Yum! Brands, Inc. (YUM) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 3, 2023 8:15 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Hello, everyone, and welcome to the First Quarter 2023 Yum! Brands Earnings Conference Call. My name is Bruno, and I'll be the operator of today.

I would now like to hand over to your host, Jodi Dyer, Vice President of Investor Relations. Please go ahead.

Jodi Dyer - VP, IR

Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions.

Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC.

In addition, please refer to our earnings release and relevant sections of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call.

Please note that during today's call, all system sales growth and operating profit growth results exclude the impact of foreign currency. Please also note the following financial reporting treatment related to our exit from Russia. As a reminder, as of the beginning of the second quarter of 2022, we elected to remove the Russia business from key performance metrics.

For the purpose of this call, all references to system sales growth and unit growth results for the quarter are adjusted to remove our Russia business from the prior year base. This negatively impacted both our worldwide unit growth and worldwide system sales growth by two percentage points. These units were removed from our same-store sales calculations and, thus, do not impact same-store sales results for the first quarter.

All GAAP figures reported continue to include the impacts of Russia operations for KFC for the full quarter. These GAAP figures primarily include royalty revenues from continued franchise operations and G&A to support our Russia business.

Additionally, our GAAP G&A includes expenses incurred relating to the transfer of ownership of the business. As a result of our decision to exit our Russia business, we have re-classed net operating profits from the operating segments in which they are earned subsequent to the start of the conflict to corporate and unallocated and reflected those net operating profits as a special item within the other income and expense line.