Yum! Brands: announces Q4 and FY 2017 results

Louisville / KY. (yb) Yum! Brands Inc. reported results for the fourth quarter ended December 31, 2017. Fourth-quarter GAAP EPS was USD 1.26, an increase of 53 percent. Full-year GAAP EPS was USD 3.77, an increase of 48 percent. Fourth-quarter EPS excluding Special Items was USD 0.96, an increase of 20 percent. Full-year EPS excluding Special Items was USD 2.96, an increase of 20 percent.

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Greg Creed, CEO, said «As we close the first full year of our transformation, I am very proud of the progress we are making towards becoming a more focused, more franchised and more efficient company that generates more growth. During 2017, system sales grew a healthy 5 percent excluding the impact of lapping the 53rd week in 2016, with same-store sales growth of 2 percent and net new unit growth of 3 percent. As we move forward into 2018, we are particularly excited about our investment in «Easy» with our new partnership with Grubhub. We are confident that the continued focus on our four key growth drivers supports our vision for a «World with More Yum!» and maximizes the creation of value for all Yum! stakeholders».

David Gibbs, President and CFO, continued «The fourth quarter was a solid ending to a year where Yum! Brands met or exceeded each component of our full-year guidance. Despite headwinds from refranchising dilution and lapping a 53rd week, we delivered full-year core operating profit growth of 7 percent. We are on track with our strategic transformation to accelerate growth and made significant progress towards achieving these objectives in 2017. We look forward to updating you as we continue on our journey to build the world’s most loved, trusted and fastest-growing restaurant brands».

Fourth-quarter highlights

• Worldwide system sales grew 4 percent, with KFC at 6 percent, Taco Bell at 3 percent and Pizza Hut at 1 percent, excluding the 53rd week.
• We opened 730 net new units for 3 percent net unit growth.
• We refranchised 896 restaurants, including 685 KFC, 144 Pizza Hut and 67 Taco Bell units, for pre-tax proceeds of USD 1.1 billion. We recorded net refranchising gains of USD 752 million in Special Items.
• As of quarter end, our global franchise ownership mix increased to 97 percent.
• We repurchased 7.5 million shares totalling USD 588 million at an average price of USD 79.
• Foreign currency translation favourably impacted divisional operating profit by USD 9 million.

Full-year highlights

• Worldwide system sales grew 5 percent, with Taco Bell at 7 percent, KFC at 6 percent and Pizza Hut at 2 percent, excluding the 53rd week.
• We opened 1’407 net new units for 3 percent net unit growth.
• We refranchised 1’470 restaurants, including 828 KFC, 389 Pizza Hut and 253 Taco Bell units, for pre-tax proceeds of USD 1.8 billion, recording net refranchising gains of USD 1.1 billion in Special Items.
• We repurchased 26.6 million shares totalling USD 1.9 billion at an average price of USD 72.

KFC Division

• KFC Division opened 539 new international restaurants during the quarter. For the year, KFC Division opened 1’247 new international restaurants in 84 countries, including 1’042 units in emerging markets.
• Operating margin increased 6.0 percentage points for the quarter and 4.6 percentage points for the year driven by refranchising and same-store sales growth.
• For the quarter, the 53rd week negatively impacted system sales growth by 2 percentage points and core operating profit growth by 4 percentage points. For the year, the 53rd week negatively impacted core operating profit growth by 2 percentage points.
• Foreign currency translation favourably impacted operating profit by USD 8 million for the quarter and USD 4 million for the year.

Pizza Hut Division

• Pizza Hut Division opened 340 new international restaurants during the quarter. For the year, Pizza Hut Division opened 826 new international restaurants in 77 countries, including 592
  units in emerging markets.
• Operating margin increased 2.9 percentage points for the quarter and 5.1 percentage points for the year driven by refranchising partially offset by higher franchise and license expense due to incremental advertising spend associated with the U.S. Transformation Agreement.
• For the quarter, the 53rd week negatively impacted system sales growth by 3 percentage points and core operating profit growth by 5 percentage points. For the year, the 53rd week negatively impacted system sales growth by 1 percentage point and core operating profit growth by 1 percentage point.
• Foreign currency translation favourably impacted operating profit by USD 1 million for the quarter and negatively impacted operating profit by USD 4 million for the year

Taco Bell Division

• Taco Bell Division opened 134 new restaurants during the quarter. For the year, Taco Bell Division opened 314 new restaurants, including 77 international new restaurants.
• Operating margin increased 3.8 percentage points for the quarter and 3.5 percentage points for the year driven by refranchising and same-store sales growth.
• For the quarter, the 53rd week negatively impacted system sales growth by 5 percentage points and core operating profit growth by 6 percentage points. For the year, the 53rd week negatively impacted both system sales growth and core operating profit growth by 2 percentage points.