Post Earnings Coverage as Yum! Brands' Earnings Surged 19%
ACCESS Newswire
Upcoming AWS Coverage on Restaurant Brands International Post-Earnings Results
LONDON, UK / ACCESSWIRE / March 1, 2017 / Active Wall St. announces its post-earnings coverage on Yum! Brands, Inc. (NYSE: YUM). The Company reported its financial results for the fourth quarter and full year 2016 results on February 09, 2017. The owner of KFC and Taco Bell reported better than expected earnings for the quarter. Register with us now for your free membership at:
One of Yum! Brands' competitors within the Restaurants space, Restaurant Brands International Inc. (NYSE: QSR), reported on February 13, 2017, its financial results for the full year and fourth quarter ended December 31, 2016. AWS will be initiating a research report on Restaurant Brands in the coming days.
Today, AWS is promoting its earnings coverage on YUM; touching on QSR. Get our free coverage by signing up to:
Yum! Brands' sales for the fourth quarter ended December 31, 2016, totaled $2.02 billion, up from $1.98 billion in the year ago same period, but still came in below the $2.04 billion analysts forecasted. The Company's Global same-store sales increased 1%, with both Taco Bell and KFC growing 3% and Pizza Hut falling 2%.
Yum! Brands reported Q4 2016 net income of $267.0 million, or $0.76 per share, compared to $275.0 million, or $0.66 per share, in Q4 2015. The Company's adjusted EPS excluding special items was $0.79 per share for the reported quarter, up 19% on a y-o-y basis and beating the $0.73 per share Wall Street expected. Yum! Brands completed the separation of Yum China Holdings, Inc. on October 31, 2016.
Yum! Brands' FY16 GAAP EPS from Continuing Operations was $2.48, an increase of 18%. Full-year EPS from Continuing Operations excluding Special Items was $2.45, an increase of 5%.
During FY16, Yum! Brands returned over $6 billion in capital through quarterly dividends and through repurchasing approximately 68 million shares.
Segment Details
For Q4 2016, KFC Division system sales increased 8% and 7% for FY16, excluding foreign currency translation. KFC Division opened 593 new international restaurants during Q4 2016, while it opened 1,086 new international restaurants in 81 countries, including 885 units in emerging markets during FY16. The segment's operating margin increased 1.9% for Q4 2016 and 1.4% for FY16, driven by franchise net-unit development and same-store sales growth. Foreign currency translation negatively impacted KFC Division's operating profit by $8 million for the reported quarter and $48 million for the year.
During Q4 2016, Pizza Hut Division system sales increased 3% and 2% for FY16, excluding foreign currency translation. Pizza Hut Division opened 379 new international restaurants during Q4 2016; and for FY16, Pizza Hut Division opened 745 new international restaurants in 74 countries, including 551 units in emerging markets. The segment's operating margin increased 9.0% for the reported quarter and 4.8% for the year driven by decreased G&A as a result of lower litigation costs and refranchising. Foreign currency translation negatively impacted Pizza Hut Division operating profit by $2 million for Q4 2016 and $7 million for the year.
For Q4 2016, Taco Bell Division system sales increased 12%, while it gained 6% for the year. Taco Bell Division opened 134 new restaurants in the reported quarter, while it opened 294 new restaurants for the year. Operating margin increased 4.5% for the quarter and 2.4% for the year driven by same-store sales growth, decreased G&A, and franchise net-unit development.
Special Items/Refranchising
During Q4 2016, Yum! Brands refranchised 232 restaurants, including 120 KFC, 83 Pizza Hut, and 29 Taco Bell units, for proceeds of $200 million. The Company recorded refranchising gains of $64 million in Special Items. As of year-end, Yum! Brands franchise ownership mix was 93%. During the quarter, the Company incurred $39 million in Special Items related to the strategic transformation of Yum! Brands, the biggest component of which was severance costs. In addition, Yum! Brands recorded a non-cash charge of $30 million in Special Items related to share-based compensation award modifications related to the separation of Yum China Holdings, Inc.
Additionally, a Special Items charge of $24 million was incurred during Q4 2016 related to settlement charges associated with pay-outs from a deferred vested pension pay-out program.
Share Repurchase
As of December 31, 2016, the Company had $1.9 billion remaining in share repurchase authorization through year-end 2017.
Stock Performance
On February 28, 2017, Yum! Brands' share price finished the trading session at $65.32, marginally down 0.31%. A total volume of 2.67 million shares exchanged hands, which was higher than the 3 months average volume of 2.41 million shares. The stock has rallied 3.60% and 28.08% in the last three months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 3.62%. The stock is trading at a PE ratio of 26.29 and has a dividend yield of 2.65%.
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