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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Yum Brands Inc | NYSE:YUM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.73 | -0.54% | 134.34 | 136.00 | 133.92 | 135.88 | 2,448,252 | 01:00:00 |
Yum! Brands, Inc. (NYSE: YUM) today reported results for the second-quarter ended June 30, 2021. Worldwide system sales excluding foreign currency translation grew 26%, with 23% same-store sales and 2% unit growth. Second-quarter GAAP EPS was $1.29, an increase of 91% over the prior year quarter. Second-quarter EPS excluding Special Items was $1.16, an increase of 41% over the prior year quarter.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210729005361/en/
DAVID GIBBS COMMENTS
David Gibbs, CEO, said “Our strong second-quarter results, led by record unit development and 23% same-store sales growth are a testament to our iconic brands, world-class talent, and best-in-class franchisees. I’m proud that each of our divisions reported positive same-store sales growth on a 2-year basis, a step up from first-quarter trends. This sustained momentum was underpinned by our investments in digital and off-premise and the agility of our brands to meet the needs of consumers in an ever-changing environment. I'm thrilled to say that unit development has accelerated driven by strong unit-level economics. On the basis of these strong results, we're reinstating our long-term growth algorithm and revising the unit growth component of this algorithm from 4% unit growth to between 4% and 5% unit growth. The resilience of our diversified global business positions us perfectly to drive growth and maximize value creation for all our stakeholders for years to come.”
SECOND-QUARTER HIGHLIGHTS
% Change
System Sales Ex F/X
Same-Store Sales
Units
GAAP Operating Profit
Core Operating Profit1
KFC Division
+35
+30
+5
+108
+93
Pizza Hut Division
+10
+10
(3)
+18
+14
Taco Bell Division
+24
+21
+2
+29
+29
Worldwide
+26
+23
+2
+89
+53
Second-Quarter
Year-to-Date
2021
2020
% Change
2021
2020
% Change
GAAP EPS
$1.29
$0.67
+91
$2.35
$0.94
+150
Special Items EPS1
$0.13
$(0.15)
NM
$0.13
$(0.52)
NM
EPS Excluding Special Items
$1.16
$0.82
+41
$2.22
$1.46
+52
1 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items.
All comparisons are versus the same period a year ago.
System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.
Digital system sales includes all transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology.
KFC DIVISION
Second-Quarter
Year-to-Date
%/ppts Change
%/ppts Change
2021
2020
Reported
Ex F/X
2021
2020
Reported
Ex F/X
Restaurants
25,720
24,390
+5
N/A
25,720
24,390
+5
N/A
System Sales ($MM)
7,638
5,288
+44
+35
14,911
11,575
+29
+22
Same-Store Sales Growth (%)
+30
(21)
NM
NM
+18
(15)
NM
NM
Franchise and Property Revenues ($MM)
379
251
+52
+42
733
566
+30
+23
Operating Profit ($MM)
318
153
+108
+93
618
377
+64
+54
Operating Margin (%)
46.5
37.4
9.1
9.4
47.3
38.7
8.6
8.8
Second-Quarter (% Change)
Year-to-Date (% Change)
International
U.S.
International
U.S.
System Sales Growth Ex F/X
+42
+10
+24
+11
Same-Store Sales Growth
+36
+11
+20
+12
KFC Markets1
Percent of KFC System Sales2
System Sales Growth Ex F/X
Second-Quarter (% Change)
Year-to-Date (% Change)
China
27%
+14
+19
United States
18%
+10
+11
Asia
12%
+11
+5
Russia, Central & Eastern Europe
7%
+101
+40
Australia
7%
+23
+17
United Kingdom
6%
+248
+80
Western Europe
5%
+65
+28
Latin America
5%
+81
+29
Africa
4%
+186
+55
Middle East / Turkey / North Africa
4%
+118
+49
Canada
2%
+15
+13
Thailand
2%
Even
(10)
India
1%
+221
+61
1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.
2Reflects Full Year 2020.
PIZZA HUT DIVISION
Second-Quarter
Year-to-Date
%/ppts Change
%/ppts Change
2021
2020
Reported
Ex F/X
2021
2020
Reported
Ex F/X
Restaurants
17,809
18,326
(3)
N/A
17,809
18,326
(3)
N/A
System Sales ($MM)
3,143
2,753
+14
+10
6,239
5,554
+12
+9
Same-Store Sales Growth (%)
+10
(9)
NM
NM
+11
(10)
NM
NM
Franchise and Property Revenues ($MM)
147
126
+16
+12
288
259
+11
+8
Operating Profit ($MM)
103
87
+18
+14
205
163
+25
+21
Operating Margin (%)
41.3
36.8
4.5
4.0
41.0
34.8
6.2
5.8
Second-Quarter (% Change)
Year-to-Date (% Change)
International
U.S.
International
U.S.
System Sales Growth Ex F/X
+19
Even
+13
+4
Same-Store Sales Growth
+16
+4
+12
+10
Pizza Hut Markets1
Percent of Pizza Hut System Sales2
System Sales Growth Ex F/X
Second-Quarter (% Change)
Year-to-Date (% Change)
United States
45%
Even
+4
China
15%
+16
+33
Asia
15%
+2
+1
Latin America / Spain / Portugal
10%
+36
+11
Europe (excluding Spain & Portugal)
8%
+26
(3)
Middle East / Turkey / North Africa
3%
+57
+13
Canada
3%
+12
+15
India
1%
+163
+51
Africa
<1%
+157
+60
1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.
2Reflects Full Year 2020.
TACO BELL DIVISION
Second-Quarter
Year-to-Date
%/ppts Change
%/ppts Change
2021
2020
Reported
Ex F/X
2021
2020
Reported
Ex F/X
Restaurants
7,567
7,400
+2
N/A
7,567
7,400
+2
N/A
System Sales ($MM)
3,189
2,564
+24
+24
6,069
5,160
+18
+17
Same-Store Sales Growth (%)
+21
(8)
NM
NM
+15
(4)
NM
NM
Franchise and Property Revenues ($MM)
179
147
+22
+21
341
295
+16
+15
Operating Profit ($MM)
198
154
+29
+29
376
298
+26
+26
Operating Margin (%)
37.2
34.4
2.8
2.8
36.8
33.0
3.8
3.8
HABIT BURGER GRILL DIVISION
OTHER ITEMS
CONFERENCE CALL
Yum! Brands, Inc. will host a conference call to review the company's financial performance and strategies at 8:15 a.m. Eastern Time July 29, 2021. The number is 877/871-3172 for U.S. callers, 412/902-6603 for international callers, conference ID 5033749.
The call will be available for playback beginning at 10:00 a.m. Eastern Time July 29, 2021 through August 5, 2021. To access the playback, dial 877/344-7529 in the U.S., 855/669-9658 in Canada, and 412/317-0088 internationally, conference ID 10158416.
The webcast and the playback can be accessed by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting “Q2 2021 Yum! Brands, Inc. Earnings Call.”
ADDITIONAL INFORMATION ONLINE
Quarter end dates for each division, restaurant count details, definitions of terms and Restricted Group financial information are available at investors.yum.com. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included within this release.
FORWARD-LOOKING STATEMENTS
This announcement may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,” “likely,” “seek,” “project,” “model,” “ongoing,” “will,” “should,” “forecast,” “outlook” or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved.
Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: the severity and duration of the COVID-19 pandemic, food safety and food borne-illness issues; health concerns arising from outbreaks of a significant health epidemic; the success of our franchisees and licensees; our significant exposure to the Chinese market; changes in economic and political conditions in countries and territories outside of the U.S. where we operate; our ability to protect the integrity and security of personal information of our customers and employees; our ability to successfully implement technology initiatives; our increasing dependence on multiple digital commerce platforms; the impact of social media; our ability to secure and maintain distribution and adequate supply to our restaurants; the loss of key personnel, or labor shortages or difficulty finding qualified employees; the success of our development strategy in emerging markets; changes in commodity, labor and other operating costs; harm or dilution to our brands caused by franchisee and third party activity; pending or future litigation and legal claims or proceedings; changes in or noncompliance with government regulations, including labor standards and anti-bribery or anti-corruption laws; tax matters, including changes in tax laws or disagreements with taxing authorities; consumer preferences and perceptions of our brands; failure to protect our service marks or other intellectual property; changes in consumer discretionary spending and general economic conditions; competition within the retail food industry; not realizing the anticipated benefits from past or potential future acquisitions, investments or other strategic transactions, and risks relating to our significant amount of indebtedness. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions “Risk Factors” and “Forward-Looking Statements” in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.
Yum! Brands, Inc., based in Louisville, Kentucky, has over 51,000 restaurants in more than 150 countries and territories primarily operating the company’s brands – KFC, Pizza Hut and Taco Bell – global leaders of the chicken, pizza and Mexican-style food categories. The Company’s family of brands also includes The Habit Burger Grill, a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Yum! Brands was included on the 2021 Bloomberg Gender-Equality Index and in 2020, Yum! Brands was named to the Dow Jones Sustainability Index North America and was ranked among the top 100 Best Corporate Citizens by 3BL Media.
YUM! Brands, Inc.
Condensed Consolidated Summary of Results
(amounts in millions, except per share amounts)
(unaudited)
Quarter ended
% Change
Year to date
% Change
6/30/21
6/30/20
B/(W)
6/30/21
6/30/20
B/(W)
Revenues
Company sales
$
520
$
403
29
$
996
$
758
31
Franchise and property revenues
706
525
35
1,364
1,121
22
Franchise contributions for advertising and other services
376
270
39
728
582
25
Total revenues
1,602
1,198
34
3,088
2,461
26
Costs and Expenses, Net
Company restaurant expenses
417
349
(20)
809
647
(25)
General and administrative expenses
230
259
12
436
467
7
Franchise and property expenses
27
36
25
50
94
48
Franchise advertising and other services expense
372
264
(41)
715
574
(25)
Refranchising (gain) loss
(7
)
(8
)
(18)
(22
)
(21
)
2
Other (income) expense
(4
)
(2
)
NM
(10
)
150
NM
Total costs and expenses, net
1,035
898
(15)
1,978
1,911
(4)
Operating Profit
567
300
89
1,110
550
102
Investment (income) expense, net
(1
)
(91
)
(99)
(1
)
(57
)
(99)
Other pension (income) expense
2
2
23
5
5
7
Interest expense, net
159
132
(21)
290
250
(17)
Income before income taxes
407
257
58
816
352
132
Income tax provision
16
51
68
99
63
(58)
Net Income
$
391
$
206
89
$
717
$
289
148
Basic EPS
EPS
$
1.31
$
0.68
92
$
2.39
$
0.96
150
Average shares outstanding
298
303
1
299
302
1
Diluted EPS
EPS
$
1.29
$
0.67
91
$
2.35
$
0.94
150
Average shares outstanding
304
307
1
304
307
1
Dividends declared per common share
$
0.50
$
0.47
$
1.00
$
0.94
See accompanying notes.
Percentages may not recompute due to rounding.
YUM! Brands, Inc.
KFC DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter ended
% Change
Year to date
% Change
6/30/21
6/30/20
B/(W)
6/30/21
6/30/20
B/(W)
Company sales
$
147
$
86
70
$
280
$
216
29
Franchise and property revenues
379
251
52
733
566
30
Franchise contributions for advertising and other services
156
72
115
294
193
52
Total revenues
682
409
67
1,307
975
34
Company restaurant expenses
118
83
(41)
229
198
(16)
General and administrative expenses
80
70
(13)
153
143
(6)
Franchise and property expenses
15
29
46
29
62
53
Franchise advertising and other services expense
151
70
(117)
284
190
(50)
Other (income) expense
—
4
NM
(6
)
5
NM
Total costs and expenses, net
364
256
(42)
689
598
(15)
Operating Profit
$
318
$
153
108
$
618
$
377
64
Company restaurant margin %1
19.2
%
2.7
%
16.5 ppts.
18.0
%
8.1
%
9.9 ppts.
Operating margin
46.5
%
37.4
%
9.1 ppts.
47.3
%
38.7
%
8.6 ppts.
See accompanying notes.
Percentages may not recompute due to rounding.
1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.
YUM! Brands, Inc.
PIZZA HUT DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter ended
% Change
Year to date
% Change
6/30/21
6/30/20
B/(W)
6/30/21
6/30/20
B/(W)
Company sales
$
12
$
19
(34)
$
26
$
37
(29)
Franchise and property revenues
147
126
16
288
259
11
Franchise contributions for advertising and other services
90
90
—
186
174
7
Total revenues
249
235
6
500
470
6
Company restaurant expenses
11
18
36
24
37
34
General and administrative expenses
43
44
6
83
90
9
Franchise and property expenses
5
1
(389)
7
13
48
Franchise advertising and other services expense
91
87
(5)
185
171
(8)
Other (income) expense
(4
)
(2
)
NM
(4
)
(4
)
NM
Total costs and expenses, net
146
148
2
295
307
4
Operating Profit
$
103
$
87
18
$
205
$
163
25
Company restaurant margin %1
8.0
%
4.5
%
3.5 ppts.
7.3
%
0.8
%
6.5 ppts.
Operating margin
41.3
%
36.8
%
4.5 ppts.
41.0
%
34.8
%
6.2 ppts.
See accompanying notes.
Percentages may not recompute due to rounding.
1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.
YUM! Brands, Inc.
TACO BELL DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter ended
% Change
Year to date
% Change
6/30/21
6/30/20
B/(W)
6/30/21
6/30/20
B/(W)
Company sales
$
223
$
194
16
$
431
$
392
10
Franchise and property revenues
179
147
22
341
295
16
Franchise contributions for advertising and other services
130
108
21
248
215
15
Total revenues
532
449
19
1,020
902
13
Company restaurant expenses
165
147
(13)
323
300
(8)
General and administrative expenses
33
37
10
64
75
14
Franchise and property expenses
7
5
(34)
14
16
14
Franchise advertising and other services expense
130
107
(21)
246
213
(15)
Other (income) expense
(1
)
(1
)
NM
(3
)
—
NM
Total costs and expenses, net
334
295
(14)
644
604
(7)
Operating Profit
$
198
$
154
29
$
376
$
298
26
Company restaurant margin %1
25.9
%
24.5
%
1.4 ppts.
25.0
%
23.5
%
1.5 ppts.
Operating margin
37.2
%
34.4
%
2.8 ppts.
36.8
%
33.0
%
3.8 ppts.
See accompanying notes.
Percentages may not recompute due to rounding.
1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.
YUM! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
(unaudited) 6/30/21
12/31/20
ASSETS
Current Assets
Cash and cash equivalents
$
552
$
730
Accounts and notes receivable, less allowance: $34 in 2021 and $45 in 2020
525
534
Prepaid expenses and other current assets
437
425
Total Current Assets
1,514
1,689
Property, plant and equipment, net of accumulated depreciation of $1,279 in 2021 and $1,230 in 2020
1,211
1,235
Goodwill
597
597
Intangible assets, net
352
343
Other assets
1,408
1,435
Deferred income taxes
567
553
Total Assets
$
5,649
$
5,852
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable and other current liabilities
$
1,142
$
1,189
Income taxes payable
16
33
Short-term borrowings
400
453
Total Current Liabilities
1,558
1,675
Long-term debt
10,258
10,272
Other liabilities and deferred credits
1,726
1,796
Total Liabilities
13,542
13,743
Shareholders' Deficit
Common Stock, no par value, 750 shares authorized; 296 shares issued in 2021 and 300 issued in 2020
—
—
Accumulated deficit
(7,569
)
(7,480
)
Accumulated other comprehensive loss
(324
)
(411
)
Total Shareholders' Deficit
(7,893
)
(7,891
)
Total Liabilities and Shareholders' Deficit
$
5,649
$
5,852
See accompanying notes.
YUM! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
Quarter ended
6/30/21
6/30/20
Cash Flows - Operating Activities
Net Income
$
717
$
289
Depreciation and amortization
78
53
Impairment and closure expense
1
146
Refranchising (gain) loss
(22
)
(21
)
Investment (income) expense, net
(1
)
(57
)
Contributions to defined benefit pension plans
(3
)
(1
)
Deferred income taxes
(41
)
(20
)
Share-based compensation expense
38
29
Changes in accounts and notes receivable
25
4
Changes in prepaid expenses and other current assets
(11
)
(26
)
Changes in accounts payable and other current liabilities
(95
)
(76
)
Changes in income taxes payable
(25
)
(49
)
Other, net
112
91
Net Cash Provided by Operating Activities
773
362
Cash Flows - Investing Activities
Capital spending
(84
)
(67
)
Acquisition of The Habit Restaurants, Inc.
—
(408
)
Proceeds from refranchising of restaurants
43
3
Other, net
33
—
Net Cash Used in Financing Activities
(8
)
(472
)
Cash Flows - Financing Activities
Proceeds from long-term debt
1,900
600
Repayments of long-term debt
(2,002
)
(41
)
Revolving credit facilities, three months or less, net
—
575
Short-term borrowings by original maturity
More than three months - proceeds
—
85
More than three months - payments
—
(90
)
Three months or less, net
—
—
Repurchase shares of Common Stock
(530
)
—
Dividends paid on Common Stock
(299
)
(283
)
Debt issuance costs
(18
)
(7
)
Other, net
(17
)
(31
)
Net Cash Provided by (Used in) Financing Activities
(966
)
808
Effect of Exchange Rate on Cash and Cash Equivalents
11
(18
)
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
(190
)
680
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period
1,024
768
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period
$
834
$
1,448
See accompanying notes.
Reconciliation of Non-GAAP Measurements to GAAP Results (amounts in millions, except per share amounts) (unaudited)
In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company provides the following non-GAAP measurements.
These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations.
Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature. Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance. The Special Items are described in (a) - (h) in the accompanying notes.
Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales ("Company restaurant margin %") is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.
Certain non-GAAP measurements are presented excluding the impact of FX. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the FX impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.
Quarter ended
Year to date
6/30/21
6/30/20
6/30/21
6/30/20
Detail of Special Items
Refranchising gain (loss)(a)
$
2
$
3
$
4
$
6
Costs associated with acquisition and integration of Habit Burger Grill(b)
—
(3
)
—
(9
)
Impairment of Habit Burger Grill goodwill(c)
—
—
—
(139
)
Unlocking Opportunity Initiative contribution(d)
—
(50
)
—
(50
)
Charges associated with resource optimization(e)
(2
)
—
(3
)
—
Other Special Items Income (Expense)
—
(4
)
1
(7
)
Special Items Income (Expense) - Operating Profit
—
(54
)
2
(199
)
Charges associated with resource optimization - Other pension (expense) income(e)
1
—
1
—
Interest expense, net(f)
(34
)
—
(34
)
—
Special Items Income (Expense) before Income Taxes
(33
)
(54
)
(31
)
(199
)
Tax Benefit on Special Items(g)
8
7
7
40
Tax Benefit - Intra-entity transfer of intellectual property(h)
64
—
64
—
Special Items Income (Expense), net of tax
$
39
$
(47
)
$
40
$
(159
)
Average diluted shares outstanding
304
307
304
307
Special Items diluted EPS
$
0.13
$
(0.15
)
$
0.13
$
(0.52
)
Reconciliation of GAAP Operating Profit to Core Operating Profit
Consolidated
GAAP Operating Profit
$
567
$
300
$
1,110
$
550
Special Items Income (Expense)
—
(54
)
2
(199
)
Foreign Currency Impact on Divisional Operating Profit
27
N/A
43
N/A
Core Operating Profit
$
540
$
354
$
1,065
$
749
KFC Division
GAAP Operating Profit
$
318
$
153
$
618
$
377
Foreign Currency Impact on Divisional Operating Profit
23
N/A
36
N/A
Core Operating Profit
$
295
$
153
$
582
$
377
Pizza Hut Division
GAAP Operating Profit
$
103
$
87
$
205
$
163
Foreign Currency Impact on Divisional Operating Profit
4
N/A
7
N/A
Core Operating Profit
$
99
$
87
$
198
$
163
Taco Bell Division
GAAP Operating Profit
$
198
$
154
$
376
$
298
Foreign Currency Impact on Divisional Operating Profit
—
N/A
—
N/A
Core Operating Profit
$
198
$
154
$
376
$
298
Habit Burger Grill Division
GAAP Operating Profit (Loss)
$
5
$
(6
)
$
5
$
(8
)
Foreign Currency Impact on Divisional Operating Profit
—
N/A
—
N/A
Core Operating Profit
$
5
$
(6
)
$
5
$
(8
)
Reconciliation of Diluted EPS to Diluted EPS excluding Special Items
Diluted EPS
$
1.29
$
0.67
$
2.35
$
0.94
Special Items Diluted EPS
0.13
(0.15
)
0.13
(0.52
)
Diluted EPS excluding Special Items
$
1.16
$
0.82
$
2.22
$
1.46
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
GAAP Effective Tax Rate
4.0
%
19.8
%
12.1
%
17.8
%
Impact on Tax Rate as a result of Special Items
(16.0
)%
1.0
%
(8.0
)%
(0.9
)%
Effective Tax Rate excluding Special Items
20.0
%
18.8
%
20.1
%
18.7
%
Reconciliation of GAAP Operating Profit to Company Restaurant Profit
Quarter ended 6/30/2021
KFC Division
Pizza Hut Division
Taco Bell Division
Habit Burger Grill Division
Unallocated
Total
GAAP Operating Profit (Loss)
$
318
$
103
$
198
$
5
$
(57
)
$
567
Less:
Franchise and property revenues
379
147
179
1
—
706
Franchise contributions for advertising and other services
156
90
130
—
—
376
Add:
General and administrative expenses
80
43
33
11
63
230
Franchise and property expenses
15
5
7
—
—
27
Franchise advertising and other services expense
151
91
130
—
—
372
Refranchising (gain) loss
—
—
—
—
(7
)
(7
)
Other (income) expense
—
(4
)
(1
)
—
1
(4
)
Company restaurant profit
$
29
$
1
$
58
$
15
$
—
$
103
Company sales
$
147
$
12
$
223
$
138
$
—
$
520
Company restaurant margin %
19.2
%
8.0
%
25.9
%
11.6
%
—
%
19.8
%
Quarter ended 6/30/2020
KFC Division
Pizza Hut Division
Taco Bell Division
Habit Burger Grill Division
Unallocated
Total
GAAP Operating Profit (Loss)
$
153
$
87
$
154
$
(6
)
$
(88
)
$
300
Less:
Franchise and property revenues
251
126
147
1
—
525
Franchise contributions for advertising and other services
72
90
108
—
—
270
Add:
General and administrative expenses
70
44
37
10
98
259
Franchise and property expenses
29
1
5
—
1
36
Franchise advertising and other services expense
70
87
107
—
—
264
Refranchising (gain) loss
—
—
—
—
(8
)
(8
)
Other (income) expense
4
(2
)
(1
)
—
(3
)
(2
)
Company restaurant profit
$
3
$
1
$
47
$
3
$
—
$
54
Company sales
$
86
$
19
$
194
$
104
$
—
$
403
Company restaurant margin %
2.7
%
4.5
%
24.5
%
3.0
%
—
%
13.4
%
Year to date 6/30/2021
KFC Division
Pizza Hut Division
Taco Bell Division
Habit Burger Grill Division
Unallocated
Total
GAAP Operating Profit (Loss)
$
618
$
205
$
376
$
5
$
(94
)
$
1,110
Less:
Franchise and property revenues
733
288
341
2
—
1,364
Franchise contributions for advertising and other services
294
186
248
—
—
728
Add:
General and administrative expenses
153
83
64
23
113
436
Franchise and property expenses
29
7
14
—
—
50
Franchise advertising and other services expense
284
185
246
—
—
715
Refranchising (gain) loss
—
—
—
—
(22
)
(22
)
Other (income) expense
(6
)
(4
)
(3
)
—
3
(10
)
Company restaurant profit
$
51
$
2
$
108
$
26
$
—
$
187
Company sales
$
280
$
26
$
431
$
259
$
—
$
996
Company restaurant margin %
18.0
%
7.3
%
25.0
%
10.3
%
—
%
18.7
%
Year to date 6/30/2020
KFC Division
Pizza Hut Division
Taco Bell Division
Habit Burger Grill Division
Unallocated
Total
GAAP Operating Profit (Loss)
$
377
$
163
$
298
$
(8
)
$
(280
)
$
550
Less:
Franchise and property revenues
566
259
295
1
—
1,121
Franchise contributions for advertising and other services
193
174
215
—
—
582
Add:
General and administrative expenses
143
90
75
11
148
467
Franchise and property expenses
62
13
16
—
3
94
Franchise advertising and other services expense
190
171
213
—
—
574
Refranchising (gain) loss
—
—
—
—
(21
)
(21
)
Other (income) expense
5
(4
)
—
—
149
150
Company restaurant profit
$
18
$
—
$
92
$
2
$
(1
)
$
111
Company sales
$
216
$
37
$
392
$
113
$
—
$
758
Company restaurant margin %
8.1
%
0.8
%
23.5
%
2.1
%
—
%
14.7
%
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
Quarter Ended 6/30/2021
KFC
Pizza Hut
Taco Bell
Habit Burger Grill
Corporate and Unallocated
Consolidated
Total revenues
$
682
$
249
$
532
$
139
$
—
$
1,602
Company restaurant expenses
118
11
165
123
—
417
General and administrative expenses
80
43
33
11
63
230
Franchise and property expenses
15
5
7
—
—
27
Franchise advertising and other services expense
151
91
130
—
—
372
Refranchising (gain) loss
—
—
—
—
(7
)
(7
)
Other (income) expense
—
(4
)
(1
)
—
1
(4
)
Total costs and expenses, net
364
146
334
134
57
1,035
Operating Profit (Loss)
$
318
$
103
$
198
$
5
$
(57
)
$
567
Quarter Ended 6/30/2020
KFC
Pizza Hut
Taco Bell
Habit Burger Grill
Corporate and Unallocated
Consolidated
Total revenues
$
409
$
235
$
449
$
105
$
—
$
1,198
Company restaurant expenses
83
18
147
101
—
349
General and administrative expenses
70
44
37
10
98
259
Franchise and property expenses
29
1
5
—
1
36
Franchise advertising and other services expense
70
87
107
—
—
264
Refranchising (gain) loss
—
—
—
—
(8)
(8)
Other (income) expense
4
(2)
(1)
—
(3)
(2)
Total costs and expenses, net
256
148
295
111
88
898
Operating Profit (Loss)
$
153
$
87
$
154
$
(6)
$
(88)
$
300
The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.
The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.
YUM! Brands, Inc.
Segment Results
(amounts in millions)
(unaudited)
Year to Date 6/30/2021
KFC
Pizza Hut
Taco Bell
Habit Burger Grill
Corporate and Unallocated
Consolidated
Total revenues
$
1,307
$
500
$
1,020
$
261
$
—
$
3,088
Company restaurant expenses
229
24
323
233
—
809
General and administrative expenses
153
83
64
23
113
436
Franchise and property expenses
29
7
14
—
—
50
Franchise advertising and other services expense
284
185
246
—
—
715
Refranchising (gain) loss
—
—
—
—
(22
)
(22
)
Other (income) expense
(6
)
(4
)
(3
)
—
3
(10
)
Total costs and expenses, net
689
295
644
256
94
1,978
Operating Profit (Loss)
$
618
$
205
$
376
$
5
$
(94
)
$
1,110
Year to Date 6/30/2020
KFC
Pizza Hut
Taco Bell
Habit Burger Grill
Corporate and Unallocated
Consolidated
Total revenues
$
975
$
470
$
902
114
$
—
$
2,461
Company restaurant expenses
198
37
300
111
1
647
General and administrative expenses
143
90
75
11
148
467
Franchise and property expenses
62
13
16
—
3
94
Franchise advertising and other services expense
190
171
213
—
—
574
Refranchising (gain) loss
—
—
—
—
(21
)
(21
)
Other (income) expense
5
(4
)
—
—
149
150
Total costs and expenses, net
598
307
604
122
280
1,911
Operating Profit
$
377
$
163
$
298
$
(8
)
$
(280
)
$
550
The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.
The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.
Notes to the Condensed Consolidated Summary of Results, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows (amounts in millions) (unaudited)
Amounts presented as of and for the quarters and years to date ended June 30, 2021 and 2020 are preliminary.
(a)
Due to their size and volatility, we have reflected as Special Items those refranchising gains and losses that were recorded in connection with our previously announced plans to have at least 98% franchise restaurant ownership by the end of 2018. As such, refranchising gains and losses recorded during the quarters and years to date ended June 30, 2021 and 2020 as Special Items directly relate to refranchising actions initiated prior to December 31, 2018.
During the quarters ended June 30, 2021 and 2020, we recorded net refranchising gains of $2 million and $3 million, respectively, that have been reflected as Special Items. During the years to date ended June 30, 2021 and 2020, we recorded net refranchising gains of $4 million and $6 million, respectively, that have been reflected as Special Items.
Additionally, we recorded net refranchising gains of $5 million during both quarters ended June 30, 2021 and 2020, that have not been reflected as Special Items. During the years to date ended June 30, 2021 and 2020, we recorded net refranchising gains of $18 million and $15 million, respectively, that have not been reflected as Special Items. These gains relate to refranchising of restaurants in 2021 and 2020 that were not part of our aforementioned plans to achieve 98% franchise ownership and that we believe are now more indicative of our expected ongoing refranchising activity.
(b)
During the quarter and year to date ended June 30, 2020, we recorded Special Item charges of $3 million and $9 million, respectively, related to the acquisition and integration of The Habit Restaurants, Inc. ("Habit").
(c)
On March 18, 2020 we acquired all of the issued and outstanding common shares of Habit for total cash consideration of $408 million, net of cash acquired. During the first-quarter of 2020 the operation of substantially all Habit restaurants was impacted by government recommendations and mandates arising from containment and mitigation measures related to the COVID-19 global pandemic. As a result of the impacts of the COVID-19 pandemic on Habit’s results through March 31, 2020 as well as general market conditions, during the quarter ended March 31, 2020 we recorded a goodwill impairment charge of $139 million to Other (income) expense, which has been reflected as a Special Item. We reflected the tax benefit of this impairment charge of $32 million as a Special Item.
(d)
On June 24, 2020, the YUM! Brands, Inc. Board of Directors approved the establishment of the Company's new global "Unlocking Opportunity Initiative" including a $100 million investment over the next five years to fight inequality by unlocking opportunities for employees, restaurant team members and communities. The Company contributed $50 million in the quarter ended June 30, 2020 to Yum! Brands Foundation, Inc. (a stand-alone, not-for-profit organization that is not consolidated in the Company's results) as part of these efforts and investment. As a result of the size and specific nature of this contribution, we have reflected the associated expense as a Special Item.
(e)
During the quarter ended June 30, 2021, we recorded a charge of $2 million to General and administrative expenses and a credit of $1 million to Other pension (income) expense related to a resource optimization program initiated in the third quarter of 2020. This program is part of our efforts to optimize our resources, reallocating them toward critical areas of the business that will drive future growth. These critical areas include accelerating our digital, technology and innovation capabilities to deliver a modern, world-class team member and customer experience and improve unit economics. These charges have been reflected as Special Items.
(f)
During the quarter ended June 30, 2021, certain subsidiaries of the Company redeemed $1,050 million aggregate principal amount of 5.25% Subsidiary Senior Unsecured Notes due in 2026 (the "2026 Notes"). The redemption amount was equal to 102.625% of the $1,050 million aggregate principal amount redeemed, reflecting a $28 million "call premium". We recognized the call premium and the write-off of $6 million of unamortized debt issuance costs associated with the 2026 Notes within Interest expense, net and we reflected the charges as Special Items due to their collective size and the fact that the amounts are not indicative of our ongoing interest expense.
(g)
Tax Benefit on Special Items was determined based upon the impact of the nature, as well as the jurisdiction of the respective individual components within Special Items.
(h)
During the quarter ended June 30, 2021, the United Kingdom ("UK") Finance Act 2021 was enacted resulting in an increase in the UK corporate income tax rate from 19% to 25%. As a result, in the quarter ended June 30, 2021, we remeasured the deferred tax assets originally recorded as a Special Item as part of a fourth quarter 2019 intercompany restructuring of intellectual property rights into the UK, which resulted in the recognition of an additional $64 million deferred tax benefit as a Special Item.
Category: Earnings
View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005361/en/
Analysts are invited to contact: Jodi Dyer, Vice President, Investor Relations and CFO, Digital & Technology at 888/298-6986
Members of the media are invited to contact: Virginia Ferguson, Vice President, Public Relations, at 502/874-8200
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