Total Revenues grew 9%, or 15% in constant
currency; System Sales grew 15% in constant
currency;
Operating Profit grew 2% to $323 million, or 9% in constant currency,
Adjusted Operating Profit of $327
million reached a record;
Record year-to-date
store openings of 1,155 net new adds, on track for full-year net
new store target
SHANGHAI, Oct. 31,
2023 /PRNewswire/ -- Yum China Holdings, Inc. (the
"Company" or "Yum China") (NYSE:
YUMC and HKEX: 9987) today reported unaudited results for the third
quarter ended September 30, 2023.
Third Quarter Highlights
- Total revenues increased 9% year over year to
$2.91 billion from $2.68 billion (a 15% increase in constant
currency).
- Total system sales increased 15% year over year, with
increases of 15% at KFC and 13% at Pizza Hut in constant currency.
Growth was mainly attributable to new unit contribution, same-store
sales and lapping of temporary closures in the prior year.
- Same-store sales increased 4% year over year, with
increases of 4% at KFC and 2% at Pizza Hut in constant
currency.
- Opened 500 net new stores during the quarter; total
store count reached 14,102, as of September
30, 2023.
- Operating Profit increased 2% year over year to
$323 million from $316 million (a 9% increase in constant
currency), primarily driven by sales leveraging.
- Adjusted Operating Profit increased 3% year over year to
$327 million from $318 million (a 10% increase in constant
currency).
- Restaurant margin was 17.0%, compared with 18.8% in the
prior year period, mainly due to lapping of austerity measures and
temporary relief in the prior year.
- Effective tax rate was 27.5%.
- Net Income increased 18% to $244
million from $206 million in
the prior year period, primarily due to the increase in Operating
Profit and higher interest income.
- Adjusted Net Income increased 19% to $248 million from $208
million in the prior year period (a 27% increase in constant
currency). Adjusted Net Income includes the net losses of
$3 million and $12 million in the third quarter of 2023 and
2022, respectively, from the mark-to-market equity investment in
Meituan. Excluding such losses, Adjusted Net Income increased 14%
year over year (a 21% increase in constant currency).
- Diluted EPS increased 18% to $0.58 from $0.49 in
the prior year period.
- Adjusted Diluted EPS increased 20% to $0.59 from $0.49 in
the prior year period (a 29% increase in constant currency).
Excluding the net losses from the mark-to-market equity investments
in the third quarter of 2023 and 2022, as aforementioned, Adjusted
Diluted EPS increased 15% year over year (a 21% increase in
constant currency).
Key Financial Results
|
Third Quarter
2023
|
|
|
Year to Date Ended
9/30/2023
|
|
|
%
Change
|
|
|
%
Change
|
|
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
Yum China
|
+15
|
|
+4
|
|
+14
|
|
+2
|
|
|
+20
|
|
+8
|
|
+14
|
|
+69
|
|
KFC
|
+15
|
|
+4
|
|
+14
|
|
+4
|
|
|
+21
|
|
+9
|
|
+14
|
|
+54
|
|
Pizza
Hut
|
+13
|
|
+2
|
|
+14
|
|
(5)
|
|
|
+19
|
|
+7
|
|
+14
|
|
+52
|
|
|
|
Third
Quarter
|
|
|
|
Year to Date Ended
9/30
|
(in US$ million,
except
|
|
|
|
|
|
%
Change
|
|
|
|
|
|
|
|
%
Change
|
per share data and
percentages)
|
|
2023
|
|
|
2022
|
Reported
|
|
Ex F/X
|
|
|
|
2023
|
|
|
2022
|
Reported
|
|
Ex F/X
|
Operating
Profit
|
$
|
323
|
|
$
|
316
|
+2
|
|
+9
|
|
|
$
|
996
|
|
$
|
588
|
+69
|
|
+79
|
Adjusted Operating
Profit(1)
|
$
|
327
|
|
$
|
318
|
+3
|
|
+10
|
|
|
$
|
1,005
|
|
$
|
593
|
+69
|
|
+79
|
Net Income
|
$
|
244
|
|
$
|
206
|
+18
|
|
+26
|
|
|
$
|
730
|
|
$
|
389
|
+88
|
|
+98
|
Adjusted Net
Income(1)
|
$
|
248
|
|
$
|
208
|
+19
|
|
+27
|
|
|
$
|
739
|
|
$
|
394
|
+88
|
|
+98
|
Basic Earnings Per
Common Share
|
$
|
0.59
|
|
$
|
0.49
|
+20
|
|
+27
|
|
|
$
|
1.75
|
|
$
|
0.92
|
+90
|
|
+101
|
Adjusted Basic
Earnings
Per Common Share(1)
|
$
|
0.60
|
|
$
|
0.49
|
+22
|
|
+27
|
|
|
$
|
1.77
|
|
$
|
0.93
|
+90
|
|
+101
|
Diluted Earnings Per
Common Share
|
$
|
0.58
|
|
$
|
0.49
|
+18
|
|
+27
|
|
|
$
|
1.73
|
|
$
|
0.92
|
+88
|
|
+99
|
Adjusted Diluted
Earnings
Per Common Share(1)
|
$
|
0.59
|
|
$
|
0.49
|
+20
|
|
+29
|
|
|
$
|
1.75
|
|
$
|
0.93
|
+88
|
|
+99
|
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 delivered a record
third quarter in total revenues, adjusted operating profit and net
new store openings. System sales grew 15% and adjusted operating
profit excluding temporary reliefs grew 21% in constant currency.
For the first nine months of the year, operating profit and
adjusted operating profit also set new records, reaching around
$1 billion. Our robust supply chain,
industry-leading digital ecosystem and strong innovation
capabilities have enabled us to stay agile in evolving market
conditions. We continued to enrich our core menu offerings and
launch targeted, engaging campaigns to drive incremental traffic.
Beef burger and whole chicken categories combined make up more than
6% of KFC's sales mix, exceeding that of the Original Recipe
Chicken. KFC's collaboration with Honkai: Star Rail, a popular e-game, broadened our
customer reach and grew our membership base. Furthermore, we are
expanding our price range to appeal to a broader customer base,
tapping into underserved consumers. At Pizza Hut, we continue to
expand pizza selections priced below RMB
50, to capture this very significant segment of the overall
pizza market. At KFC, our offers range from premium products such
as Ultra Cheese 2.0 Beef Burger to RMB
19.9 3-item value combos to address diverse customer
preferences."
"We accelerated new store openings in the quarter, adding 500
net new stores. With 1,155 net new stores in the first three
quarters of this year, we are on track to meet our updated
full-year target of 1,400 to 1,600. Importantly, our new store
payback periods and unit economics remain healthy. At our Investor
Day in September, we shared our views on the vast, untapped
potential that China continues to offer, even with moderate
economic growth. With our "RGM 2.0" strategy, we are focusing on
growth while reinforcing resilience and widening our strategic
moats. We have set a clear roadmap and growth targets for 2024 to
2026. These include 20,000 stores by 2026 and a return of
$3 billion to shareholders through
cash dividends and share repurchases during the same three-year
period. We are confident in our capabilities to capture growth
opportunities," Wat concluded.
Andy Yeung, CFO of Yum China, added, "In the third quarter, we
achieved robust results despite macroeconomic headwinds. Same-store
sales growth was solid on a year-over-year basis, and maintained at
approximately 90% of the 2019 level in the quarter. But we observed
softening consumer demand emerged in late September through
October. Looking ahead, the fourth quarter is a seasonally small
quarter in terms of sales and profits; hence small fluctuations in
sales could have a more pronounced impact on our margins. It is
important to highlight that during the fourth quarter last year, we
received temporary relief of $26
million, which is not expected to repeat this year. Last
year, we also experienced staffing shortages due to widespread
COVID infections. This year, we are returning to more normalized
operations and staffing levels at our restaurants. The
post-pandemic economic recovery is shaping up to be a "wave-like"
and "non-linear" process. So, we will continue to stay agile and
take actions to drive sales and cost-efficiency in these evolving
market conditions. However, the overall trend towards recovery is
evident this year, and many of our performance metrics are setting
new records. We remain excited about the significant
opportunities China presents and confident in delivering
sustainable growth and long-term value to our shareholders. We are
proud to report that we returned $211
million to shareholders in the third quarter, through cash
dividends and share repurchases, and are on track to return
$600 to 800 million for the full
year."
Share Repurchases and Dividends
- During the third quarter, the Company repurchased approximately
2.9 million shares of Yum China
common stock for $157 million at an
average price of $54.91 per share. As
of September 30, 2023, approximately
$870 million 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 December 19, 2023 to shareholders of record as of
the close of business on November 28,
2023.
Digital and Delivery
- KFC and Pizza Hut loyalty programs exceeded 460 million members
combined, as of quarter-end. Member sales accounted for
approximately 65% of system sales in the third quarter of
2023.
- Delivery contributed approximately 35% of KFC and Pizza Hut's
Company sales in the third quarter of 2023, a decrease of 3%
compared with the prior year period.
- Digital orders, including delivery, mobile orders and kiosk
orders, accounted for approximately 89% of KFC and Pizza Hut's
Company sales in the third quarter of 2023.
KFC and Pizza Hut
Total
|
|
Third
Quarter
|
|
|
Year to Date Ended
9/30
|
|
|
|
2023
|
|
2022
|
|
|
2023
|
|
2022
|
|
Member
count (as of period-end)
|
|
460 million+
|
|
400 million+
|
|
|
460 million+
|
|
400 million+
|
|
Member
sales as % of system sales
|
|
~65%
|
|
~62%
|
|
|
~65%
|
|
~62%
|
|
Delivery
as % of Company sales
|
|
~35%
|
|
~38%
|
|
|
~36%
|
|
~37%
|
|
Digital
orders as % of Company sales
|
|
~89%
|
|
~91%
|
|
|
~89%
|
|
~89%
|
|
New-Unit Development and Asset Upgrade
- The Company opened 500 net new stores in the third quarter of
2023, mainly driven by development of the KFC and Pizza Hut
brands.
- The Company remodeled 194 stores in the third quarter of
2023.
|
|
Net New
Units
|
|
|
Restaurant
Count
|
|
|
|
Third
Quarter
|
|
Year to
Date
|
|
|
As of September
30
|
|
|
|
2023
|
|
Ended
9/30/2023
|
|
|
2023
|
|
2022
|
|
Yum China
|
|
500
|
|
1,155
|
|
|
14,102
|
|
12,409
|
|
KFC
|
|
355
|
|
823
|
|
|
9,917
|
|
8,675
|
|
Pizza
Hut
|
|
130
|
|
299
|
|
|
3,202
|
|
2,806
|
|
Others(2)
|
|
15
|
|
33
|
|
|
983
|
|
928
|
|
2 Others
include Taco Bell, Lavazza, Little Sheep, Huang Ji Huang, and for
2022, COFFii & JOY.
|
Restaurant Margin
- Restaurant margin was 17.0% in the third quarter of 2023
compared with 18.8% in the prior year period, driven primarily by
lapping of the austerity measures and temporary relief in the prior
year, higher promotion costs and wage inflation, partially offset
by sales leveraging and favorable commodity prices.
|
Third
Quarter
|
|
|
Year to Date Ended
9/30
|
|
|
|
2023
|
|
2022
|
|
ppts
change
|
|
|
2023
|
|
2022
|
|
ppts
change
|
|
Yum China
|
|
17.0 %
|
|
18.8 %
|
|
(1.8)
|
|
|
17.9 %
|
|
15.1 %
|
|
+2.8
|
|
KFC
|
|
18.6 %
|
|
20.6 %
|
|
(2.0)
|
|
|
19.4 %
|
|
16.6 %
|
|
+2.8
|
|
Pizza
Hut
|
|
12.7 %
|
|
13.4 %
|
|
(0.7)
|
|
|
13.1 %
|
|
11.1 %
|
|
+2.0
|
|
2023 Outlook
The Company's fiscal year 2023 targets were updated at Investor
Day on September 14, 2023:
- To open approximately 1,400 to 1,600 net new stores, an
increase of 300 stores from the previous target.
- To make capital expenditures in the range of approximately
$700 million to $900 million, unchanged from the previous
target.
Company Updates
- On September 14, 2023, the
Company announced the following financial and operating targets at
its Investor Day.
- To reach total count of 20,000 stores by 2026.
- To achieve high-single-to-double-digit CAGR for system sales
and operating profit, and double-digit EPS CAGR from 2024 to 2026,
compared to base year 2023 and in constant currency.
- To return approximately $3
billion to shareholders through quarterly dividends and
share repurchases from 2024 to 2026.
- On September 27, 2023, the
Company was named to Fortune's 2023 Change the World list, an
annual list that recognizes a select group of companies that have
had a positive social impact through activities that are part of
their core business strategy. Yum
China was one of 59 companies worldwide – and the only
restaurant company – selected for the recognition.
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.
Other Information
In this release, the Company has also disclosed the change in
adjusted operating profit excluding temporary relief. This
temporary relief was provided by landlords and government agencies,
and consisted of $1 million in the
third quarter of 2023 and $30 million
in the third quarter of 2022. The temporary relief received
primarily related to the COVID-19 pandemic, and is not expected to
recur. The Company believes this information is useful to investors
because it facilitates greater comparability between periods.
Conference Call
Yum China's management will hold
an earnings conference call at 8:00
p.m. U.S. Eastern Time on Tuesday,
October 31, 2023 (8:00 a.m.
Beijing/Hong Kong Time on
Wednesday, November 1,
2023).
A live webcast of the call may be accessed at
https://edge.media-server.com/mmc/p/bpvn2yvj.
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/10033304-ahyd6f.html
A replay of the conference call will be available one hour after
the call ends until Wednesday, November 8,
2023 and may be accessed by phone using 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:
|
10033304
|
Additionally, this earnings release, the accompanying slides, as
well as the live and 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, 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 14,000 restaurants under six
brands across 1,900 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
|
|
Year to Date
Ended
|
|
|
%
Change
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
B/(W)
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
2,759
|
|
|
$
|
2,561
|
|
|
|
8
|
|
|
|
$
|
8,048
|
|
|
$
|
7,135
|
|
|
|
13
|
|
|
Franchise fees and
income
|
|
|
23
|
|
|
|
22
|
|
|
|
7
|
|
|
|
|
69
|
|
|
|
65
|
|
|
|
8
|
|
|
Revenues from
transactions with franchisees
|
|
|
100
|
|
|
|
80
|
|
|
|
25
|
|
|
|
|
282
|
|
|
|
219
|
|
|
|
29
|
|
|
Other
revenues
|
|
|
32
|
|
|
|
22
|
|
|
|
41
|
|
|
|
|
86
|
|
|
|
62
|
|
|
|
39
|
|
|
Total
revenues
|
|
|
2,914
|
|
|
|
2,685
|
|
|
|
9
|
|
|
|
|
8,485
|
|
|
|
7,481
|
|
|
|
13
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
858
|
|
|
|
787
|
|
|
|
(9)
|
|
|
|
|
2,466
|
|
|
|
2,206
|
|
|
|
(12)
|
|
|
Payroll and employee
benefits
|
|
|
699
|
|
|
|
603
|
|
|
|
(16)
|
|
|
|
|
2,047
|
|
|
|
1,819
|
|
|
|
(12)
|
|
|
Occupancy and other
operating expenses
|
|
|
732
|
|
|
|
691
|
|
|
|
(6)
|
|
|
|
|
2,098
|
|
|
|
2,034
|
|
|
|
(3)
|
|
|
Company restaurant
expenses
|
|
|
2,289
|
|
|
|
2,081
|
|
|
|
(10)
|
|
|
|
|
6,611
|
|
|
|
6,059
|
|
|
|
(9)
|
|
|
General and
administrative expenses
|
|
|
169
|
|
|
|
157
|
|
|
|
(8)
|
|
|
|
|
485
|
|
|
|
449
|
|
|
|
(8)
|
|
|
Franchise
expenses
|
|
|
9
|
|
|
|
9
|
|
|
|
2
|
|
|
|
|
28
|
|
|
|
27
|
|
|
|
—
|
|
|
Expenses for
transactions with franchisees
|
|
|
95
|
|
|
|
76
|
|
|
|
(24)
|
|
|
|
|
270
|
|
|
|
212
|
|
|
|
(28)
|
|
|
Other operating costs
and expenses
|
|
|
29
|
|
|
|
18
|
|
|
|
(62)
|
|
|
|
|
77
|
|
|
|
53
|
|
|
|
(45)
|
|
|
Closures and impairment
expenses, net
|
|
|
—
|
|
|
|
4
|
|
|
NM
|
|
|
|
|
17
|
|
|
|
20
|
|
|
|
15
|
|
|
Other expenses,
net
|
|
|
—
|
|
|
|
24
|
|
|
|
100
|
|
|
|
|
1
|
|
|
|
73
|
|
|
|
98
|
|
|
Total costs and
expenses, net
|
|
|
2,591
|
|
|
|
2,369
|
|
|
|
(9)
|
|
|
|
|
7,489
|
|
|
|
6,893
|
|
|
|
(9)
|
|
|
Operating
Profit
|
|
|
323
|
|
|
|
316
|
|
|
|
2
|
|
|
|
|
996
|
|
|
|
588
|
|
|
|
69
|
|
|
Interest income,
net
|
|
|
46
|
|
|
|
25
|
|
|
|
86
|
|
|
|
|
124
|
|
|
|
51
|
|
|
|
145
|
|
|
Investment
loss
|
|
|
(4)
|
|
|
|
(15)
|
|
|
|
75
|
|
|
|
|
(32)
|
|
|
|
(32)
|
|
|
|
(1)
|
|
|
Income Before Income
Taxes and
Equity in Net Earnings (Losses) from
Equity Method Investments
|
|
|
365
|
|
|
|
326
|
|
|
|
12
|
|
|
|
|
1,088
|
|
|
|
607
|
|
|
|
79
|
|
|
Income tax
provision
|
|
|
(100)
|
|
|
|
(97)
|
|
|
|
(3)
|
|
|
|
|
(296)
|
|
|
|
(183)
|
|
|
|
(62)
|
|
|
Equity in net earnings
(losses) from
equity method investments
|
|
|
2
|
|
|
|
(2)
|
|
|
NM
|
|
|
|
|
2
|
|
|
|
(4)
|
|
|
NM
|
|
|
Net income – including
noncontrolling interests
|
|
|
267
|
|
|
|
227
|
|
|
|
18
|
|
|
|
|
794
|
|
|
|
420
|
|
|
|
89
|
|
|
Net income –
noncontrolling interests
|
|
|
23
|
|
|
|
21
|
|
|
|
(14)
|
|
|
|
|
64
|
|
|
|
31
|
|
|
|
(110)
|
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
|
244
|
|
|
$
|
206
|
|
|
|
18
|
|
|
|
$
|
730
|
|
|
$
|
389
|
|
|
|
88
|
|
|
Effective tax
rate
|
|
|
27.5
|
%
|
|
|
29.9
|
%
|
|
|
2.4
|
|
ppts.
|
|
|
27.2
|
%
|
|
|
30.1
|
%
|
|
|
2.9
|
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
|
0.59
|
|
|
$
|
0.49
|
|
|
|
|
|
|
$
|
1.75
|
|
|
$
|
0.92
|
|
|
|
|
|
Weighted-average shares
outstanding
(in millions)
|
|
|
416
|
|
|
|
420
|
|
|
|
|
|
|
|
417
|
|
|
|
422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Common Share
|
|
$
|
0.58
|
|
|
$
|
0.49
|
|
|
|
|
|
|
$
|
1.73
|
|
|
$
|
0.92
|
|
|
|
|
|
Weighted-average shares
outstanding
(in millions)
|
|
|
420
|
|
|
|
424
|
|
|
|
|
|
|
|
421
|
|
|
|
426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
Food and
paper
|
|
|
31.1
|
|
|
|
30.7
|
|
|
|
(0.4)
|
|
ppts.
|
|
|
30.6
|
|
|
|
30.9
|
|
|
|
0.3
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
25.3
|
|
|
|
23.5
|
|
|
|
(1.8)
|
|
ppts.
|
|
|
25.4
|
|
|
|
25.5
|
|
|
|
0.1
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
26.6
|
|
|
|
27.0
|
|
|
|
0.4
|
|
ppts.
|
|
|
26.1
|
|
|
|
28.5
|
|
|
|
2.4
|
|
ppts.
|
Restaurant
margin
|
|
|
17.0
|
%
|
|
|
18.8
|
%
|
|
|
(1.8)
|
|
ppts.
|
|
|
17.9
|
%
|
|
|
15.1
|
%
|
|
|
2.8
|
|
ppts.
|
Operating
margin
|
|
|
11.7
|
%
|
|
|
12.3
|
%
|
|
|
(0.6)
|
|
ppts.
|
|
|
12.4
|
%
|
|
|
8.2
|
%
|
|
|
4.2
|
|
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
|
|
Year to Date
Ended
|
|
|
%
Change
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
B/(W)
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
2,154
|
|
|
$
|
1,992
|
|
|
|
8
|
|
|
|
$
|
6,274
|
|
|
$
|
5,554
|
|
|
|
13
|
|
|
Franchise fees and
income
|
|
|
16
|
|
|
|
15
|
|
|
|
6
|
|
|
|
|
48
|
|
|
|
44
|
|
|
|
9
|
|
|
Revenues from
transactions with franchisees
|
|
|
12
|
|
|
|
9
|
|
|
|
40
|
|
|
|
|
33
|
|
|
|
24
|
|
|
|
38
|
|
|
Other
revenues
|
|
|
4
|
|
|
|
1
|
|
|
|
152
|
|
|
|
|
13
|
|
|
|
6
|
|
|
|
114
|
|
|
Total
revenues
|
|
|
2,186
|
|
|
|
2,017
|
|
|
|
8
|
|
|
|
|
6,368
|
|
|
|
5,628
|
|
|
|
13
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
666
|
|
|
|
607
|
|
|
|
(10)
|
|
|
|
|
1,914
|
|
|
|
1,712
|
|
|
|
(12)
|
|
|
Payroll and employee
benefits
|
|
|
528
|
|
|
|
449
|
|
|
|
(18)
|
|
|
|
|
1,538
|
|
|
|
1,363
|
|
|
|
(13)
|
|
|
Occupancy and other
operating expenses
|
|
|
560
|
|
|
|
526
|
|
|
|
(6)
|
|
|
|
|
1,603
|
|
|
|
1,557
|
|
|
|
(3)
|
|
|
Company restaurant
expenses
|
|
|
1,754
|
|
|
|
1,582
|
|
|
|
(11)
|
|
|
|
|
5,055
|
|
|
|
4,632
|
|
|
|
(9)
|
|
|
General and
administrative expenses
|
|
|
68
|
|
|
|
63
|
|
|
|
(10)
|
|
|
|
|
203
|
|
|
|
191
|
|
|
|
(7)
|
|
|
Franchise
expenses
|
|
|
8
|
|
|
|
8
|
|
|
|
2
|
|
|
|
|
24
|
|
|
|
23
|
|
|
|
—
|
|
|
Expenses for
transactions with franchisees
|
|
|
11
|
|
|
|
8
|
|
|
|
(35)
|
|
|
|
|
29
|
|
|
|
22
|
|
|
|
(33)
|
|
|
Other operating costs
and expenses
|
|
|
3
|
|
|
|
1
|
|
|
|
(201)
|
|
|
|
|
11
|
|
|
|
4
|
|
|
|
(159)
|
|
|
Closures and impairment
expenses, net
|
|
|
—
|
|
|
|
3
|
|
|
|
99
|
|
|
|
|
9
|
|
|
|
11
|
|
|
|
18
|
|
|
Other expenses,
net
|
|
|
—
|
|
|
|
24
|
|
|
|
100
|
|
|
|
|
2
|
|
|
|
75
|
|
|
|
97
|
|
|
Total costs and
expenses, net
|
|
|
1,844
|
|
|
|
1,689
|
|
|
|
(9)
|
|
|
|
|
5,333
|
|
|
|
4,958
|
|
|
|
(8)
|
|
|
Operating
Profit
|
|
$
|
342
|
|
|
$
|
328
|
|
|
|
4
|
|
|
|
$
|
1,035
|
|
|
$
|
670
|
|
|
|
54
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
Food and
paper
|
|
|
30.9
|
|
|
|
30.5
|
|
|
|
(0.4)
|
|
ppts.
|
|
|
30.5
|
|
|
|
30.8
|
|
|
|
0.3
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
24.5
|
|
|
|
22.5
|
|
|
|
(2.0)
|
|
ppts.
|
|
|
24.5
|
|
|
|
24.5
|
|
|
|
—
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
26.0
|
|
|
|
26.4
|
|
|
|
0.4
|
|
ppts.
|
|
|
25.6
|
|
|
|
28.1
|
|
|
|
2.5
|
|
ppts.
|
Restaurant
margin
|
|
|
18.6
|
%
|
|
|
20.6
|
%
|
|
|
(2.0)
|
|
ppts.
|
|
|
19.4
|
%
|
|
|
16.6
|
%
|
|
|
2.8
|
|
ppts.
|
Operating
margin
|
|
|
15.8
|
%
|
|
|
16.5
|
%
|
|
|
(0.7)
|
|
ppts.
|
|
|
16.5
|
%
|
|
|
12.1
|
%
|
|
|
4.4
|
|
ppts.
|
Percentages may not recompute due to rounding.
Yum China
Holdings, Inc.
|
Pizza Hut Operating
Results
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
%
Change
|
|
Year to Date
Ended
|
|
|
%
Change
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
B/(W)
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
591
|
|
|
$
|
556
|
|
|
|
6
|
|
|
|
$
|
1,728
|
|
|
$
|
1,541
|
|
|
|
12
|
|
|
Franchise fees and
income
|
|
|
2
|
|
|
|
2
|
|
|
|
15
|
|
|
|
|
6
|
|
|
|
6
|
|
|
|
5
|
|
|
Revenues from
transactions with franchisees
|
|
|
1
|
|
|
|
1
|
|
|
|
11
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
11
|
|
|
Other
revenues
|
|
|
5
|
|
|
|
2
|
|
|
|
126
|
|
|
|
|
13
|
|
|
|
6
|
|
|
|
132
|
|
|
Total
revenues
|
|
|
599
|
|
|
|
561
|
|
|
|
7
|
|
|
|
|
1,750
|
|
|
|
1,556
|
|
|
|
13
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
187
|
|
|
|
176
|
|
|
|
(7)
|
|
|
|
|
537
|
|
|
|
481
|
|
|
|
(12)
|
|
|
Payroll and employee
benefits
|
|
|
167
|
|
|
|
149
|
|
|
|
(11)
|
|
|
|
|
496
|
|
|
|
437
|
|
|
|
(13)
|
|
|
Occupancy and other
operating expenses
|
|
|
162
|
|
|
|
156
|
|
|
|
(4)
|
|
|
|
|
469
|
|
|
|
452
|
|
|
|
(4)
|
|
|
Company restaurant
expenses
|
|
|
516
|
|
|
|
481
|
|
|
|
(7)
|
|
|
|
|
1,502
|
|
|
|
1,370
|
|
|
|
(10)
|
|
|
General and
administrative expenses
|
|
|
30
|
|
|
|
27
|
|
|
|
(13)
|
|
|
|
|
89
|
|
|
|
84
|
|
|
|
(6)
|
|
|
Franchise
expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
(13)
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
(7)
|
|
|
Expenses for
transactions with franchisees
|
|
|
1
|
|
|
|
1
|
|
|
|
(12)
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
(11)
|
|
|
Other operating costs
and expenses
|
|
|
4
|
|
|
|
2
|
|
|
|
(127)
|
|
|
|
|
11
|
|
|
|
5
|
|
|
|
(129)
|
|
|
Closures and impairment
expenses, net
|
|
|
—
|
|
|
|
—
|
|
|
|
19
|
|
|
|
|
5
|
|
|
|
1
|
|
|
NM
|
|
|
Total costs and
expenses, net
|
|
|
552
|
|
|
|
512
|
|
|
|
(8)
|
|
|
|
|
1,613
|
|
|
|
1,466
|
|
|
|
(10)
|
|
|
Operating
Profit
|
|
$
|
47
|
|
|
$
|
49
|
|
|
|
(5)
|
|
|
|
$
|
137
|
|
|
$
|
90
|
|
|
|
52
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
Food and
paper
|
|
|
31.7
|
|
|
|
31.6
|
|
|
|
(0.1)
|
|
ppts.
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
0.1
|
|
ppts.
|
Payroll and employee
benefits
|
|
|
28.1
|
|
|
|
26.9
|
|
|
|
(1.2)
|
|
ppts.
|
|
|
28.7
|
|
|
|
28.4
|
|
|
|
(0.3)
|
|
ppts.
|
Occupancy and other
operating expenses
|
|
|
27.5
|
|
|
|
28.1
|
|
|
|
0.6
|
|
ppts.
|
|
|
27.1
|
|
|
|
29.3
|
|
|
|
2.2
|
|
ppts.
|
Restaurant
margin
|
|
|
12.7
|
%
|
|
|
13.4
|
%
|
|
|
(0.7)
|
|
ppts.
|
|
|
13.1
|
%
|
|
|
11.1
|
%
|
|
|
2.0
|
|
ppts.
|
Operating
margin
|
|
|
7.9
|
%
|
|
|
8.8
|
%
|
|
|
(0.9)
|
|
ppts.
|
|
|
7.9
|
%
|
|
|
5.9
|
%
|
|
|
2.0
|
|
ppts.
|
Percentages may not recompute due to rounding. NM refers to not
meaningful.
Yum China
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in US$
million)
|
|
|
|
9/30/2023
|
|
|
12/31/2022
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,131
|
|
|
$
|
1,130
|
|
Short-term
investments
|
|
|
2,001
|
|
|
|
2,022
|
|
Accounts receivable,
net
|
|
|
62
|
|
|
|
64
|
|
Inventories,
net
|
|
|
419
|
|
|
|
417
|
|
Prepaid expenses and
other current assets
|
|
|
310
|
|
|
|
307
|
|
Total Current
Assets
|
|
|
3,923
|
|
|
|
3,940
|
|
Property, plant and
equipment, net
|
|
|
2,117
|
|
|
|
2,118
|
|
Operating lease
right-of-use assets
|
|
|
2,083
|
|
|
|
2,219
|
|
Goodwill
|
|
|
1,879
|
|
|
|
1,988
|
|
Intangible assets,
net
|
|
|
147
|
|
|
|
159
|
|
Long-term bank deposits
and notes
|
|
|
1,237
|
|
|
|
680
|
|
Equity
investments
|
|
|
319
|
|
|
|
361
|
|
Deferred income tax
assets
|
|
|
106
|
|
|
|
113
|
|
Other assets
|
|
|
259
|
|
|
|
248
|
|
Total
Assets
|
|
|
12,070
|
|
|
|
11,826
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
|
2,129
|
|
|
|
2,096
|
|
Short-term
borrowings
|
|
|
210
|
|
|
|
2
|
|
Income taxes
payable
|
|
|
133
|
|
|
|
68
|
|
Total Current
Liabilities
|
|
|
2,472
|
|
|
|
2,166
|
|
Non-current operating
lease liabilities
|
|
|
1,787
|
|
|
|
1,906
|
|
Non-current finance
lease liabilities
|
|
|
41
|
|
|
|
42
|
|
Deferred income tax
liabilities
|
|
|
364
|
|
|
|
390
|
|
Other
liabilities
|
|
|
147
|
|
|
|
162
|
|
Total
Liabilities
|
|
|
4,811
|
|
|
|
4,666
|
|
|
|
|
|
|
|
|
Redeemable
Noncontrolling Interest
|
|
|
13
|
|
|
|
12
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common stock,
$0.01 par value; 1,000 million shares authorized;
415 million shares and 419
million shares issued and outstanding
at September 30, 2023 and
December 31, 2022, respectively.
|
|
|
4
|
|
|
|
4
|
|
Additional paid-in
capital
|
|
|
4,382
|
|
|
|
4,390
|
|
Retained
earnings
|
|
|
2,526
|
|
|
|
2,191
|
|
Accumulated other
comprehensive loss
|
|
|
(341)
|
|
|
|
(103)
|
|
Total Yum China
Holdings, Inc. Stockholders' Equity
|
|
|
6,571
|
|
|
|
6,482
|
|
Noncontrolling
interests
|
|
|
675
|
|
|
|
666
|
|
Total
Equity
|
|
|
7,246
|
|
|
|
7,148
|
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
|
$
|
12,070
|
|
|
$
|
11,826
|
|
|
|
|
|
|
|
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(in US$
million)
|
(unaudited)
|
|
|
|
Year to Date
Ended
|
|
|
9/30/2023
|
|
9/30/2022
|
Cash Flows –
Operating Activities
|
|
|
|
|
|
|
|
|
Net income –
including noncontrolling interests
|
|
$
|
794
|
|
|
|
$
|
420
|
|
|
Depreciation and
amortization
|
|
|
339
|
|
|
|
|
467
|
|
|
Non-cash
operating lease cost
|
|
|
301
|
|
|
|
|
333
|
|
|
Closures and
impairment expenses
|
|
|
17
|
|
|
|
|
20
|
|
|
Investment
loss
|
|
|
32
|
|
|
|
|
32
|
|
|
Equity in net
(earnings) losses from equity method investments
|
|
|
(2)
|
|
|
|
|
4
|
|
|
Distributions of
income received from equity method investments
|
|
|
8
|
|
|
|
|
7
|
|
|
Deferred income
taxes
|
|
|
(6)
|
|
|
|
|
(7)
|
|
|
Share-based
compensation expense
|
|
|
46
|
|
|
|
|
31
|
|
|
Changes in
accounts receivable
|
|
|
(2)
|
|
|
|
|
(6)
|
|
|
Changes in
inventories
|
|
|
(25)
|
|
|
|
|
71
|
|
|
Changes in
prepaid expenses, other current assets and VAT assets
|
|
|
(10)
|
|
|
|
|
216
|
|
|
Changes in
accounts payable and other current liabilities
|
|
|
112
|
|
|
|
|
(19)
|
|
|
Changes in income
taxes payable
|
|
|
71
|
|
|
|
|
70
|
|
|
Changes in
non-current operating lease liabilities
|
|
|
(295)
|
|
|
|
|
(299)
|
|
|
Other,
net
|
|
|
(46)
|
|
|
|
|
(11)
|
|
|
Net Cash
Provided by Operating Activities
|
|
|
1,334
|
|
|
|
|
1,329
|
|
|
Cash Flows –
Investing Activities
|
|
|
|
|
|
|
|
|
Capital
spending
|
|
|
(499)
|
|
|
|
|
(509)
|
|
|
Purchases of
short-term investments, long-term bank deposits and
notes
|
|
|
(3,287)
|
|
|
|
|
(4,290)
|
|
|
Maturities of
short-term investments, long-term bank deposits and
notes
|
|
|
2,730
|
|
|
|
|
4,226
|
|
|
Acquisition of
business, net of cash acquired
|
|
|
—
|
|
|
|
|
(23)
|
|
|
Other,
net
|
|
|
4
|
|
|
|
|
3
|
|
|
Net Cash Used
in Investing Activities
|
|
|
(1,052)
|
|
|
|
|
(593)
|
|
|
Cash Flows –
Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from
short-term borrowings
|
|
|
212
|
|
|
|
|
—
|
|
|
Repurchase of
shares of common stock
|
|
|
(280)
|
|
|
|
|
(411)
|
|
|
Cash dividends
paid on common stock
|
|
|
(162)
|
|
|
|
|
(152)
|
|
|
Dividends paid to
noncontrolling interests
|
|
|
(37)
|
|
|
|
|
(29)
|
|
|
Contributions
from noncontrolling interests
|
|
|
35
|
|
|
|
|
18
|
|
|
Payment of
acquisition related holdback
|
|
|
(3)
|
|
|
|
|
(7)
|
|
|
Other,
net
|
|
|
(5)
|
|
|
|
|
(2)
|
|
|
Net Cash Used
in Financing Activities
|
|
|
(240)
|
|
|
|
|
(583)
|
|
|
Effect of
Exchange Rates on Cash, Cash Equivalents and Restricted
Cash
|
|
|
(41)
|
|
|
|
|
(78)
|
|
|
Net Increase
in Cash, Cash Equivalents and Restricted Cash
|
|
|
1
|
|
|
|
|
75
|
|
|
Cash, Cash
Equivalents, and Restricted Cash - Beginning of
Period
|
|
|
1,130
|
|
|
|
|
1,136
|
|
|
Cash, Cash
Equivalents, and Restricted Cash - End of Period
|
|
$
|
1,131
|
|
|
|
$
|
1,211
|
|
|
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 and franchise
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 restaurants typically
generate ongoing franchise fees for the Company at an average rate
of approximately 6% of system sales. Franchise 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
|
|
|
Year to Date
Ended
|
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
|
323
|
|
|
$
|
316
|
|
|
$
|
996
|
|
|
$
|
588
|
|
Special Items,
Operating Profit
|
|
|
(4)
|
|
|
|
(2)
|
|
|
|
(9)
|
|
|
|
(5)
|
|
Adjusted Operating
Profit
|
|
$
|
327
|
|
|
$
|
318
|
|
|
$
|
1,005
|
|
|
$
|
593
|
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income – Yum China
Holdings, Inc.
|
|
$
|
244
|
|
|
$
|
206
|
|
|
$
|
730
|
|
|
$
|
389
|
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
|
(4)
|
|
|
|
(2)
|
|
|
|
(9)
|
|
|
|
(5)
|
|
Adjusted Net Income –
Yum China Holdings, Inc.
|
|
$
|
248
|
|
|
$
|
208
|
|
|
$
|
739
|
|
|
$
|
394
|
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
|
0.59
|
|
|
$
|
0.49
|
|
|
$
|
1.75
|
|
|
$
|
0.92
|
|
Special Items, Basic
Earnings Per Common Share
|
|
|
(0.01)
|
|
|
|
—
|
|
|
|
(0.02)
|
|
|
|
(0.01)
|
|
Adjusted Basic Earnings
Per Common Share
|
|
$
|
0.60
|
|
|
$
|
0.49
|
|
|
$
|
1.77
|
|
|
$
|
0.93
|
|
Diluted Earnings Per
Common Share
|
|
$
|
0.58
|
|
|
$
|
0.49
|
|
|
$
|
1.73
|
|
|
$
|
0.92
|
|
Special Items, Diluted
Earnings Per Common Share
|
|
|
(0.01)
|
|
|
|
—
|
|
|
|
(0.02)
|
|
|
|
(0.01)
|
|
Adjusted Diluted
Earnings Per Common Share
|
|
$
|
0.59
|
|
|
$
|
0.49
|
|
|
$
|
1.75
|
|
|
$
|
0.93
|
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
27.5
|
%
|
|
|
29.9
|
%
|
|
|
27.2
|
%
|
|
|
30.1
|
%
|
Impact on effective tax
rate as a result of Special Items
|
|
|
0.3
|
%
|
|
|
0.2
|
%
|
|
|
0.2
|
%
|
|
|
0.2
|
%
|
Adjusted effective tax
rate
|
|
|
27.2
|
%
|
|
|
29.7
|
%
|
|
|
27.0
|
%
|
|
|
29.9
|
%
|
Net income, along with the reconciliation to Adjusted EBITDA, is
presented below:
|
|
Quarter
Ended
|
|
|
Year to Date
Ended
|
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income – Yum China
Holdings, Inc.
|
|
$
|
244
|
|
|
$
|
206
|
|
|
$
|
730
|
|
|
$
|
389
|
|
Net income –
noncontrolling interests
|
|
|
23
|
|
|
|
21
|
|
|
|
64
|
|
|
|
31
|
|
Equity in net
(earnings) losses from equity method investments
|
|
|
(2)
|
|
|
|
2
|
|
|
|
(2)
|
|
|
|
4
|
|
Income tax
provision
|
|
|
100
|
|
|
|
97
|
|
|
|
296
|
|
|
|
183
|
|
Interest income,
net
|
|
|
(46)
|
|
|
|
(25)
|
|
|
|
(124)
|
|
|
|
(51)
|
|
Investment
loss
|
|
|
4
|
|
|
|
15
|
|
|
|
32
|
|
|
|
32
|
|
Operating
Profit
|
|
|
323
|
|
|
|
316
|
|
|
|
996
|
|
|
|
588
|
|
Special Items,
Operating Profit
|
|
|
4
|
|
|
|
2
|
|
|
|
9
|
|
|
|
5
|
|
Adjusted Operating
Profit
|
|
|
327
|
|
|
|
318
|
|
|
|
1,005
|
|
|
|
593
|
|
Depreciation and
amortization
|
|
|
111
|
|
|
|
150
|
|
|
|
339
|
|
|
|
467
|
|
Store impairment
charges
|
|
|
3
|
|
|
|
7
|
|
|
|
24
|
|
|
|
37
|
|
Adjusted
EBITDA
|
|
$
|
441
|
|
|
$
|
475
|
|
|
$
|
1,368
|
|
|
$
|
1,097
|
|
Details of Special Items are presented below:
|
|
Quarter
Ended
|
|
|
Year to Date
Ended
|
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
9/30/2023
|
|
|
9/30/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation expense for Partner PSU
Awards(1)
|
|
$
|
(4)
|
|
|
$
|
(2)
|
|
|
$
|
(9)
|
|
|
$
|
(5)
|
|
Special Items,
Operating Profit
|
|
|
(4)
|
|
|
|
(2)
|
|
|
|
(9)
|
|
|
|
(5)
|
|
Tax effect on Special
Items(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Special Items, net
income – including noncontrolling interests
|
|
|
(4)
|
|
|
|
(2)
|
|
|
|
(9)
|
|
|
|
(5)
|
|
Special Items, net
income – noncontrolling interests
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
$
|
(4)
|
|
|
$
|
(2)
|
|
|
$
|
(9)
|
|
|
$
|
(5)
|
|
Weighted-average
Diluted Shares Outstanding (in millions)
|
|
|
420
|
|
|
|
424
|
|
|
|
421
|
|
|
|
426
|
|
Special Items, Diluted
Earnings Per Common Share
|
|
$
|
(0.01)
|
|
|
$
|
—
|
|
|
$
|
(0.02)
|
|
|
$
|
(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
|
|
|
9/30/2023
|
|
Company-owned
|
|
|
8,214
|
|
|
|
868
|
|
|
|
(164)
|
|
|
|
(3)
|
|
|
|
8,915
|
|
Franchisees
|
|
|
880
|
|
|
|
131
|
|
|
|
(12)
|
|
|
|
3
|
|
|
|
1,002
|
|
Total
|
|
|
9,094
|
|
|
|
999
|
|
|
|
(176)
|
|
|
|
—
|
|
|
|
9,917
|
|
Pizza Hut
|
|
12/31/2022
|
|
|
New Builds
|
|
|
Closures
|
|
|
Refranchised
|
|
|
9/30/2023
|
|
Company-owned
|
|
|
2,760
|
|
|
|
366
|
|
|
|
(77)
|
|
|
|
(2)
|
|
|
|
3,047
|
|
Franchisees
|
|
|
143
|
|
|
|
12
|
|
|
|
(2)
|
|
|
|
2
|
|
|
|
155
|
|
Total
|
|
|
2,903
|
|
|
|
378
|
|
|
|
(79)
|
|
|
|
—
|
|
|
|
3,202
|
|
Others
|
|
12/31/2022
|
|
|
New Builds
|
|
|
Closures
|
|
|
9/30/2023
|
|
Company-owned
|
|
|
187
|
|
|
|
59
|
|
|
|
(16)
|
|
|
|
230
|
|
Franchisees
|
|
|
763
|
|
|
|
84
|
|
|
|
(94)
|
|
|
|
753
|
|
Total
|
|
|
950
|
|
|
|
143
|
|
|
|
(110)
|
|
|
|
983
|
|
Yum China
Holdings, Inc.
|
Segment
Results
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter Ended
9/30/2023
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
2,154
|
|
|
$
|
591
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,759
|
|
Franchise fees and
income
|
|
|
16
|
|
|
|
2
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23
|
|
Revenues from
transactions with franchisees(2)
|
|
|
12
|
|
|
|
1
|
|
|
|
20
|
|
|
|
67
|
|
|
|
—
|
|
|
|
100
|
|
Other
revenues
|
|
|
4
|
|
|
|
5
|
|
|
|
162
|
|
|
|
12
|
|
|
|
(151)
|
|
|
|
32
|
|
Total
revenues
|
|
$
|
2,186
|
|
|
$
|
599
|
|
|
$
|
201
|
|
|
$
|
79
|
|
|
$
|
(151)
|
|
|
$
|
2,914
|
|
Company restaurant
expenses
|
|
|
1,754
|
|
|
|
516
|
|
|
|
20
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
2,289
|
|
General and
administrative expenses
|
|
|
68
|
|
|
|
30
|
|
|
|
11
|
|
|
|
60
|
|
|
|
—
|
|
|
|
169
|
|
Franchise
expenses
|
|
|
8
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
Expenses for
transactions with franchisees(2)
|
|
|
11
|
|
|
|
1
|
|
|
|
17
|
|
|
|
66
|
|
|
|
—
|
|
|
|
95
|
|
Other operating costs
and expenses
|
|
|
3
|
|
|
|
4
|
|
|
|
160
|
|
|
|
12
|
|
|
|
(150)
|
|
|
|
29
|
|
Total costs and
expenses, net
|
|
|
1,844
|
|
|
|
552
|
|
|
|
208
|
|
|
|
138
|
|
|
|
(151)
|
|
|
|
2,591
|
|
Operating Profit
(Loss)
|
|
$
|
342
|
|
|
$
|
47
|
|
|
$
|
(7)
|
|
|
$
|
(59)
|
|
|
$
|
—
|
|
|
$
|
323
|
|
Reconciliation of GAAP Operating Profit to Restaurant
Profit
|
|
Quarter Ended
9/30/2023
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated
|
|
|
Elimination
|
|
|
Total
|
|
GAAP Operating Profit
(Loss)
|
|
$
|
342
|
|
|
$
|
47
|
|
|
$
|
(7)
|
|
|
$
|
(59)
|
|
|
$
|
—
|
|
|
$
|
323
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise fees and
income
|
|
|
16
|
|
|
|
2
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23
|
|
Revenues from
transactions with franchisees
|
|
|
12
|
|
|
|
1
|
|
|
|
20
|
|
|
|
67
|
|
|
|
—
|
|
|
|
100
|
|
Other
revenues
|
|
|
4
|
|
|
|
5
|
|
|
|
162
|
|
|
|
12
|
|
|
|
(151)
|
|
|
|
32
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
|
68
|
|
|
|
30
|
|
|
|
11
|
|
|
|
60
|
|
|
|
—
|
|
|
|
169
|
|
Franchise
expenses
|
|
|
8
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
Expenses for
transactions with franchisees
|
|
|
11
|
|
|
|
1
|
|
|
|
17
|
|
|
|
66
|
|
|
|
—
|
|
|
|
95
|
|
Other operating costs
and expenses
|
|
|
3
|
|
|
|
4
|
|
|
|
160
|
|
|
|
12
|
|
|
|
(150)
|
|
|
|
29
|
|
Restaurant profit
(loss)
|
|
$
|
400
|
|
|
$
|
75
|
|
|
$
|
(6)
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
470
|
|
Company
sales
|
|
|
2,154
|
|
|
|
591
|
|
|
|
14
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,759
|
|
Restaurant margin
%
|
|
|
18.6
|
%
|
|
|
12.7
|
%
|
|
|
(36.1)
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
17.0
|
%
|
|
|
Quarter Ended
9/30/2022
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
1,992
|
|
|
$
|
556
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,561
|
|
Franchise fees and
income
|
|
|
15
|
|
|
|
2
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22
|
|
Revenues from
transactions with franchisees(2)
|
|
|
9
|
|
|
|
1
|
|
|
|
11
|
|
|
|
59
|
|
|
|
—
|
|
|
|
80
|
|
Other
revenues
|
|
|
1
|
|
|
|
2
|
|
|
|
157
|
|
|
|
12
|
|
|
|
(150)
|
|
|
|
22
|
|
Total
revenues
|
|
$
|
2,017
|
|
|
$
|
561
|
|
|
$
|
186
|
|
|
$
|
71
|
|
|
$
|
(150)
|
|
|
$
|
2,685
|
|
Company restaurant
expenses
|
|
|
1,582
|
|
|
|
481
|
|
|
|
18
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,081
|
|
General and
administrative expenses
|
|
|
63
|
|
|
|
27
|
|
|
|
12
|
|
|
|
55
|
|
|
|
—
|
|
|
|
157
|
|
Franchise
expenses
|
|
|
8
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
Expenses for
transactions with franchisees(2)
|
|
|
8
|
|
|
|
1
|
|
|
|
9
|
|
|
|
58
|
|
|
|
—
|
|
|
|
76
|
|
Other operating costs
and expenses
|
|
|
1
|
|
|
|
2
|
|
|
|
155
|
|
|
|
10
|
|
|
|
(150)
|
|
|
|
18
|
|
Closures and impairment
expenses, net
|
|
|
3
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Other expenses,
net
|
|
|
24
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
Total costs and
expenses, net
|
|
|
1,689
|
|
|
|
512
|
|
|
|
195
|
|
|
|
123
|
|
|
|
(150)
|
|
|
|
2,369
|
|
Operating Profit
(Loss)
|
|
$
|
328
|
|
|
$
|
49
|
|
|
$
|
(9)
|
|
|
$
|
(52)
|
|
|
$
|
—
|
|
|
$
|
316
|
|
Reconciliation of GAAP Operating Profit to Restaurant
Profit
|
|
Quarter Ended
9/30/2022
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated
|
|
|
Elimination
|
|
|
Total
|
|
GAAP Operating Profit
(Loss)
|
|
$
|
328
|
|
|
$
|
49
|
|
|
$
|
(9)
|
|
|
$
|
(52)
|
|
|
$
|
—
|
|
|
$
|
316
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise fees and
income
|
|
|
15
|
|
|
|
2
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22
|
|
Revenues from
transactions with franchisees
|
|
|
9
|
|
|
|
1
|
|
|
|
11
|
|
|
|
59
|
|
|
|
—
|
|
|
|
80
|
|
Other
revenues
|
|
|
1
|
|
|
|
2
|
|
|
|
157
|
|
|
|
12
|
|
|
|
(150)
|
|
|
|
22
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
|
63
|
|
|
|
27
|
|
|
|
12
|
|
|
|
55
|
|
|
|
—
|
|
|
|
157
|
|
Franchise
expenses
|
|
|
8
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
Expenses for
transactions with franchisees
|
|
|
8
|
|
|
|
1
|
|
|
|
9
|
|
|
|
58
|
|
|
|
—
|
|
|
|
76
|
|
Other operating costs
and expenses
|
|
|
1
|
|
|
|
2
|
|
|
|
155
|
|
|
|
10
|
|
|
|
(150)
|
|
|
|
18
|
|
Closures and impairment
expenses, net
|
|
|
3
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Other expenses,
net
|
|
|
24
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
Restaurant profit
(loss)
|
|
$
|
410
|
|
|
$
|
75
|
|
|
$
|
(5)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
480
|
|
Company
sales
|
|
|
1,992
|
|
|
|
556
|
|
|
|
13
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,561
|
|
Restaurant margin
%
|
|
|
20.6
|
%
|
|
|
13.4
|
%
|
|
|
(30.6)
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year to Date Ended
9/30/2023
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
6,274
|
|
|
$
|
1,728
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,048
|
|
Franchise fees and
income
|
|
|
48
|
|
|
|
6
|
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
69
|
|
Revenues from
transactions with franchisees(2)
|
|
|
33
|
|
|
|
3
|
|
|
|
56
|
|
|
|
190
|
|
|
|
—
|
|
|
|
282
|
|
Other
revenues
|
|
|
13
|
|
|
|
13
|
|
|
|
468
|
|
|
|
32
|
|
|
|
(440)
|
|
|
|
86
|
|
Total
revenues
|
|
$
|
6,368
|
|
|
$
|
1,750
|
|
|
$
|
585
|
|
|
$
|
222
|
|
|
$
|
(440)
|
|
|
$
|
8,485
|
|
Company restaurant
expenses
|
|
|
5,055
|
|
|
|
1,502
|
|
|
|
56
|
|
|
|
—
|
|
|
|
(2)
|
|
|
|
6,611
|
|
General and
administrative expenses
|
|
|
203
|
|
|
|
89
|
|
|
|
32
|
|
|
|
161
|
|
|
|
—
|
|
|
|
485
|
|
Franchise
expenses
|
|
|
24
|
|
|
|
3
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
Expenses for
transactions with franchisees(2)
|
|
|
29
|
|
|
|
3
|
|
|
|
50
|
|
|
|
188
|
|
|
|
—
|
|
|
|
270
|
|
Other operating costs
and expenses
|
|
|
11
|
|
|
|
11
|
|
|
|
463
|
|
|
|
30
|
|
|
|
(438)
|
|
|
|
77
|
|
Closures and impairment
expenses, net
|
|
|
9
|
|
|
|
5
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
Other expenses
(income), net
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
1
|
|
Total costs and
expenses, net
|
|
|
5,333
|
|
|
|
1,613
|
|
|
|
605
|
|
|
|
378
|
|
|
|
(440)
|
|
|
|
7,489
|
|
Operating Profit
(Loss)
|
|
$
|
1,035
|
|
|
$
|
137
|
|
|
$
|
(20)
|
|
|
$
|
(156)
|
|
|
$
|
—
|
|
|
$
|
996
|
|
Reconciliation of GAAP Operating Profit to Restaurant
Profit
|
|
Year to Date Ended
9/30/2023
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated
|
|
|
Elimination
|
|
|
Total
|
|
GAAP Operating Profit
(Loss)
|
|
$
|
1,035
|
|
|
$
|
137
|
|
|
$
|
(20)
|
|
|
$
|
(156)
|
|
|
$
|
—
|
|
|
$
|
996
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise fees and
income
|
|
|
48
|
|
|
|
6
|
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
69
|
|
Revenues from
transactions with franchisees
|
|
|
33
|
|
|
|
3
|
|
|
|
56
|
|
|
|
190
|
|
|
|
—
|
|
|
|
282
|
|
Other
revenues
|
|
|
13
|
|
|
|
13
|
|
|
|
468
|
|
|
|
32
|
|
|
|
(440)
|
|
|
|
86
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
|
203
|
|
|
|
89
|
|
|
|
32
|
|
|
|
161
|
|
|
|
—
|
|
|
|
485
|
|
Franchise
expenses
|
|
|
24
|
|
|
|
3
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
Expenses for
transactions with franchisees
|
|
|
29
|
|
|
|
3
|
|
|
|
50
|
|
|
|
188
|
|
|
|
—
|
|
|
|
270
|
|
Other operating costs
and expenses
|
|
|
11
|
|
|
|
11
|
|
|
|
463
|
|
|
|
30
|
|
|
|
(438)
|
|
|
|
77
|
|
Closures and impairment
expenses, net
|
|
|
9
|
|
|
|
5
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
Other expenses
(income), net
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
1
|
|
Restaurant profit
(loss)
|
|
$
|
1,219
|
|
|
$
|
226
|
|
|
$
|
(10)
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
1,437
|
|
Company
sales
|
|
|
6,274
|
|
|
|
1,728
|
|
|
|
46
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,048
|
|
Restaurant margin
%
|
|
|
19.4
|
%
|
|
|
13.1
|
%
|
|
|
(21.6)
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
17.9
|
%
|
|
|
Year to Date Ended
9/30/2022
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
5,554
|
|
|
$
|
1,541
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,135
|
|
Franchise fees and
income
|
|
|
44
|
|
|
|
6
|
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65
|
|
Revenues from
transactions with franchisees(2)
|
|
|
24
|
|
|
|
3
|
|
|
|
29
|
|
|
|
163
|
|
|
|
—
|
|
|
|
219
|
|
Other
revenues
|
|
|
6
|
|
|
|
6
|
|
|
|
407
|
|
|
|
31
|
|
|
|
(388)
|
|
|
|
62
|
|
Total
revenues
|
|
$
|
5,628
|
|
|
$
|
1,556
|
|
|
$
|
491
|
|
|
$
|
194
|
|
|
$
|
(388)
|
|
|
$
|
7,481
|
|
Company restaurant
expenses
|
|
|
4,632
|
|
|
|
1,370
|
|
|
|
55
|
|
|
|
—
|
|
|
|
2
|
|
|
|
6,059
|
|
General and
administrative expenses
|
|
|
191
|
|
|
|
84
|
|
|
|
36
|
|
|
|
138
|
|
|
|
—
|
|
|
|
449
|
|
Franchise
expenses
|
|
|
23
|
|
|
|
3
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27
|
|
Expenses for
transactions with franchisees(2)
|
|
|
22
|
|
|
|
3
|
|
|
|
24
|
|
|
|
163
|
|
|
|
—
|
|
|
|
212
|
|
Other operating costs
and expenses
|
|
|
4
|
|
|
|
5
|
|
|
|
406
|
|
|
|
28
|
|
|
|
(390)
|
|
|
|
53
|
|
Closures and impairment
expenses, net
|
|
|
11
|
|
|
|
1
|
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
Other expenses
(income), net
|
|
|
75
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2)
|
|
|
|
—
|
|
|
|
73
|
|
Total costs and
expenses, net
|
|
|
4,958
|
|
|
|
1,466
|
|
|
|
530
|
|
|
|
327
|
|
|
|
(388)
|
|
|
|
6,893
|
|
Operating Profit
(Loss)
|
|
$
|
670
|
|
|
$
|
90
|
|
|
$
|
(39)
|
|
|
$
|
(133)
|
|
|
$
|
—
|
|
|
$
|
588
|
|
Reconciliation of GAAP Operating Profit to Restaurant
Profit
|
|
Year to Date Ended
9/30/2022
|
|
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated
|
|
|
Elimination
|
|
|
Total
|
|
GAAP Operating Profit
(Loss)
|
|
$
|
670
|
|
|
$
|
90
|
|
|
$
|
(39)
|
|
|
$
|
(133)
|
|
|
$
|
—
|
|
|
$
|
588
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise fees and
income
|
|
|
44
|
|
|
|
6
|
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65
|
|
Revenues from
transactions with franchisees
|
|
|
24
|
|
|
|
3
|
|
|
|
29
|
|
|
|
163
|
|
|
|
—
|
|
|
|
219
|
|
Other
revenues
|
|
|
6
|
|
|
|
6
|
|
|
|
407
|
|
|
|
31
|
|
|
|
(388)
|
|
|
|
62
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
|
191
|
|
|
|
84
|
|
|
|
36
|
|
|
|
138
|
|
|
|
—
|
|
|
|
449
|
|
Franchise
expenses
|
|
|
23
|
|
|
|
3
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27
|
|
Expenses for
transactions with franchisees
|
|
|
22
|
|
|
|
3
|
|
|
|
24
|
|
|
|
163
|
|
|
|
—
|
|
|
|
212
|
|
Other operating costs
and expenses
|
|
|
4
|
|
|
|
5
|
|
|
|
406
|
|
|
|
28
|
|
|
|
(390)
|
|
|
|
53
|
|
Closures and impairment
expenses, net
|
|
|
11
|
|
|
|
1
|
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
Other expenses
(income), net
|
|
|
75
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2)
|
|
|
|
—
|
|
|
|
73
|
|
Restaurant profit
(loss)
|
|
$
|
922
|
|
|
$
|
171
|
|
|
$
|
(15)
|
|
|
$
|
—
|
|
|
$
|
(2)
|
|
|
$
|
1,076
|
|
Company
sales
|
|
|
5,554
|
|
|
|
1,541
|
|
|
|
40
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,135
|
|
Restaurant margin
%
|
|
|
16.6
|
%
|
|
|
11.1
|
%
|
|
|
(36.3)
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
15.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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-third-quarter-2023-results-301972719.html
SOURCE Yum China Holdings, Inc.