Yum! Brands: Reports Strong Q3-2019

Louisville / KY. (yb) Yum! Brands Inc. reported results for the third-quarter ended September 30, 2019. Worldwide system sales excluding foreign currency translation grew 8 percent, with 7 percent net-new units and 3 percent same-store sales growth. Third-quarter GAAP EPS was USD 0.81, a decrease of (42) percent. Third-quarter EPS excluding Special Items was USD 0.80, a decrease of (23) percent.

Commentary

Greg Creed, CEO, said, «Following a very strong first half of 2019 and in line with our expectations, third-quarter results were consistent with our long-term growth model. We delivered system sales growth of 8 percent, with same-store sales of 3 percent and net-new unit growth of 7 percent, led by continued strong performances at KFC International and Taco Bell. We’re rapidly approaching the end of a truly historic year. 2019 will not only mark the completion of our 3-year transformation of Yum!, but it will also mark the end of my tenure as Yum! CEO. I couldn’t be prouder of the progress that our teams around the world have made to become more focused, more franchised and more efficient; all while accelerating global growth. Today Yum! has a unique and powerful business model backed by a culture that is stronger than ever and by talent that is truly world class. I’m confident that as I retire, David Gibbs is the right leader to leverage our scale and key growth drivers to enhance franchisee economics, champion the customer experience and drive global growth to maximize value for our stakeholders.»

Second Quarter Highlights

• Worldwide system sales excluding foreign currency translation grew 8 percent, with KFC at 8 percent, Pizza Hut at 7 percent and Taco Bell at 7 percent. Adjusting the prior year base to include Telepizza, system sales growth excluding foreign currency translation would have been 6 percent worldwide and 2 percent for the Pizza Hut Division.
• We opened 389 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 percent.
• We repurchased 1.5 million shares totaling USD 174 million at an average price per share of USD 115.
• We recorded USD 60 million of pre-tax investment expense related to the change in fair value of our investment in Grubhub, which resulted in a negative (USD 0.15) impact in EPS. When coupled with USD 94 million of pre-tax investment income recorded in the third quarter of 2018, which resulted in a USD 0.22 benefit to EPS, our Grubhub investment unfavorably impacted year-over-year EPS growth by (USD 0.37).
• Foreign currency translation unfavorably impacted divisional operating profit by USD 7 million.

For additional information please read Yum! Brands’s PDF file below (899 KB):

20191031-YUM-Q3-2019.