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Yum China (YUMC) Q1 Earnings Miss Estimates, Revenues Top
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Yum China Holdings, Inc. (YUMC - Free Report) reported first-quarter 2022 results, wherein earnings missed the Zacks Consensus Estimate, but revenues beat the same. While the top line increased from the prior-year quarter's levels, the bottom line declined on a year-over-year basis.
During the quarter under discussion, the company's operations were affected by the Omicron variant. The company noted that the Omicron variant continues to have a severe impact in the second quarter. Economically important regions like Shanghai, Tianjin, Jilin, Suzhou, Shenzhen and Guangzhou have been severely impacted by the Omicron variant.
Earnings & Revenue Discussion
During first-quarter 2022, the company reported adjusted diluted earnings of 24 cents. The figure lagged the Zacks Consensus Estimate of 29 cents. The bottom line declined 56% from 54 cents reported in the year-ago quarter.
Quarterly revenues of $2,668 million surpassed the consensus mark of $2,609 million. The top line improved 4% on a year-over-year basis. Excluding foreign currency translation, the top line rose 2% year over year.
Total system sales in the reported quarter decreased 4% year over year. System sales at KFC and Pizza Hut declined by 4% and 1%, respectively. Meanwhile, same-store sales dropped 8% year over year, primarily due to a decline of 9% at KFC and 5% at Pizza Hut. In March, same-store sales fell by more than 20% year over year. The dismal performance continued in April (preliminary) as same-store sales decreased more than 20% year over year.
During first-quarter 2022, total costs and expenses totaled $2,477 million, down 12% from $2,215 million reported in the prior-year quarter.
Restaurant margin in the quarter under review was 13.8%, down 490 basis points from the year-ago quarter's levels. The downside was primarily due to sales deleveraging, higher inflation in commodity, wage and utility costs, and a rise in rider cost related to rising delivery volume.
During the quarter, adjusted operating profit totaled $193 million, down 44% from the year-ago quarter's levels. Adjusted net income amounted to $102 million compared with $233 million in the prior-year quarter.
Balance Sheet
As of Mar 31, 2022, cash and cash equivalents amounted to $1,047 million compared with $1,136 million as of Dec 31, 2021. Inventories during the first quarter were $345 million compared with $432 million in the previous quarter.
During the first quarter, the company repurchased $232 million worth of stock at an average price of $46.57. As of Mar 31, the company had approximately $1.4 billion available for the buyback program.
The company declared a quarterly cash dividend of 12 cents per common share. The dividend will be payable on Jun 21, 2022, to shareholders of record as of May 31, 2022.
Unit Development and Other Updates
During first-quarter 2022, Yum China opened 522 gross new restaurants driven by the development of the KFC and Pizza Hut brands. As of Mar 31, the company's total restaurant count was 12,117, up 1,392 stores year over year.
During the quarter under review, the company's delivery accounted for nearly 36% of KFC and Pizza Hut's company sales, up nearly five percentage points from the prior-year quarter's levels.
Digital orders during the quarter contributed 88% to KFC and Pizza Hut's company sales. During the first quarter, KFC and Pizza Hut loyalty programs increased to more than 370 million members.
2022 Outlook
In 2022, Yum China anticipates opening approximately 1,000 to 1,200 new stores. The company expects solid expansion related to KFC and Pizza Hut stores. Capital expenditures in 2022 are forecast in the range of $800 million to $1000 million.
Zacks Rank & Key Picks
Yum China currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are BBQ Holdings, Inc. , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Arcos Dorados Holdings Inc. (ARCO - Free Report) .
BBQ Holdings sports a Zacks Rank #1 (Strong Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have increased 9.2% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and EPS suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.
Dave & Buster's flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have increased 2.2% in the past year.
The Zacks Consensus Estimate for Dave & Buster's current-year sales and EPS suggests growth of 24.4% and 49.3%, respectively, from the year-ago period's levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have surged 32.5% in the past year.
The Zacks Consensus Estimate for Arcos Dorados' 2022 sales and EPS suggests growth of 16.6% and 66.7%, respectively, from the year-ago period's levels.
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Yum China (YUMC) Q1 Earnings Miss Estimates, Revenues Top
Yum China Holdings, Inc. (YUMC - Free Report) reported first-quarter 2022 results, wherein earnings missed the Zacks Consensus Estimate, but revenues beat the same. While the top line increased from the prior-year quarter's levels, the bottom line declined on a year-over-year basis.
During the quarter under discussion, the company's operations were affected by the Omicron variant. The company noted that the Omicron variant continues to have a severe impact in the second quarter. Economically important regions like Shanghai, Tianjin, Jilin, Suzhou, Shenzhen and Guangzhou have been severely impacted by the Omicron variant.
Earnings & Revenue Discussion
During first-quarter 2022, the company reported adjusted diluted earnings of 24 cents. The figure lagged the Zacks Consensus Estimate of 29 cents. The bottom line declined 56% from 54 cents reported in the year-ago quarter.
Quarterly revenues of $2,668 million surpassed the consensus mark of $2,609 million. The top line improved 4% on a year-over-year basis. Excluding foreign currency translation, the top line rose 2% year over year.
Total system sales in the reported quarter decreased 4% year over year. System sales at KFC and Pizza Hut declined by 4% and 1%, respectively. Meanwhile, same-store sales dropped 8% year over year, primarily due to a decline of 9% at KFC and 5% at Pizza Hut. In March, same-store sales fell by more than 20% year over year. The dismal performance continued in April (preliminary) as same-store sales decreased more than 20% year over year.
Yum China Price, Consensus and EPS Surprise
Yum China price-consensus-eps-surprise-chart | Yum China Quote
Operating Highlights
During first-quarter 2022, total costs and expenses totaled $2,477 million, down 12% from $2,215 million reported in the prior-year quarter.
Restaurant margin in the quarter under review was 13.8%, down 490 basis points from the year-ago quarter's levels. The downside was primarily due to sales deleveraging, higher inflation in commodity, wage and utility costs, and a rise in rider cost related to rising delivery volume.
During the quarter, adjusted operating profit totaled $193 million, down 44% from the year-ago quarter's levels. Adjusted net income amounted to $102 million compared with $233 million in the prior-year quarter.
Balance Sheet
As of Mar 31, 2022, cash and cash equivalents amounted to $1,047 million compared with $1,136 million as of Dec 31, 2021. Inventories during the first quarter were $345 million compared with $432 million in the previous quarter.
During the first quarter, the company repurchased $232 million worth of stock at an average price of $46.57. As of Mar 31, the company had approximately $1.4 billion available for the buyback program.
The company declared a quarterly cash dividend of 12 cents per common share. The dividend will be payable on Jun 21, 2022, to shareholders of record as of May 31, 2022.
Unit Development and Other Updates
During first-quarter 2022, Yum China opened 522 gross new restaurants driven by the development of the KFC and Pizza Hut brands. As of Mar 31, the company's total restaurant count was 12,117, up 1,392 stores year over year.
During the quarter under review, the company's delivery accounted for nearly 36% of KFC and Pizza Hut's company sales, up nearly five percentage points from the prior-year quarter's levels.
Digital orders during the quarter contributed 88% to KFC and Pizza Hut's company sales. During the first quarter, KFC and Pizza Hut loyalty programs increased to more than 370 million members.
2022 Outlook
In 2022, Yum China anticipates opening approximately 1,000 to 1,200 new stores. The company expects solid expansion related to KFC and Pizza Hut stores. Capital expenditures in 2022 are forecast in the range of $800 million to $1000 million.
Zacks Rank & Key Picks
Yum China currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are BBQ Holdings, Inc. , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Arcos Dorados Holdings Inc. (ARCO - Free Report) .
BBQ Holdings sports a Zacks Rank #1 (Strong Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have increased 9.2% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and EPS suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.
Dave & Buster's flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have increased 2.2% in the past year.
The Zacks Consensus Estimate for Dave & Buster's current-year sales and EPS suggests growth of 24.4% and 49.3%, respectively, from the year-ago period's levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have surged 32.5% in the past year.
The Zacks Consensus Estimate for Arcos Dorados' 2022 sales and EPS suggests growth of 16.6% and 66.7%, respectively, from the year-ago period's levels.