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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 | |
---|---|---|---|---|---|---|---|---|
-3.21 | -2.24% | 139.98 | 142.86 | 139.55 | 139.55 | 4,089,399 | 01:00:00 |
Yum! Brands, Inc. (NYSE: YUM) today reported results for the second-quarter ended June 30, 2020. Worldwide system sales excluding foreign currency translation declined (12)%, with a (15)% same-store sales decline and 3% net-new unit growth. Second-quarter GAAP EPS was $0.67, a decrease of (27)% over the prior year quarter. Second-quarter EPS excluding Special Items was $0.82, a decrease of (12)% over the prior year quarter.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200730005180/en/
DAVID GIBBS COMMENTS
David Gibbs, CEO, said “While second-quarter results were meaningfully impacted by COVID-19, I couldn’t be prouder of how our brands adapted with remarkable agility, leveraging consumer insights and digitally enabled off-premise capabilities to adjust operations, menu options and marketing across the globe. Digital sales were a big driver of the dramatic improvement in sales from the initial impact of COVID-19, reaching an all-time high of $3.5 billion for the quarter, an increase of more than $1 billion over the prior year. World-class operations, including rapid implementation of contactless options, supported a steady pace of store reopening through the quarter, with approximately 95% of our global system restaurants now at least partially open. Same-store sales trends for open stores stabilized in June just a few points short of flat, despite the majority of our dining rooms still remaining closed, and these trends have continued into July.
As we continue to reopen our restaurants across the globe, we remain focused on our Recipe for Growth and Good strategy and on ensuring customers can access our delicious food in a safe, low-contact manner with outstanding value. Leveraging our scale and capabilities as the world’s largest restaurant company, our four iconic brands are optimally positioned to drive profitable system sales growth in the new customer environment. While COVID-19 has presented incredible challenges for the entire restaurant industry, I remain confident in the power and resiliency of our unique and highly diversified global business model and that we will emerge an even stronger growth company for all our stakeholders.”
SECOND-QUARTER HIGHLIGHTS
% Change
System Sales Ex F/X
Same-Store Sales
Net-New Units
GAAP Operating Profit
Core
Operating Profit2
KFC Division
(18)
(21)
+6
(41)
(40)
Pizza Hut Division
(10)
(9)
(1)
(9)
(8)
Taco Bell Division
(6)
(8)
+4
(3)
(3)
Worldwide1
(12)
(15)
+3
(36)
(25)
Second-Quarter
Year-to-Date
2020
2019
% Change
2020
2019
% Change
GAAP EPS
$0.67
$0.92
(27)
$0.94
$1.75
(46)
Special Items EPS2
$(0.15)
$(0.01)
NM
$(0.52)
$(0.01)
NM
EPS Excluding Special Items
$0.82
$0.93
(12)
$1.46
$1.76
(17)
1 Worldwide system sales ex F/X and net-new units include the benefit of our acquisition of Habit Burger Grill on March 18, 2020. Same-store sales reflects the inclusion of Habit Burger Grill in the prior year base.
2 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items.
All comparisons are versus the same period a year ago.
System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.
KFC DIVISION
Second-Quarter
Year-to-Date
%/ppts Change
%/ppts Change
2020
2019
Reported
Ex F/X
2020
2019
Reported
Ex F/X
Restaurants
24,390
23,118
+6
N/A
24,390
23,118
+6
N/A
System Sales ($MM)
5,288
6,648
(20)
(18)
11,575
13,195
(12)
(10)
Same-Store Sales Growth (%)
(21)
+6
NM
NM
(15)
+5
NM
NM
Franchise and Property Revenues ($MM)
251
332
(24)
(22)
566
655
(14)
(11)
Operating Profit ($MM)
153
261
(41)
(40)
377
497
(24)
(22)
Operating Margin (%)
37.4
44.7
(7.3)
(7.8)
38.7
43.2
(4.5)
(4.8)
Second-Quarter (% Change)
Year-to-Date (% Change)
International
U.S.
International
U.S.
System Sales Growth Ex F/X
(23)
+8
(12)
+4
Same-Store Sales Growth
(27)
+7
(18)
+2
KFC Markets1
Percent of KFC System Sales2
System Sales Growth Ex F/X
Second-Quarter (% Change)
Year-to-Date (% Change)
China
27%
(6)
(10)
United States
16%
+8
+4
Asia
12%
(11)
(4)
Russia, Central & Eastern Europe
8%
(41)
(19)
Australia
7%
(3)
+3
United Kingdom
6%
(58)
(23)
Western Europe
6%
(34)
(20)
Latin America
5%
(41)
(19)
Africa
4%
(58)
(24)
Middle East / Turkey / North Africa
4%
(48)
(23)
Canada
2%
(4)
(3)
Thailand
2%
(15)
(5)
India
1%
(74)
(40)
1Refer to investors.yum.com under Financial Reports for a list of the countries within each of the markets.
2Reflects Full Year 2019.
PIZZA HUT DIVISION
Second-Quarter
Year-to-Date
%/ppts Change
%/ppts Change
2020
2019
Reported
Ex F/X
2020
2019
Reported
Ex F/X
Restaurants
18,326
18,515
(1)
N/A
18,326
18,515
(1)
N/A
System Sales ($MM)
2,753
3,098
(11)
(10)
5,554
6,229
(11)
(10)
Same-Store Sales Growth (%)
(9)
+2
NM
NM
(10)
+1
NM
NM
Franchise and Property Revenues ($MM)
126
143
(12)
(11)
259
288
(10)
(10)
Operating Profit ($MM)
87
96
(9)
(8)
163
193
(15)
(14)
Operating Margin (%)
36.8
38.7
(1.9)
(1.9)
34.8
39.4
(4.6)
(4.6)
Second-Quarter (% Change)
Year-to-Date (% Change)
International
U.S.
International
U.S.
System Sales Growth Ex F/X
(18)
+1
(15)
(3)
Same-Store Sales Growth
(19)
+5
(17)
(1)
Pizza Hut Markets1
Percent of Pizza Hut System Sales2
System Sales Growth Ex F/X
Second-Quarter (% Change)
Year-to-Date (% Change)
United States
42%
+1
(3)
China
17%
(12)
(25)
Asia
13%
+8
+8
Latin America / Spain / Portugal
11%
(37)
(21)
Europe (excluding Spain & Portugal)
9%
(32)
(19)
Middle East / Turkey / North Africa
4%
(46)
(25)
Canada
2%
+18
+11
India
1%
(66)
(38)
Africa
<1%
(38)
(11)
1Refer to investors.yum.com under Financial Reports for a list of the countries within each of the markets.
2Reflects Full Year 2019.
TACO BELL DIVISION
Second-Quarter
Year-to-Date
%/ppts Change
%/ppts Change
2020
2019
Reported
Ex F/X
2020
2019
Reported
Ex F/X
Restaurants
7,400
7,136
+4
N/A
7,400
7,136
+4
N/A
System Sales ($MM)
2,564
2,727
(6)
(6)
5,160
5,233
(1)
(1)
Same-Store Sales Growth (%)
(8)
+7
NM
NM
(4)
+6
NM
NM
Franchise and Property Revenues ($MM)
147
158
(7)
(6)
295
302
(2)
(2)
Operating Profit ($MM)
154
159
(3)
(3)
298
297
Even
Even
Operating Margin (%)
34.4
33.2
1.2
1.2
33.0
32.1
0.9
0.9
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 30, 2020. The number is 877/871-3172 for U.S. callers, 412/902-6603 for international callers, conference ID 9876991.
The call will be available for playback beginning at 10:00 a.m. Eastern Time July 30, 2020 through August 6, 2020. To access the playback, dial 877/344-7529 in the U.S., 855/669-9658 in Canada, and 412/317-0088 internationally, conference ID 10145598.
The webcast and the playback can be accessed by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting “Q2 2020 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 individually identifiable data of our customers and employees; our ability to successfully implement technology initiatives; our increasing dependence on digital commerce platforms and information technology systems; 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 50,000 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. In 2019, Yum! Brands was named to the Dow Jones Sustainability North America Index and in 2020, the company 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
6/30/20
6/30/19
B/(W)
6/30/20
6/30/19
B/(W)
Revenues
Company sales
$
403
$
359
12
$
758
$
692
10
Franchise and property revenues
525
633
(17)
1,121
1,245
(10)
Franchise contributions for advertising and other services
270
318
(15)
582
627
(7)
Total revenues
1,198
1,310
(9)
2,461
2,564
(4)
Costs and Expenses, Net
Company restaurant expenses
349
286
(22)
647
558
(16)
General and administrative expenses
259
198
(30)
467
409
(14)
Franchise and property expenses
36
38
5
94
81
(17)
Franchise advertising and other services expense
264
315
16
574
616
7
Refranchising (gain) loss
(8
)
(4
)
82
(21
)
(10
)
NM
Other (income) expense
(2
)
6
NM
150
6
NM
Total costs and expenses, net
898
839
(7)
1,911
1,660
(15)
Operating Profit
300
471
(36)
550
904
(39)
Investment (income) expense, net
(91
)
(25
)
NM
(57
)
(9
)
NM
Other pension (income) expense
2
—
NM
5
3
(57)
Interest expense, net
132
119
(10)
250
234
(7)
Income before income taxes
257
377
(32)
352
676
(48)
Income tax provision
51
88
42
63
125
50
Net Income
$
206
$
289
(29)
$
289
$
551
(48)
Basic EPS
EPS
$
0.68
$
0.94
(28)
$
0.96
$
1.79
(47)
Average shares outstanding
303
307
1
302
307
2
Diluted EPS
EPS
$
0.67
$
0.92
(27)
$
0.94
$
1.75
(46)
Average shares outstanding
307
314
2
307
314
2
Dividends declared per common share
$
0.47
$
0.42
$
0.94
$
0.84
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
6/30/20
6/30/19
B/(W)
6/30/20
6/30/19
B/(W)
Company sales
$
86
$
135
(36)
$
216
$
260
(17)
Franchise and property revenues
251
332
(24)
566
655
(14)
Franchise contributions for advertising and other services
72
117
(38)
193
235
(18)
Total revenues
409
584
(30)
975
1,150
(15)
Company restaurant expenses
83
113
26
198
221
10
General and administrative expenses
70
75
6
143
153
6
Franchise and property expenses
29
19
(52)
62
47
(32)
Franchise advertising and other services expense
70
116
40
190
232
18
Other (income) expense
4
—
NM
5
—
NM
Total costs and expenses, net
256
323
21
598
653
8
Operating Profit
$
153
$
261
(41)
$
377
$
497
(24)
Restaurant margin
2.7
%
15.8
%
(13.1) ppts.
8.1
%
15.0
%
(6.9) ppts.
Operating margin
37.4
%
44.7
%
(7.3) ppts.
38.7
%
43.2
%
(4.5) ppts.
See accompanying notes.
Percentages may not recompute due to rounding.
YUM! Brands, Inc.
PIZZA HUT DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter ended
% Change
Year to date
% Change
6/30/20
6/30/19
B/(W)
6/30/20
6/30/19
B/(W)
Company sales
$
19
$
11
71
$
37
$
22
66
Franchise and property revenues
126
143
(12)
259
288
(10)
Franchise contributions for advertising and other services
90
92
(1)
174
179
(2)
Total revenues
235
246
(4)
470
489
(4)
Company restaurant expenses
18
10
(66)
37
21
(70)
General and administrative expenses
44
44
(2)
90
91
—
Franchise and property expenses
1
9
89
13
14
6
Franchise advertising and other services expense
87
89
2
171
172
1
Other (income) expense
(2
)
(2
)
NM
(4
)
(2
)
NM
Total costs and expenses, net
148
150
1
307
296
(3)
Operating Profit
$
87
$
96
(9)
$
163
$
193
(15)
Restaurant margin
4.5
%
1.6
%
2.9 ppts.
0.8
%
2.7
%
(1.9) ppts.
Operating margin
36.8
%
38.7
%
(1.9) ppts.
34.8
%
39.4
%
(4.6) ppts.
See accompanying notes.
Percentages may not recompute due to rounding.
YUM! Brands, Inc.
TACO BELL DIVISION Operating Results
(amounts in millions)
(unaudited)
Quarter ended
% Change
Year to date
% Change
6/30/20
6/30/19
B/(W)
6/30/20
6/30/19
B/(W)
Company sales
$
194
$
213
(9)
$
392
$
410
(4)
Franchise and property revenues
147
158
(7)
295
302
(2)
Franchise contributions for advertising and other services
108
109
(2)
215
213
—
Total revenues
449
480
(7)
902
925
(3)
Company restaurant expenses
147
163
10
300
316
5
General and administrative expenses
37
41
10
75
84
11
Franchise and property expenses
5
8
38
16
17
5
Franchise advertising and other services expense
107
110
3
213
212
(1)
Other (income) expense
(1
)
(1
)
NM
—
(1
)
NM
Total costs and expenses, net
295
321
8
604
628
4
Operating Profit
$
154
$
159
(3)
$
298
$
297
—
Restaurant margin
24.5
%
23.6
%
0.9 ppts.
23.5
%
22.8
%
0.7 ppts.
Operating margin
34.4
%
33.2
%
1.2 ppts.
33.0
%
32.1
%
0.9 ppts.
See accompanying notes.
Percentages may not recompute due to rounding.
YUM! Brands, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
(unaudited) 6/30/20
12/31/19
ASSETS
Current Assets
Cash and cash equivalents
$
1,243
$
605
Accounts and notes receivable, less allowance: $101 in 2020 and $72 in 2019
530
584
Prepaid expenses and other current assets
625
338
Total Current Assets
2,398
1,527
Property, plant and equipment, net of accumulated depreciation of $1,167 in 2020 and $1,136 in 2019
1,265
1,170
Goodwill
602
530
Intangible assets, net
344
244
Other assets
1,313
1,313
Deferred income taxes
499
447
Total Assets
$
6,421
$
5,231
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable and other current liabilities
$
908
$
960
Income taxes payable
133
150
Short-term borrowings
434
431
Total Current Liabilities
1,475
1,541
Long-term debt
11,252
10,131
Other liabilities and deferred credits
1,802
1,575
Total Liabilities
14,529
13,247
Shareholders' Deficit
Common Stock, no par value, 750 shares authorized; 301 shares issued in 2020 and 300 issued in 2019
11
—
Accumulated deficit
(7,631
)
(7,628
)
Accumulated other comprehensive loss
(488
)
(388
)
Total Shareholders' Deficit
(8,108
)
(8,016
)
Total Liabilities and Shareholders' Deficit
$
6,421
$
5,231
See accompanying notes.
YUM! Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
(unaudited)
Year to date
6/30/20
6/30/19
Cash Flows - Operating Activities
Net Income
$
289
$
551
Depreciation and amortization
53
54
Impairment and closure (income) expenses
146
1
Refranchising (gain) loss
(21
)
(10
)
Investment (income) expense, net
(57
)
(9
)
Contributions to defined benefit pension plans
(1
)
(11
)
Deferred income taxes
(20
)
—
Share-based compensation expense
29
31
Changes in accounts and notes receivable
4
7
Changes in prepaid expenses and other current assets
(26
)
(24
)
Changes in accounts payable and other current liabilities
(76
)
(171
)
Changes in income taxes payable
(49
)
(36
)
Other, net
91
78
Net Cash Provided by Operating Activities
362
461
Cash Flows - Investing Activities
Capital spending
(67
)
(76
)
Acquisition of The Habit Restaurants, Inc.
(408
)
—
Proceeds from refranchising of restaurants
3
25
Other, net
—
(1
)
Net Cash Used in Investing Activities
(472
)
(52
)
Cash Flows - Financing Activities
Proceeds from long-term debt
600
—
Repayments of long-term debt
(41
)
(40
)
Revolving credit facilities, three months or less, net
575
157
Short-term borrowings by original maturity
More than three months - proceeds
85
48
More than three months - payments
(90
)
(44
)
Three months or less, net
—
—
Repurchase shares of Common Stock
—
(305
)
Dividends paid on Common Stock
(283
)
(257
)
Debt issuance costs
(7
)
—
Other, net
(31
)
(51
)
Net Cash Provided by (Used in) Financing Activities
808
(492
)
Effect of Exchange Rate on Cash and Cash Equivalents
(18
)
(2
)
Net Increase (Decrease) in Cash and Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
680
(85
)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period
768
474
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period
$
1,448
$
389
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 (b), (c), (d), (e), (f) and (g) in the accompanying notes.
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
6/30/20
6/30/19
6/30/20
6/30/19
Detail of Special Items
Refranchising gain (loss)(b)
$
3
$
4
$
6
$
10
Costs associated with acquisition and integration of Habit Burger Grill(c)
(3
)
—
(9
)
—
Impairment of Habit Burger Grill goodwill(d)
—
—
(139
)
—
Unlocking Opportunity Initiative contribution(e)
(50
)
—
(50
)
—
Other Special Items Expense(f)
(4
)
(9
)
(7
)
(11
)
Special Items Income (Expense) - Operating Profit
(54
)
(5
)
(199
)
(1
)
Interest expense, net(f)
—
(2
)
—
(2
)
Special Items Income (Expense) before Income Taxes
(54
)
(7
)
(199
)
(3
)
Tax Benefit (Expense) on Special Items(g)
7
3
40
2
Special Items Income (Expense), net of tax
$
(47
)
$
(4
)
$
(159
)
$
(1
)
Average diluted shares outstanding
307
314
307
314
Special Items diluted EPS
$
(0.15
)
$
(0.01
)
$
(0.52
)
$
(0.01
)
Reconciliation of GAAP Operating Profit to Core Operating Profit
Consolidated
GAAP Operating Profit
$
300
$
471
$
550
$
904
Special Items Income (Expense)
(54
)
(5
)
(199
)
(1
)
Foreign Currency Impact on Divisional Operating Profit
(6
)
N/A
(12
)
N/A
Core Operating Profit
$
360
$
476
$
761
$
905
KFC Division
GAAP Operating Profit
$
153
$
261
$
377
$
497
Foreign Currency Impact on Divisional Operating Profit
(5
)
N/A
(10
)
N/A
Core Operating Profit
$
158
$
261
$
387
$
497
Reconciliation of Non-GAAP Measurements to GAAP Results (Continued) (amounts in millions, except per share amounts) (unaudited)
Quarter ended
Year to date
6/30/20
6/30/19
6/30/20
6/30/19
Pizza Hut Division
GAAP Operating Profit
$
87
$
96
$
163
$
193
Foreign Currency Impact on Divisional Operating Profit
(1
)
N/A
(2
)
N/A
Core Operating Profit
$
88
$
96
$
165
$
193
Taco Bell Division
GAAP Operating Profit
$
154
$
159
$
298
$
297
Foreign Currency Impact on Divisional Operating Profit
—
N/A
—
N/A
Core Operating Profit
$
154
$
159
$
298
$
297
Habit Burger Grill Division
GAAP Operating Profit
$
(6
)
N/A
$
(8
)
N/A
Foreign Currency Impact on Divisional Operating Profit
—
N/A
—
N/A
Core Operating Profit
$
(6
)
N/A
$
(8
)
N/A
Reconciliation of Diluted EPS to Diluted EPS excluding Special Items
Diluted EPS
$
0.67
$
0.92
$
0.94
$
1.75
Special Items Diluted EPS
(0.15
)
(0.01
)
(0.52
)
(0.01
)
Diluted EPS excluding Special Items
$
0.82
$
0.93
$
1.46
$
1.76
Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
GAAP Effective Tax Rate
19.8
%
23.3
%
17.8
%
18.5
%
Impact on Tax Rate as a result of Special Items
1.0
%
(0.4
)%
(0.9
)%
(0.2
)%
Effective Tax Rate excluding Special Items
18.8
%
23.7
%
18.7
%
18.7
%
YUM! Brands, Inc. Segment Results (amounts in millions) (unaudited)
Quarter Ended 6/30/2020
KFC
Pizza Hut
Taco Bell
Habit Burger
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
Quarter Ended 6/30/2019
KFC
Pizza Hut
Taco Bell
Corporate and Unallocated
Consolidated
Total revenues
$
584
$
246
$
480
$
—
$
1,310
Company restaurant expenses
113
10
163
—
286
General and administrative expenses
75
44
41
38
198
Franchise and property expenses
19
9
8
2
38
Franchise advertising and other services expense
116
89
110
—
315
Refranchising (gain) loss
—
—
—
(4
)
(4
)
Other (income) expense
—
(2
)
(1
)
9
6
Total costs and expenses, net
323
150
321
45
839
Operating Profit (Loss)
$
261
$
96
$
159
$
(45
)
$
471
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 6/30/2020
KFC
Pizza Hut
Taco Bell
Habit Burger
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
Year to Date 6/30/2019
KFC
Pizza Hut
Taco Bell
Corporate and Unallocated
Consolidated
Total revenues
$
1,150
$
489
$
925
$
—
$
2,564
Company restaurant expenses
221
21
316
—
558
General and administrative expenses
153
91
84
81
409
Franchise and property expenses
47
14
17
3
81
Franchise advertising and other services expense
232
172
212
—
616
Refranchising (gain) loss
—
—
—
(10
)
(10
)
Other (income) expense
—
(2
)
(1
)
9
6
Total costs and expenses, net
653
296
628
83
1,660
Operating Profit
$
497
$
193
$
297
$
(83
)
$
904
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)
(a)
Amounts presented as of and for the quarters and years to date ended June 30, 2020 and 2019 are preliminary.
(b)
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, 2020 and 2019 as Special Items primarily include true-ups to refranchising gains and losses recorded prior to December 31, 2018.
During the quarters ended June 30, 2020 and 2019, we recorded net refranchising gains of $3 million and $4 million, respectively, that have been reflected as Special Items.
During the years to date ended June 30, 2020 and 2019, we recorded net refranchising gains of $6 million and $10 million, respectively, that have been reflected as Special Items.
Additionally, during the quarter and year to date ended June 30, 2020 we recorded refranchising gains of $5 million and $15 million, respectively, that have not been reflected as Special Items. These gains relate to the refranchising of restaurants in 2020 that were not part of our aforementioned plans to achieve 98% franchise ownership.
(c)
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").
(d)
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, we recorded a goodwill impairment charge of $139 million to Other (income) expense, which has been reflected as a Special Item. We have also reflected the tax benefit of this impairment charge of $32 million as a Special Item.
(e)
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 recorded a Special Item charge of $50 million in the quarter ended June 30, 2020 related to a contribution made to the Yum Foundation as part of these efforts and investment.
(f)
During the quarter ended June 30, 2019 we recorded charges of $8 million and $2 million to Other (income) expense and Interest expense, net, respectively, related to cash payments in excess of our recorded liability to settle contingent consideration associated with our acquisition of the KFC Turkey and Pizza Hut Turkey businesses in 2013. Consistent with prior adjustments to the recorded contingent consideration we have reflected this as a Special Item.
(g)
Tax Expense 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.
Category: Earnings
View source version on businesswire.com: https://www.businesswire.com/news/home/20200730005180/en/
Analysts are invited to contact: Keith Siegner, Vice President, Investor Relations, M&A and Treasurer at 888/298-6986
Members of the media are invited to contact: Virginia Ferguson, Senior Director, Public Relations, at 502/874-8200
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