Nov 1, 2023 By Business Wire 30 min read

LOUISVILLE, Ky.-(BUSINESS WIRE)-Nov 1, 2023-

Yum! Brands, Inc. (NYSE: YUM) today reported results for the third quarter ended September 30, 2023. Worldwide system sales, excluding foreign currency translation, grew 10%, with 6% same-store sales growth and 6% unit growth. Third-quarter GAAP operating profit grew 12% and third-quarter core operating profit grew 16%. Third-quarter GAAP EPS was $1.46 and third-quarter EPS excluding Special Items was $1.44. Third-quarter EPS includes a favorable $0.05 mark-to-market impact from the remeasurement of the Company’s investment in Devyani International Ltd. and a negative $0.01 impact from foreign currency translation.

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DAVID GIBBS COMMENTS

David Gibbs, CEO, said “We’re incredibly pleased to report yet another excellent quarter with 10% system sales growth driven by 6% same-store sales growth and 6% unit growth with a Q3 record of over 1,100 gross new units. Our twin growth engines, KFC International and Taco Bell U.S., led the way, with KFC showing broad-based strength across both developed and emerging markets. With our strong year-to-date performance, we continue to expect that our full-year 2023 results will outperform on all aspects of our long-term growth algorithm. We set another digital sales record this quarter, with the next leg of our digital growth planned through enhancements of our customer insights platforms and expansions of our global loyalty programs. The exceptional performance of our teams and franchisees gives us confidence in sustaining our top and bottom line momentum in the years ahead.”

THIRD-QUARTER HIGHLIGHTS

• Worldwide system sales grew 10%, excluding foreign currency translation, with KFC at 12%, Taco Bell at 11% and Pizza Hut 4%.
• Unit count increased 6% driven by 1,130 gross new units, a Q3 record.
• Record digital sales exceeded $7 billion, with digital mix over 45%.
• GAAP operating profit grew 12% and core operating profit grew 16%.
• Foreign currency translation unfavorably impacted divisional operating profit by $5 million.

	Third-Quarter	Year-to-Date
	2023	2022	% Change	2023	2022	% Change
GAAP EPS	$1.46	$1.14	+27	$3.97	$3.28	+21
Less Special Items EPS 1	$0.02	$0.05	NM	$0.06	$0.07	NM
EPS Excluding Special Items	$1.44	$1.09	+32	$3.91	$3.21	+22

Digital system sales includes all transactions at system restaurants where consumers utilize ordering interaction that is primarily facilitated by automated technology.

KFC DIVISION

	Third-Quarter (% Change)	Year-to-Date (% Change)
	International	U.S.	International	U.S.
System Sales Growth Ex F/X	+14	Even	+16	+3
Same-Store Sales Growth	+7	Even	+11	+2

• KFC Division opened 664 gross new restaurants across 57 countries.
• Foreign currency translation unfavorably impacted operating profit by $4 million.

1 Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.

2 Reflects Full Year 2022 adjusted for the exclusion of Russia.

TACO BELL DIVISION

	Third-Quarter	Year-to-Date
			%/ppts Change			%/ppts Change
	2023	2022	Reported	Ex F/X	2023	2022	Reported	Ex F/X
Restaurants	19,469	18,807	+4	N/A	19,469	18,807	+4	N/A
System Sales ($MM)	3,243	3,146	+3	+4	9,780	9,345	+5	+7
Same-Store Sales Growth (%)	+1	+1	NM	NM	+4	Even	NM	NM
Franchise and Property Revenues ($MM)	150	145	+3	+4	454	438	+4	+6
Operating Profit ($MM)	97	92	+5	+7	292	287	+2	+5
Operating Margin (%)	40.3	39.0	1.3	1.8	39.6	40.1	(0.5)	0.2

Pizza Hut Markets 1	Percent of Pizza Hut System Sales 2	System Sales Growth Ex F/X
Third-Quarter (% Change)	Year-to-Date (% Change)
United States	41%	+1	+4
China	16%	+14	+21
Asia	14%	+3	+2
Europe	14%	+1	+1
Latin America	6%	(1)	+3
Middle East / Africa	4%	+15	+16
Canada	3%	+10	+8
India	2%	+1	+9

ADDITIONAL INFORMATION ONLINE

Quarter-end dates for each division, restaurant count details, definitions of terms and Restricted Group financial information are available at investors.yum.com. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included in our Condensed Consolidated Summary of Results.

FORWARD-LOOKING STATEMENTS

This announcement may contain “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. 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,” “likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: food safety and food- or beverage-borne illness issues; adverse impacts of catastrophic or unforeseen events; the resurgence of COVID-19 infections and the circulation of novel variants of COVID-19; the success of our concepts’ franchisees; the success of our development strategy; anticipated benefits from past or potential future acquisitions, investments or other strategic transactions, or our portfolio business model; our significant exposure to the Chinese market; our global operations; foreign currency risks and foreign exchange controls; our ability to protect the integrity or availability of IT systems or the security of confidential information and other cybersecurity risks; compliance with data privacy and data protection legal requirements; our ability to successfully implement technology initiatives; our increasing dependence on multiple digital commerce platforms; the impact of social media; our ability to protect our trademarks and other intellectual property; shortages or interruptions in the availability and the delivery of food, equipment and other supplies; the loss of key personnel, labor shortages and increased labor costs, including as a result of state and local legislation related to wages and working conditions, such as the recently enacted AB1228 in California; changes in food prices and other operating costs; our corporate reputation and the value and perception of our brands; evolving expectations and requirements with respect to social and environmental sustainability matters; adverse effects of climate change; pending or future litigation and legal claims or proceedings; changes in, or noncompliance with, legal requirements; tax matters, including changes in tax rates or laws, impositions of new taxes, tax implications of our restructurings, or disagreements with taxing authorities; changes in consumer preferences, wellness trends, discretionary spending and economic conditions, including inflationary pressures; competition within the retail food industry; risks relating to our significant amount of indebtedness. 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.

The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions “Risk Factors” and “Forward-Looking Statements” in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.

Yum! Brands, Inc., based in Louisville, Kentucky, and its subsidiaries franchise or operate a system of over 57,000 restaurants in more than 155 countries and territories under the company’s concepts – KFC, Taco Bell, Pizza Hut and the Habit Burger Grill. The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food, and pizza categories, respectively. The Habit Burger Grill is a fast casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. In 2023, the KFC, Taco Bell and Pizza Hut brands were ranked in the top five of Entrepreneur’s Top Global Franchises Ranking. In addition, in 2023 Yum! Brands was included on the Bloomberg Gender-Equality Index; Forbes’ list of America’s Best Employers for Diversity; and Newsweek’s lists recognizing America’s Most Responsible Companies, America’s Greatest Workplaces for Diversity, America’s Greenest Companies and America’s Greatest Workplaces for Women. In 2022, the Company was named to the Dow Jones Sustainability Index North America.

Category: Earnings

View source version on businesswire.com:https://www.businesswire.com/news/home/20231030732696/en/

CONTACT: Analysts are invited to contact:

Matt Morris, Head of Investor Relations at 888/298-6986Members of the media are invited to contact:

Virginia Ferguson, Vice President, Public Relations, at 502/874-8200

KEYWORD: UNITED STATES NORTH AMERICA KENTUCKY

INDUSTRY KEYWORD: RETAIL RESTAURANT/BAR FOOD/BEVERAGE

SOURCE: Yum! Brands, Inc.

Copyright Business Wire 2023.

PUB: 11/01/2023 07:00 AM/DISC: 11/01/2023 07:02 AM

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