McDonald's Corp. (NYSE:MCD) Q4 2014 Earnings Conference Call - Final Transcript

Jan 23, 2015 • 11:00 am ET


McDonald's Corp. (NYSE:MCD) Q4 2014 Earnings Conference Call - Final Transcript


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Hello, and welcome to McDonald's January 23rd, 2015, Investor Conference Call. [Operator Instructions]

I would now like to turn the conference over to Mr. Chris Stent, Vice President of Investor Relations for McDonald's Corporation. Mr. Stent, you may begin.

Chris Stent

Hello, everyone, and thank you for joining us. With me on the call are President and Chief Executive Officer, Don Thompson; and Chief Financial Officer, Pete Bensen. In addition, McDonald's USA President, Mike Andres will join us for Q&A. Today's conference call is being webcast live and recorded for replay by phone, webcast, and podcast.

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

And now, I'd like to turn it over to Don. Don?

Don Thompson

Thank you, Chris, and good morning, everyone. 2014 was a difficult year, during which performance fell short of our expectations. But it was also a building year. As we entered 2014, we were well aware of the obstacles that we faced in terms of growing comparable sales and margins amid ongoing broad-based challenges and cost pressures throughout our P&L.

Now, while some of the challenges were anticipated, others were not, like the supplier issue in Asia-Pacific, Middle East Africa, and the volatile operating environment in Russia and the Ukraine. And we experienced shortfalls in our internal plans, particularly in key markets such as the U.S. In response to these shortfalls, we took a number of important steps to lay the foundation for our turnaround.

We're acting with a sense of urgency as these steps are critical to addressing current performance and to advancing our longer-term strategies. Specifically, we renewed our focus on our customers with the evolution of our strategic plan. We brought in new talent in several major markets around the world to provide innovative thinking and fresh perspectives. We announced the changes that we are making to the U.S. organization to put decision-making and accountability closer to the customer.

We redefined menu choice and personalization with the introduction of the Create Your Taste platform in Australia and the U.S. We focused on the service experience through an increased emphasis on operations excellence and the initiation of our global digital strategy. And we did more to bolster trust in brand McDonald's because we know that when our customers feel good about us and about eating at McDonald's they visit us more often.

Now, let's turn to 2014 results. In constant currencies, operating income was down 15% for the fourth quarter and 8% for the year. Earnings per share was down 14% for the quarter and 11% for the full year, both in constant currencies. Excluding the impact of the higher tax rate and the supplier issue in APMEA, earnings per share for the year would have been down 1% in constant currencies. For