Yum China Reports Third Quarter Results
Yum China (YUMC) reported strong Q3 2024 results with total revenues increasing 5% YoY to $3.07 billion. Operating profit grew 15% to $371 million, while diluted EPS rose 33% to $0.77. The company expanded its store network to 15,861 locations, including 11,283 KFC and 3,606 Pizza Hut stores, adding 438 net new stores in Q3. Digital sales reached $2.61 billion, accounting for 90% of total Company sales. The company plans to increase capital returns to shareholders from $3 billion to $4.5 billion between 2024-2026. Same-store sales reached 97% of prior year's level, with same-store transactions growing 1% YoY for the seventh consecutive quarter.
Yum China (YUMC) ha riportato risultati solidi per il terzo trimestre del 2024, con ricavi totali aumentati del 5% rispetto all'anno precedente, raggiungendo $3,07 miliardi. L'utile operativo è cresciuto del 15% a $371 milioni, mentre l'EPS diluito è aumentato del 33% a $0,77. L'azienda ha ampliato la sua rete di negozi a 15.861 locations, incluse 11.283 KFC e 3.606 Pizza Hut, aggiungendo 438 nuovi negozi netti nel terzo trimestre. Le vendite digitali hanno raggiunto $2,61 miliardi, rappresentando il 90% delle vendite totali della società. L'azienda prevede di aumentare i ritorni di capitale per gli azionisti da $3 miliardi a $4,5 miliardi tra il 2024 e il 2026. Le vendite nei negozi comparabili hanno raggiunto il 97% del livello dell'anno precedente, con le transazioni nei negozi comparabili in crescita dell'1% anno su anno per il settimo trimestre consecutivo.
Yum China (YUMC) reportó resultados sólidos para el tercer trimestre de 2024, con ingresos totales que aumentaron un 5% interanual a $3.07 mil millones. El beneficio operativo creció un 15% a $371 millones, mientras que el EPS diluido aumentó un 33% a $0.77. La compañía amplió su red de tiendas a 15,861 ubicaciones, incluyendo 11,283 KFC y 3,606 Pizza Hut, añadiendo 438 nuevas tiendas netas en el tercer trimestre. Las ventas digitales alcanzaron los $2.61 mil millones, representando el 90% de las ventas totales de la empresa. La compañía planea aumentar los retornos de capital a los accionistas de $3 mil millones a $4.5 mil millones entre 2024 y 2026. Las ventas en tiendas comparables alcanzaron el 97% del nivel del año anterior, con las transacciones en tiendas comparables creciendo un 1% interanual durante el séptimo trimestre consecutivo.
Yum China (YUMC)는 2024년 3분기 강력한 실적을 발표하며 총 수익이 전년 대비 5% 증가한 30억 7천만 달러에 이르렀습니다. 운영 이익은 15% 증가하여 3억 7천1백만 달러에 달했고, 희석 주당순이익(EPS)은 33% 상승하여 0.77달러를 기록했습니다. 이 회사는 15,861개 매장으로 매장 네트를 확장했으며, 여기에는 11,283개의 KFC와 3,606개의 Pizza Hut 매장이 포함되어 있으며, 3분기에 순 신규 매장 438개를 추가했습니다. 디지털 판매는 26억 1천만 달러에 달하며, 회사 총 매출의 90%를 차지했습니다. 이 회사는 2024년부터 2026년 사이 주주들에게의 자본 환원을 30억 달러에서 45억 달러로 늘릴 계획입니다. 동일 매장 수익은 전년도 수준의 97%에 도달했으며, 동일 매장 거래는 7분기 연속으로 전년 대비 1% 증가했습니다.
Yum China (YUMC) a reporté de solides résultats pour le troisième trimestre 2024, avec des revenus totaux en hausse de 5 % par rapport à l'année précédente, atteignant 3,07 milliards de dollars. Le bénéfice d'exploitation a augmenté de 15 %, s'élevant à 371 millions de dollars, tandis que le BPA dilué a grimpé de 33 % à 0,77 dollar. L'entreprise a élargi son réseau de magasins à 15 861 emplacements, comprenant 11 283 KFC et 3 606 Pizza Hut, ajoutant 438 nouveaux magasins nets au troisième trimestre. Les ventes numériques ont atteint 2,61 milliards de dollars, représentant 90 % du total des ventes de l'entreprise. L'entreprise prévoit d'augmenter les retours de capital aux actionnaires de 3 milliards à 4,5 milliards de dollars entre 2024 et 2026. Les ventes dans les magasins comparables ont atteint 97 % du niveau de l'année précédente, avec des transactions dans les magasins comparables en hausse de 1 % d'une année sur l'autre pour le septième trimestre consécutif.
Yum China (YUMC) hat starke Ergebnisse für das 3. Quartal 2024 gemeldet, mit einem Umsatzanstieg von 5% im Vergleich zum Vorjahr auf 3,07 Milliarden Dollar. Der Betriebsgewinn wuchs um 15% auf 371 Millionen Dollar, während das verwässerte EPS um 33% auf 0,77 Dollar stieg. Das Unternehmen erweiterte sein Filialnetz auf 15.861 Standorte, darunter 11.283 KFC und 3.606 Pizza Hut-Filialen, und fügte im 3. Quartal 438 netto neue Filialen hinzu. Die Digitalverkäufe erreichten 2,61 Milliarden Dollar und machten 90% des Gesamtumsatzes des Unternehmens aus. Das Unternehmen plant, die Kapitalrückflüsse an die Aktionäre von 3 Milliarden auf 4,5 Milliarden Dollar im Zeitraum von 2024 bis 2026 zu erhöhen. Die vergleichbaren Filialverkäufe erreichten 97% des Vorjahresniveaus, wobei die Transaktionen in vergleichbaren Filialen im siebten aufeinanderfolgenden Quartal um 1% im Jahresvergleich anstiegen.
- Total revenues reached all-time quarter high of $3.07 billion, up 5% YoY
- Operating profit increased 15% YoY to $371 million
- Diluted EPS grew 33% YoY to $0.77
- Digital sales reached $2.61 billion, representing 90% of total Company sales
- Increased capital return program by 50% to $4.5 billion for 2024-2026
- Added 438 net new stores in Q3 2024
- Same-store sales declined 3% YoY
- KFC same-store sales decreased 2% YoY
- Pizza Hut same-store sales fell 6% YoY
Insights
A strong quarter with impressive financial metrics. Total revenues hit an all-time high of
Two key strategic shifts stand out: First, the increased focus on franchising, targeting 40-50% franchise mix for KFC and 20-30% for Pizza Hut. Second, the
Restaurant margins remain healthy at
The company's performance in China's competitive market shows strategic resilience. Same-store sales reached
Innovation initiatives like KCOFFEE Cafes (500 stores) and Pizza Hut WOW (150 stores) are successfully expanding market reach. The membership program now exceeds 510 million members, driving
Robust Sales Growth, Margin Expansion and
Sequential Improvement in Same-Store Sales Index and Seventh Consecutive Quarter of Same-Store Transaction Growth
Operating Profit Increased by
Stepping up Capital Returns to Shareholders by
Third Quarter Highlights
- Total system sales grew
4% year over year ("YoY"), excluding foreign currency translation ("F/X"). The growth was primarily attributable to7% of net new unit contribution.2 - Total store count reached 15,861 as of September 30, 2024, including 11,283 KFC stores and 3,606 Pizza Hut stores. The Company opened 438 net new stores in the third quarter. 145 net new stores, or
33% , were opened by franchisees. - Total revenues increased
5% YoY to , an all-time quarter high (a$3.07 billion 4% increase excluding F/X). - Delivery sales grew
18% YoY, maintaining the double-digit annual growth Yum China has sustained over the past decade. Delivery contributed approximately40% of KFC and Pizza Hut's Company sales. - Same-store sales reached
97% of the prior year's level, improved from96% in the second quarter. Same-store transactions grew1% YoY, the seventh consecutive quarter of growth. - Operating profit grew
15% YoY to (a$371 million 14% increase excluding F/X). Core operating profit1 grew18% YoY. - OP margin3 was
12.1% , an increase of 100 basis points YoY, supported by resilient restaurant margins and savings in G&A expenses. - Restaurant margin was
17.0% , steady YoY. Excluding in items affecting comparability, restaurant margin increased by 50 basis points YoY, driven by improved operational efficiencies.$15 million - Diluted EPS increased
33% YoY to (a$0.77 32% increase excluding F/X). Excluding the impact of the mark-to-market equity investments in the third quarter of 2024 and 2023, Diluted EPS increased19% YoY. - Digital sales4 reached
, with digital ordering accounting for approximately$2.61 billion 90% of total Company sales. - Total membership of KFC and Pizza Hut exceeded 510 million. Member sales accounted for approximately
64% of KFC and Pizza Hut's system sales in aggregate. - Yum China returned
to shareholders in the third quarter, through$248 million in share repurchases and$187 million $61 million in cash dividends. In the first nine months, the Company returned to shareholders, nearly three times the amount returned in the same period last year.$1.24 billion
Joey Wat, CEO of Yum China, commented, "We delivered strong results again in the third quarter. Operating profit increased by
Wat added, "We regard both system sales and same-store sales growth as equally important. With these priorities in mind, we continue to drive menu innovations, infusing fresh energy into our flagship products. By optimizing our delivery strategy, we have captured more smaller order transactions and gained market share on aggregator platforms. Our breakthrough business models, side-by-side KCOFFEE Cafes and Pizza Hut WOW, enabled us to broaden our addressable market and capture new customer demand, reaching 500 and 150 stores, respectively."
Wat concluded, "We see ample opportunities across
[1] Core operating profit is defined as operating profit adjusted for special items, further excluding items affecting comparability and the impact of F/X. The Company uses core operating profit for the purposes of evaluating the performance of its core operations. Please refer to "Reconciliation of Reported GAAP Results to Non-GAAP Measures" included in the accompanying tables of this release for further details. [2] Net new unit contribution refers to sales contribution from net new stores. [3] OP margin refers to operating profit as a percentage of total revenues. [4] Digital sales refer to sales at Company-owned stores where orderings were placed digitally. |
Key Financial Results
Third Quarter | Year to Date Ended 9/30 | |||||||||||||||||||||||||||||||
%/ppts Change | %/ppts Change | |||||||||||||||||||||||||||||||
2024 | 2023 | Reported | Ex F/X | 2024 | 2023 | Reported | Ex F/X | |||||||||||||||||||||||||
System Sales Growth (5) (%) | 4 | 15 | NM | NM | 5 | 20 | NM | NM | ||||||||||||||||||||||||
Same-Store Sales Growth (5) (%) | (3) | 4 | NM | NM | (3) | 8 | NM | NM | ||||||||||||||||||||||||
Operating Profit ($mn) | 371 | 323 | +15 | +14 | 1,011 | 996 | +1 | +5 | ||||||||||||||||||||||||
Adjusted Operating Profit (6) ($mn) | 371 | 327 | +13 | +13 | 1,011 | 1,005 | +1 | +4 | ||||||||||||||||||||||||
Core Operating Profit (6) (7) ($mn) | 369 | 312 | NM | +18 | 1,040 | 951 | NM | +10 | ||||||||||||||||||||||||
OP Margin (%) | 12.1 | 11.1 | +1.0 | +1.0 | 11.6 | 11.7 | (0.1) | — | ||||||||||||||||||||||||
Core OP Margin (6) (8) (%) | 12.1 | 10.7 | NM | +1.4 | 11.7 | 11.2 | NM | +0.5 | ||||||||||||||||||||||||
Net Income ($mn) | 297 | 244 | +22 | +21 | 796 | 730 | +9 | +12 | ||||||||||||||||||||||||
Adjusted Net Income (6) ($mn) | 297 | 248 | +20 | +19 | 796 | 739 | +8 | +11 | ||||||||||||||||||||||||
Diluted Earnings | 0.77 | 0.58 | +33 | +32 | 2.03 | 1.73 | +17 | +20 | ||||||||||||||||||||||||
Adjusted Diluted Earnings | 0.77 | 0.59 | +31 | +30 | 2.03 | 1.75 | +16 | +19 | ||||||||||||||||||||||||
[5] 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. [6] See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" included in the accompanying tables of this release for further details. [7] Current period amounts are derived by translating results at average exchange rates of the prior year period. [8] Core OP margin refers to core operating profit as a percentage of total revenues excluding F/X. |
Stepping Up Capital Returns to Shareholders
- The Company plans to step up the capital returns to shareholders from
to$3 billion between 2024 and 2026, representing an increase of$4.5 billion 50% . - As part of the enlarged capital returns program, the Company plans to return
for the full year 2024. In the first nine months, the Company returned a record$1.5 billion to shareholders, including$1.24 billion in share repurchases and$1.06 billion in cash dividends. Yum China repurchased 27.3 million shares of common stock, which is equivalent to approximately$187 million 7% of its outstanding shares as of December 31, 2023. - In November 2024, Yum China's board of directors (the "Board") increased the Company's share repurchase authorization by
, bringing total authorization since 2017 to an aggregate of$1 billion . From 2017 to November 1, 2024, the Company repurchased approximately 71.8 million shares of common stock for$4.4 billion . Our remaining authorization is approximately$3.0 billion .$1.4 billion - The Board declared a cash dividend of
per share on Yum China's common stock, payable on December 17, 2024, to shareholders of record as of the close of business on November 26, 2024.$0.16
KFC
Third Quarter | Year to Date Ended 9/30 | |||||||||||||||||||||||||||||
%/ppts Change | %/ppts Change | |||||||||||||||||||||||||||||
2024 | 2023 | Reported | Ex F/X | 2024 | 2023 | Reported | Ex F/X | |||||||||||||||||||||||
Restaurants | 11,283 | 9,917 | +14 | NM | 11,283 | 9,917 | +14 | NM | ||||||||||||||||||||||
System Sales Growth (%) | 6 | 15 | NM | NM | 6 | 21 | NM | NM | ||||||||||||||||||||||
Same-Store Sales Growth (%) | (2) | 4 | NM | NM | (2) | 9 | NM | NM | ||||||||||||||||||||||
Total Revenues ($mn) | 2,311 | 2,186 | +6 | +5 | 6,555 | 6,368 | +3 | +5 | ||||||||||||||||||||||
Operating Profit ($mn) | 364 | 342 | +6 | +6 | 1,000 | 1,035 | (3) | (1) | ||||||||||||||||||||||
Core Operating Profit ($mn) | 362 | 332 | NM | +9 | 1,027 | 991 | NM | +4 | ||||||||||||||||||||||
OP Margin (%) | 15.7 | 15.6 | +0.1 | +0.2 | 15.2 | 16.3 | (1.1) | (1.0) | ||||||||||||||||||||||
Restaurant Margin (%) | 18.3 | 18.6 | (0.3) | (0.3) | 18.0 | 19.4 | (1.4) | (1.4) |
- System sales for KFC grew
6% YoY in the quarter, primarily driven by net new unit contribution of8% . - Same-store sales reached
98% of the prior year's level, improved from97% in the second quarter. - Delivery sales grew
19% YoY, continuing the double-digit annual growth trend since the spin-off and contributing approximately40% of KFC's Company sales for the quarter. Off-premises dining accounted for approximately68% of KFC's Company sales. - KFC opened 352 net new stores during the quarter. 134 net new stores, or
38% , were opened by franchisees. Total store count reached 11,283 as of September 30, 2024. - Operating profit grew
6% YoY to , a record level for the third quarter since the spin-off. Core operating profit increased$364 million 9% YoY. - OP margin was
15.7% , an increase of 10 basis points YoY. - Restaurant margin was
18.3% for the quarter. Excluding items affecting comparability, restaurant margin increased by 30 basis points, primarily due to improved operational efficiency and favorable commodity prices, partially offset by increased value-for-money offerings to drive traffic and wage inflation.
Pizza Hut
Third Quarter | Year to Date Ended 9/30 | |||||||||||||
%/ppts Change | %/ppts Change | |||||||||||||
2024 | 2023 | Reported | Ex F/X | 2024 | 2023 | Reported | Ex F/X | |||||||
Restaurants | 3,606 | 3,202 | +13 | NM | 3,606 | 3,202 | +13 | NM | ||||||
System Sales Growth (%) | 2 | 13 | NM | NM | 2 | 19 | NM | NM | ||||||
Same-Store Sales Growth (%) | (6) | 2 | NM | NM | (6) | 7 | NM | NM | ||||||
Total Revenues ($mn) | 615 | 599 | +2 | +1 | 1,750 | 1,750 | — | +2 | ||||||
Operating Profit ($mn) | 52 | 47 | +13 | +13 | 139 | 137 | +2 | +5 | ||||||
Core Operating Profit ($mn) | 52 | 43 | NM | +20 | 143 | 129 | NM | +12 | ||||||
OP Margin (%) | 8.6 | 7.8 | +0.8 | +0.8 | 8.0 | 7.8 | +0.2 | +0.2 | ||||||
Restaurant Margin (%) | 12.8 | 12.7 | +0.1 | +0.1 | 12.8 | 13.1 | (0.3) | (0.3) |
- System sales for Pizza Hut grew
2% YoY in the quarter, primarily driven by net new unit contribution of7% . - Same-store sales reached
94% of the prior year's level, improved from92% in the second quarter. - Delivery sales grew
11% YoY, contributing approximately39% of Pizza Hut's Company sales for the quarter. Off-premises dining accounted for approximately49% of Pizza Hut's Company sales. - Pizza Hut opened 102 net new stores during the quarter. 15 net new stores, or
15% , were opened by franchisees. Total store count reached 3,606 as of September 30, 2024. - Operating profit grew
13% YoY to . Core operating profit increased$52 million 20% YoY. - OP margin was
8.6% , an increase of 80 basis points YoY. - Restaurant margin was
12.8% for the quarter. Excluding items affecting comparability, restaurant margin was up 60 basis points YoY. Higher operational efficiency and favorable commodity prices offset the impact of increased value-for-money offerings to drive traffic and wage inflation, resulting in an increased margin.
Outlook
The Company's targets for the 2024 fiscal year remain unchanged from the prior period's disclosures.
- Open approximately 1,500 to 1,700 net new stores.
- Make capital expenditures in the range of approximately
to$700 million .$850 million - Return a Company record-setting
to shareholders through quarterly cash dividends and share repurchases.$1.5 billion
Note on Non-GAAP Measures
Reported GAAP results include items that are excluded from non-GAAP measures. See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" and "Segment Results" within this release for non-GAAP reconciliation details.
Conference Call
Yum China's management will hold an earnings conference call at 7:00 a.m.
This change from the Company's previous practice of releasing earnings after the U.S. market closes (before the trading hours of the Hong Kong Stock Exchange) is designed to better serve our global investor base by offering a more convenient time.
A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/asco39nb.
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/10042700-y56ut2.html
A replay of the conference call will be available one hour after the call ends until Monday, November 11, 2024, and may be accessed by phone at the following numbers:
1 855 883 1031 | |
Mainland China: | 400 1209 216 |
800 930 639 | |
0800 031 4295 | |
Replay PIN: | 10042700 |
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
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 "2024 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, investments, store openings, capital expenditures, dividend and share repurchase plans, CAGR for system sales, operating profit and EPS, 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, our ability to control costs and expenses, including tax costs, as well as changes in political, economic and regulatory conditions in
About Yum China Holdings, Inc.
Yum China is the largest restaurant company in
Contacts
Investor Relations Contact:
Tel: +86 21 2407 7556
IR@YumChina.com
Media Contact:
Tel: +86 21 2407 8288 / +852 2267 5807
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 | |||||||||||
9/30/2024 | 9/30/2023 | B/(W) | 9/30/2024 | 9/30/2023 | B/(W) | |||||||||
Revenues | ||||||||||||||
Company sales | $ 2,895 | $ 2,759 | 5 | $ 8,217 | $ 8,048 | 2 | ||||||||
Franchise fees and income | 25 | 23 | 8 | 72 | 69 | 3 | ||||||||
Revenues from transactions with franchisees | 116 | 100 | 16 | 319 | 282 | 13 | ||||||||
Other revenues | 35 | 32 | 14 | 100 | 86 | 17 | ||||||||
Total revenues | 3,071 | 2,914 | 5 | 8,708 | 8,485 | 3 | ||||||||
Costs and Expenses, Net | ||||||||||||||
Company restaurants | ||||||||||||||
Food and paper | 918 | 858 | (7) | 2,611 | 2,466 | (6) | ||||||||
Payroll and employee benefits | 728 | 699 | (4) | 2,102 | 2,047 | (3) | ||||||||
Occupancy and other operating expenses | 755 | 732 | (3) | 2,126 | 2,098 | (1) | ||||||||
Company restaurant expenses | 2,401 | 2,289 | (5) | 6,839 | 6,611 | (3) | ||||||||
General and administrative expenses | 139 | 169 | 18 | 412 | 485 | 15 | ||||||||
Franchise expenses | 10 | 9 | (11) | 29 | 28 | (6) | ||||||||
Expenses for transactions with franchisees | 110 | 95 | (16) | 306 | 270 | (13) | ||||||||
Other operating costs and expenses | 32 | 29 | (10) | 90 | 77 | (17) | ||||||||
Closures and impairment expenses, net | 8 | — | NM | 22 | 17 | (32) | ||||||||
Other expenses (income), net | — | — | NM | (1) | 1 | NM | ||||||||
Total costs and expenses, net | 2,700 | 2,591 | (4) | 7,697 | 7,489 | (3) | ||||||||
Operating Profit | 371 | 323 | 15 | 1,011 | 996 | 1 | ||||||||
Interest income, net | 31 | 46 | (32) | 100 | 124 | (19) | ||||||||
Investment gain (loss) | 34 | (4) | NM | 50 | (32) | NM | ||||||||
Income Before Income Taxes and | 436 | 365 | 20 | 1,161 | 1,088 | 7 | ||||||||
Income tax provision | (119) | (100) | (19) | (309) | (296) | (5) | ||||||||
Equity in net earnings (losses) from | 2 | 2 | (11) | 2 | 2 | (11) | ||||||||
Net income – including noncontrolling interests | 319 | 267 | 20 | 854 | 794 | 8 | ||||||||
Net income – noncontrolling interests | 22 | 23 | 3 | 58 | 64 | 9 | ||||||||
Net Income – Yum China Holdings, Inc. | $ 297 | $ 244 | 22 | $ 796 | $ 730 | 9 | ||||||||
Effective tax rate | 27.3 % | 27.5 % | 0.2 | ppts. | 26.6 % | 27.2 % | 0.6 | ppts. | ||||||
Basic Earnings Per Common Share | $ 0.77 | $ 0.59 | $ 2.04 | $ 1.75 | ||||||||||
Weighted-average shares outstanding | 384 | 416 | 391 | 417 | ||||||||||
Diluted Earnings Per Common Share | $ 0.77 | $ 0.58 | $ 2.03 | $ 1.73 | ||||||||||
Weighted-average shares outstanding | 385 | 420 | 393 | 421 | ||||||||||
OP margin | 12.1 % | 11.1 % | 1.0 | ppts. | 11.6 % | 11.7 % | (0.1) | ppts. | ||||||
Company sales | 100.0 % | 100.0 % | 100.0 % | 100.0 % | ||||||||||
Food and paper | 31.7 | 31.1 | (0.6) | ppts. | 31.8 | 30.6 | (1.2) | ppts. | ||||||
Payroll and employee benefits | 25.1 | 25.3 | 0.2 | ppts. | 25.6 | 25.4 | (0.2) | ppts. | ||||||
Occupancy and other operating expenses | 26.2 | 26.6 | 0.4 | ppts. | 25.8 | 26.1 | 0.3 | ppts. | ||||||
Restaurant margin | 17.0 % | 17.0 % | — | ppts. | 16.8 % | 17.9 % | (1.1) | 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 | |||||||||||
9/30/2024 | 9/30/2023 | B/(W) | 9/30/2024 | 9/30/2023 | B/(W) | |||||||||
Revenues | ||||||||||||||
Company sales | $ 2,276 | $ 2,154 | 6 | $ 6,452 | $ 6,274 | 3 | ||||||||
Franchise fees and income | 19 | 16 | 15 | 53 | 48 | 10 | ||||||||
Revenues from transactions with franchisees | 15 | 12 | 23 | 41 | 33 | 25 | ||||||||
Other revenues | 1 | 4 | (63) | 9 | 13 | (29) | ||||||||
Total revenues | 2,311 | 2,186 | 6 | 6,555 | 6,368 | 3 | ||||||||
Costs and Expenses, Net | ||||||||||||||
Company restaurants | ||||||||||||||
Food and paper | 713 | 666 | (7) | 2,033 | 1,914 | (6) | ||||||||
Payroll and employee benefits | 558 | 528 | (6) | 1,613 | 1,538 | (5) | ||||||||
Occupancy and other operating expenses | 588 | 560 | (5) | 1,647 | 1,603 | (3) | ||||||||
Company restaurant expenses | 1,859 | 1,754 | (6) | 5,293 | 5,055 | (5) | ||||||||
General and administrative expenses | 62 | 68 | 10 | 183 | 203 | 10 | ||||||||
Franchise expenses | 8 | 8 | (10) | 25 | 24 | (6) | ||||||||
Expenses for transactions with franchisees | 13 | 11 | (19) | 36 | 29 | (21) | ||||||||
Other operating costs and expenses | 1 | 3 | 76 | 7 | 11 | 37 | ||||||||
Closures and impairment expenses, net | 4 | — | NM | 11 | 9 | (33) | ||||||||
Other expenses, net | — | — | (151) | — | 2 | 76 | ||||||||
Total costs and expenses, net | 1,947 | 1,844 | (6) | 5,555 | 5,333 | (4) | ||||||||
Operating Profit | $ 364 | $ 342 | 6 | $ 1,000 | $ 1,035 | (3) | ||||||||
OP margin | 15.7 % | 15.6 % | 0.1 | ppts. | 15.2 % | 16.3 % | (1.1) | ppts. | ||||||
Company sales | 100.0 % | 100.0 % | 100.0 % | 100.0 % | ||||||||||
Food and paper | 31.3 | 30.9 | (0.4) | ppts. | 31.5 | 30.5 | (1.0) | ppts. | ||||||
Payroll and employee benefits | 24.5 | 24.5 | — | ppts. | 25.0 | 24.5 | (0.5) | ppts. | ||||||
Occupancy and other operating expenses | 25.9 | 26.0 | 0.1 | ppts. | 25.5 | 25.6 | 0.1 | ppts. | ||||||
Restaurant margin | 18.3 % | 18.6 % | (0.3) | ppts. | 18.0 % | 19.4 % | (1.4) | 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 | |||||||||||
9/30/2024 | 9/30/2023 | B/(W) | 9/30/2024 | 9/30/2023 | B/(W) | |||||||||
Revenues | ||||||||||||||
Company sales | $ 606 | $ 591 | 2 | $ 1,723 | $ 1,728 | — | ||||||||
Franchise fees and income | 2 | 2 | 8 | 6 | 6 | 4 | ||||||||
Revenues from transactions with franchisees | 2 | 1 | 20 | 4 | 3 | 7 | ||||||||
Other revenues | 5 | 5 | (4) | 17 | 13 | 30 | ||||||||
Total revenues | 615 | 599 | 2 | 1,750 | 1,750 | — | ||||||||
Costs and Expenses, Net | ||||||||||||||
Company restaurants | ||||||||||||||
Food and paper | 202 | 187 | (7) | 567 | 537 | (5) | ||||||||
Payroll and employee benefits | 167 | 167 | — | 479 | 496 | 3 | ||||||||
Occupancy and other operating expenses | 160 | 162 | 2 | 457 | 469 | 3 | ||||||||
Company restaurant expenses | 529 | 516 | (2) | 1,503 | 1,502 | — | ||||||||
General and administrative expenses | 26 | 30 | 15 | 80 | 89 | 11 | ||||||||
Franchise expenses | 1 | 1 | (6) | 3 | 3 | (3) | ||||||||
Expenses for transactions with franchisees | 1 | 1 | (6) | 3 | 3 | 2 | ||||||||
Other operating costs and expenses | 5 | 4 | (7) | 16 | 11 | (43) | ||||||||
Closures and impairment expenses, net | 1 | — | NM | 6 | 5 | (17) | ||||||||
Total costs and expenses, net | 563 | 552 | (1) | 1,611 | 1,613 | — | ||||||||
Operating Profit | $ 52 | $ 47 | 13 | $ 139 | $ 137 | 2 | ||||||||
OP margin | 8.6 % | 7.8 % | 0.8 | ppts. | 8.0 % | 7.8 % | 0.2 | ppts. | ||||||
Company sales | 100.0 % | 100.0 % | 100.0 % | 100.0 % | ||||||||||
Food and paper | 33.2 | 31.7 | (1.5) | ppts. | 32.9 | 31.1 | (1.8) | ppts. | ||||||
Payroll and employee benefits | 27.5 | 28.1 | 0.6 | ppts. | 27.8 | 28.7 | 0.9 | ppts. | ||||||
Occupancy and other operating expenses | 26.5 | 27.5 | 1.0 | ppts. | 26.5 | 27.1 | 0.6 | ppts. | ||||||
Restaurant margin | 12.8 % | 12.7 % | 0.1 | ppts. | 12.8 % | 13.1 % | (0.3) | ppts. | ||||||
Percentages may not recompute due to rounding. NM refers to not meaningful. | ||||||||||||||
Yum China Holdings, Inc. | ||||
Condensed Consolidated Balance Sheets | ||||
(in US$ million) | ||||
9/30/2024 | 12/31/2023 | |||
(Unaudited) | ||||
ASSETS | ||||
Current Assets | ||||
Cash and cash equivalents | $ 1,193 | $ 1,128 | ||
Short-term investments | 1,338 | 1,472 | ||
Accounts receivable, net | 79 | 68 | ||
Inventories, net | 359 | 424 | ||
Prepaid expenses and other current assets | 348 | 339 | ||
Total Current Assets | 3,317 | 3,431 | ||
Property, plant and equipment, net | 2,431 | 2,310 | ||
Operating lease right-of-use assets | 2,215 | 2,217 | ||
Goodwill | 1,955 | 1,932 | ||
Intangible assets, net | 150 | 150 | ||
Long-term bank deposits and notes | 933 | 1,265 | ||
Equity investments | 388 | 332 | ||
Deferred income tax assets | 145 | 129 | ||
Other assets | 267 | 265 | ||
Total Assets | 11,801 | 12,031 | ||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY | ||||
Current Liabilities | ||||
Accounts payable and other current liabilities | 2,103 | 2,164 | ||
Short-term borrowings | 315 | 168 | ||
Income taxes payable | 160 | 90 | ||
Total Current Liabilities | 2,578 | 2,422 | ||
Non-current operating lease liabilities | 1,880 | 1,899 | ||
Non-current finance lease liabilities | 51 | 44 | ||
Deferred income tax liabilities | 406 | 390 | ||
Other liabilities | 158 | 157 | ||
Total Liabilities | 5,073 | 4,912 | ||
Redeemable Noncontrolling Interest | 13 | 13 | ||
Equity | ||||
Common stock, | 4 | 4 | ||
Treasury stock | (18) | — | ||
Additional paid-in capital | 4,053 | 4,320 | ||
Retained earnings | 2,156 | 2,310 | ||
Accumulated other comprehensive loss | (179) | (229) | ||
Total Yum China Holdings, Inc. Stockholders' Equity | 6,016 | 6,405 | ||
Noncontrolling interests | 699 | 701 | ||
Total Equity | 6,715 | 7,106 | ||
Total Liabilities, Redeemable Noncontrolling Interest and Equity | $ 11,801 | $ 12,031 |
Yum China Holdings, Inc. | ||||||
Condensed Consolidated Statements of Cash Flows | ||||||
(in US$ million) | ||||||
(unaudited) | ||||||
Year to Date Ended | ||||||
9/30/2024 | 9/30/2023 | |||||
Cash Flows – Operating Activities | ||||||
Net income – including noncontrolling interests | $ 854 | $ 794 | ||||
Depreciation and amortization | 355 | 339 | ||||
Non-cash operating lease cost | 305 | 301 | ||||
Closures and impairment expenses | 22 | 17 | ||||
Investment (gain) loss | (50) | 32 | ||||
Equity in net (earnings) losses from equity method investments | (2) | (2) | ||||
Distributions of income received from equity method investments | 7 | 8 | ||||
Deferred income taxes | (4) | (6) | ||||
Share-based compensation expense | 32 | 46 | ||||
Changes in accounts receivable | (4) | (2) | ||||
Changes in inventories | 69 | (25) | ||||
Changes in prepaid expenses, other current assets and value-added tax assets | 3 | (10) | ||||
Changes in accounts payable and other current liabilities | (83) | 112 | ||||
Changes in income taxes payable | 67 | 71 | ||||
Changes in non-current operating lease liabilities | (303) | (295) | ||||
Other, net | (16) | (46) | ||||
Net Cash Provided by Operating Activities | 1,252 | 1,334 | ||||
Cash Flows – Investing Activities | ||||||
Capital spending | (523) | (499) | ||||
Purchases of short-term investments, long-term bank deposits and notes | (3,330) | (3,287) | ||||
Maturities of short-term investments, long-term bank deposits and notes | 3,821 | 2,730 | ||||
Other, net | 4 | 4 | ||||
Net Cash Used in Investing Activities | (28) | (1,052) | ||||
Cash Flows – Financing Activities | ||||||
Proceeds from short-term borrowings | 307 | 212 | ||||
Repayment of short-term borrowings | (167) | — | ||||
Repurchase of shares of common stock | (1,057) | (280) | ||||
Cash dividends paid on common stock | (187) | (162) | ||||
Dividends paid to noncontrolling interests | (36) | (37) | ||||
Contributions from noncontrolling interests | — | 35 | ||||
Payment of acquisition related holdback | — | (3) | ||||
Other, net | (19) | (5) | ||||
Net Cash Used in Financing Activities | (1,159) | (240) | ||||
Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash | — | (41) | ||||
Net Increase in Cash, Cash Equivalents and Restricted Cash | 65 | 1 | ||||
Cash, Cash Equivalents, and Restricted Cash - Beginning of Period | 1,128 | 1,130 | ||||
Cash, Cash Equivalents, and Restricted Cash - End of Period | $ 1,193 | $ 1,131 |
In this press release:
- Certain performance metrics and non-GAAP measures are presented 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.
Unit Count by Brand | |||||||||||||
KFC | |||||||||||||
12/31/2023 | New Builds | Closures | Acquired | 9/30/2024 | |||||||||
Company-owned | 9,237 | 904 | (185) | 2 | 9,958 | ||||||||
Franchisees | 1,059 | 285 | (17) | (2) | 1,325 | ||||||||
Total | 10,296 | 1,189 | (202) | — | 11,283 | ||||||||
Pizza Hut | |||||||||||||
12/31/2023 | New Builds | Closures | 9/30/2024 | ||||||||||
Company-owned | 3,155 | 380 | (107) | 3,428 | |||||||||
Franchisees | 157 | 26 | (5) | 178 | |||||||||
Total | 3,312 | 406 | (112) | 3,606 | |||||||||
Others | |||||||||||||
12/31/2023 | New Builds | Closures | 9/30/2024 | ||||||||||
Company-owned | 256 | 13 | (84) | 185 | |||||||||
Franchisees | 780 | 97 | (90) | 787 | |||||||||
Total | 1,036 | 110 | (174) | 972 | |||||||||
Reconciliation of Reported GAAP Results to Non-GAAP Measures
(in millions, except per share data)
(unaudited)
In addition to the results provided in accordance with
- 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;
- Company Restaurant Profit ("Restaurant profit") and Restaurant margin;
- Core Operating Profit and Core OP margin, which exclude Special Items, and further adjusted for Items Affecting Comparability and the impact of F/X;
These non-GAAP 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 non-GAAP 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 core operations.
With respect to non-GAAP measures adjusted for Special Items, the Company excludes impact from Special Items for the purpose of evaluating performance internally and uses them as factors in determining compensation for certain employees. Special Items are not included in any of our segment results.
Adjusted EBITDA is defined 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, 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 analysts may find it useful in measuring operating performance without regard to such non-cash items.
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. We also use Restaurant profit and Restaurant margin for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe they provide useful information to investors as to the profitability of our Company-owned restaurants.
Core Operating Profit is defined as Operating Profit adjusted for Special Items, and further excluding Items Affecting Comparability and the impact of F/X. We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Items such as charges, gains and accounting changes which are viewed by management as significantly impacting the current period or the comparable period, due to changes in policy or other external factors, or non-cash items pertaining to underlying activities that are different from or unrelated to our core operations, are generally considered "Items Affecting Comparability." Examples of Items Affecting Comparability include, but are not limited to: temporary relief from landlords and government agencies; VAT deductions due to tax policy changes; and amortization of reacquired franchise rights recognized upon acquisitions. We believe presenting Core Operating Profit provides additional information to further enhance comparability of our operating results and we use this measure for purposes of evaluating the performance of our core operations. Core OP margin is defined as Core Operating Profit divided by Total revenues, excluding the impact of F/X.
The following tables set forth the reconciliation of the most directly comparable GAAP financial measures to the non-GAAP financial measures. The reconciliation of GAAP Operating Profit to Restaurant Profit and Core Operating Profit by segment is presented in Segment Results within this release.
Quarter Ended | Year to Date Ended | |||||||
9/30/2024 | 9/30/2023 | 9/30/2024 | 9/30/2023 | |||||
Reconciliation of Operating Profit to Adjusted Operating Profit | ||||||||
Operating Profit | $ 371 | $ 323 | $ 1,011 | $ 996 | ||||
Special Items, Operating Profit | — | (4) | — | (9) | ||||
Adjusted Operating Profit | $ 371 | $ 327 | $ 1,011 | $ 1,005 | ||||
Reconciliation of Net Income to Adjusted Net Income | ||||||||
Net Income – Yum China Holdings, Inc. | $ 297 | $ 244 | $ 796 | $ 730 | ||||
Special Items, Net Income –Yum China Holdings, Inc. | — | (4) | — | (9) | ||||
Adjusted Net Income – Yum China Holdings, Inc. | $ 297 | $ 248 | $ 796 | $ 739 | ||||
Reconciliation of EPS to Adjusted EPS | ||||||||
Basic Earnings Per Common Share | $ 0.77 | $ 0.59 | $ 2.04 | $ 1.75 | ||||
Special Items, Basic Earnings Per Common Share | — | (0.01) | — | (0.02) | ||||
Adjusted Basic Earnings Per Common Share | $ 0.77 | $ 0.60 | $ 2.04 | $ 1.77 | ||||
Diluted Earnings Per Common Share | $ 0.77 | $ 0.58 | $ 2.03 | $ 1.73 | ||||
Special Items, Diluted Earnings Per Common Share | — | (0.01) | — | (0.02) | ||||
Adjusted Diluted Earnings Per Common Share | $ 0.77 | $ 0.59 | $ 2.03 | $ 1.75 | ||||
Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate | ||||||||
Effective tax rate | 27.3 % | 27.5 % | 26.6 % | 27.2 % | ||||
Impact on effective tax rate as a result of Special Items | — | 0.3 % | — | 0.2 % | ||||
Adjusted effective tax rate | 27.3 % | 27.2 % | 26.6 % | 27.0 % |
Net income, along with the reconciliation to Adjusted EBITDA, is presented below:
Quarter Ended | Year to Date Ended | |||||||
9/30/2024 | 9/30/2023 | 9/30/2024 | 9/30/2023 | |||||
Net Income – Yum China Holdings, Inc. | $ 297 | $ 244 | $ 796 | $ 730 | ||||
Net income – noncontrolling interests | 22 | 23 | 58 | 64 | ||||
Equity in net (earnings) losses from equity method investments | (2) | (2) | (2) | (2) | ||||
Income tax provision | 119 | 100 | 309 | 296 | ||||
Interest income, net | (31) | (46) | (100) | (124) | ||||
Investment (gain) loss | (34) | 4 | (50) | 32 | ||||
Operating Profit | 371 | 323 | 1,011 | 996 | ||||
Special Items, Operating Profit | — | 4 | — | 9 | ||||
Adjusted Operating Profit | 371 | 327 | 1,011 | 1,005 | ||||
Depreciation and amortization | 120 | 111 | 355 | 339 | ||||
Store impairment charges | 10 | 3 | 29 | 24 | ||||
Adjusted EBITDA | $ 501 | $ 441 | $ 1,395 | $ 1,368 |
Details of Special Items are presented below:
Quarter Ended | Year to Date Ended | |||||||
9/30/2024 | 9/30/2023 | 9/30/2024 | 9/30/2023 | |||||
Share-based compensation expense for Partner PSU Awards(1) | $ — | $ (4) | $ — | $ (9) | ||||
Special Items, Operating Profit | — | (4) | — | (9) | ||||
Tax effect on Special Items(2) | — | — | — | — | ||||
Special Items, net income – including noncontrolling interests | — | (4) | — | (9) | ||||
Special Items, net income – noncontrolling interests | — | — | — | — | ||||
Special Items, Net Income –Yum China Holdings, Inc. | $ — | $ (4) | $ — | $ (9) | ||||
Weighted-average Diluted Shares Outstanding (in millions) | 385 | 420 | 393 | 421 | ||||
Special Items, Diluted Earnings Per Common Share | $ — | $ (0.01) | $ — | $ (0.02) |
(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 |
(2) The tax expense was determined based upon the nature, as well as the jurisdiction, of each Special Item at the applicable tax rate. |
Operating Profit, along with the reconciliation to Core Operating Profit, is presented below:
Quarter ended | % Change | Year to Date Ended | % Change | ||||||||||
9/30/2024 | 9/30/2023 | B/(W) | 9/30/2024 | 9/30/2023 | B/(W) | ||||||||
Operating profit | $ 371 | $ 323 | 15 | $ 1,011 | $ 996 | 1 | |||||||
Special Items, Operating Profit | — | 4 | — | 9 | |||||||||
Adjusted Operating Profit | $ 371 | $ 327 | 13 | $ 1,011 | $ 1,005 | 1 | |||||||
Items Affecting Comparability | |||||||||||||
Temporary relief from landlords(1) | — | — | — | (10) | |||||||||
Temporary relief from government agencies(2) | — | (1) | — | (4) | |||||||||
VAT deductions(3) | — | (14) | — | (42) | |||||||||
Amortization of reacquired franchise rights(4) | — | — | — | 2 | |||||||||
F/X impact | (2) | — | 29 | — | |||||||||
Core Operating Profit | $ 369 | $ 312 | 18 | $ 1,040 | $ 951 | 10 | |||||||
Total revenues | 3,071 | 2,914 | 5 | 8,708 | 8,485 | 3 | |||||||
F/X impact | (31) | — | 208 | — | |||||||||
Total revenues, excluding the impact of F/X | $ 3,040 | $ 2,914 | 4 | $ 8,916 | $ 8,485 | 5 | |||||||
Core OP margin | 12.1 % | 10.7 % | 1.4 | ppts | 11.7 % | 11.2 % | 0.5 | ppts. | |||||
(1) In relation to the effects of the COVID-19 pandemic, the Company was granted lease concessions from landlords. The lease concessions were primarily in the form of rent reduction over the period of time when the Company's restaurant business was adversely impacted. Such concessions were primarily recognized as a reduction of Occupancy and other operating expenses within Company restaurant expenses included in the Condensed Consolidated Statement of Income in the period the concession was granted. | |||||||||||||
(2) In relation to the effects of the COVID-19 pandemic, the Company received government subsidies for employee benefits and providing training to employees. The temporary relief was primarily recognized as a reduction to Payroll and employee benefits within Company restaurant expenses included in the Condensed Consolidated Statement of Income. | |||||||||||||
(3) Pursuant to the tax policy issued by relevant government authorities, general VAT taxpayers in certain industries that meet certain criteria are allowed to claim an additional | |||||||||||||
(4) As a result of the acquisition of our previously unconsolidated joint ventures of Hangzhou KFC, Suzhou KFC and Wuxi KFC, |
Yum China Holdings, Inc. | ||||||||||||
Segment Results | ||||||||||||
(in US$ million) | ||||||||||||
(unaudited) | ||||||||||||
Quarter Ended 9/30/2024 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | Elimination | Total | |||||||
Company sales | $ 2,276 | $ 606 | $ 13 | $ — | $ — | $ 2,895 | ||||||
Franchise fees and income | 19 | 2 | 4 | — | — | 25 | ||||||
Revenues from transactions with franchisees(2) | 15 | 2 | 19 | 80 | — | 116 | ||||||
Other revenues | 1 | 5 | 176 | 17 | (164) | 35 | ||||||
Total revenues | $ 2,311 | $ 615 | $ 212 | $ 97 | $ (164) | $ 3,071 | ||||||
Company restaurant expenses | 1,859 | 529 | 14 | — | (1) | 2,401 | ||||||
General and administrative expenses | 62 | 26 | 9 | 42 | — | 139 | ||||||
Franchise expenses | 8 | 1 | 1 | — | — | 10 | ||||||
Expenses for transactions with franchisees(2) | 13 | 1 | 17 | 79 | — | 110 | ||||||
Other operating costs and expenses | 1 | 5 | 172 | 17 | (163) | 32 | ||||||
Closures and impairment expenses, net | 4 | 1 | 3 | — | — | 8 | ||||||
Total costs and expenses, net | 1,947 | 563 | 216 | 138 | (164) | 2,700 | ||||||
Operating Profit (Loss) | $ 364 | $ 52 | $ (4) | $ (41) | $ — | $ 371 | ||||||
Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows: | ||||||||||||
Quarter Ended 9/30/2024 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | Elimination | Total | |||||||
GAAP Operating Profit (Loss) | $ 364 | $ 52 | $ (4) | $ (41) | $ — | $ 371 | ||||||
Less: | ||||||||||||
Franchise fees and income | 19 | 2 | 4 | — | — | 25 | ||||||
Revenues from transactions with franchisees(2) | 15 | 2 | 19 | 80 | — | 116 | ||||||
Other revenues | 1 | 5 | 176 | 17 | (164) | 35 | ||||||
Add: | ||||||||||||
General and administrative expenses | 62 | 26 | 9 | 42 | — | 139 | ||||||
Franchise expenses | 8 | 1 | 1 | — | — | 10 | ||||||
Expenses for transactions with franchisees(2) | 13 | 1 | 17 | 79 | — | 110 | ||||||
Other operating costs and expenses | 1 | 5 | 172 | 17 | (163) | 32 | ||||||
Closures and impairment expenses, net | 4 | 1 | 3 | — | — | 8 | ||||||
Restaurant profit (loss) | $ 417 | $ 77 | $ (1) | $ — | $ 1 | $ 494 | ||||||
Company sales | 2,276 | 606 | 13 | — | — | 2,895 | ||||||
Restaurant margin % | 18.3 % | 12.8 % | (13.2) % | N/A | N/A | 17.0 % | ||||||
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows: | ||||||||||||
Quarter Ended 9/30/2024 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | Elimination | Total | |||||||
GAAP Operating Profit (Loss) | $ 364 | $ 52 | $ (4) | $ (41) | $ — | $ 371 | ||||||
Special Items, Operating Profit | — | — | — | — | — | — | ||||||
Adjusted Operating Profit (Loss) | $ 364 | $ 52 | $ (4) | $ (41) | $ — | $ 371 | ||||||
F/X impact | (2) | — | — | — | — | (2) | ||||||
Core Operating Profit (Loss) | $ 362 | $ 52 | $ (4) | $ (41) | $ — | $ 369 | ||||||
Quarter Ended 9/30/2023 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | 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 is as follows: | ||||||||||||
Quarter Ended 9/30/2023 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | 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(2) | 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(2) | 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 % | ||||||
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows: | ||||||||||||
Quarter Ended 9/30/2023 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | Elimination | Total | |||||||
GAAP Operating Profit (Loss) | $ 342 | $ 47 | $ (7) | $ (59) | $ — | $ 323 | ||||||
Special Items, Operating Profit | — | — | — | 4 | — | 4 | ||||||
Adjusted Operating Profit (Loss) | $ 342 | $ 47 | $ (7) | $ (55) | $ — | $ 327 | ||||||
Items Affecting Comparability | ||||||||||||
Temporary relief from landlords | — | — | — | — | — | — | ||||||
Temporary relief from government agencies | — | (1) | — | — | — | (1) | ||||||
VAT deductions | (10) | (3) | (1) | — | — | (14) | ||||||
F/X impact | — | — | — | — | — | — | ||||||
Core Operating Profit (Loss) | $ 332 | $ 43 | $ (8) | $ (55) | $ — | $ 312 | ||||||
Year to Date Ended 9/30/2024 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | Elimination | Total | |||||||
Company sales | $ 6,452 | $ 1,723 | $ 42 | $ — | $ — | $ 8,217 | ||||||
Franchise fees and income | 53 | 6 | 13 | — | — | 72 | ||||||
Revenues from transactions with franchisees(2) | 41 | 4 | 55 | 219 | — | 319 | ||||||
Other revenues | 9 | 17 | 484 | 48 | (458) | 100 | ||||||
Total revenues | $ 6,555 | $ 1,750 | $ 594 | $ 267 | $ (458) | $ 8,708 | ||||||
Company restaurant expenses | 5,293 | 1,503 | 45 | — | (2) | 6,839 | ||||||
General and administrative expenses | 183 | 80 | 29 | 120 | — | 412 | ||||||
Franchise expenses | 25 | 3 | 1 | — | — | 29 | ||||||
Expenses for transactions with franchisees(2) | 36 | 3 | 50 | 217 | — | 306 | ||||||
Other operating costs and expenses | 7 | 16 | 476 | 47 | (456) | 90 | ||||||
Closures and impairment expenses, net | 11 | 6 | 5 | — | — | 22 | ||||||
Other expenses (income), net | — | — | — | (1) | — | (1) | ||||||
Total costs and expenses, net | 5,555 | 1,611 | 606 | 383 | (458) | 7,697 | ||||||
Operating Profit (Loss) | $ 1,000 | $ 139 | $ (12) | $ (116) | $ — | $ 1,011 | ||||||
Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows: | ||||||||||||
Year to Date Ended 9/30/2024 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | Elimination | Total | |||||||
GAAP Operating Profit (Loss) | $ 1,000 | $ 139 | $ (12) | $ (116) | $ — | $ 1,011 | ||||||
Less: | ||||||||||||
Franchise fees and income | 53 | 6 | 13 | — | — | 72 | ||||||
Revenues from transactions with franchisees(2) | 41 | 4 | 55 | 219 | — | 319 | ||||||
Other revenues | 9 | 17 | 484 | 48 | (458) | 100 | ||||||
Add: | ||||||||||||
General and administrative expenses | 183 | 80 | 29 | 120 | — | 412 | ||||||
Franchise expenses | 25 | 3 | 1 | — | — | 29 | ||||||
Expenses for transactions with franchisees(2) | 36 | 3 | 50 | 217 | — | 306 | ||||||
Other operating costs and expenses | 7 | 16 | 476 | 47 | (456) | 90 | ||||||
Closures and impairment expenses, net | 11 | 6 | 5 | — | — | 22 | ||||||
Other expenses (income), net | — | — | — | (1) | — | (1) | ||||||
Restaurant profit (loss) | $ 1,159 | $ 220 | $ (3) | $ — | $ 2 | $ 1,378 | ||||||
Company sales | 6,452 | 1,723 | 42 | — | — | 8,217 | ||||||
Restaurant margin % | 18.0 % | 12.8 % | (11.8) % | N/A | N/A | 16.8 % | ||||||
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows: | ||||||||||||
Year to Date Ended 9/30/2024 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | Elimination | Total | |||||||
GAAP Operating Profit (Loss) | $ 1,000 | $ 139 | $ (12) | $ (116) | $ — | $ 1,011 | ||||||
Special Items, Operating Profit | — | — | — | — | — | — | ||||||
Adjusted Operating Profit (Loss) | $ 1,000 | $ 139 | $ (12) | $ (116) | $ — | $ 1,011 | ||||||
F/X impact | 27 | 4 | — | (2) | — | 29 | ||||||
Core Operating Profit (Loss) | $ 1,027 | $ 143 | $ (12) | $ (118) | $ — | $ 1,040 | ||||||
Year to Date Ended 9/30/2023 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | 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 is as follows: | ||||||||||||
Year to Date Ended 9/30/2023 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | 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(2) | 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(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 | ||||||
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 % | ||||||
Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows: | ||||||||||||
Year to Date Ended 9/30/2023 | ||||||||||||
KFC | Pizza Hut | All Other Segments | Corporate | Elimination | Total | |||||||
GAAP Operating Profit (Loss) | $ 1,035 | $ 137 | $ (20) | $ (156) | $ — | $ 996 | ||||||
Special Items, Operating Profit | — | — | — | 9 | — | 9 | ||||||
Adjusted Operating Profit (Loss) | $ 1,035 | $ 137 | $ (20) | $ (147) | $ — | $ 1,005 | ||||||
Items Affecting Comparability | ||||||||||||
Temporary relief from landlords | (9) | (1) | — | — | — | (10) | ||||||
Temporary relief from government agencies | (3) | (1) | — | — | — | (4) | ||||||
VAT deductions | (34) | (6) | (2) | — | — | (42) | ||||||
Amortization of reacquired franchise rights | 2 | — | — | — | — | 2 | ||||||
F/X impact | — | — | — | — | — | — | ||||||
Core Operating Profit (Loss) | $ 991 | $ 129 | $ (22) | $ (147) | $ — | $ 951 | ||||||
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 | ||||||||||||
(2) Primarily includes revenues and associated expenses of transactions with franchisees derived from the Company's central procurement model whereby |
View original content:https://www.prnewswire.com/news-releases/yum-china-reports-third-quarter-results-302295137.html
SOURCE Yum China Holdings, Inc.
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