

Executives

Mary Kay Shaw – VP, IR

Jim Skinner – Vice Chairman and CEO

Pete Bensen – EVP and CFO

Don Thompson – President and COO

Analysts

David Palmer – UBS

David Tarantino – Robert Baird

Greg Badishkanian – Citi

Jeff Omohundro – Wells Fargo

Joe Buckley – BofA\Merrill Lynch

Jason West – Deutsche Bank

John Glass – Morgan Stanley

Jeff Bernstein – Barclays

Mitch Speiser – Buckingham Research

Keith Siegner – Credit Suisse

Larry Miller – RBC

Matt Van Vliet – Stifel Nicolaus

Howard Penney – Hedgeye Risk Management

Presentation

Operator

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» McDonald's Corporation Q1 2009 Earnings Call Transcript

Hello and welcome to the McDonald's April 21st 2010 investor conference call. As a request, the McDonald's Corporation, this conference is been recorded. Following today's presentation there will be a question–and–answer session for investors. At that time investors only may ask a question by pressing star one on your touch tone phone. I'd now like to turn the conference over to Miss. Mary Kay Shaw, Vice President of Investor Relations for McDonald's Corporation.

Miss Shaw, you may begin.

Mary

Kay

Shaw

Thank you. Hello everyone and thank you for joining us. With me on the call today, our Chief Executive Officer Jim Skinner, Chief Financial Officer Pete Bensen, and joining us for Q&A, President and Chief Operating Officer, Don Thompson. Today's conference call is being webcast live and recorded for replay via phone webcast and podcast. Before I turn it over to Jim, I want to remind everyone that as always forward–looking statements in our earnings release in 8–K filing also applies to our comments.

Those documents are available on www.investor.mcdonalds.com. As our reconciliations of any non–GAAP financial measures mentioned on today's call with the corresponding GAAP measures, and now I'll turn it over to Jim.

Jim Skinner

Thanks Mary Kay. Good morning everybody. I'm joining you from our McDonald's Worldwide Owner/Operator Convention in Orlando. Every two years we bring together our franchisees from around the world and along with a number of our suppliers and company employees we celebrate our success, but mostly we calibrate about our future. But we're in the middle of it now and it's been a tremendous week so far. From the Convention floor to our business meetings, we are focused on operations, menu, reinvestment and building this great brand.

'

We're sharing ideas and learning from each other further strengthening our alignment, which I know is critical to our future success. We're energized and confident about what we're doing regarding our business and taking our business to the next level. So as we come together and looked ahead I'm proud of the results we achieved this quarter. Global comparable sales were up 4.2%. Operating income increased 13% in constant currency and earnings per share reached $1, a 9% increase in constant currency.

Our success continues to be a system wide effort driven by strong results in each area of the world. In the U.S. comparable sales for the quarter increased 1.5% and operating income grew 12%. Comparable sales in Europe rose 5.2% and operating income grew 14% in constant currencies and in Asia Pacific, Middle East and Africa or APMEA, comp sales grew 5.7% with operating income rising 9% in constant currencies.

Our momentum is continuing at April with comparable sales trending positive across all of our geographies. We are now into our seventh year of positive comp sales growth in every part of the world, a feat that underscores the ongoing strength and relevance of our plan to win business strategy.

Guided by the plan, we continue to focus on differentiating our brands through common business drivers, mainly a variety of beverage choice, better restaurant operations, convenience in daypart expansion, everyday predictable low prices and ongoing restaurant reinvestment. On all of these fronts we're improving and re–innovating. As a result, we are growing our business in widening our market share lead around the world.

Together, we're aligned around these drivers in delivering them in the most locally relevant liege. Regarding menu, we made gains by promoting our iconic core products while delivering new food and beverage news. In the U.S. as growing Olympic theme promotion help ignite our Chicken McNuggets sales and drove sustained sales growth across our entire chicken category.

Our new product news included McSnack Wrap with all the great taste of Big Mac and a portable wrap which has helped lift the entire Snack Wrap line or category across the menu. Looking ahead, the U.S. is continuing the expansion of McCafé line with the introduction of Frappes and Smoothies.

Frappe is now around about 90% of the U.S. Restaurants, and are already exceeding expectations, and that's without any national advertising, and later this summer we will be launching Wild Berry and Straw Berry Banana Smoothies. With these new additions were becoming even more of the beverage destination serving familiar and popular drinks with the quality convenience and value that only McDonald's can provide.

Looking at Europe, we continue to delight customers and drive sales with our fourth tier menu offerings, which deliver a popular option of smaller premium portable sandwiches. Little Tasters in the U.K. and Snack Deluxe in Germany have both delivered solid sales results and our latest line of Petit plaisirs in France has exceeded expectations. Europe is also driving momentum with its premium offerings from the Big Tasty in France and the Chicken Bacon Onion Sandwich in the U.K. to the launch of McKinley Burgers, which have performed strongly across our entire market.

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