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McDonald's Reports Fourth Quarter and Full Year 2022 Results [1]

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Date: 2024-05

THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED THROUGHOUT THIS RELEASE

Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other charges and gains, as well as material regulatory and other income tax impacts, and bases incentive compensation plans on these results because the Company believes this better represents underlying business trends.

Comparable sales and comparable guest counts are compared to the same period in the prior year and represent sales and transactions, respectively, at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction, natural disasters and acts of war, terrorism or other hostilities (including restaurants temporarily closed due to COVID-19, as well as those that remain closed in Ukraine). Restaurants in Russia were treated as permanently closed as of April 1, 2022 and therefore excluded from the calculation of comparable sales and comparable guest counts beginning in the second quarter of 2022. Comparable sales exclude the impact of currency translation and the sales of any market considered hyper-inflationary (generally identified as those markets whose cumulative inflation rate over a three-year period exceeds 100%), which management believes more accurately reflects the underlying business trends. Comparable sales are driven by changes in guest counts and average check, the latter of which is affected by changes in pricing and product mix.

Systemwide sales include sales at all restaurants, whether operated by the Company or by franchisees. This includes sales from digital channels, which are comprised of the mobile app, delivery and kiosk at both Company-operated and franchised restaurants. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company's financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base. The Company's revenues consist of sales by Company-operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. Changes in Systemwide

sales are primarily driven by comparable sales and net restaurant unit expansion.

Free cash flow , defined as cash provided by operations less capital expenditures, and free cash flow conversion rate, defined as free cash flow divided by net income, are measures reviewed by management in order to evaluate the Company’s ability to convert net profits into cash resources, after reinvesting in the core business, that can be used to pursue opportunities to enhance shareholder value.

RELATED COMMUNICATIONS

This press release should be read in conjunction with Exhibit 99.2 to the Company's Form 8-K filing for supplemental information related to the Company's results for the quarter and year ended December 31, 2022.

McDonald’s Corporation will broadcast its investor earnings conference call live over the Internet at 7:30 a.m. (Central Time) on January 31, 2023. A link to the live webcast will be available at www.investor.mcdonalds.com. There will also be an archived webcast available for a limited time thereafter.

UPCOMING COMMUNICATIONS

For important news and information regarding McDonald's, including the timing of future investor conferences and earnings calls, visit the Investor Relations section of the Company's Internet home page at www.investor.mcdonalds.com. McDonald's uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.

ABOUT McDONALD’S

McDonald’s is the world’s leading global foodservice retailer with over 40,000 locations in over 100 countries. Approximately 95% of McDonald’s restaurants worldwide are owned and operated by independent local business owners.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from expectations are detailed in the Company’s filings with the Securities and Exchange Commission, including the risk factors discussed in Exhibit 99.2 to the Company’s Form 8-K filing on January 31, 2023. The Company undertakes no obligation to update such forward-looking statements, except as may otherwise be required by law.

McDONALD'S CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

Dollars and shares in millions, except per share data

Quarters Ended December 31,

2022 2021 Inc/ (Dec) Revenues Sales by Company-operated restaurants $2,208.4 $2,538.8 $(330.4) (13)% Revenues from franchised restaurants 3,645.0 3,391.6 253.4 7 Other revenues 73.1 78.7 (5.6) (7) TOTAL REVENUES 5,926.5 6,009.1 (82.6) (1) Operating costs and expenses Company-operated restaurant expenses 1,872.3 2,100.3 (228.0) (11) Franchised restaurants-occupancy expenses 588.1 591.8 (3.7) (1) Other restaurant expenses 57.2 56.0 1.2 2 Selling, general & administrative expenses Depreciation and amortization 91.4 86.5 4.9 6 Other 720.3 755.4 (35.1) (5) Other operating (income) expense, net 14.5 22.0 (7.5) (34) Total operating costs and expenses 3,343.8 3,612.0 (268.2) (7) OPERATING INCOME 2,582.7 2,397.1 185.6 8 Interest expense 322.9 295.6 27.3 9 Nonoperating (income) expense, net (79.1) (6.3) (72.8) n/m Income before provision for income taxes 2,338.9 2,107.8 231.1 11 Provision for income taxes 435.5 469.0 (33.5) (7) NET INCOME $1,903.4 $1,638.8 $264.6 16 % EARNINGS PER SHARE-DILUTED $2.59 $2.18 $0.41 19 % Weighted average shares outstanding-diluted 736.0 751.6 (15.6) (2)%

n/m Not meaningful

Dollars and shares in millions, except per share data

Years Ended December 31,

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[1] Url: https://corporate.mcdonalds.com/corpmcd/our-stories/article/Q4-2022-results.html

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