Q3 2020 Mcdonald's Corp Earnings Call

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Primarily driven by lower incentive compensation accruals and lower travel costs, while we continue to invest in strategic technology initiatives.

When looking at the cadence of our GNS spend over the past few years. We've historically spent about 30% of our full year DNA in the fourth quarter.

We expect the Q4 DNA percentage this year to be slightly higher than that given some one time investments, we're making in renewed brand communications and in the actions, we're taking to have an even greater impact with our purpose to feed and foster community.

Turning to other operating income and expense.

Gains on restaurant sales for the full year are still expected to be down significantly versus last year with minimal restaurants sales expected for the fourth quarter.

Our equity in earnings of affiliates for the full year is projected to be down substantially.

And finally as a reminder, we provided nearly $1 billion of short term liquidity deferrals to franchisees at the onset of the pandemic.

We've now collected roughly half of the deferrals and expect that we will collect most of the remaining balance over the fourth quarter of 2020 in first quarter of 2021.

As a result in the third quarter, we reduced $27 million of our bad debt reserve related to rent and royalty deferrals.

We expect our full year effective tax rate to be about 23%, resulting in a fourth quarter tax rate of about 25%.

Capital expenditures for 2020 are still expected to be around $1.6 billion as we plan to open about 950, gross and 300 net new restaurants by year end.

About half of the 1.6 billion is dedicated to the US business and we remain on track to complete roughly 900, Iot TF projects this year.

In October our board of directors approved a 3% dividend increase to the equivalent of $5.16 annually.

This marked over 40 consecutive years of increasing our dividend for shareholders and further reinforces our confidence in the company's long term strategy.

We will continue to manage and utilize our funds in a judicious manner that focuses on ensuring we grow our business our franchisees remain financially strong and our shareholders are duly rewarded.

Our velocity growth plans served us well over the past few years and gave us confidence in our ability to successfully navigate through this crisis.

As our customers needs have evolved so to have elements of our path forward.

We will continue to further draw on our solid foundation unique advantages and core equities to meet the needs of today, while building towards a better tomorrow.

We look forward to sharing the evolution of our growth strategy later, this morning, and our virtual investor update.

Now I'll turn it back to Mike for a few closing comments.

Thanks, Kevin and thank you all for joining US. This concludes our third quarter 2020 earnings call as Kevin just mentioned, our Investor update presentation begin soon at 830 am Central standard time, and we look forward to connecting with you then.

This does concludes Mcdonalds Corporation it extra conference call you may now disconnect.