Industry Record Full-Year 4,754 Gross Unit Openings Translating to 6% Unit Growth

Full-Year System Sales Grew 10% with 22% Digital Sales Growth

Yum! Brands, Inc. (NYSE:YUM) today reported results for the fourth quarter and year ended December 31, 2023. Fourth-quarter worldwide system sales, excluding foreign currency translation, grew 5%, with 6% unit growth and 1% same-store sales growth. Full-year worldwide system sales, excluding foreign currency translation, grew 10%, with 6% unit growth and 6% same-store sales growth. Full-year GAAP Operating Profit growth was 6%. Full-year Core Operating Profit growth was 12%. Fourth-quarter GAAP EPS was $1.62 and EPS excluding Special Items was $1.26. Full-year GAAP EPS was $5.59 and EPS excluding Special Items was $5.17, an increase of 14%.

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DAVID GIBBS & CHRIS TURNER COMMENTS

David Gibbs, CEO, said "2023 was another remarkable year for Yum! Brands as we crossed the $60 billion system sales threshold and exceeded all aspects of our long-term growth algorithm. We achieved 10% system sales growth with broad-based strength across the globe and another record year for development, opening over 4,700 new stores. We also made massive strides in scaling our proprietary digital and AI-driven ecosystem in partnership with our franchisees. Looking to 2024, this will be a year of major milestones as we cross 30,000 restaurants at KFC, 20,000 at Pizza Hut and well over 60,000 globally for Yum!."

Chris Turner, CFO, said "Last year proved to be another great example of Yum!'s unique blend of growth and resilience. We delivered 6% unit growth, 10% system sales growth, and 12% Core Operating profit growth. Simply put, there is no other retail business that is growing across 110 different countries and opening the equivalent of a new store roughly every two hours. We are excited about our plans to further scale our incredible technology capabilities and loyalty programs while maintaining focus on cost control. I'm confident 2024 will represent another strong year of global growth and expect to deliver our long-term growth algorithm for the year."

SUMMARY FINANCIAL TABLE

	Fourth-Quarter			Full-Year
	2023	2022	% Change	2023	2022	% Change
GAAP EPS	$1.62	$1.29	+26	$5.59	$4.57	+23
Special Items EPS¹	$0.36	$(0.03)	NM	$0.42	$0.04	NM
EPS Excluding Special Items	$1.26	$1.32	(5)	$5.17	$4.53	+14

¹See reconciliation of Non-GAAP Measurements to GAAP Results in our Consolidated Summary of Results for further detail of Special Items.

All comparisons are versus the same period a year ago.

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results in our Consolidated Summary of Results for further details.

Digital system sales includes all transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology.

FOURTH-QUARTER HIGHLIGHTS

Worldwide system sales grew 5% excluding foreign currency translation, with KFC at 7%, Taco Bell at 6%, and Pizza Hut at 1%.
We opened 1,853 gross units during the fourth quarter.
Restaurant level margins were 17.4%, up 180 basis points year-over-year.
Ex-special EPS was $1.26, lower year-over-year driven by a $0.23 headwind from fluctuations in our quarterly tax rate that resulted in our quarterly effective rate being above our guided range in 2023 and below our guided range in 2022.

	% Change
	System Sales Ex F/X	Same-Store Sales	Units	GAAP Operating Profit	Core Operating Profit¹
KFC Division	+7	+2	+8	+6	+7
Taco Bell Division	+6	+3	+4	+16	+16
Pizza Hut Division	+1	(2)	+4	(1)	(2)
Worldwide	+5	+1	+6	+5	+8

FULL-YEAR HIGHLIGHTS

Worldwide system sales grew 10% excluding foreign currency translation, with KFC at 12%, Taco Bell at 9%, and Pizza Hut at 5%.
We opened a record 4,754 gross units during the year.
Digital sales increased 22% year-over-year, with digital mix exceeding 45%.
Restaurant level margins were 17.2%, up 140 basis points year-over-year.
Foreign currency translation unfavorably impacted divisional operating profit by $49 million.

	% Change
	System Sales Ex F/X	Same-Store Sales	Units	GAAP Operating Profit	Core Operating Profit¹
KFC Division	+12	+7	+8	+9	+12
Taco Bell Division	+9	+5	+4	+11	+11
Pizza Hut Division	+5	+2	+4	+1	+3
Worldwide	+10	+6	+6	+6	+12

¹See reconciliation of Non-GAAP Measurements to GAAP Results in our Consolidated Summary of Results for further detail of Core Operating Profit.

KFC DIVISION

	Fourth-Quarter				Full-Year
			%/ppts Change				%/ppts Change
	2023	2022	Reported	Ex F/X	2023	2022	Reported	Ex F/X
Restaurants	29,900	27,760	+8	NA	29,900	27,760	+8	NA
System Sales ($MM)	8,888	8,307	+7	+7	33,863	31,116	+9	+12
Same-Store Sales Growth (%)	+2	+5	NM	NM	+7	+4	NM	NM
Franchise & Property Revenues ($MM)	444	450	(1)	(2)	1,698	1,645	+3	+6
Operating Profit ($MM)	329	310	+6	+7	1,304	1,198	+9	+12
Operating Margin (%)	43.3	39.0	4.3	4.6	46.1	42.3	3.8	4.2

	Fourth-Quarter (% Change)		Full-Year (% Change)
	International	U.S.	International	U.S.
System Sales Growth Ex F/X	+9	Even	+14	+2
Same-Store Sales Growth	+2	Even	+8	+2

KFC Division opened 1,067 gross new restaurants during the quarter.
- For the year, KFC Division opened 2,716 gross new restaurants in 97 countries.
Foreign currency translation unfavorably impacted operating profit by $1 million for the quarter and $41 million for the year.

KFC Markets¹	Percent of KFC System Sales²	System Sales Growth Ex F/X
KFC Markets¹	Percent of KFC System Sales²	Fourth-Quarter (% Change)	Full-Year (% Change)
China	27%	+18	+20
United States	15%	Even	+2
Europe (excluding United Kingdom)	11%	+9	+17
Asia	10%	(2)	+8
Australia	7%	+6	+9
Latin America	7%	+16	+17
United Kingdom	6%	+2	+6
Middle East / Turkey / North Africa	6%	(5)	+21
Africa	5%	+13	+15
Thailand	2%	+13	+13
Canada	2%	+6	+7
India	2%	+14	+19

¹Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets.

²Reflects Full Year 2023.

TACO BELL DIVISION

	Fourth-Quarter				Full-Year
			%/ppts Change				%/ppts Change
	2023	2022	Reported	Ex F/X	2023	2022	Reported	Ex F/X
Restaurants	8,564	8,218	+4	NA	8,564	8,218	+4	NA
System Sales ($MM)	4,887	4,619	+6	+6	15,915	14,653	+9	+9
Same-Store Sales Growth (%)	+3	+11	NM	NM	+5	+8	NM	NM
Franchise & Property Revenues ($MM)	281	263	+7	+6	918	837	+10	+10
Operating Profit ($MM)	286	246	+16	+16	944	850	+11	+11
Operating Margin (%)	34.9	32.1	2.8	2.8	35.8	34.9	0.9	0.9

Taco Bell Division opened 201 gross new restaurants during the quarter.
- For the year, Taco Bell Division opened 417 gross new restaurants in 25 countries.
Taco Bell U.S. system sales grew 6% and Taco Bell International system sales grew 7% for the quarter.
- For the year, Taco Bell U.S. system sales grew 8% and Taco Bell International system sales grew 16%.
Taco Bell U.S. same-store sales grew 3% and Taco Bell International same-store sales declined 2% for the quarter.
- For the year, Taco Bell U.S. same-store sales grew 6% and Taco Bell International same-store sales grew 1%.
Company-owned restaurant margins were approximately 23% for the quarter, flat year-over-year.
- For the year, company-owned restaurant margins were approximately 24%, flat year-over-year.

PIZZA HUT DIVISION

	Fourth-Quarter				Full-Year
			%/ppts Change				%/ppts Change
	2023	2022	Reported	Ex F/X	2023	2022	Reported	Ex F/X
Restaurants	19,866	19,034	+4	NA	19,866	19,034	+4	NA
System Sales ($MM)	3,535	3,508	+1	+1	13,315	12,853	+4	+5
Same-Store Sales Growth (%)	(2)	+1	NM	NM	+2	Even	NM	NM
Franchise & Property Revenues ($MM)	168	169	Even	(1)	622	607	+3	+4
Operating Profit ($MM)	99	100	(1)	(2)	391	387	+1	+3
Operating Margin (%)	35.0	34.5	0.5	0.4	38.3	38.5	(0.2)	0.3

	Fourth-Quarter (% Change)		Full-Year (% Change)
	International	U.S.	International	U.S.
System Sales Growth Ex F/X	+4	(3)	+8	+2
Same-Store Sales Growth	Even	(4)	+3	+1

Pizza Hut Division opened 575 gross new restaurants during the quarter.
- For the year, Pizza Hut Division opened 1,586 gross new restaurants in 73 countries.
Foreign currency translation favorably impacted operating profit by $1 million for the quarter and unfavorably impacted operating profit $8 million for the year.

Pizza Hut Markets¹	Percent of Pizza Hut System Sales²	System Sales Growth Ex F/X
Pizza Hut Markets¹	Percent of Pizza Hut System Sales²	Fourth-Quarter (% Change)	Full-Year (% Change)
United States	41%	(3)	+2
China	18%	+25	+22
Asia	13%	(4)	+1
Europe	12%	(3)	Even
Latin America	6%	(2)	+2
Middle East / Africa	5%	(3)	+11
Canada	3%	+8	+8
India	2%	(1)	+6

¹Refer to investors.yum.com/financial-information/financial-reports/ for a list of the countries within each of the markets. Note that during the first quarter of 2023 Pizza Hut Division realigned their international market structure.

²Reflects Full Year 2023.

THE HABIT BURGER GRILL DIVISION

The Habit Burger Grill Division grew system sales 2% for the quarter and 6% for the year.
The Habit Burger Grill Division same-store sales declined 5% for the quarter and 3% for the year.
The Habit Burger Grill Division opened 10 gross new restaurants during the quarter.
- For the year, The Habit Burger Grill Division opened 35 gross new restaurants.

OTHER ITEMS

During the quarter the Company paid off a $325 million debt maturity with no further significant debt maturities in 2024 or 2025. Our net leverage ratio ended the quarter at 4.2x.
On December 6th, the Company announced the acquisition of 218 KFC restaurants in the U.K. and Ireland. The transaction will be funded from the Company's cash on hand and is expected to have an immaterial impact on the Company's 2024 EPS. We expect the transaction to close in the second quarter.
In January 2024 the Company's Board of Directors approved a $0.67 quarterly dividend, an increase of 11%.
See reconciliation of Non-GAAP Measurements to GAAP results within this release for further detail of Special Items by financial statement line item including the impact of Special Items on General and administrative expenses.
Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the 2023 Form 10-K.

CONFERENCE CALL

Yum! Brands, Inc. will host a conference call to review the company's financial performance and strategies at 8:15 a.m. Eastern Time Wednesday, February 7, 2024. The number is 833/470-1428 in the U.S., 833/950-0062 in Canada and 1-929-526-1599 for international callers, conference ID 491669.

The call will be available for playback beginning at 10:00 a.m. Eastern Time February 7, 2024 through February 14, 2024. To access the playback, dial 866/813-9403 in the U.S., 226/828-7578 in Canada, 0204/525-0658 for U.K. (local), and +1/929-458-6194 internationally, conference ID 928786.

The webcast and the playback can be accessed via the website by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting "Q4 2023 Earnings Conference Call."

ADDITIONAL INFORMATION ONLINE

Quarter end dates for each division, restaurant count details, definitions of terms and Restricted Group financial information are available at investors.yum.com. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included within this release.

FORWARD-LOOKING STATEMENTS

This announcement may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "likely," "seek," "project," "model," "ongoing," "will," "should," "forecast," "outlook" or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: food safety and food- or beverage-borne illness concerns; adverse impacts of deterioration in public health conditions associated with COVID-19, or the occurrence of other catastrophic or unforeseen events; the success of our concepts' franchisees; the success of our development strategy; anticipated benefits from past or potential future acquisitions, investments or other strategic transactions, or our portfolio business model; our significant exposure to the Chinese market; our global operations and related exposure to geopolitical instability; foreign currency risks and foreign exchange controls; our ability to protect the integrity or availability of IT systems or the security of confidential information and other cybersecurity risks; compliance with data privacy and data protection legal requirements; our ability to successfully implement technology initiatives; our increasing dependence on digital commerce platforms; the impact of social media; our ability to protect our trademarks or other intellectual property; shortages or interruptions in the availability and the delivery of food, equipment and other supplies; the loss of key personnel, labor shortages and increased labor costs, including as a result of state and local legislation related to wages and working conditions, such as AB1228 in California; changes in food prices and other operating costs; our corporate reputation, the value and perception of our brands and changes in consumer preferences and wellness trends; evolving expectations and requirements with respect to social and environmental sustainability matters; adverse effects of climate change; pending or future litigation and legal claims or proceedings; changes in, or noncompliance with, legal requirements; tax matters, including changes in tax rates or laws, impositions of new taxes, tax implications of our restructurings, or disagreements with taxing authorities; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures and elevated interest rates; competition within the retail food industry; risks relating to our level of indebtedness. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions "Risk Factors" and "Forward-Looking Statements" in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.

Yum! Brands, Inc., based in Louisville, Kentucky, and its subsidiaries franchise or operate a system of over 58,000 restaurants in more than 155 countries and territories under the company's concepts – KFC, Taco Bell, Pizza Hut and the Habit Burger Grill. The Company's KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-style food, and pizza categories, respectively. The Habit Burger Grill is a fast casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. In 2024, Yum! was named to the Dow Jones Sustainability Index North America for the eighth consecutive year, and the company was recognized among TIME Magazine's list of Best Companies for Future Leaders and Newsweek's list of America's Most Responsible Companies. Yum! also received widespread recognition in 2023, including being listed on the Bloomberg Gender-Equality Index; Forbes' list of America's Best Employers for Diversity; and Newsweek's list of America's Greenest Companies. In addition, KFC, Taco Bell and Pizza Hut brands were ranked in the top five of Entrepreneur's Top Global Franchises Ranking for 2023.

Category: Earnings

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Yum! Brands Reports Fourth-Quarter and Full-Year Results