Yum China Holdings, Inc. (NYSE:YUMC) Q3 2023 Earnings Conference Call October 31, 2023 ET

Company Participants

Joey Wat - Chief Executive Officer

Andy Yeung - Chief Financial Officer

Michelle Shen - Director of Investor Relations

Conference Call Participants

Michelle Cheng - Goldman Sachs

Lin Sijie - CICC

Christine Peng - UBS

Chen Luo - Bank of America

Lillian Lou - Morgan Stanley

Anne Ling - Jefferies

Ethan Wang - CLSA

Xiaopo Wei - Citi

Operator

Thank you for standing by, and welcome to the Yum China, Third Quarter 2023 Earnings Conference Call.

I would now like to hand the conference over to Michelle Shen. Please go ahead.

Michelle Shen

Thank you, Zack. Hello, everyone. Thank you for joining Yum China's third quarter 2023 earnings conference call. On today's call are our CEO, Ms. Joey Wat; and our CFO, Mr. Andy Yeung.

I'd like to remind everyone that our earnings call and investor materials contain forward-looking statements, which are subject to future events and uncertainties. Actual results may differ materially from these forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statement in our earnings release and the risk factors included in our filings with the SEC.

This call also includes certain non-GAAP financial measures. You should carefully consider the comparable GAAP measures. Reconciliation of non-GAAP and GAAP measures is included in our earnings release. You can find the webcast of this call and a PowerPoint presentation on our IR website.

Now, I would like to turn the call over to Joey Wat, CEO of Yum China. Joey.

Joey Wat

Hello, everyone, and thank you for joining us today. We held our Investor Day in September in Xi'an, China. It was wonderful meeting investors face-to-face. At the event, we unveiled our RGM 2.0 strategy with a strong focus on growth. We have set ambitious growth targets for the coming three years. These include reaching 20,000 stores by 2026, achieving double-digit EPS, CAGR, and returning $3 billion to shareholders in dividends and share repurchases.

With our long-term growth commitment in mind, let's zoom into the third quarter. Our results reflect continued strength. Third quarter net new stores, revenue and adjusted operating profit, all reached record levels. We accelerated new store openings with 500 net new stores in the quarter, while maintaining healthy store payback period.

Our portfolio now exceeds 14,000 stores. System sales grew 15% year-over-year in constant currency. Adjusted operating profit, excluding temporary relief grew 21% year-over-year in constant currency. In the first nine months, adjusted operating profit exceeds $1 billion.