Yum!(YUM) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenues for Q1 2025 reached $1,787 million, a 12$1,598 million in Q1 2024[8] - Net income for Q1 2025 was $253 million, down 19$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$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]