Exhibit 99.1

Yum China Reports First Quarter 2021 Results

 

Total Revenues grew 46%. System Sales grew 34% and Same-Store Sales were up 10% in constant currency

Opened 315 new stores and reported $342 million Operating Profit

 

Shanghai, China (April 27, 2021) – Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the first quarter ended March 31, 2021.

 

Impact of COVID-19 Outbreak and Mitigation Efforts  

 

Yum China reported substantial year-over-year growth in the first quarter, as the Company began to lap prior year periods that were impacted by COVID-19. System sales growth was mainly attributable to same-store sales growth, new unit contribution and substantially fewer temporary store closures. Operating Profit growth was further driven by lower commodity prices and productivity gains.

 

First quarter sales were impacted by regional resurgences of COVID-19 before the Chinese New Year and tightened public health measures across China. The tightened measures and associated consumer caution resulted in smaller gatherings and a noticeably reduced volume of travel. Our transportation and tourist locations, representing high single digits of our store mix, were significantly affected by the decline in travel. According to government statistics, the number of travelers was down approximately 40% versus 2020, and down approximately 70% versus 2019, when compared to the corresponding 40-day Chinese New Year holiday periods. These impacts were more pronounced for KFC, which accounts for most of our stores in these locations.

 

The pandemic has also introduced volatility and uncertainty to our operations. The Company acted and reacted nimbly to changing conditions. By planning for a wide range of possible situations, our team worked tirelessly to meet shifting demand across city tiers, trade zones and sales channels. Leveraging our digital capabilities, direct connection with consumers and in-house supply chain, we were able to deftly adjust offers and promotions to changing market conditions. We deployed resources flexibly to help ensure the best possible levels of restaurant staffing and delivery riders, as demand patterns shifted.

 

Looking ahead, the Company expects a full recovery of same-store sales to pre-COVID-19 levels to take time, and the unevenness of recovery to linger for several reasons. Public health measures and social distancing behaviors persist as occasional outbreaks, such as those in the first quarter and more recent outbreaks in Yunnan province, remind people of the lingering risks. Dine-in traffic, as well as sales at our transportation locations, remains well below 2019 levels. Accordingly, the Company will continue to focus on driving the sales recovery while ensuring the safety of our employees and customers.

 

First Quarter Highlights

 

Total revenues increased 46% year over year to $2.56 billion from $1.75 billion (a 36% increase excluding foreign currency translation (“F/X”)).

 

Total system sales increased 34% year over year, with increases of 24% at KFC and 57% at Pizza Hut, excluding F/X.

 

Same-store sales increased 10% year over year, with increases of 5% at KFC and 38% at Pizza Hut, excluding F/X.

 

Opened 315 new stores during the quarter; total store count reached 10,725 as of March 31, 2021.

 

Restaurant margin was 18.7%, compared with 10.7% in the prior year period.

 

Operating Profit increased 250% year over year to $342 million from $97 million (a 227% increase excluding F/X).

 

 

Adjusted Operating Profit increased 249% year over year to $345 million from $98 million (a 227% increase excluding F/X).

 

 

Effective tax rate was 29.6%.

 

Net Income increased 272% to $230 million from $62 million in the prior year period, primarily due to the increase in Operating Profit.

 

 

Adjusted Net Income increased 271% to $233 million from $63 million in the prior year period (a 249% increase excluding the mark-to-market losses of $16 million and $8 million in the first quarter of 2021 and 2020, respectively, from our equity investments; a 225% increase if further excluding F/X).

Yum China Holdings, Inc. •  Shanghai, China •  Website http://ir.yumchina.com

 


 

 

Diluted EPS increased 231% to $0.53 from $0.16 in the prior year period.

 

Adjusted Diluted EPS increased 238% to $0.54 from $0.16 in the prior year period (a 217% increase excluding the mark-to-market losses from our equity investments in the first quarter of 2021 and 2020; a 194% increase if further excluding F/X).

 

Results include the consolidation of Huang Ji Huang since April 2020, and Suzhou KFC since August 2020.

 

Key Financial Results

First Quarter 2021

 

 

 

% Change

 

 

 

System Sales

 

 

Same-Store Sales

 

 

Net New Units

 

 

Operating Profit

 

 

Yum China

 

+34

 

 

 

+10

 

 

 

+15

 

 

 

+250

 

 

        KFC

 

+24

 

 

 

+5

 

 

 

+11

 

 

 

+113

 

 

        Pizza Hut

 

+57

 

 

 

+38

 

 

 

+5

 

 

NM

 

 

 

 

First Quarter

 

 

(in US$ million, except

 

 

 

 

 

 

 

 

 

 

% Change

 

 

per share data and percentages)

 

2021

 

 

 

2020

 

 

Reported

 

 

Ex F/X

 

 

Operating Profit

$

 

342

 

 

$

 

97

 

 

 

+250

 

 

 

+227

 

 

Adjusted Operating Profit1

$

 

345

 

 

$

 

98

 

 

 

+249

 

 

 

+227

 

 

Net Income

$

 

230

 

 

$

 

62

 

 

 

+272

 

 

 

+244

 

 

Adjusted Net Income1

$

 

233

 

 

$

 

63

 

 

 

+271

 

 

 

+244

 

 

Basic Earnings Per Common Share

$

 

0.55

 

 

$

 

0.16

 

 

 

+244

 

 

 

+219

 

 

Adjusted Basic Earnings Per

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Common Share1

$

 

0.55

 

 

$

 

0.17

 

 

 

+224

 

 

 

+200

 

 

Diluted Earnings Per Common Share

$

 

0.53

 

 

$

 

0.16

 

 

 

+231

 

 

 

+206

 

 

Adjusted Diluted Earnings Per

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Common Share1

$

 

0.54

 

 

$

 

0.16

 

 

 

+238

 

 

 

+213

 

 

1 See “Reconciliation of Reported GAAP Results to non-GAAP 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 not meaningful.

Percentages may not recompute due to rounding.

System sales and same-store sales percentages exclude the impact of F/X. Effective January 1, 2018, temporary store closures are normalized in the same-store sales calculation by excluding the period during which stores are temporarily closed.

 

CEO and CFO Comments

Joey Wat, CEO of Yum China, commented, “Our first quarter results once again demonstrated the resilience of Yum China and were accomplished by our dedicated and tireless team of over 400,000 people. We delivered solid sales growth and operating profit amid challenging market conditions. Our operations and supply chain teams overcame a wide array of challenges and uncertainties, managed potential disruptions and delivered robust operations for our stores. Our brands adapted quickly to an unusual Chinese New Year, driving on- and off-premise dining demand with compelling offers and flexible resource planning. KFC continued its journey of accelerated growth, while Pizza Hut made significant strides in making its business more resilient.”

 

Wat continued, “We remain optimistic about our long-term growth opportunity in China, which is reflected in our vigorous pace of investment. We accelerated store network expansion, opening 315 new stores during the quarter. As part of our end-to-end digitization initiatives, we are digitizing and automating our restaurants to improve operational efficiency. Leveraging emerging technologies, we have been enhancing our ability to manage inventory, product quality and kitchen processes. Furthermore, we continue to fortify our supply chain to give us more operational flexibility, allow us to be more responsive and to grow even faster. During the quarter, we took a 5% equity interest in our largest poultry supplier Sunner to deepen collaboration, and broke ground to build an intelligent supply chain support center in Chengdu. All these initiatives are essential to help accelerate our growth in the years ahead.”  

 

Andy Yeung, CFO of Yum China, added, “While we are pleased with the first quarter performance, sales were impacted by regional outbreaks and significantly reduced travel volumes. The impacts of COVID-19 are subsiding, but we continue to expect the recovery of same-store sales to 2019 levels to take time and the recovery path to remain uneven and non-linear. In the short term, the top priority of our business is to drive consumer traffic back to our stores. We plan to invest more in our marketing, value proposition, digital engagement and customer service. On the other hand, we are also seeing early signs of inflationary pressure in commodity prices and wages as the economy continues to recover. Despite the lingering effects of COVID-19, we will continue to invest to drive sustainable long-term growth.”

2


 

 

Dividends

 

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 June 18, 2021 to shareholders of record as of the close of business on May 25, 2021.

 

Digital and Delivery

 

The KFC and Pizza Hut loyalty programs exceeded 315 million members combined as of quarter-end. Member sales increased to approximately 61% of system sales in the first quarter of 2021.

 

Delivery contributed approximately 29% of KFC and Pizza Hut’s Company sales in the first quarter of 2021, a decrease of approximately six percentage points from the prior year period due to recovery of dine-in volumes.

 

Digital orders, including delivery, mobile orders and kiosk orders, accounted for approximately 84% of KFC and Pizza Hut’s Company sales in the first quarter of 2021.

KFC and Pizza Hut Total

 

First Quarter

 

 

 

2021

 

 

2020

 

        Member count (as of period-end)

 

315 million+

 

 

250 million+

 

        Member sales as % of system sales

 

~61%

 

 

~59%

 

        Delivery as % of Company sales

 

~29%

 

 

~35%

 

        Digital orders as % of Company sales

 

~84%

 

 

~80%

 

 

New-Unit Development and Asset Upgrade

 

The Company opened 315 new stores in the first quarter of 2021, mainly driven by development of the KFC brand.

 

The Company remodeled 108 stores in the first quarter of 2021.

 

New Units

 

 

 

Restaurant Count

 

 

 

 

First Quarter

 

 

 

As of March 31

 

 

 

 

2021

 

 

 

2021

 

 

2020

 

 

Yum China

 

 

315

 

 

 

 

10,725

 

 

 

9,295

 

 

   KFC

 

253

 

 

 

 

7,373

 

 

 

6,661

 

 

   Pizza Hut

 

44

 

 

 

 

2,382

 

 

 

2,271

 

 

   Others2

 

 

18

 

 

 

 

970

 

 

 

363

 

 

2 Others include Taco Bell, Little Sheep, Huang Ji Huang, East Dawning, COFFii & JOY and Lavazza.

 

Restaurant Margin

 

Restaurant margin was 18.7% in the first quarter of 2021, compared with 10.7% in the prior year period, primarily attributable to sales leverage, lower commodity prices and higher productivity, partially offset by increased value promotions, lower temporary relief provided by landlords and government agencies and wage inflation.

First Quarter

 

 

 

 

2021

 

 

2020

 

 

ppts change

 

 

Yum China

 

 

18.7

%

 

 

10.7

%

 

 

+8.0

 

 

   KFC

 

 

19.9

%

 

 

13.6

%

 

 

+6.3

 

 

   Pizza Hut

 

 

15.3

%

 

 

0.3

%

 

 

+15.0

 

 

 

2021 Outlook

The Company’s fiscal year 2021 targets remain unchanged:

 

To open approximately 1,000 new stores (gross).

 

To make capital expenditures of approximately $600 million.

 

Other Updates

 

On March 16, 2021, the Company announced that it acquired a 5% equity interest in Fujian Sunner Development Co., Ltd. (“Sunner”), the Company’s largest poultry supplier, for total cash consideration of approximately $261 million. This strategic investment is intended to enhance the Company’s supply chain security and deepen its collaboration with Sunner, especially in product development and menu innovation.

 

On March 26, 2021, Yum China announced the beginning of construction of its Southwest Supply Chain Support Center in Chengdu with a total investment of approximately $28 million. This center is part of Yum China’s intelligent supply chain initiative that integrates Internet of Things technology, big data platforms and high-quality cold chain logistics facilities to support the Company’s rapid development.

3


 

 

Note on Non-GAAP Adjusted Measures

Reported GAAP results include Special Items, which are excluded from non-GAAP 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 Non-GAAP Adjusted Measures” within this release.

 

 

Conference Call

Yum China’s management will hold an earnings conference call at 8:00 p.m. U.S. Eastern Time on Tuesday, April 27, 2021 (8:00 a.m. Beijing/Hong Kong Time on Wednesday, April 28, 2021).  

 

Operator-assisted conference calls are not available at the moment. Please register in advance of the conference through the link provided below. Upon registering, you will be provided with participant dial-in numbers, a passcode and a unique registrant ID.

 

 

Pre-registration Link:

http://apac.directeventreg.com/registration/event/2388999

 

Conference ID:

2388999

 

A live webcast of the call may also be accessed at https://edge.media-server.com/mmc/p/6urc2ev7.

 

A replay of the conference call will be available two hours after the call ends until 10:00 a.m. U.S. Eastern Time on Wednesday, May 5, 2021 (10:00 p.m. Beijing/Hong Kong Time on Wednesday, May 5, 2021) and may be accessed by phone at the following numbers:

 

 

U.S.:

1 855 452 5696

 

Mainland China:

400 602 2065 or 800 870 0206

 

Hong Kong:

+852 3051 2780

 

U.K.:

0808 234 0072

 

International:

+61 2 8199 0299

 

 

Replay access code:

2388999

 

Additionally, this earnings release, the accompanying slides, a live webcast and an archived webcast of this conference call will be available at Yum China’s Investor Relations website at http://ir.yumchina.com.

 

For important news and information regarding Yum China, including our filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange, visit Yum China's Investor Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.

 

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 “2021 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, dividend and share repurchase plans, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, the expected impact of the COVID-19 outbreak, the anticipated effects of our innovation, digital and delivery capabilities and investments 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, changes in public health conditions, including the COVID-19 outbreak, our ability to control costs

4


 

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 and subsequent Quarterly Reports on Form 10-Q) 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, Huang Ji Huang, East Dawning and COFFii & JOY concepts outright. In addition, Yum China has partnered with Lavazza to explore and develop the Lavazza coffee shop concept in China. The Company had 10,725 restaurants in over 1,500 cities at the end of March 2021. Yum China ranked # 361 on the Fortune 500 list for 2020. Yum China has been named the Industry Leader for the Restaurant & Leisure Facilities Industry in the 2020 Dow Jones Sustainability Indices. In 2021, Yum China was named to the Bloomberg Gender-Equality Index and was certified as a Top Employer 2021 in China by the Top Employers Institute, both for the third consecutive year. For more information, please visit http://ir.yumchina.com.

 

Investor Relations Contact:

 

 

Tel: +86 21 2407 7556 / +852 2267 5801

IR@YumChina.com  

 

 

 

  

Media Contact:

 

 

Tel: +86 21 2407 7510

Media@YumChina.com

5


 

 

Yum China Holdings, Inc.

Condensed Consolidated Statements of Income

(in US$ million, except per share data)

(unaudited)

 

 

Quarter Ended

 

 

% Change

 

 

 

3/31/2021

 

 

3/31/2020

 

 

B/(W)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

2,331

 

 

$

1,548

 

 

 

51

 

 

 

Franchise fees and income

 

 

42

 

 

 

35

 

 

 

17

 

 

 

Revenues from transactions with

   franchisees and unconsolidated affiliates

 

 

171

 

 

 

161

 

 

 

6

 

 

 

Other revenues

 

 

13

 

 

 

10

 

 

 

29

 

 

 

Total revenues

 

 

2,557

 

 

 

1,754

 

 

 

46

 

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

704

 

 

 

495

 

 

 

(42

)

 

 

Payroll and employee benefits

 

 

544

 

 

 

394

 

 

 

(38

)

 

 

Occupancy and other operating expenses

 

 

648

 

 

 

494

 

 

 

(31

)

 

 

Company restaurant expenses

 

 

1,896

 

 

 

1,383

 

 

 

(37

)

 

 

General and administrative expenses

 

 

130

 

 

 

99

 

 

 

(32

)

 

 

Franchise expenses

 

 

17

 

 

 

17

 

 

 

3

 

 

 

Expenses for transactions with

   franchisees and unconsolidated affiliates

 

 

169

 

 

 

156

 

 

 

(8

)

 

 

Other operating costs and expenses

 

 

11

 

 

 

10

 

 

 

(5

)

 

 

Closures and impairment (income) expenses, net

 

 

(2

)

 

 

8

 

 

NM

 

 

 

Other income, net

 

 

(6

)

 

 

(16

)

 

 

(63

)

 

 

Total costs and expenses, net

 

 

2,215

 

 

 

1,657

 

 

 

(34

)

 

 

Operating Profit

 

 

342

 

 

 

97

 

 

 

250

 

 

 

Interest income, net

 

 

15

 

 

 

9

 

 

 

68

 

 

 

Investment loss

 

 

(12

)

 

 

(8

)

 

 

(42

)

 

 

Income Before Income Taxes

 

 

345

 

 

 

98

 

 

 

251

 

 

 

Income tax provision

 

 

(102

)

 

 

(32

)

 

 

(218

)

 

 

Net income – including noncontrolling interests

 

 

243

 

 

 

66

 

 

 

268

 

 

 

Net income – noncontrolling interests

 

 

13

 

 

 

4

 

 

 

(206

)

 

 

Net Income – Yum China Holdings, Inc.

 

$

230

 

 

$

62

 

 

 

272

 

 

 

Effective tax rate

 

 

29.6

%

 

 

32.7

%

 

 

3.1

 

ppts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Common Share

 

$

0.55

 

 

$

0.16

 

 

 

 

 

 

 

Weighted-average shares outstanding

    (in millions)

 

 

420

 

 

 

376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Common Share

 

$

0.53

 

 

$

0.16

 

 

 

 

 

 

 

Weighted-average shares outstanding

    (in millions)

 

 

434

 

 

 

386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Dividends Declared Per Common Share

 

$

0.12

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

Food and paper

 

 

30.2

 

 

 

32.0

 

 

 

1.8

 

ppts.

 

Payroll and employee benefits

 

 

23.3

 

 

 

25.5

 

 

 

2.2

 

ppts.

 

Occupancy and other operating expenses

 

 

27.8

 

 

 

31.8

 

 

 

4.0

 

ppts.

 

Restaurant margin

 

 

18.7

%

 

 

10.7

%

 

 

8.0

 

ppts.

 

Operating margin

 

 

14.7

%

 

 

6.3

%

 

 

8.4

 

ppts.

 

 

Percentages may not recompute due to rounding.

6


 

Yum China Holdings, Inc.

KFC Operating Results

(in US$ million)

(unaudited)

 

 

Quarter Ended

 

 

% Change

 

 

 

3/31/2021

 

 

3/31/2020

 

 

B/(W)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

1,783

 

 

$

1,220

 

 

 

46

 

 

 

Franchise fees and income

 

 

33

 

 

 

33

 

 

 

(2

)

 

 

Revenues from transactions with

   franchisees and unconsolidated affiliates

 

 

15

 

 

 

16

 

 

 

(6

)

 

 

Other revenues

 

 

1

 

 

 

 

 

NM

 

 

 

Total revenues

 

 

1,832

 

 

 

1,269

 

 

 

44

 

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

540

 

 

 

392

 

 

 

(38

)

 

 

Payroll and employee benefits

 

 

398

 

 

 

287

 

 

 

(39

)

 

 

Occupancy and other operating expenses

 

 

490

 

 

 

375

 

 

 

(30

)

 

 

Company restaurant expenses

 

 

1,428

 

 

 

1,054

 

 

 

(36

)

 

 

General and administrative expenses

 

 

55

 

 

 

46

 

 

 

(19

)

 

 

Franchise expenses

 

 

16

 

 

 

16

 

 

 

3

 

 

 

Expenses for transactions with

   franchisees and unconsolidated affiliates

 

 

15

 

 

 

16

 

 

 

7

 

 

 

Closures and impairment expenses, net

 

 

 

 

 

1

 

 

NM

 

 

 

Other income, net

 

 

(9

)

 

 

(17

)

 

 

(45

)

 

 

Total costs and expenses, net

 

 

1,505

 

 

 

1,116

 

 

 

(35

)

 

 

Operating Profit

 

$

327

 

 

$

153

 

 

 

113

 

 

 

Company sales

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

Food and paper

 

 

30.3

 

 

 

32.1

 

 

 

1.8

 

ppts.

 

Payroll and employee benefits

 

 

22.3

 

 

 

23.5

 

 

 

1.2

 

ppts.

 

Occupancy and other operating expenses

 

 

27.5

 

 

 

30.8

 

 

 

3.3

 

ppts.

 

Restaurant margin

 

 

19.9

%

 

 

13.6

%

 

 

6.3

 

ppts.

 

Operating margin

 

 

18.3

%

 

 

12.6

%

 

 

5.7

 

ppts.

 

 

Percentages may not recompute due to rounding.

7


 

Yum China Holdings, Inc.

Pizza Hut Operating Results

(in US$ million)

(unaudited)

 

 

Quarter Ended

 

 

% Change

 

 

 

3/31/2021

 

 

3/31/2020

 

 

B/(W)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company sales

 

$

538

 

 

$

322

 

 

 

67

 

 

 

Franchise fees and income

 

 

2

 

 

 

1

 

 

 

90

 

 

 

Revenues from transactions with

   franchisees and unconsolidated affiliates

 

 

1

 

 

 

1

 

 

 

91

 

 

 

Total revenues

 

 

541

 

 

 

324

 

 

 

67

 

 

 

Costs and Expenses, Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and paper

 

 

160

 

 

 

102

 

 

 

(58

)

 

 

Payroll and employee benefits

 

 

143

 

 

 

104

 

 

 

(36

)

 

 

Occupancy and other operating expenses

 

 

153

 

 

 

115

 

 

 

(34

)

 

 

Company restaurant expenses

 

 

456

 

 

 

321

 

 

 

(42

)

 

 

General and administrative expenses

 

 

25

 

 

 

24

 

 

 

(6

)

 

 

Franchise expenses

 

 

1

 

 

 

1

 

 

 

(38

)

 

 

Expenses for transactions with

   franchisees and unconsolidated affiliates

 

 

1

 

 

 

1

 

 

 

(75

)

 

 

Closures and impairment (income) expenses, net

 

 

(2

)

 

 

5

 

 

NM

 

 

 

Total costs and expenses, net

 

 

481

 

 

 

352

 

 

 

(37

)

 

 

Operating Profit (Loss)

 

$

60

 

 

$

(28

)

 

NM

 

 

 

Company sales

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

Food and paper

 

 

29.8

 

 

 

31.6

 

 

 

1.8

 

ppts.

 

Payroll and employee benefits

 

 

26.4

 

 

 

32.4

 

 

 

6.0

 

ppts.

 

Occupancy and other operating expenses

 

 

28.5

 

 

 

35.7

 

 

 

7.2

 

ppts.

 

Restaurant margin

 

 

15.3

%

 

 

0.3

%

 

 

15.0

 

ppts.

 

Operating margin

 

 

11.1

%

 

 

(8.7

)%

 

 

19.8

 

ppts.

 

 

Percentages may not recompute due to rounding.

8


 

Yum China Holdings, Inc.

Condensed Consolidated Balance Sheets

(in US$ million)

 

 

3/31/2021

 

 

12/31/2020

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,084

 

 

$

1,158

 

Short-term investments

 

 

3,026

 

 

 

3,105

 

Accounts receivable, net

 

 

102

 

 

 

99

 

Inventories, net

 

 

345

 

 

 

398

 

Prepaid expenses and other current assets

 

 

199

 

 

 

176

 

Total Current Assets

 

 

4,756

 

 

 

4,936

 

Property, plant and equipment, net

 

 

1,749

 

 

 

1,765

 

Operating lease right-of-use assets

 

 

2,140

 

 

 

2,164

 

Goodwill

 

 

829

 

 

 

832

 

Intangible assets, net

 

 

234

 

 

 

246

 

Deferred income tax assets

 

 

83

 

 

 

98

 

Investments in unconsolidated affiliates

 

 

48

 

 

 

85

 

Other assets

 

 

998

 

 

 

749

 

Total Assets

 

 

10,837

 

 

 

10,875

 

 

 

 

 

 

 

 

 

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and other current liabilities

 

 

1,800

 

 

 

1,995

 

Income taxes payable

 

 

122

 

 

 

72

 

Total Current Liabilities

 

 

1,922

 

 

 

2,067

 

Non-current operating lease liabilities

 

 

1,882

 

 

 

1,915

 

Non-current finance lease obligations

 

 

28

 

 

 

28

 

Deferred income tax liabilities

 

 

227

 

 

 

227

 

Other liabilities

 

 

165

 

 

 

167

 

Total Liabilities

 

 

4,224

 

 

 

4,404

 

 

 

 

 

 

 

 

 

 

Redeemable Noncontrolling Interest

 

 

12

 

 

 

12

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock,  $0.01 par value; 1,000 million shares authorized; 440 million shares and

   440 million shares issued at March 31, 2021 and December 31, 2020, respectively; 420

   million shares and 420 million shares outstanding at March 31, 2021 and December 31,

   2020, respectively

 

 

4

 

 

 

4

 

Treasury stock

 

 

(728

)

 

 

(728

)

Additional paid-in capital

 

 

4,664

 

 

 

4,658

 

Retained earnings

 

 

2,285

 

 

 

2,105

 

Accumulated other comprehensive income

 

 

150

 

 

 

167

 

Total Yum China Holdings, Inc. Stockholders' Equity

 

 

6,375

 

 

 

6,206

 

Noncontrolling interests

 

 

226

 

 

 

253

 

Total Equity

 

 

6,601

 

 

 

6,459

 

Total Liabilities, Redeemable Noncontrolling Interest and Equity

 

$

10,837

 

 

$

10,875

 

 

 

 

 

 

 

 

 

 

9


 

 

Yum China Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in US$ million)

(unaudited)

 

 

 

 

Quarter Ended

 

 

 

 

3/31/2021

 

3/31/2020

Cash Flows – Operating Activities

 

 

 

 

 

 

 

 

 

 

 

Net income – including noncontrolling interests

 

 

$

243

 

 

 

$

66

 

 

Depreciation and amortization

 

 

 

128

 

 

 

 

109

 

 

Non-cash operating lease cost

 

 

 

101

 

 

 

 

88