SHANGHAI, July 29, 2020 /PRNewswire/ -- Yum China Holdings,
Inc. (the "Company" or "Yum China") (NYSE: YUMC) today reported
unaudited results for the second quarter ended June 30, 2020.
Impact of COVID-19 Outbreak and Mitigation
Efforts
Second quarter operations improved since the COVID-19 outbreak.
More than 99% of stores in China
are now open, with sales and profits trending unevenly. Sales
improved sequentially in April and May but softened in June. Sales
were primarily impacted by significantly reduced traffic at
transportation and tourist locations, delayed and shortened school
holidays and resurging regional infections. These factors and the
lingering effect of COVID-19 continue to impact operations in
July.
The unevenness in recovery was most pronounced in the
differences between regions and trade zones. Eastern China recovered faster than other
regions. Northern China's recovery
was notably slower, primarily due to more stringent public health
measures. Transportation and tourist locations, which accounted for
high single digits of sales, continue to experience significant
year over year traffic declines. The pace of recovery also varies
across days of the week. Weekdays recovered the fastest as people
returned to work and school, followed by weekends, with holidays
lagging behind.
The Company's primary focus continues to be safety, efficiency
and driving traffic. The Company drove traffic during the second
quarter by leveraging its digital and operating capabilities and
adapting to changing consumer demand. While dine-in improved when
compared to the beginning of the COVID-19 outbreak, delivery and
takeaway continued to grow year over year and contributed over half
of Company sales in the second quarter. Member sales also grew
double digits year over year and exceeded 60% of system sales.
Digital ordering grew in popularity, accounting for approximately
80% of Company sales in the quarter.
Sales deleveraging and additional costs reduced restaurant
margin and operating profit compared to the prior year period.
Those negative impacts were partially offset by the realignment of
our cost structure and labor productivity improvements. The Company
also received one-time relief from landlords and government
agencies.
Second Quarter Highlights
- Results for this quarter include the consolidation of the
recently acquired Huang Ji Huang
operations from the date of the acquisition on April 8, 2020.
- Total revenues declined 11% year over year to
$1.90 billion from $2.12 billion (a 7% decline excluding foreign
currency translation ("F/X")).
- Total system sales declined 4% year over year, with
declines of 6% at KFC and 12% at Pizza Hut, excluding F/X (7%
decline excluding the consolidation of Huang Ji Huang).
- Same-store sales declined 11% year over year, with a 10%
decline at KFC and 12% decline at Pizza Hut, excluding F/X.
- Opened 169 new stores during the quarter. Including 607 Huang
Ji Huang restaurants, total store count reached 9,954.
- Restaurant margin was 13.7%, compared with 14.7% in the
prior year period.
- Operating Profit declined 38% year over year to
$128 million from $204 million (35% decline excluding F/X).
Adjusted Operating Profit declined 36% year over year to
$132 million from $204 million (33% decline excluding F/X).
- Effective tax rate was 25.2%.
- Net Income declined 26% to $132 million from $178
million in the prior year period, primarily due to the
decline in Operating Profit partially offset by gains from our
equity investment in Meituan Dianping ("Meituan").
- Adjusted Net Income declined 23% to $136 million from $178
million in the prior year period (35% decline excluding the
$31 million and $17 million net gains in the second quarter of
2020 and 2019, respectively, from our equity investment in Meituan,
31% decline if further excluding F/X).
- Diluted EPS declined 26% to $0.34 from $0.46 in
the prior year period.
- Adjusted Diluted EPS declined 24% to $0.35 from $0.46 in
the prior year period (34% decline excluding the gains from our
equity investment in Meituan in 2020 and 2019, 31% decline if
further excluding F/X).
- The Company sold a portion of its equity investment in Meituan
during the quarter. The Company currently owns 4.2 million shares
of Meituan.
Key Financial Results
|
Second Quarter
2020
|
|
|
Year to Date Ended
6/30/2020
|
|
|
%
Change
|
|
|
%
Change
|
|
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
Yum China
|
(4)
|
|
(11)
|
|
+14
|
|
(38)
|
|
|
(13)
|
|
(13)
|
|
+14
|
|
(56)
|
|
KFC
|
(6)
|
|
(10)
|
|
+9
|
|
(22)
|
|
|
(10)
|
|
(11)
|
|
+9
|
|
(37)
|
|
Pizza
Hut
|
(12)
|
|
(12)
|
|
-
|
|
(48)
|
|
|
(25)
|
|
(22)
|
|
-
|
|
NM
|
|
|
|
Second
Quarter
|
|
|
|
Year to Date Ended
6/30
|
|
(in US$ million,
except
|
|
|
|
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
%
Change
|
|
per share data
and
percentages)
|
|
2020
|
|
|
2019
|
|
Reported
|
|
Ex F/X
|
|
|
2020
|
|
2019
|
|
Reported
|
|
Ex F/X
|
|
Operating
Profit
|
$
|
128
|
|
$
|
204
|
|
(38)
|
|
(35)
|
|
|
$
|
225
|
|
$
|
507
|
|
(56)
|
|
(54)
|
|
Adjusted Operating
Profit[1]
|
$
|
132
|
|
$
|
204
|
|
(36)
|
|
(33)
|
|
|
$
|
230
|
|
$
|
507
|
|
(55)
|
|
(53)
|
|
Net Income
|
$
|
132
|
|
$
|
178
|
|
(26)
|
|
(23)
|
|
|
$
|
194
|
|
$
|
400
|
|
(52)
|
|
(50)
|
|
Adjusted Net
Income[1]
|
$
|
136
|
|
$
|
178
|
|
(23)
|
|
(20)
|
|
|
$
|
199
|
|
$
|
408
|
|
(51)
|
|
(49)
|
|
Basic Earnings
Per
Common Share
|
$
|
0.35
|
|
$
|
0.47
|
|
(26)
|
|
(23)
|
|
|
$
|
0.51
|
|
$
|
1.06
|
|
(52)
|
|
(49)
|
|
Adjusted Basic
Earnings
Per Common Share[1]
|
$
|
0.36
|
|
$
|
0.47
|
|
(23)
|
|
(19)
|
|
$
|
0.53
|
|
$
|
1.08
|
|
(51)
|
|
(49)
|
|
Diluted Earnings
Per
Common Share
|
$
|
0.34
|
|
$
|
0.46
|
|
(26)
|
|
(24)
|
|
|
$
|
0.50
|
|
$
|
1.03
|
|
(51)
|
|
(50)
|
|
Adjusted Diluted
Earnings Per Common
Share[1]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.35
|
|
$
|
0.46
|
|
(24)
|
|
(20)
|
|
|
$
|
0.51
|
|
$
|
1.05
|
|
(51)
|
|
(50)
|
|
|
[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.
|
NM refers to changes
over 100%, from negative to positive amounts or from zero to an
amount.
|
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
"I am proud of the results we achieved in Q2. We continue to
operate in a tough environment, facing significant headwinds from
reduced traffic, particularly at transportation and tourist
locations, delayed and shortened school holidays and regional
resurgences of COVID-19 infections. Nevertheless, we continued to
operate safely, serve our communities and recover sales, and
remained profitable," said Joey Wat,
CEO of Yum China. "I take great pride in our employees, who are
committed to serving our customers and remained responsive to the
circumstances on the ground. Our business model is resilient and
adaptable. We quickly adjusted our operations and marketing
campaigns to meet evolving consumer preferences and market
limitations. Rapid innovation, our leading digital infrastructure
and our membership program supported product launches and value
offers that were necessary to drive traffic. We protected margins
through the flexible cost structure we have developed and optimized
over the years. These, along with our other core capabilities such
as supply chain and operations, make me confident in our ability to
navigate the challenges ahead."
Wat continued, "Seeing this great team in action, I am
optimistic about our long-term prospects. Despite the uncertainties
brought about by the COVID-19 pandemic, we grew our footprint. And
in July, we reached a major milestone of 10,000 stores! Our 2020
target to open 800-850 gross new stores remains unchanged. With our
innovation capabilities, strong digital strategy, and resilient
business model, I believe we will emerge from this pandemic
stronger than ever, and ready to capture the exciting long-term
market opportunity in China."
Andy Yeung, CFO of Yum China,
added, "Our system sales recovered to 96% of the prior year, or 93%
excluding Huang Ji Huang, in
constant currency. Same-store sales also improved to 89% of the
prior year, 4 percentage points higher than the first quarter. We
are especially encouraged by the improvement at Pizza Hut, where
same-store sales recovered from 69% in the first quarter to 88% in
the second quarter. At Yum China, this is achieved amid ongoing
reduced traffic at transportation and tourist locations, delayed
and shortened school holidays, and resurging regional infections.
The recovery is non-linear and uneven with differences across
regions and trade zones. These impacts, together with the lingering
effects of the COVID-19 outbreak, will continue to put pressure on
our sales and operations in the third quarter."
Yeung continued, "Our realigned cost structure and productivity
improvements helped us achieve a $128
million operating profit and generate strong free cash flow
in the quarter. However, with restaurant traffic still below
pre-outbreak levels and the global pandemic still evolving, we are
prudently managing our financial position. We believe our financial
strength enables us to respond to contingencies and invest in our
top opportunities in the future."
Dividends and Share Repurchases
- As announced in the first quarter 2020 earnings release, the
Company temporarily suspended its share repurchases and, through
the end of the third quarter of 2020, cash dividends on the
Company's common stock.
Digital and Delivery
- As of June 30, 2020, the KFC and
Pizza Hut loyalty programs had over 265 million members. During the
quarter, member sales represented approximately 65% of KFC's system
sales and 53% of Pizza Hut's system sales.
- Delivery contributed to approximately 27% of KFC's Company
sales and 35% of Pizza Hut's Company sales in the second quarter of
2020, up from approximately 18% and 24% from the prior year period,
respectively.
- Digital orders, including delivery, mobile orders and kiosk
orders, accounted for approximately 86% of KFC's Company sales and
61% of Pizza Hut's Company sales in the second quarter of 2020, up
from approximately 62% and 29% from the prior year period,
respectively.
New-Unit Development and Asset Upgrade
- The Company opened 169 new stores in the second quarter 2020,
mainly driven by development of the KFC brand.
- The Company remodeled 310 stores in the second quarter
2020.
|
|
New
Units
|
|
|
Restaurant
Count
|
|
|
|
Second
Quarter
|
|
Year to
Date
|
|
|
As of
6/30
|
|
|
|
2020
|
|
Ended
6/30/2020
|
|
|
2020
|
|
2019
|
|
Yum China
|
|
169
|
|
348
|
|
|
9,954
|
|
8,751
|
|
KFC
|
|
142
|
|
307
|
|
|
6,749
|
|
6,179
|
|
Pizza
Hut
|
|
8
|
|
19
|
|
|
2,258
|
|
2,252
|
|
Others[2]
|
|
19
|
|
22
|
|
|
947
|
|
320
|
|
[2] Others
include Taco Bell, Little Sheep, Huang Ji Huang, East Dawning,
COFFii & JOY and Lavazza.
|
Restaurant Margin
Restaurant margin was 13.7% in the second quarter of 2020,
compared with 14.7% in the prior-year period, primarily
attributable to same-store sales decline and value promotions,
combined with wage and commodity inflation, partially offset by
improved productivity and relief provided by landlords and
government agencies.
|
Second
Quarter
|
|
|
Year to Date Ended
6/30
|
|
|
|
2020
|
|
2019
|
|
ppts
change
|
|
|
2020
|
|
2019
|
|
ppts
change
|
|
Yum China
|
|
13.7%
|
|
14.7%
|
|
(1.0)
|
|
|
12.2%
|
|
16.7%
|
|
(4.5)
|
|
KFC
|
|
14.6%
|
|
16.1%
|
|
(1.5)
|
|
|
14.1%
|
|
18.1%
|
|
(4.0)
|
|
Pizza
Hut
|
|
11.2%
|
|
11.3%
|
|
(0.1)
|
|
|
6.4%
|
|
12.9%
|
|
(6.5)
|
|
2020 Outlook
The Company is affirming the following fiscal year 2020 targets,
subject to revision based on future development of the COVID-19
situation:
- To open between 800 and 850 new stores (gross), excluding
Huang Ji Huang
- To make capital expenditures between $500 million and $550
million
The Company believes that the COVID-19 outbreak will continue to
have a material and extended adverse impact on its operational and
financial results in 2020. Future operations, as well as the
Company's cash flows and financial position, may be materially and
adversely influenced by further developments related to this global
outbreak, including potential additional announcements and actions
from governments and local authorities, disruption in our supply
chain, our inability to provide safety measures to protect our
employees, or other reasons. Nevertheless, the Company is
well-positioned to capture future growth opportunities through its
resilient business model, strong capabilities and dedicated
team.
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
Wednesday, July 29, 2020
(8:00 a.m. Beijing/Hong Kong Time on Thursday, July 30, 2020).
Operator-assisted conference calls are not available at the
moment. 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 registrant
ID.
Pre-registration
Link:
http://apac.directeventreg.com/registration/event/7255203
Conference
ID:
7255203
A live webcast of the call may also be accessed
at https://edge.media-server.com/mmc/p/ne6pumzr.
A replay of the conference call will be available two hours
after the call ends until 10:00 a.m. U.S. Eastern Time on
Thursday, August 6, 2020 (10:00 p.m. Beijing/Hong Kong Time on Thursday,
August 6, 2020) and may be accessed by phone at the following
numbers:
U.S.:
+1 855 452 5696
Mainland
China:
400 632 2162 or 800 870 0205
Hong
Kong:
+852 3051 2780
U.K.:
+44 20 37014269
International:
+61 2 9003 4211
Replay access
code:
7255203
Additionally, a live webcast and an archived webcast of
this conference call will be available at
http://ir.yumchina.com.
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
"2020 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" 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, business plans, investment, dividend and share
repurchase plans, earnings, performance and returns of Yum China,
anticipated effects of population and macroeconomic trends, and the
expected impact of the COVID-19 outbreak, the anticipated effects
of our innovation, digital and delivery capabilities 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 outbreak, 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, East
Dawning and COFFii & JOY concepts outright. The Company had
9,954 restaurants in over 1,400 cities and towns at the end of
June 2020. Yum China ranked #
361 on the Fortune 500 list for 2020. In 2020, Yum China was named
to the Bloomberg Gender-Equality Index and was certified as a Top
Employer 2020 in China by the Top
Employers Institute, both for the second consecutive year. For more
information, please visit http://ir.yumchina.com.
Investor Relations
Contact:
|
|
|
Tel: +86 21 2407
7556
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
|
|
|
6/30/2020
|
|
6/30/2019
|
|
B/(W)
|
|
6/30/2020
|
|
6/30/2019
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
1,692
|
|
$
1,926
|
|
(12)
|
|
|
$
3,240
|
|
$
4,015
|
|
(19)
|
|
Franchise fees and
income
|
|
37
|
|
36
|
|
2
|
|
|
72
|
|
75
|
|
(4)
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
157
|
|
154
|
|
1
|
|
|
318
|
|
324
|
|
(2)
|
|
Other
revenues
|
|
16
|
|
8
|
|
97
|
|
|
26
|
|
14
|
|
86
|
|
Total
revenues
|
|
1,902
|
|
2,124
|
|
(11)
|
|
|
3,656
|
|
4,428
|
|
(17)
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
556
|
|
607
|
|
8
|
|
|
1,051
|
|
1,245
|
|
16
|
|
Payroll and employee
benefits
|
|
384
|
|
450
|
|
15
|
|
|
778
|
|
916
|
|
15
|
|
Occupancy and other
operating expenses
|
|
521
|
|
586
|
|
11
|
|
|
1,015
|
|
1,185
|
|
14
|
|
Company restaurant
expenses
|
|
1,461
|
|
1,643
|
|
11
|
|
|
2,844
|
|
3,346
|
|
15
|
|
General and
administrative expenses
|
|
113
|
|
109
|
|
(4)
|
|
|
212
|
|
223
|
|
5
|
|
Franchise
expenses
|
|
16
|
|
16
|
|
4
|
|
|
33
|
|
36
|
|
8
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
160
|
|
154
|
|
(4)
|
|
|
316
|
|
321
|
|
2
|
|
Other operating costs
and expenses
|
|
13
|
|
6
|
|
NM
|
|
|
23
|
|
11
|
|
NM
|
|
Closures and
impairment expenses, net
|
|
21
|
|
4
|
|
NM
|
|
|
29
|
|
15
|
|
(99)
|
|
Other income,
net
|
|
(10)
|
|
(12)
|
|
(15)
|
|
|
(26)
|
|
(31)
|
|
(14)
|
|
Total costs and
expenses, net
|
|
1,774
|
|
1,920
|
|
8
|
|
|
3,431
|
|
3,921
|
|
13
|
|
Operating
Profit
|
|
128
|
|
204
|
|
(38)
|
|
|
225
|
|
507
|
|
(56)
|
|
Interest income,
net
|
|
8
|
|
10
|
|
(8)
|
|
|
17
|
|
19
|
|
(8)
|
|
Investment
gain
|
|
45
|
|
17
|
|
NM
|
|
|
37
|
|
27
|
|
40
|
|
Income Before
Income Taxes
|
|
181
|
|
231
|
|
(22)
|
|
|
279
|
|
553
|
|
(49)
|
|
Income tax
provision
|
|
(45)
|
|
(46)
|
|
1
|
|
|
(77)
|
|
(139)
|
|
44
|
|
Net income –
including noncontrolling interests
|
|
136
|
|
185
|
|
(27)
|
|
|
202
|
|
414
|
|
(51)
|
|
Net income –
noncontrolling interests
|
|
4
|
|
7
|
|
50
|
|
|
8
|
|
14
|
|
44
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
132
|
|
$
178
|
|
(26)
|
|
|
$
194
|
|
$
400
|
|
(52)
|
|
Effective tax
rate
|
|
25.2%
|
|
20.0%
|
|
(5.2)
|
ppts.
|
|
27.8%
|
|
25.2%
|
|
(2.6)
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
0.35
|
|
$
0.47
|
|
|
|
|
$
0.51
|
|
$
1.06
|
|
|
|
Weighted average
shares outstanding
(in millions)
|
|
377
|
|
378
|
|
|
|
|
376
|
|
378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Common Share
|
|
$
0.34
|
|
$
0.46
|
|
|
|
|
$
0.50
|
|
$
1.03
|
|
|
|
Weighted average
shares outstanding
(in millions)
|
|
388
|
|
389
|
|
|
|
|
387
|
|
389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends
Declared Per Common Share
|
|
$
—
|
|
$
0.12
|
|
|
|
|
$
0.12
|
|
$
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
100.0%
|
|
100.0%
|
|
|
|
|
100.0%
|
|
100.0%
|
|
|
|
Food and
paper
|
|
32.9
|
|
31.5
|
|
(1.4)
|
ppts.
|
|
32.4
|
|
31.0
|
|
(1.4)
|
ppts.
|
Payroll and employee
benefits
|
|
22.7
|
|
23.4
|
|
0.7
|
ppts.
|
|
24.0
|
|
22.8
|
|
(1.2)
|
ppts.
|
Occupancy and other
operating expenses
|
|
30.7
|
|
30.4
|
|
(0.3)
|
ppts.
|
|
31.4
|
|
29.5
|
|
(1.9)
|
ppts.
|
Restaurant
margin
|
|
13.7%
|
|
14.7%
|
|
(1.0)
|
ppts.
|
|
12.2%
|
|
16.7%
|
|
(4.5)
|
ppts.
|
Operating
margin
|
|
7.5%
|
|
10.6%
|
|
(3.1)
|
ppts.
|
|
7.0%
|
|
12.6%
|
|
(5.6)
|
ppts.
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
KFC Operating
Results
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
%
Change
|
|
Year to Date
Ended
|
|
%
Change
|
|
|
6/30/2020
|
|
6/30/2019
|
|
B/(W)
|
|
6/30/2020
|
|
6/30/2019
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
1,260
|
|
$
1,410
|
|
(11)
|
|
|
$
2,480
|
|
$
2,949
|
|
(16)
|
|
Franchise fees and
income
|
|
32
|
|
33
|
|
(5)
|
|
|
65
|
|
69
|
|
(7)
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
15
|
|
15
|
|
1
|
|
|
31
|
|
32
|
|
(1)
|
|
Total
revenues
|
|
1,307
|
|
1,458
|
|
(10)
|
|
|
2,576
|
|
3,050
|
|
(16)
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
419
|
|
450
|
|
7
|
|
|
811
|
|
926
|
|
12
|
|
Payroll and employee
benefits
|
|
271
|
|
311
|
|
13
|
|
|
558
|
|
631
|
|
12
|
|
Occupancy and other
operating expenses
|
|
387
|
|
424
|
|
9
|
|
|
762
|
|
858
|
|
11
|
|
Company restaurant
expenses
|
|
1,077
|
|
1,185
|
|
9
|
|
|
2,131
|
|
2,415
|
|
12
|
|
General and
administrative expenses
|
|
42
|
|
49
|
|
15
|
|
|
88
|
|
98
|
|
10
|
|
Franchise
expenses
|
|
16
|
|
16
|
|
8
|
|
|
32
|
|
35
|
|
11
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
15
|
|
15
|
|
—
|
|
|
31
|
|
32
|
|
1
|
|
Closures and
impairment expenses, net
|
|
10
|
|
—
|
|
NM
|
|
|
11
|
|
7
|
|
(64)
|
|
Other income,
net
|
|
(12)
|
|
(12)
|
|
(8)
|
|
|
(29)
|
|
(30)
|
|
—
|
|
Total costs and
expenses, net
|
|
1,148
|
|
1,253
|
|
8
|
|
|
2,264
|
|
2,557
|
|
11
|
|
Operating
Profit
|
|
$
159
|
|
$
205
|
|
(22)
|
|
|
$
312
|
|
$
493
|
|
(37)
|
|
Company
sales
|
|
100.0%
|
|
100.0%
|
|
|
|
|
100.0%
|
|
100.0%
|
|
|
|
Food and
paper
|
|
33.3
|
|
31.9
|
|
(1.4)
|
ppts.
|
|
32.7
|
|
31.4
|
|
(1.3)
|
ppts.
|
Payroll and employee
benefits
|
|
21.5
|
|
22.0
|
|
0.5
|
ppts.
|
|
22.5
|
|
21.4
|
|
(1.1)
|
ppts.
|
Occupancy and other
operating expenses
|
|
30.6
|
|
30.0
|
|
(0.6)
|
ppts.
|
|
30.7
|
|
29.1
|
|
(1.6)
|
ppts.
|
Restaurant
margin
|
|
14.6%
|
|
16.1%
|
|
(1.5)
|
ppts.
|
|
14.1%
|
|
18.1%
|
|
(4.0)
|
ppts.
|
Operating
margin
|
|
12.6%
|
|
14.5%
|
|
(1.9)
|
ppts.
|
|
12.6%
|
|
16.7%
|
|
(4.1)
|
ppts.
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
Pizza Hut
Operating Results
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
%
Change
|
|
Year to Date
Ended
|
|
%
Change
|
|
|
6/30/2020
|
|
6/30/2019
|
|
B/(W)
|
|
6/30/2020
|
|
6/30/2019
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
422
|
|
$
507
|
|
(17)
|
|
|
$
744
|
|
$
1,048
|
|
(29)
|
|
Franchise fees and
income
|
|
1
|
|
1
|
|
28
|
|
|
2
|
|
2
|
|
14
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
1
|
|
1
|
|
12
|
|
|
2
|
|
2
|
|
8
|
|
Other
revenues
|
|
—
|
|
1
|
|
(32)
|
|
|
—
|
|
1
|
|
(25)
|
|
Total
revenues
|
|
424
|
|
510
|
|
(17)
|
|
|
748
|
|
1,053
|
|
(29)
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
134
|
|
155
|
|
14
|
|
|
236
|
|
314
|
|
25
|
|
Payroll and employee
benefits
|
|
111
|
|
137
|
|
19
|
|
|
215
|
|
280
|
|
23
|
|
Occupancy and other
operating expenses
|
|
130
|
|
157
|
|
17
|
|
|
245
|
|
319
|
|
23
|
|
Company restaurant
expenses
|
|
375
|
|
449
|
|
16
|
|
|
696
|
|
913
|
|
24
|
|
General and
administrative expenses
|
|
23
|
|
27
|
|
13
|
|
|
47
|
|
51
|
|
8
|
|
Franchise
expenses
|
|
—
|
|
—
|
|
(8)
|
|
|
1
|
|
1
|
|
(3)
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
1
|
|
1
|
|
(16)
|
|
|
2
|
|
2
|
|
(20)
|
|
Other operating costs
and expenses
|
|
—
|
|
1
|
|
32
|
|
|
—
|
|
1
|
|
26
|
|
Closures and
impairment expenses, net
|
|
10
|
|
3
|
|
NM
|
|
|
15
|
|
6
|
|
NM
|
|
Total costs and
expenses, net
|
|
409
|
|
481
|
|
15
|
|
|
761
|
|
974
|
|
22
|
|
Operating Profit
(Loss)
|
|
$
15
|
|
$
29
|
|
(48)
|
|
|
$
(13)
|
|
$
79
|
|
NM
|
|
Company
sales
|
|
100.0%
|
|
100.0%
|
|
|
|
|
100.0%
|
|
100.0%
|
|
|
|
Food and
paper
|
|
31.8
|
|
30.7
|
|
(1.1)
|
ppts.
|
|
31.7
|
|
30.0
|
|
(1.7)
|
ppts.
|
Payroll and employee
benefits
|
|
26.1
|
|
27.0
|
|
0.9
|
ppts.
|
|
28.8
|
|
26.7
|
|
(2.1)
|
ppts.
|
Occupancy and other
operating expenses
|
|
30.9
|
|
31.0
|
|
0.1
|
ppts.
|
|
33.1
|
|
30.4
|
|
(2.7)
|
ppts.
|
Restaurant
margin
|
|
11.2%
|
|
11.3%
|
|
(0.1)
|
ppts.
|
|
6.4%
|
|
12.9%
|
|
(6.5)
|
ppts.
|
Operating
margin
|
|
3.6%
|
|
5.8%
|
|
(2.2)
|
ppts.
|
|
(1.7)%
|
|
7.6%
|
|
(9.3)
|
ppts.
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in US$
million)
|
|
|
|
6/30/2020
|
|
12/31/2019
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
674
|
|
$
1,046
|
Short-term
investments
|
|
1,034
|
|
611
|
Accounts receivable,
net
|
|
83
|
|
88
|
Inventories,
net
|
|
346
|
|
380
|
Prepaid expenses and
other current assets
|
|
166
|
|
134
|
Total Current
Assets
|
|
2,303
|
|
2,259
|
Property, plant and
equipment, net
|
|
1,504
|
|
1,594
|
Operating lease
right-of-use assets
|
|
1,886
|
|
1,985
|
Goodwill
|
|
309
|
|
254
|
Intangible assets,
net
|
|
183
|
|
94
|
Deferred income
taxes
|
|
99
|
|
95
|
Investments in
unconsolidated affiliates
|
|
68
|
|
89
|
Other
assets
|
|
611
|
|
580
|
Total
Assets
|
|
6,963
|
|
6,950
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST
AND EQUITY
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
1,660
|
|
1,691
|
Income taxes
payable
|
|
63
|
|
45
|
Total Current
Liabilities
|
|
1,723
|
|
1,736
|
Non-current operating
lease liabilities
|
|
1,677
|
|
1,803
|
Non-current finance
lease obligations
|
|
24
|
|
26
|
Other
liabilities
|
|
252
|
|
210
|
Total
Liabilities
|
|
3,676
|
|
3,775
|
|
|
|
|
|
Redeemable
Noncontrolling Interest
|
|
12
|
|
—
|
|
|
|
|
|
Equity
|
|
|
|
|
Common
stock, $0.01 par value; 1,000 million shares authorized; 397
million
shares and 395 million shares issued at
June 30, 2020 and December 31,
2019, respectively; 377 million shares and
376 million shares outstanding at
June 30, 2020 and December 31, 2019,
respectively
|
|
4
|
|
4
|
Treasury
stock
|
|
(728)
|
|
(721)
|
Additional paid-in
capital
|
|
2,444
|
|
2,427
|
Retained
earnings
|
|
1,565
|
|
1,416
|
Accumulated other
comprehensive loss
|
|
(82)
|
|
(49)
|
Total Equity – Yum
China Holdings, Inc.
|
|
3,203
|
|
3,077
|
Noncontrolling
interests
|
|
72
|
|
98
|
Total
Equity
|
|
3,275
|
|
3,175
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
|
$
6,963
|
|
$
6,950
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(in US$
million)
|
(unaudited)
|
|
|
|
Year to Date
Ended
|
|
|
6/30/2020
|
|
6/30/2019
|
Cash Flows –
Operating Activities
|
|
|
|
|
|
|
Net income –
including noncontrolling interests
|
|
$
202
|
|
|
$
414
|
|
Depreciation and
amortization
|
|
214
|
|
|
217
|
|
Non-cash operating
lease cost
|
|
178
|
|
|
167
|
|
Closures and
impairment expenses
|
|
29
|
|
|
15
|
|
Investment
gain
|
|
(37)
|
|
|
(27)
|
|
Equity income from
investments in unconsolidated affiliates
|
|
(34)
|
|
|
(37)
|
|
Distributions of
income received from unconsolidated affiliates
|
|
25
|
|
|
38
|
|
Deferred income
taxes
|
|
6
|
|
|
6
|
|
Share-based
compensation expense
|
|
17
|
|
|
15
|
|
Changes in accounts
receivable
|
|
6
|
|
|
(5)
|
|
Changes in
inventories
|
|
35
|
|
|
(1)
|
|
Changes in prepaid
expenses and other current assets
|
|
17
|
|
|
—
|
|
Changes in accounts
payable and other current liabilities
|
|
(16)
|
|
|
70
|
|
Changes in income
taxes payable
|
|
17
|
|
|
3
|
|
Changes in
non-current operating lease liabilities
|
|
(194)
|
|
|
(188)
|
|
Other, net
|
|
(13)
|
|
|
(30)
|
|
Net Cash Provided
by Operating Activities
|
|
452
|
|
|
657
|
|
Cash Flows –
Investing Activities
|
|
|
|
|
|
|
Capital
spending
|
|
(185)
|
|
|
(212)
|
|
Purchases of
short-term investments
|
|
(1,093)
|
|
|
(409)
|
|
Purchase of long-term
time deposits
|
|
(57)
|
|
|
—
|
|
Maturities of
short-term investments
|
|
662
|
|
|
248
|
|
Contribution to
unconsolidated affiliates
|
|
(13)
|
|
|
—
|
|
Acquisition of
business, net of cash acquired
|
|
(177)
|
|
|
—
|
|
Disposal of equity
securities
|
|
54
|
|
|
—
|
|
Other, net
|
|
48
|
|
|
5
|
|
Net Cash Used in
Investing Activities
|
|
(761)
|
|
|
(368)
|
|
Cash Flows –
Financing Activities
|
|
|
|
|
|
|
Repurchase of shares
of common stock
|
|
(8)
|
|
|
(143)
|
|
Cash dividends paid
on common stock
|
|
(45)
|
|
|
(91)
|
|
Dividends paid to
noncontrolling interests
|
|
(7)
|
|
|
(25)
|
|
Other, net
|
|
1
|
|
|
—
|
|
Net Cash Used in
Financing Activities
|
|
(59)
|
|
|
(259)
|
|
Effect of Exchange
Rates on Cash, Cash Equivalents and Restricted Cash
|
|
(6)
|
|
|
—
|
|
Net (Decrease)
Increase in Cash, Cash Equivalents and Restricted
Cash
|
|
(374)
|
|
|
30
|
|
Cash, Cash
Equivalents and Restricted Cash - Beginning of
Period
|
|
1,055
|
|
|
1,266
|
|
Cash, Cash
Equivalents and Restricted Cash - End of Period
|
|
681
|
|
|
1,296
|
|
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 a 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 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 EPS, Adjusted Effective Tax Rate and Adjusted
EBITDA, which we define as net income including noncontrolling
interests adjusted for income tax, interest income, net, investment
gain or loss, depreciation, amortization and other items, including
store impairment charges and Special Items. The Special Items for
the year to date ended June 30, 2020
represent derecognition of indemnification assets related to
Daojia and share-based compensation cost recognized for a special
award of performance stock units ("Partner PSU Awards") granted to
select employees which are described in the accompanying notes. The
Special Item for the year to date ended June
30, 2019 represents impact from the U.S. Tax Cuts and Jobs
Act (the "Tax Act"), as described in the accompanying notes.
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 income tax, interest income, net,
investment gain or loss, depreciation, amortization and other
items, including store impairment charges and Special Items. 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. These adjusted measures should not be considered
in isolation or as a substitute for GAAP financial results, but
should be read in conjunction with the unaudited Condensed
Consolidated Statements of Income and other information presented
herein. A reconciliation of the most directly comparable GAAP
measures to non-GAAP adjusted measures is presented below.
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
6/30/2020
|
|
6/30/2019
|
|
6/30/2020
|
|
6/30/2019
|
Detail of Special
Items
|
|
|
|
|
|
|
|
|
Derecognition of
indemnification assets related to Daojia(b)
|
|
$
(3)
|
|
$
—
|
|
$
(3)
|
|
$
—
|
Share-based
compensation expense for Partner PSU
awards(c)
|
|
(1)
|
|
—
|
|
(2)
|
|
—
|
Special Items,
Operating Profit
|
|
(4)
|
|
—
|
|
(5)
|
|
—
|
Tax effect on Special
Items(d)
|
|
—
|
|
—
|
|
—
|
|
—
|
Impact from the Tax
Act(e)
|
|
—
|
|
—
|
|
—
|
|
(8)
|
Special Items, net
income – including noncontrolling interests
|
|
(4)
|
|
—
|
|
(5)
|
|
(8)
|
Special Items, net
income – noncontrolling interests
|
|
—
|
|
—
|
|
—
|
|
—
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
$
(4)
|
|
$
—
|
|
$
(5)
|
|
$
(8)
|
Weighted-average
Diluted Shares Outstanding (in millions)
|
|
388
|
|
389
|
|
387
|
|
389
|
Special Items,
Diluted Earnings Per Common Share
|
|
$
(0.01)
|
|
$
—
|
|
$
(0.01)
|
|
$
(0.02)
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
128
|
|
$
204
|
|
$
225
|
|
$
507
|
Special Items,
Operating Profit
|
|
(4)
|
|
—
|
|
(5)
|
|
—
|
Adjusted Operating
Profit
|
|
$
132
|
|
$
204
|
|
$
230
|
|
$
507
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
132
|
|
$
178
|
|
$
194
|
|
$
400
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
(4)
|
|
—
|
|
(5)
|
|
(8)
|
Adjusted Net Income –
Yum China Holdings, Inc.
|
|
$
136
|
|
$
178
|
|
$
199
|
|
$
408
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
0.35
|
|
$
0.47
|
|
$
0.51
|
|
$
1.06
|
Special Items, Basic
Earnings Per Common Share
|
|
(0.01)
|
|
—
|
|
(0.02)
|
|
(0.02)
|
Adjusted Basic
Earnings Per Common Share
|
|
$
0.36
|
|
$
0.47
|
|
$
0.53
|
|
$
1.08
|
Diluted Earnings Per
Common Share
|
|
$
0.34
|
|
$
0.46
|
|
$
0.50
|
|
$
1.03
|
Special Items,
Diluted Earnings Per Common Share
|
|
(0.01)
|
|
—
|
|
(0.01)
|
|
(0.02)
|
Adjusted Diluted
Earnings Per Common Share
|
|
$
0.35
|
|
$
0.46
|
|
$
0.51
|
|
$
1.05
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
25.2%
|
|
20.0%
|
|
27.8%
|
|
25.2%
|
Impact on effective
tax rate as a result of Special Items
|
|
0.6%
|
|
—%
|
|
0.5%
|
|
1.4%
|
Adjusted effective
tax rate
|
|
24.6%
|
|
20.0%
|
|
27.3%
|
|
23.8%
|
Notes to the Condensed
Consolidated Statements of Income, Condensed Consolidated Balance
Sheets,
|
Condensed Consolidated
Statements of Cash Flows and
|
Reconciliation of Reported GAAP
Results to Non-GAAP Adjusted Measures
|
(in US$
million)
|
(unaudited)
|
(a) Amounts presented as of and for the quarters and years to
date ended June 30, 2020 and 2019 are
unaudited.
(b) In the quarter ended June 30,
2020, the Company derecognized a $3
million indemnification asset previously recorded for the
Daojia acquisition as the indemnification right expired pursuant to
the purchase agreement. The amount was included in Other income,
net, as a deduction item, but was not allocated to any segment for
performance reporting purposes.
(c) 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 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 cost of $1 million and $2 million
associated with the Partner PSU Awards for the quarter and year to
date ended June 30, 2020, respectively.
(d) The tax expense was determined based upon the nature, as
well as the jurisdiction, of each Special Item at the applicable
tax rate.
(e) We completed the evaluation of the impact on our transition
tax computation based on the final regulations released by the U.S.
Treasury Department and the U.S. Internal Revenue Service became
effective in the first quarter of 2019, and recorded an additional
tax expense of $8 million for the
transition tax accordingly.
Reconciliation of
Net Income to Adjusted EBITDA
|
(in US$
million)
|
(unaudited)
|
|
Net income, along
with the reconciliation to Adjusted EBITDA, is presented
below.
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
6/30/2020
|
|
6/30/2019
|
|
6/30/2020
|
|
6/30/2019
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
132
|
|
$
178
|
|
$
194
|
|
$
400
|
Net income –
noncontrolling interests
|
|
4
|
|
7
|
|
8
|
|
14
|
Income tax
provision
|
|
45
|
|
46
|
|
77
|
|
139
|
Interest income,
net
|
|
(8)
|
|
(10)
|
|
(17)
|
|
(19)
|
Investment
gain
|
|
(45)
|
|
(17)
|
|
(37)
|
|
(27)
|
Operating
Profit
|
|
128
|
|
204
|
|
225
|
|
507
|
Special Items,
Operating Profit
|
|
4
|
|
—
|
|
5
|
|
—
|
Adjusted Operating
Profit
|
|
132
|
|
204
|
|
230
|
|
507
|
Depreciation and
amortization
|
|
105
|
|
106
|
|
214
|
|
217
|
Store impairment
charges
|
|
24
|
|
11
|
|
36
|
|
25
|
Adjusted
EBITDA
|
|
$
261
|
|
$
321
|
|
$
480
|
|
$
749
|
|
|
|
|
|
|
|
|
|
Unit Count by
Brand
|
|
KFC
|
|
|
|
|
12/31/2019
|
|
New Builds
|
|
Closures
|
|
6/30/2020
|
Company-owned
|
|
|
|
5,083
|
|
227
|
|
(79)
|
|
5,231
|
Unconsolidated
affiliates
|
|
|
|
896
|
|
63
|
|
(12)
|
|
947
|
Franchisees
|
|
|
|
555
|
|
17
|
|
(1)
|
|
571
|
Total
|
|
|
|
6,534
|
|
307
|
|
(92)
|
|
6,749
|
|
|
Pizza
Hut
|
|
|
12/31/2019
|
|
New Builds
|
|
Closures
|
|
Refranchised
|
|
6/30/2020
|
Company-owned
|
|
2,178
|
|
17
|
|
(42)
|
|
(3)
|
|
2,150
|
Franchisees
|
|
103
|
|
2
|
|
—
|
|
3
|
|
108
|
Total
|
|
2,281
|
|
19
|
|
(42)
|
|
—
|
|
2,258
|
|
|
Others
|
|
|
12/31/2019
|
|
New Builds
|
|
Closures
|
|
Acquired(1)
|
|
6/30/2020
|
Company-owned
|
|
94
|
|
7
|
|
(6)
|
|
3
|
|
98
|
Franchisees
|
|
291
|
|
14
|
|
(80)
|
|
623
|
|
848
|
Other
|
|
—
|
|
1
|
|
—
|
|
—
|
|
1
|
Total
|
|
385
|
|
22
|
|
(86)
|
|
626
|
|
947
|
|
(1) On
April 8, 2020, the Company completed the acquisition of Huang Ji
Huang.
|
Yum China
Holdings, Inc.
|
Segment
Results
|
(in US$
million)
|
(unaudited)
|
|
Quarter Ended
6/30/2020
|
|
KFC
|
|
Pizza
Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Elimination
|
|
Total
|
Company
sales
|
|
$
1,260
|
|
$
422
|
|
$
10
|
|
$
—
|
|
$
—
|
|
$
1,692
|
Franchise fees and
income
|
|
32
|
|
1
|
|
4
|
|
—
|
|
—
|
|
37
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
15
|
|
1
|
|
11
|
|
130
|
|
—
|
|
157
|
Other
revenues
|
|
—
|
|
—
|
|
25
|
|
1
|
|
(10)
|
|
16
|
Total
revenues
|
|
$
1,307
|
|
$
424
|
|
$
50
|
|
$
131
|
|
$
(10)
|
|
$
1,902
|
Company restaurant
expenses
|
|
1,077
|
|
375
|
|
10
|
|
—
|
|
(1)
|
|
1,461
|
General and
administrative expenses
|
|
42
|
|
23
|
|
11
|
|
37
|
|
—
|
|
113
|
Franchise
expenses
|
|
16
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
15
|
|
1
|
|
9
|
|
135
|
|
—
|
|
160
|
Other operating costs
and expenses
|
|
—
|
|
—
|
|
21
|
|
1
|
|
(9)
|
|
13
|
Closures and
impairment income, net
|
|
10
|
|
10
|
|
1
|
|
—
|
|
—
|
|
21
|
Other (income)
expenses, net
|
|
(12)
|
|
—
|
|
—
|
|
2
|
|
—
|
|
(10)
|
Total costs and
expenses, net
|
|
1,148
|
|
409
|
|
52
|
|
175
|
|
(10)
|
|
1,774
|
Operating Profit
(Loss)
|
|
$
159
|
|
$
15
|
|
$
(2)
|
|
$
(44)
|
|
$
—
|
|
$
128
|
|
Quarter Ended
6/30/2019
|
|
KFC
|
|
Pizza
Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Elimination
|
|
Total
|
Company
sales
|
|
$
1,410
|
|
$
507
|
|
$
9
|
|
$
—
|
|
$
—
|
|
$
1,926
|
Franchise fees and
income
|
|
33
|
|
1
|
|
2
|
|
—
|
|
—
|
|
36
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
15
|
|
1
|
|
5
|
|
133
|
|
—
|
|
154
|
Other
revenues
|
|
—
|
|
1
|
|
16
|
|
1
|
|
(10)
|
|
8
|
Total
revenues
|
|
$
1,458
|
|
$
510
|
|
$
32
|
|
$
134
|
|
$
(10)
|
|
$
2,124
|
Company restaurant
expenses
|
|
1,185
|
|
449
|
|
9
|
|
—
|
|
—
|
|
1,643
|
General and
administrative expenses
|
|
49
|
|
27
|
|
8
|
|
25
|
|
—
|
|
109
|
Franchise
expenses
|
|
16
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
15
|
|
1
|
|
5
|
|
133
|
|
—
|
|
154
|
Other operating costs
and expenses
|
|
—
|
|
1
|
|
14
|
|
1
|
|
(10)
|
|
6
|
Closures and
impairment income, net
|
|
—
|
|
3
|
|
1
|
|
—
|
|
—
|
|
4
|
Other income,
net
|
|
(12)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(12)
|
Total costs and
expenses, net
|
|
1,253
|
|
481
|
|
37
|
|
159
|
|
(10)
|
|
1,920
|
Operating Profit
(Loss)
|
|
$
205
|
|
$
29
|
|
$
(5)
|
|
$
(25)
|
|
$
—
|
|
$
204
|
|
Year to Date Ended
6/30/2020
|
|
KFC
|
|
Pizza
Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Elimination
|
|
Total
|
Company
sales
|
|
$
2,480
|
|
$
744
|
|
$
16
|
|
$
—
|
|
$
—
|
|
$
3,240
|
Franchise fees and
income
|
|
65
|
|
2
|
|
5
|
|
—
|
|
—
|
|
72
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
31
|
|
2
|
|
16
|
|
269
|
|
—
|
|
318
|
Other
revenues
|
|
—
|
|
—
|
|
41
|
|
2
|
|
(17)
|
|
26
|
Total
revenues
|
|
$
2,576
|
|
$
748
|
|
$
78
|
|
$
271
|
|
$
(17)
|
|
$
3,656
|
Company restaurant
expenses
|
|
2,131
|
|
696
|
|
19
|
|
—
|
|
(2)
|
|
2,844
|
General and
administrative expenses
|
|
88
|
|
47
|
|
19
|
|
58
|
|
—
|
|
212
|
Franchise
expenses
|
|
32
|
|
1
|
|
—
|
|
—
|
|
—
|
|
33
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
31
|
|
2
|
|
13
|
|
270
|
|
—
|
|
316
|
Other operating costs
and expenses
|
|
—
|
|
—
|
|
36
|
|
2
|
|
(15)
|
|
23
|
Closures and
impairment expenses, net
|
|
11
|
|
15
|
|
3
|
|
—
|
|
—
|
|
29
|
Other income,
net
|
|
(29)
|
|
—
|
|
—
|
|
3
|
|
—
|
|
(26)
|
Total costs and
expenses, net
|
|
2,264
|
|
761
|
|
90
|
|
333
|
|
(17)
|
|
3,431
|
Operating Profit
(Loss)
|
|
$
312
|
|
$
(13)
|
|
$
(12)
|
|
$
(62)
|
|
$
—
|
|
$
225
|
|
Year to Date Ended
6/30/2019
|
|
KFC
|
|
Pizza
Hut
|
|
All Other
Segments
|
|
Corporate
and
Unallocated(1)
|
|
Elimination
|
|
Total
|
Company
sales
|
|
$
2,949
|
|
$
1,048
|
|
$
18
|
|
$
—
|
|
$
—
|
|
$
4,015
|
Franchise fees and
income
|
|
69
|
|
2
|
|
4
|
|
—
|
|
—
|
|
75
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
32
|
|
2
|
|
12
|
|
278
|
|
—
|
|
324
|
Other
revenues
|
|
—
|
|
1
|
|
30
|
|
2
|
|
(19)
|
|
14
|
Total
revenues
|
|
$
3,050
|
|
$
1,053
|
|
$
64
|
|
$
280
|
|
$
(19)
|
|
$
4,428
|
Company restaurant
expenses
|
|
2,415
|
|
913
|
|
19
|
|
—
|
|
(1)
|
|
3,346
|
General and
administrative expenses
|
|
98
|
|
51
|
|
16
|
|
58
|
|
—
|
|
223
|
Franchise
expenses
|
|
35
|
|
1
|
|
—
|
|
—
|
|
—
|
|
36
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
32
|
|
2
|
|
11
|
|
276
|
|
—
|
|
321
|
Other operating costs
and expenses
|
|
—
|
|
1
|
|
26
|
|
2
|
|
(18)
|
|
11
|
Closures and
impairment expenses, net
|
|
7
|
|
6
|
|
2
|
|
—
|
|
—
|
|
15
|
Other income,
net
|
|
(30)
|
|
—
|
|
—
|
|
(1)
|
|
—
|
|
(31)
|
Total costs and
expenses, net
|
|
2,557
|
|
974
|
|
74
|
|
335
|
|
(19)
|
|
3,921
|
Operating Profit
(Loss)
|
|
$
493
|
|
$
79
|
|
$
(10)
|
|
$
(55)
|
|
$
—
|
|
$
507
|
|
The above tables
reconcile segment information, which is based on management
responsibility, with our Condensed Consolidated Statements of
Income.
|
(1) Corporate and unallocated
expenses comprise items that are not allocated to segments for
performance reporting purposes.
Amount includes revenues and expenses associated with transactions
with franchisees and unconsolidated affiliates such as
inventory procurement and other services provided to franchisees
and unconsolidated affiliates. The Corporate and Unallocated
column in the above tables includes, among other amounts, all
amounts that we have deemed Special Items. See "Reconciliation
of Reported GAAP Results to Non-GAAP Adjusted Measures".
|
View original
content:http://www.prnewswire.com/news-releases/yum-china-reports-second-quarter-2020-results-301102302.html
SOURCE Yum China Holdings, Inc.