© 2023 WUKY
background_fid.jpg
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations

Yum! Brands Report Major Profit Growth

yumbrands102_pd1408969317461_vzaparal.jpg
Yum Brands Inc
/

Yum! Brands, Inc. (NYSE: YUM) today reported results for the third quarter ended September 30, 2017. Third-quarter GAAP EPS was $1.18, an increase of 115%. Third-quarter EPS excluding Special Items was $0.68, an increase of 22%.

GREG CREED COMMENTS

Greg Creed, CEO, said “I’m pleased to report another strong quarter with 11% core operating profit growth and 22% EPS growth excluding special items, as a result of the continued focus on our four key growth drivers. We are maintaining our full-year 2017 guidance and remain on-track with our multi-year transformation strategy. As we celebrate both our 1 st anniversary from the spin-off of Yum China and our 20 th anniversary as an independent company, I am proud of our accomplishments. I’m especially proud of our ability to leverage our culture to rapidly transform to a more focused, more franchised and more efficient company which delivers more growth to our shareholders.”

THIRD-QUARTER HIGHLIGHTS

Worldwide system sales grew 6%, with KFC at 7%, Taco Bell at 6% and Pizza Hut at 3%.
We opened 362 net new units for 3% net unit growth.
We refranchised 209 restaurants, including 72 KFC, 46 Pizza Hut and 91 Taco Bell units, for gross proceeds of $395 million. We recorded net refranchising gains of $201 million in Special Items. As of quarter end, our global franchise ownership mix increased to 95%.
We repurchased 6.6 million shares totaling $501 million at an average price of $75.
Foreign currency translation favorably impacted divisional operating profit by $2 million.
   
  % Change
  System Sales 

Same-Store
Sales

 Net New Units 

GAAP
Operating Profit

 

Core
Operating Profit

KFC Division +7 +4 +4 +14 +13
Pizza Hut Division +3 +1 +2 (1) Even
Taco Bell Division +6 +3 +3 +3 +3
Worldwide +6 +3 +3 +61 +11
     
  Third Quarter Year-to-Date
  2017 2016 % Change 2017 2016 % Change
GAAP EPS $1.18 $0.55 +115 $2.52 $1.73 +46
Special Items EPS 1 $0.50 $(0.01) NM $0.51 $0.05 NM
EPS Excluding Special Items $0.68 $0.56 +22 $2.01 $1.68 +20

1 See Reconciliation of GAAP results to non-GAAP measurements within this release for further detail of Special Items.

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of GAAP results to non-GAAP measurements within this release for further details.

All comparisons are versus the same period a year ago. Effective January 2017, we removed the reporting lags from our international subsidiary fiscal calendars. To accommodate these changes, Yum! Brands now reports on a monthly calendar basis though certain subsidiaries, including our U.S. subsidiaries, continue to be included in our consolidated results on a periodic basis with 3, 3, 3 & 4 four-week periods in each quarter, respectively. Prior year figures in this earnings release have been restated to present comparable results. An 8-K was filed on April 13, 2017 with restated quarterly 2016 results.

KFC DIVISION

  Third Quarter Year-to-Date
      %/ppts Change     %/ppts Change
  2017 2016 Reported Ex F/X 2017 2016 Reported Ex F/X
Restaurants 21,063 20,284 +4 N/A 21,063 20,284 +4 N/A
System Sales ($MM) 6,282 5,833 +8 +7 17,688 16,818 +5 +6
Same-Store Sales Growth (%) +4 +2 NM NM +3 +2 NM NM
Franchise & License Fees ($MM) 296 267 +11 +11 831 761 +9 +10
Restaurant Margin (%) 15.9 15.0 0.9 0.8 15.1 14.4 0.7 0.7
Operating Profit ($MM) 260 230 +14 +13 710 618 +15 +16
Operating Margin (%) 32.8 29.2 3.6 3.9 30.9 26.8 4.1 4.3
                 
  Third Quarter (% Change)
  Int'l Emerging Markets   Int'l Developed Markets   U.S.
System Sales Growth (Ex F/X) +11   +6   Even
Same-Store Sales Growth +5   +2   +1
           
KFC Division opened 291 new international restaurants in 51 countries, including 249 units in emerging markets.
Operating margin increased 3.6 percentage points driven by refranchising and same-store sales growth.
Foreign currency translation favorably impacted GAAP operating profit by $2 million.
     
KFC Markets1 

Percent of KFC

System Sales2

 System Sales Growth Ex F/X
  Third Quarter (%) Year-to-Date (%)
Emerging Markets      
China 3 26% +14 +8
Asia (e.g. Malaysia, Indonesia, Philippines) 6% +7 +8
Middle East / Turkey / North Africa 5% (4) (1)
Latin America (e.g. Mexico, Peru) 4% +12 +13
Africa 4% +3 +4
Russia 3% +22 +24
Thailand 2% +9 +4
Continental Europe (e.g. Poland) 2% +15 +17
India 1% +8 +6
Developed Markets      
U.S. 19% Even +1
Asia (e.g. Japan, Korea, Taiwan) 7% (2) Even
Australia 7% +6 +8
U.K. 6% +9 +7
Continental Europe (e.g. France, Germany) 5% +14 +11
Canada 2% +4 +4
Latin America (e.g. Puerto Rico) 1% (2) (1)
       

1 Refer to www.yum.com/investors/financial-information/financial-reports for a list of the countries within each of the markets.
2 Reflects Full Year 2016.
3 Includes July, August and September; YUMC Q3 reported results include June, July and August.

PIZZA HUT DIVISION

  Third Quarter Year-to-Date
      %/ppts Change     %/ppts Change
  2017 2016 Reported Ex F/X 2017 2016 Reported Ex F/X
Restaurants 16,551 16,215 +2 N/A 16,551 16,215 +2 N/A
System Sales ($MM) 2,966 2,884 +3 +3 8,665 8,629 Even +2
Same-Store Sales Growth (%) +1 (1) NM NM (1) (1) NM NM
Franchise & License Fees ($MM) 148 145 +2 +2 433 433 Even +1
Restaurant Margin (%) 1.9 3.5 (1.6) (1.6) 6.0 7.9 (1.9) (1.9)
Operating Profit ($MM) 82 84 (1) Even 250 256 (2) Even
Operating Margin (%) 40.5 33.3 7.2 7.3 38.0 32.0 6.0 6.3
                 
   
  Third Quarter (% Change)
  Int'l Emerging Markets   Int'l Developed Markets   U.S.
System Sales Growth (Ex F/X) +7   +7   (1)
Same-Store Sales Growth Even   +4   Even
           
Pizza Hut Division opened 192 new international restaurants in 47 countries, including 144 units in emerging markets.

Operating margin increased 7.2 percentage points driven by refranchising partially offset by higher franchise and

license expense due to incremental advertising spend associated with the Transformation Agreement.

Pizza Hut Markets1 

Percent of Pizza
Hut System Sales2

 System Sales Growth Ex F/X
  Third Quarter (%) Year-to-Date (%)
Emerging Markets      
China 3 17% +7 +7
Latin America (e.g. Mexico, Peru) 5% +5 +5
Middle East / Turkey / Africa 4% (2) +2
Asia (e.g. Malaysia, Indonesia, Philippines) 4% +16 +13
India 1% +7 +7
Continental Europe (e.g. Poland) 1% +13 +11
Developed Markets      
U.S. 48% (1) (4)
Asia (e.g. Japan, Korea, Taiwan) 7% +1 +2
U.K. 5% +14 +7
Continental Europe (e.g. France, Germany) 4% +6 +4
Canada 2% Even +3
Australia 1% +35 +25
Latin America (e.g. Puerto Rico) 1% (2) Even

1 Refer to www.yum.com/investors/financial-information/financial-reports for a list of the countries within each of the markets.
2 Reflects Full Year 2016.
3 Includes July, August and September; YUMC Q3 reported results include June, July and August.

TACO BELL DIVISION

     
  Third Quarter Year-to-Date
      %/ppts Change     %/ppts Change
  2017 2016 Reported Ex F/X 2017 2016 Reported Ex F/X
Restaurants 6,738 6,515 +3 N/A 6,738 6,515 +3 N/A
System Sales ($MM) 2,423 2,293 +6 +6 7,058 6,523 +8 +8
Same-Store Sales Growth (%) +3 +3 NM NM +5 +1 NM NM
Franchise & License Fees ($MM) 124 115 +7 +7 358 327 +9 +9
Restaurant Margin (%) 21.9 21.7 0.2 0.2 22.1 21.7 0.4 0.4
Operating Profit ($MM) 147 143 +3 +3 440 400 +10 +10
Operating Margin (%) 33.3 29.8 3.5 3.5 32.6 29.2 3.4 3.4