McDonald's Corp MCD
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/22/2013

Operator: Hello and welcome to McDonald's July 22, 2013 Investor Conference Call. At the request of McDonald's Corporation, this conference is being recorded. Following today's presentation, there will be a question-and-answer session for investors.

I would now like to turn the call over to Ms. Kathy Martin, Vice President of Investor Relations for McDonald's Corporation. Ms. Martin, you may begin.

Kathy Martin - IR: good morning, everyone, and thanks for joining us. With me on the call are our President and Chief Executive Officer, Don Thompson and Chief Financial Officer, Pete Bensen. In addition, Chief Operating Officer, Tim Fenton, is here for Q&A. Today's conference call is being webcast live and recorded for replay via the phone, webcast and podcast.

Before I turn it over to Don, I want to remind everyone that as always the forward-looking statements in our earnings release and 8-K filing also apply to our comments. Both documents are available at our website, as are reconciliations of any non-GAAP financial measures mentioned on today's call with our corresponding GAAP measures.

Now, I'd like to turn it over to Don.

Don Thompson - President and CEO: Thanks Chris, and good morning, everyone. I'd like to begin by briefly framing our performance using three lenses; the past, the present and the future. First the past; because it provides perspective and guides our present and future. Throughout McDonald's history we have effectively grown both the top and bottom lines to varying degrees across a variety of economic and competitive cycles. We have an iconic brand, an outstanding system of owner operators, suppliers and employees and superb real estate location in nearly every market around the world. This provides a solid foundation from which we operate.

Second, the present; in the second quarter we grew revenues, operating income and earnings per share despite the ongoing impact of the challenging environment. This is truly a testament to the fortitude and resilience of our system. Our sustainable competitive advantages and the collective focus on execution at our restaurants.

Third the future; we expect the dynamics of this cycle to persist in the near term, namely flat to declining informal eating out markets, increasingly less ability to take price cost pressures throughout our P&L and heightened competitive activity. Our second quarter results tell a story consistent with these lenses. Global comparable sales were up 1%. Operating income was up 3% in constant currencies and earnings per share, was $1.38, a 6% increase in constant currencies.

Now as we begin the third quarter, global comparable sales are expected to be relatively flat in July. Based on our recent sales trends, our results for the rest of the year are expected to remain challenged. We remain committed to the plan to win in our three global growth priorities to optimize our menu, modernize the customer experience, and to broaden accessibility to brand McDonald's around the world. This customer centric plan enables us to deliver an appealing experience by offering great tasting, affordable food and beverages, and clean and modern restaurants. At the same time, we are diligently implementing thoughtful adjustments through our proven strategies and solutions when and where needed. This flexibility has enabled us to maintain or grow market share in most of our major markets around the world.

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