Record first quarter performance – Total
Revenues reached $2.92 billion and
Operating Profit reached $416
million
Total Revenues grew 9%; System Sales grew
17% and Same-store Sales grew 8% in constant
currency
Operating Profit increased 118% year over year,
attributed to sales leveraging and margin expansion
SHANGHAI, May 2, 2023
/PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or
"Yum China") (NYSE: YUMC and HKEX:
9987) today reported unaudited results for the first quarter ended
March 31, 2023.
First Quarter Highlights
- Total revenues increased 9% year over year to
$2.92 billion from $2.67 billion (an 18% increase excluding foreign
currency translation ("F/X")).
- Total system sales increased 17% year over year, with
increases of 17% at both KFC and Pizza Hut, excluding F/X. Growth
was mainly attributable to same-store sales growth, new unit
contribution and lapping of temporary store closures in the prior
year.
- Same-store sales increased 8% year over year, with
increases of 8% at KFC and 7% at Pizza Hut, excluding F/X.
- Opened 233 net new stores during the quarter; total
store count reached 13,180 as of March 31,
2023.
- Operating Profit increased 118% year over year to
$416 million from $191 million (a 134% increase excluding F/X),
primarily driven by sales leveraging and margin expansion.
- Adjusted Operating Profit increased 117% year over year
to $419 million from $193 million (a 133% increase excluding
F/X).
- Restaurant margin was 20.3%, compared with 13.8% in the
prior year period.
- Effective tax rate was 28.5%.
- Net Income increased 189% to $289
million from $100 million in
the prior year period, primarily due to the increase in Operating
Profit.
- Adjusted Net Income increased 186% to $292 million from $102
million in the prior year period (a 131% increase excluding
the net losses of $14 million and
$30 million in the first quarter of
2023 and 2022, respectively, from our mark-to-market equity
investments; a 148% increase if further excluding F/X).
- Diluted EPS increased 196% to $0.68 from $0.23 in
the prior year period.
- Adjusted Diluted EPS increased 188% to $0.69 from $0.24 in
the prior year period (a 132% increase excluding the net losses
from our mark-to-market equity investments in the first quarter of
2023 and 2022; a 148% increase if further excluding F/X).
Key Financial Results
|
First Quarter
2023
|
|
|
%
Change
|
|
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
Yum China
|
+17
|
|
+8
|
|
+9
|
|
+118
|
|
KFC
|
+17
|
|
+8
|
|
+9
|
|
+91
|
|
Pizza
Hut
|
+17
|
|
+7
|
|
+11
|
|
+85
|
|
|
|
First
Quarter
|
|
(in US$ million,
except
|
|
|
|
|
|
|
%
Change
|
|
per share data and
percentages)
|
|
2023
|
|
|
2022
|
|
Reported
|
|
Ex F/X
|
|
Operating
Profit
|
$
|
416
|
|
$
|
191
|
|
+118
|
|
+134
|
|
Adjusted Operating
Profit(1)
|
$
|
419
|
|
$
|
193
|
|
+117
|
|
+133
|
|
Net Income
|
$
|
289
|
|
$
|
100
|
|
+189
|
|
+212
|
|
Adjusted Net
Income(1)
|
$
|
292
|
|
$
|
102
|
|
+186
|
|
+207
|
|
Basic Earnings Per
Common Share
|
$
|
0.69
|
|
$
|
0.23
|
|
+200
|
|
+222
|
|
Adjusted Basic Earnings
Per Common Share(1)
|
$
|
0.70
|
|
$
|
0.24
|
|
+192
|
|
+213
|
|
Diluted Earnings Per
Common Share
|
$
|
0.68
|
|
$
|
0.23
|
|
+196
|
|
+222
|
|
Adjusted Diluted
Earnings Per Common Share(1)
|
$
|
0.69
|
|
$
|
0.24
|
|
+188
|
|
+208
|
|
(1) See
"Reconciliation of Reported GAAP Results to non-GAAP Adjusted
Measures" included in the accompanying tables of this release for
further details.
Note: All comparisons are
versus the same period a year ago.
Percentages may not recompute due to
rounding.
System sales and same-store sales percentages
exclude the impact of F/X. Effective January
1, 2018, temporary store closures are normalized in the
same-store sales calculation by excluding the period during which
stores are temporarily closed.
CEO and CFO Comments
Joey Wat, CEO of Yum China, commented, "We are pleased to have
set new first quarter records for revenues and operating profit. I
want to recognize all of our employees whose unwavering dedication
has been instrumental in delivering this performance. We started
the new year with low visibility into how conditions would unfold.
The operating environment was fluid with lingering COVID outbreaks.
Through our team's hard work, scenario planning and laser focus to
drive sales, we successfully capitalized on critical trading
during the Chinese New Year ("CNY") holiday period. Offering
delicious food and superior value served us well. We added juicy
whole chicken to KFC's signature Golden Bucket to capture at-home
consumption around family reunions. Creative twists to our classic
Beef Wrap and Supreme Pizza delighted local taste buds. We also
fueled traffic with compelling value promotions, including Crazy
Thursday, weekday value combos and weekend buy-more-save-more."
Wat continued, "Our performance was enabled by the execution of
our RGM (Resilience-Growth-Moat) strategy over the past few years.
Today, we are more agile and responsive to the dynamic operating
environment. Our robust digital ecosystem has continued to unleash
our capabilities in running the entire business, from customer
engagement to restaurant operation and supply chain. By planning
for multiple scenarios for CNY and incorporating regional
variances, we were able to effectively deploy resources as
opportunities arose. In addition, we enhanced labor
productivity with innovative approaches such as management sharing
across stores. As we progress through 2023, we plan to stay nimble
to the evolving market conditions. At the same time, we will focus
on building sales momentum, expanding our store network, and
fortifying our competitive moat to position Yum China for sustainable growth."
Andy Yeung, CFO of Yum China, added, "First quarter sales rebounded
significantly year over year and sequentially. Our efforts to focus
on driving sales were rewarded, as the country pivoted from strict
COVID measures. Margins also improved substantially, benefitting
from sales leveraging, cost structure rebasing, and temporary
relief from the government and landlords. However, we are still in
the early stages of recovery. Sales during the CNY trading period
were buoyed by pent-up travel demand, yet same-store sales post-CNY
have remained at teens level below 2019. Therefore, driving sales
remains our top priority for this year. Consumers are looking for
value, so value campaigns would be an important tool to drive store
traffic and sales. On the cost side, we expect inflationary
pressures to be gradually built-up and the benefit from temporary
relief to be phased out over the coming quarters. The pace and the
trajectory of the recovery remain uncertain, given the challenging
macroeconomic conditions and the lingering effects of the pandemic.
Nevertheless, we are confident that with vigorous scenario
planning, more flexible cost structures and operational agilities,
we can seize opportunities in good times and stay resilient in
challenging times."
Share Repurchases and Dividends
- During the first quarter, we repurchased approximately 1.0
million shares of Yum China common
stock for $62 million at an average
price of $60.30 per share. As of
March 31, 2023, approximately
$1.1 billion remained available for
future share repurchases under the current authorization.
- The Board declared a cash dividend of $0.13 per share on Yum
China's common stock, payable on June
20, 2023 to shareholders of record as of the close of
business on May 30, 2023.
Digital and Delivery
- The KFC and Pizza Hut loyalty programs exceeded 430 million
members combined, as of quarter-end. Member sales accounted for
approximately 64% of system sales in the first quarter of
2023.
- Delivery contributed approximately 36% of KFC and Pizza Hut's
Company sales in the first quarter of 2023, on par with the prior
year period. Delivery sales continued to grow even as dine-in
traffic improved.
- Digital orders, including delivery, mobile orders and kiosk
orders, accounted for approximately 89% of KFC and Pizza Hut's
Company sales in the first quarter of 2023.
KFC and Pizza Hut
Total
|
|
First
Quarter
|
|
|
|
2023
|
|
2022
|
|
Member count (as of
period-end)
|
|
430 million+
|
|
370 million+
|
|
Member sales as % of
system sales
|
|
~64%
|
|
~62%
|
|
Delivery as % of
Company sales
|
|
~36%
|
|
~36%
|
|
Digital orders as % of
Company sales
|
|
~89%
|
|
~88%
|
|
New-Unit Development and Asset Upgrade
- The Company opened 233 net new stores in the first quarter of
2023, mainly driven by development of the KFC and Pizza Hut
brands.
- The Company remodeled 83 stores in the first quarter of
2023.
|
|
Net New
Units
|
|
|
Restaurant
Count
|
|
|
|
First
Quarter
|
|
|
As of March
31
|
|
|
|
2023
|
|
|
2023
|
|
2022
|
|
Yum China
|
|
233
|
|
|
13,180
|
|
12,117
|
|
KFC
|
|
145
|
|
|
9,239
|
|
8,441
|
|
Pizza
Hut
|
|
80
|
|
|
2,983
|
|
2,679
|
|
Others(2)
|
|
8
|
|
|
958
|
|
997
|
|
(2) Others include
Taco Bell, Lavazza, Little Sheep, Huang Ji
Huang, and, for 2022, COFFii & JOY.
Restaurant Margin
- Restaurant margin was 20.3% in the first quarter of 2023,
compared with 13.8% in the prior year period, primarily driven by
sales leveraging, higher labor productivity and operational
efficiency, and temporary relief, partially offset by higher
promotion cost and wage inflation.
|
First
Quarter
|
|
|
|
2023
|
|
2022
|
|
ppts
change
|
|
Yum China
|
|
20.3 %
|
|
13.8 %
|
|
+6.5
|
|
KFC
|
|
22.2 %
|
|
15.2 %
|
|
+7.0
|
|
Pizza
Hut
|
|
14.2 %
|
|
10.7 %
|
|
+3.5
|
|
2023 Outlook
The Company's fiscal year 2023 targets remain unchanged:
- To open approximately 1,100 to 1,300 net new stores.
- To make capital expenditures in the range of approximately
$700 million to $900 million.
Other Updates
- The Company recently published its 2022 Sustainability Report,
which outlines the Company's commitment to environmental and social
responsibility and the Company's progress against its
sustainability goals.
Note on Non-GAAP Measures
Reported GAAP results include Special Items, which are excluded
from non-GAAP adjusted measures. Special Items are not allocated to
any segment and therefore only impact reported GAAP results of
Yum China. See "Reconciliation of
Reported GAAP Results to Non-GAAP Adjusted Measures" within this
release. In addition, for the non-GAAP measures of Restaurant
profit and Restaurant margin, see "Reconciliation of GAAP Operating
Profit to Restaurant Profit" under "Segment Results" within this
release.
Conference Call
Yum China's management will hold
an earnings conference call at 8:00
p.m. U.S. Eastern Time on Tuesday,
May 2, 2023 (8:00 a.m.
Beijing/Hong Kong Time on
Wednesday, May 3,
2023).
A live webcast of the call may be accessed at
https://edge.media-server.com/mmc/p/x72ajhoq.
To join by phone, please register in advance of the conference
through the link provided below. Upon registering, you will be
provided with participant dial-in numbers, a passcode and a unique
access PIN.
Pre-registration
Link:
https://s1.c-conf.com/diamondpass/10029676-te54kl.html
A replay of the conference call will be available one hour after
the call ends until Wednesday, May 10,
2023 and may be accessed by phone at the following
numbers:
U.S.: 1 855 883 1031
Mainland China: 400 1209 216
Hong Kong: 800 930 639
U.K. 0800 031 4295
Replay access code: 10029676
Additionally, this earnings release, the accompanying slides, a
live webcast and an archived webcast of this conference call will
be available at Yum China's Investor Relations website at
http://ir.yumchina.com.
For important news and information regarding Yum China, including our filings with the U.S.
Securities and Exchange Commission and the Hong Kong Stock
Exchange, visit Yum China's Investor
Relations website at http://ir.yumchina.com. Yum China 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.
Forward-Looking Statements
This press release contains "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, including under
"2023 Outlook." 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," "project," "likely," "will," "continue," "should,"
"forecast," "outlook," "commit" or similar terminology. These
statements are based on current estimates and assumptions made by
us in light of our experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors that we believe are appropriate and reasonable under
the circumstances, but there can be no assurance that such
estimates and assumptions will prove to be correct. Forward-looking
statements include, without limitation, statements regarding the
future strategies, growth, business plans, investment, dividend and
share repurchase plans, earnings, performance and returns of
Yum China, anticipated effects of
population and macroeconomic trends, the expected impact of the
COVID-19 pandemic, pace of recovery of Yum
China's business, the anticipated effects of our innovation,
digital and delivery capabilities and investments on growth and
beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements
are not guarantees of performance and are inherently subject to
known and unknown risks and uncertainties that are difficult to
predict and could cause our actual results or events to differ
materially from those indicated by those statements. We cannot
assure you that any of our expectations, estimates or assumptions
will be achieved. The forward-looking statements included in this
press release are only made as of the date of this press release,
and we disclaim any obligation to publicly update any
forward-looking statement to reflect subsequent events or
circumstances, except as required by law. Numerous factors could
cause our actual results or events to differ materially from those
expressed or implied by forward-looking statements, including,
without limitation: whether we are able to achieve development
goals at the times and in the amounts currently anticipated, if at
all, the success of our marketing campaigns and product innovation,
our ability to maintain food safety and quality control systems,
changes in public health conditions, including the COVID-19
pandemic, our ability to control costs and expenses, including tax
costs, as well as changes in political, economic and regulatory
conditions in China. 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. You should consult our filings with the Securities and
Exchange Commission (including the information set forth under the
captions "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in our Annual
Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q)
for additional detail about factors that could affect our financial
and other results.
About Yum China Holdings, Inc.
Yum China is the largest
restaurant company in China with a
mission to make every life taste beautiful. The Company has over
400,000 employees and operates over 13,000 restaurants under six
brands across 1,800 cities in China. KFC and Pizza Hut are the leading
brands in the quick-service and casual dining restaurant spaces in
China, respectively. Taco Bell
offers innovative Mexican-inspired food. Yum China has also partnered with Lavazza to
develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine.
Yum China has a world-class,
digitalized supply chain which includes an extensive network of
logistics centers nationwide and an in-house supply chain
management system. Its strong digital capabilities and loyalty
program enable the Company to reach customers faster and serve them
better. Yum China is a Fortune 500
company with the vision to be the world's most innovative pioneer
in the restaurant industry. For more information, please visit
http://ir.yumchina.com.
Investor Relations
Contact:
|
|
|
Tel: +86 21 2407 7556 /
+852 2267 5801
IR@YumChina.com
|
|
|
|
Media
Contact:
|
|
|
Tel: +86 21 2407
7510
Media@YumChina.com
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Statements of Income
|
(in US$ million,
except per share data)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
%
Change
|
|
|
3/31/2023
|
|
|
3/31/2022
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
2,772
|
|
|
$
|
2,548
|
|
|
|
9
|
|
|
Franchise fees and
income
|
|
|
25
|
|
|
|
24
|
|
|
|
1
|
|
|
Revenues from
transactions with franchisees
|
|
|
93
|
|
|
|
77
|
|
|
|
21
|
|
|
Other
revenues
|
|
|
27
|
|
|
|
19
|
|
|
|
43
|
|
|
Total
revenues
|
|
|
2,917
|
|
|
|
2,668
|
|
|
|
9
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
835
|
|
|
|
792
|
|
|
|
(6)
|
|
|
Payroll and employee
benefits
|
|
|
683
|
|
|
|
667
|
|
|
|
(2)
|
|
|
Occupancy and other
operating expenses
|
|
|
691
|
|
|
|
738
|
|
|
|
6
|
|
|
Company restaurant
expenses
|
|
|
2,209
|
|
|
|
2,197
|
|
|
|
(1)
|
|
|
General and
administrative expenses
|
|
|
163
|
|
|
|
151
|
|
|
|
(8)
|
|
|
Franchise
expenses
|
|
|
10
|
|
|
|
10
|
|
|
|
3
|
|
|
Expenses for
transactions with franchisees
|
|
|
91
|
|
|
|
75
|
|
|
|
(21)
|
|
|
Other operating costs
and expenses
|
|
|
24
|
|
|
|
17
|
|
|
|
(44)
|
|
|
Closures and impairment
expenses, net
|
|
|
3
|
|
|
|
2
|
|
|
|
(48)
|
|
|
Other expenses,
net
|
|
|
1
|
|
|
|
25
|
|
|
|
96
|
|
|
Total costs and
expenses, net
|
|
|
2,501
|
|
|
|
2,477
|
|
|
|
(1)
|
|
|
Operating
Profit
|
|
|
416
|
|
|
|
191
|
|
|
|
118
|
|
|
Interest income,
net
|
|
|
38
|
|
|
|
12
|
|
|
|
224
|
|
|
Investment
loss
|
|
|
(17)
|
|
|
|
(37)
|
|
|
|
54
|
|
|
Income Before Income
Taxes and
Equity in Net Earnings (Losses) from
Equity Method Investments
|
|
|
437
|
|
|
|
166
|
|
|
|
164
|
|
|
Income tax
provision
|
|
|
(125)
|
|
|
|
(55)
|
|
|
|
(127)
|
|
|
Equity in net earnings
(losses) from
equity method investments
|
|
|
1
|
|
|
|
(1)
|
|
|
NM
|
|
|
Net income – including
noncontrolling interests
|
|
|
313
|
|
|
|
110
|
|
|
|
184
|
|
|
Net income –
noncontrolling interests
|
|
|
24
|
|
|
|
10
|
|
|
|
(136)
|
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
|
289
|
|
|
$
|
100
|
|
|
|
189
|
|
|
Effective tax
rate
|
|
|
28.5
|
%
|
|
|
33.1
|
%
|
|
|
4.6
|
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
|
0.69
|
|
|
$
|
0.23
|
|
|
|
|
|
Weighted-average shares
outstanding
(in millions)
|
|
|
418
|
|
|
|
426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Common Share
|
|
$
|
0.68
|
|
|
$
|
0.23
|
|
|
|
|
|
Weighted-average shares
outstanding
(in millions)
|
|
|
423
|
|
|
|
430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
Food and
paper
|
|
|
30.1
|
|
|
|
31.1
|
|
|
|
1.0
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
24.6
|
|
|
|
26.2
|
|
|
|
1.6
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
25.0
|
|
|
|
28.9
|
|
|
|
3.9
|
|
ppts.
|
Restaurant
margin
|
|
|
20.3
|
%
|
|
|
13.8
|
%
|
|
|
6.5
|
|
ppts.
|
Operating
margin
|
|
|
15.0
|
%
|
|
|
7.5
|
%
|
|
|
7.5
|
|
ppts.
|
Percentages may not recompute due to rounding. NM refers to not
meaningful.
Yum China
Holdings, Inc.
|
KFC Operating
Results
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
%
Change
|
|
|
3/31/2023
|
|
|
3/31/2022
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
2,166
|
|
|
$
|
1,991
|
|
|
|
9
|
|
|
Franchise fees and
income
|
|
|
17
|
|
|
|
16
|
|
|
|
5
|
|
|
Revenues from
transactions with franchisees
|
|
|
10
|
|
|
|
8
|
|
|
|
29
|
|
|
Other
revenues
|
|
|
5
|
|
|
|
2
|
|
|
|
195
|
|
|
Total
revenues
|
|
|
2,198
|
|
|
|
2,017
|
|
|
|
9
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
646
|
|
|
|
621
|
|
|
|
(4)
|
|
|
Payroll and employee
benefits
|
|
|
512
|
|
|
|
501
|
|
|
|
(2)
|
|
|
Occupancy and other
operating expenses
|
|
|
527
|
|
|
|
567
|
|
|
|
7
|
|
|
Company restaurant
expenses
|
|
|
1,685
|
|
|
|
1,689
|
|
|
|
—
|
|
|
General and
administrative expenses
|
|
|
68
|
|
|
|
65
|
|
|
|
(4)
|
|
|
Franchise
expenses
|
|
|
9
|
|
|
|
9
|
|
|
|
4
|
|
|
Expenses for
transactions with franchisees
|
|
|
9
|
|
|
|
8
|
|
|
|
(25)
|
|
|
Other operating costs
and expenses
|
|
|
4
|
|
|
|
1
|
|
|
|
(295)
|
|
|
Closures and impairment
expenses (income), net
|
|
|
1
|
|
|
|
(1)
|
|
|
NM
|
|
|
Other expenses,
net
|
|
|
2
|
|
|
|
26
|
|
|
|
92
|
|
|
Total costs and
expenses, net
|
|
|
1,778
|
|
|
|
1,797
|
|
|
|
1
|
|
|
Operating
Profit
|
|
$
|
420
|
|
|
$
|
220
|
|
|
|
91
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
Food and
paper
|
|
|
29.8
|
|
|
|
31.2
|
|
|
|
1.4
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
23.6
|
|
|
|
25.2
|
|
|
|
1.6
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
24.4
|
|
|
|
28.4
|
|
|
|
4.0
|
|
ppts.
|
Restaurant
margin
|
|
|
22.2
|
%
|
|
|
15.2
|
%
|
|
|
7.0
|
|
ppts.
|
Operating
margin
|
|
|
19.4
|
%
|
|
|
11.1
|
%
|
|
|
8.3
|
|
ppts.
|
Percentages may not recompute due to rounding. NM refers to not
meaningful.
Yum China
Holdings, Inc.
|
Pizza Hut Operating
Results
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
%
Change
|
|
|
3/31/2023
|
|
|
3/31/2022
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
591
|
|
|
$
|
542
|
|
|
|
9
|
|
|
Franchise fees and
income
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
Revenues from
transactions with franchisees
|
|
|
1
|
|
|
|
1
|
|
|
|
7
|
|
|
Other
revenues
|
|
|
3
|
|
|
|
2
|
|
|
|
88
|
|
|
Total
revenues
|
|
|
597
|
|
|
|
547
|
|
|
|
9
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
184
|
|
|
|
166
|
|
|
|
(11)
|
|
|
Payroll and employee
benefits
|
|
|
167
|
|
|
|
157
|
|
|
|
(6)
|
|
|
Occupancy and other
operating expenses
|
|
|
156
|
|
|
|
161
|
|
|
|
3
|
|
|
Company restaurant
expenses
|
|
|
507
|
|
|
|
484
|
|
|
|
(5)
|
|
|
General and
administrative expenses
|
|
|
29
|
|
|
|
29
|
|
|
|
(1)
|
|
|
Franchise
expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
(1)
|
|
|
Expenses for
transactions with franchisees
|
|
|
1
|
|
|
|
1
|
|
|
|
(5)
|
|
|
Other operating costs
and expenses
|
|
|
3
|
|
|
|
1
|
|
|
|
(75)
|
|
|
Closures and impairment
expenses, net
|
|
|
1
|
|
|
|
1
|
|
|
|
(82)
|
|
|
Total costs and
expenses, net
|
|
|
542
|
|
|
|
517
|
|
|
|
(5)
|
|
|
Operating
Profit
|
|
$
|
55
|
|
|
$
|
30
|
|
|
|
85
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
Food and
paper
|
|
|
31.2
|
|
|
|
30.6
|
|
|
|
(0.6)
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
28.2
|
|
|
|
28.9
|
|
|
|
0.7
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
26.4
|
|
|
|
29.8
|
|
|
|
3.4
|
|
ppts.
|
Restaurant
margin
|
|
|
14.2
|
%
|
|
|
10.7
|
%
|
|
|
3.5
|
|
ppts.
|
Operating
margin
|
|
|
9.3
|
%
|
|
|
5.5
|
%
|
|
|
3.8
|
|
ppts.
|
Percentages may not recompute due to rounding. NM refers to not
meaningful.
Yum China
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in US$
million)
|
|
|
|
|
3/31/2023
|
|
|
12/31/2022
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,111
|
|
|
$
|
1,130
|
|
Short-term
investments
|
|
|
1,870
|
|
|
|
2,022
|
|
Accounts receivable,
net
|
|
|
59
|
|
|
|
64
|
|
Inventories,
net
|
|
|
378
|
|
|
|
417
|
|
Prepaid expenses and
other current assets
|
|
|
296
|
|
|
|
307
|
|
Total Current
Assets
|
|
|
3,714
|
|
|
|
3,940
|
|
Property, plant and
equipment, net
|
|
|
2,114
|
|
|
|
2,118
|
|
Operating lease
right-of-use assets
|
|
|
2,172
|
|
|
|
2,219
|
|
Goodwill
|
|
|
1,995
|
|
|
|
1,988
|
|
Intangible assets,
net
|
|
|
157
|
|
|
|
159
|
|
Long-term bank deposits and notes
|
|
|
1,094
|
|
|
|
680
|
|
Equity
investments
|
|
|
346
|
|
|
|
361
|
|
Deferred income tax
assets
|
|
|
93
|
|
|
|
113
|
|
Other assets
|
|
|
278
|
|
|
|
248
|
|
Total
Assets
|
|
|
11,963
|
|
|
|
11,826
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
|
1,957
|
|
|
|
2,098
|
|
Income taxes
payable
|
|
|
143
|
|
|
|
68
|
|
Total Current
Liabilities
|
|
|
2,100
|
|
|
|
2,166
|
|
Non-current operating
lease liabilities
|
|
|
1,864
|
|
|
|
1,906
|
|
Non-current finance
lease liabilities
|
|
|
41
|
|
|
|
42
|
|
Deferred income tax
liabilities
|
|
|
378
|
|
|
|
390
|
|
Other
liabilities
|
|
|
164
|
|
|
|
162
|
|
Total
Liabilities
|
|
|
4,547
|
|
|
|
4,666
|
|
|
|
|
|
|
|
|
Redeemable
Noncontrolling Interest
|
|
|
12
|
|
|
|
12
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common stock,
$0.01 par value; 1,000 million shares authorized;
418 million shares and 419
million shares issued and outstanding
at March 31, 2023 and December
31, 2022, respectively
|
|
|
4
|
|
|
|
4
|
|
Additional paid-in
capital
|
|
|
4,391
|
|
|
|
4,390
|
|
Retained
earnings
|
|
|
2,374
|
|
|
|
2,191
|
|
Accumulated other
comprehensive loss
|
|
|
(91)
|
|
|
|
(103)
|
|
Total Yum China
Holdings, Inc. Stockholders' Equity
|
|
|
6,678
|
|
|
|
6,482
|
|
Noncontrolling
interests
|
|
|
726
|
|
|
|
666
|
|
Total
Equity
|
|
|
7,404
|
|
|
|
7,148
|
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
|
$
|
11,963
|
|
|
$
|
11,826
|
|
|
|
|
|
|
|
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
3/31/2023
|
|
3/31/2022
|
Cash Flows –
Operating Activities
|
|
|
|
|
|
|
|
|
Net income –
including noncontrolling interests
|
|
$
|
313
|
|
|
|
$
|
110
|
|
|
Depreciation and
amortization
|
|
|
116
|
|
|
|
|
164
|
|
|
Non-cash
operating lease cost
|
|
|
102
|
|
|
|
|
120
|
|
|
Closures and
impairment expenses
|
|
|
3
|
|
|
|
|
2
|
|
|
Investment
loss
|
|
|
17
|
|
|
|
|
37
|
|
|
Equity in net
(earnings) losses from equity method investments
|
|
|
(1)
|
|
|
|
|
1
|
|
|
Distributions of
income received from equity method investments
|
|
|
4
|
|
|
|
|
—
|
|
|
Deferred income
taxes
|
|
|
7
|
|
|
|
|
1
|
|
|
Share-based
compensation expense
|
|
|
13
|
|
|
|
|
11
|
|
|
Changes in
accounts receivable
|
|
|
5
|
|
|
|
|
(2)
|
|
|
Changes in
inventories
|
|
|
40
|
|
|
|
|
88
|
|
|
Changes in
prepaid expenses, other current assets and VAT assets
|
|
|
12
|
|
|
|
|
38
|
|
|
Changes in
accounts payable and other current liabilities
|
|
|
(93)
|
|
|
|
|
(322)
|
|
|
Changes in income
taxes payable
|
|
|
75
|
|
|
|
|
26
|
|
|
Changes in
non-current operating lease liabilities
|
|
|
(94)
|
|
|
|
|
(106)
|
|
|
Other,
net
|
|
|
(12)
|
|
|
|
|
3
|
|
|
Net Cash
Provided by Operating Activities
|
|
|
507
|
|
|
|
|
171
|
|
|
Cash Flows –
Investing Activities
|
|
|
|
|
|
|
|
|
Capital
spending
|
|
|
(179)
|
|
|
|
|
(205)
|
|
|
Purchases of short-term
investments, long-term bank deposits and notes
|
|
|
(1,378)
|
|
|
|
|
(1,041)
|
|
|
Maturities of short-term investments, long-term
bank deposits and notes
|
|
|
1,126
|
|
|
|
|
1,281
|
|
|
Acquisition of
business, net of cash acquired
|
|
|
—
|
|
|
|
|
(23)
|
|
|
Other,
net
|
|
|
2
|
|
|
|
|
1
|
|
|
Net Cash (Used
in) Provided by Investing Activities
|
|
|
(429)
|
|
|
|
|
13
|
|
|
Cash Flows –
Financing Activities
|
|
|
|
|
|
|
|
|
Repurchase of
shares of common stock
|
|
|
(60)
|
|
|
|
|
(224)
|
|
|
Cash dividends
paid on common stock
|
|
|
(54)
|
|
|
|
|
(51)
|
|
|
Dividends paid to
noncontrolling interests
|
|
|
(15)
|
|
|
|
|
(17)
|
|
|
Contribution from
noncontrolling interests
|
|
|
35
|
|
|
|
|
18
|
|
|
Other,
net
|
|
|
(5)
|
|
|
|
|
—
|
|
|
Net Cash Used
in Financing Activities
|
|
|
(99)
|
|
|
|
|
(274)
|
|
|
Effect of
Exchange Rates on Cash, Cash Equivalents and Restricted
Cash
|
|
|
2
|
|
|
|
|
1
|
|
|
Net Decrease
in Cash, Cash Equivalents and Restricted Cash
|
|
|
(19)
|
|
|
|
|
(89)
|
|
|
Cash, Cash
Equivalents, and Restricted Cash - Beginning of
Period
|
|
|
1,130
|
|
|
|
|
1,136
|
|
|
Cash, Cash
Equivalents, and Restricted Cash - End of Period
|
|
$
|
1,111
|
|
|
|
$
|
1,047
|
|
|
In this press release:
- The Company provides certain percentage changes excluding the
impact of foreign currency translation ("F/X"). These amounts are
derived by translating current year results at prior year average
exchange rates. We believe the elimination of the F/X impact
provides better year-to-year comparability without the distortion
of foreign currency fluctuations.
- System sales growth reflects the results of all restaurants
regardless of ownership, including Company-owned, franchise and
unconsolidated affiliate restaurants that operate our restaurant
concepts, except for non-Company-owned restaurants for which we do
not receive a sales-based royalty. Sales of franchise and
unconsolidated affiliate restaurants typically generate ongoing
franchise fees for the Company at an average rate of approximately
6% of system sales. Franchise and unconsolidated affiliate
restaurant sales are not included in Company sales in the Condensed
Consolidated Statements of Income; however, the franchise fees are
included in the Company's revenues. We believe system sales growth
is useful to investors as a significant indicator of the overall
strength of our business as it incorporates all of our revenue
drivers, Company and franchise same-store sales as well as net unit
growth.
- Effective January 1, 2018, the
Company revised its definition of same-store sales growth to
represent the estimated percentage change in sales of food of all
restaurants in the Company system that have been open prior to the
first day of our prior fiscal year, excluding the period during
which stores are temporarily closed. We refer to these as our
"base" stores. Previously, same-store sales growth represented the
estimated percentage change in sales of all restaurants in the
Company system that have been open for one year or more, including
stores temporarily closed, and the base stores changed on a rolling
basis from month to month. This revision was made to align with how
management measures performance internally and focuses on trends of
a more stable base of stores.
- Company sales represent revenues from Company-owned
restaurants. Company Restaurant profit ("Restaurant profit") is
defined as Company sales less expenses incurred directly by our
Company-owned restaurants in generating Company sales, including
cost of food and paper, restaurant-level payroll and employee
benefits, rent, depreciation and amortization of restaurant-level
assets, advertising expenses, and other operating expenses. Company
restaurant margin percentage is defined as Restaurant profit
divided by Company sales.
- Certain comparative items in the Condensed Consolidated
Financial Statements have been reclassified to conform to the
current period's presentation to facilitate comparison.
Reconciliation of Reported GAAP Results to
Non-GAAP Adjusted Measures
(in millions, except per share data)
(unaudited)
In addition to the results provided in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP") in this press
release, the Company provides non-GAAP measures adjusted for
Special Items, which include Adjusted Operating Profit, Adjusted
Net Income, Adjusted Earnings Per Common Share ("EPS"), Adjusted
Effective Tax Rate and Adjusted EBITDA, which we define as net
income including noncontrolling interests adjusted for equity in
net earnings (losses) from equity method investments, income tax,
interest income, net, investment gain or loss, certain non-cash
expenses, consisting of depreciation and amortization as well as
store impairment charges, and Special Items. We also use Restaurant
profit and Restaurant margin (as defined above) for the purposes of
internally evaluating the performance of our Company-owned
restaurants and we believe Restaurant profit and Restaurant margin
provide useful information to investors as to the profitability of
our Company-owned restaurants.
The following table set forth the reconciliation of the most
directly comparable GAAP financial measures to the non-GAAP
adjusted financial measures. The reconciliation of GAAP Operating
Profit to Restaurant Profit is presented in Segment Results within
this release.
|
|
Quarter
Ended
|
|
|
|
|
3/31/2023
|
|
|
3/31/2022
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
|
416
|
|
|
$
|
191
|
|
|
Special Items,
Operating Profit
|
|
|
(3)
|
|
|
|
(2)
|
|
|
Adjusted Operating
Profit
|
|
$
|
419
|
|
|
$
|
193
|
|
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
Net Income – Yum China
Holdings, Inc.
|
|
$
|
289
|
|
|
$
|
100
|
|
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
|
(3)
|
|
|
|
(2)
|
|
|
Adjusted Net Income –
Yum China Holdings, Inc.
|
|
$
|
292
|
|
|
$
|
102
|
|
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
|
0.69
|
|
|
$
|
0.23
|
|
|
Special Items, Basic
Earnings Per Common Share
|
|
|
(0.01)
|
|
|
|
(0.01)
|
|
|
Adjusted Basic Earnings
Per Common Share
|
|
$
|
0.70
|
|
|
$
|
0.24
|
|
|
Diluted Earnings Per
Common Share
|
|
$
|
0.68
|
|
|
$
|
0.23
|
|
|
Special Items, Diluted
Earnings Per Common Share
|
|
|
(0.01)
|
|
|
|
(0.01)
|
|
|
Adjusted Diluted
Earnings Per Common Share
|
|
$
|
0.69
|
|
|
$
|
0.24
|
|
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
28.5
|
%
|
|
|
33.1
|
%
|
|
Impact on effective tax
rate as a result of Special Items
|
|
|
0.1
|
%
|
|
|
0.4
|
%
|
|
Adjusted effective tax
rate
|
|
|
28.4
|
%
|
|
|
32.7
|
%
|
|
Net income, along with the reconciliation to Adjusted EBITDA, is
presented below:
|
|
Quarter
Ended
|
|
|
|
|
3/31/2023
|
|
|
3/31/2022
|
|
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
Net Income – Yum China
Holdings, Inc.
|
|
$
|
289
|
|
|
$
|
100
|
|
|
Net income –
noncontrolling interests
|
|
|
24
|
|
|
|
10
|
|
|
Equity in net
(earnings) losses from equity method investments
|
|
|
(1)
|
|
|
|
1
|
|
|
Income tax
provision
|
|
|
125
|
|
|
|
55
|
|
|
Interest income,
net
|
|
|
(38)
|
|
|
|
(12)
|
|
|
Investment
loss
|
|
|
17
|
|
|
|
37
|
|
|
Operating
Profit
|
|
|
416
|
|
|
|
191
|
|
|
Special Items,
Operating Profit
|
|
|
3
|
|
|
|
2
|
|
|
Adjusted Operating
Profit
|
|
|
419
|
|
|
|
193
|
|
|
Depreciation and
amortization
|
|
|
116
|
|
|
|
164
|
|
|
Store impairment
charges
|
|
|
4
|
|
|
|
8
|
|
|
Adjusted
EBITDA
|
|
$
|
539
|
|
|
$
|
365
|
|
|
Details of Special Items are presented below:
|
|
Quarter
Ended
|
|
|
|
|
3/31/2023
|
|
|
3/31/2022
|
|
|
Share-based
compensation expense for Partner PSU
Awards(1)
|
|
$
|
(3)
|
|
|
$
|
(2)
|
|
|
Special Items,
Operating Profit
|
|
|
(3)
|
|
|
|
(2)
|
|
|
Tax effect on Special
Items(2)
|
|
|
—
|
|
|
|
—
|
|
|
Special Items, net
income – including noncontrolling interests
|
|
|
(3)
|
|
|
|
(2)
|
|
|
Special Items, net
income – noncontrolling interests
|
|
|
—
|
|
|
|
—
|
|
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
$
|
(3)
|
|
|
$
|
(2)
|
|
|
Weighted-average
Diluted Shares Outstanding (in millions)
|
|
|
423
|
|
|
|
430
|
|
|
Special Items, Diluted
Earnings Per Common Share
|
|
$
|
(0.01)
|
|
|
$
|
(0.01)
|
|
|
(1) In February
2020, the Company granted Partner PSU Awards to select
employees who were deemed critical to the Company's execution of
its strategic operating plan. These PSU awards will only vest if
threshold performance goals are achieved over a four-year
performance period, with the payout ranging from 0% to 200% of the
target number of shares subject to the PSU awards. Partner PSU
Awards were granted to address increased competition for executive
talent, motivate transformational performance and encourage
management retention. Given the unique nature of these grants, the
Compensation Committee does not intend to grant similar, special
grants to the same employees during the performance period. The
impact from these special awards is excluded from metrics that
management uses to assess the Company's performance.
(2) The tax expense was determined based upon
the nature, as well as the jurisdiction, of each Special Item at
the applicable tax rate.
The Company excludes impact from Special Items for the purpose
of evaluating performance internally. Special Items are not
included in any of our segment results. In addition, the Company
provides Adjusted EBITDA because we believe that investors and
analysts may find it useful in measuring operating performance
without regard to items such as equity in net earnings (losses)
from equity method investments, income tax, interest income, net,
investment gain or loss, depreciation and amortization, store
impairment charges, and Special Items. Store impairment charges
included as an adjustment item in Adjusted EBITDA primarily
resulted from our semi-annual impairment evaluation of long-lived
assets of individual restaurants, and additional impairment
evaluation whenever events or changes in circumstances indicate
that the carrying value of the assets may not be recoverable. If
these restaurant-level assets were not impaired, depreciation of
the assets would have been recorded and included in EBITDA.
Therefore, store impairment charges were a non-cash item similar to
depreciation and amortization of our long-lived assets of
restaurants. The Company believes that investors and analyst may
find it useful in measuring operating performance without regard to
such non-cash item.
These adjusted measures are not intended to replace the
presentation of our financial results in accordance with
GAAP. Rather, the Company believes that the presentation of
these adjusted measures provides additional information to
investors to facilitate the comparison of past and present results,
excluding those items that the Company does not believe are
indicative of our ongoing operations due to their nature.
Unit
Count by Brand
KFC
|
|
12/31/2022
|
|
|
New Builds
|
|
|
Closures
|
|
|
Refranchised
|
|
|
3/31/2023
|
|
Company-owned
|
|
|
8,214
|
|
|
|
191
|
|
|
|
(68)
|
|
|
|
(2)
|
|
|
|
8,335
|
|
Franchisees
|
|
|
880
|
|
|
|
25
|
|
|
|
(3)
|
|
|
|
2
|
|
|
|
904
|
|
Total
|
|
|
9,094
|
|
|
|
216
|
|
|
|
(71)
|
|
|
|
—
|
|
|
|
9,239
|
|
Pizza Hut
|
|
12/31/2022
|
|
|
New Builds
|
|
|
Closures
|
|
|
Refranchised
|
|
|
3/31/2023
|
|
Company-owned
|
|
|
2,760
|
|
|
|
103
|
|
|
|
(23)
|
|
|
|
(2)
|
|
|
|
2,838
|
|
Franchisees
|
|
|
143
|
|
|
|
1
|
|
|
|
(1)
|
|
|
|
2
|
|
|
|
145
|
|
Total
|
|
|
2,903
|
|
|
|
104
|
|
|
|
(24)
|
|
|
|
—
|
|
|
|
2,983
|
|
Others
|
|
12/31/2022
|
|
|
New Builds
|
|
|
Closures
|
|
|
3/31/2023
|
|
Company-owned
|
|
|
187
|
|
|
|
20
|
|
|
|
(6)
|
|
|
|
201
|
|
Franchisees
|
|
|
763
|
|
|
|
16
|
|
|
|
(22)
|
|
|
|
757
|
|
Total
|
|
|
950
|
|
|
|
36
|
|
|
|
(28)
|
|
|
|
958
|
|
Yum China
Holdings, Inc.
|
Segment
Results
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter Ended
3/31/2023
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
2,166
|
|
|
$
|
591
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,772
|
|
Franchise fees and
income
|
|
|
17
|
|
|
|
2
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25
|
|
Revenues from
transactions with franchisees(2)
|
|
|
10
|
|
|
|
1
|
|
|
|
19
|
|
|
|
63
|
|
|
|
—
|
|
|
|
93
|
|
Other
revenues
|
|
|
5
|
|
|
|
3
|
|
|
|
162
|
|
|
|
10
|
|
|
|
(153)
|
|
|
|
27
|
|
Total
revenues
|
|
$
|
2,198
|
|
|
$
|
597
|
|
|
$
|
202
|
|
|
$
|
73
|
|
|
$
|
(153)
|
|
|
$
|
2,917
|
|
Company restaurant
expenses
|
|
|
1,685
|
|
|
|
507
|
|
|
|
18
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
2,209
|
|
General and
administrative expenses
|
|
|
68
|
|
|
|
29
|
|
|
|
10
|
|
|
|
56
|
|
|
|
—
|
|
|
|
163
|
|
Franchise
expenses
|
|
|
9
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
Expenses for
transactions with franchisees(2)
|
|
|
9
|
|
|
|
1
|
|
|
|
18
|
|
|
|
63
|
|
|
|
—
|
|
|
|
91
|
|
Other operating costs
and expenses
|
|
|
4
|
|
|
|
3
|
|
|
|
161
|
|
|
|
8
|
|
|
|
(152)
|
|
|
|
24
|
|
Closures and impairment
expenses, net
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
Other expenses
(income), net
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
1
|
|
Total costs and
expenses, net
|
|
|
1,778
|
|
|
|
542
|
|
|
|
208
|
|
|
|
126
|
|
|
|
(153)
|
|
|
|
2,501
|
|
Operating Profit
(Loss)
|
|
$
|
420
|
|
|
$
|
55
|
|
|
$
|
(6)
|
|
|
$
|
(53)
|
|
|
$
|
—
|
|
|
$
|
416
|
|
Reconciliation of GAAP Operating Profit to Restaurant
Profit
|
|
Quarter Ended
3/31/2023
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated
|
|
|
Elimination
|
|
|
Total
|
|
GAAP Operating Profit
(Loss)
|
|
$
|
420
|
|
|
$
|
55
|
|
|
$
|
(6)
|
|
|
$
|
(53)
|
|
|
$
|
—
|
|
|
$
|
416
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise fees and
income
|
|
|
17
|
|
|
|
2
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25
|
|
Revenues from
transactions with franchisees
|
|
|
10
|
|
|
|
1
|
|
|
|
19
|
|
|
|
63
|
|
|
|
—
|
|
|
|
93
|
|
Other
revenues
|
|
|
5
|
|
|
|
3
|
|
|
|
162
|
|
|
|
10
|
|
|
|
(153)
|
|
|
|
27
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
|
68
|
|
|
|
29
|
|
|
|
10
|
|
|
|
56
|
|
|
|
—
|
|
|
|
163
|
|
Franchise
expenses
|
|
|
9
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
Expenses for
transactions with franchisees
|
|
|
9
|
|
|
|
1
|
|
|
|
18
|
|
|
|
63
|
|
|
|
—
|
|
|
|
91
|
|
Other operating costs
and expenses
|
|
|
4
|
|
|
|
3
|
|
|
|
161
|
|
|
|
8
|
|
|
|
(152)
|
|
|
|
24
|
|
Closures and impairment
expenses, net
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
Other expenses
(income), net
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
1
|
|
Restaurant profit
(loss)
|
|
$
|
481
|
|
|
$
|
84
|
|
|
$
|
(3)
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
563
|
|
Company
sales
|
|
|
2,166
|
|
|
|
591
|
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,772
|
|
Restaurant margin
%
|
|
|
22.2
|
%
|
|
|
14.2
|
%
|
|
|
(21.2)
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
20.3
|
%
|
|
|
Quarter Ended
3/31/2022
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
1,991
|
|
|
$
|
542
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,548
|
|
Franchise fees and
income
|
|
|
16
|
|
|
|
2
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
Revenues from
transactions with franchisees(2)
|
|
|
8
|
|
|
|
1
|
|
|
|
11
|
|
|
|
57
|
|
|
|
—
|
|
|
|
77
|
|
Other
revenues
|
|
|
2
|
|
|
|
2
|
|
|
|
131
|
|
|
|
10
|
|
|
|
(126)
|
|
|
|
19
|
|
Total
revenues
|
|
$
|
2,017
|
|
|
$
|
547
|
|
|
$
|
163
|
|
|
$
|
67
|
|
|
$
|
(126)
|
|
|
$
|
2,668
|
|
Company restaurant
expenses
|
|
|
1,689
|
|
|
|
484
|
|
|
|
22
|
|
|
|
—
|
|
|
|
2
|
|
|
|
2,197
|
|
General and
administrative expenses
|
|
|
65
|
|
|
|
29
|
|
|
|
13
|
|
|
|
44
|
|
|
|
—
|
|
|
|
151
|
|
Franchise
expenses
|
|
|
9
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
Expenses for
transactions with franchisees(2)
|
|
|
8
|
|
|
|
1
|
|
|
|
9
|
|
|
|
57
|
|
|
|
—
|
|
|
|
75
|
|
Other operating costs
and expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
134
|
|
|
|
9
|
|
|
|
(128)
|
|
|
|
17
|
|
Closures and impairment
(income) expenses, net
|
|
|
(1)
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
Other expenses
(income), net
|
|
|
26
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
25
|
|
Total costs and
expenses, net
|
|
|
1,797
|
|
|
|
517
|
|
|
|
180
|
|
|
|
109
|
|
|
|
(126)
|
|
|
|
2,477
|
|
Operating Profit
(Loss)
|
|
$
|
220
|
|
|
$
|
30
|
|
|
$
|
(17)
|
|
|
$
|
(42)
|
|
|
$
|
—
|
|
|
$
|
191
|
|
Reconciliation of GAAP Operating Profit to Restaurant
Profit
|
|
Quarter Ended
3/31/2022
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated
|
|
|
Elimination
|
|
|
Total
|
|
GAAP Operating Profit
(Loss)
|
|
$
|
220
|
|
|
$
|
30
|
|
|
$
|
(17)
|
|
|
$
|
(42)
|
|
|
$
|
—
|
|
|
$
|
191
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise fees and
income
|
|
|
16
|
|
|
|
2
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
Revenues from
transactions with franchisees
|
|
|
8
|
|
|
|
1
|
|
|
|
11
|
|
|
|
57
|
|
|
|
—
|
|
|
|
77
|
|
Other
revenues
|
|
|
2
|
|
|
|
2
|
|
|
|
131
|
|
|
|
10
|
|
|
|
(126)
|
|
|
|
19
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
|
65
|
|
|
|
29
|
|
|
|
13
|
|
|
|
44
|
|
|
|
—
|
|
|
|
151
|
|
Franchise
expenses
|
|
|
9
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
Expenses for
transactions with franchisees
|
|
|
8
|
|
|
|
1
|
|
|
|
9
|
|
|
|
57
|
|
|
|
—
|
|
|
|
75
|
|
Other operating costs
and expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
134
|
|
|
|
9
|
|
|
|
(128)
|
|
|
|
17
|
|
Closures and impairment
(income) expenses, net
|
|
|
(1)
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
Other expenses
(income), net
|
|
|
26
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
25
|
|
Restaurant profit
(loss)
|
|
$
|
302
|
|
|
$
|
58
|
|
|
$
|
(7)
|
|
|
$
|
—
|
|
|
$
|
(2)
|
|
|
$
|
351
|
|
Company
sales
|
|
|
1,991
|
|
|
|
542
|
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,548
|
|
Restaurant margin
%
|
|
|
15.2
|
%
|
|
|
10.7
|
%
|
|
|
(50.9)
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
13.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above tables reconcile segment information, which is based
on management responsibility, with our Condensed Consolidated
Statements of Income.
(1) Amounts have not been allocated to any segment for
purpose of making operating decision or assessing financial
performance as the transactions are deemed corporate revenues and
expenses in nature.
(2) Primarily includes revenues and associated expenses of
transactions with franchisees derived from the Company's central
procurement model whereby the Company centrally purchases
substantially all food and paper products from suppliers and then
sells and delivers to KFC and Pizza Hut restaurants, including
franchisees.
View original
content:https://www.prnewswire.com/news-releases/yum-china-reports-first-quarter-2023-results-301813315.html
SOURCE Yum China Holdings, Inc.