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Yum! Brands 8-K Report, Financial Results (Feb 7, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 7, 2024
Period End
February 7, 2024
Security
YUM
In the record · 2016–202610-K1110-Q328-K146

YUM filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 146 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jun ’17Jun ’17
  2. Material agreement8-K · Apr ’20Apr ’20
  3. Leadership change8-K · Dec ’22Dec ’22
  4. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed February 7, 2024. Cited figures are marked; the original filing is the authoritative source.

Yum!

Brands, Inc. (NYSE: YUM) reported fourth-quarter and full-year 2023 results in a press release attached as Exhibit 99.1 to this Form 8-K. For full-year 2023, worldwide system sales excluding foreign currency translation grew 10%, with 6% unit growth, 6% same-store sales growth, and a record 4,754 gross unit openings. GAAP diluted EPS was $5.59a, up 23% from $4.57, and EPS excluding Special Items was $5.17, an increase of 14%.

Full-year Core Operating Profit grew 12%, while GAAP Operating Profit grew 6%, with total revenues of $7,076 millionb versus $6,842 million in 2022. Fourth-quarter results were more modest. Worldwide system sales excluding foreign currency grew 5%, with 1% same-store sales growth, and GAAP diluted EPS was $1.62 versus $1.29, while EPS excluding Special Items declined 5% to $1.26, which management attributed largely to a $0.23 headwind from quarterly tax rate fluctuations.

KFC, Taco Bell and Pizza Hut all showed positive full-year system sales growth, with KFC at 12%, Taco Bell at 9% and Pizza Hut at 5% ex-F/X. Balance-sheet and capital-return items included the payoff of a $325 millionc debt maturity in the quarter with no further significant maturities in 2024 or 2025, a net leverage ratio of 4.2x at quarter end, and a January 2024 quarterly dividend increase to $0.67 (11%). The company also disclosed a pending acquisition of 218 KFC restaurants in the U.K. and Ireland, expected to close in the second quarter of 2024 and funded from cash on hand.

02—Key points

Key Highlights

  1. Full-year 2023 worldwide system sales grew 10% ex-F/X, with 6% unit growth and 6% same-store sales growth; a record 4,754 gross units were opened.
  2. Full-year GAAP diluted EPS was $5.59 (up 23%); EPS excluding Special Items was $5.17 (up 14%).
  3. Full-year Core Operating Profit grew 12%, versus 6% GAAP Operating Profit growth, with Core Operating Profit of $2,406 million.
  4. Fourth-quarter EPS excluding Special Items fell 5% to $1.26, driven by a $0.23 headwind from quarterly tax rate fluctuations.
  5. Digital sales increased 22% for the year, with digital mix exceeding 45%.
  6. Paid off a $325 million debt maturity in the quarter; net leverage ratio was 4.2x at year end with no further significant maturities in 2024 or 2025.
  7. Board approved a quarterly dividend of $0.67 in January 2024, an 11% increase, and the company agreed to acquire 218 KFC restaurants in the U.K. and Ireland, expected to close in Q2 2024.

03—Questions

Frequently Asked Questions

  1. How did Yum! Brands perform for full-year 2023?

    Worldwide system sales excluding F/X grew 10%, with 6% unit growth and 6% same-store sales growth. GAAP Operating Profit grew 6% and Core Operating Profit grew 12%. GAAP diluted EPS was $5.59 and EPS excluding Special Items was $5.17, up 14%.

  2. Why was fourth-quarter EPS excluding Special Items lower year over year?

    The company stated that EPS excluding Special Items was $1.26, lower year over year, driven by a $0.23 headwind from fluctuations in its quarterly tax rate, which put the quarterly effective rate above its guided range in 2023 and below its guided range in 2022.

  3. How did the individual brands perform in 2023?

    For the full year, ex-F/X system sales grew 12% at KFC, 9% at Taco Bell and 5% at Pizza Hut. Same-store sales grew 7% at KFC, 5% at Taco Bell and 2% at Pizza Hut. The Habit Burger Grill Division grew system sales 6% for the year.

  4. What capital allocation and balance sheet actions were disclosed?

    The company paid off a $325 million debt maturity during the quarter with no further significant debt maturities in 2024 or 2025, and ended the quarter with a net leverage ratio of 4.2x. In January 2024 the Board approved a $0.67 quarterly dividend, an increase of 11%. The company also announced the acquisition of 218 KFC restaurants in the U.K. and Ireland, to be funded from cash on hand and expected to close in the second quarter.

  5. What do the Special Items affecting results include?

    Special Items for the full year 2023 included $39 million of operating profit impact, including $28 million of General and administrative expenses, $21 million of resource optimization charges, and $11 million related to the decision to exit Russia. Special Items also included a $161 million tax benefit, which lifted GAAP EPS relative to EPS excluding Special Items.

04—Continue

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