Business Wire | Oct 28, 2021 07:02AM EDT

Yum! Brands Reports Third-Quarter Results; Record 760 Net-New Units and Same-Store Sales Growth of 5%, Driving System Sales Growth of 8%; Sustained Digital System Sales of Over $5 Billion

Oct. 28, 2021

LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 28, 2021--Yum! Brands, Inc. (NYSE: YUM) today reported results for the third-quarter ended September 30, 2021. Worldwide system sales excluding foreign currency translation grew 8%, with 5% same-store sales and 4% unit growth. Third-quarter GAAP EPS was $1.75, an increase of 90% over the prior year quarter. Third-quarter EPS excluding Special Items was $1.22, an increase of 21% over the prior year quarter.

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DAVID GIBBS COMMENTS

David Gibbs, CEO, said "Our third quarter results, led by record-breaking unit development and sustained momentum in digital sales, are a testament to the strength of our Brands and the unmatched commitment and capability of our best-in-class franchise partners. I am proud that each of our global divisions contributed to delivering 760 net-new units in the quarter. Our 5% same store sales growth for the third quarter, or 3% same-store sales growth on a 2-year basis, demonstrates the resilience of our diversified global business model despite the headwind of the Delta variant in certain key markets.

During the quarter, we advanced our digital capabilities with the acquisition of Dragontail and its AI-based integrated kitchen order management and delivery technologies that strengthens store operations, enhances the customer experience and makes it easier for team members to run a restaurant. As we continue to navigate the short-term uncertainties of the COVID recovery, we are incredibly confident in the ability of our iconic brands and our world-class talent to drive growth and maximize stakeholder value by delivering on our long-term growth algorithm."

THIRD-QUARTER HIGHLIGHTS

* Worldwide system sales excluding foreign currency translation grew 8%, with KFC at 11%, Taco Bell at 8% and Pizza Hut at 4%. * We reported 4% unit growth year-over-year and record third-quarter net-new unit growth of 760. * Foreign currency translation favorably impacted divisional operating profit by $12 million.

% Change

System Same-Store GAAP Core Sales Sales Units Operating Operating Profit Ex F/X Profit ^1

KFC Division +11 +6 +7 +14 +10

Pizza Hut +4 +4 +1 +13 +11Division

Taco Bell +8 +5 +3 (1) (1)Division

Worldwide +8 +5 +4 +12 +3

Third-Quarter

Year-to-Date

2021

2020

% Change

2021

2020

% Change

GAAP EPS

$1.75

$0.92

+90

$4.10

$1.86

+120

Special Items EPS1

$0.53

$(0.09)

NM

$0.66

$(0.61)

NM

EPS Excluding Special Items

$1.22

$1.01

+21

$3.44

$2.47

+39

Third-Quarter Year-to-Date

2021 2020 % Change 2021 2020 % Change

GAAP EPS $1.75 $0.92 +90 $4.10 $1.86 +120

Special Items EPS^1 $0.53 $(0.09) NM $0.66 $(0.61) NM

EPS Excluding Special Items $1.22 $1.01 +21 $3.44 $2.47 +39

1 See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Core Operating Profit and Special Items.

All comparisons are versus the same period a year ago.

System sales growth figures exclude foreign currency translation ("F/X") and core operating profit growth figures exclude F/X and Special Items. Special Items are not allocated to any segment and therefore only impact worldwide GAAP results. See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further details.

Digital system sales includes all transactions where consumers at system restaurants utilize ordering interaction that is primarily facilitated by automated technology.

KFC DIVISION

^1 See reconciliation of Non-GAAP Measurements to GAAP Results within thisrelease for further detail of Core Operating Profit and Special Items.



All comparisons are versus the same period a year ago.

System sales growth figures exclude foreign currency translation ("F/X") andcore operating profit growth figures exclude F/X and Special Items. SpecialItems are not allocated to any segment and therefore only impact worldwide GAAPresults. See reconciliation of Non-GAAP Measurements to GAAP Results withinthis release for further details.

Digital system sales includes all transactions where consumers at systemrestaurants utilize ordering interaction that is primarily facilitated byautomated technology.

KFC DIVISION

Third-Quarter Year-to-Date

%/ppts Change %/ppts Change

2021 2020 Reported Ex F/ 2021 2020 Reported Ex X F/X

Restaurants 26,222 24,602 +7 N/A 26,222 24,602 +7 N/A

System Sales ($MM) 7,878 6,909 +14 +11 22,789 18,484 +23 +18

Same-Store Sales Growth +6 (4) NM NM +14 (11) NM NM(%)

Franchise and Property 391 340 +15 +12 1,124 906 +24 +19Revenues ($MM)

Operating Profit ($MM) 314 278 +14 +10 932 655 +42 +35

Operating Margin (%) 45.4 47.2 (1.8) (1.7) 46.6 41.9 4.7 4.9

Third-Quarter (% Change)

Year-to-Date (% Change)

International

U.S.

International

U.S.

System Sales Growth Ex F/X

+12

+3

+20

+9

Same-Store Sales Growth

+6

+4

+15

+9

* KFC Division opened 636 gross new restaurants in 61 countries. * Operating margin decreased 1.8 percentage points driven by lapping bad debt recoveries offset by system sales growth. * Foreign currency translation favorably impacted operating profit by $10 million. * For the division, same-store sales grew 1% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the third-quarter 2021. For KFC International, same-store sales declined 1% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the third-quarter 2021. For KFC U.S., same-store sales grew 13% on a 2-year basis.

Third-Quarter (% Change) Year-to-Date (% Change)

International U.S. International U.S.

System Sales Growth Ex F/X +12 +3 +20 +9

Same-Store Sales Growth +6 +4 +15 +9

* KFC Division opened 636 gross new restaurants in 61 countries. * Operating margin decreased 1.8 percentage points driven by lapping bad debt recoveries offset by system sales growth. * Foreign currency translation favorably impacted operating profit by $10 million. * For the division, same-store sales grew 1% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the third-quarter 2021. For KFC International, same-store sales declined 1% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the third-quarter 2021. For KFC U.S., same-store sales grew 13% on a 2-year basis.

System Sales Growth Ex F/XKFC Markets^1 Percent of KFC System Sales^2 Third-Quarter Year-to-Date (% Change) (% Change)

China 27% +1 +12

United States 18% +3 +9

Asia 12% +6 +5

Russia, Central & Eastern Europe 7% +30 +36

Australia 7% +1 +11

United Kingdom 6% +26 +56

Western Europe 5% +19 +24

Latin America 5% +41 +33

Africa 4% +17 +40

Middle East / Turkey / North Africa 4% +33 +43

Canada 2% +4 +9

Thailand 2% (13) (11)

India 1% +92 +72

^1Refer to investors.yum.com/financial-information/financial-reports/ for alist of the countries within each of the markets.

^2Reflects Full Year 2020.

PIZZA HUT DIVISION

Third-Quarter Year-to-Date

%/ppts Change %/ppts Change

2021 2020 Reported Ex F 2021 2020 Reported Ex F /X /X

Restaurants 18,007 17,842 +1 N/A 18,007 17,842 +1 N/A

System Sales ($MM) 3,170 2,994 +6 +4 9,409 8,548 +10 +7

Same-Store Sales Growth +4 (3) NM NM +9 (8) NM NM(%)

Franchise and Property 147 134 +9 +7 435 393 +10 +8Revenues ($MM)

Operating Profit ($MM) 101 89 +13 +11 306 252 +21 +18

Operating Margin (%) 40.6 36.7 3.9 3.8 40.9 35.4 5.5 5.2

Third-Quarter (% Change)

Year-to-Date (% Change)

International

U.S.

International

U.S.

System Sales Growth Ex F/X

+9

(2)

+11

+2

Same-Store Sales Growth

+6

+2

+10

+7

* Pizza Hut Division opened 297 gross new restaurants in 39 countries. * Operating margin increased 3.9 percentage points driven by same-store sales growth. * Foreign currency translation favorably impacted operating profit by $2 million. * For the division, same-store sales grew 1% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the third-quarter 2021. For Pizza Hut International, same-store sales declined 4% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the third-quarter 2021. For Pizza Hut U.S., same-store sales grew 8% on a 2-year basis.

Third-Quarter (% Change) Year-to-Date (% Change)

International U.S. International U.S.

System Sales Growth Ex F/X +9 (2) +11 +2

Same-Store Sales Growth +6 +2 +10 +7

* Pizza Hut Division opened 297 gross new restaurants in 39 countries. * Operating margin increased 3.9 percentage points driven by same-store sales growth. * Foreign currency translation favorably impacted operating profit by $2 million. * For the division, same-store sales grew 1% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the third-quarter 2021. For Pizza Hut International, same-store sales declined 4% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of the third-quarter 2021. For Pizza Hut U.S., same-store sales grew 8% on a 2-year basis.

Percent of Pizza System Sales Growth Ex F/XPizza Hut Markets^1 Hut System Sales^ 2 Third-Quarter Year-to-Date (% Change) (% Change)

United States 45% (2) +2

China 15% +1 +20

Asia 15% +1 +1

Latin America / Spain / Portugal 10% +23 +15

Europe (excluding Spain & 8% +11 +2Portugal)

Middle East / Turkey / North 3% +9 +11Africa

Canada 3% +10 +13

India 1% +78 +60

Africa <1% +3 +39

^1Refer to investors.yum.com/financial-information/financial-reports/ for alist of the countries within each of the markets.

^2Reflects Full Year 2020.

TACO BELL DIVISION

Third-Quarter Year-to-Date

%/ppts Change %/ppts Change

2021 2020 Reported Ex F/ 2021 2020 Reported Ex F X /X

Restaurants 7,619 7,400 +3 N/A 7,619 7,400 +3 N/A

System Sales ($MM) 3,143 2,914 +8 +8 9,212 8,074 +14 +14

Same-Store Sales Growth +5 +3 NM NM +12 (2) NM NM(%)

Franchise and Property 177 165 +8 +7 518 460 +13 +13Revenues ($MM)

Operating Profit ($MM) 184 186 (1) (1) 560 484 +16 +16

Operating Margin (%) 34.6 37.2 (2.6) (2.6) 36.1 34.5 1.6 1.6

* Taco Bell Division opened 74 gross new restaurants in 15 countries. * Operating margin decreased 2.6 percentage points due to restaurant level margins returning to historical levels and increased general and administrative expenses offset by same-store sales growth. * For the division, same-store sales grew 8% on a 2-year basis.

HABIT BURGER GRILL DIVISION

* The Habit Burger Grill Division opened 8 gross new restaurants in the U.S. * During the quarter, The Habit Burger Grill Division same-store sales grew 11%. For the year-to-date, The Habit Burger Grill Division same-store sales grew 18%. * For the division, same-store sales for the quarter grew 7% on a 2-year basis, which includes the impact of about 1% of stores that were temporarily closed as of the end of the third-quarter 2021.

OTHER ITEMS

* Same-store sales growth on a 2-year basis is calculated using the geometric method as follows: (1 + Q3 2020 reported same-store sales growth) * (1 + Q3 2021 reported same-store sales growth) - 1. * We recorded $52 million of pre-tax investment income related to the change in fair value of our approximate 5% investment in Devyani International Limited, an entity that operates KFC and Pizza Hut franchised units in India that executed an initial public offering during the quarter. This change in fair value resulted in a $0.16 benefit to third-quarter EPS. * During the third quarter of 2021 a subsidiary of Taco Bell Corp. issued $2.25 billion of Securitization Notes. Proceeds were used to repay $1.3 billion of existing higher coupon Taco Bell Securitization Notes and for general corporate purposes including capital return to shareholders. * Disclosures pertaining to outstanding debt in our Restricted Group capital structure will be provided at the time of the filing of the third-quarter Form 10-Q.

CONFERENCE CALL

Yum! Brands, Inc. will host a conference call to review the company's financial performance and strategies at 8:15 a.m. Eastern Time October 28, 2021. The number is 877/871-3172 for U.S. callers, 412/902-6603 for international callers, conference ID 1801564.

The call will be available for playback beginning at 10:00 a.m. Eastern Time October 28, 2021 through November 4, 2021. To access the playback, dial 877/344-7529 in the U.S., 855/669-9658 in Canada, and 412/317-0088 internationally, conference ID 10159830.

The webcast and the playback can be accessed by visiting Yum! Brands' website, investors.yum.com/events-and-presentations and selecting "Q3 2021 Yum! Brands, Inc. Earnings Call."

ADDITIONAL INFORMATION ONLINE

Quarter end dates for each division, restaurant count details, definitions of terms and Restricted Group financial information are available at investors.yum.com. Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures are included within this release.

FORWARD-LOOKING STATEMENTS

This announcement 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 Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "likely," "seek," "project," "model," "ongoing," "will," "should," "forecast," "outlook" or similar terminology. These statements are based on and reflect our current expectations, estimates, assumptions and/or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: the severity and duration of the COVID-19 pandemic, food safety and food borne-illness issues; health concerns arising from outbreaks of a significant health epidemic; the success of our franchisees and licensees; our significant exposure to the Chinese market; changes in economic and political conditions in countries and territories outside of the U.S. where we operate; our ability to protect the integrity and security of personal information of our customers and employees; our ability to successfully implement technology initiatives; our increasing dependence on multiple digital commerce platforms; the impact of social media; our ability to secure and maintain distribution and adequate supply to our restaurants; the loss of key personnel, or labor shortages or difficulty finding and retaining qualified employees; the success of our development strategy in emerging markets; changes in commodity, labor and other operating costs; harm or dilution to our brands caused by franchisee and third party activity; pending or future litigation and legal claims or proceedings; changes in or noncompliance with government regulations, including labor standards and anti-bribery or anti-corruption laws; tax matters, including changes in tax laws or disagreements with taxing authorities; consumer preferences and perceptions of our brands; failure to protect our service marks or other intellectual property; changes in consumer discretionary spending and general economic conditions; competition within the retail food industry; not realizing the anticipated benefits from past or potential future acquisitions, investments or other strategic transactions, and risks relating to our significant amount of indebtedness. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions "Risk Factors" and "Forward-Looking Statements" in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.

Yum! Brands, Inc., based in Louisville, Kentucky, has over 52,000 restaurants in more than 150 countries and territories primarily operating the company's brands - KFC, Pizza Hut and Taco Bell - global leaders of the chicken, pizza and Mexican-style food categories. The Company's family of brands also includes The Habit Burger Grill, a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Yum! Brands was included on the 2021 Bloomberg Gender-Equality Index and in 2020, Yum! Brands was named to the Dow Jones Sustainability Index North America and was ranked among the top 100 Best Corporate Citizens by 3BL Media.

YUM! Brands, Inc.

Condensed Consolidated Summary of Results

(amounts in millions, except per share amounts)

(unaudited)

Quarter ended % Year to date % Change Change

9/30/21 9/30/20 B/(W) 9/30/21 9/30/20 B/(W)

Revenues

Company sales $ 513 $ 486 5 $ 1,509 $ 1,244 21

Franchise and 716 639 12 2,080 1,760 18property revenues

Franchisecontributions for 377 323 17 1,105 905 22advertising andother services

Total revenues 1,606 1,448 11 4,694 3,909 20



Costs and Expenses, Net

Companyrestaurant 421 399 (5) 1,230 1,046 (18)expenses

General andadministrative 253 257 1 689 724 5expenses

Franchise and 31 13 (145) 81 107 25property expenses

Franchiseadvertising and 375 313 (19) 1,090 887 (23)other servicesexpense

Refranchising 1 (9 ) (108) (21 ) (30 ) (30)(gain) loss

Other (income) (2 ) 4 NM (12 ) 154 NMexpense

Total costs and 1,079 977 (10) 3,057 2,888 (6)expenses, net



Operating Profit 527 471 12 1,637 1,021 60

Investment(income) expense, (51 ) (10 ) 386 (52 ) (67 ) (22)net

Other pension 1 4 74 6 9 34(income) expense

Interest expense, 126 161 23 416 411 (1)net

Income before 451 316 43 1,267 668 90income taxes

Income tax(benefit) (77 ) 33 330 22 96 77provision

Net Income $ 528 $ 283 87 $ 1,245 $ 572 118



Basic EPS

EPS $ 1.78 $ 0.94 91 $ 4.17 $ 1.89 120

Average shares 296 303 2 298 302 1outstanding



Diluted EPS

EPS $ 1.75 $ 0.92 90 $ 4.10 $ 1.86 120

Average shares 302 307 2 304 307 1outstanding



Dividendsdeclared per $ 0.50 $ 0.47 $ 1.50 $ 1.41 common share

See accompanying notes.

Percentages may not recompute due to rounding.

YUM! Brands, Inc.

KFC DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

9/30/21

9/30/20

B/(W)

9/30/21

9/30/20

B/(W)

Company sales

$

143

$

130

10

$

423

$

346

22

Franchise and property revenues

391

340

15

1,124

906

24

Franchise contributions for advertising and other services

158

116

36

452

309

46

Total revenues

692

586

18

1,999

1,561

28

Company restaurant expenses

117

109

(7)

346

307

(12)

General and administrative expenses

86

81

(8)

239

224

(7)

Franchise and property expenses

20

7

(165)

49

69

29

Franchise advertising and other services expense

154

111

(37)

438

301

(45)

Other (income) expense

1

-

NM

(5

)

5

NM

Total costs and expenses, net

378

308

(22)

1,067

906

(18)

Operating Profit

$

314

$

278

14

$

932

$

655

42

Company restaurant margin %1

18.9

%

16.3

%

2.6 ppts.

18.3

%

11.2

%

7.1 ppts.

Operating margin

45.4

%

47.2

%

(1.8) ppts.

46.6

%

41.9

%

4.7 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.

YUM! Brands, Inc.

KFC DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended % Year to date % Change Change

9/30/21 9/30/20 B/(W) 9/30/21 9/30/20 B/(W)



Company sales $ 143 $ 130 10 $ 423 $ 346 22

Franchise and property 391 340 15 1,124 906 24revenues

Franchise contributionsfor advertising and 158 116 36 452 309 46other services

Total revenues 692 586 18 1,999 1,561 28



Company restaurant 117 109 (7) 346 307 (12)expenses

General and 86 81 (8) 239 224 (7)administrative expenses

Franchise and property 20 7 (165) 49 69 29expenses

Franchise advertisingand other services 154 111 (37) 438 301 (45)expense

Other (income) expense 1 - NM (5 ) 5 NM

Total costs and 378 308 (22) 1,067 906 (18)expenses, net

Operating Profit $ 314 $ 278 14 $ 932 $ 655 42



Company restaurant 18.9 % 16.3 % 2.6 18.3 % 11.2 % 7.1margin %^1 ppts. ppts.



Operating margin 45.4 % 47.2 % (1.8) 46.6 % 41.9 % 4.7 ppts. ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

^1See reconciliation of Non-GAAP Measurements to GAAP Results within thisrelease for further detail of Company restaurant margin %.

YUM! Brands, Inc.

PIZZA HUT DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

9/30/21

9/30/20

B/(W)

9/30/21

9/30/20

B/(W)

Company sales

$

13

$

20

(34)

$

39

$

57

(31)

Franchise and property revenues

147

134

9

435

393

10

Franchise contributions for advertising and other services

87

89

(1)

273

263

4

Total revenues

247

243

2

747

713

5

Company restaurant expenses

12

18

32

36

55

33

General and administrative expenses

45

51

10

128

141

9

Franchise and property expenses

2

(2

)

(216)

9

11

20

Franchise advertising and other services expense

90

85

(6)

275

256

(8)

Other (income) expense

(3

)

2

NM

(7

)

(2

)

NM

Total costs and expenses, net

146

154

5

441

461

4

Operating Profit

$

101

$

89

13

$

306

$

252

21

Company restaurant margin %1

6.0

%

8.2

%

(2.2) ppts.

6.9

%

3.4

%

3.5 ppts.

Operating margin

40.6

%

36.7

%

3.9 ppts.

40.9

%

35.4

%

5.5 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.

YUM! Brands, Inc.

PIZZA HUT DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended % Year to date % Change Change

9/30/21 9/30/ B/(W) 9/30/21 9/30/20 B/(W) 20



Company sales $ 13 $ 20 (34) $ 39 $ 57 (31)

Franchise and property 147 134 9 435 393 10revenues

Franchise contributionsfor advertising and 87 89 (1) 273 263 4other services

Total revenues 247 243 2 747 713 5



Company restaurant 12 18 32 36 55 33expenses

General and 45 51 10 128 141 9administrative expenses

Franchise and property 2 (2 ) (216) 9 11 20expenses

Franchise advertisingand other services 90 85 (6) 275 256 (8)expense

Other (income) expense (3 ) 2 NM (7 ) (2 ) NM

Total costs and 146 154 5 441 461 4expenses, net

Operating Profit $ 101 $ 89 13 $ 306 $ 252 21



Company restaurant 6.0 % 8.2 % (2.2) 6.9 % 3.4 % 3.5margin %^1 ppts. ppts.



Operating margin 40.6 % 36.7 % 3.9 40.9 % 35.4 % 5.5 ppts. ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

^1See reconciliation of Non-GAAP Measurements to GAAP Results within thisrelease for further detail of Company restaurant margin %.

YUM! Brands, Inc.

TACO BELL DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended

% Change

Year to date

% Change

9/30/21

9/30/20

B/(W)

9/30/21

9/30/20

B/(W)

Company sales

$

225

$

218

3

$

656

$

610

7

Franchise and property revenues

177

165

8

518

460

13

Franchise contributions for advertising and other services

132

118

12

380

333

14

Total revenues

534

501

6

1,554

1,403

11

Company restaurant expenses

172

158

(9)

495

458

(8)

General and administrative expenses

40

33

(18)

104

108

4

Franchise and property expenses

9

8

(17)

23

24

5

Franchise advertising and other services expense

131

117

(12)

377

330

(14)

Other (income) expense

(2

)

(1

)

NM

(5

)

(1

)

NM

Total costs and expenses, net

350

315

(11)

994

919

(8)

Operating Profit

$

184

$

186

(1)

$

560

$

484

16

Company restaurant margin %1

23.4

%

27.8

%

(4.4) ppts.

24.5

%

25.0

%

(0.5) ppts.

Operating margin

34.6

%

37.2

%

(2.6) ppts.

36.1

%

34.5

%

1.6 ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

1See reconciliation of Non-GAAP Measurements to GAAP Results within this release for further detail of Company restaurant margin %.

YUM! Brands, Inc.

TACO BELL DIVISION Operating Results

(amounts in millions)

(unaudited)

Quarter ended % Year to date % Change Change

9/30/21 9/30/20 B/(W) 9/30/21 9/30/20 B/(W)



Company sales $ 225 $ 218 3 $ 656 $ 610 7

Franchise and property 177 165 8 518 460 13revenues

Franchise contributionsfor advertising and 132 118 12 380 333 14other services

Total revenues 534 501 6 1,554 1,403 11



Company restaurant 172 158 (9) 495 458 (8)expenses

General and 40 33 (18) 104 108 4administrative expenses

Franchise and property 9 8 (17) 23 24 5expenses

Franchise advertisingand other services 131 117 (12) 377 330 (14)expense

Other (income) expense (2 ) (1 ) NM (5 ) (1 ) NM

Total costs and 350 315 (11) 994 919 (8)expenses, net

Operating Profit $ 184 $ 186 (1) $ 560 $ 484 16



Company restaurant 23.4 % 27.8 % (4.4) 24.5 % 25.0 % (0.5)margin %^1 ppts. ppts.



Operating margin 34.6 % 37.2 % (2.6) 36.1 % 34.5 % 1.6 ppts. ppts.

See accompanying notes.

Percentages may not recompute due to rounding.

^1See reconciliation of Non-GAAP Measurements to GAAP Results within thisrelease for further detail of Company restaurant margin %.

YUM! Brands, Inc.

Condensed Consolidated Balance Sheets

(amounts in millions)

(unaudited) 9/30/21

12/31/20

ASSETS

Current Assets

Cash and cash equivalents

$

1,001

$

730

Accounts and notes receivable, less allowance: $36 in 2021 and $45 in 2020

548

534

Prepaid expenses and other current assets

513

425

Total Current Assets

2,062

1,689

Property, plant and equipment, net of accumulated depreciation of $1,274 in 2021 and $1,230 in 2020

1,193

1,235

Goodwill

650

597

Intangible assets, net

361

343

Other assets

1,459

1,435

Deferred income taxes

694

553

Total Assets

$

6,419

$

5,852

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities

Accounts payable and other current liabilities

$

1,265

$

1,189

Income taxes payable

26

33

Short-term borrowings

64

453

Total Current Liabilities

1,355

1,675

Long-term debt

11,189

10,272

Other liabilities and deferred credits

1,730

1,796

Total Liabilities

14,274

13,743

Shareholders' Deficit

Common Stock, no par value, 750 shares authorized; 294 shares issued in 2021 and 300 issued in 2020

-

-

Accumulated deficit

(7,524

)

(7,480

)

Accumulated other comprehensive loss

(331

)

(411

)

Total Shareholders' Deficit

(7,855

)

(7,891

)

Total Liabilities and Shareholders' Deficit

$

6,419

$

5,852

See accompanying notes.

YUM! Brands, Inc.

Condensed Consolidated Balance Sheets

(amounts in millions)

(unaudited) 12/31/20 9/30/21

ASSETS

Current Assets

Cash and cash equivalents $ 1,001 $ 730

Accounts and notes receivable, less allowance: $36 in 548 534 2021 and $45 in 2020

Prepaid expenses and other current assets 513 425

Total Current Assets 2,062 1,689



Property, plant and equipment, net of accumulated 1,193 1,235 depreciation of $1,274 in 2021 and $1,230 in 2020

Goodwill 650 597

Intangible assets, net 361 343

Other assets 1,459 1,435

Deferred income taxes 694 553

Total Assets $ 6,419 $ 5,852



LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities

Accounts payable and other current liabilities $ 1,265 $ 1,189

Income taxes payable 26 33

Short-term borrowings 64 453

Total Current Liabilities 1,355 1,675



Long-term debt 11,189 10,272

Other liabilities and deferred credits 1,730 1,796

Total Liabilities 14,274 13,743



Shareholders' Deficit

Common Stock, no par value, 750 shares authorized; 294 - - shares issued in 2021 and 300 issued in 2020

Accumulated deficit (7,524 ) (7,480 )

Accumulated other comprehensive loss (331 ) (411 )

Total Shareholders' Deficit (7,855 ) (7,891 )

Total Liabilities and Shareholders' Deficit $ 6,419 $ 5,852

See accompanying notes.

YUM! Brands, Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)

Year to date

9/30/21

9/30/20

Cash Flows - Operating Activities

Net Income

$

1,245

$

572

Depreciation and amortization

117

100

Impairment and closure expense

2

156

Refranchising (gain) loss

(21

)

(30

)

Investment (income) expense, net

(52

)

(67

)

Contributions to defined benefit pension plans

(5

)

(2

)

Deferred income taxes

(173

)

(32

)

Share-based compensation expense

58

44

Changes in accounts and notes receivable

-

46

Changes in prepaid expenses and other current assets

(5

)

11

Changes in accounts payable and other current liabilities

24

105

Changes in income taxes payable

(45

)

(152

)

Other, net

147

102

Net Cash Provided by Operating Activities

1,292

853

Cash Flows - Investing Activities

Capital spending

(138

)

(99

)

Acquisition of The Habit Restaurants, Inc.

-

(408

)

Proceeds from sale of investment in Grubhub, Inc. common stock

-

206

Proceeds from refranchising of restaurants

48

13

Other, net

(33

)

19

Net Cash Used in Investing Activities

(123

)

(269

)

Cash Flows - Financing Activities

Proceeds from long-term debt

4,150

1,650

Repayments of long-term debt

(3,647

)

(1,142

)

Revolving credit facilities, three months or less, net

-

-

Short-term borrowings by original maturity

More than three months - proceeds

-

85

More than three months - payments

-

(90

)

Three months or less, net

-

-

Repurchase shares of Common Stock

(857

)

-

Dividends paid on Common Stock

(446

)

(425

)

Debt issuance costs

(37

)

(20

)

Other, net

(44

)

(34

)

Net Cash Provided by (Used in) Financing Activities

(881

)

24

Effect of Exchange Rate on Cash and Cash Equivalents

(1

)

(1

)

Net Increase in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

287

607

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period

1,024

768

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period

$

1,311

$

1,375

See accompanying notes.

Reconciliation of Non-GAAP Measurements to GAAP Results (amounts in millions, except per share amounts) (unaudited)

In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company provides the following non-GAAP measurements.

* Diluted Earnings Per Share ("EPS") excluding Special Items (as defined below); * Effective Tax Rate excluding Special Items; * Core Operating Profit. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance internally; * Company restaurant profit and Company restaurant margin as a percentage of sales (as defined below).

These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations.

Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature. Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance. The Special Items are described in (a) - (h) in the accompanying notes.

Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales ("Company restaurant margin %") is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.

Certain non-GAAP measurements are presented excluding the impact of FX. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the FX impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

YUM! Brands, Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)

Year to date

9/30/21 9/30/20

Cash Flows - Operating Activities

Net Income $ 1,245 $ 572

Depreciation and amortization 117 100

Impairment and closure expense 2 156

Refranchising (gain) loss (21 ) (30 )

Investment (income) expense, net (52 ) (67 )

Contributions to defined benefit pension plans (5 ) (2 )

Deferred income taxes (173 ) (32 )

Share-based compensation expense 58 44

Changes in accounts and notes receivable - 46

Changes in prepaid expenses and other current assets (5 ) 11

Changes in accounts payable and other current liabilities 24 105

Changes in income taxes payable (45 ) (152 )

Other, net 147 102

Net Cash Provided by Operating Activities 1,292 853



Cash Flows - Investing Activities

Capital spending (138 ) (99 )

Acquisition of The Habit Restaurants, Inc. - (408 )

Proceeds from sale of investment in Grubhub, Inc. common - 206 stock

Proceeds from refranchising of restaurants 48 13

Other, net (33 ) 19

Net Cash Used in Investing Activities (123 ) (269 )



Cash Flows - Financing Activities

Proceeds from long-term debt 4,150 1,650

Repayments of long-term debt (3,647 ) (1,142 )

Revolving credit facilities, three months or less, net - -

Short-term borrowings by original maturity

More than three months - proceeds - 85

More than three months - payments - (90 )

Three months or less, net - -

Repurchase shares of Common Stock (857 ) -

Dividends paid on Common Stock (446 ) (425 )

Debt issuance costs (37 ) (20 )

Other, net (44 ) (34 )

Net Cash Provided by (Used in) Financing Activities (881 ) 24

Effect of Exchange Rate on Cash and Cash Equivalents (1 ) (1 )

Net Increase in Cash, Cash Equivalents, Restricted Cash and 287 607 Restricted Cash Equivalents

Cash, Cash Equivalents, Restricted Cash and Restricted Cash 1,024 768 Equivalents - Beginning of Period

Cash, Cash Equivalents, Restricted Cash and Restricted Cash $ 1,311 $ 1,375 Equivalents - End of Period



See accompanying notes.

Reconciliation of Non-GAAP Measurements to GAAP Results (amounts in millions, except per share amounts) (unaudited)

In addition to the results provided in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company provides the following non-GAAP measurements.

* Diluted Earnings Per Share ("EPS") excluding Special Items (as defined below); * Effective Tax Rate excluding Special Items; * Core Operating Profit. Core Operating Profit excludes Special Items and FX and we use Core Operating Profit for the purposes of evaluating performance internally; * Company restaurant profit and Company restaurant margin as a percentage of sales (as defined below).

These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measurements provide additional information to investors to facilitate the comparison of past and present operations.

Special Items are not included in any of our Division segment results as the Company does not believe they are indicative of our ongoing operations due to their size and/or nature. Our chief operating decision maker does not consider the impact of Special Items when assessing segment performance. The Special Items are described in (a) - (h) in the accompanying notes.

Company restaurant profit is defined as Company sales less Company restaurant expenses, both of which appear on the face of our Condensed Consolidated Statements of Income. Company restaurant expenses include those expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, cost of restaurant-level labor, rent, depreciation and amortization of restaurant-level assets and advertising expenses incurred by and on behalf of that Company restaurant. Company restaurant margin as a percentage of sales ("Company restaurant margin %") is defined as Company restaurant profit divided by Company sales. We use Company restaurant profit for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe Company restaurant profit provides useful information to investors as to the profitability of our Company-owned restaurants. In calculating Company restaurant profit, the Company excludes revenues and expenses directly associated with our franchise operations as well as non-restaurant-level costs included in General and administrative expenses, some of which may support Company-owned restaurant operations. The Company also excludes restaurant-level asset impairment and closures expenses, which have historically not been significant, from the determination of Company restaurant profit as such expenses are not believed to be indicative of ongoing operations. Company restaurant profit and Company restaurant margin % as presented may not be comparable to other similarly titled measures of other companies in the industry.

Certain non-GAAP measurements are presented excluding the impact of FX. These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the FX impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

Quarter ended Year to date

9/30/21 9/30/20 9/30/21 9/30/20

Detail of Special Items

Refranchising gain (loss)^(a) $ - $ 2 $ 4 $ 8

Costs associated withacquisition and integration of - - - (9 )Habit Burger Grill^(b)

Impairment of Habit Burger Grill - (5 ) - (144 )goodwill^(c)

Unlocking Opportunity Initiative - - - (50 )contribution^(d)

Charges associated with resource (4 ) (32 ) (7 ) (32 )optimization^(e)

Other Special Items Income 1 1 2 (6 )(Expense)

Special Items Income (Expense) - (3 ) (34 ) (1 ) (233 )Operating Profit

Charges associated with resourceoptimization - Other pension - (1 ) 1 (1 )(expense) income^(e)

Interest expense, net^(f) - (34 ) (34 ) (34 )

Special Items Income (Expense) (3 ) (69 ) (34 ) (268 )before Income Taxes

Tax (Expense) Benefit on Special 11 17 18 57 Items^(g)

Tax Benefit - Intra-entitytransfer of intellectual 152 25 216 25 property^(h)

Special Items Income (Expense), $ 160 $ (27 ) $ 200 $ (186 )net of tax

Average diluted shares 302 307 304 307 outstanding

Special Items diluted EPS $ 0.53 $ (0.09 ) $ 0.66 $ (0.61 )



Reconciliation of GAAP Operating Profit to Core Operating Profit



Consolidated

GAAP Operating Profit $ 527 $ 471 $ 1,637 $ 1,021

Special Items Income (Expense) (3 ) (34 ) (1 ) (233 )

Foreign Currency Impact on 12 N/A 55 N/A Divisional Operating Profit

Core Operating Profit $ 518 $ 505 $ 1,583 $ 1,254



KFC Division

GAAP Operating Profit $ 314 $ 278 $ 932 $ 655

Foreign Currency Impact on 10 N/A 46 N/A Divisional Operating Profit

Core Operating Profit $ 304 $ 278 $ 886 $ 655



Pizza Hut Division

GAAP Operating Profit $ 101 $ 89 $ 306 $ 252

Foreign Currency Impact on 2 N/A 8 N/A Divisional Operating Profit

Core Operating Profit $ 99 $ 89 $ 298 $ 252



Taco Bell Division

GAAP Operating Profit $ 184 $ 186 $ 560 $ 484

Foreign Currency Impact on - N/A 1 N/A Divisional Operating Profit

Core Operating Profit $ 184 $ 186 $ 559 $ 484



Habit Burger Grill Division

GAAP Operating Profit (Loss) $ 1 $ (7 ) $ 6 $ (15 )

Foreign Currency Impact on - N/A - N/A Divisional Operating Profit

Core Operating Profit $ 1 $ (7 ) $ 6 $ (15 )



Reconciliation of Diluted EPS toDiluted EPS excluding Special Items

Diluted EPS $ 1.75 $ 0.92 $ 4.10 $ 1.86

Special Items Diluted EPS 0.53 (0.09 ) 0.66 (0.61 )

Diluted EPS excluding Special $ 1.22 $ 1.01 $ 3.44 $ 2.47 Items



Reconciliation of GAAP EffectiveTax Rate to Effective Tax Rate excluding Special Items

GAAP Effective Tax Rate (17.0 ) 10.5 % 1.8 % 14.4 % %

Impact on Tax Rate as a result (35.9 ) (8.8 ) (17.9 ) (4.6 )of Special Items % % % %

Effective Tax Rate excluding 18.9 % 19.3 % 19.7 % 19.0 %Special Items



Reconciliation of GAAP Operating Profit to Company Restaurant Profit

Quarter ended 9/30/2021

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Corporate and Unallocated

Consolidated

GAAP Operating Profit (Loss)

$

314

$

101

$

184

$

1

$

(73

)

$

527

Less:

Franchise and property revenues

391

147

177

1

-

716

Franchise contributions for advertising and other services

158

87

132

-

-

377

Add:

General and administrative expenses

86

45

40

12

70

253

Franchise and property expenses

20

2

9

-

-

31

Franchise advertising and other services expense

154

90

131

-

-

375

Refranchising (gain) loss

-

-

-

-

1

1

Other (income) expense

1

(3

)

(2

)

-

2

(2

)

Company restaurant profit

$

26

$

1

$

53

$

12

$

-

$

92

Company sales

$

143

$

13

$

225

$

132

$

-

$

513

Company restaurant margin %

18.9

%

6.0

%

23.4

%

8.6

%

N/A

17.9

%

Reconciliation of GAAP Operating Profit to Company Restaurant Profit

Quarter ended 9/30/2021

Pizza Taco Habit Corporate KFC Hut Bell Burger and Consolidated Division Division Division Grill Unallocated Division

GAAP Operating $ 314 $ 101 $ 184 $ 1 $ (73 ) $ 527 Profit (Loss)

Less:

Franchise andproperty 391 147 177 1 - 716 revenues

Franchisecontributionsfor advertising 158 87 132 - - 377 and otherservices

Add:

General andadministrative 86 45 40 12 70 253 expenses

Franchise andproperty 20 2 9 - - 31 expenses

Franchiseadvertising and 154 90 131 - - 375 other servicesexpense

Refranchising - - - - 1 1 (gain) loss

Other (income) 1 (3 ) (2 ) - 2 (2 )expense

Companyrestaurant $ 26 $ 1 $ 53 $ 12 $ - $ 92 profit

Company sales $ 143 $ 13 $ 225 $ 132 $ - $ 513

Companyrestaurant 18.9 % 6.0 % 23.4 % 8.6 % N/A 17.9 %margin %

Quarter ended 9/30/2020

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Corporate and Unallocated

Consolidated

GAAP Operating Profit (Loss)

$

278

$

89

$

186

$

(7

)

$

(75

)

$

471

Less:

Franchise and property revenues

340

134

165

-

-

639

Franchise contributions for advertising and other services

116

89

118

-

-

323

Add:

General and administrative expenses

81

51

33

11

81

257

Franchise and property expenses

7

(2

)

8

-

-

13

Franchise advertising and other services expense

111

85

117

-

-

313

Refranchising (gain) loss

-

-

-

-

(9

)

(9

)

Other (income) expense

-

2

(1

)

(1

)

4

4

Company restaurant profit

$

21

$

2

$

60

$

3

$

1

$

87

Company sales

$

130

$

20

$

218

$

118

$

-

$

486

Company restaurant margin %

16.3

%

8.2

%

27.8

%

2.2

%

N/A

17.8

%

Quarter ended 9/30/2020

Pizza Taco Habit Corporate KFC Hut Bell Burger and Consolidated Division Division Division Grill Unallocated Division

GAAP Operating $ 278 $ 89 $ 186 $ (7 ) $ (75 ) $ 471 Profit (Loss)

Less:

Franchise andproperty 340 134 165 - - 639 revenues

Franchisecontributionsfor advertising 116 89 118 - - 323 and otherservices

Add:

General andadministrative 81 51 33 11 81 257 expenses

Franchise andproperty 7 (2 ) 8 - - 13 expenses

Franchiseadvertising and 111 85 117 - - 313 other servicesexpense

Refranchising - - - - (9 ) (9 )(gain) loss

Other (income) - 2 (1 ) (1 ) 4 4 expense

Companyrestaurant $ 21 $ 2 $ 60 $ 3 $ 1 $ 87 profit

Company sales $ 130 $ 20 $ 218 $ 118 $ - $ 486

Companyrestaurant 16.3 % 8.2 % 27.8 % 2.2 % N/A 17.8 %margin %

Year to date 9/30/2021

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Corporate and Unallocated

Consolidated

GAAP Operating Profit (Loss)

$

932

$

306

$

560

$

6

$

(167

)

$

1,637

Less:

Franchise and property revenues

1,124

435

518

3

-

2,080

Franchise contributions for advertising and other services

452

273

380

-

-

1,105

Add:

General and administrative expenses

239

128

104

35

183

689

Franchise and property expenses

49

9

23

-

-

81

Franchise advertising and other services expense

438

275

377

-

-

1,090

Refranchising (gain) loss

-

-

-

-

(21

)

(21

)

Other (income) expense

(5

)

(7

)

(5

)

-

5

(12

)

Company restaurant profit

$

77

$

3

$

161

$

38

$

-

$

279

Company sales

$

423

$

39

$

656

$

391

$

-

$

1,509

Company restaurant margin %

18.3

%

6.9

%

24.5

%

9.7

%

N/A

18.5

%

Year to date 9/30/2021

Pizza Taco Habit Corporate KFC Hut Bell Burger and Consolidated Division Division Division Grill Unallocated Division

GAAP Operating $ 932 $ 306 $ 560 $ 6 $ (167 ) $ 1,637 Profit (Loss)

Less:

Franchise andproperty 1,124 435 518 3 - 2,080 revenues

Franchisecontributionsfor advertising 452 273 380 - - 1,105 and otherservices

Add:

General andadministrative 239 128 104 35 183 689 expenses

Franchise andproperty 49 9 23 - - 81 expenses

Franchiseadvertising and 438 275 377 - - 1,090 other servicesexpense

Refranchising - - - - (21 ) (21 )(gain) loss

Other (income) (5 ) (7 ) (5 ) - 5 (12 )expense

Companyrestaurant $ 77 $ 3 $ 161 $ 38 $ - $ 279 profit

Company sales $ 423 $ 39 $ 656 $ 391 $ - $ 1,509

Companyrestaurant 18.3 % 6.9 % 24.5 % 9.7 % N/A 18.5 %margin %

Year to date 9/30/2020

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Corporate and Unallocated

Consolidated

GAAP Operating Profit (Loss)

$

655

$

252

$

484

$

(15

)

$

(355

)

$

1,021

Less:

Franchise and property revenues

906

393

460

1

-

1,760

Franchise contributions for advertising and other services

309

263

333

-

-

905

Add:

General and administrative expenses

224

141

108

22

229

724

Franchise and property expenses

69

11

24

-

3

107

Franchise advertising and other services expense

301

256

330

-

-

887

Refranchising (gain) loss

-

-

-

-

(30

)

(30

)

Other (income) expense

5

(2

)

(1

)

(1

)

153

154

Company restaurant profit

$

39

$

2

$

152

$

5

$

-

$

198

Company sales

$

346

$

57

$

610

$

231

$

-

$

1,244

Company restaurant margin %

11.2

%

3.4

%

25.0

%

2.2

%

N/A

15.9

%

Year to date 9/30/2020

Pizza Taco Habit Corporate KFC Hut Bell Burger and Consolidated Division Division Division Grill Unallocated Division

GAAP Operating $ 655 $ 252 $ 484 $ (15 ) $ (355 ) $ 1,021 Profit (Loss)

Less:

Franchise andproperty 906 393 460 1 - 1,760 revenues

Franchisecontributionsfor advertising 309 263 333 - - 905 and otherservices

Add:

General andadministrative 224 141 108 22 229 724 expenses

Franchise andproperty 69 11 24 - 3 107 expenses

Franchiseadvertising and 301 256 330 - - 887 other servicesexpense

Refranchising - - - - (30 ) (30 )(gain) loss

Other (income) 5 (2 ) (1 ) (1 ) 153 154 expense

Companyrestaurant $ 39 $ 2 $ 152 $ 5 $ - $ 198 profit

Company sales $ 346 $ 57 $ 610 $ 231 $ - $ 1,244

Companyrestaurant 11.2 % 3.4 % 25.0 % 2.2 % N/A 15.9 %margin %

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

Quarter Ended 9/30/2021

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Corporate and Unallocated

Consolidated

Total revenues

$

692

$

247

$

534

$

133

$

-

$

1,606

Company restaurant expenses

117

12

172

120

-

421

General and administrative expenses

86

45

40

12

70

253

Franchise and property expenses

20

2

9

-

-

31

Franchise advertising and other services expense

154

90

131

-

-

375

Refranchising (gain) loss

-

-

-

-

1

1

Other (income) expense

1

(3

)

(2

)

-

2

(2

)

Total costs and expenses, net

378

146

350

132

73

1,079

Operating Profit (Loss)

$

314

$

101

$

184

$

1

$

(73

)

$

527

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

Habit CorporateQuarter Ended KFC Pizza Hut Taco Bell Burger and Consolidated9/30/2021 Division Division Division Grill Unallocated Division

Total revenues $ 692 $ 247 $ 534 $ 133 $ - $ 1,606



Companyrestaurant 117 12 172 120 - 421 expenses

General andadministrative 86 45 40 12 70 253 expenses

Franchise andproperty 20 2 9 - - 31 expenses

Franchiseadvertisingand other 154 90 131 - - 375 servicesexpense

Refranchising - - - - 1 1 (gain) loss

Other (income) 1 (3 ) (2 ) - 2 (2 )expense

Total costsand expenses, 378 146 350 132 73 1,079 net

Operating $ 314 $ 101 $ 184 $ 1 $ (73 ) $ 527 Profit (Loss)

Quarter Ended 9/30/2020

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Corporate and Unallocated

Consolidated

Total revenues

$

586

$

243

$

501

$

118

$

-

$

1,448

Company restaurant expenses

109

18

158

115

(1

)

399

General and administrative expenses

81

51

33

11

81

257

Franchise and property expenses

7

(2

)

8

-

-

13

Franchise advertising and other services expense

111

85

117

-

-

313

Refranchising (gain) loss

-

-

-

-

(9

)

(9

)

Other (income) expense

-

2

(1

)

(1

)

4

4

Total costs and expenses, net

308

154

315

125

75

977

Operating Profit (Loss)

$

278

$

89

$

186

$

(7

)

$

(75

)

$

471

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

Habit CorporateQuarter Ended KFC Pizza Hut Taco Bell Burger and Consolidated9/30/2020 Division Division Division Grill Unallocated Division

Total revenues $ 586 $ 243 $ 501 $ 118 $ - $ 1,448



Companyrestaurant 109 18 158 115 (1 ) 399 expenses

General andadministrative 81 51 33 11 81 257 expenses

Franchise andproperty 7 (2 ) 8 - - 13 expenses

Franchiseadvertisingand other 111 85 117 - - 313 servicesexpense

Refranchising - - - - (9 ) (9 )(gain) loss

Other (income) - 2 (1 ) (1 ) 4 4 expense

Total costsand expenses, 308 154 315 125 75 977 net

Operating $ 278 $ 89 $ 186 $ (7 ) $ (75 ) $ 471 Profit (Loss)

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

YUM! Brands, Inc.

Segment Results

(amounts in millions)

(unaudited)

Habit CorporateYear to Date 9 KFC Pizza Hut Taco Bell Burger and Consolidated/30/2021 Division Division Division Grill Unallocated Division

Total revenues $ 1,999 $ 747 $ 1,554 $ 394 $ - $ 4,694



Companyrestaurant 346 36 495 353 - 1,230 expenses

General andadministrative 239 128 104 35 183 689 expenses

Franchise andproperty 49 9 23 - - 81 expenses

Franchiseadvertisingand other 438 275 377 - - 1,090 servicesexpense

Refranchising - - - - (21 ) (21 )(gain) loss

Other (income) (5 ) (7 ) (5 ) - 5 (12 )expense

Total costsand expenses, 1,067 441 994 388 167 3,057 net

Operating $ 932 $ 306 $ 560 $ 6 $ (167 ) $ 1,637 Profit (Loss)

Year to Date 9/30/2020

KFC Division

Pizza Hut Division

Taco Bell Division

Habit Burger Grill Division

Corporate and Unallocated

Consolidated

Total revenues

$

1,561

$

713

$

1,403

232

$

-

$

3,909

Company restaurant expenses

307

55

458

226

-

1,046

General and administrative expenses

224

141

108

22

229

724

Franchise and property expenses

69

11

24

-

3

107

Franchise advertising and other services expense

301

256

330

-

-

887

Refranchising (gain) loss

-

-

-

-

(30

)

(30

)

Other (income) expense

5

(2

)

(1

)

(1

)

153

154

Total costs and expenses, net

906

461

919

247

355

2,888

Operating Profit (Loss)

$

655

$

252

$

484

$

(15

)

$

(355

)

$

1,021

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

Habit CorporateYear to Date 9 KFC Pizza Hut Taco Bell Burger and Consolidated/30/2020 Division Division Division Grill Unallocated Division

Total revenues $ 1,561 $ 713 $ 1,403 232 $ - $ 3,909



Companyrestaurant 307 55 458 226 - 1,046 expenses

General andadministrative 224 141 108 22 229 724 expenses

Franchise andproperty 69 11 24 - 3 107 expenses

Franchiseadvertisingand other 301 256 330 - - 887 servicesexpense

Refranchising - - - - (30 ) (30 )(gain) loss

Other (income) 5 (2 ) (1 ) (1 ) 153 154 expense

Total costsand expenses, 906 461 919 247 355 2,888 net

Operating $ 655 $ 252 $ 484 $ (15 ) $ (355 ) $ 1,021 Profit (Loss)

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Summary of Results. Corporate and unallocated expenses comprise items that are not allocated to segments for performance reporting purposes.

The Corporate and Unallocated column in the above tables includes, among other amounts, all amounts that we have deemed Special Items. See Reconciliation of Non-GAAP Measurements to GAAP Results.

Notes to the Condensed Consolidated Summary of Results, Condensed ConsolidatedBalance Sheets

and Condensed Consolidated Statements of Cash Flows

(amounts in millions)

(unaudited)





Amounts presented as of and for the quarters and years to date ended September30, 2021 and 2020 are preliminary.

Due to their size and volatility, we have reflected as Special Items those refranchising gains and losses that were recorded in connection with our(a) previously announced plans to have at least 98% franchise restaurant ownership by the end of 2018. As such, refranchising gains and losses recorded during 2021 and 2020 as Special Items are directly associated with restaurants that were refranchised prior to the end of 2018.



During the quarter ended September 30, 2020, we recorded net refranchising gains of $2 million that have been reflected as a Special Item. During the years to date ended September 30, 2021 and 2020, we recorded net refranchising gains of $4 million and $8 million, respectively, that have been reflected as Special Items.



Additionally, we recorded net refranchising losses of $1 million and net refranchising gains of $7 million during the quarters ended September 30, 2021 and 2020, respectively, that have not been reflected as Special Items. During the years to date ended September 30, 2021 and 2020, we recorded net refranchising gains of $17 million and $22 million, respectively, that have not been reflected as Special Items. These net gains and losses relate to refranchising of restaurants in 2021 and 2020 that were not part of our aforementioned plans to achieve 98% franchise ownership and that we believe are now more indicative of our expected ongoing refranchising activity.



During the year to date ended September 30, 2020, we recorded Special Item(b) charges of $9 million related to the acquisition and integration of The Habit Restaurants, Inc. ("Habit").



On March 18, 2020 we acquired all of the issued and outstanding common shares of Habit for total cash consideration of $408 million, net of cash acquired. During the first-quarter of 2020 the operations of substantially all Habit restaurants were impacted by government recommendations and mandates arising from containment and mitigation measures related to the COVID-19 global pandemic. As a result of the impacts of the COVID-19 pandemic on Habit's results through March 31, 2020 as well as general(c) market conditions, during the quarter ended March 31, 2020, we recorded a goodwill impairment charge of $139 million to Other (income) expense. As we continued to refine our preliminary purchase price allocation for Habit in the quarter ended September 30, 2020, the impairment charge was adjusted upward by $5 million. These impairment charges have been reflected as Special Items. We have also reflected the tax benefit of these impairment charges, which were $1 million and $32 million for the quarter and year to date ended September 30, 2020, respectively, as Special Items.



On June 24, 2020, the YUM! Brands, Inc. Board of Directors approved the establishment of the Company's new global "Unlocking Opportunity Initiative" including a $100 million investment over the next five years to fight inequality by unlocking opportunities for employees, restaurant team(d) members and communities. The Company contributed $50 million in the quarter ended June 30, 2020 to Yum! Brands Foundation, Inc. (a stand-alone, not-for-profit organization that is not consolidated in the Company's results) as part of these efforts and investment. As a result of the size and specific nature of this contribution, we have reflected the associated expense as a Special Item.



During the quarter ended September 30, 2021, we recorded a charge of $4 million to General and administrative expenses, and during the quarter(e) ended September 30, 2020, we recorded charges of $32 million and $1 million to General and administrative expenses and Other pension (expense) income, respectively, related to a resource optimization program initiated in the third quarter of 2020.



During the years to date ended September 30, 2021 and 2020, we recorded charges of $7 million and $32 million to General and administrative expenses, respectively, and a credit of $1 million and a charge of $1 million, respectively, to Other pension (expense) income related to the resource optimization program.



This program is part of our efforts to optimize our resources, reallocating them toward critical areas of the business that will drive future growth. These critical areas include accelerating our digital, technology and innovation capabilities to deliver a modern, world-class team member and customer experience and improve unit economics. Due to the size and scope of the resource optimization program, these amounts have been reflected as Special Items.



During the quarter ended June 30, 2021, certain subsidiaries of the Company redeemed $1,050 million aggregate principal amount of 5.25% Subsidiary Senior Unsecured Notes due in 2026 (the "2026 Notes"). The redemption amount was equal to 102.625% of the $1,050 million aggregate principal(f) amount redeemed, reflecting a $28 million "call premium". We recognized the call premium and the write-off of $6 million of unamortized debt issuance costs associated with the 2026 Notes within Interest expense, net and we reflected the charges as Special Items due to their collective size and the fact that the amounts are not indicative of our ongoing interest expense.



During the quarter ended September 30, 2020, KFC Holding Co., Pizza Hut Holdings, LLC and Taco Bell of America, LLC, each of which a wholly-owned subsidiary of the Company, issued a notice of redemption for $1,050 million aggregate principal amount of 5.00% Subsidiary Senior Unsecured Notes due in 2024 (the "2024 Notes"). The redemption amount included a $26 million call premium plus accrued and unpaid interest to the date of redemption of October 9, 2020. We recorded the call premium, $6 million of unamortized debt issuance costs associated with the 2024 Notes and $2 million of accrued and unpaid interest associated with the period of time from prepayment of the 2024 Notes with the Trustee on September 25, 2020 to their redemption date within Interest expense, net and reflected the charges as Special Items due to their collective size and the fact that the amounts are not indicative of our ongoing interest expense.



Tax (Expense) Benefit on Special Items was determined based upon the impact of the nature, as well as the jurisdiction of the respective individual(g) components within Special Items. Additionally, during the quarter ended September 30, 2021, we recorded as a Special Item a $10 million tax benefit related to prior refranchisings for which the associated pre-tax gain or loss was recorded as Special.



During the quarter ended September 30, 2020, the United Kingdom ("UK") Finance Act 2020 was enacted resulting in an increase in the UK corporate income tax rate from 17% to 19%. As a result, in the quarter ended(h) September 30, 2020, we remeasured the deferred tax assets originally recorded as a Special Item in the fourth quarter of 2019 as part of an intercompany restructuring of certain intellectual property ("IP") rights into the UK and recognized an additional $25 million deferred tax benefit as a Special Item.



During the quarter ended June 30, 2021, the UK Finance Act 2021 was enacted resulting in an increase in the UK corporate income tax rate from 19% to 25%. As a result, in the quarter ended June 30, 2021, we remeasured the deferred tax assets originally recorded as a Special Item as part of the aforementioned 2019 intercompany restructuring of certain IP rights into the UK and recognized an additional $64 million deferred tax benefit as a Special Item.



In July 2021, we concentrated management responsibility for European (excluding the UK) KFC franchise development, support operations and management oversight in Switzerland. Concurrent with this change in management responsibility, we completed intra-entity transfers of certain KFC IP rights from subsidiaries in the UK to subsidiaries in Switzerland. With the transfer of these rights, we received a step-up in amortizable tax basis to current fair value under applicable Swiss tax law. As a result of this transfer, we recorded a net, one-time tax benefit of $152 million as a Special Item in the quarter ended September 30, 2021.

Category: Earnings

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CONTACT: Analysts are invited to contact: Jodi Dyer, Vice President, Investor Relations and CFO, Digital & Technology at 888/298-6986

CONTACT: Members of the media are invited to contact: Virginia Ferguson, Vice President, Public Relations, at 502/874-8200