Financial Performance - Total revenues for Q1 2025 reached $1,787 million, a 12% increase from $1,598 million in Q1 2024[8] - Net income for Q1 2025 was $253 million, down 19% from $314 million in Q1 2024[8] - Basic earnings per share for Q1 2025 were $0.91, compared to $1.11 in Q1 2024, reflecting a decrease of 18%[8] - Operating profit for Q1 2025 was $548 million, slightly up from $520 million in Q1 2024, indicating a 5% increase[8] - The company reported a comprehensive income of $275 million for Q1 2025, compared to $307 million in Q1 2024[10] - U.S. revenues for KFC, Taco Bell, Pizza Hut, and Habit Burger & Grill Divisions totaled $1.0 billion in Q1 2025, up from $0.9 billion in Q1 2024, representing an increase of approximately 11.1%[54] - Company sales reached $607 million, up 28.1% from $474 million in the prior year quarter[8] - Consolidated operating profit for the quarter was $548 million, with income before income taxes reported at $429 million[52] Cash Flow and Assets - Cash provided by operating activities in Q1 2025 was $404 million, an increase from $363 million in Q1 2024[12] - Total assets as of March 31, 2025, were $6,659 million, a decrease from $6,727 million at the end of 2024[14] - Cash and cash equivalents as of March 31, 2025, totaled $607 million, down from $616 million at the end of 2024[40] - The total cash, cash equivalents, restricted cash, and restricted cash equivalents decreased to $782 million as of March 31, 2025, down from $807 million as of December 31, 2024, representing a decrease of about 3.1%[40] - Accounts and notes receivable, net decreased to $712 million from $775 million as of December 31, 2024[37] - Property, plant and equipment, net increased to $1,338 million from $1,304 million at the end of 2024[39] Shareholder Information - Shareholders' deficit increased to $7,804 million as of March 31, 2025, compared to $7,648 million at the end of 2024[14] - Dividends declared per common share increased to $0.71 in Q1 2025 from $0.67 in Q1 2024[8] - The company declared dividends of $199 million in Q1 2025, compared to $190 million in Q1 2024, representing a 4.7% increase[15] - The company repurchased 1,556 thousand shares of common stock for $228 million, with remaining capacity to repurchase up to $1.4 billion[33] Tax and Legal Matters - The effective tax rate for Q1 2025 was 41.0%, significantly higher than the 18.0% rate in Q1 2024[41] - The income tax provision for the quarter ended March 31, 2025, was $176 million, significantly higher than the $69 million recorded in the same quarter of 2024, indicating a year-over-year increase of approximately 155.2%[41] - The IRS has proposed an underpayment of tax amounting to $2.1 billion plus $418 million in penalties for the fiscal year 2014, with an estimated interest of approximately $1.5 billion through Q1 2025[72] - The company intends to contest the IRS's proposed tax adjustments vigorously and has filed a protest with the IRS Examination Division[73] - The company does not expect resolution of the IRS matter within twelve months and believes its tax position will be sustained[74] Acquisitions and Growth Strategy - The acquisition of 216 KFC restaurants in the U.K. and Ireland was completed for a purchase price of $177 million, enhancing KFC's growth strategy in the region[23][26] - The total identifiable net assets from the acquisition were valued at $89 million, with goodwill recognized at $88 million[27][29] - As of March 31, 2025, Yum! Brands operated over 60,000 restaurants in more than 155 countries, with 98% owned by franchisees[17] Capital Expenditures - Capital spending for Q1 2025 was $71 million, up from $49 million in Q1 2024[12] - Capital spending for the quarter was $71 million, with KFC and Taco Bell accounting for $18 million and $31 million, respectively[53] Debt and Financial Instruments - The company has a total long-term debt of $11.327 billion as of March 31, 2025, compared to $11.306 billion at the end of 2024, reflecting a marginal increase[58] - The company entered into new interest rate swaps in April 2025 to fix the interest rate on $1.5 billion of borrowings at a rate of 5.09% from April 2025 to March 2028[63] - The carrying value of the Term Loan A Facility was $500 million, with a fair value of $496 million as of March 31, 2025[69] - The carrying value of the YUM Senior Unsecured Notes was $4.550 billion, with a fair value of $4.395 billion as of March 31, 2025[69] Miscellaneous - The company recognized a foreign exchange net loss of $3 million in Q1 2025, compared to a gain of $5 million in Q1 2024[35] - The company is appealing a court decision regarding the utilization of tax losses in Mexico, with no expected resolution within twelve months[44] - The company incurred corporate and unallocated G&A expenses of $105 million for the quarter, which included charges related to resource optimization and brand headquarters consolidation[55] - The company recorded a net periodic benefit cost of $(1) million for its U.S. pension plans for the quarter ended March 31, 2025[57] - The company reported a loss of $20 million related to the sale of a 5% minority interest in Devyani International Limited during Q1 2024[60]

Group 1 - The collaboration between Nanjing Hongshan Forest Zoo and well-known brands has created new engagement opportunities, attracting nationwide fans during the May Day holiday [1][2] - The zoo's partnership with Golden Eagle Group has launched a 2.0 version of deep co-creation, themed "Everything is Cute," integrating cultural tourism and commerce to enhance visitor experiences [1][3] - The zoo implemented a visitor management system during the holiday, limiting daily admissions to 80,000 and peak in-park numbers to 40,000 to ensure safety and order [3] Group 2 - The collaboration with KFC introduced exclusive merchandise, such as plush keychains, which significantly increased customer engagement and social media discussions, with a topic reaching 409,000 views and 2,660 discussions [2] - A pop-up bus featuring zoo mascots was deployed at a shopping area, further promoting the partnership and attracting fans for photo opportunities [2][3] - The zoo's visitor numbers ranked in the top four among city attractions during the holiday, indicating a successful marketing strategy [3]

Core Insights - Yum Brands reported $1.79 billion in revenue for Q1 2025, an 11.8% year-over-year increase, with EPS of $1.30 compared to $1.15 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $1.84 billion by 2.76%, while the EPS exceeded the consensus estimate of $1.29 by 0.78% [1] Financial Performance Metrics - System same-store sales for Pizza Hut Division decreased by 2% compared to an estimated increase of 1.4% [4] - Taco Bell Division saw a 9% increase in same-store sales, surpassing the estimated 7.4% [4] - KFC Division reported a 2% increase in same-store sales, slightly above the estimated 1.6% [4] - Total restaurants for Taco Bell Division were 8,723, below the average estimate of 8,794 [4] Revenue Breakdown - Company sales for Taco Bell Division were $607 million, below the average estimate of $640.81 million, but represented a year-over-year increase of 28.1% [4] - Franchise contributions for advertising and other services amounted to $395 million, slightly above the average estimate of $394.76 million, with a year-over-year change of 7.6% [4] - Franchise and property revenues totaled $785 million, below the average estimate of $805.21 million, reflecting a 3.7% year-over-year increase [4] - Habit Burger Grill Division company sales were $125 million, below the average estimate of $134.02 million [4] - Taco Bell Division franchise and property revenues reached $234 million, exceeding the estimated $229.75 million, with an 11.4% year-over-year increase [4] - Pizza Hut Division franchise and property revenues were $143 million, below the average estimate of $151.72 million, representing a 3.4% year-over-year decline [4] - KFC Division franchise and property revenues totaled $407 million, slightly below the average estimate of $416.53 million, with a 2.5% year-over-year increase [4] - Taco Bell Division franchise contributions for advertising and other services were $160 million, slightly below the average estimate of $162.24 million, with an 8.1% year-over-year increase [4] Stock Performance - Yum Brands shares have returned -7.1% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - YUM! Brands, Inc. reported first-quarter 2025 results with adjusted earnings exceeding expectations while revenues fell short, reflecting a year-over-year increase in both metrics [1][3]. Financial Performance - Adjusted earnings per share (EPS) for the quarter were $1.30, surpassing the Zacks Consensus Estimate of $1.29 by 0.8%, and increased 13% from $1.15 in the same quarter last year [3]. - Quarterly revenues reached $1.79 billion, missing the consensus mark of $1.83 billion, but rose 12% year-over-year [3]. Divisional Contributions - KFC division revenues totaled $773 million, up 22% year-over-year, with comparable sales growing 2% [5]. - Taco Bell revenues were $657 million, reflecting a 10% year-over-year increase, with comparable sales up 9% [7]. - Pizza Hut revenues decreased to $231 million, down 3% year-over-year, with comparable sales declining 2% [6]. - Habit Burger Grill revenues were $128 million, slightly down from $130 million in the prior year, with comparable sales declining 3% [8]. Digital Sales and Strategy - Digital sales approached $9 billion, accounting for 55% of total sales, indicating significant progress in the company's digital strategy [2]. - Positive feedback from franchisees on the proprietary digital platform, Byte by Yum!, supports the brand's tech-driven growth strategy [2]. Long-Term Outlook - The company reaffirms its long-term financial targets, aiming for approximately 5% annual unit growth and a 7% increase in system sales, excluding foreign currency effects [11]. - Targeting at least 8% growth in core operating profit, adjusted for currency movements and calendar anomalies [11]. Other Financial Details - As of March 31, 2025, cash and cash equivalents totaled $607 million, while long-term debt stood at $11.33 billion [10].

Core Insights - Yum! Brands reported solid earnings driven by strong performance in Taco Bell and KFC, despite challenges in the Pizza Hut segment [1][2] - The company achieved a Non-GAAP EPS of $1.30, slightly above the expected $1.29, while revenue was $1.79 billion, below the anticipated $1.85 billion [1][3] Financial Performance - Non-GAAP EPS for Q1 2025 was $1.30, reflecting a 13.0% increase from $1.15 in Q1 2024 [3] - Revenue totaled $1.79 billion, an 11.8% increase year-over-year from $1.60 billion [3] - Operating profit reached $548 million, up 5.4% from $520 million in Q1 2024 [3] - KFC's operating margin decreased to 42.9% from 49.5% in Q1 2024, a decline of 6.6 percentage points [3][7] Business Overview - Yum! Brands operates over 61,000 restaurants globally, focusing on franchise relationships, global expansion, and digital transformation [4] - The company emphasizes digital innovations, with the Byte by Yum! platform enhancing operational efficiencies and driving digital sales [5] Segment Performance - Taco Bell achieved an 11% growth in U.S. system sales, with operating profit increasing by 16% year-over-year to $241 million in Q1 2025 [6] - KFC saw a 6% increase in system sales, supported by international unit growth, but its operating margin declined [7] - Pizza Hut's performance was hindered by competition and a need for market revitalization [7] Strategic Focus - Global system sales grew by 5% in Q1 2025, excluding foreign currency impacts, indicating successful international strategy and digital initiatives [8] - Digital sales accounted for over 50% of total system revenue in 2024, highlighting the importance of digital transformation [8] - Management is focused on long-term growth strategies, including enhancing digital platforms and franchise operations, amid CEO David Gibbs' upcoming retirement [9][10]

Financial Performance - Yum Brands reported quarterly earnings of $1.30 per share, exceeding the Zacks Consensus Estimate of $1.29 per share, and up from $1.15 per share a year ago, representing an earnings surprise of 0.78% [1] - The company posted revenues of $1.79 billion for the quarter ended March 2025, which missed the Zacks Consensus Estimate by 2.76%, compared to $1.6 billion in the same quarter last year [2] - Over the last four quarters, Yum has surpassed consensus EPS estimates three times, but has only topped consensus revenue estimates once [2] Stock Performance and Outlook - Yum shares have increased by approximately 10.1% since the beginning of the year, contrasting with a decline of 5.5% in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.45 on revenues of $1.96 billion, and for the current fiscal year, it is $5.99 on revenues of $8.2 billion [7] Industry Context - The Retail - Restaurants industry, to which Yum belongs, is currently ranked in the bottom 17% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Yum's stock performance [5][6]

Financial Data and Key Metrics Changes - Core operating profit increased by 8% in Q1 2025, reaching $586 million, driven by strong performance from Taco Bell U.S. and KFC International [5][30] - System sales grew by 5%, with same store sales growth of 3% and unit growth of 3% [30] - Reported EPS was $0.90, with an unfavorable tax impact of $0.33 [33] Business Line Data and Key Metrics Changes - Taco Bell U.S. achieved a 9% increase in same store sales and an 11% increase in system sales, with a 16% increase in operating profit [7][17] - KFC International posted low single-digit traffic growth and 5% system sales growth, with a 9% increase in operating profit [10][15] - Pizza Hut experienced a 3% decline in system sales, primarily due to underperformance in the U.S., although international markets showed positive same store sales [19][20] Market Data and Key Metrics Changes - KFC International's same store sales growth was 3%, with notable performance in Canada (6%) and Korea (13%) [16][58] - Taco Bell's digital sales mix reached 42%, with a year-over-year growth of 37% [18][32] - Pizza Hut U.S. faced intense competition but saw sequential gains in revenue and transactions towards the end of Q1 [20][21] Company Strategy and Development Direction - The company is focused on leveraging AI technology through its digital platform, Byte by Yum!, to enhance consumer experiences and operational efficiency [5][24] - Taco Bell is expanding its product offerings and digital channels, aiming for a 10% increase in average unit volumes by 2030 [8] - KFC is modernizing its brand through menu upgrades and innovative partnerships, while also focusing on value-driven offerings [15][58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model despite economic uncertainties, highlighting Taco Bell's position as a value leader [46][47] - The company anticipates an 8% core operating profit growth for 2025, with expectations for stronger performance in the second half of the year [48][62] - Management noted that the geopolitical environment has not negatively impacted consumer behavior towards KFC [56] Other Important Information - The company hosted a global franchise convention, showcasing strong franchisee engagement and commitment to growth [26][38] - Yum! Brands received the Corporate Responsibility Award for integrating responsible business practices into its core strategies [28] - The company is planning to expand its innovative beverage concepts, such as Quench by KFC and Live Mas Cafe by Taco Bell [12][18] Q&A Session Summary Question: Concerns about KFC International's performance amid geopolitical dynamics - Management reassured that KFC International's same store sales growth is widespread and not negatively impacted by geopolitical issues, with strong performance in various markets [56][58] Question: Confidence in full-year guidance and profit growth acceleration - Management expressed confidence in achieving 8% core operating profit growth, citing strong Q1 performance and favorable profit laps expected in the second half [62] Question: Store development outlook amid macroeconomic challenges - Management indicated strong confidence in the development plan, with franchisees optimistic about future growth despite global complexities [66][68] Question: Potential of Byte technology and its future applications - Management highlighted the significant investment in digital technology and the potential for Byte to enhance operational efficiency and profitability across the system [74][75] Question: Sustainability of Taco Bell's strong performance - Management noted that Taco Bell's strong sales trends are expected to continue, driven by innovative offerings and value propositions [96]

Financial Data and Key Metrics Changes - The company reported a core operating profit increase of 8% in the first quarter, reaching $586 million, driven by strong performances from Taco Bell U.S. and KFC International [5][30] - System sales grew by 5%, with same-store sales growth of 3% and unit growth of 3% [30] - Taco Bell's operating profit increased by 16%, while KFC's operating profit grew by 9% [30][32] Business Line Data and Key Metrics Changes - Taco Bell U.S. achieved a 9% increase in same-store sales, with system sales up 11% [8][18] - KFC International reported low single-digit traffic growth and same-store sales growth of 3%, with notable performance in Canada and Korea [11][17] - Pizza Hut experienced a 3% decline in system sales, primarily due to underperformance in the U.S., although international markets showed positive trends [20][21] Market Data and Key Metrics Changes - KFC International's same-store sales growth was 5% when excluding China, with positive trends across all 10 measured markets [56] - In Canada, KFC saw a 6% same-store sales increase, while Korea reported a 13% increase [17] - The U.S. market for Pizza Hut showed sequential gains in revenue and transactions towards the end of the quarter [21] Company Strategy and Development Direction - The company is focused on leveraging AI technology through its digital platform, Byte by Yum!, to enhance consumer experiences and operational efficiency [5][25] - Taco Bell is expanding its digital channels and loyalty programs, aiming for a 10% increase in average unit volumes by 2030 [9] - The company plans to continue its development strategy, targeting 5% unit growth for the year, with a focus on international expansion [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model despite economic uncertainties, highlighting Taco Bell's position as a value leader [49][50] - The company anticipates an 8% core operating profit growth for the year, with expectations for stronger profit growth in the second half [50][48] - Management noted that the competitive environment remains challenging, particularly for Pizza Hut, but emphasized ongoing innovation and value offerings [21][86] Other Important Information - The company is investing in AI technologies in partnership with NVIDIA to enhance operational performance and consumer engagement [25][90] - The recent global franchise convention showcased strong franchisee sentiment and commitment to growth [39][40] - The company received the Corporate Responsibility Award for integrating responsible business practices into its core strategies [28] Q&A Session Summary Question: Concerns about KFC International's performance - Management reassured that KFC International is recovering well, with widespread sales growth and no significant anti-American sentiment affecting performance [56][58] Question: Confidence in full-year guidance - Management expressed confidence in achieving 8% operating income growth, citing strong Q1 performance and strategic moves to drive sales [61][63] Question: Store development outlook amid macro challenges - Management remains confident in the development plan, noting strong franchisee sentiment and encouraging unit growth despite planned closures [66][69] Question: Byte technology and its future potential - Management highlighted the significant investment in digital technology and the positive impact of Byte on sales and profitability, with plans for further expansion [75][76] Question: Expansion of the Saucy concept - Management is pleased with the initial performance of the Saucy concept and is exploring avenues for expansion while ensuring supply chain and real estate scalability [78][79] Question: Future growth potential for KFC and Pizza Hut - Management acknowledged the challenges facing Pizza Hut but expressed optimism about recovery and growth potential for both KFC and Pizza Hut internationally [85][88]

Core Insights - Yum Brands reported mixed quarterly results, with Pizza Hut's same-store sales declining more than expected, impacting overall performance [1][2] - The company’s net income for the first quarter was $253 million, down from $314 million a year earlier, translating to earnings of 90 cents per share [1] - Net sales increased by 12% to $1.79 billion, but fell short of the expected $1.85 billion [6] Financial Performance - Adjusted earnings per share were $1.30, slightly above the expected $1.29 [6] - Same-store sales across all brands rose by 3%, with Taco Bell leading with a 9% increase, surpassing estimates [2][3] - KFC's same-store sales grew by 2%, exceeding the 1.4% estimate, but its U.S. sales declined by 1% [3][4] Brand-Specific Performance - Pizza Hut's same-store sales fell by 2%, worse than the anticipated 0.1% decline, with U.S. sales down 5% and international sales flat [2] - KFC's performance in the U.S. is struggling, with competition from rivals like Wingstop and Raising Cane's [4] Digital Sales - Digital orders accounted for 55% of Yum's total sales this quarter, indicating a significant shift towards online and mobile ordering [4] Leadership Changes - CEO David Gibbs announced plans to retire in the first quarter of 2026, with the board currently searching for a successor [5]

Financial Performance - Yum! Brands reported first-quarter GAAP EPS of $0.90, with EPS excluding Special Items at $1.30, reflecting a 13% increase year-over-year [2]. - Total revenues for Q1 2025 reached $1,787 million, a 12% increase from $1,598 million in Q1 2024 [29]. - Company sales increased by 28% to $607 million in Q1 2025, compared to $474 million in Q1 2024 [29]. - Net income for Q1 2025 was $253 million, down 19% from $314 million in Q1 2024 [29]. - Operating profit for the company was $548 million, a 5% increase from $520 million in Q1 2024 [29]. - Core Operating Profit grew by 8%, with GAAP Operating Profit increasing by 5% [3]. - Core Operating Profit rose to $586 million, reflecting a 7.7% increase from $544 million in the prior year [51]. - Diluted EPS excluding Special Items was $1.30, compared to $1.15 for the same quarter last year, marking a 13.0% increase [54]. - Total revenues for Q1 2025 reached $1,787 million, a 11.8% increase from $1,598 million in Q1 2024 [57]. - Operating profit for Q1 2025 was $548 million, compared to $520 million in Q1 2024, reflecting a 5.4% increase [57]. Division Performance - Taco Bell U.S. achieved 9% same-store sales growth, while KFC International reported 7% unit growth year-over-year [3]. - KFC division reported a 22% increase in total revenues to $773 million, up from $632 million in Q1 2024 [32]. - Taco Bell division achieved total revenues of $657 million, a 10% increase from $598 million in Q1 2024 [35]. - Pizza Hut division's total revenues decreased by 3% to $231 million, down from $238 million in Q1 2024 [38]. - Taco Bell Division system sales reached $3.98 billion, an 11% increase, with same-store sales growth of 9% [13]. - KFC Division opened 528 gross new restaurants across 52 countries, with system sales of $8.34 billion, a 3% increase [10]. - Pizza Hut Division experienced a 4% decline in system sales to $3.03 billion, with same-store sales down by 2% [14]. Expenses and Costs - Company restaurant expenses totaled $520 million in Q1 2025, up from $400 million in Q1 2024, indicating a 30% increase [57]. - General and administrative expenses were $302 million in Q1 2025, compared to $286 million in Q1 2024, a 5.6% increase [57]. - Franchise advertising and other services expense amounted to $396 million in Q1 2025, up from $367 million in Q1 2024, a 7.9% increase [57]. - Total costs and expenses for Q1 2025 were $1,239 million, an increase from $1,078 million in Q1 2024, reflecting a 14.9% rise [57]. Cash Flow and Assets - Net Cash Provided by Operating Activities increased to $404 million, up 11.3% from $363 million year-over-year [43]. - Total assets as of March 31, 2025, were $6,659 million, a slight decrease from $6,727 million at the end of 2024 [41]. - Long-term debt remained stable at $11,327 million as of March 31, 2025, compared to $11,306 million at the end of 2024 [41]. Strategic Initiatives - The company announced a collaboration with NVIDIA to integrate AI technologies into its restaurants globally [9]. - The company aims to accelerate growth through resource reallocation and optimization strategies [64]. - The company recorded charges of $17 million in Q1 2025 related to a resource optimization program aimed at enhancing digital and technology capabilities [64]. - Approximately $7 million in charges were recorded in Q1 2025 for relocating brand headquarters to improve collaboration [64]. Shareholder Returns - The company declared a dividend of $0.71 per common share, up from $0.67 in the previous year [29].