McDonald's Conference Call Highlights

McDonald's Corporation MCD reported its third quarter earnings on Tuesday. Shares of the company are down 1 percent.

Below are some key highlights from its conference call.

• Let me start by saying that we are disappointed by our recent performance, which fell short of our expectations.
• Global comparable sales decreased 3.3% for the quarter, operating income was down 14% in constant currencies, and earnings per share was $1.09, a 28% decrease in constant currencies.
• Third-quarter results remain pressured by a number of internal and external factors.
• A significantly higher tax rate, which was due to an increase in tax reserves in certain foreign markets, impacted earnings per share by $0.26 per share.
• In addition, the supply issue in China negatively impacted EPS by approximately $0.15 per share, and the estimated impact of store closures in Russia and the Ukraine impacted EPS by $0.01 per share.
• I'd like to share our strategy for growth and discuss the actions that we're taking to improve performance in the U.S. and our priority markets of Germany, Japan and Australia
• And in Australia, comparable sales in September were solid and represented the highest comps since August 2012.
• While current results reflect the impact of the supplier issue in China, weak comparable sales trends have persisted the past several years in Japan.
• Around the world, we're changing, and we're doing it aggressively.
• Our business is financially strong and so is our conviction, and the future of brand McDonald's and what we know we can become for our customers.
• The second most significant factor impacting third quarter results was the China supplier issue.
• We estimated a total impact from lost sales, expenses associated with our customer recovery efforts and the tax effect of these items to be in the range of $0.15 to $0.20 per share.
• The actual impact was approximately $0.15 per share and the impact was felt in virtually every line of our P&L.
• The segment operating income declined $107 million or about $0.07 per share primarily due to soft comparable sales which contributed to margin declines.
• Our price increases in Europe vary by market with the overall segment averaging about 2% year-over-year.
• Our 2014 spend will now be approximately $2.7 billion.
• McDonald's current three-year cash return target of $18 billion to $20 billion is a testament to our ongoing commitment to build long-term shareholder value.
• We are targeting to identify and redirect $100 million in savings for future long-term growth initiatives.
• McDonald's generated $6.2 billion of operating income, raised the quarterly dividend 5% to $0.85 per share and returned $4.6 billion to shareholders through a combination of dividends and share repurchases.
• McDonald's current three-year cash return target of $18 billion to $20 billion is a testament to our ongoing commitment to build long-term shareholder value.