Resilience and agility enable Yum China to serve communities in
need
Grew Total Revenues and sustained Operating Profit
despite significant challenges from the COVID-19
outbreak
Remains focused on long-term opportunities:
Total stores exceeded 12,000, in Q1 opened 329 net new
stores
SHANGHAI, May 3, 2022
/PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or
"Yum China") (NYSE: YUMC and HKEX:
9987) today reported unaudited results for the first quarter ended
March 31, 2022.
Impact of COVID-19 Outbreak and Mitigation
Efforts
The highly transmissible Omicron variant caused significant
volatility in our business operations in the first quarter, and
continues to have a severe impact in the second quarter. The
COVID-19 situation was relatively stable in January and February.
However, the situation rapidly deteriorated in March, resulting in
the largest outbreak since COVID-19 first emerged in early 2020.
This latest outbreak and the challenges we face are unprecedented.
Compared to first quarter 2020, the case counts, duration,
geographical coverage and restrictive measures experienced in the
first quarter 2022 are much more severe:
- COVID-19 case counts have reached new records. In March, case
counts (including asymptomatic cases) surpassed 2020 and 2021
combined. Cases in April further increased to nearly 600,000, which
is approximately six times higher than that of March.
- Many cities across large swaths of China have been fully or
partially locked down for weeks or even months, including
economically important regions such as Shanghai, Tianjin, Jilin, Suzhou, Shenzhen and Guangzhou.
- Eastern China, the most
vibrant economic region and most important market for us,
accounting for 30-40% of our stores and sales, has been the most
affected in this wave.
- Drastic public health measures are being stepped up nationwide
in line with the strict enforcement of dynamic zero-COVID policy,
resulting in further reductions of social activities, travel and
consumption.
Stores temporarily closed or that offered only takeaway and
delivery services significantly increased in March and April:
- January and February – Around 300 stores on average. Over 500
stores at the peak in January.
- March – Over 1,700 stores on average, of which approximately
40% of stores were temporarily closed.
- April – Around 3,000 stores, on average, of which approximately
50% of stores were temporarily closed.
- Temporary store closures are excluded from our same-store sales
calculation.
- System sales are impacted by temporary store closures and
same-store sales.
Same-store sales declined sharply in March and April:
- January and February combined – Decreased approximately 4% year
over year, reflecting a sequential improvement from the fourth
quarter.
- March – Decreased by more than 20% year over year, as the
COVID-19 situation rapidly deteriorated.
- April (preliminary) – Decreased by more than 20% year over
year, as the outbreak persisted.
We have responded quickly and taken measures intending to lessen
the impact of these unprecedented headwinds.
- We designed alternative routes, set up temporary drop-off and
pick-up sites and optimized sourcing to fulfill the demand of our
store network. Our resilient supply chain management has enabled us
to lessen disruptions from supply complexities and mobility
restrictions.
- Nationwide, we have adjusted marketing campaigns, simplified
menus and promoted off-premise services. Our digital capabilities
have enabled us to engage customers directly and nimbly. Our hybrid
delivery model has allowed us to maintain adequate rider capacity
and continue operations in most places.
- In heavily impacted regions like Shanghai, to serve our community, we have
quickly launched community purchasing (a new way of group ordering)
across all our brands, promoted new retail packaged food,
significantly cut down on menu offerings and shortened operating
hours.
As a result of our tremendous efforts, first quarter operating
profit of $191 million was in line
with expectations indicated in the March business update. However,
we were only able to partially mitigate COVID-19 impacts and
incurred an operating loss in March. Unless conditions
significantly improve in May and June, we expect to incur an
operating loss in the second quarter, due to (1) the significant
sales decline driven by the worsening COVID-19 situation, (2) a
more pronounced sales deleveraging impact as the second quarter is
seasonally a lower quarter for sales and profit margins and (3)
increases in commodity prices, wages, and utility prices. In light
of this, we are pulling back on advertising and promotional
activities, temporarily postponing store remodels, negotiating rent
relief, implementing austerity measures to reduce G&A, and
optimizing our raw material cost structure.
First Quarter Highlights
- Total revenues increased 4% year over year to
$2.67 billion from $2.56 billion (a 2% increase excluding foreign
currency translation ("F/X")).
- Total system sales decreased 4% year over year,
with decreases of 4% at KFC and 1% at Pizza Hut, excluding
F/X.
- Same-store sales decreased 8% year over year, with
decreases of 9% at KFC and 5% at Pizza Hut, excluding F/X.
- Opened 329 net new stores during the quarter; total
store count reached 12,117 as of March 31,
2022.
- Restaurant margin was 13.8%, compared with 18.7% in
the prior year period, primarily due to sales deleveraging as a
result of the worsened COVID-19 situation.
- Operating Profit decreased 44% year over year to
$191 million from $342 million (a 45% decrease excluding F/X).
- Adjusted Operating Profit decreased 44% year over
year to $193 million from
$345 million (a 45% decrease
excluding F/X).
- Effective tax rate was 33.1%.
- Net Income decreased 57% to $100 million from $230
million in the prior year period, primarily due to the
decrease in Operating Profit and the loss from our mark-to-market
investment in Meituan Dianping.
- Adjusted Net Income decreased 56% to $102 million from $233
million in the prior year period (a 47% decrease excluding
the net losses of $30 million and
$16 million in the first quarter of
2022 and 2021, respectively, from our mark-to-market equity
investments; a 48% decrease if further excluding F/X).
- Diluted EPS decreased 57% to $0.23 from $0.53 in
the prior year period.
- Adjusted Diluted EPS decreased 56% to $0.24 from $0.54 in
the prior year period (a 46% decrease excluding the net losses from
our mark-to-market equity investments in the first quarter of 2022
and 2021; a 47% decrease if further excluding F/X).
- Results for the current year period include the consolidation
of Hangzhou KFC.
Key Financial Results
|
First Quarter 2022
|
|
|
% Change
|
|
|
System Sales
|
|
Same-Store Sales
|
|
Net New Units
|
|
Operating Profit
|
|
Yum China
|
(4)
|
|
(8)
|
|
+13
|
|
(44)
|
|
KFC
|
(4)
|
|
(9)
|
|
+14
|
|
(33)
|
|
Pizza
Hut
|
(1)
|
|
(5)
|
|
+12
|
|
(50)
|
|
|
|
First Quarter
|
|
(in US$ million,
except
|
|
|
|
|
|
|
% Change
|
|
per share data and
percentages)
|
|
2022
|
|
|
2021
|
|
Reported
|
|
Ex F/X
|
|
Operating
Profit
|
$
|
191
|
|
$
|
342
|
|
(44)
|
|
(45)
|
|
Adjusted Operating
Profit(1)
|
$
|
193
|
|
$
|
345
|
|
(44)
|
|
(45)
|
|
Net Income
|
$
|
100
|
|
$
|
230
|
|
(57)
|
|
(58)
|
|
Adjusted Net
Income(1)
|
$
|
102
|
|
$
|
233
|
|
(56)
|
|
(57)
|
|
Basic Earnings Per
Common Share
|
$
|
0.23
|
|
$
|
0.55
|
|
(58)
|
|
(58)
|
|
Adjusted Basic Earnings
Per
|
|
|
|
|
|
|
|
|
|
|
Common
Share(1)
|
$
|
0.24
|
|
$
|
0.55
|
|
(56)
|
|
(58)
|
|
Diluted Earnings Per
Common Share
|
$
|
0.23
|
|
$
|
0.53
|
|
(57)
|
|
(57)
|
|
Adjusted Diluted
Earnings Per
|
|
|
|
|
|
|
|
|
|
|
Common
Share(1)
|
$
|
0.24
|
|
$
|
0.54
|
|
(56)
|
|
(57)
|
|
Note: All comparisons are
versus the same period a year ago.
Percentages may not recompute due to rounding.
System sales and same-store sales percentages exclude the impact
of F/X. Effective January 1,
2018, temporary store closures are normalized in the
same-store sales calculation by excluding the period during which
stores are temporarily closed.
CEO and CFO Comments
Joey Wat, CEO of Yum China, commented, "Foremost, I want to thank
frontline workers and volunteers for their selfless and noble
efforts. The country and our company are facing the toughest
challenges yet in the battle against COVID-19. Frontline employees
in our stores and supply chain are once again rising to the
occasion. Our teams worked together across the brands and
functions, and quickly developed ways to address the fast-changing
conditions. In the cities on lockdown, where most business
activities have halted, we are one of the first authorized
essential food suppliers serving communities in need. We have also
been prioritizing meals to the frontline workers fighting the
crisis and to disadvantaged and vulnerable groups. I hope we have
been able to bring some joy to people in need during this difficult
time."
Wat continued, "Our ability to quickly adapt to this
ever-changing operating environment is at the core of our
resilience. Nationwide, we swiftly designed detour routes and
optimized supply sourcing to lessen the impact of supply chain
disruptions. In Shanghai, when
less than 10% of our restaurants were open and operating with
limited capacity, we launched community purchasing across all
brands in a matter of days. This breakthrough allowed us to
efficiently deploy limited resources to serve more customers. We
seized at-home demand with our ready-to-eat products which are easy
to store during the lockdown. We believe our solid business
fundamentals and agility will continue to help us navigate the
near-term challenges. Despite the current COVID-19
situation, we will remain focused on executing our RGM
strategic framework to fortify resilience, accelerate growth and
widen our strategic moat to drive long-term and sustainable
growth."
Andy Yeung, CFO of Yum China, added, "First quarter operational
performance was significantly impacted by the surge of Omicron
variant in March. The case counts, duration, coverage, and severity
of restrictive measures are far more extensive than previous
outbreaks. Our quick response to sustain operations in areas on
lockdown, drive off-premise sales and proactively manage costs
partially mitigated the impact. While we generated operating profit
in the first quarter, we experienced a loss for the month of March.
Unless the COVID-19 situation improves significantly in May and
June, we expect to incur an operating loss in the second quarter.
During this enormously difficult time, our priority is to operate
our restaurants safely in order to serve customers and communities
in need."
Yeung continued, "We continue to employ a disciplined and
balanced capital allocation strategy, ensuring that we have
sufficient cash to sustain operations and deal with potential
contingencies. While the pace of store remodeling and expansion may
be temporarily impacted by the COVID-19 outbreak, our new unit
development pipeline remains robust, powered by healthy unit
economics. We will continue to make significant capex investments
in digital, supply chain infrastructure and our store network
expansion. We remain confident these investments will widen our
strategic moat, drive sustainable growth and capture attractive
long-term opportunities in China."
Share Repurchases and Dividends
- In March 2022, the Board of
Directors (the "Board") increased the Company's share repurchase
authorization by $1 billion to an
aggregate of $2.4 billion.
- During the first quarter, we repurchased approximately 5.0
million shares of Yum China common
stock for $232 million at an average
price of $46.57 per share. As of
March 31, 2022, approximately
$1.4 billion remained available for
future share repurchases under the current authorization.
- The Board declared a cash dividend of $0.12 per share on Yum
China's common stock, payable on June
21, 2022 to shareholders of record as of the close of
business on May 31, 2022.
Digital and Delivery
- The KFC and Pizza Hut loyalty programs exceeded 370 million
members combined, as of quarter-end. Member sales accounted for
approximately 62% of system sales in the first quarter of
2022.
- Delivery contributed approximately 36% of KFC and Pizza Hut's
Company sales in the first quarter of 2022, an increase of
approximately five percentage points from the prior year period due
to more severe outbreaks.
- Digital orders, including delivery, mobile orders and kiosk
orders, accounted for approximately 88% of KFC and Pizza Hut's
Company sales in the first quarter of 2022.
KFC and Pizza Hut
Total
|
|
First Quarter
|
|
|
|
2022
|
|
|
2021
|
|
Member count (as of
period-end)
|
|
370 million+
|
|
|
315 million+
|
|
Member sales as % of
system sales
|
|
~62%
|
|
|
~64%
|
|
Delivery as % of
Company sales
|
|
~36%
|
|
|
~31%
|
|
Digital orders as % of
Company sales
|
|
~88%
|
|
|
~86%
|
|
New-Unit Development and Asset Upgrade
- The Company opened 522 gross new stores, or 329 net new stores
in the first quarter of 2022, mainly driven by development of the
KFC and Pizza Hut brands. The net reduction in others was mainly
due to closures in the Huang Ji Huang and Little Sheep brands.
- The Company remodeled 96 stores in the first quarter of
2022.
|
|
Net New Units
|
|
|
Restaurant Count
|
|
|
|
First Quarter
|
|
|
As of March 31
|
|
|
|
2022
|
|
|
2022
|
|
2021
|
|
Yum China
|
|
329
|
|
|
12,117
|
|
10,725
|
|
KFC
|
|
273
|
|
|
8,441
|
|
7,373
|
|
Pizza
Hut
|
|
89
|
|
|
2,679
|
|
2,382
|
|
Others(2)
|
|
(33)
|
|
|
997
|
|
970
|
|
2 Others include Taco Bell, Little Sheep, Huang Ji
Huang, East Dawning, COFFii & JOY and Lavazza.
Restaurant Margin
- Restaurant margin was 13.8% in the first quarter of 2022,
compared with 18.7% in the prior year period, primarily
attributable to sales deleveraging, higher inflation in commodity,
wage and utility costs, as well as increased rider cost associated
with rising delivery volume.
|
First
Quarter
|
|
|
|
2022
|
|
2021
|
|
ppts
change
|
|
Yum China
|
|
13.8%
|
|
18.7%
|
|
(4.9)
|
|
KFC
|
|
15.2%
|
|
19.9%
|
|
(4.7)
|
|
Pizza
Hut
|
|
10.7%
|
|
15.3%
|
|
(4.6)
|
|
2022 Outlook
Yum China remains focused on
capturing long-term opportunities in China. The Company's fiscal year 2022 targets
are unchanged:
- To open approximately 1,000 to 1,200 net new stores.
- To make capital expenditures in the range of approximately
$800 million to $1 billion.
Other Updates
- On April 15, 2022, the Company
and Yum! Brands entered into an amendment to the Master License
Agreement to amend the development milestones for the Taco Bell
brand. The Company has committed to expanding the Taco Bell store
network to at least 100 stores by the end of 2022 and at least 225
stores by the end of 2025, with certain investment support from
Yum! Brands. Subject to achieving these milestones, the Company
will have the exclusive right to operate and sublicense the Taco
Bell brand in China for 50
years.
- On April 19, 2022, the Company
announced the appointments of Johnson
Huang, General Manager, KFC, to the position of Chief
Customer Officer of the Company and Warton Wang, Chief Development
Officer, as General Manager, KFC, effective May 1, 2022.
Note on Non-GAAP Adjusted Measures
Reported GAAP results include Special Items, which are excluded
from non-GAAP adjusted measures. Special Items are not allocated to
any segment and therefore only impact reported GAAP results of
Yum China. See "Reconciliation of
Reported GAAP Results to Non-GAAP Adjusted Measures" within this
release.
Conference Call
Yum China's management will hold
an earnings conference call at 8:00
p.m. U.S. Eastern Time on Tuesday,
May 3, 2022 (8:00 a.m.
Beijing/Hong Kong Time on
Wednesday, May 4,
2022).
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/3380199
Conference ID:
3380199
A live webcast of the call may also be accessed at
https://edge.media-server.com/mmc/p/p4o65n8v.
A replay of the conference call will be available two hours
after the call ends until 9:00 a.m.
U.S. Eastern Time on Wednesday, May 11,
2022 (9:00 p.m. Beijing/Hong Kong Time on Wednesday, May 11, 2022) and may be accessed by
phone at the following numbers:
U.S.:
1 855 452
5696
Mainland
China:
400 820 9035 or 800 988 0552
Hong
Kong:
+852 3051 2780
U.K.:
0808 234
0072
International:
+61 2 9003 4211
Replay access
code:
3380199
Additionally, this earnings release, the accompanying slides, a
live webcast and an archived webcast of this conference call will
be available at Yum China's Investor Relations website at
http://ir.yumchina.com.
For important news and information regarding Yum China, including our filings with the U.S.
Securities and Exchange Commission and the Hong Kong Stock
Exchange, visit Yum China's Investor
Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel
for disclosing key information to its investors, some of which may
contain material and previously non-public information.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including under
"2022 Outlook." We intend all forward-looking statements to be
covered by the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements generally
can be identified by the fact that they do not relate strictly to
historical or current facts and by the use of forward-looking words
such as "expect," "expectation," "believe," "anticipate," "may,"
"could," "intend," "belief," "plan," "estimate," "target,"
"predict," "project," "likely," "will," "continue," "should,"
"forecast," "outlook", "commit" or similar terminology. These
statements are based on current estimates and assumptions made by
us in light of our experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors that we believe are appropriate and reasonable under
the circumstances, but there can be no assurance that such
estimates and assumptions will prove to be correct. Forward-looking
statements include, without limitation, statements regarding the
future strategies, growth, business plans, investment, dividend and
share repurchase plans, earnings, performance and returns of
Yum China, anticipated effects of
population and macroeconomic trends, the expected impact of the
COVID-19 pandemic, the anticipated effects of our innovation,
digital and delivery capabilities and investments on growth and
beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements
are not guarantees of performance and are inherently subject to
known and unknown risks and uncertainties that are difficult to
predict and could cause our actual results or events to differ
materially from those indicated by those statements. We cannot
assure you that any of our expectations, estimates or assumptions
will be achieved. The forward-looking statements included in this
press release are only made as of the date of this press release,
and we disclaim any obligation to publicly update any
forward-looking statement to reflect subsequent events or
circumstances, except as required by law. Numerous factors could
cause our actual results or events to differ materially from those
expressed or implied by forward-looking statements, including,
without limitation: whether we are able to achieve development
goals at the times and in the amounts currently anticipated, if at
all, the success of our marketing campaigns and product innovation,
our ability to maintain food safety and quality control systems,
changes in public health conditions, including the COVID-19
pandemic and regional outbreaks caused by existing or new COVID-19
variants, our ability to control costs and expenses, including tax
costs, as well as changes in political, economic and regulatory
conditions in China. In addition,
other risks and uncertainties not presently known to us or that we
currently believe to be immaterial could affect the accuracy of any
such forward-looking statements. All forward-looking statements
should be evaluated with the understanding of their inherent
uncertainty. You should consult our filings with the Securities and
Exchange Commission (including the information set forth under the
captions "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in our Annual
Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q)
for additional detail about factors that could affect our financial
and other results.
About Yum China Holdings, Inc.
Yum China Holdings, Inc. is a licensee of Yum! Brands in
mainland China. It has exclusive rights in mainland China to KFC,
China's leading quick-service restaurant brand, Pizza Hut, the
leading casual dining restaurant brand in China, and Taco Bell, a California-based restaurant chain serving
innovative Mexican-inspired food. Yum
China also owns the Little Sheep, Huang Ji Huang and COFFii
& JOY concepts outright. In addition, Yum China has partnered with Lavazza to explore
and develop the Lavazza coffee shop concept in China. The Company had 12,117 restaurants in
over 1,700 cities at the end of March
2022.
In 2021, Yum China ranked # 363
on the Fortune 500 list and was named to TIME100 Most Influential
Companies list. Yum China has also
been selected as member of both Dow Jones Sustainability Indices
(DJSI): World Index and Emerging Market Index. In 2022, the Company
was named to the Bloomberg Gender-Equality Index and was certified
as a Top Employer 2022 in China by
the Top Employers Institute, both for the fourth consecutive year.
For more information, please visit
http://ir.yumchina.com.
Investor Relations
Contact:
|
|
|
Tel: +86 21 2407 7556 /
+852 2267 5801
IR@YumChina.com
|
|
|
|
Media
Contact:
|
|
|
Tel: +86 21 2407
7510
Media@YumChina.com
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Statements of Income
|
(in US$ million,
except per share data)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
%
Change
|
|
|
|
3/31/2022
|
|
|
3/31/2021
|
|
|
B/(W)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
2,548
|
|
|
$
|
2,331
|
|
|
|
9
|
|
|
|
Franchise fees and
income
|
|
|
24
|
|
|
|
42
|
|
|
|
(42)
|
|
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
77
|
|
|
|
171
|
|
|
|
(55)
|
|
|
|
Other
revenues
|
|
|
19
|
|
|
|
13
|
|
|
|
46
|
|
|
|
Total
revenues
|
|
|
2,668
|
|
|
|
2,557
|
|
|
|
4
|
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
792
|
|
|
|
704
|
|
|
|
(12)
|
|
|
|
Payroll and employee
benefits
|
|
|
667
|
|
|
|
544
|
|
|
|
(23)
|
|
|
|
Occupancy and other
operating expenses
|
|
|
738
|
|
|
|
648
|
|
|
|
(14)
|
|
|
|
Company restaurant
expenses
|
|
|
2,197
|
|
|
|
1,896
|
|
|
|
(16)
|
|
|
|
General and
administrative expenses
|
|
|
151
|
|
|
|
130
|
|
|
|
(16)
|
|
|
|
Franchise
expenses
|
|
|
10
|
|
|
|
17
|
|
|
|
42
|
|
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
|
75
|
|
|
|
169
|
|
|
|
56
|
|
|
|
Other operating costs
and expenses
|
|
|
17
|
|
|
|
11
|
|
|
|
(54)
|
|
|
|
Closures and impairment
expenses (income), net
|
|
|
2
|
|
|
|
(2)
|
|
|
NM
|
|
|
|
Other expenses
(income), net
|
|
|
25
|
|
|
|
(6)
|
|
|
NM
|
|
|
|
Total costs and
expenses, net
|
|
|
2,477
|
|
|
|
2,215
|
|
|
|
(12)
|
|
|
|
Operating
Profit
|
|
|
191
|
|
|
|
342
|
|
|
|
(44)
|
|
|
|
Interest income,
net
|
|
|
12
|
|
|
|
15
|
|
|
|
(19)
|
|
|
|
Investment
loss
|
|
|
(37)
|
|
|
|
(12)
|
|
|
NM
|
|
|
|
Income Before Income
Taxes and
Equity in Net Earnings (Losses) from Equity
Method Investments
|
|
|
166
|
|
|
|
345
|
|
|
|
(52)
|
|
|
|
Income tax
provision
|
|
|
(55)
|
|
|
|
(102)
|
|
|
|
46
|
|
|
|
Equity in net earnings
(losses) from equity method investments
|
|
|
(1)
|
|
|
|
—
|
|
|
NM
|
|
|
|
Net income – including
noncontrolling interests
|
|
|
110
|
|
|
|
243
|
|
|
|
(55)
|
|
|
|
Net income –
noncontrolling interests
|
|
|
10
|
|
|
|
13
|
|
|
|
21
|
|
|
|
Net Income – Yum
China Holdings, Inc.
|
|
$
|
100
|
|
|
$
|
230
|
|
|
|
(57)
|
|
|
|
Effective tax
rate
|
|
|
33.1
|
%
|
|
|
29.6
|
%
|
|
|
(3.5)
|
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
|
0.23
|
|
|
$
|
0.55
|
|
|
|
|
|
|
Weighted-average shares
outstanding
(in millions)
|
|
|
426
|
|
|
|
420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Common Share
|
|
$
|
0.23
|
|
|
$
|
0.53
|
|
|
|
|
|
|
Weighted-average shares
outstanding
(in millions)
|
|
|
430
|
|
|
|
434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends
Declared Per Common Share
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
Food and
paper
|
|
|
31.1
|
|
|
|
30.2
|
|
|
|
(0.9)
|
|
ppts.
|
|
Payroll and employee
benefits
|
|
|
26.2
|
|
|
|
23.3
|
|
|
|
(2.9)
|
|
ppts.
|
|
Occupancy and other
operating expenses
|
|
|
28.9
|
|
|
|
27.8
|
|
|
|
(1.1)
|
|
ppts.
|
|
Restaurant
margin
|
|
|
13.8
|
%
|
|
|
18.7
|
%
|
|
|
(4.9)
|
|
ppts.
|
|
Operating
margin
|
|
|
7.5
|
%
|
|
|
14.7
|
%
|
|
|
(7.2)
|
|
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
|
|
|
|
3/31/2022
|
|
|
3/31/2021
|
|
|
B/(W)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
1,991
|
|
|
$
|
1,783
|
|
|
|
12
|
|
|
|
Franchise fees and
income
|
|
|
16
|
|
|
|
33
|
|
|
|
(51)
|
|
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
8
|
|
|
|
15
|
|
|
|
(47)
|
|
|
|
Other
revenues
|
|
|
2
|
|
|
|
1
|
|
|
|
53
|
|
|
|
Total
revenues
|
|
|
2,017
|
|
|
|
1,832
|
|
|
|
10
|
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
621
|
|
|
|
540
|
|
|
|
(15)
|
|
|
|
Payroll and employee
benefits
|
|
|
501
|
|
|
|
398
|
|
|
|
(26)
|
|
|
|
Occupancy and other
operating expenses
|
|
|
567
|
|
|
|
490
|
|
|
|
(16)
|
|
|
|
Company restaurant
expenses
|
|
|
1,689
|
|
|
|
1,428
|
|
|
|
(18)
|
|
|
|
General and
administrative expenses
|
|
|
65
|
|
|
|
55
|
|
|
|
(20)
|
|
|
|
Franchise
expenses
|
|
|
9
|
|
|
|
16
|
|
|
|
47
|
|
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
|
8
|
|
|
|
15
|
|
|
|
50
|
|
|
|
Other operating costs
and expenses
|
|
|
1
|
|
|
|
—
|
|
|
NM
|
|
|
|
Closures and impairment
(income) expenses, net
|
|
|
(1)
|
|
|
|
—
|
|
|
NM
|
|
|
|
Other expenses
(income), net
|
|
|
26
|
|
|
|
(9)
|
|
|
NM
|
|
|
|
Total costs and
expenses, net
|
|
|
1,797
|
|
|
|
1,505
|
|
|
|
(19)
|
|
|
|
Operating
Profit
|
|
$
|
220
|
|
|
$
|
327
|
|
|
|
(33)
|
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
Food and
paper
|
|
|
31.2
|
|
|
|
30.3
|
|
|
|
(0.9)
|
|
ppts.
|
|
Payroll and employee
benefits
|
|
|
25.2
|
|
|
|
22.3
|
|
|
|
(2.9)
|
|
ppts.
|
|
Occupancy and other
operating expenses
|
|
|
28.4
|
|
|
|
27.5
|
|
|
|
(0.9)
|
|
ppts.
|
|
Restaurant
margin
|
|
|
15.2
|
%
|
|
|
19.9
|
%
|
|
|
(4.7)
|
|
ppts.
|
|
Operating
margin
|
|
|
11.1
|
%
|
|
|
18.3
|
%
|
|
|
(7.2)
|
|
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
|
|
|
|
3/31/2022
|
|
|
3/31/2021
|
|
|
B/(W)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
$
|
542
|
|
|
$
|
538
|
|
|
|
1
|
|
|
|
Franchise fees and
income
|
|
|
2
|
|
|
|
2
|
|
|
|
7
|
|
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
1
|
|
|
|
1
|
|
|
|
(28)
|
|
|
|
Other
revenues
|
|
|
2
|
|
|
|
—
|
|
|
NM
|
|
|
|
Total
revenues
|
|
|
547
|
|
|
|
541
|
|
|
|
1
|
|
|
|
Costs and Expenses,
Net
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
|
166
|
|
|
|
160
|
|
|
|
(4)
|
|
|
|
Payroll and employee
benefits
|
|
|
157
|
|
|
|
143
|
|
|
|
(10)
|
|
|
|
Occupancy and other
operating expenses
|
|
|
161
|
|
|
|
153
|
|
|
|
(5)
|
|
|
|
Company restaurant
expenses
|
|
|
484
|
|
|
|
456
|
|
|
|
(6)
|
|
|
|
General and
administrative expenses
|
|
|
29
|
|
|
|
25
|
|
|
|
(15)
|
|
|
|
Franchise
expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
(5)
|
|
|
|
Expenses for
transactions with
franchisees and unconsolidated affiliates
|
|
|
1
|
|
|
|
1
|
|
|
|
29
|
|
|
|
Other operating costs
and expenses
|
|
|
1
|
|
|
|
—
|
|
|
NM
|
|
|
|
Closures and impairment
expenses (income), net
|
|
|
1
|
|
|
|
(2)
|
|
|
NM
|
|
|
|
Total costs and
expenses, net
|
|
|
517
|
|
|
|
481
|
|
|
|
(7)
|
|
|
|
Operating
Profit
|
|
$
|
30
|
|
|
$
|
60
|
|
|
|
(50)
|
|
|
|
Company
sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
Food and
paper
|
|
|
30.6
|
|
|
|
29.8
|
|
|
|
(0.8)
|
|
ppts.
|
|
Payroll and employee
benefits
|
|
|
28.9
|
|
|
|
26.4
|
|
|
|
(2.5)
|
|
ppts.
|
|
Occupancy and other
operating expenses
|
|
|
29.8
|
|
|
|
28.5
|
|
|
|
(1.3)
|
|
ppts.
|
|
Restaurant
margin
|
|
|
10.7
|
%
|
|
|
15.3
|
%
|
|
|
(4.6)
|
|
ppts.
|
|
Operating
margin
|
|
|
5.5
|
%
|
|
|
11.1
|
%
|
|
|
(5.6)
|
|
ppts.
|
|
Percentages may not recompute due to rounding. NM refers to not
meaningful.
Yum China
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in US$
million)
|
|
|
|
3/31/2022
|
|
|
12/31/2021
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,047
|
|
|
$
|
1,136
|
|
Short-term
investments
|
|
|
2,622
|
|
|
|
2,860
|
|
Accounts receivable,
net
|
|
|
70
|
|
|
|
67
|
|
Inventories,
net
|
|
|
345
|
|
|
|
432
|
|
Prepaid expenses and
other current assets
|
|
|
182
|
|
|
|
221
|
|
Total Current
Assets
|
|
|
4,266
|
|
|
|
4,716
|
|
Property, plant and
equipment, net
|
|
|
2,231
|
|
|
|
2,251
|
|
Operating lease
right-of-use assets
|
|
|
2,546
|
|
|
|
2,612
|
|
Goodwill
|
|
|
2,163
|
|
|
|
2,142
|
|
Intangible assets,
net
|
|
|
251
|
|
|
|
272
|
|
Investments in
unconsolidated affiliates
|
|
|
305
|
|
|
|
292
|
|
Deferred income tax
assets
|
|
|
96
|
|
|
|
106
|
|
Other assets
|
|
|
781
|
|
|
|
832
|
|
Total
Assets
|
|
|
12,639
|
|
|
|
13,223
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
|
2,008
|
|
|
|
2,332
|
|
Income taxes
payable
|
|
|
77
|
|
|
|
51
|
|
Total Current
Liabilities
|
|
|
2,085
|
|
|
|
2,383
|
|
Non-current operating
lease liabilities
|
|
|
2,214
|
|
|
|
2,286
|
|
Non-current finance
lease obligations
|
|
|
41
|
|
|
|
40
|
|
Deferred income tax
liabilities
|
|
|
418
|
|
|
|
425
|
|
Other
liabilities
|
|
|
173
|
|
|
|
167
|
|
Total
Liabilities
|
|
|
4,931
|
|
|
|
5,301
|
|
|
|
|
|
|
|
|
Redeemable
Noncontrolling Interest
|
|
|
14
|
|
|
|
14
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common stock,
$0.01 par value; 1,000 million shares authorized; 449 million
shares and
449 million shares issued at March 31,
2022 and December 31, 2021, respectively; 423
million shares and 428 million shares
outstanding at March 31, 2022 and December 31,
2021, respectively
|
|
|
4
|
|
|
|
4
|
|
Treasury
stock
|
|
|
(1,035)
|
|
|
|
(803)
|
|
Additional paid-in
capital
|
|
|
4,704
|
|
|
|
4,695
|
|
Retained
earnings
|
|
|
2,941
|
|
|
|
2,892
|
|
Accumulated other
comprehensive income
|
|
|
279
|
|
|
|
268
|
|
Total Yum China
Holdings, Inc. Stockholders' Equity
|
|
|
6,893
|
|
|
|
7,056
|
|
Noncontrolling
interests
|
|
|
801
|
|
|
|
852
|
|
Total
Equity
|
|
|
7,694
|
|
|
|
7,908
|
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
|
$
|
12,639
|
|
|
$
|
13,223
|
|
|
|
|
|
|
|
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(in US$
million)
|
(unaudited)
|
|
|
|
Quarter
Ended
|
|
|
3/31/2022
|
|
3/31/2021
|
Cash Flows –
Operating Activities
|
|
|
|
|
|
|
|
|
Net income –
including noncontrolling interests
|
|
$
|
110
|
|
|
|
$
|
243
|
|
|
Depreciation and
amortization
|
|
|
164
|
|
|
|
|
128
|
|
|
Non-cash
operating lease cost
|
|
|
120
|
|
|
|
|
101
|
|
|
Closures and
impairment expenses (income)
|
|
|
2
|
|
|
|
|
(2)
|
|
|
Investment
loss
|
|
|
37
|
|
|
|
|
12
|
|
|
Equity income
from investments in unconsolidated affiliates
|
|
|
—
|
|
|
|
|
(17)
|
|
|
Distributions of
income received from unconsolidated affiliates
|
|
|
—
|
|
|
|
|
11
|
|
|
Deferred income
taxes
|
|
|
1
|
|
|
|
|
15
|
|
|
Share-based
compensation expense
|
|
|
11
|
|
|
|
|
10
|
|
|
Changes in
accounts receivable
|
|
|
(2)
|
|
|
|
|
(3)
|
|
|
Changes in
inventories
|
|
|
88
|
|
|
|
|
52
|
|
|
Changes in
prepaid expenses and other current assets
|
|
|
38
|
|
|
|
|
20
|
|
|
Changes in
accounts payable and other current liabilities
|
|
|
(322)
|
|
|
|
|
(175)
|
|
|
Changes in income
taxes payable
|
|
|
26
|
|
|
|
|
51
|
|
|
Changes in
non-current operating lease liabilities
|
|
|
(106)
|
|
|
|
|
(104)
|
|
|
Other,
net
|
|
|
4
|
|
|
|
|
(11)
|
|
|
Net Cash
Provided by Operating Activities
|
|
|
171
|
|
|
|
|
331
|
|
|
Cash Flows –
Investing Activities
|
|
|
|
|
|
|
|
|
Capital
spending
|
|
|
(205)
|
|
|
|
|
(165)
|
|
|
Purchases of
short-term investments
|
|
|
(1,041)
|
|
|
|
|
(1,180)
|
|
|
Maturities of
short-term investments
|
|
|
1,281
|
|
|
|
|
1,258
|
|
|
Acquisition of
business, net of cash acquired
|
|
|
(23)
|
|
|
|
|
—
|
|
|
Acquisition of
equity investment
|
|
|
—
|
|
|
|
|
(261)
|
|
|
Other,
net
|
|
|
1
|
|
|
|
|
1
|
|
|
Net Cash
Provided by (Used in) Investing Activities
|
|
|
13
|
|
|
|
|
(347)
|
|
|
Cash Flows –
Financing Activities
|
|
|
|
|
|
|
|
|
Repurchase of
shares of common stock
|
|
|
(224)
|
|
|
|
|
—
|
|
|
Cash dividends
paid on common stock
|
|
|
(51)
|
|
|
|
|
(50)
|
|
|
Dividends paid to
noncontrolling interests
|
|
|
(17)
|
|
|
|
|
(1)
|
|
|
Contribution from
noncontrolling interests
|
|
|
18
|
|
|
|
|
—
|
|
|
Other,
net
|
|
|
—
|
|
|
|
|
(4)
|
|
|
Net Cash Used
in Financing Activities
|
|
|
(274)
|
|
|
|
|
(55)
|
|
|
Effect of
Exchange Rates on Cash, Cash Equivalents and Restricted
Cash
|
|
|
1
|
|
|
|
|
(3)
|
|
|
Net Decrease
in Cash, Cash Equivalents and Restricted Cash
|
|
|
(89)
|
|
|
|
|
(74)
|
|
|
Cash, Cash
Equivalents, and Restricted Cash - Beginning of
Period
|
|
|
1,136
|
|
|
|
|
1,158
|
|
|
Cash, Cash
Equivalents, and Restricted Cash - End of Period
|
|
$
|
1,047
|
|
|
|
$
|
1,084
|
|
|
In this press release:
- The Company provides certain percentage changes excluding the
impact of foreign currency translation ("F/X"). These amounts are
derived by translating current year results at prior year average
exchange rates. We believe the elimination of the F/X impact
provides better year-to-year comparability without the distortion
of foreign currency fluctuations.
- System sales growth reflects the results of all restaurants
regardless of ownership, including Company-owned, franchise and
unconsolidated affiliate restaurants that operate our restaurant
concepts, except for non-Company-owned restaurants for which we do
not receive a sales-based royalty. Sales of franchise and
unconsolidated affiliate restaurants typically generate ongoing
franchise fees for the Company at an average rate of approximately
6% of system sales. Franchise and unconsolidated affiliate
restaurant sales are not included in Company sales in the Condensed
Consolidated Statements of Income; however, the franchise fees are
included in the Company's revenues. We believe system sales growth
is useful to investors as a significant indicator of the overall
strength of our business as it incorporates all of our revenue
drivers, Company and franchise same-store sales as well as net unit
growth.
- Effective January 1, 2018, the
Company revised its definition of same-store sales growth to
represent the estimated percentage change in sales of food of all
restaurants in the Company system that have been open prior to the
first day of our prior fiscal year, excluding the period during
which stores are temporarily closed. We refer to these as our
"base" stores. Previously, same-store sales growth represented the
estimated percentage change in sales of all restaurants in the
Company system that have been open for one year or more, including
stores temporarily closed, and the base stores changed on a rolling
basis from month to month. This revision was made to align with how
management measures performance internally and focuses on trends of
a more stable base of stores.
- Company sales represent revenues from Company-owned
restaurants. Company Restaurant profit ("Restaurant profit") is
defined as Company sales less expenses incurred directly by our
Company-owned restaurants in generating Company sales. Company
restaurant margin percentage is defined as Restaurant profit
divided by Company sales.
Reconciliation of Reported GAAP Results to
Non-GAAP Adjusted Measures
(in millions, except per share
data)
(unaudited)
In addition to the results provided in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP") in this press
release, the Company provides non-GAAP measures adjusted for
Special Items, which include Adjusted Operating Profit, Adjusted
Net Income, Adjusted Earnings Per Common Share ("EPS"), Adjusted
Effective Tax Rate and Adjusted EBITDA, which we define as net
income including noncontrolling interests adjusted for equity in
net earnings (losses) from equity method investments, income tax,
interest income, net, investment gain or loss, certain non-cash
expenses, consisting of depreciation and amortization as well as
store impairment charges, and Special Items.
The following table set forth the reconciliation of the most
directly comparable GAAP financial measures to the non-GAAP
adjusted financial measures.
|
|
Quarter
Ended
|
|
|
|
|
3/31/2022
|
|
|
3/31/2021
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
|
191
|
|
|
$
|
342
|
|
|
Special Items,
Operating Profit
|
|
|
(2)
|
|
|
|
(3)
|
|
|
Adjusted Operating
Profit
|
|
$
|
193
|
|
|
$
|
345
|
|
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
Net Income – Yum China
Holdings, Inc.
|
|
$
|
100
|
|
|
$
|
230
|
|
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
|
(2)
|
|
|
|
(3)
|
|
|
Adjusted Net Income –
Yum China Holdings, Inc.
|
|
$
|
102
|
|
|
$
|
233
|
|
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
|
$
|
0.23
|
|
|
$
|
0.55
|
|
|
Special Items, Basic
Earnings Per Common Share
|
|
|
(0.01)
|
|
|
|
—
|
|
|
Adjusted Basic Earnings
Per Common Share
|
|
$
|
0.24
|
|
|
$
|
0.55
|
|
|
Diluted Earnings Per
Common Share
|
|
$
|
0.23
|
|
|
$
|
0.53
|
|
|
Special Items, Diluted
Earnings Per Common Share
|
|
|
(0.01)
|
|
|
|
(0.01)
|
|
|
Adjusted Diluted
Earnings Per Common Share
|
|
$
|
0.24
|
|
|
$
|
0.54
|
|
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
33.1
|
%
|
|
|
29.6
|
%
|
|
Impact on effective tax
rate as a result of Special Items
|
|
|
0.4
|
%
|
|
|
0.3
|
%
|
|
Adjusted effective tax
rate
|
|
|
32.7
|
%
|
|
|
29.3
|
%
|
|
Net income, along with the reconciliation to Adjusted EBITDA, is
presented below:
|
|
Quarter
Ended
|
|
|
|
|
3/31/2022
|
|
|
3/31/2021
|
|
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
Net Income – Yum China
Holdings, Inc.
|
|
$
|
100
|
|
|
$
|
230
|
|
|
Net income –
noncontrolling interests
|
|
|
10
|
|
|
|
13
|
|
|
Equity in net
(earnings) losses from equity method investments
|
|
|
1
|
|
|
|
—
|
|
|
Income tax
provision
|
|
|
55
|
|
|
|
102
|
|
|
Interest income,
net
|
|
|
(12)
|
|
|
|
(15)
|
|
|
Investment
loss
|
|
|
37
|
|
|
|
12
|
|
|
Operating
Profit
|
|
|
191
|
|
|
|
342
|
|
|
Special Items,
Operating Profit
|
|
|
2
|
|
|
|
3
|
|
|
Adjusted Operating
Profit
|
|
|
193
|
|
|
|
345
|
|
|
Depreciation and
amortization
|
|
|
164
|
|
|
|
128
|
|
|
Store impairment
charges
|
|
|
8
|
|
|
|
3
|
|
|
Adjusted
EBITDA
|
|
$
|
365
|
|
|
$
|
476
|
|
|
Details of Special Items are presented below:
|
|
Quarter
Ended
|
|
|
|
|
3/31/2022
|
|
|
3/31/2021
|
|
|
Share-based
compensation expense for Partner PSU
awards(1)
|
|
$
|
(2)
|
|
|
$
|
(3)
|
|
|
Special Items,
Operating Profit
|
|
|
(2)
|
|
|
|
(3)
|
|
|
Tax effect on Special
Items(2)
|
|
|
—
|
|
|
|
—
|
|
|
Special Items, net
income – including noncontrolling interests
|
|
|
(2)
|
|
|
|
(3)
|
|
|
Special Items, net
income – noncontrolling interests
|
|
|
—
|
|
|
|
—
|
|
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
$
|
(2)
|
|
|
$
|
(3)
|
|
|
Weighted-average
Diluted Shares Outstanding (in millions)
|
|
|
430
|
|
|
|
434
|
|
|
Special Items, Diluted
Earnings Per Common Share
|
|
$
|
(0.01)
|
|
|
$
|
(0.01)
|
|
|
(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 0% to 200% of the
target number of shares subject to the PSU awards. Partner PSU
Awards were granted to address increased competition for executive
talent, motivate transformational performance and encourage
management retention. Given the unique nature of these grants, the
Compensation Committee does not intend to grant similar, special
grants to the same employees during the performance period. The
impact from these special awards is excluded from metrics that
management uses to assess the Company's performance. The Company
recognized share-based compensation expense of $2 million and $3
million associated with the Partner PSU Awards for the
quarter ended March 31, 2022 and
2021, respectively.
(2) The tax expense was determined based upon
the nature, as well as the jurisdiction, of each Special Item at
the applicable tax rate.
The Company excludes impact from Special Items for the purpose
of evaluating performance internally. Special Items are not
included in any of our segment results. In addition, the Company
provides Adjusted EBITDA because we believe that investors and
analysts may find it useful in measuring operating performance
without regard to items such as equity in net earnings (losses)
from equity method investments, income tax, interest income, net,
investment gain or loss, depreciation and amortization, store
impairment charges, and Special Items. Store impairment charges
included as an adjustment item in Adjusted EBITDA primarily
resulted from our semi-annual impairment evaluation of long-lived
assets of individual restaurants, and additional impairment
evaluation whenever events or changes in circumstances indicate
that the carrying value of the assets may not be recoverable. If
these restaurant-level assets were not impaired, depreciation of
the assets would have been recorded and included in EBITDA.
Therefore, store impairment charges were a non-cash item similar to
depreciation and amortization of our long-lived assets of
restaurants. The Company believes that investors and analyst may
find it useful in measuring operating performance without regard to
such non-cash item.
These adjusted measures are not intended to replace the
presentation of our financial results in accordance with
GAAP. Rather, the Company believes that the presentation of
these adjusted measures provides additional information to
investors to facilitate the comparison of past and present results,
excluding those items that the Company does not believe are
indicative of our ongoing operations due to their nature.
Unit Count by Brand
KFC
|
|
12/31/2021
|
|
|
New Builds
|
|
|
Closures
|
|
|
Acquired
|
|
|
3/31/2022
|
|
Company-owned
|
|
|
7,437
|
|
|
|
310
|
|
|
|
(84)
|
|
|
|
5
|
|
|
|
7,668
|
|
Franchisees
|
|
|
731
|
|
|
|
51
|
|
|
|
(4)
|
|
|
|
(5)
|
|
|
|
773
|
|
Total
|
|
|
8,168
|
|
|
|
361
|
|
|
|
(88)
|
|
|
|
—
|
|
|
|
8,441
|
|
Pizza Hut
|
|
12/31/2021
|
|
|
New Builds
|
|
|
Closures
|
|
|
Acquired
|
|
|
3/31/2022
|
|
Company-owned
|
|
|
2,452
|
|
|
|
121
|
|
|
|
(35)
|
|
|
|
5
|
|
|
|
2,543
|
|
Franchisees
|
|
|
138
|
|
|
|
4
|
|
|
|
(1)
|
|
|
|
(5)
|
|
|
|
136
|
|
Total
|
|
|
2,590
|
|
|
|
125
|
|
|
|
(36)
|
|
|
|
—
|
|
|
|
2,679
|
|
Others
|
|
12/31/2021
|
|
|
New Builds
|
|
|
Closures
|
|
|
Acquired
|
|
|
3/31/2022
|
|
Company-owned
|
|
|
162
|
|
|
|
26
|
|
|
|
(15)
|
|
|
|
1
|
|
|
|
174
|
|
Franchisees
|
|
|
868
|
|
|
|
10
|
|
|
|
(54)
|
|
|
|
(1)
|
|
|
|
823
|
|
Total
|
|
|
1,030
|
|
|
|
36
|
|
|
|
(69)
|
|
|
|
—
|
|
|
|
997
|
|
Yum China
Holdings, Inc.
|
Segment
Results
|
(in US$
million)
|
(unaudited)
|
|
Quarter Ended
3/31/2022
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
1,991
|
|
|
$
|
542
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,548
|
|
Franchise fees and
income
|
|
|
16
|
|
|
|
2
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
Revenues from
transactions with
franchisees and unconsolidated
affiliates(2)
|
|
|
8
|
|
|
|
1
|
|
|
|
11
|
|
|
|
57
|
|
|
|
—
|
|
|
|
77
|
|
Other
revenues
|
|
|
2
|
|
|
|
2
|
|
|
|
131
|
|
|
|
10
|
|
|
|
(126)
|
|
|
|
19
|
|
Total
revenues
|
|
$
|
2,017
|
|
|
$
|
547
|
|
|
$
|
163
|
|
|
$
|
67
|
|
|
$
|
(126)
|
|
|
$
|
2,668
|
|
Company restaurant
expenses
|
|
|
1,689
|
|
|
|
484
|
|
|
|
22
|
|
|
|
—
|
|
|
|
2
|
|
|
|
2,197
|
|
General and
administrative expenses
|
|
|
65
|
|
|
|
29
|
|
|
|
13
|
|
|
|
44
|
|
|
|
—
|
|
|
|
151
|
|
Franchise
expenses
|
|
|
9
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
Expenses for
transactions with
franchisees and unconsolidated
affiliates(2)
|
|
|
8
|
|
|
|
1
|
|
|
|
9
|
|
|
|
57
|
|
|
|
—
|
|
|
|
75
|
|
Other operating costs
and expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
134
|
|
|
|
9
|
|
|
|
(128)
|
|
|
|
17
|
|
Closures and impairment
(income) expenses, net
|
|
|
(1)
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
Other expenses
(income), net
|
|
|
26
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
25
|
|
Total costs and
expenses, net
|
|
|
1,797
|
|
|
|
517
|
|
|
|
180
|
|
|
|
109
|
|
|
|
(126)
|
|
|
|
2,477
|
|
Operating Profit
(Loss)
|
|
$
|
220
|
|
|
$
|
30
|
|
|
$
|
(17)
|
|
|
$
|
(42)
|
|
|
$
|
—
|
|
|
$
|
191
|
|
Quarter Ended
3/31/2021
|
|
KFC
|
|
|
Pizza
Hut
|
|
|
All Other
Segments
|
|
|
Corporate
and
Unallocated(1)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
1,783
|
|
|
$
|
538
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,331
|
|
Franchise fees and
income
|
|
|
33
|
|
|
|
2
|
|
|
|
7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42
|
|
Revenues from
transactions with
franchisees and unconsolidated
affiliates(2)
|
|
|
15
|
|
|
|
1
|
|
|
|
26
|
|
|
|
129
|
|
|
|
—
|
|
|
|
171
|
|
Other
revenues
|
|
|
1
|
|
|
|
—
|
|
|
|
35
|
|
|
|
2
|
|
|
|
(25)
|
|
|
|
13
|
|
Total
revenues
|
|
$
|
1,832
|
|
|
$
|
541
|
|
|
$
|
78
|
|
|
$
|
131
|
|
|
$
|
(25)
|
|
|
$
|
2,557
|
|
Company restaurant
expenses
|
|
|
1,428
|
|
|
|
456
|
|
|
|
12
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,896
|
|
General and
administrative expenses
|
|
|
55
|
|
|
|
25
|
|
|
|
9
|
|
|
|
41
|
|
|
|
—
|
|
|
|
130
|
|
Franchise
expenses
|
|
|
16
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
Expenses for
transactions with
franchisees and unconsolidated
affiliates(2)
|
|
|
15
|
|
|
|
1
|
|
|
|
24
|
|
|
|
129
|
|
|
|
—
|
|
|
|
169
|
|
Other operating costs
and expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
33
|
|
|
|
3
|
|
|
|
(25)
|
|
|
|
11
|
|
Closures and impairment
(income) expenses, net
|
|
|
—
|
|
|
|
(2)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2)
|
|
Other (income)
expenses, net
|
|
|
(9)
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6)
|
|
Total costs and
expenses, net
|
|
|
1,505
|
|
|
|
481
|
|
|
|
81
|
|
|
|
173
|
|
|
|
(25)
|
|
|
|
2,215
|
|
Operating Profit
(Loss)
|
|
$
|
327
|
|
|
$
|
60
|
|
|
$
|
(3)
|
|
|
$
|
(42)
|
|
|
$
|
—
|
|
|
$
|
342
|
|
The above tables reconcile segment information, which is based
on management responsibility, with our Condensed Consolidated
Statements of Income.
(1) Amounts have not been allocated to any segment for
purpose of making operating decision or assessing financial
performance as the transactions are deemed corporate revenues and
expenses in nature.
(2) Primarily includes revenues and associated expenses of
transactions with franchisees and unconsolidated affiliates derived
from the Company's central procurement model whereby the Company
centrally purchases substantially all food and paper products from
suppliers and then sells and delivers to KFC and Pizza Hut
restaurants, including franchisees and unconsolidated affiliates
that operate our concepts.
View original
content:https://www.prnewswire.com/news-releases/yum-china-reports-first-quarter-2022-results-301538791.html
SOURCE Yum China Holdings, Inc.