Broad-Based Global Strength Resulting in 13%
System Sales Growth excluding Russia Impact;
8% Same-Store Sales Growth and Record
Digital System Sales With Digital Mix Exceeding 45%
Yum! Brands, Inc. (NYSE: YUM) today reported results for the
first-quarter ending March 31, 2023. Worldwide system sales
excluding foreign currency translation grew 13% excluding Russia
impact, with 8% same-store sales growth and 5% unit growth.
First-quarter GAAP operating profit grew 3%. First-quarter core
operating profit grew 11% including a 1 percentage point headwind
from Russia. First-quarter GAAP EPS was $1.05 and first-quarter EPS
excluding Special Items was $1.06. First-quarter EPS includes a
negative $0.07 mark-to-market impact from unrealized investment
losses and a negative $0.08 impact from foreign currency
translation.
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DAVID GIBBS COMMENTS
David Gibbs, CEO, said “Our first-quarter results continue to
illustrate the power of our global portfolio and the advantages of
our business model. The demand for our iconic brands is evident as
our incredible teams and franchise partners delivered another
strong quarter with system sales growth of 13% excluding Russia,
driven by 8% same-store sales growth and continued development
momentum. We're seeing broad-based accelerating digital sales
growth leading to a record quarter for both digital system sales of
nearly $7 billion and digital sales mix that exceeded 45%. I’m
pleased to see the revenue flow through in the quarter translate to
11% core operating profit growth. We're proud of the strong start
to the year and confident we'll continue to build on our position
as the global franchisor of choice.”
RUSSIA UPDATE
- On April 17, 2023, Yum! Brands completed its exit from the
Russian market by selling its KFC business in Russia to Smart
Service Ltd., including all Russian KFC restaurants, operating
system, master franchise rights and the trademark for the Rostik's
brand. With the completion of the transaction, we have now ceased
our corporate presence in Russia.
- As of the beginning of the second quarter 2022, we elected to
remove Russia from our unit count and system sales, negatively
impacting those key performance metrics as presented in our
FIRST-QUARTER HIGHLIGHTS section and the remainder of this
release.
- Removing Russia from our prior year base, key performance
metrics would have been as follows:
Key Performance
Metrics Adjusted for
Russia
% Change
System Sales
Ex F/X
Units
KFC Division
+15
+7
Worldwide
+13
+5
FIRST-QUARTER HIGHLIGHTS
- Worldwide system sales grew 11%, excluding foreign currency
translation, with KFC at 11%, Taco Bell at 12% and Pizza Hut
10%.
- We added 746 gross units during the first quarter.
- Reported record digital sales of nearly $7 billion, with
digital mix exceeding 45%.
- Foreign currency translation unfavorably impacted divisional
operating profit by $27 million.
Reported Results
% Change
System Sales
Ex F/X
Same-Store Sales
Units
GAAP Operating Profit
Core
Operating Profit1
KFC Division
+11
+9
+2
+5
+12
Taco Bell Division
+12
+8
+6
+10
+11
Pizza Hut Division
+10
+7
+3
+2
+7
Worldwide
+11
+8
+3
+3
+11
1 See reconciliation of Non-GAAP
Measurements to GAAP Results within this release for further detail
of Core Operating Profit.
All comparisons are versus the same period
a year ago.
System sales growth figures exclude
foreign currency translation ("F/X") and core operating profit
growth figures exclude F/X and Special Items. Special Items are not
allocated to any segment and therefore only impact worldwide GAAP
results. See reconciliation of Non-GAAP Measurements to GAAP
Results within this release for further details.
Digital system sales includes all
transactions where consumers at system restaurants utilize ordering
interaction that is primarily facilitated by automated
technology.
First-Quarter
2023
2022
% Change
GAAP EPS
$1.05
$1.36
(23)
Special Items EPS1
$(0.01)
$0.31
NM
EPS Excluding Special Items
$1.06
$1.05
Even
1 See reconciliation of Non-GAAP
Measurements to GAAP Results within this release for further detail
of Special Items.
KFC DIVISION
First-Quarter
%/ppts Change
2023
2022
Reported
Ex F/X
Restaurants
28,003
27,372
+2
N/A
System Sales ($MM)
8,057
7,733
+4
+11
Same-Store Sales Growth (%)
+9
+3
NM
NM
Franchise and Property Revenues ($MM)
412
383
+8
+14
Operating Profit ($MM)
305
291
+5
+12
Operating Margin (%)
44.4
44.1
+0.3
+0.9
First-Quarter (%
Change)
International
U.S.
System Sales Growth Ex F/X
+12
+3
Same-Store Sales Growth
+11
+2
- KFC Division opened 385 gross new restaurants in 47
countries.
- Removing Russia from our first-quarter results negatively
impacted KFC International system sales growth by 5 percentage
points and KFC Division operating profit growth excluding foreign
currency by 2 percentage points.
- Foreign currency translation unfavorably impacted operating
profit by $21 million.
KFC Markets1
Percent of KFC
System Sales2
System Sales Growth Ex
F/X
First-Quarter
(% Change)
China
25%
+17
United States
15%
+3
Europe (excluding United Kingdom)
12%
+28
Asia
11%
+12
Australia
7%
+11
United Kingdom
7%
+5
Middle East / Turkey / North Africa
6%
+27
Latin America
6%
+18
Africa
5%
+16
Thailand
2%
+15
Canada
2%
+7
India
2%
+25
1Refer to
investors.yum.com/financial-information/financial-reports/ for a
list of the countries within each of the markets.
2Reflects Full Year 2022 adjusted for the
exclusion of Russia.
TACO BELL DIVISION
First-Quarter
%/ppts Change
2023
2022
Reported
Ex F/X
Restaurants
8,276
7,831
+6
N/A
System Sales ($MM)
3,464
3,108
+11
+12
Same-Store Sales Growth (%)
+8
+5
NM
NM
Franchise and Property Revenues ($MM)
201
179
+12
+12
Operating Profit ($MM)
204
185
+10
+11
Operating Margin (%)
35.6
35.7
(0.1)
Even
- Taco Bell Division opened 79 gross new restaurants in 16
countries.
- Taco Bell U.S. system sales grew 11% and Taco Bell
International system sales excluding foreign currency grew
25%.
- Taco Bell U.S. same-store sales grew 9% and Taco Bell
International same-store sales grew 4%.
- Company-owned restaurant margins were approximately 22%, flat
year-over-year.
- Foreign currency translation unfavorably impacted operating
profit by $1 million.
PIZZA HUT DIVISION
First-Quarter
%/ppts Change
2023
2022
Reported
Ex F/X
Restaurants
19,046
18,518
+3
N/A
System Sales ($MM)
3,336
3,160
+6
+10
Same-Store Sales Growth (%)
+7
Even
NM
NM
Franchise and Property Revenues ($MM)
155
151
+3
+6
Operating Profit ($MM)
104
102
+2
+7
Operating Margin (%)
41.2
42.1
(0.9)
(0.1)
First-Quarter (%
Change)
International
U.S.
System Sales Growth Ex F/X
+10
+10
Same-Store Sales Growth
+5
+8
- Pizza Hut Division opened 271 gross new restaurants in 31
countries.
- Foreign currency translation unfavorably impacted operating
profit by $5 million.
Pizza Hut Markets1
Percent of Pizza Hut System
Sales2
System Sales Growth Ex
F/X
First-Quarter
(% Change)
United States
41%
+10
China
16%
+24
Asia
14%
(1)
Europe
14%
+3
Latin America
6%
+5
Middle East / Africa
4%
+10
Canada
3%
+7
India
2%
+16
1Refer to
investors.yum.com/financial-information/financial-reports/ for a
list of the countries within each of the markets. Note that during
the first quarter of 2023 Pizza Hut Division
realigned their international market
structure.
2Reflects Full Year 2022 adjusted for the
exclusion of Russia.
HABIT BURGER GRILL
DIVISION
- The Habit Burger Grill Division system sales grew 8% with flat
same-store sales growth.
- The Habit Burger Grill Division opened 11 gross new restaurants
in the U.S. and Cambodia.
OTHER ITEMS
- Disclosures pertaining to outstanding debt in our Restricted
Group capital structure will be provided at the time of the filing
of the first-quarter Form 10-Q.
CONFERENCE CALL
Yum! Brands, Inc. will host a conference call to review the
company's financial performance and strategies at 8:15 a.m. Eastern
Time May 3, 2023. The number is 844/200-6205 for U.S. callers,
833/950-0062 for Canada callers, and 929/526-1599 for international
callers, conference ID 981951.
The call will be available for playback beginning at 10:00 a.m.
Eastern Time May 3, 2023 through May 10, 2023. To access the
playback, dial 866/813-9403 in the U.S., 226/828-7578 in Canada,
0204/525-0658 for U.K. (local), and +44/204-525-0658
internationally, conference ID 146153.
The webcast and the playback can be accessed by visiting Yum!
Brands' website, investors.yum.com/events-and-presentations and
selecting “Q1 2023 Yum! Brands, Inc. Earnings Call.”
ADDITIONAL INFORMATION
ONLINE
Quarter end dates for each division, restaurant count details,
definitions of terms and Restricted Group financial information are
available at investors.yum.com. Reconciliation of non-GAAP
financial measures to the most directly comparable GAAP measures
are included in our Condensed Consolidated Summary of Results.
FORWARD-LOOKING
STATEMENTS
This announcement may contain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We intend all
forward-looking statements to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the fact
that they do not relate strictly to historical or current facts and
by the use of forward-looking words such as “expect,”
“expectation,” “believe,” “anticipate,” “may,” “could,” “intend,”
“belief,” “plan,” “estimate,” “target,” “predict,” “likely,”
“seek,” “project,” “model,” “ongoing,” “will,” “should,”
“forecast,” “outlook” or similar terminology. These statements are
based on and reflect our current expectations, estimates,
assumptions and/or projections, our perception of historical trends
and current conditions, as well as other factors that we believe
are appropriate and reasonable under the circumstances.
Forward-looking statements are neither predictions nor guarantees
of future events, circumstances or performance and are inherently
subject to known and unknown risks, uncertainties and assumptions
that could cause our actual results to differ materially from those
indicated by those statements. There can be no assurance that our
expectations, estimates, assumptions and/or projections, including
with respect to the future earnings and performance or capital
structure of Yum! Brands, will prove to be correct or that any of
our expectations, estimates or projections will be achieved.
Numerous factors could cause our actual results and events to
differ materially from those expressed or implied by
forward-looking statements, including, without limitation: the
severity and duration of the COVID-19 pandemic; food safety and
food- or beverage-borne illness issues; adverse impacts of
catastrophic or unforeseen events; the success of our concepts’
franchisees; the success of our development strategy; anticipated
benefits from past or potential future acquisitions, investments or
other strategic transactions, or our portfolio business model; our
significant exposure to the Chinese market; our global operations;
foreign currency risks and foreign exchange controls; our ability
to protect the integrity or availability of IT systems or the
security of confidential information and other cybersecurity risks;
compliance with data privacy and data protection legal
requirements; our ability to successfully implement technology
initiatives; our increasing dependence on multiple digital commerce
platforms; the impact of social media; our ability to protect our
trademarks and other intellectual property; shortages or
interruptions in the availability and the delivery of food,
equipment and other supplies; the loss of key personnel, labor
shortages and increased labor costs; changes in food prices and
other operating costs; our corporate reputation and the value and
perception of our brands; evolving expectations and requirements
with respect to social and environmental sustainability matters;
adverse effects of climate change; pending or future litigation and
legal claims or proceedings; changes in, or noncompliance with,
legal requirements; tax matters, including changes in tax rates or
laws, impositions of new taxes, tax implications of our
restructurings, or disagreements with taxing authorities; changes
in consumer discretionary spending and economic conditions,
including inflationary pressures; competition within the retail
food industry; risks relating to our significant amount of
indebtedness. In addition, other risks and uncertainties not
presently known to us or that we currently believe to be immaterial
could affect the accuracy of any such forward-looking statements.
All forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.
The forward-looking statements included in this announcement are
only made as of the date of this announcement and we disclaim any
obligation to publicly update any forward-looking statement to
reflect subsequent events or circumstances. You should consult our
filings with the Securities and Exchange Commission (including the
information set forth under the captions “Risk Factors” and
“Forward-Looking Statements” in our most recently filed Annual
Report on Form 10-K and Quarterly Report on Form 10-Q) for
additional detail about factors that could affect our financial and
other results.
Yum! Brands, Inc., based in Louisville, Kentucky, and its
subsidiaries franchise or operate a system of over 55,000
restaurants in more than 155 countries and territories under the
company’s concepts – KFC, Taco Bell, Pizza Hut and the Habit Burger
Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global
leaders of the chicken, Mexican-style food, and pizza categories,
respectively. The Habit Burger Grill is a fast casual restaurant
concept specializing in made-to-order chargrilled burgers,
sandwiches and more. In 2023, the KFC, Taco Bell and Pizza Hut
brands were ranked in the top five of Entrepreneur’s Top Global
Franchises Ranking. In addition, in 2023 Yum! Brands was included
on the Bloomberg Gender-Equality Index; Forbes’ list of America’s
Best Employers for Diversity; and Newsweek’s lists recognizing
America’s Most Responsible Companies, America’s Greatest Workplaces
for Diversity and America’s Greatest Workplaces for Women. In 2022,
the Company was named to the Dow Jones Sustainability Index North
America.
Category: Earnings
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Analysts are invited to contact: Jodi Dyer, Vice President,
Investor Relations at 888/298-6986
Members of the media are invited to contact: Virginia Ferguson,
Vice President, Public Relations, at 502/874-8200
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