On November 1st Yum! Brands (YUM) reported on Q3 of fiscal 2023 ending September 30th. The Company beat on earnings but was light on revenue compared with Zach’s estimate. For the period, net income was $416 million on revenue of $1,708 million including company sales, franchise fees and advertising generating a diluted EPS of $1.46. For Q3 of fiscal 2022 earnings attained $331 million on total revenue of $1,640 million with a diluted EPS of $1.14.
Worldwide system sales including foreign currency translation grew 10 percent with a 6 percent unit growth of 1,130 stores in Q3.
In reviewing the three major operating divisions, significant parameters were:-
The KFC Division posted an increase in same-store sales of 6 percent over 29,051 restaurants, generating an operating profit of $344 million with an operating margin of 49.2 percent. Of total KFC sales, 25 percent were derived from China, 15 percent from the U.S. followed by 11 percent from the remainder of Asia.
For the Pizza Hut Division, system sales amounted to $3,243 million with 19,496 restaurants. Operating profit was $97 million with an operating margin of 40.3 percent. Same-store sales growth attained one percent. The U.S. represents 41 percent of system sales followed by China with 16 percent and the remainder of Asia and Europe at 14 percent each.
The Taco Bell Division with 8,385 restaurants posted same-store sales growth of 8 percent with sales amounting to $3,804 million with an operating profit of $226 million and an operating margin of 36.0 percent.
In commenting on Q3 results, David Gibbs, CEO stated " We're incredibly pleased to report yet another excellent quarter with 10 percent system sales growth driven by 6 percent same-store sales growth and 6 percent unit growth with a Q3 record of over 1,100 gross new units. Our twin growth engines, KFC International and Taco Bell U.S., led the way, with KFC showing broad-based strength across both developed and emerging markets. With our strong year-to-date performance, we continue to expect that our full-year 2023 results will outperform on all aspects of our long-term growth algorithm. We set another digital sales record this quarter, with the next leg of our digital growth planned through enhancements of our customer insights platforms and expansions of our global loyalty programs. The exceptional performance of our teams and franchisees gives us confidence in sustaining our top and bottom line momentum in the years ahead.”
The company recorded total assets of $6,071 million on September 30th 2023, of which $1,007 million comprised intangibles and goodwill. The company carries $11,152 million in long-term debt and has accumulated a shareholder's deficit of $8,190 million.
Yum! Brands has a market capitalization of $35,300 million. YUM has fluctuated over the past fifty-two-weeks in a range of $116.53 to $143.75 with a 50-day moving average of $123.49. YUM trades with a forward P/E of 21.5. The company posted a twelve-month trailing operating margin of 36.6 percent and a profit margin of 21.3 percent, generating a return on assets of 24.9 percent.