YUM CHINA(YUMC) - 2024 Q1 - Quarterly Results

Financial Performance - Total revenues reached $2.96 billion, a 1% increase year over year; excluding foreign currency effects, revenues would have increased by 7%[2] - Operating profit was$ 374 million, with core operating profit growing 1% year over year to $396 million[2] - Diluted EPS rose by 4% year over year to$ 0.71, or 10% excluding foreign currency effects[2] - Net income for Yum China Holdings, Inc. was $287 million, a decrease of 1% compared to$ 289 million in Q1 2023[20] - The effective tax rate improved to 26.9%, down from 28.5% in the previous year, reflecting a 1.6 percentage point decrease[20] - Adjusted Operating Profit for Q1 2024 is $374 million, down 11% from$ 419 million in Q1 2023[46] - Core Operating Profit for Q1 2024 is $396 million, a 1% increase from$ 392 million in Q1 2023[46] - Basic Earnings Per Common Share for Q1 2024 is $0.72, compared to$ 0.70 in Q1 2023[41] - Adjusted EBITDA for Q1 2024 is $495 million, down from$ 539 million in Q1 2023[41] Sales and Growth - Total system sales increased by 6% year over year, with a net new unit contribution of 8%[2] - KFC opened 307 net new stores, more than double the previous year's openings, contributing to a 7% system sales growth[6] - Pizza Hut opened 113 net new stores, a 40% increase from the prior year, with system sales growing by 4%[9] - Company sales for KFC were $2,193 million, up 1% from$ 2,166 million in the same quarter last year[21] - Total revenues for Q1 2024 reached $2,958 million, a 1% increase from$ 2,917 million in Q1 2023[20] Profit Margins - Operating profit margin was 12.6%, down from 14.3% in the prior year, primarily due to increased costs[4] - The restaurant margin for KFC decreased to 19.3%, down from 22.2% in Q1 2023, reflecting a 2.9 percentage point decline[21] - Core OP margin decreased to 12.7% in Q1 2024 from 13.5% in Q1 2023, a decline of 0.8 percentage points[46] - The restaurant profit for the quarter was $493 million, with a restaurant margin of 17.6%[51] - The restaurant margin for KFC was 19.3%, while Pizza Hut's margin was 12.5%[51] Shareholder Returns - Yum China returned approximately$ 745 million to shareholders, the highest quarterly return in the company's history[2] - The company plans to open approximately 1,500 to 1,700 net new stores in 2024 and return a record $1.5 billion to shareholders[11] - The company repurchased$ 679 million worth of common stock during the quarter, significantly higher than the $60 million repurchased in the same quarter of the previous year[27] Assets and Liabilities - Total assets decreased from$ 12,031 million on December 31, 2023, to $11,295 million on March 31, 2024, a decline of approximately 6.1%[25] - Total current liabilities decreased from$ 2,422 million on December 31, 2023, to $2,263 million on March 31, 2024, a reduction of approximately 6.6%[25] - The company’s equity decreased from$ 7,106 million on December 31, 2023, to $6,575 million on March 31, 2024, a decline of approximately 7.5%[25] Cash Flow - Net cash provided by operating activities was$ 442 million for the quarter, compared to $507 million for the same period last year, reflecting a decrease of about 12.8%[27] - Cash, cash equivalents, and restricted cash decreased from$ 1,128 million at the beginning of the period to $883 million at the end of the period[27] Franchise and Other Revenues - Franchise fees and income for the company totaled$ 25 million, a 2% increase from $25 million in Q1 2023[20] - Other revenues increased by 18% to$ 32 million, compared to $27 million in the same quarter last year[20] - The company reported a decrease in other revenues, resulting in a net impact of$ (157) million[51]