Press Release

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Yum! Brands, Inc. (NYSE: YUM) today reported results for the fourth-quarter and year ended December 31, 2022. Fourth-quarter GAAP EPS was $1.29, an increase of 17%. Fourth-quarter EPS excluding Special Items was $1.31, an increase of 29%. Full-year GAAP EPS was $4.57, a decrease of (12)%. Full-year EPS excluding Special Items was $4.51, an increase of 1%. Full-year GAAP Operating Profit growth was 2%. Full-year Core Operating Profit¹ growth was 6%, including a 2-point headwind from the removal of Russia profits.

DAVID GIBBS & CHRIS TURNER COMMENTS

David Gibbs, CEO, said “2022 was a landmark year for Yum! as we beat our own industry record for unit development, opening an incredible 4,560 gross new units. Despite a challenging environment, we achieved widespread system sales growth of 8% excluding Russia with $24 billion in digital sales, demonstrating that our iconic brands are more relevant, easy and distinctive than ever. I’m confident that our distinct competitive advantages including our world-class franchisees and the industry’s best talent will drive accelerated growth in the future.”

Chris Turner, CFO, said “Our fiscal 2022 results delivered on our raised long-term growth algorithm with record-setting net new unit growth and 4% same-store sales growth. Despite inflationary pressures and a 2-point negative impact from Russia, we delivered 6% Core Operating Profit growth – a testament to the strength of our enterprise. We remain focused on executing the strategies underlying our Recipe for Good Growth to drive our business forward. I'm also pleased to announce our Board of Directors approved an increased quarterly dividend of $0.605.”

RUSSIA UPDATE

• As previously announced, Yum! entered into a sale and purchase agreement to transfer ownership of our Russian KFC restaurants, operating system and master franchise rights, including the network of KFC franchised restaurants, to Smart Service Ltd., a business operated by one of our existing KFC franchisees in Russia. Under the agreement, the buyer will be responsible for rebranding locations to a non-Yum! concept and retaining employees in Russia. Completion of the transaction is subject to regulatory and governmental approvals, as well as other conditions. Following the completion of the transaction, we will have ceased our corporate presence in Russia.
• As of the beginning of the second quarter, we elected to remove Russia from our unit count and system sales, negatively impacting those key performance metrics as presented in our FOURTH-QUARTER HIGHLIGHTS and FULL-YEAR HIGHLIGHTS sections and the remainder of this release.
• Removing Russia from our prior year base, key performance metrics would have been as follows:

Key Performance Metrics Adjusted for Russia	% Change
	Fourth-Quarter		Full-Year
	System Sales Ex F/X	Units	System Sales Ex F/X	Units
KFC Division	+10	+7	+9	+7
Worldwide	+10	+6	+8	+6

1See reconciliation of Non-GAAP Measurements to GAAP Results in our Consolidated Summary of Results for further detail of Core Operating Profit.

SUMMARY FINANCIAL TABLE

	Fourth-Quarter			Full-Year
	2022	2021	% Change	2022	2021	% Change
GAAP EPS	$1.29	$1.11	+17	$4.57	$5.21	(12)
Special Items EPS1	$(0.02)	$0.09	NM	$0.06	$0.75	NM
EPS Excluding Special Items	$1.31	$1.02	+29	$4.51	$4.46	+1
1 See reconciliation of Non-GAAP Measurements to GAAP Results in our Consolidated Summary Results for further detail of Special Items.

FOURTH-QUARTER HIGHLIGHTS

• Worldwide system sales grew 8% excluding foreign currency translation, with KFC at 6%, Taco Bell at 14%, and Pizza Hut at 4%.
• We added 1,830 gross units during the fourth quarter.
• We repurchased 4.1 million shares totaling $486 million at an average price per share of $119.
• Foreign currency translation unfavorably impacted divisional operating profit by $42 million.

	% Change
	System Sales Ex F/X	Same-Store Sales	Units	GAAP Operating Profit	Core Operating Profit2
KFC Division	+6	+5	+3	+4	+16
Taco Bell Division	+14	+11	+5	+24	+24
Pizza Hut Division	+4	+1	+4	+22	+30
Worldwide	+8	+6	+4	+15	+22

FULL-YEAR HIGHLIGHTS

• Worldwide system sales grew 6% excluding foreign currency translation, with KFC at 6%, Taco Bell at 11%, and Pizza Hut at 3%.
• We added a record 4,560 gross units during the year.
• We repurchased 10 million shares totaling $1.2 billion at an average price per share of $119.
• Foreign currency translation unfavorably impacted divisional operating profit by $118 million.

	% Change
	System Sales Ex F/X	Same-Store Sales	Units	GAAP Operating Profit	Core Operating Profit2
KFC Division	+6	+4	+3	(3)	+5
Taco Bell Division	+11	+8	+5	+12	+12
Pizza Hut Division	+3	Even	+4	Even	+4
Worldwide	+6	+4	+4	+2	+6

2See reconciliation of Non-GAAP Measurements to GAAP Results in our Consolidated Summary of Results for further detail of Core Operating Profit.

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 in our Consolidated Summary of Results 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

	Fourth-Quarter				Full-Year
			%/ppts Change				%/ppts Change
	2022	2021	Reported	Ex F/X	2022	2021	Reported	Ex F/X
Restaurants	27,760	26,934	+3	NA	27,760	26,934	+3	NA
System Sales ($MM)	8,307	8,576	(3)	+6	31,116	31,365	(1)	+6
Same-Store Sales Growth (%)	+5	+5	NM	NM	+4	+11	NM	NM
Franchise & Property Revenues ($MM)	450	433	+4	+12	1,645	1,557	+6	+12
Operating Profit ($MM)	310	298	+4	+16	1,198	1,230	(3)	+5
Operating Margin (%)	39.0	37.5	1.5	2.5	42.3	44.0	(1.7)	(1.1)

	Fourth-Quarter (% Change)		Full-Year (% Change)
	International	U.S.	International	U.S.
System Sales Growth Ex F/X	+7	+2	+7	Even
Same-Store Sales Growth	+6	+1	+5	(1)

• As of the beginning of the second quarter, we removed 1,112 units in Russia from our global KFC unit count, or 4% of beginning of year units.
• KFC Division opened 997 gross new restaurants during the quarter.
  • For the year, KFC Division opened 2,447 gross new restaurants in 103 countries.
• KFC Division ex-China same-store sales grew 9% for the quarter.
  • For the year, ex-China same-store sales grew 9%.
• As a result of our decision to exit the Russia business, fourth-quarter KFC Division and KFC International system sales growth were each negatively impacted by 4 percentage points. KFC Division operating profit growth excluding foreign currency was negatively impacted by 3 percentage points.
  • For the year, KFC Division system sales growth was negatively impacted by 3 percentage points, KFC International system sales growth was negatively impacted by 4 percentage points and KFC Division operating profit growth excluding foreign currency was negatively impacted by 4 percentage points.
• Foreign currency translation unfavorably impacted operating profit by $34 million for the quarter and $98 million for the year.

KFC Markets1	Percent of KFC System Sales2	System Sales Growth Ex F/X
		Fourth-Quarter (% Change)	Full-Year (% Change)
China	25%	(1)	(4)
United States	15%	+2	Even
Europe (excluding United Kingdom)	12%	+27	+29
Asia	11%	+11	+8
Australia	7%	+9	+9
United Kingdom	7%	+4	(1)
Middle East / Turkey / North Africa	6%	+38	+41
Latin America	6%	+16	+27
Africa	5%	+17	+24
Thailand	2%	+21	+24
Canada	2%	+3	+2
India	2%	+26	+49

1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.

2Reflects Full Year 2022 adjusted for the exclusion of Russia.

TACO BELL DIVISION

	Fourth-Quarter				Full-Year
			%/ppts Change				%/ppts Change
	2022	2021	Reported	Ex F/X	2022	2021	Reported	Ex F/X
Restaurants	8,218	7,791	+5	NA	8,218	7,791	+5	NA
System Sales ($MM)	4,619	4,068	+14	+14	14,653	13,280	+10	+11
Same-Store Sales Growth (%)	+11	+8	NM	NM	+8	+11	NM	NM
Franchise & Property Revenues ($MM)	263	224	+18	+18	837	742	+13	+13
Operating Profit ($MM)	246	198	+24	+24	850	758	+12	+12
Operating Margin (%)	32.1	28.9	3.2	3.2	34.9	33.9	1.0	1.0

• Taco Bell Division opened 253 gross new restaurants during the quarter.
  • For the year, Taco Bell Division opened 496 gross new restaurants in 24 countries.
• Taco Bell U.S. system sales grew 14% and Taco Bell International system sales grew 23% for the quarter.
  • For the year, Taco Bell U.S. system sales grew 10% and Taco Bell International system sales grew 29%.
• Taco Bell U.S. same-store sales grew 11% and Taco Bell International same-store sales grew 4% for the quarter.
  • For the year, Taco Bell U.S. same-store sales grew 8% and Taco Bell International same-store sales grew 7%.
• Company-owned restaurant margins were approximately 23% for the quarter, flat year-over-year.
• Foreign currency translation unfavorably impacted operating profit by less than $1 million for the quarter and $2 million for the year.

PIZZA HUT DIVISION

	Fourth-Quarter				Full-Year
			%/ppts Change				%/ppts Change
	2022	2021	Reported	Ex F/X	2022	2021	Reported	Ex F/X
Restaurants	19,034	18,381	+4	NA	19,034	18,381	+4	NA
System Sales ($MM)	3,508	3,546	(1)	+4	12,853	12,955	(1)	+3
Same-Store Sales Growth (%)	+1	+3	NM	NM	Even	+7	NM	NM
Franchise & Property Revenues ($MM)	169	162	+4	+9	607	597	+2	+5
Operating Profit ($MM)	100	81	+22	+30	387	387	Even	+4
Operating Margin (%)	34.5	29.2	5.3	6.7	38.5	37.7	0.8	1.6

	Fourth-Quarter (% Change)		Full-Year (% Change)
	International	U.S.	International	U.S.
System Sales Growth Ex F/X	+3	+5	+6	Even
Same-Store Sales Growth	(1)	+4	+1	(1)

• As of the beginning of the second quarter, we removed 53 units in Russia from our global Pizza Hut unit count.
• Pizza Hut Division opened 571 gross new restaurants during the quarter.
  • For the year, Pizza Hut Division opened 1,584 gross new restaurants in 73 countries.
• Pizza Hut International ex-China same-store sales grew 4% for the quarter.
  • For the year, ex-China same-store sales grew 6%.
• Foreign currency translation unfavorably impacted operating profit by $8 million for the quarter and $18 million for the year.

Pizza Hut Markets1	Percent of Pizza Hut System Sales2	System Sales Growth Ex F/X
		Fourth-Quarter (% Change)	Full-Year (% Change)
United States	41%	+5	Even
China	16%	(6)	(3)
Asia	14%	+7	+5
Latin America / Spain / Portugal	11%	+7	+12
Europe (excluding Spain & Portugal)	9%	+1	+8
Middle East / Turkey / North Africa	4%	+15	+15
Canada	3%	+8	+7
India	2%	+24	+47
Africa	<1%	+22	+20

1Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.

2Reflects Full Year 2022 adjusted for the exclusion of Russia.

THE HABIT BURGER GRILL DIVISION

• The Habit Burger Grill Division grew system sales 12% for the quarter and the year.
• The Habit Burger Grill Division same-store sales declined 1% for the quarter and the year.
• The Habit Burger Grill Division opened 9 gross new restaurants during the quarter.
  • For the year, The Habit Burger Grill Division opened 33 gross new restaurants.

OTHER ITEMS

• As we reported in the Form 8-K filed on January 18, 2023, we experienced a ransomware attack in January. The attack disrupted operations at fewer than 300 restaurants in one market for one day. Store operations were otherwise uninterrupted, and impacted information technology systems have largely been restored. We have incurred some incremental expenses relating to the remediation and investigation of the attack, but we do not expect such expenses to be material and do not otherwise expect this incident to have a material adverse impact on our business, operations or financial results. Because the forensic investigation is ongoing, we will have no further comment at this time.
• The Company's Board of Directors declared a dividend of $0.605 per share of common stock. The quarterly dividend will be distributed March 10, 2023 to shareholders of record at the close of business on February 22, 2023.
• Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the 2022 Form 10-K.

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 Wednesday, February 8, 2023. The number is 844/200-6205 in the U.S., 833/950-0062 in Canada and 1-929-526-1599 for international callers, conference ID 493282.

The call will be available for playback beginning at 10:00 a.m. Eastern Time February 8, 2023 through February 15, 2023. To access the playback, dial 866/813-9403 in the U.S., 226/828-7578 in Canada, 0204/525-0658 for U.K. (local), and +44/204-525-0658 internationally, conference ID 070098.

The webcast and the playback can be accessed via the website by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting “Q4 2022 Earnings Conference 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; the macroeconomic and regional instability caused by the Russia conflict in Ukraine; our ability to protect the integrity or availability of IT systems or the security of confidential including personal information and other cybersecurity risks; the impact of the ransomware attack announced by us in January 2023 for which an investigation is ongoing, including any legal, reputational and financial risks resulting from the ransomware attack, as well as the identification and remediation of any possible deficiencies or material weakness(es) in our internal controls; ; 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 and retaining 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, including inflationary pressures ; 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, and its subsidiaries franchise or operate a system of over 55,000 restaurants in more than 155 countries and territories under the company’s concepts – KFC, Taco Bell, Pizza Hut and the Habit Burger Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food, and pizza categories, respectively. The Habit Burger Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. In 2023, Yum! Brands was included on the Bloomberg Gender-Equality Index and Newsweek’s lists recognizing America’s Most Responsible Companies and America’s Greatest Workplaces for Diversity. In 2022, the Company was named to the 2022 Dow Jones Sustainability Index North America and was among 3BL Media’s 100 Best Corporate Citizens.

Category: Earnings

Source: Yum! Brands, Inc.