Highlights of Yum! Brands Solid First-Quarter

02 May 2019: Yum! Brands, Inc.today reported results for the first quarter ended March 31, 2019. Worldwide system sales excluding foreign currency translation grew 8%, with 7% net-new units and 4% same-store sales growth. First-quarter GAAP EPS was $0.83, a decrease of (35)%. First-quarter EPS excluding Special Items was $0.82, a decrease of (8)%.

Greg Creed, CEO, said “The third and final year of our transformation is underway and I’m thrilled with the progress towards our commitment to becoming a more focused, more franchised, and more efficient growth company. First-quarter results were a solid
start to the year, reflecting particular strength at the KFC division and Taco Bell U.S. With this quarter, we have a healthy foundation to help us achieve our 2019 guidance. Through the lens of our four growth drivers, we continue to leverage our unprecedented scale and expand our capabilities with the goal of improving franchise economics and accelerating growth. We remain confident in our enviable business model and our commitment to lasting growth that maximizes shareholder value.”

FIRST QUARTER HIGHLIGHTS

Worldwide system sales excluding foreign currency translation grew 8%, with KFC at 9%, Taco Bell at 7%, and Pizza Hut at 7%. Adjusting the prior year base to include Telepizza, system sales growth excluding foreign currency translation would have been 7% worldwide and 1% for the Pizza Hut Division.

We opened 310 net units in the quarter. On a year-over-year basis, which takes into account the strategic alliance with Telepizza in the fourth-quarter 2018, net new unit growth was 7%.

We repurchased 1.1 million shares totaling $106 million at an average price of $94.

We reflected the change in fair value of our investment in GrubHub by recording $20 million of pre-tax investment expense, resulting in a negative ($0.05) impact in EPS.

Our Grubhub investment unfavorably impacted year-over-year EPS growth by ($0.21).

Foreign currency translation unfavorably impacted divisional operating profit by $19 million.

KFC DIVISION

KFC Division opened 372 new restaurants in 46 countries.
Operating margin increased 8.1 percentage points driven by refranchising and same-store sales growth.
Foreign currency translation unfavorably impacted operating profit by $16 million.

PIZZA HUT DIVISION

Pizza Hut Division opened 172 new restaurants in 39 countries.
Operating margin increased 5.1 percentage points driven by refranchising and lower franchise and property expense due to lower advertising spend associated with the U.S. Transformation Agreement.
Foreign currency translation unfavorably impacted operating profit by $3 million.

TACO BELL DIVISION

Taco Bell Division opened 62 new restaurants, including 12 new international restaurants.
Operating margin increased 2.5 percentage points driven by refranchising and same-store sales growth.