SHANGHAI, Oct. 29, 2019 /PRNewswire/ -- Yum China Holdings,
Inc. (the "Company" or "Yum China") (NYSE: YUMC) today reported
unaudited results for the third quarter ended September 30, 2019. Reported GAAP results
include Special Items, which are excluded from
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
Adjusted Measures" within this release.
Third Quarter Highlights
- Total revenues increased 5% year over year to
$2.3 billion from $2.2 billion (8% year over year increase
excluding foreign currency translation ("F/X")).
- Total system sales grew 8% year over year, with growth
of 10% at KFC and 3% at Pizza Hut, excluding F/X.
- Same-store sales grew 2% year over year, with a 3%
increase at KFC and a 1% increase at Pizza Hut, excluding F/X.
- Restaurant margin was 17.7%, compared with 17.6% in the
prior year period.
- Operating Profit increased 11% year over year to
$300 million from $269 million (14% year over year increase
excluding F/X).
- Effective tax rate was 26.9%.
- Net Income increased 11% to $223 million from $203
million in the prior year period, primarily due to the
increase in operating profit and mark to market gain from our
equity investment in Meituan Dianping.
- Diluted EPS increased 14% to $0.58 from $0.51 in
the prior year period (8% year over year increase excluding the
$0.03 per share mark to market gain
from our equity investment in Meituan Dianping).
- Opened 231 new restaurants during the quarter, bringing total
store count to 8,917 across more than 1,300 cities.
Key Financial Results
|
Third Quarter
2019
|
|
|
Year to Date Ended
9/30/2019
|
|
%
Change
|
|
|
%
Change
|
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
|
|
System
Sales
|
|
Same-Store
Sales
|
|
Net New
Units
|
|
Operating
Profit
|
Yum China
|
+8
|
|
+2
|
|
+7
|
|
+11
|
|
|
+9
|
|
+4
|
|
+7
|
|
(6)
|
KFC
|
+10
|
|
+3
|
|
+9
|
|
+12
|
|
|
+11
|
|
+4
|
|
+9
|
|
+4
|
Pizza
Hut
|
+3
|
|
+1
|
|
+2
|
|
(29)
|
|
|
+3
|
|
+1
|
|
+2
|
|
+9
|
|
|
Third
Quarter
|
|
|
|
Year to Date Ended
9/30
|
(in US$ million,
except
|
|
|
|
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
%
Change
|
for per share data
and percentages)
|
|
2019
|
|
|
2018
|
|
Reported
|
|
Ex F/X
|
|
|
2019
|
|
2018
|
|
Reported
|
|
Ex F/X
|
Operating
Profit
|
$
|
300
|
|
$
|
269
|
|
+11
|
|
+14
|
|
|
$
|
807
|
|
$
|
857
|
|
(6)
|
|
(1)
|
Adjusted Operating
Profit[1]
|
$
|
300
|
|
$
|
269
|
|
+11
|
|
+14
|
|
|
$
|
807
|
|
$
|
759
|
|
+6
|
|
+12
|
Net Income
|
$
|
223
|
|
$
|
203
|
|
+11
|
|
+14
|
|
|
$
|
623
|
|
$
|
634
|
|
(2)
|
|
+4
|
Adjusted Net
Income[1]
|
$
|
223
|
|
$
|
203
|
|
+11
|
|
+14
|
|
|
$
|
631
|
|
$
|
560
|
|
+13
|
|
+19
|
Basic Earnings Per
Common Share
|
$
|
0.59
|
|
$
|
0.53
|
|
+11
|
|
+15
|
|
|
$
|
1.65
|
|
$
|
1.64
|
|
+1
|
|
+6
|
Adjusted Basic
Earnings Per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Share[1]
|
$
|
0.59
|
|
$
|
0.53
|
|
+11
|
|
+15
|
|
|
$
|
1.67
|
|
$
|
1.45
|
|
+15
|
|
+21
|
Diluted Earnings Per
Common Share
|
$
|
0.58
|
|
$
|
0.51
|
|
+14
|
|
+16
|
|
|
$
|
1.60
|
|
$
|
1.59
|
|
+1
|
|
+6
|
Adjusted Diluted
Earnings Per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Share[1]
|
$
|
0.58
|
|
$
|
0.51
|
|
+14
|
|
+16
|
|
|
$
|
1.62
|
|
$
|
1.41
|
|
+15
|
|
+21
|
[1]See
"Reconciliation of Reported GAAP Results to Adjusted Measures"
included in the accompanying tables of this release for further
details.
|
Note:
All comparisons are versus the same period a year ago.
|
|
NM refers to changes
over 100%, from negative to positive amounts or from zero to an
amount.
|
Percentages may not
recompute due to rounding.
|
System sales and
same-store sales percentages exclude the impact of F/X.
|
CEO and CFO Comments
Joey Wat, CEO of Yum China,
commented, "We are pleased with our continued strong performance in
the third quarter, which was driven by our competitive positioning,
leading digital capabilities and ongoing innovation across the
business. We achieved our 12th consecutive quarter of system sales
growth since the spin-off, highlighting the strength of our
business model and demonstrating our ability to effectively adapt
to changing market conditions. KFC delivered solid sales and profit
growth as we strategically decreased promotion intensity to protect
margins. Pizza Hut maintained positive sales momentum with a
decline in margin during the quarter due to the important and
necessary long-term investments in the revitalization program."
"We will continue to build on KFC's resilient business model,
cement the revitalization of Pizza Hut, invest in the growth of our
smaller brands and sharpen our industry-leading digital ecosystem,
which enables us to meet customer demands and manage the business
effectively," continued Ms. Wat. "We are cautiously optimistic
about the future because we see significant growth opportunities in
China, and we will focus on
leveraging our competitive advantages to succeed in this dynamic
environment."
Andy Yeung, CFO of Yum China,
added, "I am very excited to have joined the Yum China team and am
pleased to be reporting another strong set of quarterly results,
which highlight Yum China's strength in many areas. We continued
rapid expansion of our store network and maintained very healthy
cash payback for our new stores. We also delivered strong sales,
operating profit and EPS growth despite continued pressure from
higher chicken and labor costs. In addition, we returned
$109 million to shareholders through
dividends and share repurchases in the quarter. Looking ahead, we
will continue to focus on driving sales and managing costs while
making prudent investments to drive long-term growth. As always, we
remain committed to driving significant overall value to our
shareholders."
Dividend and Share Repurchase
- The Board of Directors declared a cash dividend of $0.12 per share on Yum China's common stock,
payable as of the close of business on December 17, 2019 to shareholders of record as of
the close of business on November 26,
2019.
- During the third quarter, we repurchased approximately 1.4
million shares of Yum China common stock for $64.0 million at an average price of $44.70 per share.
Digital and Delivery
- As of September 30, 2019, the KFC
loyalty program had over 200 million members and the Pizza Hut
loyalty program had over 65 million members, an increase of 55
million and 15 million, respectively, year over year.
- Digital payments accounted for 91% of Company sales in the
quarter, an increase of 9 percentage points year over year.
- Delivery contributed to 20% of Company sales in the third
quarter of 2019, an increase of 3 percentage points year over year.
Delivery services are now available in 1,225 cities, up from 1,063
cities at the end of the prior year period.
New-Unit Development and Asset Upgrade
- The Company opened 231 new restaurants and remodeled 222
restaurants in the third quarter of 2019.
|
|
New
Units
|
|
|
Restaurant
Count
|
|
|
Third
Quarter
|
|
Year to
Date
|
|
|
As of
9/30
|
|
|
2019
|
|
Ended
9/30/2019
|
|
|
2019
|
|
2018
|
Yum China
|
|
231
|
|
646
|
|
|
8,917
|
|
8,313
|
KFC
|
|
174
|
|
501
|
|
|
6,324
|
|
5,800
|
Pizza
Hut
|
|
24
|
|
84
|
|
|
2,255
|
|
2,215
|
Others[2]
|
|
33
|
|
61
|
|
|
338
|
|
298
|
[2] Others include
Little Sheep, East Dawning, Taco Bell and COFFii &
JOY.
|
Restaurant Margin
- In the third quarter of 2019, Yum China restaurant margin was
17.7%, as compared with 17.6% in the prior year period, primarily
attributable to sales leverage, productivity improvement and other
cost savings, partially offset by wage and commodity inflation and
promotional activities.
|
Third
Quarter
|
|
|
|
Year to Date Ended
9/30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
% pts
change
|
|
|
|
2019
|
|
|
2018
|
|
|
% pts
change
|
|
|
Yum China
|
|
|
17.7
|
%
|
|
|
17.6
|
%
|
|
|
+0.1
|
|
|
|
|
17.0
|
%
|
|
|
16.9
|
%
|
|
|
+0.1
|
|
|
KFC
|
|
|
20.1
|
%
|
|
|
19.2
|
%
|
|
|
+0.9
|
|
|
|
|
18.8
|
%
|
|
|
19.0
|
%
|
|
|
(0.2)
|
|
|
Pizza
Hut
|
|
|
11.4
|
%
|
|
|
13.8
|
%
|
|
|
(2.4)
|
|
|
|
|
12.4
|
%
|
|
|
11.8
|
%
|
|
|
+0.6
|
|
|
2019 Outlook
- The Company continues to expect fiscal year 2019 targets as
follows:
-
- Between 800 and 850 gross new units.
- Capital expenditures between $475
million and $525 million.
- Effective tax rate below 28%, excluding any impact from the
Company's equity investment in Meituan Dianping.
The Company provides its effective tax rate outlook excluding
any impact from its investment in Meituan Dianping, which will be
subject to mark to market accounting and may be
significant.
Conference Call
Yum China's management will hold an earnings conference call at
8:00 p.m. U.S. Eastern Time on
Tuesday, October 29, 2019
(8:00 a.m. Beijing/Hong Kong Time on Wednesday, October 30, 2019). A copy of the
presentation will be available on the Yum China Holdings, Inc.
website, http://ir.yumchina.com.
U.S.:
+1 845 675 0437
Mainland China: 400 620 8038
or 800 819 0121
Hong
Kong:
+852 3018 6771
U.K.:
+44 20 36214779
International:
+65 6713 5090
Password: Yum
China
A replay of the conference call will be available two hours
after the call ends until 8:00 a.m.
U.S. Eastern Time on Wednesday, November 6, 2019 (9:00 p.m. Beijing/Hong Kong Time on Wednesday,
November 6, 2019) and may be accessed by phone at the following
numbers:
U.S.:
+1 855 452 5696
International: +61
2 9003 4211
Passcode: 7952028
Additionally, a live webcast and an archived webcast of this
conference call will be available at
http://ir.yumchina.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including under
"2019 Outlook." We intend all forward-looking statements to be
covered by the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements generally
can be identified by the fact that they do not relate strictly to
historical or current facts and by the use of forward-looking words
such as "expect," "expectation," "believe," "anticipate," "may,"
"could," "intend," "belief," "plan," "estimate," "target,"
"predict," "project," "likely," "will," "continue,"
"should," "forecast," "outlook" or similar terminology. These
statements are based on current estimates and assumptions made by
us in light of our experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors that we believe are appropriate and reasonable under
the circumstances, but there can be no assurance that such
estimates and assumptions will prove to be correct. Forward-looking
statements include, without limitation, statements regarding the
future strategies, business plans, investment plans, earnings,
performance and returns of Yum China, statements regarding the
revitalization of Pizza Hut, anticipated effects of population and
macroeconomic trends, the capital structure and effective tax rate
of Yum China, the anticipated effects of our digital and delivery
capabilities on growth and beliefs regarding the long-term
drivers of Yum China's business. Forward-looking statements are not
guarantees of performance and are inherently subject to known and
unknown risks and uncertainties that are difficult to predict and
could cause our actual results or events to differ materially from
those indicated by those statements. We cannot assure you that any
of our expectations, estimates or assumptions will be achieved. The
forward-looking statements included in this press release are only
made as of the date of this press release, and we disclaim any
obligation to publicly update any forward-looking statement to
reflect subsequent events or circumstances, except as required by
law. Numerous factors could cause our actual results or events to
differ materially from those expressed or implied by
forward-looking statements, including, without limitation: whether
we are able to achieve development goals at the times and in the
amounts currently anticipated, if at all, the success of our
marketing campaigns and product innovation, our ability to maintain
food safety and quality control systems, 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) 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, East Dawning and COFFii & JOY concepts outright.
The Company had more than 8,900 restaurants in over 1,300 cities at
the end of September 2019. In 2019,
Yum China was named to the Bloomberg Gender-Equality Index and was
certified as a Top Employer 2019 in China by the Top Employers Institute. For more
information, please visit http://ir.yumchina.com.
Investor Relations Contact:
Tel: +86 21 2407 7556
IR@YumChina.com
Media Contact:
Tel: +86 21 2407 7510
Media@YumChina.com
Yum China
Holdings, Inc.
|
Condensed
Consolidated Statements of Income
|
(in US$ million,
except per share data)
|
(unaudited)
|
|
|
Quarter
Ended
|
|
% Change
|
|
Year to Date
Ended
|
|
% Change
|
|
9/30/2019
|
|
9/30/2018
|
|
B/(W)
|
|
9/30/2019
|
|
9/30/2018
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
$
|
2,097
|
|
$
|
2,008
|
|
4
|
|
|
$
|
6,112
|
|
$
|
5,912
|
|
3
|
|
Franchise fees and
income
|
|
38
|
|
|
36
|
|
7
|
|
|
|
113
|
|
|
110
|
|
3
|
|
Revenues from
transactions with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
franchisees and unconsolidated affiliates
|
|
172
|
|
|
159
|
|
8
|
|
|
|
496
|
|
|
461
|
|
8
|
|
Other
revenues
|
|
12
|
|
|
9
|
|
39
|
|
|
|
26
|
|
|
18
|
|
45
|
|
Total
revenues
|
|
2,319
|
|
|
2,212
|
|
5
|
|
|
|
6,747
|
|
|
6,501
|
|
4
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
651
|
|
|
610
|
|
(7)
|
|
|
|
1,896
|
|
|
1,775
|
|
(7)
|
|
Payroll and employee
benefits
|
|
455
|
|
|
430
|
|
(6)
|
|
|
|
1,371
|
|
|
1,296
|
|
(6)
|
|
Occupancy and other
operating expenses
|
|
619
|
|
|
615
|
|
(1)
|
|
|
|
1,804
|
|
|
1,841
|
|
2
|
|
Company restaurant
expenses
|
|
1,725
|
|
|
1,655
|
|
(4)
|
|
|
|
5,071
|
|
|
4,912
|
|
(3)
|
|
General and
administrative expenses
|
|
117
|
|
|
119
|
|
—
|
|
|
|
340
|
|
|
334
|
|
(2)
|
|
Franchise
expenses
|
|
19
|
|
|
18
|
|
(3)
|
|
|
|
55
|
|
|
55
|
|
1
|
|
Expenses for
transactions with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
franchisees and unconsolidated affiliates
|
|
167
|
|
|
156
|
|
(7)
|
|
|
|
488
|
|
|
454
|
|
(7)
|
|
Other operating costs
and expenses
|
|
9
|
|
|
6
|
|
(56)
|
|
|
|
20
|
|
|
17
|
|
(21)
|
|
Closures and
impairment (income) expenses, net
|
|
(1)
|
|
|
(1)
|
|
18
|
|
|
|
14
|
|
|
15
|
|
6
|
|
Other income,
net
|
|
(17)
|
|
|
(10)
|
|
73
|
|
|
|
(48)
|
|
|
(143)
|
|
(67)
|
|
Total costs and
expenses, net
|
|
2,019
|
|
|
1,943
|
|
(4)
|
|
|
|
5,940
|
|
|
5,644
|
|
(5)
|
|
Operating
Profit
|
|
300
|
|
|
269
|
|
11
|
|
|
|
807
|
|
|
857
|
|
(6)
|
|
Interest income,
net
|
|
10
|
|
|
10
|
|
6
|
|
|
|
29
|
|
|
28
|
|
4
|
|
Investment
gain
|
|
12
|
|
|
—
|
|
NM
|
|
|
|
39
|
|
|
—
|
|
NM
|
|
Income Before
Income Taxes
|
|
322
|
|
|
279
|
|
15
|
|
|
|
875
|
|
|
885
|
|
(1)
|
|
Income tax
provision
|
|
(87)
|
|
|
(67)
|
|
(28)
|
|
|
|
(226)
|
|
|
(227)
|
|
1
|
|
Net income –
including noncontrolling interests
|
|
235
|
|
|
212
|
|
11
|
|
|
|
649
|
|
|
658
|
|
(1)
|
|
Net income –
noncontrolling interests
|
|
12
|
|
|
9
|
|
(26)
|
|
|
|
26
|
|
|
24
|
|
(6)
|
|
Net Income – Yum
China Holdings, Inc.
|
$
|
223
|
|
$
|
203
|
|
11
|
|
|
$
|
623
|
|
$
|
634
|
|
(2)
|
|
Effective tax
rate
|
|
26.9%
|
|
|
24.2%
|
|
(2.7)
|
ppts.
|
|
|
25.8%
|
|
|
25.%7
|
|
(0.1)
|
ppts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
$
|
0.59
|
|
$
|
0.53
|
|
|
|
|
$
|
1.65
|
|
$
|
1.64
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
377
|
|
|
384
|
|
|
|
|
|
378
|
|
|
386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Common Share
|
$
|
0.58
|
|
$
|
0.51
|
|
|
|
|
$
|
1.60
|
|
$
|
1.59
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
388
|
|
|
394
|
|
|
|
|
|
389
|
|
|
398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends
Declared Per Common Share
|
$
|
0.12
|
|
$
|
0.10
|
|
|
|
|
$
|
0.36
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
|
100.0%
|
|
|
100.0%
|
|
|
|
Food and
paper
|
|
31.0
|
|
|
30.4
|
|
(0.6)
|
ppts.
|
|
|
31.0
|
|
|
30.0
|
|
(1.0)
|
ppts.
|
Payroll and employee
benefits
|
|
21.7
|
|
|
21.4
|
|
(0.3)
|
ppts.
|
|
|
22.4
|
|
|
21.9
|
|
(0.5)
|
ppts.
|
Occupancy and other
operating expenses
|
|
29.6
|
|
|
30.6
|
|
1.0
|
ppts.
|
|
|
29.6
|
|
|
31.2
|
|
1.6
|
ppts.
|
Restaurant
margin
|
|
17.7%
|
|
|
17.6%
|
|
0.1
|
ppts.
|
|
|
17.0%
|
|
|
16.9%
|
|
0.1
|
ppts.
|
Operating
margin
|
|
14.3%
|
|
|
13.4%
|
|
0.9
|
ppts.
|
|
|
13.2%
|
|
|
14.5%
|
|
(1.3)
|
ppts.
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
KFC Operating
Results
|
(in US$
million)
|
(unaudited)
|
|
|
Quarter
Ended
|
|
% Change
|
|
Year to Date
Ended
|
|
% Change
|
|
9/30/2019
|
|
9/30/2018
|
|
B/(W)
|
|
9/30/2019
|
|
9/30/2018
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
$
|
1,546
|
|
$
|
1,452
|
|
6
|
|
|
$
|
4,495
|
|
$
|
4,248
|
|
6
|
|
Franchise fees and
income
|
|
35
|
|
|
34
|
|
4
|
|
|
|
104
|
|
|
104
|
|
1
|
|
Revenues from
transactions with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
franchisees and unconsolidated affiliates
|
|
16
|
|
|
15
|
|
9
|
|
|
|
48
|
|
|
47
|
|
3
|
|
Other
revenues
|
|
1
|
|
|
—
|
|
NM
|
|
|
|
1
|
|
|
—
|
|
NM
|
|
Total
revenues
|
|
1,598
|
|
|
1,501
|
|
6
|
|
|
|
4,648
|
|
|
4,399
|
|
6
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
477
|
|
|
444
|
|
(7)
|
|
|
|
1,403
|
|
|
1,281
|
|
(10)
|
|
Payroll and employee
benefits
|
|
311
|
|
|
297
|
|
(5)
|
|
|
|
942
|
|
|
879
|
|
(7)
|
|
Occupancy and other
operating expenses
|
|
447
|
|
|
432
|
|
(3)
|
|
|
|
1,305
|
|
|
1,281
|
|
(2)
|
|
Company restaurant
expenses
|
|
1,235
|
|
|
1,173
|
|
(5)
|
|
|
|
3,650
|
|
|
3,441
|
|
(6)
|
|
General and
administrative expenses
|
|
50
|
|
|
44
|
|
(16)
|
|
|
|
148
|
|
|
135
|
|
(10)
|
|
Franchise
expenses
|
|
18
|
|
|
17
|
|
(2)
|
|
|
|
53
|
|
|
53
|
|
—
|
|
Expenses for
transactions with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
franchisees and unconsolidated affiliates
|
|
16
|
|
|
15
|
|
(4)
|
|
|
|
48
|
|
|
47
|
|
(2)
|
|
Closures and
impairment expenses, net
|
|
—
|
|
|
—
|
|
NM
|
|
|
|
7
|
|
|
6
|
|
(7)
|
|
Other income,
net
|
|
(16)
|
|
|
(12)
|
|
34
|
|
|
|
(46)
|
|
|
(42)
|
|
7
|
|
Total costs and
expenses, net
|
|
1,303
|
|
|
1,237
|
|
(5)
|
|
|
|
3,860
|
|
|
3,640
|
|
(6)
|
|
Operating
Profit
|
$
|
295
|
|
$
|
264
|
|
12
|
|
|
$
|
788
|
|
$
|
759
|
|
4
|
|
Company
sales
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
|
100.0%
|
|
|
100.0%
|
|
|
|
Food and
paper
|
|
30.9
|
|
|
30.6
|
|
(0.3)
|
ppts.
|
|
|
31.2
|
|
|
30.2
|
|
(1.0)
|
ppts.
|
Payroll and employee
benefits
|
|
20.1
|
|
|
20.4
|
|
0.3
|
ppts.
|
|
|
21.0
|
|
|
20.7
|
|
(0.3)
|
ppts.
|
Occupancy and other
operating expenses
|
|
28.9
|
|
|
29.8
|
|
0.9
|
ppts.
|
|
|
29.0
|
|
|
30.1
|
|
1.1
|
ppts.
|
Restaurant
margin
|
|
20.1%
|
|
|
19.2%
|
|
0.9
|
ppts.
|
|
|
18.8%
|
|
|
19%.0
|
|
(0.2)
|
ppts.
|
Operating
margin
|
|
19.1%
|
|
|
18.1%
|
|
1.0
|
ppts.
|
|
|
17.%5
|
|
|
17.8%
|
|
(0.3)
|
ppts.
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
Pizza Hut
Operating Results
|
(in US$
million)
|
(unaudited)
|
|
|
Quarter
Ended
|
|
% Change
|
|
Year to Date
Ended
|
|
% Change
|
|
9/30/2019
|
|
9/30/2018
|
|
B/(W)
|
|
9/30/2019
|
|
9/30/2018
|
|
B/(W)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
sales
|
$
|
540
|
|
$
|
548
|
|
(1)
|
|
|
$
|
1,588
|
|
$
|
1,640
|
|
|
(3)
|
|
Franchise fees and
income
|
|
1
|
|
|
1
|
|
NM
|
|
|
|
3
|
|
|
2
|
|
|
68
|
|
Revenues from
transactions with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
franchisees and unconsolidated affiliates
|
|
1
|
|
|
1
|
|
NM
|
|
|
|
3
|
|
|
1
|
|
|
NM
|
|
Other
revenues
|
|
—
|
|
|
—
|
|
NM
|
|
|
|
1
|
|
|
—
|
|
|
NM
|
|
Total
revenues
|
|
542
|
|
|
550
|
|
(1)
|
|
|
|
1,595
|
|
|
1,643
|
|
|
(3)
|
|
Costs and
Expenses, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
restaurants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and
paper
|
|
170
|
|
|
163
|
|
(5)
|
|
|
|
484
|
|
|
486
|
|
|
—
|
|
Payroll and employee
benefits
|
|
140
|
|
|
130
|
|
(8)
|
|
|
|
420
|
|
|
410
|
|
|
(2)
|
|
Occupancy and other
operating expenses
|
|
168
|
|
|
179
|
|
7
|
|
|
|
487
|
|
|
551
|
|
|
12
|
|
Company restaurant
expenses
|
|
478
|
|
|
472
|
|
(1)
|
|
|
|
1,391
|
|
|
1,447
|
|
|
4
|
|
General and
administrative expenses
|
|
25
|
|
|
24
|
|
(6)
|
|
|
|
76
|
|
|
80
|
|
|
5
|
|
Franchise
expenses
|
|
1
|
|
|
1
|
|
(73)
|
|
|
|
2
|
|
|
2
|
|
|
(34)
|
|
Expenses for
transactions with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
franchisees and unconsolidated affiliates
|
|
1
|
|
|
1
|
|
NM
|
|
|
|
3
|
|
|
1
|
|
|
NM
|
|
Other operating costs
and expenses
|
|
—
|
|
|
—
|
|
NM
|
|
|
|
1
|
|
|
—
|
|
|
NM
|
|
Closures and
impairment (income) expenses, net
|
|
(1)
|
|
|
(1)
|
|
77
|
|
|
|
5
|
|
|
9
|
|
|
38
|
|
Other income,
net
|
|
—
|
|
|
—
|
|
NM
|
|
|
|
—
|
|
|
(2)
|
|
|
NM
|
|
Total costs and
expenses, net
|
|
504
|
|
|
497
|
|
(2)
|
|
|
|
1,478
|
|
|
1,537
|
|
|
4
|
|
Operating
Profit
|
$
|
38
|
|
$
|
53
|
|
(29)
|
|
|
$
|
117
|
|
$
|
106
|
|
|
9
|
|
Company
sales
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
Food and
paper
|
|
31.5
|
|
|
29.7
|
|
(1.8)
|
ppts.
|
|
|
30.5
|
|
|
29.6
|
|
|
(0.9)
|
ppts.
|
Payroll and employee
benefits
|
|
26.0
|
|
|
23.8
|
|
(2.2)
|
ppts.
|
|
|
26.5
|
|
|
25.0
|
|
|
(1.5)
|
ppts.
|
Occupancy and other
operating expenses
|
|
31.1
|
|
|
32.7
|
|
1.6
|
ppts.
|
|
|
30.6
|
|
|
33.6
|
|
|
3
|
ppts.
|
Restaurant
margin
|
|
11.4%
|
|
|
13.8%
|
|
(2.4)
|
ppts.
|
|
|
12.4%
|
|
|
11.8%
|
|
|
0.6
|
ppts.
|
Operating
margin
|
|
7.0%
|
|
|
9.8%
|
|
(2.8)
|
ppts.
|
|
|
7.4%
|
|
|
6.5%
|
|
|
0.9
|
ppts.
|
|
Percentages may not
recompute due to rounding.
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Balance Sheets
|
(in US$
million)
|
|
|
9/30/2019
|
|
12/31/2018
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,355
|
|
$
|
1,266
|
Short-term
investments
|
|
364
|
|
|
122
|
Accounts receivable,
net
|
|
79
|
|
|
80
|
Inventories,
net
|
|
317
|
|
|
307
|
Prepaid expenses and
other current assets
|
|
141
|
|
|
177
|
Total Current
Assets
|
|
2,256
|
|
|
1,952
|
Property, plant and
equipment, net
|
|
1,506
|
|
|
1,615
|
Operating lease
right-of-use assets
|
|
1,893
|
|
|
—
|
Goodwill
|
|
256
|
|
|
266
|
Intangible assets,
net
|
|
97
|
|
|
116
|
Deferred income
taxes
|
|
89
|
|
|
89
|
Investments in
unconsolidated affiliates
|
|
74
|
|
|
81
|
Other
assets
|
|
539
|
|
|
491
|
Total
Assets
|
|
6,710
|
|
|
4,610
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
1,566
|
|
|
1,199
|
Income taxes
payable
|
|
82
|
|
|
54
|
Total Current
Liabilities
|
|
1,648
|
|
|
1,253
|
Non-current operating
lease liabilities
|
|
1,729
|
|
|
—
|
Capital lease
obligations
|
|
23
|
|
|
25
|
Other
liabilities
|
|
195
|
|
|
355
|
Total
Liabilities
|
|
3,595
|
|
|
1,633
|
Redeemable
Noncontrolling Interest
|
|
1
|
|
|
1
|
Equity
|
|
|
|
|
|
Common
stock, $0.01 par value; 1,000 million shares
authorized;
394 million
shares and 392 million shares issued at September 30, 2019 and
December 31,
2018,
respectively; 376 million shares and 379 million shares outstanding
at September 30,
2019 and
December 31, 2018, respectively
|
|
4
|
|
|
4
|
Treasury
stock
|
|
(664)
|
|
|
(460)
|
Additional paid-in
capital
|
|
2,423
|
|
|
2,402
|
Retained
earnings
|
|
1,371
|
|
|
944
|
Accumulated other
comprehensive loss
|
|
(109)
|
|
|
(17)
|
Total Equity – Yum
China Holdings, Inc.
|
|
3,025
|
|
|
2,873
|
Noncontrolling
interests
|
|
89
|
|
|
103
|
Total
Equity
|
|
3,114
|
|
|
2,976
|
Total Liabilities,
Redeemable Noncontrolling Interest and Equity
|
$
|
6,710
|
|
$
|
4,610
|
|
|
|
|
|
|
Yum China
Holdings, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(in US$
million)
|
(unaudited)
|
|
|
Year to Date
Ended
|
|
9/30/2019
|
|
9/30/2018
|
Cash Flows –
Operating Activities
|
|
|
|
|
|
Net income –
including noncontrolling interests
|
$
|
649
|
|
$
|
658
|
Depreciation and
amortization
|
|
322
|
|
|
343
|
Amortization of
operating lease right-of-use assets
|
|
251
|
|
|
—
|
Closures and
impairment expenses
|
|
14
|
|
|
15
|
Gain from
re-measurement of equity interest upon acquisition
|
|
—
|
|
|
(98)
|
Investment
gain
|
|
(39)
|
|
|
—
|
Equity income from
investments in unconsolidated affiliates
|
|
(56)
|
|
|
(52)
|
Distributions of
income received from unconsolidated affiliates
|
|
50
|
|
|
51
|
Deferred income
taxes
|
|
12
|
|
|
46
|
Share-based
compensation expense
|
|
21
|
|
|
18
|
Changes in accounts
receivable
|
|
(2)
|
|
|
2
|
Changes in
inventories
|
|
(22)
|
|
|
14
|
Changes in prepaid
expenses and other current assets
|
|
7
|
|
|
(13)
|
Changes in accounts
payable and other current liabilities
|
|
118
|
|
|
184
|
Changes in income
taxes payable
|
|
32
|
|
|
41
|
Changes in
non-current operating lease liabilities
|
|
(280)
|
|
|
—
|
Other, net
|
|
(32)
|
|
|
(36)
|
Net Cash Provided
by Operating Activities
|
|
1,045
|
|
|
1,173
|
Cash Flows –
Investing Activities
|
|
|
|
|
|
Capital
spending
|
|
(310)
|
|
|
(359)
|
Purchases of
short-term investments
|
|
(619)
|
|
|
(513)
|
Maturities of
short-term investments
|
|
366
|
|
|
513
|
Acquisition of
business, net of cash acquired
|
|
—
|
|
|
(91)
|
Investment in equity
securities
|
|
—
|
|
|
(74)
|
Other, net
|
|
10
|
|
|
(3)
|
Net Cash Used in
Investing Activities
|
|
(553)
|
|
|
(527)
|
Cash Flows –
Financing Activities
|
|
|
|
|
|
Repayment of
short-term borrowings assumed from acquisition
|
|
—
|
|
|
(10)
|
Repurchase of shares
of common stock
|
|
(207)
|
|
|
(161)
|
Cash dividends paid
on common stock
|
|
(136)
|
|
|
(115)
|
Dividends paid to
noncontrolling interests
|
|
(25)
|
|
|
(29)
|
Other, net
|
|
—
|
|
|
(3)
|
Net Cash Used in
Financing Activities
|
|
(368)
|
|
|
(318)
|
Effect of Exchange
Rates on Cash and Cash Equivalents and Restricted
Cash
|
|
(26)
|
|
|
(53)
|
Net Increase in
Cash, Cash Equivalents and Restricted Cash
|
|
98
|
|
|
275
|
Cash, Cash
Equivalents and Restricted Cash - Beginning of
Period
|
|
1,266
|
|
|
1,059
|
Cash, Cash
Equivalents and Restricted Cash - End of Period
|
$
|
1,364
|
|
$
|
1,334
|
In this press release:
- The Company provides certain percentage changes excluding the
impact of foreign currency translation ("F/X"). These amounts are
derived by translating current year results at prior year average
exchange rates. We believe the elimination of the F/X impact
provides better year-to-year comparability without the distortion
of foreign currency fluctuations.
- System sales growth reflects the results of all restaurants
regardless of ownership, including Company-owned, franchise and
unconsolidated affiliate restaurants that operate our restaurant
concepts, except for non-Company-owned restaurants for which we do
not receive a sales-based royalty. Sales of franchise and
unconsolidated affiliate restaurants typically generate ongoing
franchise fees for the Company at a rate of approximately 6% of
system sales. Franchise and unconsolidated affiliate restaurant
sales are not included in Company sales in the Condensed
Consolidated Statements of Income; however, the franchise fees are
included in the Company's revenues. We believe system sales growth
is useful to investors as a significant indicator of the overall
strength of our business as it incorporates all of our revenue
drivers, Company and franchise same-store sales as well as net unit
growth.
- Effective January 1, 2018, the
Company revised its definition of same-store sales growth to
represent the estimated percentage change in sales of food of all
restaurants in the Company system that have been open prior to the
first day of our prior fiscal year. 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, and the
base stores changed on a rolling basis from month to month. This
revision was made to align with how management measures performance
internally and focuses on trends of a more stable base of
stores.
- Company Restaurant profit ("Restaurant profit") is defined as
Company sales less expenses incurred directly by our Company-owned
restaurants in generating Company sales. Company restaurant margin
percentage is defined as Restaurant profit divided by Company
sales.
Reconciliation of Reported GAAP Results to Adjusted
Measures
(in millions, except per share
data)
(unaudited)
In addition to the results provided in accordance with US
Generally Accepted Accounting Principles ("GAAP") in this press
release, the Company provides measures adjusted for Special Items,
which include Adjusted Operating Profit, Adjusted Net Income,
Adjusted EPS, Adjusted Effective Tax Rate and Adjusted EBITDA,
which we define as net income including noncontrolling interests
adjusted for income tax, interest income, net, investment gain or
loss, depreciation, amortization and other items, including store
impairment charges and Special Items. The Special Item for the year
to date ended September 30, 2019
represents the impact from the US Tax Cuts and Jobs Act (the "Tax
Act"), as described in the accompanying notes. The Special Item for
the year to date ended September 30,
2018 represents a gain recognized from the re-measurement of
our previously held equity interest in Wuxi KFC at fair value upon
acquisition, as described in the accompanying notes. The Company
excludes impact from Special Items for the purpose of evaluating
performance internally. Special Items are not included in any of
our segment results. In addition, the Company provides Adjusted
EBITDA because we believe that investors and analysts may find it
useful in measuring operating performance without regard to items
such as income tax, interest income, net, investment gain or loss,
depreciation, amortization and other items, including store
impairment charges and Special Items. These adjusted measures are
not intended to replace the presentation of our financial results
in accordance with GAAP. Rather, the Company believes that
the presentation of these adjusted measures provide additional
information to investors to facilitate the comparison of past and
present results, excluding those items that the Company does not
believe are indicative of our ongoing operations due to their
nature. These adjusted measures should not be considered in
isolation or as a substitute for GAAP financial results, but should
be read in conjunction with the unaudited Condensed Consolidated
Statements of Income and other information presented herein. A
reconciliation of the most directly comparable GAAP measures to
adjusted measures follows.
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
9/30/2019
|
|
9/30/2018
|
Detail of Special
Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from
re-measurement of equity interest upon
acquisition(b)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
98
|
Special Items,
Operating Profit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98
|
Tax effect on Special
Items(c)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24)
|
Impact from the Tax
Act(d)
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
—
|
Special Items, net
income – including noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
74
|
Special Items, net
income – noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
$
|
—
|
|
$
|
—
|
|
$
|
(8)
|
|
$
|
74
|
Weighted Average
Diluted Shares Outstanding
|
|
388
|
|
|
394
|
|
|
389
|
|
|
398
|
Special Items,
Diluted Earnings Per Common Share
|
$
|
—
|
|
$
|
—
|
|
$
|
(0.02)
|
|
$
|
0.18
|
Reconciliation of
Operating Profit to Adjusted Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
$
|
300
|
|
$
|
269
|
|
$
|
807
|
|
$
|
857
|
Special Items,
Operating Profit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98
|
Adjusted Operating
Profit
|
$
|
300
|
|
$
|
269
|
|
$
|
807
|
|
$
|
759
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
|
|
|
|
Net Income – Yum
China Holdings, Inc.
|
$
|
223
|
|
$
|
203
|
|
$
|
623
|
|
$
|
634
|
Special Items, Net
Income –Yum China Holdings, Inc.
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
74
|
Adjusted Net Income –
Yum China Holdings, Inc.
|
$
|
223
|
|
$
|
203
|
|
$
|
631
|
|
$
|
560
|
Reconciliation of
EPS to Adjusted EPS
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
$
|
0.59
|
|
$
|
0.53
|
|
$
|
1.65
|
|
$
|
1.64
|
Special Items, Basic
Earnings Per Common Share
|
|
—
|
|
|
—
|
|
|
(0.02)
|
|
|
0.19
|
Adjusted Basic
Earnings Per Common Share
|
$
|
0.59
|
|
$
|
0.53
|
|
$
|
1.67
|
|
$
|
1.45
|
Diluted Earnings Per
Common Share
|
$
|
0.58
|
|
$
|
0.51
|
|
$
|
1.6
|
|
$
|
1.59
|
Special Items,
Diluted Earnings Per Common Share
|
|
—
|
|
|
—
|
|
|
(0.02)
|
|
|
0.18
|
Adjusted Diluted
Earnings Per Common Share
|
$
|
0.58
|
|
$
|
0.51
|
|
$
|
1.62
|
|
$
|
1.41
|
Reconciliation of
Effective Tax Rate to Adjusted Effective Tax Rate
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
26.9%
|
|
|
24.2%
|
|
|
25.8%
|
|
|
25.7%
|
Impact on effective
tax rate as a result of Special Items
|
|
—
|
|
|
—
|
|
|
0.9%
|
|
|
(0.1)%
|
Adjusted effective
tax rate
|
|
26.9%
|
|
|
24.2%
|
|
|
24.9%
|
|
|
25.8%
|
Notes to the Condensed Consolidated Statements
of Income, Condensed Consolidated Balance
Sheets,
Condensed Consolidated Statements of Cash Flows
and Reconciliation of Reported GAAP Results to Adjusted
Measures
(in US$ million)
(unaudited)
(a) Amounts presented as of and
for the quarters and years to date ended September 30, 2019 and 2018 are unaudited.
(b) As a result of the acquisition of
Wuxi KFC in the first quarter of 2018, the Company recognized a
gain of $98 million from the
re-measurement of our previously held 47% equity interest at fair
value, which was not allocated to any segment for performance
reporting purposes.
(c) The tax expense was determined
based upon the nature, as well as the jurisdiction, of each Special
Item at the applicable tax rate.
(d) We completed the evaluation of
the impact on our transition tax computation based on the final
regulations released by the US Treasury Department and the IRS in
the first quarter of 2019 and recorded an additional amount of $8
million for the transition tax accordingly.
Reconciliation
of Net Income to Adjusted EBITDA
|
(in US$
million)
|
(unaudited)
|
Net income, along
with the reconciliation to Adjusted EBITDA, is presented
below.
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
9/30/2019
|
|
9/30/2018
|
|
9/30/2019
|
|
9/30/2018
|
Reconciliation of
Net Income to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Net Income – Yum
China Holdings, Inc.
|
$
|
223
|
|
$
|
203
|
|
$
|
623
|
|
$
|
634
|
Net income –
noncontrolling interests
|
|
12
|
|
|
9
|
|
|
26
|
|
|
24
|
Income tax
provision
|
|
87
|
|
|
67
|
|
|
226
|
|
|
227
|
Interest income,
net
|
|
(10)
|
|
|
(10)
|
|
|
(29)
|
|
|
(28)
|
Investment
gain
|
|
(12)
|
|
|
—
|
|
|
(39)
|
|
|
—
|
Operating
Profit
|
|
300
|
|
|
269
|
|
|
807
|
|
|
857
|
Special Items,
Operating Profit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98)
|
Adjusted Operating
Profit
|
|
300
|
|
|
269
|
|
|
807
|
|
|
759
|
Depreciation and
amortization
|
|
105
|
|
|
108
|
|
|
322
|
|
|
343
|
Store impairment
charges
|
|
2
|
|
|
2
|
|
|
27
|
|
|
23
|
Adjusted
EBITDA
|
$
|
407
|
|
$
|
379
|
|
$
|
1,156
|
|
$
|
1,125
|
Unit Count by
Brand
|
|
KFC
|
|
|
|
12/31/2018
|
|
|
New Builds
|
|
|
Closures
|
|
|
Refranchised
|
|
|
9/30/2019
|
|
Company-owned
|
|
|
4,597
|
|
|
|
398
|
|
|
|
(62)
|
|
|
|
(8)
|
|
|
|
4,925
|
|
Unconsolidated
affiliates
|
|
|
811
|
|
|
|
69
|
|
|
|
(17)
|
|
|
|
|
|
|
|
863
|
|
Franchisees
|
|
|
502
|
|
|
|
34
|
|
|
|
(8)
|
|
|
|
8
|
|
|
|
536
|
|
Total
|
|
|
5,910
|
|
|
|
501
|
|
|
|
(87)
|
|
|
|
—
|
|
|
|
6,324
|
|
|
|
Pizza
Hut
|
|
|
|
12/31/2018
|
|
|
New Builds
|
|
|
Closures
|
|
|
Refranchised
|
|
|
9/30/2019
|
|
Company-owned
|
|
|
2,188
|
|
|
|
75
|
|
|
|
(68)
|
|
|
|
(30)
|
|
|
|
2,165
|
|
Franchisees
|
|
|
52
|
|
|
|
9
|
|
|
|
(1)
|
|
|
|
30
|
|
|
|
90
|
|
Total
|
|
|
2,240
|
|
|
|
84
|
|
|
|
(69)
|
|
|
|
—
|
|
|
|
2,255
|
|
|
|
Others
|
|
|
|
12/31/2018
|
|
|
New Builds
|
|
|
Closures
|
|
|
Refranchised
|
|
|
9/30/2019
|
|
Company-owned
|
|
|
47
|
|
|
|
38
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
81
|
|
Franchisees
|
|
|
287
|
|
|
|
23
|
|
|
|
(55)
|
|
|
|
2
|
|
|
|
257
|
|
Total
|
|
|
334
|
|
|
|
61
|
|
|
|
(57)
|
|
|
|
—
|
|
|
|
338
|
|
Yum China
Holdings, Inc.
|
Segment
Results
|
(in US$
million)
|
(unaudited)
|
|
Quarter Ended
9/30/2019
|
|
KFC
|
|
|
Pizza Hut
|
|
|
All Other
Segments(1)
|
|
|
Corporate
and
Unallocated(2)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
1,546
|
|
|
$
|
540
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,097
|
|
Franchise fees and
income
|
|
|
35
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
16
|
|
|
|
1
|
|
|
|
8
|
|
|
|
147
|
|
|
|
—
|
|
|
|
172
|
|
Other
revenues
|
|
|
1
|
|
|
|
—
|
|
|
|
19
|
|
|
|
1
|
|
|
|
(9)
|
|
|
|
12
|
|
Total
revenues
|
|
$
|
1,598
|
|
|
$
|
542
|
|
|
$
|
40
|
|
|
$
|
148
|
|
|
$
|
(9)
|
|
|
$
|
2,319
|
|
Company restaurant
expenses
|
|
|
1,235
|
|
|
|
478
|
|
|
|
12
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,725
|
|
General and
administrative expenses
|
|
|
50
|
|
|
|
25
|
|
|
|
8
|
|
|
|
34
|
|
|
|
—
|
|
|
|
117
|
|
Franchise
expenses
|
|
|
18
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19
|
|
Expenses for
transactions with
franchisees
and unconsolidated affiliates
|
|
|
16
|
|
|
|
1
|
|
|
|
5
|
|
|
|
145
|
|
|
|
—
|
|
|
|
167
|
|
Other operating costs
and expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
|
|
1
|
|
|
|
(9)
|
|
|
|
9
|
|
Closures and
impairment income, net
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
Other income,
net
|
|
|
(16)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
(17)
|
|
Total costs and
expenses, net
|
|
|
1,303
|
|
|
|
504
|
|
|
|
42
|
|
|
|
179
|
|
|
|
(9)
|
|
|
|
2,019
|
|
Operating Profit
(Loss)
|
|
$
|
295
|
|
|
$
|
38
|
|
|
$
|
(2)
|
|
|
$
|
(31)
|
|
|
$
|
—
|
|
|
$
|
300
|
|
|
Quarter Ended
9/30/2018
|
|
KFC
|
|
|
Pizza Hut
|
|
|
All Other
Segments(1)
|
|
|
Corporate
and
Unallocated(2)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
1,452
|
|
|
$
|
548
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,008
|
|
Franchise fees and
income
|
|
|
34
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
36
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
15
|
|
|
|
1
|
|
|
|
7
|
|
|
|
136
|
|
|
|
—
|
|
|
|
159
|
|
Other
revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
14
|
|
|
|
1
|
|
|
|
(6)
|
|
|
|
9
|
|
Total
revenues
|
|
$
|
1,501
|
|
|
$
|
550
|
|
|
$
|
30
|
|
|
$
|
137
|
|
|
$
|
(6)
|
|
|
$
|
2,212
|
|
Company restaurant
expenses
|
|
|
1,173
|
|
|
|
472
|
|
|
|
9
|
|
|
|
—
|
|
|
|
1
|
|
|
|
1,655
|
|
General and
administrative expenses
|
|
|
44
|
|
|
|
24
|
|
|
|
9
|
|
|
|
42
|
|
|
|
—
|
|
|
|
119
|
|
Franchise
expenses
|
|
|
17
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18
|
|
Expenses for
transactions with
franchisees
and unconsolidated affiliates
|
|
|
15
|
|
|
|
1
|
|
|
|
5
|
|
|
|
135
|
|
|
|
—
|
|
|
|
156
|
|
Other operating costs
and expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
(7)
|
|
|
|
6
|
|
Closures and
impairment income, net
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
Other income,
net
|
|
|
(12)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
(10)
|
|
Total costs and
expenses, net
|
|
|
1,237
|
|
|
|
497
|
|
|
|
36
|
|
|
|
179
|
|
|
|
(6)
|
|
|
|
1,943
|
|
Operating Profit
(Loss)
|
|
$
|
264
|
|
|
$
|
53
|
|
|
$
|
(6)
|
|
|
$
|
(42)
|
|
|
$
|
—
|
|
|
$
|
269
|
|
|
Year to Date Ended
9/30/2019
|
|
KFC
|
|
|
Pizza Hut
|
|
|
All Other
Segments(1)
|
|
|
Corporate
and
Unallocated(2)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
4,495
|
|
|
$
|
1,588
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,112
|
|
Franchise fees and
income
|
|
|
104
|
|
|
|
3
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
113
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
48
|
|
|
|
3
|
|
|
|
20
|
|
|
|
425
|
|
|
|
—
|
|
|
|
496
|
|
Other
revenues
|
|
|
1
|
|
|
|
1
|
|
|
|
49
|
|
|
|
3
|
|
|
|
(28)
|
|
|
|
26
|
|
Total
revenues
|
|
$
|
4,648
|
|
|
$
|
1,595
|
|
|
$
|
104
|
|
|
$
|
428
|
|
|
$
|
(28)
|
|
|
$
|
6,747
|
|
Company restaurant
expenses
|
|
|
3,650
|
|
|
|
1,391
|
|
|
|
31
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
5,071
|
|
General and
administrative expenses
|
|
|
148
|
|
|
|
76
|
|
|
|
24
|
|
|
|
92
|
|
|
|
—
|
|
|
|
340
|
|
Franchise
expenses
|
|
|
53
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
55
|
|
Expenses for
transactions with
franchisees
and unconsolidated affiliates
|
|
|
48
|
|
|
|
3
|
|
|
|
16
|
|
|
|
421
|
|
|
|
—
|
|
|
|
488
|
|
Other operating costs
and expenses
|
|
|
—
|
|
|
|
1
|
|
|
|
43
|
|
|
|
3
|
|
|
|
(27)
|
|
|
|
20
|
|
Closures and
impairment expenses, net
|
|
|
7
|
|
|
|
5
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14
|
|
Other income,
net
|
|
|
(46)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2)
|
|
|
|
—
|
|
|
|
(48)
|
|
Total costs and
expenses, net
|
|
|
3,860
|
|
|
|
1,478
|
|
|
|
116
|
|
|
|
514
|
|
|
|
(28)
|
|
|
|
5,940
|
|
Operating Profit
(Loss)
|
|
$
|
788
|
|
|
$
|
117
|
|
|
$
|
(12)
|
|
|
$
|
(86)
|
|
|
$
|
—
|
|
|
$
|
807
|
|
|
Year to Date Ended
9/30/2018
|
|
KFC
|
|
|
Pizza Hut
|
|
|
All Other
Segments(1)
|
|
|
Corporate
and
Unallocated(2)
|
|
|
Elimination
|
|
|
Total
|
|
Company
sales
|
|
$
|
4,248
|
|
|
$
|
1,640
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,912
|
|
Franchise fees and
income
|
|
|
104
|
|
|
|
2
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
110
|
|
Revenues from
transactions with
franchisees and unconsolidated affiliates
|
|
|
47
|
|
|
|
1
|
|
|
|
18
|
|
|
|
395
|
|
|
|
—
|
|
|
|
461
|
|
Other
revenues
|
|
|
—
|
|
|
|
—
|
|
|
|
25
|
|
|
|
2
|
|
|
|
(9)
|
|
|
|
18
|
|
Total
revenues
|
|
$
|
4,399
|
|
|
$
|
1,643
|
|
|
$
|
71
|
|
|
$
|
397
|
|
|
$
|
(9)
|
|
|
$
|
6,501
|
|
Company restaurant
expenses
|
|
|
3,441
|
|
|
|
1,447
|
|
|
|
25
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
4,912
|
|
General and
administrative expenses
|
|
|
135
|
|
|
|
80
|
|
|
|
25
|
|
|
|
94
|
|
|
|
—
|
|
|
|
334
|
|
Franchise
expenses
|
|
|
53
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
55
|
|
Expenses for
transactions with
franchisees
and unconsolidated affiliates
|
|
|
47
|
|
|
|
1
|
|
|
|
14
|
|
|
|
392
|
|
|
|
—
|
|
|
|
454
|
|
Other operating costs
and expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
|
|
1
|
|
|
|
(8)
|
|
|
|
17
|
|
Closures and
impairment expenses, net
|
|
|
6
|
|
|
|
9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15
|
|
Other income,
net
|
|
|
(42)
|
|
|
|
(2)
|
|
|
|
(1)
|
|
|
|
(98)
|
|
|
|
—
|
|
|
|
(143)
|
|
Total costs and
expenses, net
|
|
|
3,640
|
|
|
|
1,537
|
|
|
|
87
|
|
|
|
389
|
|
|
|
(9)
|
|
|
|
5,644
|
|
Operating Profit
(Loss)
|
|
$
|
759
|
|
|
$
|
106
|
|
|
$
|
(16)
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
857
|
|
|
The above tables
reconcile segment information, which is based on management
responsibility, with our Condensed Consolidated
Statements of Income.
|
|
(1)
Starting from the first quarter of 2019, our newly developed COFFii
& JOY concept and e-commerce business became
operating segments, as their financial results started being
regularly reviewed by the Company's chief operating decision
maker.
Accordingly, our six non-reportable operating segments, reflecting
the operations of East Dawning, Little Sheep, Taco Bell,
Daojia, COFFii & JOY and our e-commerce business, are combined
and referred to as All Other Segments, as those operating
segments are insignificant both individually and in the aggregate.
Segment financial information for prior quarters has been
recast to align with this change in segment reporting. There was no
impact on the condensed consolidated financial statements
of the Company as a result of this change.
|
|
(2)
Corporate and unallocated expenses comprise items that are not
allocated to segments for performance reporting purposes.
Amount includes revenues and expenses associated with transactions
with franchisees and unconsolidated affiliates such as
inventory procurement and other services provided to franchisees
and unconsolidated affiliates. The Corporate and Unallocated
column in the above tables includes, among other amounts, all
amounts that we have deemed Special Items. See "Reconciliation
of Reported GAAP Results to Adjusted Measures".
|
View original
content:http://www.prnewswire.com/news-releases/yum-china-reports-third-quarter-2019-results-300947122.html
SOURCE Yum China Holdings, Inc.