Financial Data and Key Metrics - Total revenue declined 9% YoY in reported currency to $2.1 billion in Q4 2022, but grew 2% in constant currency [18] - System sales and same-store sales both declined 4% YoY in Q4 2022 [19] - Restaurant margin improved by 290 basis points YoY to 10.4% in Q4 2022, driven by labor productivity, operational efficiency, and temporary relief [19] - Free cash flow for 2022 was $734 million, with $668 million returned to shareholders through dividends and share repurchases [23] - Cash and short-term investments decreased to $3.2 billion from $4 billion in Q3 2022, mainly due to reclassification of $600 million to long-term deposits [23] Business Line Performance - KFC same-store sales were 97% of prior year levels in Q4 2022, with same-store traffic at 84% and ticket average up 16% due to higher delivery mix [19] - Pizza Hut same-store sales were 92% of prior year levels, with same-store traffic at 98% and ticket average at 95% [19] - Delivery sales mix doubled from 20% in 2019 to 39% in 2022, with off-premise sales reaching almost two-thirds of total sales in Q4 2022 [5] - Digital ordering increased from 55% of sales in 2019 to 89% in 2022, generating over $20 billion in digital sales over three years [6] - Packaged food sales grew 90% in 2022, reaching nearly CNY 900 million [14] Market Performance - KFC entered 200 new cities in 2022, focusing on white space in lower-tier cities and increasing density in higher-tier cities [37] - Pizza Hut opened a record 300+ stores in 2022, with a focus on satellite and smaller store formats [70][72] - Lavazza expanded to 85 stores by the end of Q4 2022, with loyalty members more than doubling to 1 million [15] - Taco Bell doubled its store count to 91 stores in 2022, with a focus on menu localization and improving unit economics [15] Strategy and Industry Competition - The company plans to open 1,100 to 1,300 new stores in 2023, with capital expenditure of $700 million to $900 million [26] - Focus on driving sales through product innovation, value promotions, and digital initiatives, while maintaining disciplined store expansion [52][53] - Continued investment in supply chain, digital, and automation to enhance operational efficiency and resilience [7][81] - The company remains committed to returning capital to shareholders, with a raised cash dividend from $0.12 to $0.13 per share [27] Management Commentary on Operating Environment and Future Outlook - The company faced significant challenges in Q4 2022 due to COVID-related labor shortages and temporary store closures, but managed to improve restaurant margins despite lower sales [17][19] - Management is cautiously optimistic about the recovery in 2023, but expects it to be gradual and uneven due to macroeconomic uncertainties and cautious consumer spending [25][45] - The company plans to focus on driving sales growth while maintaining operational efficiency and cost control [25][53] Other Important Information - The company hosted its 2023 Investor Day in Shanghai in September, with plans to share more details about the event [4] - The company has maintained profitability every quarter since the start of the pandemic in 2020, generating $1.9 billion in free cash flow and returning over $1 billion to shareholders [8] Q&A Session Summary Question: New store performance and margins post-COVID [30] - New stores opened during the pandemic have shown strong performance, with KFC stores breaking even within three months and Pizza Hut stores achieving a payback period of two to three years [31][32] - The company has focused on smaller store formats and flexible rent terms, reducing CapEx per store and improving unit economics [33][36] Question: Restaurant margin recovery potential in 2023 [41] - Management expects restaurant margins to improve with sales recovery, but cautions that inflationary pressures and the end of temporary relief measures could impact margins [43][44] - Cost of sales and labor are expected to remain stable, with a focus on reducing occupancy and other operating expenses [46][47] Question: Competitive landscape and promotion strategy [58] - The company has gained market share during the pandemic and plans to continue driving sales through effective promotions and product innovation [59][60] - Pricing strategy includes a mix of lower entry-point products and high-end offerings to cater to different customer segments [61] Question: Recovery pace for KFC and Pizza Hut [63] - KFC performed slightly better than Pizza Hut during the Chinese New Year period, with off-premise sales playing a key role in protecting margins [64][67] - Pizza Hut is focusing on increasing store count and improving resiliency through satellite and smaller store formats [70][72] Question: Regional recovery differences [74] - Recovery has been strong across regions, with lower-tier cities performing better during the Chinese New Year period [75] - Management remains cautious about post-holiday consumer spending and plans to focus on value promotions to drive traffic [76] Question: Supply chain and ESG initiatives [80] - The company plans to continue investing in supply chain infrastructure and automation, with a focus on reducing carbon footprint and working with suppliers to achieve net-zero emissions by 2050 [81][82] - Supply chain innovations, such as the use of rail and sea freight, have improved resilience during disruptions [86] Question: New store opening targets for 2023 [88] - The company plans to open 1,100 to 1,300 new stores in 2023, with a focus on quality of growth over quantity [89][90] - Store expansion will depend on market conditions and unit economics, with a disciplined approach to investment [91]

Financial Performance - Yum China's total revenue decreased by 3% to $9.57 billion for the full year 2022 [7], and decreased by 9% to $2.09 billion for Q4 2022 [7], stated in reported currency - The company's system sales growth decreased by 5% for the full year and 4% for Q4, stated on a constant currency basis [7] - Same-store sales growth decreased by 7% for the full year and 4% for Q4, stated on a constant currency basis [7] - Restaurant margin increased to 14.1% for the full year and 10.4% for Q4 [7] - Adjusted operating profit was $633 million for the full year and $40 million for Q4 [7] - Digital sales reached approximately $8 billion in 2022 [13] Store Development and Expansion - The company expanded its portfolio by 1,159 stores in the full year 2022 [7] - Net new stores totaled 1,159 for the full year and 538 for Q4 [7] - The company expects to open approximately 1,100 to 1,300 net new stores in 2023 [50] Brand Performance - KFC's total stores reached 9,094 [16], with net new stores of 926 for the full year [16] - KFC's system sales growth decreased by 4% and same-store sales growth decreased by 7% for the full year [16], stated on a constant currency basis - KFC's restaurant margin was 15.7% for the full year [16] - KFC's delivery sales accounted for approximately 38% of company sales for the full year [16] - Digital orders accounted for approximately 89% of KFC's company sales for the full year [16] Capital Allocation - The company's capital expenditure is expected to be in the range of $700 million to $900 million in 2023 [50] - The company had approximately $1.2 billion share repurchases authorization remained available as of December 31, 2022 [48]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _________________ Commission file number 001-37762 Yum China Holdings, Inc. (Exact Name of Registrant as Specified in Its Charter) Delawa ...

Yum China Holdings, Inc. (NYSE:YUMC) Q3 2022 Earnings Conference Call November 1, 2022 8:00 PM ET Company Participants Michelle Shen - Director, Investor Relations Joey Wat - CEO & Director Andy Yeung - CFO Conference Call Participants Chen Luo - Bank of America Merrill Lynch Lillian Lou - Morgan Stanley Xiaopo Wei - Citigroup Michelle Cheng - Goldman Sachs Anne Ling - Jefferies LLC, Research Division Veronica Song - Crédit Suisse Christine Peng - UBS Operator Thank you for standing by, and welcome to the Y ...

Financial Performance - Total revenue for Q3 2022 was $2.68 billion, a 5% increase from $2.55 billion in the same period last year[6]. - Operating profit rose by 77% to $316 million, compared to $178 million in Q3 2021[6]. - Net profit reached $206 million, a 98% increase from $104 million in the same quarter last year[6]. - Adjusted net profit was $208 million, a 117% increase from $96 million in Q3 2021[7]. - Diluted earnings per share were $0.49, a 104% increase from $0.24 in the same quarter last year[7]. - Company restaurant revenue reached $2,561 million, up 11% from $2,310 million in the same quarter of the previous year[24]. - Operating profit for the quarter was $316 million, representing a 77% increase compared to $178 million in the same quarter of 2021[24]. - Net profit attributable to Yum China Holdings, Inc. was $206 million, a 98% increase from $104 million in the same quarter of the previous year[24]. - The company reported a restaurant profit margin of 18.8%, up from 12.2% in the same quarter of 2021, reflecting a 6.6 percentage point increase[24]. - The operating profit margin improved to 12.3%, compared to 7.7% in the same quarter of the previous year, marking a 4.6 percentage point increase[24]. Restaurant Operations - System sales increased by 5% year-over-year, with KFC and Pizza Hut growing by 5% and 7% respectively, excluding foreign exchange impacts[6]. - The company added a net of 239 new restaurants in Q3, bringing the total to 12,409 locations as of September 30, 2022[6]. - Same-store sales remained flat year-over-year, with KFC unchanged and Pizza Hut increasing by 2%[6]. - The company opened 403 new stores in Q3 2022, resulting in a net increase of 239 stores, primarily driven by KFC and Pizza Hut brand development[12]. - Yum China operates 12,409 restaurants across over 1,700 cities in China as of September 2022[22]. - As of September 30, 2022, the total number of self-operated restaurants for KFC was 7,437, and for Pizza Hut, it was 2,590, resulting in a total of 10,027 restaurants[39]. - The company reported a net increase of 1,030 restaurants from new openings and closures as of September 30, 2022[41]. Market Strategy and Expansion - The company aims to add between 1,000 to 1,200 new stores by the end of the fiscal year[3]. - The company expects to open approximately 1,000 to 1,200 new stores in 2022, with capital expenditures estimated between $800 million and $1 billion[16]. - The company plans to continue expanding its market presence and investing in new product development to drive future growth[25]. - The company plans to continue expanding its market presence through new restaurant openings and potential acquisitions[40]. - The company is focusing on enhancing its product offerings and technology development to drive future growth[40]. - Future outlook includes continued expansion and potential new product development to drive revenue growth[45]. Membership and Sales Channels - The membership program now has over 400 million members, with member sales accounting for approximately 62% of system sales in Q3 2022[10]. - Takeout revenue represented about 38% of restaurant income, an increase of approximately 4 percentage points year-over-year[10]. - Digital orders, including takeout, mobile orders, and self-service kiosk orders, accounted for around 91% of restaurant income in Q3 2022[10]. Financial Health and Investments - The company repurchased approximately 270,000 shares for a total of $13 million at an average price of $48.05 per share in Q3 2022[9]. - The board declared a cash dividend of $0.12 per share, to be paid on December 20, 2022[9]. - The effective tax rate for the quarter was 29.9%, an increase of 1.6 percentage points from 28.3% in the same quarter of 2021[24]. - Total costs and expenses for the quarter were $2,369 million, a slight decrease from $2,376 million in the same quarter of 2021[24]. - The company reported a decrease in inventory from $432 million to $321 million, a reduction of approximately 25.7%[28]. - The company's cash and cash equivalents increased to $1,211 million from $1,136 million, reflecting a growth of about 6.6%[28]. - Total liabilities decreased to $4,528 million from $5,301 million, a reduction of about 14.5%[29]. - The total equity attributable to shareholders was $6,418 million, down from $7,056 million, representing a decline of approximately 9.0%[30]. Sustainability and Recognition - Yum China was ranked 359th on the Fortune 500 list in 2022[22]. - The company has been included in the Bloomberg Gender-Equality Index for four consecutive years[22]. - Yum China was selected for the Dow Jones Sustainability Index in 2021[22]. - The company has received certification as an outstanding employer in China[22]. Future Outlook and Guidance - The company continues to face uncertainties in the market, with expectations of potential negative impacts on sales and profits due to economic pressures and inflation[8]. - Forward-looking statements regarding 2022 performance outlook are included in the press release[21]. - The earnings conference call is scheduled for November 1, 2022, at 8 PM ET[19]. - The earnings report and related materials will be available on the investor relations website[19].

Financial Performance - Total revenue for Q2 2022 was $2,128 million, a decrease of 13.2% compared to $2,451 million in Q2 2021[2] - Net profit for Q2 2022 was $83 million, down from $193 million in Q2 2021, representing a decline of 57.0%[3] - The basic earnings per share for Q2 2022 was $0.20, compared to $0.43 in Q2 2021, reflecting a decrease of 53.5%[2] - The company reported a net income of $193 million for the first half of 2022, compared to $436 million in the same period of 2021, indicating a decline of 55.7%[3] - The company’s total revenue for the six months ended June 30, 2022, was $5,034 million, with KFC generating $3,611 million and Pizza Hut $995 million[31] - The company reported a net profit of $83 million for the quarter ending March 31, 2022, compared to a net profit of $181 million for the same quarter in 2021[40] - The company’s total income for the first half of 2022 was $995 million, down from $1,079 million in the same period of 2021, reflecting an 8% decline[123] - The company’s net profit for the six months ending June 30, 2022, was $272 million, down from $575 million for the same period in 2021[42] Revenue Sources - Company restaurant revenue for the first half of 2022 was $4,574 million, slightly up from $4,564 million in the same period of 2021[2] - KFC and Pizza Hut generated total restaurant revenue of $2,026 million for the quarter ended June 30, 2022, with KFC contributing $1,571 million and Pizza Hut $443 million[29] - Franchise fee income amounted to $19 million, including $13 million from KFC and $2 million from Pizza Hut, for the same quarter[29] - The company’s revenue from transactions with franchisees and joint ventures reached $62 million, primarily from food and packaging sales[26] - The company’s other income for the quarter was $133 million, with significant contributions from various service offerings[29] Costs and Expenses - Total costs and expenses for Q2 2022 were $2,047 million, down from $2,218 million in Q2 2021, a reduction of 7.7%[2] - The operating profit for the second quarter of 2022 was $81 million, a decrease from $233 million in the same quarter of 2021, primarily due to the impact of COVID-19[42] - The company reported a restaurant-level impairment of $15 million for the quarter ended June 30, 2022, compared to $13 million for the same period in 2021[74] - The company experienced a 4% increase in labor costs and a rise in utility rates, contributing to the decrease in restaurant profit[119] - Management expenses increased to $63 million for the quarter ended June 30, 2022, up 7% from $58 million in the same quarter of 2021[116] Assets and Liabilities - Total assets as of June 30, 2022, amounted to $12,054 million, a decrease from $13,223 million at the end of 2021[6] - Total liabilities decreased to $4,752 million from $5,301 million at the end of 2021, reflecting a reduction of 10.4%[6] - Cash and cash equivalents at the end of the period were $1,147 million, slightly up from $1,136 million at the beginning of the period[6] - The total equity attributable to shareholders decreased to $6,529 million from $7,056 million, a decline of 7.4%[6] - The company’s total current liabilities were $2,099 million as of June 30, 2022, compared to $2,332 million as of December 31, 2021, marking a decrease of about 10.0%[53] Investments and Acquisitions - The company is exploring potential acquisitions to strengthen its market position and expand its footprint[1] - The company invested $255 million in Q4 2021 for a 28% stake in Hangzhou Catering Group, increasing its ownership in the Hangzhou KFC joint venture to approximately 60%[9] - The company acquired a 5% stake in Shengnong for approximately $261 million, making Shengnong the largest poultry supplier[17] - The company reported unrealized gains of $20 million and losses of $18 million from its investment in Meituan as of June 30, 2022[20] - The company completed an investment of $255 million in Hangzhou Yingfu, acquiring a 28% stake, which resulted in a total ownership of approximately 60% in Hangzhou KFC[15] Market and Operational Challenges - In Q2 2022, same-store sales decreased by over 20% year-on-year due to the severe impact of COVID-19, with an average of over 2,500 restaurants temporarily closed in April and May[103] - The company expects that the future development of the COVID-19 pandemic may continue to have a significant and lasting adverse impact on its operational performance, cash flow, and financial condition[144] - The company anticipates challenges related to its growth strategies for Lavazza and COFFii& JOY, which may not yield the expected benefits[166] - The company is subject to ongoing tax audits by various tax authorities, which may impact its financial position and operating results[76] - The company is exposed to fluctuations in raw material prices, which could adversely impact its financial condition and operating results[165] Shareholder Returns - The company declared a cash dividend of $0.12 per share for the quarter ending March 31, 2022, totaling $50 million[39] - The company repurchased $400 million worth of shares or 9 million common shares under its buyback plan during the first half of 2022[156] - The board has authorized a total share repurchase plan of $2.4 billion, with no expiration date for the authorization[186] - The estimated dollar value of shares yet to be repurchased under the plan is approximately $1.2 billion[186] - The company’s ability to pay dividends may be restricted by applicable Chinese laws regarding distributable profits[157] Strategic Initiatives - The company plans to continue investing in technology and innovation to enhance customer experience and operational efficiency[1] - The company aims to expand the Taco Bell network to at least 100 stores by the end of 2022 and to at least 225 stores by the end of 2025, supported by capital from Yum[97] - The company is currently evaluating the impact of new accounting standards effective from January 1, 2023, on its financial statements[161][162][163] - The company plans to invest in digitalization, automation, and logistics infrastructure as part of its future capital expenditures[154] - The company aims to expand its business footprint in existing and new cities, believing there is significant growth potential in the Chinese market[103]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _________________ Commission file number 001-37762 Yum China Holdings, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 81 ...

Yum China Holdings, Inc. (NYSE:YUMC) Q2 2022 Earnings Conference Call July 28, 2022 8:00 PM ET Corporate Participants Michelle Shen - Director, Finance Joey Wat - Chief Executive Officer Andy Yeung - Chief Financial Officer Conference Call Participants Lillian Lou - Morgan Stanley Michelle Cheng - Goldman Sachs Brian Wong - CMS Xiaopo Wei - Citi CJ Lin - CICC Anne Ling - Jefferies Christine Peng - UBS Lucy Yu - Bank of America Walter Woo - CMB International Operator Thank you all for standing by, and welcom ...