Yum! Brands Reports Fourth-Quarter Results; Industry Record Full-Year 3,057 Net-New Units; Fourth-Quarter System Sales Growth of 9% with Over $6 Billion in Digital Sales; Full-Year System Sales Growth of 13% and Record Digital Sales of $22 Billion

Yum! Brands, Inc. (NYSE: YUM) today reported results for the fourth-quarter and year ended December 31, 2021. Fourth-quarter GAAP EPS was $1.11, an increase of 3%. Full-year GAAP EPS was $5.21, an increase of 77%. Fourth-quarter EPS excluding Special Items was $1.02, a decrease of (12)%. Full-year EPS excluding Special Items was $4.46, an increase of 23%.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220208006260/en/

DAVID GIBBS & CHRIS TURNER COMMENTS

David Gibbs, CEO, said “We opened an astounding 4,180 gross units in 2021, marking the strongest growth year in Yum!'s history and setting a restaurant industry record for unit development. We also reached new heights in digital sales that topped $22 billion. I’m confident and energized heading into 2022, which marks Yum!’s 25th anniversary, as we continue to build the world’s most loved and trusted brands while delivering lasting value for our stakeholders.”

Chris Turner, CFO, said “Our fiscal 2021 system sales growth of 13%, with 10% same store sales and 6% unit growth, illustrates the health of our global system – iconic Brands, capable, committed, and well-capitalized franchise partners and strong unit economics. During the quarter, system sales grew 9% including 5% same store sales growth, or 4% on a 2-year basis. We remain focused on fueling growth, with confidence in our Recipe for Growth and Good strategies, and delivering on our long-term growth algorithm in fiscal 2022 and beyond.”

SUMMARY FINANCIAL TABLE

 

Fourth-Quarter

Full-Year

 

2021

2020

% Change

2021

2020

% Change

GAAP EPS

$1.11

$1.08

+3

$5.21

$2.94

+77

Special Items EPS1

$0.09

$(0.07)

NM

$0.75

$(0.68)

NM

EPS Excluding Special Items

$1.02

$1.15

(12)

$4.46

$3.62

+23

1 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Special Items. 

 

All comparisons are versus the same period a year ago. 

 

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details. 

 

Digital sales includes all transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology.

FOURTH-QUARTER HIGHLIGHTS

  • Worldwide system sales grew 9% excluding foreign currency translation, with KFC at 10%, Taco Bell at 11%, and Pizza Hut at 4%.
  • We added 1,678 gross units during the fourth quarter.
  • We repurchased 5.6 million shares totaling $720 million at an average price per share of $128.
  • Foreign currency translation unfavorably impacted divisional operating profit by $1 million.

 

% Change

 

System Sales

Ex F/X

Same-Store Sales

Units

GAAP

Operating Profit

Core

Operating Profit1

KFC Division

+10

+5

+8

+11

+12

Taco Bell Division

+11

+8

+5

(7)

(7)

Pizza Hut Division

+4

+3

+4

(1)

(1)

Worldwide

+9

+5

+6

+4

(1)

FULL-YEAR HIGHLIGHTS

  • Worldwide system sales grew 13% excluding foreign currency translation, with KFC at 16%, Taco Bell at 13%, and Pizza Hut at 6%.
  • We added a record 4,180 gross units during the year contributing to 6% unit growth.
  • We repurchased 13 million shares totaling $1.6 billion at an average price per share of $122.
  • Foreign currency translation favorably impacted divisional operating profit by $54 million.

 

% Change

 

System Sales

Ex F/X

Same-Store Sales

Units

GAAP

Operating Profit

Core

Operating Profit1

KFC Division

+16

+11

+8

+33

+29

Taco Bell Division

+13

+11

+5

+9

+9

Pizza Hut Division

+6

+7

+4

+16

+13

Worldwide

+13

+10

+6

+42

+18

 
 

1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items.

KFC DIVISION

 

Fourth-Quarter

Full-Year

 

 

 

%/ppts Change

 

 

%/ppts Change

 

2021

2020

Reported

Ex F/X

2021

2020

Reported

Ex F/X

Restaurants

26,934

25,000

+8

NA

26,934

25,000

+8

NA

System Sales ($MM)

8,576

7,805

+10

+10

31,365

26,289

+19

+16

Same-Store Sales Growth (%)

+5

(2)

NM

NM

+11

(9)

NM

NM

Franchise & Property Revenues ($MM)

433

389

+12

+12

1,557

1,295

+20

+17

Operating Profit ($MM)

298

267

+11

+12

1,230

922

+33

+29

Operating Margin (%)

37.5

37.6

(0.1)

0.0

44.0

40.6

3.4

3.5

 

Fourth-Quarter (% Change)

Full-Year (% Change)

 

International

U.S.

International

U.S.

System Sales Growth Ex F/X

+12

+4

+17

+7

Same-Store Sales Growth

+6

+4

+12

+8

  • KFC Division opened 904 gross new restaurants during the quarter.
    • For the year, KFC Division opened 2,471 gross new restaurants in 105 countries.
  • Operating margin was flat for the quarter as higher general and administrative expenses and higher company restaurant expenses were offset by system sales growth.
    • For the year, operating margin increased 3.5 percentage points driven by system sales growth and bad debt recoveries, partially offset by higher general and administrative expenses.
  • Foreign currency translation unfavorably impacted operating profit by $1 million for the quarter and favorably impacted operating profit by $45 million for the year.
  • For the division, same-store sales on a 2-year basis grew 3% for the quarter and 2% for the year.
    • For KFC International, same-store sales on a 2-year basis grew 2% for the quarter and declined 1% for the year.
    • For KFC U.S., same-store sales on a 2-year basis grew 12% for the quarter and 13% for the year.

KFC Markets1

Percent of KFC

System Sales2

System Sales Growth Ex F/X

Fourth-Quarter

(% Change)

Full-Year

(% Change)

China

26%

(3)

+8

United States

17%

+4

+7

Asia

11%

+7

+6

Russia, Central & Eastern Europe

8%

+33

+35

Australia

7%

+6

+9

United Kingdom

7%

+12

+38

Western Europe

6%

+30

+26

Latin America

5%

+31

+32

Africa

4%

+20

+33

Middle East / Turkey / North Africa

4%

+32

+40

Canada

2%

+8

+9

Thailand

2%

+6

(6)

India

1%

+60

+68

1Refer to investors.yum.com under Financial Reports for a list of the countries within each of the markets.

2Reflects Full Year 2021.

TACO BELL DIVISION

 

Fourth-Quarter

Full-Year

 

 

 

%/ppts Change

 

 

%/ppts Change

 

2021

2020

Reported

Ex F/X

2021

2020

Reported

Ex F/X

Restaurants

7,791

7,427

+5

NA

7,791

7,427

+5

NA

System Sales ($MM)

4,068

3,671

+11

+11

13,280

11,745

+13

+13

Same-Store Sales Growth (%)

+8

+1

NM

NM

+11

(1)

NM

NM

Franchise & Property Revenues ($MM)

224

202

+11

+11

742

662

+12

+12

Operating Profit ($MM)

198

212

(7)

(7)

758

696

+9

+9

Operating Margin (%)

28.9

33.8

(4.9)

(4.9)

33.9

34.3

(0.4)

(0.4)

  • Taco Bell Division opened 195 gross new restaurants during the quarter.
    • For the year, Taco Bell Division opened 433 gross new restaurants in 27 countries.
  • Company restaurant margin percentages were 22.6% for the quarter and 23.9% for the year.
  • Operating margin decreased 4.9 percentage points for the quarter and less than 1 percentage point for the year driven by higher company restaurant expenses and higher general and administrative expenses, partially offset by system sales growth.
  • For the division, same-store sales on a 2-year basis grew 9% for the quarter and 10% for the year.
  • Spain became the first Taco Bell International market to surpass 100 units.

PIZZA HUT DIVISION

 

Fourth-Quarter

Full-Year

 

 

 

%/ppts Change

 

 

%/ppts Change

 

2021

2020

Reported

Ex F/X

2021

2020

Reported

Ex F/X

Restaurants

18,381

17,639

+4

NA

18,381

17,639

+4

NA

System Sales ($MM)

3,546

3,407

+4

+4

12,955

11,955

+8

+6

Same-Store Sales Growth (%)

+3

(1)

NM

NM

+7

(6)

NM

NM

Franchise & Property Revenues ($MM)

162

159

+3

+3

597

552

+8

+6

Operating Profit ($MM)

81

83

(1)

(1)

387

335

+16

+13

Operating Margin (%)

29.2

28.7

0.5

0.6

37.7

33.5

4.2

4.0

 

Fourth-Quarter (% Change)

Full-Year (% Change)

 

International

U.S.

International

U.S.

System Sales Growth Ex F/X

+8

Even

+10

+1

Same-Store Sales Growth

+4

+1

+8

+5

  • Pizza Hut Division opened 571 gross new restaurants during the quarter.
    • For the year, Pizza Hut Division opened 1,250 gross new restaurants in 66 countries.
  • Operating margin increased less than 1 percentage point for the quarter primarily driven by system sales growth, partially offset by higher Franchise advertising and other services expense primarily related to digital and technology expenses.
    • For the year, operating margin increased 4 percentage points driven by system sales growth and lower general and administrative expenses, partially offset by higher Franchise advertising and other services expense primarily related to digital and technology expenses.
  • Foreign currency translation had less than $1 million unfavorable impact on operating profit for the quarter and favorably impacted operating profit $8 million for the year.
  • For the division, same-store sales on a 2-year basis grew 2% for the quarter and 1% for the year.
    • For Pizza Hut International, same-store sales on a 2-year basis declined 3% for the quarter and declined 5% for the year.
    • For Pizza Hut U.S., same-store sales on a 2-year basis grew 10% for the quarter and 9% 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

43%

Even

+1

China

16%

(2)

+14

Asia

14%

+2

+1

Latin America / Spain / Portugal

10%

+14

+15

Europe (excluding Spain & Portugal)

8%

+23

+8

Middle East / Turkey / North Africa

4%

+3

+9

Canada

3%

+10

+12

India

1%

+57

+59

Africa

<1%

+14

+32

1Refer to investors.yum.com under Financial Reports for a list of the countries within each of the markets.

2Reflects Full Year 2021.

THE HABIT BURGER GRILL DIVISION

  • The Habit Burger Grill Division grew system sales 20% for the quarter and 24% for the year.
  • The Habit Burger Grill Division same-store sales increased 11% for the quarter and 16% for the year.
    • For the division, same-store sales on a 2-year basis grew 5% for the quarter and 3% for the year.
  • The Habit Burger Grill Division opened 8 gross new restaurants during the quarter.
    • For the year, The Habit Burger Grill Division opened 26 gross new restaurants.

OTHER ITEMS

  • Same-store sales growth on a 2-year basis is calculated using the geometric method as follows: (1 + Q4 2020 reported same-store sales growth) * (1 + Q4 2021 reported same-store sales growth) - 1 and (1 + FY 2020 reported same-store sales growth) * (1 + FY 2021 reported same-store sales growth) - 1.
  • Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the 2021 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 9, 2022. The number is 877/871-3172 in the U.S., 1-877-504-2267 in Canada and 1-412-902-6603 for international callers, conference ID 2088582.

The call will be available for playback beginning at 10:00 a.m. Eastern Time February 9, 2022 through February 16, 2022. To access the playback, dial 877/344-7529 in the U.S., 855/669-9658 in Canada, and 412/317-0088 internationally, conference ID 2558485.

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 2021 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; the occurrence of a significant health epidemic or other catastrophic event; the success of our franchisees and licensees; our significant exposure to the Chinese market; changes in economic and political conditions in, and other risks associated with, countries and territories outside of the U.S. where we operate; changes in currency exchange rates; our ability to protect the integrity and security of personal information of our customers and employees, and other cybersecurity risks; our ability to successfully implement technology initiatives; our increasing dependence on multiple digital commerce platforms; the impact of social media; our ability to secure and maintain distribution and adequate supply to our restaurants; the loss of key personnel, or labor shortages or difficulty finding qualified employees; the success of our development strategy, including in emerging markets; changes in commodity, labor and other operating costs; the impact of climate change and other environmental and sustainability matters; pending or future litigation and legal claims or proceedings; changes in or noncompliance with government regulations, including data privacy laws, 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 and corporate reputation; 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 53,000 restaurants in more than 155 countries and territories, 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 2021, Yum! Brands was named to the Dow Jones Sustainability Index North America and was ranked on Newsweek’s list of America’s Most Responsible Companies.

YUM! Brands, Inc.

Consolidated Summary of Results

(amounts in millions, except per share amounts)

(unaudited)

 

 

Quarter ended

 

% Change

B/(W)

 

Year ended

 

% Change

B/(W)

 

12/31/21

 

12/31/20

 

 

12/31/21

 

12/31/20

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

Company sales

$

597

 

 

$

566

 

 

5

 

$

2,106

 

 

$

1,810

 

 

16

Franchise and property revenues

 

820

 

 

 

750

 

 

10

 

 

2,900

 

 

 

2,510

 

 

16

Franchise contributions for advertising and other services

 

473

 

 

 

427

 

 

10

 

 

1,578

 

 

 

1,332

 

 

18

Total revenues

 

1,890

 

 

 

1,743

 

 

8

 

 

6,584

 

 

 

5,652

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

Company restaurant expenses

 

495

 

 

 

460

 

 

(8)

 

 

1,725

 

 

 

1,506

 

 

(15)

General and administrative expenses

 

371

 

 

 

340

 

 

(9)

 

 

1,060

 

 

 

1,064

 

 

Franchise and property expenses

 

36

 

 

 

38

 

 

 

 

117

 

 

 

145

 

 

18

Franchise advertising and other services expense

 

486

 

 

 

427

 

 

(14)

 

 

1,576

 

 

 

1,314

 

 

(20)

Refranchising (gain) loss

 

(14

)

 

 

(4

)

 

246

 

 

(35

)

 

 

(34

)

 

2

Other (income) expense

 

14

 

 

 

 

 

NM

 

 

2

 

 

 

154

 

 

NM

Total costs and expenses, net

 

1,388

 

 

 

1,261

 

 

(10)

 

 

4,445

 

 

 

4,149

 

 

(7)

 

 

 

 

 

 

 

 

 

 

 

 

Operating Profit

 

502

 

 

 

482

 

 

4

 

 

2,139

 

 

 

1,503

 

 

42

Investment (income) expense, net

 

(34

)

 

 

(7

)

 

396

 

 

(86

)

 

 

(74

)

 

16

Other pension (income) expense

 

1

 

 

 

5

 

 

79

 

 

7

 

 

 

14

 

 

48

Interest expense, net

 

128

 

 

 

132

 

 

3

 

 

544

 

 

 

543

 

 

Income before income taxes

 

407

 

 

 

352

 

 

16

 

 

1,674

 

 

 

1,020

 

 

64

Income tax provision

 

77

 

 

 

20

 

 

(274)

 

 

99

 

 

 

116

 

 

15

Net income

$

330

 

 

$

332

 

 

 

$

1,575

 

 

$

904

 

 

74

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

 

 

 

 

 

 

 

 

 

 

EPS

$

1.13

 

 

$

1.10

 

 

3

 

$

5.30

 

 

$

2.99

 

 

78

Average shares outstanding

 

293

 

 

 

302

 

 

3

 

 

297

 

 

 

302

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

EPS

$

1.11

 

 

$

1.08

 

 

3

 

$

5.21

 

 

$

2.94

 

 

77

Average shares outstanding

 

298

 

 

 

307

 

 

3

 

 

302

 

 

 

307

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

$

0.50

 

 

$

0.47

 

 

 

 

$

2.00

 

 

$

1.88

 

 

 

 

See accompanying notes.

Percentages may not recompute due to rounding.

YUM! Brands, Inc.

KFC DIVISION Operating Results

(amounts in millions)

(unaudited)

 

 

Quarter ended

 

% Change

B/(W)

 

Year ended

 

% Change

B/(W)

 

12/31/21

 

12/31/20

 

 

12/31/21

 

12/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

$

173

 

 

$

160

 

 

8

 

$

596

 

 

$

506

 

 

18

Franchise and property revenues

 

433

 

 

 

389

 

 

12

 

 

1,557

 

 

 

1,295

 

 

20

Franchise contributions for advertising and other services

 

188

 

 

 

162

 

 

16

 

 

640

 

 

 

471

 

 

36

Total revenues

 

794

 

 

 

711

 

 

12

 

 

2,793

 

 

 

2,272

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant expenses

 

144

 

 

 

132

 

 

(10)

 

 

490

 

 

 

439

 

 

(12)

General and administrative expenses

 

138

 

 

 

122

 

 

(13)

 

 

377

 

 

 

346

 

 

(9)

Franchise and property expenses

 

25

 

 

 

22

 

 

(17)

 

 

74

 

 

 

91

 

 

18

Franchise advertising and other services expenses

 

189

 

 

 

164

 

 

(16)

 

 

627

 

 

 

465

 

 

(35)

Other (income) expense

 

 

 

 

4

 

 

NM

 

 

(5

)

 

 

9

 

 

NM

Total costs and expenses, net

 

496

 

 

 

444

 

 

(12)

 

 

1,563

 

 

 

1,350

 

 

(16)

Operating Profit

$

298

 

 

$

267

 

 

11

 

$

1,230

 

 

$

922

 

 

33

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant margin %1

 

16.3

%

 

 

17.5

%

 

(1.2) ppts.

 

 

17.7

%

 

 

13.2

%

 

4.5 ppts.

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

37.5

%

 

 

37.6

%

 

(0.1) ppts.

 

 

44.0

%

 

 

40.6

%

 

3.4 ppts.

 

See accompanying notes.

Percentages may not recompute due to rounding.

 

1See reconciliation of Non-GAAP Measurements to GAAP results within this release for further detail of Company restaurant margin %.

YUM! Brands, Inc.

TACO BELL DIVISION Operating Results

(amounts in millions)

(unaudited)

 

 

Quarter ended

 

% Change

B/(W)

 

Year ended

 

% Change

B/(W)

 

12/31/21

 

12/31/20

 

 

12/31/21

 

12/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

$

288

 

 

$

272

 

 

6

 

$

944

 

 

$

882

 

 

7

Franchise and property revenues

 

224

 

 

 

202

 

 

11

 

 

742

 

 

 

662

 

 

12

Franchise contributions for advertising and other services

 

172

 

 

 

154

 

 

12

 

 

552

 

 

 

487

 

 

14

Total revenues

 

684

 

 

 

628

 

 

9

 

 

2,238

 

 

 

2,031

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant expenses

 

224

 

 

 

199

 

 

(11)

 

 

719

 

 

 

657

 

 

(9)

General and administrative expenses

 

70

 

 

 

50

 

 

(43)

 

 

174

 

 

 

158

 

 

(11)

Franchise and property expenses

 

10

 

 

 

9

 

 

(25)

 

 

33

 

 

 

33

 

 

(3)

Franchise advertising and other services expenses

 

176

 

 

 

154

 

 

(15)

 

 

553

 

 

 

484

 

 

(14)

Other (income) expense

 

6

 

 

 

4

 

 

NM

 

 

1

 

 

 

3

 

 

NM

Total costs and expenses, net

 

486

 

 

 

416

 

 

(17)

 

 

1,480

 

 

 

1,335

 

 

(11)

Operating Profit

$

198

 

 

$

212

 

 

(7)

 

$

758

 

 

$

696

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant margin %1

 

22.6

%

 

 

26.6

%

 

(4.0) ppts.

 

 

23.9

%

 

 

25.5

%

 

(1.6) ppts.

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

28.9

%

 

 

33.8

%

 

(4.9) ppts.

 

 

33.9

%

 

 

34.3

%

 

(0.4) ppts.

 

See accompanying notes.

Percentages may not recompute due to rounding.

 

1See reconciliation of Non-GAAP Measurements to GAAP results within this release for further detail of Company restaurant margin %.

YUM! Brands, Inc.

PIZZA HUT DIVISION Operating Results

(amounts in millions)

(unaudited)

 

 

Quarter ended

 

% Change

B/(W)

 

Year ended

 

% Change

B/(W)

 

12/31/21

 

12/31/20

 

 

12/31/21

 

12/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

$

7

 

 

$

19

 

 

(66)

 

$

46

 

 

$

76

 

 

(40)

Franchise and property revenues

 

162

 

 

 

159

 

 

3

 

 

597

 

 

 

552

 

 

8

Franchise contributions for advertising and other services

 

112

 

 

 

111

 

 

 

 

385

 

 

 

374

 

 

3

Total revenues

 

281

 

 

 

289

 

 

(3)

 

 

1,028

 

 

 

1,002

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant expenses

 

7

 

 

 

18

 

 

65

 

 

43

 

 

 

73

 

 

41

General and administrative expenses

 

73

 

 

 

74

 

 

1

 

 

201

 

 

 

215

 

 

6

Franchise and property expenses

 

2

 

 

 

6

 

 

67

 

 

11

 

 

 

17

 

 

37

Franchise advertising and other services expenses

 

120

 

 

 

109

 

 

(9)

 

 

395

 

 

 

365

 

 

(8)

Other (income) expense

 

(2

)

 

 

(1

)

 

NM

 

 

(9

)

 

 

(3

)

 

NM

Total costs and expenses, net

 

200

 

 

 

206

 

 

4

 

 

641

 

 

 

667

 

 

4

Operating Profit

$

81

 

 

$

83

 

 

(1)

 

$

387

 

 

$

335

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant margin %1

 

6.1

%

 

 

10.0

%

 

(3.9) ppts.

 

 

6.8

%

 

 

5.1

%

 

1.7 ppts.

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

29.2

%

 

 

28.7

%

 

0.5 ppts.

 

 

37.7

%

 

 

33.5

%

 

4.2 ppts.

 

See accompanying notes.

Percentages may not recompute due to rounding.

 

1See reconciliation of Non-GAAP Measurements to GAAP results within this release for further detail of Company restaurant margin %.

YUM! Brands, Inc.

Consolidated Balance Sheets

(amounts in millions)

 

 

(unaudited)

 

 

 

12/31/21

 

12/31/20

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

$

486

 

 

$

730

 

Accounts and notes receivable, less allowance: $36 in 2021 and $45 in 2020

 

596

 

 

 

534

 

Prepaid expenses and other current assets

 

450

 

 

 

425

 

Total Current Assets

 

1,532

 

 

 

1,689

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation of $1,270 in 2021 and $1,230 in 2020

 

1,207

 

 

 

1,235

 

Goodwill

 

657

 

 

 

597

 

Intangible assets, net

 

359

 

 

 

343

 

Other assets

 

1,487

 

 

 

1,435

 

Deferred income taxes

 

724

 

 

 

553

 

Total Assets

$

5,966

 

 

$

5,852

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' DEFICIT

 

 

 

Current Liabilities

 

 

 

Accounts payable and other current liabilities

$

1,334

 

 

$

1,189

 

Income taxes payable

 

13

 

 

 

33

 

Short-term borrowings

 

68

 

 

 

453

 

Total Current Liabilities

 

1,415

 

 

 

1,675

 

 

 

 

 

Long-term debt

 

11,178

 

 

 

10,272

 

Other liabilities and deferred credits

 

1,746

 

 

 

1,796

 

Total Liabilities

 

14,339

 

 

 

13,743

 

 

 

 

 

Shareholders' Deficit

 

 

 

Common Stock, no par value, 750 shares authorized; 289 shares and 300 shares issued in 2021 and 2020, respectively

 

 

 

 

 

Accumulated deficit

 

(8,048

)

 

 

(7,480

)

Accumulated other comprehensive loss

 

(325

)

 

 

(411

)

Total Shareholders' Deficit

 

(8,373

)

 

 

(7,891

)

Total Liabilities and Shareholders' Deficit

$

5,966

 

 

$

5,852

 

 

See accompanying notes.

YUM! Brands, Inc.

Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)

 

 

Year ended

 

12/31/21

 

12/31/20

Cash Flows - Operating Activities

 

 

 

Net income

$

1,575

 

 

$

904

 

Depreciation and amortization

 

164

 

 

 

146

 

Impairment and closure expense

 

19

 

 

 

172

 

Refranchising (gain) loss

 

(35

)

 

 

(34

)

Investment (income) expense, net

 

(86

)

 

 

(74

)

Deferred income taxes

 

(200

)

 

 

(65

)

Share-based compensation expense

 

75

 

 

 

97

 

Changes in accounts and notes receivable

 

(46

)

 

 

62

 

Changes in prepaid expenses and other current assets

 

(33

)

 

 

8

 

Changes in accounts payable and other current liabilities

 

122

 

 

 

128

 

Changes in income taxes payable

 

(41

)

 

 

(110

)

Other, net

 

192

 

 

 

71

 

Net Cash Provided by Operating Activities

 

1,706

 

 

 

1,305

 

 

 

 

 

Cash Flows - Investing Activities

 

 

 

Capital spending

 

(230

)

 

 

(160

)

Acquisition of The Habit Restaurants, Inc., net of cash acquired

 

 

 

 

(408

)

Proceeds from sale of investment in Grubhub, Inc. common stock

 

 

 

 

206

 

Proceeds from refranchising of restaurants

 

85

 

 

 

19

 

Other, net

 

(28

)

 

 

8

 

Net Cash Used in Investing Activities

 

(173

)

 

 

(335

)

 

 

 

 

Cash Flows - Financing Activities

 

 

 

Proceeds from long-term debt

 

4,150

 

 

 

1,650

 

Repayments of long-term debt

 

(3,657

)

 

 

(1,517

)

Revolving credit facilities, three months or less, net

 

 

 

 

 

Short-term borrowings, by original maturity

 

 

 

More than three months - proceeds

 

 

 

 

95

 

More than three months - payments

 

 

 

 

(100

)

Three months or less, net

 

 

 

 

 

Repurchase shares of Common Stock

 

(1,591

)

 

 

(239

)

Dividends paid on Common Stock

 

(592

)

 

 

(566

)

Debt issuance costs

 

(37

)

 

 

(20

)

Other, net

 

(40

)

 

 

(41

)

Net Cash Used in Financing Activities

 

(1,767

)

 

 

(738

)

Effect of Exchange Rate on Cash and Cash Equivalents

 

(19

)

 

 

24

 

Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

 

(253

)

 

 

256

 

 

 

 

 

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Year

 

1,024

 

 

 

768

 

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Year

$

771

 

 

$

1,024

 

 

 

 

 

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.

  • Diluted Earnings Per Share ("EPS") excluding Special Items (as defined below);
  • Effective Tax Rate excluding Special Items;
  • Core Operating Profit. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance internally.
  • Company restaurant profit and Company restaurant margin as a percentage of sales (as defined below).

These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations.

Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature. Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance. The Special Items are described in (a) - (i) in the accompanying notes.

Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales ("Company restaurant margin %") is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.

Certain non-GAAP measurements are presented excluding the impact of FX. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the FX impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

 

Quarter ended

 

Year ended

 

12/31/21

 

12/31/20

 

12/31/21

 

12/31/20

Detail of Special Items

 

 

 

 

 

 

 

Refranchising gain (loss)(a)

$

(1

)

 

$

 

 

$

3

 

 

$

8

 

Costs associated with acquisition and integration of Habit Burger Grill(b)

 

(4

)

 

 

 

 

 

(4

)

 

 

(9

)

Impairment of Habit Burger Grill goodwill(c)

 

 

 

 

 

 

 

 

 

 

(144

)

Unlocking Opportunity Initiative contribution(d)

 

 

 

 

 

 

 

 

 

 

(50

)

COVID-19 relief contribution(e)

 

 

 

 

(25

)

 

 

 

 

 

(25

)

Charges associated with resource optimization(f)

 

(2

)

 

 

(4

)

 

 

(9

)

 

 

(36

)

Other Special Items Income (Expense)

 

(1

)

 

 

(5

)

 

 

1

 

 

 

(11

)

Special Items Income (Expense) - Operating Profit

 

(8

)

 

 

(34

)

 

 

(9

)

 

 

(267

)

Charges associated with resource optimization - Other pension (expense) income(f)

 

 

 

 

(1

)

 

 

1

 

 

 

(2

)

Interest expense, net(g)

 

 

 

 

 

 

 

(34

)

 

 

(34

)

Special Items Income (Expense) before Income Taxes

 

(8

)

 

 

(35

)

 

 

(42

)

 

 

(303

)

Tax Benefit (Expense) on Special Items(h)

 

(1

)

 

 

8

 

 

 

17

 

 

 

65

 

Tax Benefit - Intra-entity transfer of intellectual property(i)

 

35

 

 

 

3

 

 

 

251

 

 

 

28

 

Special Items Income (Expense), net of tax

$

26

 

 

$

(24

)

 

$

226

 

 

$

(210

)

Average diluted shares outstanding

 

298

 

 

 

307

 

 

 

302

 

 

 

307

 

Special Items diluted EPS

$

0.09

 

 

$

(0.07

)

 

$

0.75

 

 

$

(0.68

)

 

 

 

 

 

 

 

 

 

 

Quarter ended

 

Year ended

 

12/31/21

 

12/31/20

 

12/31/21

 

12/31/20

Reconciliation of GAAP Operating Profit to Core Operating Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

GAAP Operating Profit

$

502

 

 

$

482

 

 

$

2,139

 

 

$

1,503

 

Special Items Expense

 

(8

)

 

 

(34

)

 

 

(9

)

 

 

(267

)

Foreign Currency Impact on Divisional Operating Profit

 

(1

)

 

 

N/A

 

 

 

54

 

 

 

N/A

 

Core Operating Profit

$

511

 

 

$

516

 

 

$

2,094

 

 

$

1,770

 

 

 

 

 

 

 

 

 

KFC Division

 

 

 

 

 

 

 

GAAP Operating Profit

$

298

 

 

$

267

 

 

$

1,230

 

 

$

922

 

Foreign Currency Impact on Divisional Operating Profit

 

(1

)

 

 

N/A

 

 

 

45

 

 

 

N/A

 

Core Operating Profit

$

299

 

 

$

267

 

 

$

1,185

 

 

$

922

 

 

 

 

 

 

 

 

 

Taco Bell Division

 

 

 

 

 

 

 

GAAP Operating Profit

$

198

 

 

$

212

 

 

$

758

 

 

$

696

 

Foreign Currency Impact on Divisional Operating Profit

 

 

 

 

N/A

 

 

 

1

 

 

 

N/A

 

Core Operating Profit

$

198

 

 

$

212

 

 

$

757

 

 

$

696

 

 

 

 

 

 

 

 

 

Pizza Hut Division

 

 

 

 

 

 

 

GAAP Operating Profit

$

81

 

 

$

83

 

 

$

387

 

 

$

335

 

Foreign Currency Impact on Divisional Operating Profit

 

 

 

 

N/A

 

 

 

8

 

 

 

N/A

 

Core Operating Profit

$

81

 

 

$

83

 

 

$

379

 

 

$

335

 

 

 

 

 

 

 

 

 

Habit Burger Grill Division

 

 

 

 

 

 

 

GAAP Operating Profit (Loss)

$

(4

)

 

$

(7

)

 

$

2

 

 

$

(22

)

Foreign Currency Impact on Divisional Operating Profit

 

 

 

 

N/A

 

 

 

 

 

 

N/A

 

Core Operating Profit

$

(4

)

 

$

(7

)

 

$

2

 

 

$

(22

)

 

 

 

 

 

 

 

 

Reconciliation of Diluted EPS to Diluted EPS excluding Special Items

 

 

 

 

 

 

 

Diluted EPS

$

1.11

 

 

$

1.08

 

 

$

5.21

 

 

$

2.94

 

Special Items Diluted EPS

 

0.09

 

 

 

(0.07

)

 

 

0.75

 

 

 

(0.68

)

Diluted EPS excluding Special Items

$

1.02

 

 

$

1.15

 

 

$

4.46

 

 

$

3.62

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items

 

 

 

 

 

 

 

GAAP Effective Tax Rate

 

18.8

%

 

 

5.8

%

 

 

5.9

%

 

 

11.4

%

Impact on Tax Rate as a result of Special Items

 

(7.9

)%

 

 

(2.5

)%

 

 

(15.5

)%

 

 

(4.5

)%

Effective Tax Rate excluding Special Items

 

26.7

%

 

 

8.3

%

 

 

21.4

%

 

 

15.9

%

 

 

 

 

 

 

 

 

Reconciliation of GAAP Operating Profit to Company Restaurant Profit

 

 

Quarter ended 12/31/2021

 

 

KFC

Division

 

Taco Bell

Division

 

Pizza Hut

Division

 

Habit

Burger Grill

Division

 

Corporate

and

Unallocated

 

Consolidated

GAAP Operating Profit (Loss)

 

$

298

 

 

$

198

 

 

$

81

 

 

$

(4

)

 

$

(71

)

 

$

502

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Franchise and property revenues

 

 

433

 

 

 

224

 

 

 

162

 

 

 

1

 

 

 

 

 

 

820

 

Franchise contributions for advertising and other services

 

 

188

 

 

 

172

 

 

 

112

 

 

 

1

 

 

 

 

 

 

473

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

138

 

 

 

70

 

 

 

73

 

 

 

13

 

 

 

77

 

 

 

371

 

Franchise and property expenses

 

 

25

 

 

 

10

 

 

 

2

 

 

 

 

 

 

(1

)

 

 

36

 

Franchise advertising and other services expense

 

 

189

 

 

 

176

 

 

 

120

 

 

 

1

 

 

 

 

 

 

486

 

Refranchising (gain) loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

(14

)

Other (income) expense

 

 

 

 

 

6

 

 

 

(2

)

 

 

1

 

 

 

9

 

 

 

14

 

Company restaurant profit

 

$

29

 

 

$

64

 

 

$

 

 

$

9

 

 

$

 

 

$

102

 

Company sales

 

$

173

 

 

$

288

 

 

$

7

 

 

$

129

 

 

$

 

 

$

597

 

Company restaurant margin %

 

 

16.3

%

 

 

22.6

%

 

 

6.1

%

 

 

7.0

%

 

 

N/A

 

 

 

17.2

%

 

 

Quarter ended 12/31/2020

 

 

KFC

Division

 

Taco Bell

Division

 

Pizza Hut

Division

 

Habit

Burger Grill

Division

 

Corporate

and

Unallocated

 

Consolidated

GAAP Operating Profit (Loss)

 

$

267

 

 

$

212

 

 

$

83

 

 

$

(7

)

 

$

(73

)

 

$

482

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Franchise and property revenues

 

 

389

 

 

 

202

 

 

 

159

 

 

 

 

 

 

 

 

 

750

 

Franchise contributions for advertising and other services

 

 

162

 

 

 

154

 

 

 

111

 

 

 

 

 

 

 

 

 

427

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

122

 

 

 

50

 

 

 

74

 

 

 

11

 

 

 

83

 

 

 

340

 

Franchise and property expenses

 

 

22

 

 

 

9

 

 

 

6

 

 

 

 

 

 

1

 

 

 

38

 

Franchise advertising and other services expense

 

 

164

 

 

 

154

 

 

 

109

 

 

 

 

 

 

 

 

 

427

 

Refranchising (gain) loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Other (income) expense

 

 

4

 

 

 

4

 

 

 

(1

)

 

 

 

 

 

(7

)

 

 

 

Company restaurant profit

 

$

28

 

 

$

73

 

 

$

1

 

 

$

4

 

 

$

 

 

$

106

 

Company sales

 

$

160

 

 

$

272

 

 

$

19

 

 

$

115

 

 

$

 

 

$

566

 

Company restaurant margin %

 

 

17.5

%

 

 

26.6

%

 

 

10.0

%

 

 

3.5

%

 

 

N/A

 

 

 

18.8

%

 

 

Year ended 12/31/2021

 

 

KFC

Division

 

Taco Bell

Division

 

Pizza Hut

Division

 

Habit

Burger Grill

Division

 

Corporate

and

Unallocated

 

Consolidated

GAAP Operating Profit (Loss)

 

$

1,230

 

 

$

758

 

 

$

387

 

 

$

2

 

 

$

(238

)

 

$

2,139

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Franchise and property revenues

 

 

1,557

 

 

 

742

 

 

 

597

 

 

 

4

 

 

 

 

 

 

2,900

 

Franchise contributions for advertising and other services

 

 

640

 

 

 

552

 

 

 

385

 

 

 

1

 

 

 

 

 

 

1,578

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

377

 

 

 

174

 

 

 

201

 

 

 

48

 

 

 

260

 

 

 

1,060

 

Franchise and property expenses

 

 

74

 

 

 

33

 

 

 

11

 

 

 

 

 

 

(1

)

 

 

117

 

Franchise advertising and other services expense

 

 

627

 

 

 

553

 

 

 

395

 

 

 

1

 

 

 

 

 

 

1,576

 

Refranchising (gain) loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35

)

 

 

(35

)

Other (income) expense

 

 

(5

)

 

 

1

 

 

 

(9

)

 

 

1

 

 

 

14

 

 

 

2

 

Company restaurant profit

 

$

106

 

 

$

225

 

 

$

3

 

 

$

47

 

 

$

 

 

$

381

 

Company sales

 

$

596

 

 

$

944

 

 

$

46

 

 

$

520

 

 

$

 

 

$

2,106

 

Company restaurant margin %

 

 

17.7

%

 

 

23.9

%

 

 

6.8

%

 

 

9.0

%

 

 

N/A

 

 

 

18.1

%

 

 

Year ended 12/31/2020

 

 

KFC

Division

 

Taco Bell

Division

 

Pizza Hut

Division

 

Habit

Burger Grill

Division

 

Corporate

and

Unallocated

 

Consolidated

GAAP Operating Profit (Loss)

 

$

922

 

 

$

696

 

 

$

335

 

 

$

(22

)

 

$

(428

)

 

$

1,503

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Franchise and property revenues

 

 

1,295

 

 

 

662

 

 

 

552

 

 

 

1

 

 

 

 

 

 

2,510

 

Franchise contributions for advertising and other services

 

 

471

 

 

 

487

 

 

 

374

 

 

 

 

 

 

 

 

 

1,332

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

346

 

 

 

158

 

 

 

215

 

 

 

33

 

 

 

312

 

 

 

1,064

 

Franchise and property expenses

 

 

91

 

 

 

33

 

 

 

17

 

 

 

 

 

 

4

 

 

 

145

 

Franchise advertising and other services expense

 

 

465

 

 

 

484

 

 

 

365

 

 

 

 

 

 

 

 

 

1,314

 

Refranchising (gain) loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

(34

)

Other (income) expense

 

 

9

 

 

 

3

 

 

 

(3

)

 

 

(1

)

 

 

146

 

 

 

154

 

Company restaurant profit

 

$

67

 

 

$

225

 

 

$

3

 

 

$

9

 

 

$

 

 

$

304

 

Company sales

 

$

506

 

 

$

882

 

 

$

76

 

 

$

346

 

 

$

 

 

$

1,810

 

Company restaurant margin %

 

 

13.2

%

 

 

25.5

%

 

 

5.1

%

 

 

2.6

%

 

 

N/A

 

 

 

16.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

 

Quarter Ended 12/31/21

KFC

Division

 

Taco Bell

Division

 

Pizza Hut

Division

 

Habit

Burger Grill

Division

 

Corporate

and

Unallocated

 

Consolidated

Total revenues

$

794

 

$

684

 

$

281

 

 

$

131

 

 

$

 

 

$

1,890

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant expenses

 

144

 

 

224

 

 

7

 

 

 

120

 

 

 

 

 

 

495

 

General and administrative expenses

 

138

 

 

70

 

 

73

 

 

 

13

 

 

 

77

 

 

 

371

 

Franchise and property expenses

 

25

 

 

10

 

 

2

 

 

 

 

 

 

(1

)

 

 

36

 

Franchise advertising and other services expense

 

189

 

 

176

 

 

120

 

 

 

1

 

 

 

 

 

 

486

 

Refranchising (gain) loss

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

(14

)

Other (income) expense

 

 

 

6

 

 

(2

)

 

 

1

 

 

 

9

 

 

 

14

 

Total costs and expenses, net

 

496

 

 

486

 

 

200

 

 

 

135

 

 

 

71

 

 

 

1,388

 

Operating Profit (Loss)

$

298

 

$

198

 

$

81

 

 

$

(4

)

 

$

(71

)

 

$

502

 

Quarter Ended 12/31/20

KFC

Division

 

Taco Bell

Division

 

Pizza Hut

Division

 

Habit

Burger Grill

Division

 

Corporate

and

Unallocated

 

Consolidated

Total revenues

$

711

 

$

628

 

$

289

 

 

$

115

 

 

$

 

 

$

1,743

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant expenses

 

132

 

 

199

 

 

18

 

 

 

111

 

 

 

 

 

 

460

 

General and administrative expenses

 

122

 

 

50

 

 

74

 

 

 

11

 

 

 

83

 

 

 

340

 

Franchise and property expenses

 

22

 

 

9

 

 

6

 

 

 

 

 

 

1

 

 

 

38

 

Franchise advertising and other services expense

 

164

 

 

154

 

 

109

 

 

 

 

 

 

 

 

 

427

 

Refranchising (gain) loss

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Other (income) expense

 

4

 

 

4

 

 

(1

)

 

 

 

 

 

(7

)

 

 

 

Total costs and expenses, net

 

444

 

 

416

 

 

206

 

 

 

122

 

 

 

73

 

 

 

1,261

 

Operating Profit (Loss)

$

267

 

$

212

 

$

83

 

 

$

(7

)

 

$

(73

)

 

$

482

 

 

 

 

 

 

 

 

 

 

 

 

 

The above tables reconcile segment information, which is based on management responsibility, with our 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 Ended 12/31/21

KFC

Division

 

Taco Bell

Division

 

Pizza Hut

Division

 

Habit

Burger Grill

Division

 

Corporate

and

Unallocated

 

Consolidated

Total revenues

$

2,793

 

 

$

2,238

 

$

1,028

 

 

$

525

 

$

 

 

$

6,584

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant expenses

 

490

 

 

 

719

 

 

43

 

 

 

473

 

 

 

 

 

1,725

 

General and administrative expenses

 

377

 

 

 

174

 

 

201

 

 

 

48

 

 

260

 

 

 

1,060

 

Franchise and property expenses

 

74

 

 

 

33

 

 

11

 

 

 

 

 

(1

)

 

 

117

 

Franchise advertising and other services expense

 

627

 

 

 

553

 

 

395

 

 

 

1

 

 

 

 

 

1,576

 

Refranchising (gain) loss

 

 

 

 

 

 

 

 

 

 

 

(35

)

 

 

(35

)

Other (income) expense

 

(5

)

 

 

1

 

 

(9

)

 

 

1

 

 

14

 

 

 

2

 

Total costs and expenses, net

 

1,563

 

 

 

1,480

 

 

641

 

 

 

523

 

 

238

 

 

 

4,445

 

Operating Profit (Loss)

$

1,230

 

 

$

758

 

$

387

 

 

$

2

 

$

(238

)

 

$

2,139

 

Year Ended 12/31/20

KFC

Division

 

Taco Bell

Division

 

Pizza Hut

Division

 

Habit

Burger Grill

Division

 

Corporate

and

Unallocated

 

Consolidated

Total revenues

$

2,272

 

$

2,031

 

$

1,002

 

 

$

347

 

 

$

 

 

$

5,652

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurant expenses

 

439

 

 

657

 

 

73

 

 

 

337

 

 

 

 

 

 

1,506

 

General and administrative expenses

 

346

 

 

158

 

 

215

 

 

 

33

 

 

 

312

 

 

 

1,064

 

Franchise and property expenses

 

91

 

 

33

 

 

17

 

 

 

 

 

 

4

 

 

 

145

 

Franchise advertising and other services expense

 

465

 

 

484

 

 

365

 

 

 

 

 

 

 

 

 

1,314

 

Refranchising (gain) loss

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

(34

)

Other (income) expense

 

9

 

 

3

 

 

(3

)

 

 

(1

)

 

 

146

 

 

 

154

 

Total costs and expenses, net

 

1,350

 

 

1,335

 

 

667

 

 

 

369

 

 

 

428

 

 

 

4,149

 

Operating Profit (Loss)

$

922

 

$

696

 

$

335

 

 

$

(22

)

 

$

(428

)

 

$

1,503

 

The above tables reconcile segment information, which is based on management responsibility, with our 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 Consolidated Summary of Results, Consolidated Balance Sheets

and Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)

 

 

Amounts presented as of and for the quarter and year ended December 31, 2021 are preliminary.

 

 

(a)

Due to their size and volatility, we have reflected as Special Items those refranchising gains and losses that were recorded in connection with our previously announced plans to have at least 98% franchise restaurant ownership by the end of 2018. As such, refranchising gains and losses recorded during 2021 and 2020 as Special Items are directly associated with restaurants that were refranchised prior to the end of 2018.

 

 

 

During the quarters ended December 31, 2021 and 2020, we recorded net refranchising losses of $1 million and less than $1 million, respectively, that have been reflected as Special Items. During the years ended December 31, 2021 and 2020, we recorded net refranchising gains of $3 million and $8 million, respectively, that have been reflected as Special Items.

 

 

 

Additionally, during the quarters ended December 31, 2021 and 2020, we recorded net refranchising gains of $15 million and $4 million, respectively, that have not been reflected as Special Items. During the years ended December 31, 2021 and 2020, we recorded net refranchising gains of $32 million and $26 million, respectively, that have not been reflected as Special Items. These gains relate to refranchising of restaurants in 2021 and 2020 that were not part of our aforementioned plans to achieve 98% franchise ownership and that we believe are now more indicative of our expected ongoing refranchising activity.

 

 

(b)

During the quarter ended December 31, 2021, we recorded Special Item charges of $4 million to Other (income) expense related to the integration of The Habit Restaurants, Inc. (“Habit”).

 

 

 

During the years ended December 31, 2021 and 2020, we recorded Special Item charges of $4 million to Other (income) expense and $9 million to General and administrative expenses, respectively, related to the acquisition and integration of Habit.

 

 

(c)

On March 18, 2020 we acquired all of the issued and outstanding common shares of Habit for total cash consideration of $408 million, net of cash acquired. During the first-quarter of 2020 the operations of substantially all Habit restaurants were impacted by government recommendations and mandates arising from containment and mitigation measures related to the COVID-19 global pandemic. As a result of the impacts of the COVID-19 pandemic on Habit’s results through March 31, 2020 as well as general market conditions, during the quarter ended March 31, 2020, we recorded a goodwill impairment charge of $139 million to Other (income) expense. As we continued to refine our preliminary purchase price allocation for Habit in the quarter ended September 30, 2020 the impairment charge was adjusted upward by $5 million. These impairment charges have been reflected as Special Items. We have also reflected the tax benefit of these impairment charges, which totaled $33 million for the year ended December 31, 2020 as a Special Item.

 

 

(d)

On June 24, 2020, the YUM! Brands, Inc. Board of Directors approved the establishment of the company's new global "Unlocking Opportunity Initiative" including a $100 million investment over the next five years to fight inequality by unlocking opportunities for employees, restaurant team members and communities. The Company contributed $50 million in the quarter ended June 30, 2020 to Yum! Brands Foundation, Inc. (a stand-alone, not-for-profit organization that is not consolidated in the Company's results) as part of these efforts and investment. As a result of the size and specific nature of this contribution, we reflected the associated General and administrative expense as a Special Item.

 

 

(e)

During the quarter ended December 31, 2020, the Company made a contribution of $25 million to Yum! Brands Foundation, Inc. to fund past and anticipated payments for COVID relief provided to restaurant-level employees within the YUM system. As a result of the size and specific nature of this contribution, we have reflected the associated General and administrative expense as a Special Item.

 

 

(f)

During the quarter ended December 31, 2021, we recorded a charge of $2 million to Other (income) expense and during the quarter ended December 31, 2020, we recorded charges of $4 million to General and administrative expenses and $1 million to Other pension (income) expense related to a resource optimization program initiated in the third quarter of 2020.

 

 

 

During the year ended December 31, 2021, we recorded charges of $7 million to General and administrative expenses and $2 million to Other (income) expense and we recorded a credit of $1 million to Other pension (income) expense related to this resource optimization program. During the year ended December 31, 2020, we recorded charges of $36 million to General and administrative expenses and $2 million to Other pension (income) expense related to this resource optimization program.

 

 

 

This program is part of our efforts to optimize our resources, reallocating them toward critical areas of the business that will drive future growth. These critical areas include accelerating our digital, technology and innovation capabilities to deliver a modern, world-class team member and customer experience and improve unit economics. Due to the size and scope of the resource optimization program, these amounts have been reflected as Special Items.

 

 

(g)

During the quarter ended June 30, 2021, certain subsidiaries of the Company redeemed $1,050 million aggregate principal amount of 5.25% Subsidiary Senior Unsecured Notes due in 2026 (the “2026 Notes”). The redemption amount was equal to 102.625% of the $1,050 million aggregate principal amount redeemed, reflecting a $28 million “call premium”. We recognized the call premium and the write-off of $6 million of unamortized debt issuance costs associated with the 2026 Notes within Interest expense, net which we reflected as Special Items due to their collective size and the fact that the amounts are not indicative of our ongoing interest expense.

 

 

 

During the quarter ended September 30, 2020, KFC Holding Co., Pizza Hut Holdings, LLC and Taco Bell of America, LLC, each of which is a wholly-owned subsidiary of the Company, issued a notice of redemption for $1,050 million aggregate principal amount of 5.00% Subsidiary Senior Unsecured Notes due in 2024 (the "2024 Notes"). The redemption amount included a $26 million call premium plus accrued and unpaid interest to the date of redemption of October 9, 2020. We recorded the call premium, $6 million of unamortized debt issuance costs associated with the 2024 Notes and $2 million of accrued and unpaid interest associated with the period of time from prepayment of the 2024 Notes with the Trustee on September 25, 2020, to their redemption date within Interest expense, net and reflected the charges as Special Items due to their collective size and the fact that the amounts are not indicative of our ongoing interest expense.

 

 

(h)

Tax (Expense) Benefit on Special Items was determined based upon the impact of the nature, as well as the jurisdiction of the respective individual components within Special Items. Additionally, during the quarter and year ended December 31, 2021, we recorded as a Special Item a $2 million tax expense and a $8 million tax benefit, respectively, related to prior refranchisings for which the associated pre-tax gain or loss was recorded as Special.

 

 

(i)

In the fourth quarter of 2019, we completed intra-entity transfers of certain intellectual property ("IP") rights. As a result of the transfer of certain of these rights, largely to subsidiaries in the United Kingdom (“UK”), we received a step-up in tax basis to current fair value under applicable tax law. To the extent this step-up in tax basis was amortizable against future taxable income we recognized a significant one-time deferred tax benefit in 2019 as a Special Item. Additionally, we recognized a related deferred tax benefit of $3 million as a Special Item in the quarter ended December 31, 2020.

 

 

 

During the quarter ended September 30, 2020, the UK Finance Act 2020 was enacted resulting in an increase in the UK corporate income tax rate from 17% to 19%. As a result, in the quarter ended September 30, 2020, we remeasured the deferred tax assets originally recorded as a Special Item as described above and recognized an additional $25 million deferred tax benefit as a Special Item.

 

 

 

During the quarter ended June 30, 2021, the UK Finance Act 2021 was enacted resulting in an increase in the UK corporate income tax rate from 19% to 25%. As a result, in the quarter ended June 30, 2021, we remeasured the deferred tax assets originally recorded as a Special Item as described above and recognized an additional $64 million deferred tax benefit as a Special Item.

 

 

 

In July 2021, we concentrated management responsibility for European (excluding the UK) KFC franchise development, support operations and management oversight in Switzerland (the “KFC Europe Reorganization”). Concurrent with this change in management responsibility, we have completed intra-entity transfers of certain KFC IP rights from subsidiaries in the UK to subsidiaries in Switzerland. With the transfers of these rights, we received a step-up in amortizable tax basis to current fair value under applicable Swiss tax law. As a result of this transfer, we recorded a net one-time tax benefit of $152 million as a Special Item in the quarter ended September 30, 2021.

 

 

 

In December 2021, we continued our KFC Europe Reorganization and completed intra-entity transfers of additional European KFC IP rights from subsidiaries in the U.S. to subsidiaries in Switzerland. With the transfers of these additional rights, we received a step-up in amortizable tax basis to current fair value under applicable Swiss tax law. As a result of this transfer, we recorded a net one-time tax benefit of $35 million as a Special Item in the quarter ended December 31, 2021.

Category: Earnings

Contacts

Analysts are invited to contact:

Jodi Dyer, Vice President, Investor Relations, at 888/298-6986

Members of the media are invited to contact:

Virginia Ferguson, Vice President, Public Relations, at 502/874-8200

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