Yum China Holdings, Inc. (NYSE:YUMC) Q3 2024 Earnings Conference Call November 4, 2024 7:00 AM ET

Company Participants

Florence Lip - Senior Director of Investor Relations
Joey Wat - Chief Executive Officer
Adrian Ding - Acting Chief Financial Officer

Conference Call Participants

Xiaopo Wei - Citigroup
Lillian Lou - Morgan Stanley
Ethan Wang - CLSA
Michelle Cheng - Goldman Sachs
Sijie Lin - CICC
Anne Ling - Jefferies
Walter Woo - CMBI
Linda Huang - Macquarie

Operator

Thank you for standing by, and welcome to the Yum China Third Quarter 2024 Earnings Conference Call. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions].

I would now like to hand the conference over to Florence Lip, Senior IR Director. Please go ahead.

Florence Lip

Thank you, operator. Hello, everyone. Thank you for joining Yum China's Third Quarter 2024 Earnings Conference Call. On today's call are our CEO, Ms. Joey Wat; and our acting CFO, Mr. Adrian Ding. I'd like to remind everyone that our earnings call and investment 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, which is available to the public through our Investor Relations website located at ir.yumchina.com. You can also find a webcast of this call and a PowerPoint presentation on our IR website. Please note that during today's call, all year-over-year growth results exclude the impact of foreign currency, unless otherwise noted.

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. I'm proud to share that we achieved strong results again in Q3 2024. We delivered robust sales growth as well as accelerated profit growth compared to Q2. System sales grew 4% year-over-year. Same-store sales index improved sequentially and reached 97% of prior year's level. Delivery sales achieved double-digit growth as it has for 10 consecutive years.

On a comparable basis, both restaurant margins and OP margin expanded year-over-year. Core operating profit grew 18% and diluted EPS increased by 32%. As we execute our RGM 2.0 strategy, we have a new focus on operational efficiency and innovation. Savings generated from improved efficiency allow us to reinvest in food innovation and our value for money offers. This broadens our addressable market. It also helped us capture more traffic, drive sales growth and expand profit margins. Meanwhile, our innovative business models KCOFFEE Cafes and Pizza Hut WOW are gaining momentum and successfully capturing new customer demand.