Yum Brands Inc YUM
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/24/2013

Operator: Good morning. My name is Amanda, and I will be your conference operator today. At this time, I would like to welcome everyone to the Yum! Brands First Quarter 2013 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

Thank you. Mr. Steve Schmitt, Vice President of Investor Relations, you may begin your conference.

Steve Schmitt - VP, IR: Thanks, Amanda. Good morning, everyone and thank for joining us for our earnings call. This call is being recorded and will be available for playback. We are broadcasting the conference call via our website, Please be advised that if you ask a question, it will be included in both our live conference and in any future use of the recording.

I would also like to remind you that this conference call includes forward-looking statements. Forward-looking statements are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC.

In addition, please refer to the Investors section of the Yum! Brands' website to find disclosures and reconciliations of non-GAAP financial measures that may be used on today's call. Finally, we would like you to be aware of the following Yum! Investor events occurring in the next three months. Our April same-store sales for our China Division will be May 10 after market hours; our Taco Bell investor analyst conference will be May 21 in Irvine, in Irvine, California; and our second quarter earnings release will be Wednesday, July 10.

On our call today is David Novak, Chairman and CEO; Rick Carucci, President; and Pat Grismer, our CFO. Following remarks from each, we will take your questions.

Now I'll turn the call over to David Novak.

David C. Novak - Chairman and CEO: Thank you, Steve and good morning everyone and thank you for joining our call. Well, better than expected the first quarter was extremely difficult for Yum! Brands. As anticipated, intense media attention surrounding poultry supply in China significantly impacted KFC sales and profits.

Earnings per share declined 8% versus prior year as our China division operating profit fell 41%. Our operating profit increased 19% at Yum! Restaurants International, and 5% in our U.S. business.

While we're certainly not happy with our overall results, as we look at how our China sales evolved through March, we were making progress and it was pretty close to where we thought we'd be. Unfortunately, our quest for a full sales recovery has been dampened by the intense publicity of avian flu in China beginning in early April.

Now, the last time we were significantly impacted by avian flu was in 2005. The sales impact was initially dramatic at KFC, but relatively short-lived, lasting about three months. We anticipate this will once again be the case, but there's no way to be certain. Based on our results through the first three weeks of April, we expect China division's same-store sales will be down about 30% for the month. You will see the actual numbers in our sales release scheduled for May 10th.

Read our Earnings Call Transcript disclaimer.
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