2021 Q4 Form 10-K Financial Statement

#000156459022007640 Filed on February 28, 2022

View on sec.gov

Income Statement

Concept 2021 Q4 2021 2020 Q4
Revenue $2.291B $9.853B $2.259B
YoY Change 1.42% 19.24% 11.34%
Cost Of Revenue $1.402B $5.719B $1.278B
YoY Change 9.7% 21.55% 8.67%
Gross Profit $889.0M $4.134B $981.0M
YoY Change -9.38% 16.19% 15.01%
Gross Profit Margin 38.8% 41.96% 43.43%
Selling, General & Admin $824.0M $3.225B $744.0M
YoY Change 10.75% 19.31% 3.91%
% of Gross Profit 92.69% 78.01% 75.84%
Research & Development $6.000M
YoY Change 100.0%
% of Gross Profit 0.15%
Depreciation & Amortization $136.0M $516.0M $123.0M
YoY Change 10.57% 14.67% 16.04%
% of Gross Profit 15.3% 12.48% 12.54%
Operating Expenses $860.0M $6.000M $779.0M
YoY Change 10.4% 100.0% 4.01%
Operating Profit $29.00M $1.386B $202.0M
YoY Change -85.64% 44.22% 114.89%
Interest Expense $23.00M $64.00M $47.00M
YoY Change -51.06% -67.35% 2.17%
% of Operating Profit 79.31% 4.62% 23.27%
Other Income/Expense, Net -$14.00M -$43.00M
YoY Change
Pretax Income $635.0M $1.392B $224.0M
YoY Change 183.48% 25.63% 75.0%
Income Tax $159.0M $369.0M $63.00M
% Of Pretax Income 25.04% 26.51% 28.13%
Net Earnings $475.0M $990.0M $151.0M
YoY Change 214.57% 26.28% 67.78%
Net Earnings / Revenue 20.73% 10.05% 6.68%
Basic Earnings Per Share $2.34
Diluted Earnings Per Share $1.102M $2.28 $347.1K
COMMON SHARES
Basic Shares Outstanding 422.0M
Diluted Shares Outstanding 434.0M

Balance Sheet

Concept 2021 Q4 2021 2020 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $3.996B $3.996B $4.263B
YoY Change -6.26% -6.26% 157.27%
Cash & Equivalents $1.136B $1.136B $1.158B
Short-Term Investments $2.860B $2.860B $3.105B
Other Short-Term Assets $176.0M $176.0M $129.0M
YoY Change 36.43% 36.43% 38.71%
Inventory $432.0M $432.0M $398.0M
Prepaid Expenses
Receivables $67.00M $67.00M $99.00M
Other Receivables $45.00M $45.00M $47.00M
Total Short-Term Assets $4.716B $4.716B $4.936B
YoY Change -4.46% -4.46% 118.5%
LONG-TERM ASSETS
Property, Plant & Equipment $2.251B $4.863B $1.765B
YoY Change 27.54% 23.77% 10.73%
Goodwill $2.142B $832.0M
YoY Change 157.45% 227.56%
Intangibles $272.0M $246.0M
YoY Change 10.57% 161.7%
Long-Term Investments $515.0M $515.0M $85.00M
YoY Change 505.88% 505.88% -4.49%
Other Assets $832.0M $165.0M $749.0M
YoY Change 11.08% -71.4% 29.14%
Total Long-Term Assets $8.507B $8.507B $5.939B
YoY Change 43.24% 43.24% 26.6%
TOTAL ASSETS
Total Short-Term Assets $4.716B $4.716B $4.936B
Total Long-Term Assets $8.507B $8.507B $5.939B
Total Assets $13.22B $13.22B $10.88B
YoY Change 21.59% 21.59% 56.47%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $830.0M $830.0M $708.0M
YoY Change 17.23% 17.23% 13.64%
Accrued Expenses $1.131B $1.131B $962.0M
YoY Change 17.57% 17.57% 17.46%
Deferred Revenue $182.0M $175.0M
YoY Change 4.0% 29.63%
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $3.000M $3.000M $2.000M
YoY Change 50.0% 50.0% 0.0%
Total Short-Term Liabilities $2.383B $2.383B $2.067B
YoY Change 15.29% 15.29% 19.07%
LONG-TERM LIABILITIES
Long-Term Debt $40.00M $40.00M $28.00M
YoY Change 42.86% 42.86% 7.69%
Other Long-Term Liabilities $167.0M $2.453B $167.0M
YoY Change 0.0% 17.82% -20.48%
Total Long-Term Liabilities $167.0M $2.493B $167.0M
YoY Change 0.0% 18.15% -20.48%
TOTAL LIABILITIES
Total Short-Term Liabilities $2.383B $2.383B $2.067B
Total Long-Term Liabilities $167.0M $2.493B $167.0M
Total Liabilities $5.301B $6.167B $4.404B
YoY Change 20.37% 32.08% 16.66%
SHAREHOLDERS EQUITY
Retained Earnings $2.892B $2.105B
YoY Change 37.39% 48.66%
Common Stock $4.695B $4.658B
YoY Change 0.79% 91.92%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $7.056B $7.056B $6.206B
YoY Change
Total Liabilities & Shareholders Equity $13.22B $13.22B $10.88B
YoY Change 21.59% 21.59% 56.47%

Cashflow Statement

Concept 2021 Q4 2021 2020 Q4
OPERATING ACTIVITIES
Net Income $475.0M $990.0M $151.0M
YoY Change 214.57% 26.28% 67.78%
Depreciation, Depletion And Amortization $136.0M $516.0M $123.0M
YoY Change 10.57% 14.67% 16.04%
Cash From Operating Activities $57.00M $1.131B $215.0M
YoY Change -73.49% 1.53% 53.57%
INVESTING ACTIVITIES
Capital Expenditures -$207.0M $689.0M -$135.0M
YoY Change 53.33% 64.44% 8.0%
Acquisitions $115.0M
YoY Change -60.07%
Other Investing Activities $95.00M -$166.0M -$641.0M
YoY Change -114.82% 196.43% 176.29%
Cash From Investing Activities -$112.0M -$855.0M -$776.0M
YoY Change -85.57% -72.5% 117.37%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -93.00M -313.0M -86.00M
YoY Change 8.14% -115.21% -23.21%
NET CHANGE
Cash From Operating Activities 57.00M 1.131B 215.0M
Cash From Investing Activities -112.0M -855.0M -776.0M
Cash From Financing Activities -93.00M -313.0M -86.00M
Net Change In Cash -148.0M -22.00M -647.0M
YoY Change -77.13% -121.36% 96.66%
FREE CASH FLOW
Cash From Operating Activities $57.00M $1.131B $215.0M
Capital Expenditures -$207.0M $689.0M -$135.0M
Free Cash Flow $264.0M $442.0M $350.0M
YoY Change -24.57% -36.4% 32.08%

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<p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-weight:bold;font-family:Times New Roman;font-size:10pt;font-style:normal;text-transform:none;font-variant: normal;">Note 1 – Description of Business</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">Yum China Holdings, Inc. (“Yum China” and, together with its subsidiaries, the “Company,” “we,” “us,” and “our”) was incorporated in Delaware on April 1, 2016.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">The Company owns, franchises or has ownership in entities that own and operate restaurants (also referred to as “stores” or “units”) under the KFC, Pizza Hut, Little Sheep, Huang Ji Huang, Lavazza, COFFii &amp; JOY, Taco Bell, and East Dawning concepts (collectively, the “concepts”). In connection with the separation of the Company in 2016 from its former parent company, Yum! Brands, Inc. (“YUM”), a 50-year master license agreement was entered into between Yum Restaurants Consulting (Shanghai) Company Limited (“YCCL”), a wholly-owned indirect subsidiary of the Company and YUM, through YRI China Franchising LLC, a subsidiary of YUM, effective from January 1, 2020 and previously through Yum! Restaurants Asia Pte. Ltd., another subsidiary of YUM, from October 31, 2016 to December 31, 2019, with automatic renewals for additional consecutive renewal terms of 50 years each, subject only to YCCL being in “good standing” and unless YCCL gives notice of its intent not to renew, for the exclusive right to use and sublicense the use of intellectual property owned by YUM and its subsidiaries for the development and operation of the KFC, Pizza Hut and, subject to achieving certain agreed-upon milestones, Taco Bell brands and their related marks and other intellectual property rights for restaurant services in the People’s Republic of China (the “PRC” or “China”), excluding Hong Kong, Macau and Taiwan. In exchange, we pay a license fee to YUM equal to 3% of net system sales from both our Company and franchise restaurants. We own the intellectual property of Little Sheep, Huang Ji Huang, COFFii &amp; JOY and East Dawning, and pay no license fee related to these concepts.  </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">In 1987, KFC was the first quick-service restaurant brand to enter China. As of December 31, 2021, there are over 8,100 KFC stores in China. We maintain a 58%, 70%, and 83% controlling interest in the entities that own and operate the KFCs in and around Shanghai, Beijing and Wuxi, respectively. During the third quarter of 2020, the Company completed the acquisition of an additional 25% equity interest in an unconsolidated affiliate that operates KFC stores in and around Suzhou, China (“Suzhou KFC”), for cash consideration of $149 million. Upon closing of the acquisition, the Company increased its equity interest to 72%, allowing the Company to consolidate Suzhou KFC. During the fourth quarter of 2021, the Company completed its investment of a 28% equity interest in Hangzhou Catering Service Group (“Hangzhou Catering”), for cash consideration of $255 million. Upon closing, the Company directly and indirectly holds an approximately 60% equity interest in the Hangzhou KFC joint venture that operates KFC stores in and around Hangzhou, China (“Hangzhou KFC”), allowing the Company to consolidate Hangzhou KFC. These acquisitions were considered immaterial. We began consolidating Suzhou KFC and Hangzhou KFC upon the completion of acquisition.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">The first Pizza Hut in China opened in 1990. As of December 31, 2021, there are over 2,500 Pizza Hut restaurants in China.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">In the second quarter of 2020, the Company partnered with Luigi Lavazza S.p.A. (“Lavazza Group”), the world renowned family-owned Italian coffee company, and entered into a joint venture to explore and develop the Lavazza coffee shop concept in China. In September 2021, the Company and Lavazza Group entered into agreements for the previously formed joint venture (“Lavazza joint venture”) to accelerate the expansion of Lavazza coffee shops in China. Upon execution of these agreements, the Company controls and consolidates the joint venture with its 65% equity interest. The acquisition was considered immaterial.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">The Company has two reportable segments: KFC and Pizza Hut. Our remaining operating segments, including the operations of Little Sheep, Huang Ji Huang, Lavazza, COFFii &amp; JOY, Taco Bell, East Dawning, Daojia and our e-commerce business, are combined and referred to as All Other Segments, as those operating segments are insignificant both individually and in the aggregate. Additional details on our segment reporting are included in Note 18.</p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;"> </p> <p style="text-align:justify;margin-bottom:0pt;margin-top:0pt;text-indent:0%;font-family:Times New Roman;font-size:10pt;font-weight:normal;font-style:normal;text-transform:none;font-variant: normal;">The Company’s common stock is listed on the New York Stock Exchange ("NYSE") under the symbol “YUMC”. On September 10, 2020, the Company completed a secondary listing of its common stock on the Main Board of the Hong Kong Stock Exchange ("HKEX") under the stock code “9987”, in connection with a global offering of 41,910,700 shares of its common stock.   Net proceeds raised by the Company from the global offering after deducting underwriting fees and the offering expenses amounted to $2.2 billion.</p>
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