Total Revenues grew 5%; System Sales grew 5%
in constant currency, despite temporary closures
Delivered $316 million Operating
Profit, representing 77% growth, through strong
execution
Opened 621 net new stores year-to-date,
on track to meet full-year net new store target of 1,000 to
1,200
SHANGHAI, Nov. 1, 2022
/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, 2022.
Impact of COVID Outbreak and Mitigation Efforts
The COVID pandemic continued to impact the Company's operations
and results in the third quarter. COVID-related health measures
remained in effect across China, impacting travel and social
activities. Despite the volatile environment, the Company grew
system sales in the quarter by 5% year over year and outpaced the
2% national restaurant industry average for the period.
We captured the growing demand for delivery and takeaway which
offset the subdued dine-in volume. Same-store sales for the quarter
recovered to the same level a year ago but remain below pre-COVID
2019 levels. From a timing perspective, same-store sales recovered
sequentially in July and August, with August exceeding the prior
year level. This is primarily due to lapping the Delta variant
outbreak in the prior year period. However, same-store sales
percentage declined year over year in September as preventive
health measures were tightened. In September, on average,
approximately 900 of our stores were temporarily closed or offered
only takeaway and delivery services, compared to approximately 400
stores on average in July and August.
Entering the fourth quarter, new infections continued to
increase in October with resurgent outbreaks across China. In
October, approximately 1,400 of our stores were either temporarily
closed or offered only takeaway and delivery services. Nationwide,
consumers are traveling less and reducing expenditures. According
to government statistics, for the seven-day National Day holiday
starting October 1, the number of
travelers and related travel spending was down 18% and 26%,
respectively, compared to the same holiday period last year. The
COVID situations remain uncertain with regional outbreaks
continuing to impact our operations. Against this backdrop, we will
stay nimble with our contingency planning, ready to pivot with
changing market conditions.
Third Quarter Highlights
- Total revenues increased 5% year over year to
$2.68 billion from $2.55 billion (an 11% increase excluding foreign
currency translation ("F/X")).
- Total system sales increased 5% year over year, with
increases of 5% at KFC and 7% at Pizza Hut, excluding F/X.
- Same-store sales were flat year over year, with flat
growth at KFC and an increase of 2% at Pizza Hut, excluding
F/X.
- Opened 239 net new stores during the quarter; total
store count reached 12,409 as of September
30, 2022.
- Restaurant margin was 18.8%, compared with 12.2% in the
prior year period.
- Operating Profit increased 77% year over year to
$316 million from $178 million (an 86% increase excluding
F/X).
- Adjusted Operating Profit increased 89% year over year
to $318 million from $168 million (a 99% increase excluding F/X).
- Effective tax rate was 29.9%.
- Net Income increased 98% to $206
million from $104 million in
the prior year period, primarily due to the increase in Operating
Profit, partially offset by the net loss from our mark-to-market
investment in Meituan Dianping.
- Adjusted Net Income increased 117% to $208 million from $96
million in the prior year period (a 72% increase excluding
the net losses of $12 million and
$32 million in the third quarter of
2022 and 2021, respectively, from our mark-to-market equity
investments; an 81% increase if further excluding F/X).
- Diluted EPS increased 104% to $0.49 from $0.24 in
the prior year period.
- Adjusted Diluted EPS increased 123% to $0.49 from $0.22 in
the prior year period (a 79% increase excluding the net losses from
our mark-to-market equity investments in the third quarter of 2022
and 2021, respectively, a 90% increase if further excluding
F/X).
- Results for the current year period include the consolidation
of Hangzhou KFC.
Key Financial Results
|
Third Quarter
2022
|
|
|
Year to Date Ended
9/30/2022
|
|
|
%
Change
|
|
|
%
Change
|
|
|
System
Sales
|
|
Same-
Store Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
|
System
Sales
|
|
Same-
Store Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
Yum China
|
+5
|
|
-
|
|
+9
|
|
+77
|
|
|
(5)
|
|
(8)
|
|
+9
|
|
(22)
|
|
KFC
|
+5
|
|
-
|
|
+10
|
|
+67
|
|
|
(5)
|
|
(8)
|
|
+10
|
|
(12)
|
|
Pizza
Hut
|
+7
|
|
+2
|
|
+12
|
|
+159
|
|
|
(3)
|
|
(6)
|
|
+12
|
|
(23)
|
|
|
|
Third
Quarter
|
|
|
|
Year to Date Ended
9/30
|
(in US$ million, except
per share data and percentages)
|
|
|
|
|
|
%
Change
|
|
|
|
|
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
Reported
|
|
Ex F/X
|
|
|
|
2022
|
|
|
2021
|
Reported
|
|
Ex F/X
|
Operating
Profit
|
$
|
316
|
|
$
|
178
|
+77
|
|
+86
|
|
|
$
|
588
|
|
$
|
753
|
(22)
|
|
(20)
|
Adjusted Operating
Profit(1)
|
$
|
318
|
|
$
|
168
|
+89
|
|
+99
|
|
|
$
|
593
|
|
$
|
750
|
(21)
|
|
(19)
|
Net Income
|
$
|
206
|
|
$
|
104
|
+98
|
|
+109
|
|
|
$
|
389
|
|
$
|
515
|
(25)
|
|
(22)
|
Adjusted Net
Income(1)
|
$
|
208
|
|
$
|
96
|
+117
|
|
+128
|
|
|
$
|
394
|
|
$
|
514
|
(23)
|
|
(21)
|
Basic Earnings Per
Common Share
|
$
|
0.49
|
|
$
|
0.25
|
+96
|
|
+108
|
|
|
$
|
0.92
|
|
$
|
1.23
|
(25)
|
|
(23)
|
Adjusted Basic
Earnings
Per Common Share(1)
|
$
|
0.49
|
|
$
|
0.23
|
+113
|
|
+126
|
|
|
$
|
0.93
|
|
$
|
1.22
|
(24)
|
|
(21)
|
Diluted Earnings Per
Common Share
|
$
|
0.49
|
|
$
|
0.24
|
+104
|
|
+113
|
|
|
$
|
0.92
|
|
$
|
1.19
|
(23)
|
|
(21)
|
Adjusted Diluted
Earnings
Per Common Share(1)
|
$
|
0.49
|
|
$
|
0.22
|
+123
|
|
+136
|
|
|
$
|
0.93
|
|
$
|
1.18
|
(21)
|
|
(19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 achieved outstanding
performance in the third quarter with fantastic growth, both
top-line and bottom-line. In the past two years, we have learned to
navigate through uncertainties and volatilities. During tougher
times, our resilient business model and agility has helped us to
effectively manage the negative impact of the pandemic. As the
market situation became relatively calmer in July and August, we
successfully captured the upsides and delivered strong results. By
adapting and innovating, we have further strengthened our business
fundamentals. Our efforts to improve our cost structure make us
more nimble and efficient. This allows us to offer great value to
customers without sacrificing profitability. Our in-house and
tailor-made supply chain management system empowers us to innovate
amazing new products and launch at scale with great speed. In just
two years, we established expertise in beef burgers, capturing
meaningful market share. Also, our digital capabilities continue to
lead the industry. Our loyalty programs now have over 400 million
members with great potential to be unleashed."
Wat continued, "I am also excited about our recent Hong Kong primary listing conversion and
inclusion in Southbound Stock Connect programs. We believe this new
status will provide additional access to investors and broaden our
shareholder base. Looking ahead, we are confident about unlocking
the long-term opportunities in China. Our innovation in store formats has
enabled us to further penetrate and continue to lower upfront
investment. The strong performance of our new stores gives us
confidence to open new and profitable stores at a robust pace. We
will continue to execute our RGM (Resilience-Growth-Moat) strategic
framework to capture growth opportunities and bolster our
market-leading position amidst rapidly changing
conditions."
Andy Yeung, CFO of Yum China, stated, "We expanded restaurant
margins and delivered meaningful growth in operating profit in the
quarter. This was achieved by our continuous efforts in rebasing
the cost structure, improving efficiencies and securing temporary
reliefs. Compared to substantial sales deleveraging headwinds in
past quarters, we benefited from favorable operating leverage in
the third quarter with sequential improvement in sales. Looking
into the fourth quarter, we expect the COVID situation to remain
uncertain. Conditions in October continued to deteriorate from
September. Intermittent outbreaks along with downward pressure on
the economy and cautious consumer spending are likely to negatively
impact sales momentum. At the same time, we continue to face cost
pressures from the inflationary environment. Fourth quarter is
seasonally a low quarter in terms of sales and profit, thus
profitability could be more susceptible to fluctuations in sales
and operations. Despite the headwinds, we have strong capabilities
to capture sales and proactively manage cost. We remain committed
to growing our store portfolio and generating shareholder returns
for the long term."
Share Repurchases and Dividends
- During the third quarter, we repurchased approximately 0.27
million shares of Yum China common
stock for $13 million at an average
price of $48.05 per share. As of
September 30, 2022, approximately
$1.2 billion remained available for
future share repurchases under the current authorization.
- The Board of Directors declared a cash dividend of $0.12 per share on Yum
China's common stock, payable on December 20, 2022 to shareholders of record as of
the close of business on November 29,
2022.
- Year to date ended September 30,
2022, the Company has returned approximately $565 million of capital to shareholders in the
form of share repurchases and cash dividends. The Company remains
committed to a disciplined capital allocation strategy that
balances returning capital to the shareholders and investing in the
business for continued growth.
Digital and Delivery
- The KFC and Pizza Hut loyalty programs exceeded 400 million
members combined, as of quarter-end. Member sales accounted for
approximately 62% of system sales in the third quarter of
2022.
- Delivery contributed approximately 38% of KFC and Pizza Hut's
Company sales in the third quarter of 2022, an increase of
approximately four percentage points from the prior year period.
With the volatile COVID situation, delivery continued to be a
popular option while dine-in volumes remained subdued.
- Digital orders, including delivery, mobile orders and kiosk
orders, accounted for approximately 91% of KFC and Pizza Hut's
Company sales in the third quarter of 2022.
KFC and Pizza Hut
Total
|
|
Third
Quarter
|
|
|
Year to Date Ended
9/30
|
|
|
|
2022
|
|
2021
|
|
|
2022
|
|
2021
|
|
Member
count (as of period-end)
|
|
400 million+
|
|
350 million+
|
|
|
400 million+
|
|
350 million+
|
|
Member
sales as % of system sales
|
|
~62%
|
|
~63%
|
|
|
~62%
|
|
~64%
|
|
Delivery
as % of Company sales
|
|
~38%
|
|
~34%
|
|
|
~37%
|
|
~32%
|
|
Digital
orders as % of Company sales
|
|
~91%
|
|
~87%
|
|
|
~89%
|
|
~86%
|
|
New-Unit Development and Asset Upgrade
- The Company opened 403 gross new stores, or 239 net new stores
in the third quarter of 2022, mainly driven by development of the
KFC and Pizza Hut brands.
- The Company remodeled 99 stores in the third quarter of
2022.
|
|
Net New
Units
|
|
|
Restaurant
Count
|
|
|
|
Third
Quarter
|
|
Year to
Date
|
|
|
As of September
30
|
|
|
|
2022
|
|
Ended
9/30/2022
|
|
|
2022
|
|
2021
|
|
Yum China
|
|
239
|
|
621
|
|
|
12,409
|
|
11,415
|
|
KFC
|
|
165
|
|
507
|
|
|
8,675
|
|
7,908
|
|
Pizza
Hut
|
|
95
|
|
216
|
|
|
2,806
|
|
2,503
|
|
Others(2)
|
|
(21)
|
|
(102)
|
|
|
928
|
|
1,004
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Others
include Taco Bell, Little Sheep, Huang Ji Huang, East Dawning,
COFFii & JOY and Lavazza.
|
Restaurant Margin
- Restaurant margin was 18.8% in the third quarter of 2022,
compared with 12.2% in the prior year period, primarily
attributable to higher productivity, temporary relief and sales
leveraging, partially offset by inflation in commodity, wage and
utility costs, as well as increased rider cost associated with
rising delivery volumes.
|
Third
Quarter
|
|
|
Year to Date Ended
9/30
|
|
|
|
2022
|
|
2021
|
|
ppts
change
|
|
|
2022
|
|
2021
|
|
ppts
change
|
|
Yum China
|
|
18.8 %
|
|
12.2 %
|
|
+6.6
|
|
|
15.1 %
|
|
15.6 %
|
|
(0.5)
|
|
KFC
|
|
20.6 %
|
|
13.6 %
|
|
+7.0
|
|
|
16.6 %
|
|
16.8 %
|
|
(0.2)
|
|
Pizza
Hut
|
|
13.4 %
|
|
8.2 %
|
|
+5.2
|
|
|
11.1 %
|
|
12.2 %
|
|
(1.1)
|
|
2022 Outlook
Yum China remains focused on
capturing long-term opportunities in China. The Company's fiscal year 2022 targets
remain unchanged from those originally disclosed on February 8, 2022:
- To open approximately 1,000 to 1,200 net new stores.
- To make capital expenditures in the range of approximately
$800 million to $1 billion.
Other Updates
- On October 24, 2022, the
Company's voluntary conversion of its secondary listing status to a
primary listing status on the Main Board of the Stock Exchange of
Hong Kong Limited ("HKEX") became effective. Yum China is now a dual primary listed company
on the HKEX and New York Stock Exchange. The Company's common stock
listed on the two exchanges will continue to be fully
fungible. On the same day, the Company's shares of
common stock traded on the HKEX were included in the Shanghai-Hong
Kong Stock Connect and Shenzhen-Hong Kong Stock Connect.
Note on Non-GAAP Adjusted 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.
Conference Call
Yum China's management will hold
an earnings conference call at 8:00
p.m. U.S. Eastern Time on Tuesday,
November 1, 2022 (8:00 a.m.
Beijing/Hong Kong Time on
Wednesday, November 2,
2022).
A live webcast of the call may be accessed at
https://edge.media-server.com/mmc/p/ny6cyocx.
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/10025527-ei8ios.html
A replay of the conference call will be available one hour after
the call ends until Wednesday, November 9,
2022 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 PIN:
10025527
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
"2022 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, liquidity, earnings, performance and
returns of Yum China, anticipated
effects of population and macroeconomic trends, the expected impact
of the COVID-19 pandemic, 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 and regional outbreaks caused by existing or new COVID-19
variants, 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 Holdings, Inc. is a licensee of Yum! Brands in
mainland China. It has exclusive rights in mainland China to KFC,
China's leading quick-service restaurant brand, Pizza Hut, the
leading casual dining restaurant brand in China, and Taco Bell, a California-based restaurant chain serving
innovative Mexican-inspired food. Yum
China also owns the Little Sheep, Huang Ji Huang and COFFii & JOY concepts
outright. In addition, Yum China has
partnered with Lavazza to explore and develop the Lavazza coffee
shop concept in China. The Company
had 12,409 restaurants in over 1,700 cities at the end of
September 2022.
In 2021, Yum China was selected
as a member of both Dow Jones Sustainability Indices (DJSI): World
Index and Emerging Market Index. In 2022, Yum China ranked 359th on the Fortune
500 list. The Company was also named to the Bloomberg
Gender-Equality Index and was certified as a Top Employer 2022 in
China by the Top Employers
Institute, both for the fourth consecutive year. 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
|
|
|
9/30/2022
|
|
9/30/2021
|
|
B/(W)
|
|
9/30/2022
|
|
9/30/2021
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$ 2,561
|
|
$ 2,310
|
|
11
|
|
|
$ 7,135
|
|
$ 6,874
|
|
4
|
|
Franchise fees and
income
|
|
22
|
|
40
|
|
(45)
|
|
|
65
|
|
120
|
|
(46)
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
80
|
|
184
|
|
(57)
|
|
|
219
|
|
519
|
|
(58)
|
|
Other
revenues
|
|
22
|
|
20
|
|
11
|
|
|
62
|
|
49
|
|
27
|
|
Total
revenues
|
|
2,685
|
|
2,554
|
|
5
|
|
|
7,481
|
|
7,562
|
|
(1)
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
787
|
|
743
|
|
(6)
|
|
|
2,206
|
|
2,133
|
|
(3)
|
|
Payroll and employee
benefits
|
|
603
|
|
591
|
|
(2)
|
|
|
1,819
|
|
1,675
|
|
(9)
|
|
Occupancy and other
operating expenses
|
|
691
|
|
694
|
|
—
|
|
|
2,034
|
|
1,995
|
|
(2)
|
|
Company restaurant
expenses
|
|
2,081
|
|
2,028
|
|
(3)
|
|
|
6,059
|
|
5,803
|
|
(4)
|
|
General and
administrative expenses
|
|
157
|
|
142
|
|
(10)
|
|
|
449
|
|
408
|
|
(10)
|
|
Franchise
expenses
|
|
9
|
|
17
|
|
46
|
|
|
27
|
|
50
|
|
45
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
76
|
|
180
|
|
57
|
|
|
212
|
|
509
|
|
58
|
|
Other operating costs
and expenses
|
|
18
|
|
17
|
|
(4)
|
|
|
53
|
|
41
|
|
(28)
|
|
Closures and impairment
expenses, net
|
|
4
|
|
2
|
|
(135)
|
|
|
20
|
|
13
|
|
(53)
|
|
Other expenses
(income), net
|
|
24
|
|
(10)
|
|
NM
|
|
|
73
|
|
(15)
|
|
NM
|
|
Total costs and
expenses, net
|
|
2,369
|
|
2,376
|
|
—
|
|
|
6,893
|
|
6,809
|
|
(1)
|
|
Operating
Profit
|
|
316
|
|
178
|
|
77
|
|
|
588
|
|
753
|
|
(22)
|
|
Interest income,
net
|
|
25
|
|
16
|
|
51
|
|
|
51
|
|
47
|
|
8
|
|
Investment
loss
|
|
(15)
|
|
(39)
|
|
61
|
|
|
(32)
|
|
(43)
|
|
26
|
|
Income Before Income
Taxes and
Equity in Net Earnings (Losses) from
Equity Method Investments
|
|
326
|
|
155
|
|
110
|
|
|
607
|
|
757
|
|
(20)
|
|
Income tax
provision
|
|
(97)
|
|
(44)
|
|
(121)
|
|
|
(183)
|
|
(210)
|
|
13
|
|
Equity in net earnings
(losses) from
equity method investments
|
|
(2)
|
|
—
|
|
NM
|
|
|
(4)
|
|
—
|
|
NM
|
|
Net income – including
noncontrolling interests
|
|
227
|
|
111
|
|
103
|
|
|
420
|
|
547
|
|
(23)
|
|
Net income –
noncontrolling interests
|
|
21
|
|
7
|
|
(171)
|
|
|
31
|
|
32
|
|
5
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
206
|
|
$
104
|
|
98
|
|
|
$
389
|
|
$
515
|
|
(25)
|
|
Effective tax
rate
|
|
29.9 %
|
|
28.3 %
|
|
(1.6)
|
ppts.
|
|
30.1 %
|
|
27.7 %
|
|
(2.4)
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
0.49
|
|
$
0.25
|
|
|
|
|
$
0.92
|
|
$
1.23
|
|
|
|
Weighted-average shares
outstanding
(in millions)
|
|
420
|
|
422
|
|
|
|
|
422
|
|
421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Common Share
|
|
$
0.49
|
|
$
0.24
|
|
|
|
|
$
0.92
|
|
$
1.19
|
|
|
|
Weighted-average shares
outstanding
(in millions)
|
|
424
|
|
435
|
|
|
|
|
426
|
|
435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends
Declared Per Common Share
|
|
$
0.12
|
|
$
0.12
|
|
|
|
|
$
0.36
|
|
$
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
100.0 %
|
|
100.0 %
|
|
|
|
|
100.0 %
|
|
100.0 %
|
|
|
|
Food and
paper
|
|
30.7
|
|
32.2
|
|
1.5
|
ppts.
|
|
30.9
|
|
31.0
|
|
0.1
|
ppts.
|
Payroll and employee
benefits
|
|
23.5
|
|
25.6
|
|
2.1
|
ppts.
|
|
25.5
|
|
24.4
|
|
(1.1)
|
ppts.
|
Occupancy and other
operating expenses
|
|
27.0
|
|
30.0
|
|
3.0
|
ppts.
|
|
28.5
|
|
29.0
|
|
0.5
|
ppts.
|
Restaurant
margin
|
|
18.8 %
|
|
12.2 %
|
|
6.6
|
ppts.
|
|
15.1 %
|
|
15.6 %
|
|
(0.5)
|
ppts.
|
Operating
margin
|
|
12.3 %
|
|
7.7 %
|
|
4.6
|
ppts.
|
|
8.2 %
|
|
11.0 %
|
|
(2.8)
|
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
|
|
|
9/30/2022
|
|
9/30/2021
|
|
B/(W)
|
|
9/30/2022
|
|
9/30/2021
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$ 1,992
|
|
$ 1,750
|
|
14
|
|
|
$ 5,554
|
|
$ 5,220
|
|
6
|
|
Franchise fees and
income
|
|
15
|
|
32
|
|
(52)
|
|
|
44
|
|
95
|
|
(53)
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
9
|
|
17
|
|
(47)
|
|
|
24
|
|
46
|
|
(48)
|
|
Other
revenues
|
|
1
|
|
2
|
|
(33)
|
|
|
6
|
|
6
|
|
(1)
|
|
Total
revenues
|
|
2,017
|
|
1,801
|
|
12
|
|
|
5,628
|
|
5,367
|
|
5
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
607
|
|
567
|
|
(7)
|
|
|
1,712
|
|
1,629
|
|
(5)
|
|
Payroll and employee
benefits
|
|
449
|
|
425
|
|
(5)
|
|
|
1,363
|
|
1,214
|
|
(12)
|
|
Occupancy and other
operating expenses
|
|
526
|
|
520
|
|
(1)
|
|
|
1,557
|
|
1,500
|
|
(4)
|
|
Company restaurant
expenses
|
|
1,582
|
|
1,512
|
|
(5)
|
|
|
4,632
|
|
4,343
|
|
(7)
|
|
General and
administrative expenses
|
|
63
|
|
62
|
|
(1)
|
|
|
191
|
|
175
|
|
(9)
|
|
Franchise
expenses
|
|
8
|
|
16
|
|
49
|
|
|
23
|
|
47
|
|
50
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
8
|
|
16
|
|
49
|
|
|
22
|
|
45
|
|
51
|
|
Other operating costs
and expenses
|
|
1
|
|
2
|
|
5
|
|
|
4
|
|
3
|
|
(22)
|
|
Closures and impairment
expenses, net
|
|
3
|
|
1
|
|
(114)
|
|
|
11
|
|
7
|
|
(40)
|
|
Other expenses
(income), net
|
|
24
|
|
(4)
|
|
NM
|
|
|
75
|
|
(16)
|
|
NM
|
|
Total costs and
expenses, net
|
|
1,689
|
|
1,605
|
|
(5)
|
|
|
4,958
|
|
4,604
|
|
(8)
|
|
Operating
Profit
|
|
$
328
|
|
$
196
|
|
67
|
|
|
$
670
|
|
$
763
|
|
(12)
|
|
Company
sales
|
|
100.0 %
|
|
100.0 %
|
|
|
|
|
100.0 %
|
|
100.0 %
|
|
|
|
Food and
paper
|
|
30.5
|
|
32.4
|
|
1.9
|
ppts.
|
|
30.8
|
|
31.2
|
|
0.4
|
ppts.
|
Payroll and employee
benefits
|
|
22.5
|
|
24.3
|
|
1.8
|
ppts.
|
|
24.5
|
|
23.3
|
|
(1.2)
|
ppts.
|
Occupancy and other
operating expenses
|
|
26.4
|
|
29.7
|
|
3.3
|
ppts.
|
|
28.1
|
|
28.7
|
|
0.6
|
ppts.
|
Restaurant
margin
|
|
20.6 %
|
|
13.6 %
|
|
7.0
|
ppts.
|
|
16.6 %
|
|
16.8 %
|
|
(0.2)
|
ppts.
|
Operating
margin
|
|
16.5 %
|
|
11.2 %
|
|
5.3
|
ppts.
|
|
12.1 %
|
|
14.6 %
|
|
(2.5)
|
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
|
|
Year to Date
Ended
|
|
%
Change
|
|
|
9/30/2022
|
|
9/30/2021
|
|
B/(W)
|
|
9/30/2022
|
|
9/30/2021
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
556
|
|
$
546
|
|
2
|
|
|
$ 1,541
|
|
$ 1,617
|
|
(5)
|
|
Franchise fees and
income
|
|
2
|
|
2
|
|
(9)
|
|
|
6
|
|
6
|
|
(1)
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
1
|
|
2
|
|
(33)
|
|
|
3
|
|
5
|
|
(35)
|
|
Other
revenues
|
|
2
|
|
1
|
|
158
|
|
|
6
|
|
2
|
|
NM
|
|
Total
revenues
|
|
561
|
|
551
|
|
2
|
|
|
1,556
|
|
1,630
|
|
(4)
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
176
|
|
173
|
|
(2)
|
|
|
481
|
|
493
|
|
3
|
|
Payroll and employee
benefits
|
|
149
|
|
161
|
|
7
|
|
|
437
|
|
450
|
|
3
|
|
Occupancy and other
operating expenses
|
|
156
|
|
168
|
|
7
|
|
|
452
|
|
478
|
|
5
|
|
Company restaurant
expenses
|
|
481
|
|
502
|
|
4
|
|
|
1,370
|
|
1,421
|
|
4
|
|
General and
administrative expenses
|
|
27
|
|
27
|
|
1
|
|
|
84
|
|
80
|
|
(5)
|
|
Franchise
expenses
|
|
1
|
|
1
|
|
10
|
|
|
3
|
|
3
|
|
6
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
1
|
|
2
|
|
30
|
|
|
3
|
|
5
|
|
34
|
|
Other operating costs
and expenses
|
|
2
|
|
1
|
|
(199)
|
|
|
5
|
|
1
|
|
NM
|
|
Closures and impairment
expenses, net
|
|
—
|
|
—
|
|
(36)
|
|
|
1
|
|
3
|
|
85
|
|
Total costs and
expenses, net
|
|
512
|
|
533
|
|
4
|
|
|
1,466
|
|
1,513
|
|
3
|
|
Operating
Profit
|
|
$
49
|
|
$
18
|
|
159
|
|
|
$
90
|
|
$
117
|
|
(23)
|
|
Company
sales
|
|
100.0 %
|
|
100.0 %
|
|
|
|
|
100.0 %
|
|
100.0 %
|
|
|
|
Food and
paper
|
|
31.6
|
|
31.5
|
|
(0.1)
|
ppts.
|
|
31.2
|
|
30.5
|
|
(0.7)
|
ppts.
|
Payroll and employee
benefits
|
|
26.9
|
|
29.5
|
|
2.6
|
ppts.
|
|
28.4
|
|
27.8
|
|
(0.6)
|
ppts.
|
Occupancy and other
operating expenses
|
|
28.1
|
|
30.8
|
|
2.7
|
ppts.
|
|
29.3
|
|
29.5
|
|
0.2
|
ppts.
|
Restaurant
margin
|
|
13.4 %
|
|
8.2 %
|
|
5.2
|
ppts.
|
|
11.1 %
|
|
12.2 %
|
|
(1.1)
|
ppts.
|
Operating
margin
|
|
8.8 %
|
|
3.5 %
|
|
5.3
|
ppts.
|
|
5.9 %
|
|
7.2 %
|
|
(1.3)
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentages may not
recompute due to rounding. NM refers to not meaningful.
|
Yum China Holdings,
Inc.
|
Condensed
Consolidated Balance Sheets
|
(in US$
million)
|
|
|
|
|
|
|
|
9/30/2022
|
|
12/31/2021
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,211
|
|
$
1,136
|
Short-term
investments
|
|
2,826
|
|
2,860
|
Accounts receivable,
net
|
|
66
|
|
67
|
Inventories,
net
|
|
321
|
|
432
|
Prepaid expenses and
other current assets
|
|
286
|
|
221
|
Total Current
Assets
|
|
4,710
|
|
4,716
|
Property, plant and
equipment, net
|
|
1,965
|
|
2,251
|
Operating lease
right-of-use assets
|
|
2,154
|
|
2,612
|
Goodwill
|
|
1,927
|
|
2,142
|
Intangible assets,
net
|
|
176
|
|
272
|
Investments in
unconsolidated affiliates
|
|
256
|
|
292
|
Deferred income tax
assets
|
|
89
|
|
106
|
Other assets
|
|
419
|
|
832
|
Total
Assets
|
|
11,696
|
|
13,223
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
1,992
|
|
2,332
|
Income taxes
payable
|
|
112
|
|
51
|
Total Current
Liabilities
|
|
2,104
|
|
2,383
|
Non-current operating
lease liabilities
|
|
1,862
|
|
2,286
|
Non-current finance
lease liabilities
|
|
36
|
|
40
|
Deferred income tax
liabilities
|
|
370
|
|
425
|
Other
liabilities
|
|
156
|
|
167
|
Total
Liabilities
|
|
4,528
|
|
5,301
|
|
|
|
|
|
Redeemable
Noncontrolling Interest
|
|
13
|
|
14
|
|
|
|
|
|
Equity
|
|
|
|
|
Common stock,
$0.01 par value; 1,000 million shares authorized; 419 million
shares and
449 million shares issued at September 30, 2022
and December 31, 2021, respectively; 419
million shares and 428 million shares
outstanding at September 30, 2022 and December 31,
2021, respectively
|
|
4
|
|
4
|
Treasury
stock
|
|
—
|
|
(803)
|
Additional paid-in
capital
|
|
4,408
|
|
4,695
|
Retained
earnings
|
|
2,228
|
|
2,892
|
Accumulated other
comprehensive (loss) income
|
|
(222)
|
|
268
|
Total Yum China
Holdings, Inc. Stockholders' Equity
|
|
6,418
|
|
7,056
|
Noncontrolling
interests
|
|
737
|
|
852
|
Total
Equity
|
|
7,155
|
|
7,908
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
|
$ 11,696
|
|
$
13,223
|
Yum China Holdings,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(in US$
million)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Year to Date
Ended
|
|
|
9/30/2022
|
|
9/30/2021
|
Cash Flows –
Operating Activities
|
|
|
|
|
|
|
Net income – including
noncontrolling interests
|
|
|
$
420
|
|
|
$
547
|
Depreciation and
amortization
|
|
|
467
|
|
|
380
|
Non-cash operating
lease cost
|
|
|
333
|
|
|
310
|
Closures and impairment
expenses
|
|
|
20
|
|
|
13
|
Gain from
re-measurement of equity interest upon acquisition
|
|
|
—
|
|
|
(10)
|
Investment
loss
|
|
|
32
|
|
|
43
|
Equity income from
investments in unconsolidated affiliates
|
|
|
—
|
|
|
(38)
|
Distributions of income
received from unconsolidated affiliates
|
|
|
7
|
|
|
21
|
Deferred income
taxes
|
|
|
(7)
|
|
|
17
|
Share-based
compensation expense
|
|
|
31
|
|
|
32
|
Changes in accounts
receivable
|
|
|
(6)
|
|
|
2
|
Changes in
inventories
|
|
|
71
|
|
|
13
|
Changes in prepaid
expenses, other current assets and VAT assets
|
|
|
216
|
|
|
—
|
Changes in accounts
payable and other current liabilities
|
|
|
(19)
|
|
|
82
|
Changes in income taxes
payable
|
|
|
70
|
|
|
(5)
|
Changes in non-current
operating lease liabilities
|
|
|
(299)
|
|
|
(309)
|
Other, net
|
|
|
(7)
|
|
|
(24)
|
Net Cash Provided by
Operating Activities
|
|
|
1,329
|
|
|
1,074
|
|
|
|
|
|
|
|
Cash Flows –
Investing Activities
|
|
|
|
|
|
|
Capital
spending
|
|
|
(509)
|
|
|
(482)
|
Purchases of short-term
investments
|
|
|
(4,290)
|
|
|
(4,524)
|
Purchase of long-term
time deposits
|
|
|
—
|
|
|
(25)
|
Maturities of
short-term investments
|
|
|
4,226
|
|
|
4,544
|
Acquisition of
business, net of cash acquired
|
|
|
(23)
|
|
|
—
|
Acquisition of equity
investment
|
|
|
—
|
|
|
(261)
|
Other, net
|
|
|
3
|
|
|
5
|
Net Cash Used in
Investing Activities
|
|
|
(593)
|
|
|
(743)
|
Cash Flows –
Financing Activities
|
|
|
|
|
|
|
Repurchase of shares of
common stock
|
|
|
(411)
|
|
|
(32)
|
Cash dividends paid on
common stock
|
|
|
(152)
|
|
|
(152)
|
Dividends paid to
noncontrolling interests
|
|
|
(29)
|
|
|
(22)
|
Contribution from
noncontrolling interests
|
|
|
18
|
|
|
—
|
Payment of acquisition
related holdback
|
|
|
(7)
|
|
|
(8)
|
Other, net
|
|
|
(2)
|
|
|
(6)
|
Net Cash Used in
Financing Activities
|
|
|
(583)
|
|
|
(220)
|
Effect of Exchange
Rates on Cash, Cash Equivalents and Restricted Cash
|
|
|
(78)
|
|
|
9
|
Net Increase in
Cash, Cash Equivalents and Restricted Cash
|
|
|
75
|
|
|
120
|
Cash, Cash
Equivalents, and Restricted Cash - Beginning of
Period
|
|
|
1,136
|
|
|
1,158
|
Cash, Cash
Equivalents, and Restricted Cash - End of Period
|
|
|
$
1,211
|
|
|
$
1,278
|
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. Company
restaurant margin percentage is defined as Restaurant profit
divided by Company sales.
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.
The following table set forth the reconciliation of the most
directly comparable GAAP financial measures to the non-GAAP
adjusted financial measures.
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
9/30/2022
|
|
9/30/2021
|
|
9/30/2022
|
|
9/30/2021
|
Non-GAAP
Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
316
|
|
$
178
|
|
$
588
|
|
$
753
|
Special Items,
Operating Profit
|
|
(2)
|
|
10
|
|
(5)
|
|
3
|
Adjusted Operating
Profit
|
|
$
318
|
|
$
168
|
|
$
593
|
|
$
750
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
|
Net Income – Yum China
Holdings, Inc.
|
|
$
206
|
|
$
104
|
|
$
389
|
|
$
515
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
(2)
|
|
8
|
|
(5)
|
|
1
|
Adjusted Net Income –
Yum China Holdings, Inc.
|
|
$
208
|
|
$
96
|
|
$
394
|
|
$
514
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
0.49
|
|
$
0.25
|
|
$
0.92
|
|
$
1.23
|
Special Items, Basic
Earnings Per Common Share
|
|
—
|
|
0.02
|
|
(0.01)
|
|
0.01
|
Adjusted Basic Earnings
Per Common Share
|
|
$
0.49
|
|
$
0.23
|
|
$
0.93
|
|
$
1.22
|
Diluted Earnings Per
Common Share
|
|
$
0.49
|
|
$
0.24
|
|
$
0.92
|
|
$
1.19
|
Special Items, Diluted
Earnings Per Common Share
|
|
—
|
|
0.02
|
|
(0.01)
|
|
0.01
|
Adjusted Diluted
Earnings Per Common Share
|
|
$
0.49
|
|
$
0.22
|
|
$
0.93
|
|
$
1.18
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
29.9 %
|
|
28.3 %
|
|
30.1 %
|
|
27.7 %
|
Impact on effective tax
rate as a result of Special Items
|
|
0.2 %
|
|
(0.5) %
|
|
0.2 %
|
|
0.1 %
|
Adjusted effective tax
rate
|
|
29.7 %
|
|
28.8 %
|
|
29.9 %
|
|
27.6 %
|
Net income, along with the reconciliation to Adjusted EBITDA, is
presented below:
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
9/30/2022
|
|
9/30/2021
|
|
9/30/2022
|
|
9/30/2021
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Net Income – Yum China
Holdings, Inc.
|
|
$
206
|
|
$
104
|
|
$
389
|
|
$
515
|
Net income –
noncontrolling interests
|
|
21
|
|
7
|
|
31
|
|
32
|
Equity in net
(earnings) losses from equity method investments
|
|
2
|
|
—
|
|
4
|
|
—
|
Income tax
provision
|
|
97
|
|
44
|
|
183
|
|
210
|
Interest income,
net
|
|
(25)
|
|
(16)
|
|
(51)
|
|
(47)
|
Investment
loss
|
|
15
|
|
39
|
|
32
|
|
43
|
Operating
Profit
|
|
316
|
|
178
|
|
588
|
|
753
|
Special Items,
Operating Profit
|
|
2
|
|
(10)
|
|
5
|
|
(3)
|
Adjusted Operating
Profit
|
|
318
|
|
168
|
|
593
|
|
750
|
Depreciation and
amortization
|
|
150
|
|
128
|
|
467
|
|
380
|
Store impairment
charges
|
|
7
|
|
4
|
|
37
|
|
23
|
Adjusted
EBITDA
|
|
$
475
|
|
$
300
|
|
$ 1,097
|
|
$ 1,153
|
Details of Special Items are presented below:
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
9/30/2022
|
|
9/30/2021
|
|
9/30/2022
|
|
9/30/2021
|
|
|
|
|
|
|
|
|
|
Gain from
re-measurement of equity interest upon
acquisition(1)
|
|
$
—
|
|
$
10
|
|
$
—
|
|
$
10
|
Share-based
compensation expense for Partner PSU
awards(2)
|
|
(2)
|
|
—
|
|
(5)
|
|
(7)
|
Special Items,
Operating Profit
|
|
(2)
|
|
10
|
|
(5)
|
|
3
|
Tax effect on Special
Items(3)
|
|
—
|
|
(2)
|
|
—
|
|
(2)
|
Special Items, net
income – including noncontrolling interests
|
|
(2)
|
|
8
|
|
(5)
|
|
1
|
Special Items, net
income – noncontrolling interests
|
|
—
|
|
—
|
|
—
|
|
—
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
$
(2)
|
|
$
8
|
|
$
(5)
|
|
$
1
|
Weighted-average
Diluted Shares Outstanding (in millions)
|
|
424
|
|
435
|
|
426
|
|
435
|
Special Items,
Diluted Earnings Per Common Share
|
|
$
—
|
|
$
0.02
|
|
$ (0.01)
|
|
$
0.01
|
(1) In the quarters ended September 30, 2021, as a result of the
consolidation of the Lavazza joint venture, the Company recognized
a gain of $10 million from the
re-measurement of our previously held equity interest at fair
value, which was not allocated to any segment for performance
reporting purposes.
(2) 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. The Company
recognized share-based compensation expense of $2 million and $5
million associated with the Partner PSU Awards for the
quarter and year to date ended September 30,
2022, respectively, and nil and $7
million for the quarter and year to date ended September 30, 2021.
(3) 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
|
|
|
12/31/2021
|
|
New Builds
|
|
Closures
|
|
Acquired
|
|
9/30/2022
|
|
|
|
|
Company-owned
|
|
7,437
|
|
661
|
|
(251)
|
|
5
|
|
7,852
|
|
|
|
|
Franchisees
|
|
731
|
|
115
|
|
(18)
|
|
(5)
|
|
823
|
|
|
|
|
Total
|
|
8,168
|
|
776
|
|
(269)
|
|
—
|
|
8,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pizza
Hut
|
|
|
12/31/2021
|
|
New Builds
|
|
Closures
|
|
Acquired
|
|
9/30/2022
|
|
|
|
|
Company-owned
|
|
2,452
|
|
282
|
|
(73)
|
|
5
|
|
2,666
|
|
|
|
|
Franchisees
|
|
138
|
|
10
|
|
(3)
|
|
(5)
|
|
140
|
|
|
|
|
Total
|
|
2,590
|
|
292
|
|
(76)
|
|
—
|
|
2,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others
|
|
|
12/31/2021
|
|
New Builds
|
|
Closures
|
|
Acquired
|
|
9/30/2022
|
|
|
|
|
Company-owned
|
|
162
|
|
49
|
|
(51)
|
|
1
|
|
161
|
|
|
|
|
Franchisees
|
|
868
|
|
54
|
|
(154)
|
|
(1)
|
|
767
|
|
|
|
|
Total
|
|
1,030
|
|
103
|
|
(205)
|
|
—
|
|
928
|
|
|
|
|
Yum China Holdings,
Inc.
|
Segment
Results
|
(in US$
million)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and unconsolidated
affiliates(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 and unconsolidated
affiliates(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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
9/30/2021
|
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Elimination
|
|
Total
|
Company
sales
|
|
$ 1,750
|
|
$
546
|
|
$
14
|
|
$
—
|
|
$
—
|
|
$ 2,310
|
Franchise fees and
income
|
|
32
|
|
2
|
|
6
|
|
—
|
|
—
|
|
40
|
Revenues from
transactions with
franchisees and unconsolidated
affiliates(2)
|
|
17
|
|
2
|
|
26
|
|
139
|
|
—
|
|
184
|
Other
revenues
|
|
2
|
|
1
|
|
88
|
|
7
|
|
(78)
|
|
20
|
Total
revenues
|
|
$ 1,801
|
|
$
551
|
|
$
134
|
|
$
146
|
|
$
(78)
|
|
$ 2,554
|
Company restaurant
expenses
|
|
1,512
|
|
502
|
|
14
|
|
—
|
|
—
|
|
2,028
|
General and
administrative expenses
|
|
62
|
|
27
|
|
11
|
|
42
|
|
—
|
|
142
|
Franchise
expenses
|
|
16
|
|
1
|
|
—
|
|
—
|
|
—
|
|
17
|
Expenses for
transactions with
franchisees and unconsolidated
affiliates(2)
|
|
16
|
|
2
|
|
24
|
|
138
|
|
—
|
|
180
|
Other operating costs
and expenses
|
|
2
|
|
1
|
|
87
|
|
5
|
|
(78)
|
|
17
|
Closures and impairment
expenses, net
|
|
1
|
|
—
|
|
1
|
|
—
|
|
—
|
|
2
|
Other (income)
expenses, net
|
|
(4)
|
|
—
|
|
3
|
|
(9)
|
|
—
|
|
(10)
|
Total costs and
expenses, net
|
|
1,605
|
|
533
|
|
140
|
|
176
|
|
(78)
|
|
2,376
|
Operating Profit
(Loss)
|
|
$
196
|
|
$
18
|
|
$
(6)
|
|
$
(30)
|
|
$
—
|
|
$
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and unconsolidated
affiliates(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 and unconsolidated
affiliates(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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year to Date Ended
9/30/2021
|
|
KFC
|
|
Pizza Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Elimination
|
|
Total
|
Company
sales
|
|
$ 5,220
|
|
$ 1,617
|
|
$
37
|
|
$
—
|
|
$
—
|
|
$ 6,874
|
Franchise fees and
income
|
|
95
|
|
6
|
|
19
|
|
—
|
|
—
|
|
120
|
Revenues from
transactions with
franchisees and unconsolidated
affiliates(2)
|
|
46
|
|
5
|
|
75
|
|
393
|
|
—
|
|
519
|
Other
revenues
|
|
6
|
|
2
|
|
187
|
|
11
|
|
(157)
|
|
49
|
Total
revenues
|
|
$ 5,367
|
|
$ 1,630
|
|
$
318
|
|
$
404
|
|
$
(157)
|
|
$ 7,562
|
Company restaurant
expenses
|
|
4,343
|
|
1,421
|
|
40
|
|
—
|
|
(1)
|
|
5,803
|
General and
administrative expenses
|
|
175
|
|
80
|
|
30
|
|
123
|
|
—
|
|
408
|
Franchise
expenses
|
|
47
|
|
3
|
|
—
|
|
—
|
|
—
|
|
50
|
Expenses for
transactions with
franchisees and unconsolidated
affiliates(2)
|
|
45
|
|
5
|
|
69
|
|
390
|
|
—
|
|
509
|
Other operating costs
and expenses
|
|
3
|
|
1
|
|
183
|
|
10
|
|
(156)
|
|
41
|
Closures and impairment
expenses, net
|
|
7
|
|
3
|
|
3
|
|
—
|
|
—
|
|
13
|
Other (income)
expenses, net
|
|
(16)
|
|
—
|
|
8
|
|
(7)
|
|
—
|
|
(15)
|
Total costs and
expenses, net
|
|
4,604
|
|
1,513
|
|
333
|
|
516
|
|
(157)
|
|
6,809
|
Operating Profit
(Loss)
|
|
$
763
|
|
$
117
|
|
$
(15)
|
|
$
(112)
|
|
$
—
|
|
$
753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 included
revenues and associated expenses of transactions with franchisees
and unconsolidated affiliates 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 and unconsolidated
affiliates that
operate our concepts.
|
View original
content:https://www.prnewswire.com/news-releases/yum-china-reports-third-quarter-2022-results-301664587.html
SOURCE Yum China Holdings, Inc.