Yum!(US:YUM)2025-11-07 19:19Financial Performance - Company sales for Q3 2025 reached $697 million, a 12.2% increase from $621 million in Q3 2024[8] - Total revenues for the year to date increased to $5,699 million, up 9.8% from $5,187 million in the same period last year[8] - Net income for Q3 2025 was $397 million, compared to $382 million in Q3 2024, reflecting a 3.9% increase[9] - Basic earnings per share for Q3 2025 were $1.42, up from $1.36 in Q3 2024, representing a 4.4% increase[8] - Operating profit for the year to date was $1,836 million, an increase of 5.2% from $1,746 million in the previous year[8] - Comprehensive income for the year to date was $1,095 million, compared to $1,080 million in the same period last year, showing a 1.4% increase[9] - Comprehensive income for the quarter ended September 30, 2025, was reported at $394 million, down from $1,095 million in the same quarter of 2024[12] - The company reported a total of $1,983 million in revenues for the quarter, with a significant portion coming from franchise and property revenues[51] - The consolidated operating profit for the quarter ended September 30, 2025, was $666 million, with KFC division contributing $392 million[51] Cash Flow and Assets - Cash provided by operating activities for the year to date was $1,393 million, compared to $1,176 million in the same period last year, marking a 18.5% increase[10] - Total assets as of September 30, 2025, were $7,193 million, up from $6,727 million at the end of 2024, indicating a 6.9% growth[11] - Cash and cash equivalents increased to $1,045 million as of September 30, 2025, compared to $616 million at the end of 2024, marking a 69.5% increase[38] - Accounts and notes receivable, net decreased to $744 million as of September 30, 2025, from $775 million at the end of 2024, a decline of 4.0%[37] - Property, plant, and equipment, net increased to $1,422 million as of September 30, 2025, from $1,304 million at the end of 2024, reflecting a growth of 9.0%[37] Debt and Liabilities - Long-term debt increased to $11,506 million from $11,306 million, reflecting a 1.8% rise[11] - Total liabilities rose to $14,698 million, up from $14,375 million at the end of 2024, marking an increase of 2.2%[11] - Short-term borrowings increased to $48 million as of September 30, 2025, from $27 million as of December 31, 2024[61] - The company issued additional Securitization Notes totaling $1.5 billion on September 24, 2025, with net proceeds used to repay $938 million of existing notes and for general corporate purposes[61] Dividends and Shareholder Returns - The company declared dividends of $0.71 per share in Q3 2025, compared to $0.67 in Q3 2024, a 6% increase[8] - The company declared dividends totaling $197 million in the quarter ended September 30, 2025, compared to $594 million in the same quarter of 2024, representing a decrease of approximately 67%[12] - The company repurchased 2,540 thousand shares of common stock in 2025, with a total dollar value of $372 million, leaving a remaining capacity of $1.2 billion for future repurchases[32] Acquisitions and Growth Strategy - Yum! Brands completed the acquisition of 216 KFC restaurants in the U.K. and Ireland for a total purchase price of $177 million, enhancing its growth strategy in the region[21] - In addition to the U.K. acquisition, Yum! Brands acquired 79 restaurants from franchisees in the quarter and year to date ended September 30, 2025, for a total cash consideration of $100 million[25] - The company executed purchase agreements to acquire 128 Taco Bell restaurants across the Southeast U.S. for approximately $670 million, expected to close in Q4 2025[29] - The goodwill recognized from acquisitions reflects expected benefits that do not qualify as intangible assets, with a total increase of $14 million in estimated goodwill from the U.K. acquisition[24][27] Tax and Legal Matters - The effective tax rate for the quarter was 26.7%, up from 23.8% in the same quarter of 2024, indicating a rise in tax burden[39] - The company recorded a tax expense of $90 million due to changes in management's judgment regarding the utilization of U.S. foreign tax credit related deferred tax assets[41] - The IRS proposed an adjustment asserting an underpayment of tax of $2.1 billion plus $418 million in penalties for the 2014 fiscal year, with estimated interest on the underpayment of approximately $1.7 billion through Q3 2025[81] - The company filed a petition in the United States Tax Court disputing an IRS Notice of Deficiency received in March 2025, with litigation ongoing[82] - Yum! Restaurants India Private Limited is facing a regulatory enforcement action in India, with a penalty imposed of approximately Indian Rupee 11 billion (around $125 million) for alleged investment failures[88] Franchise Performance - Franchise revenues for the U.S. segment in the quarter ended September 30, 2025, totaled $861 million, with KFC generating $459 million and Taco Bell $254 million[51] - Franchise revenues for the U.S. divisions reached $985 million year-to-date September 30, 2025, compared to $947 million for the same period in 2024, indicating a 4% increase[45][46] - Franchise contributions for advertising and other services reached $741 million year-to-date as of September 30, 2025, compared to $717 million in the same period of 2024[45][46] - Franchise revenues from China for the year-to-date period ending September 30, 2025, were $261 million, showing a strong performance in that market[45] Operational Efficiency - The company reported an income before income taxes of $541 million for the quarter ended September 30, 2025[51] - The company incurred interest expense of $120 million for the quarter ended September 30, 2024, and $368 million year-to-date for the period ending September 30, 2025[53][54] - General and administrative expenses for the quarter ended September 30, 2024, were $189 million, with KFC at $86 million and Taco Bell at $41 million[53] - The company has ongoing litigation regarding a regulatory enforcement action in India, with a penalty of approximately $125 million imposed on Yum! Restaurants India Private Limited[88]