Yum China Holdings, Inc. · NYSE:YUMC
Yum China — Investor Day (October 2017)
21 slides from Yum China's investor day presentation, Oct 17, 2017
Slide 1: Financial Update
Financial Update Jacky Lo | Chief Finance Officer, Yum China
Slide 2: Forward-Looking Statements
Forward-Looking Statements. Our presentation may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Pr
Slide 3: Stay True, Aim High
_——— STAY AIM TRUE : HIGH
Slide 4: Unique Strengths of Yum China
No. 1 Restaurant company in China Top Brands Western Governance Best-in-class Management Nationwide Supply chain Unique Strengths of Yum China
Slide 5: How we create value for shareholders
NET NEW UNIT DEVELOPMENT SAME-STORE SALES GROWTH MARGINS & G&A MANAGEMENT STRATEGIC CAPITAL ALLOCATION 1 2 3 4 SHAREHOLDER RETURNS How we create value for shareholders
Slide 6: Solid development plan to drive system sales growth
7,747 Restaurants1 ~1.5 Average no. of restaurants opened daily2 1,220 Remodeled stores (Jan 2016 – Aug 2017) >1,100 No. of cities present1 1As of the end of August 2017. 2Per our previous guidance, Yum China targets to open 550-600 new units on a gross basis.. Average no. of restaurants opened dail
Slide 7: Compelling new unit return
1 Compelling new unit return <4 ~2 Average Pre-tax Cash Payback Period1 ~RMB 6.1mn Average Unit Volume ~RMB 2.6mn Cash Investment ~22% Cash Margin ~RMB 5.6mn ~RMB 3.3mn ~17% Years Years2 1Includes all units opened from June 2015 to May 2016, after deduction of 3% license fee. 2For Pizza Hut Casual D
Slide 8: Significant lead over competitors
Significant lead over competitors 1 >2x More units than nearest competitor 1Includes both Pizza Hut Casual Dining and Pizza Hut Home Service units. 2We define restaurant penetration as number of Yum China restaurants per million people. It is calculated as follow: Yum China’s total unit count divide
Slide 9: Encouraging trend in same-store sales growth
Encouraging trend in same-store sales growth 2 2017 2017 2017
Slide 10: Focusing on SSSG to drive sales leverage
Focusing on SSSG to drive sales leverage 2 Innovation Great value SSS Growth Digital capability Delivery network
Slide 11: Restaurant margin management
Restaurant margin management 3 Restaurant Margin Commodity Inflation Labor Inflation Efficiency Key Factors Affecting Restaurant Margin (Aug YTD 2017) No longer a tailwind from Q3 onwards
Slide 12: G&A costs optimization
G&A costs optimization 3 G&A Change YoY G&A Costs Low-teens percentage increase in 2017 Cost structure optimization Aim to keep G&A increase below total revenues growth
Slide 13: Generating robust free cash flow
Generating robust free cash flow 4 $987mn $1.6bn Zero Operating cash flow (Jan-Aug 2017) Debt2 Cash and short-term investment2 1Free cash flow is net operating cash flow less capital expenditure. 2As of the end of August 2017. 26% Free cash flow CAGR1 (2014-2016)
Slide 14: Recap of capital allocation
Recap of capital allocation 4 $128mn ~$39mn Share repurchase completed2 First quarterly dividend announced1 $61.7mn Acquisition3 $550mn Total share repurchase authorization1 1As of October 5, 2017. 2As of the end of August 2017. 3Yum China agreed to pay a cash consideration of $36.7mn to the sellers
Slide 15: Strategic capital allocation
Strategic capital allocation 4 Repurchase Dividend More shares Increase on per share basis Strategic Growth initiatives Invest Into the core business
Slide 16: Stay True, Aim High
STAY TRUE AIM HIGH
Slide 17: Ongoing financial targets
High Single Digit System sales growth, ex FX ~17% Restaurant margin Double Digit Operating profit growth, ex FX Ongoing financial targets
Slide 18: Factors impacting EPS growth
Effective tax rate Diluted share count 29.3% August YTD 2017 August YTD 2016 28.0% 397mn 364mn Factors impacting EPS growth
Slide 19: Thank You
Gp YumChina Thank You
Slide 20: Non-GAAP Definitions
Non-GAAP Definitions In an effort to provide investors with additional information regarding the Company's financial results and other financial information as determined by generally accepted accounting principles (GAAP), the company also discusses in these materials, the following Non-GAAP informa
Slide 21: Reconciliations of Reported Results to Non-GAAP Measures
Reconciliations of Reported Results to Non-GAAP Measures Reconciliation of Net Income to Adjusted EBITDA Quarter ended Year to date ended (In US$ million) 8/31/2017 8/31/2016 8/31/2017 8/31/2016 Net income – noncontrolling interests $ 10 $ 10 $ 21 $ 10 Net Income – Yum China Holdings, Inc. 211 192 4