YUM BRANDS INC - Quarter Report: 2025 March (Form 10-Q)

Proceeds from refranchising of restaurants Maturities (purchases) of Short term investments, net Other, net()()

Net Cash Provided By Investing Activities

Cash Flows – Financing ActivitiesRepayments of long-term debt()()Revolving credit facility, three months or less, net Repurchase shares of Common Stock() Dividends paid on Common Stock()()Other, net()()

Net Cash Used in Financing Activities

()()Effect of Exchange Rates on Cash and Cash Equivalents ()Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash
Equivalents() Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Beginning of Period Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - End of Period$ $ See accompanying Notes to Condensed Consolidated Financial Statements.


CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
YUM! BRANDS, INC. AND SUBSIDIARIES
(in millions)
	3/31/2025	12/31/2024
ASSETS
Current Assets
Cash and cash equivalents	$	$
Accounts and notes receivable, net
Prepaid expenses and other current assets
Total Current Assets

Property, plant and equipment, net
Goodwill
Intangible assets, net
Other assets
Deferred income taxes
Total Assets	$	$

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and other current liabilities	$	$
Income taxes payable
Short-term borrowings
Total Current Liabilities

Long-term debt
Other liabilities and deferred credits
Total Liabilities

Shareholders’ Deficit
Common Stock, par value, shares authorized; shares issued in 2025 and shares issued in 2024
Accumulated deficit	()	()
Accumulated other comprehensive loss	()	()
Total Shareholders’ Deficit	()	()
Total Liabilities and Shareholders’ Deficit	$	$

See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Unaudited)

YUM! BRANDS, INC. AND SUBSIDIARIES

Quarters ended March 31, 2025 and 2024

(in millions)

Yum! Brands, Inc.

Issued Common Stock

Accumulated Deficit

Accumulated Other Comprehensive Loss

Total Shareholders' Deficit

Amount

Balance at December 31, 2024

()

Net Income

Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature

Pension and post-retirement benefit plans (net of tax impact of less than $1 million)

Derivative instruments (net of tax impact of $ million)

()

Comprehensive Income

Dividends declared

()

Repurchase of shares of Common Stock(1)

()

Employee share-based award exercises

()

Share-based compensation events

Balance at March 31, 2025

()

Balance at December 31, 2023

()

Net Income

Translation adjustments and gains (losses) from intra-entity transactions of a long-term investment nature

()

Pension and post-retirement benefit plans

Derivative instruments (net of tax impact of $ million)

Comprehensive Income

Dividends declared

()

Repurchase of shares of Common Stock

Employee share-based award exercises

()

Share-based compensation events

Balance at March 31, 2024

()

(1)Includes excise tax on share repurchases

See accompanying Notes to Condensed Consolidated Financial Statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Tabular amounts in millions, except per share data)

Note 1 -

restaurants in more than countries and territories. As of March 31, 2025, % of these restaurants were owned and operated by franchisees. The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-inspired and pizza categories, respectively. The Habit Burger & Grill is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more.

As of March 31, 2025, YUM consisted of operating segments:

•The KFC Division which includes our worldwide operations of the KFC concept

•The Taco Bell Division which includes our worldwide operations of the Taco Bell concept

•The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept

•The Habit Burger & Grill Division which includes our worldwide operations of the Habit Burger & Grill concept

YUM's fiscal year begins on January 1 and ends December 31 of each year, with each quarter comprised of months. The majority of our U.S. subsidiaries and certain international subsidiaries operate on a weekly periodic calendar where the first three quarters of each fiscal year consist of 12 weeks and the fourth quarter consists of 16 weeks in fiscal years with 52 weeks and 17 weeks in fiscal years with 53 weeks. For subsidiaries that operate on this periodic weekly calendar, 2024 included a 53rd week. Our remaining international subsidiaries operate on a monthly calendar similar to that on which YUM operates.

Our preparation of the accompanying Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The accompanying Financial Statements include all normal and recurring adjustments considered necessary to present fairly, when read in conjunction with our 2024 Form 10-K, the results of the interim periods presented. Our results of operations, comprehensive income, cash flows and changes in shareholders' deficit for these interim periods are not necessarily indicative of the results to be expected for the full year.

In the first quarter of 2025, the Company prospectively changed its basis of presentation to round financial figures in the Financial Statements and as presented in the tabular presentations in these Notes to the nearest whole number in millions in all instances. As a result, some totals and percentages may not recompute based on rounded figures as presented within the Financial Statements and these Notes. Previously, amounts were presented to ensure that all numbers herein recomputed, resulting in the presentation of certain figures inconsistent with their underlying rounding.

Our significant interim accounting policies include the recognition of advertising and marketing costs, generally in proportion to revenue, and the recognition of income taxes using an estimated annual effective tax rate.

We have reclassified certain items in the Financial Statements for the prior periods to be comparable with the classification for the quarter ended March 31, 2025. These reclassifications had no effect on previously reported Net Income.

Note 2 -

KFC restaurants in the U.K. and Ireland. The acquisition created a significant opportunity to accelerate KFC's growth strategy in the large and growing U.K. and Ireland chicken market. The purchase price to be allocated for accounting purposes of $ million consisted of cash, net of cash acquired, in the amount of $ million, which included $ million paid in 2024 and $ million

million related to our preexisting contractual relationship with the franchisee.

The acquisition was accounted for as a business combination using the acquisition method of accounting. The preliminary allocation of the purchase price is based on management's analysis, including preliminary work performed by third party valuation specialists, as of April 29, 2024.

During the quarter ended March 31, 2025, we adjusted our preliminary estimate of the fair value of net assets acquired.

Property, plant and equipment, net

Reacquired franchise rights (included in Intangible assets, net)

Operating lease right-of-use assets (included in Other assets)

Total Identifiable Assets

Total Current Liabilities()Operating lease liabilities (included in Other liabilities and deferred credits)()Other liabilities()

Total Liabilities Assumed

()Total identifiable net assets Goodwill Purchase price to be allocated$

The cumulative adjustments to the preliminary estimate of identifiable net assets acquired (as recorded in the June 30, 2024 quarter of acquisition) resulted in a corresponding $ million increase in estimated goodwill due to the following changes to the preliminary purchase price allocation.


	Increase (Decrease) in Goodwill

Increase in Property, plant and equipment, net	$	()
Increase in Required franchise rights	()
Increase in Operating lease right-of-use assets	()
Increase in Total Current Liabilities
Increase in Operating lease liabilities
Increase in Other liabilities
Increase in consideration
Total increase in Goodwill	$

We will continue to obtain information to assist in determining the fair value of net assets acquired during the remaining measurement period.

Reacquired franchise rights, which were valued based on after-royalty cash flows expected to be earned by the acquired restaurants over the remaining term of their then-existing franchise agreements, have an estimated weighted average useful life of 5 years. The excess of the purchase price over the preliminary estimated fair value of the net, identifiable assets acquired was recorded as goodwill. The goodwill recognized represents expected benefits of the acquisition that do not qualify for recognition as intangible assets. This includes value arising from cash flows expected to be earned in years subsequent to the expiration of the terms of franchise agreements existing upon acquisition. The goodwill is expected to be partially deductible for income tax purposes and has been allocated to our KFC U.K. reporting unit.

Note 3 -

$ Weighted-average common shares outstanding (for basic calculation) Effect of dilutive share-based employee compensation Weighted-average common and dilutive potential common shares outstanding (for diluted calculation) Basic EPS$ $ Diluted EPS$ $

Unexercised employee SARs, RSUs, PSUs and stock options (in millions) excluded from the diluted EPS computation(a)

In May 2024, our Board of Directors authorized share repurchases of up to $ billion (excluding applicable transaction fees and excise taxes) of our outstanding Common Stock through December 31, 2026. As of March 31, 2025, we have remaining capacity to repurchase up to $ billion of Common Stock under the May 2024 authorization.

)$()$()$()OCI, net of tax

Gains (losses) arising during the period classified into AOCI, net of tax

(Gains) losses reclassified from AOCI, net of tax

()() ()

Balance at March 31, 2025, net of tax

$()$()$()$()

Note 5 -

)$ Impairment and closure expense Other()()Other (income) expense$()$()

Note 6 -

days of the period in which the corresponding sales occur and are classified as Accounts and notes receivable, net in our Condensed Consolidated Balance Sheets. Accounts and notes receivable, net also includes receivables generated from advertising cooperatives that we consolidate. $ Allowance for doubtful accounts()()Accounts and notes receivable, net$ $

Restricted cash

Short term investments

Assets held for sale

Prepaid expenses

Other current assets

Prepaid expenses and other current assets

$ $

Property, Plant and Equipment, net

$ Accumulated depreciation and amortization()()Property, plant and equipment, net$ $

$ Franchise incentives Other Other assets$ $

(a) million and $ million as of March 31, 2025 and December 31, 2024, respectively, are included in Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets.

Reconciliation of Cash and Cash Equivalents for Condensed Consolidated Statements of Cash Flows

Restricted cash included in Prepaid expenses and other current assets(a)

Restricted cash and restricted cash equivalents included in Other assets(b)

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents as presented in Condensed Consolidated Statements of Cash Flows$ $

(a)

(b)

Note 7 -

$ Effective tax rate % %Contract Liabilities

Our contract liabilities are comprised of unamortized upfront fees received from franchisees and are presented within Accounts payable and other current liabilities and Other liabilities and deferred credits in our Condensed Consolidated Balance Sheets. A summary of significant changes to the contract liability balance during 2025 is presented below.

Revenue recognized that was included in unamortized upfront fees received from franchisees at the beginning of the period()Increase for upfront fees associated with contracts that became effective during the period, net of amounts recognized as revenue during the period

Other(a)

Balance at March 31, 2025

(a)

1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Thereafter Total$

Note 9 -

$ $ $ $

Franchise and property revenues(a)

Franchise contributions for advertising and other services(a)

Less:Company restaurant expenses General and administrative expenses Franchise and property expenses Franchise advertising and other services expense Other (income) expense () ()

Division Operating Profit

$ $ $ $()$

Unallocated amounts:(b)

Corporate and unallocated G&A expenses(c)

$()

Unallocated Company restaurant expenses(d)

()

Unallocated Franchise and property revenues

()Unallocated Refranchising gain (loss)

Unallocated Other income (expense)

Consolidated Operating Profit Investment income (expense), net Other pension income (expense) Interest expense, net()Income before income taxes$

$ $ $ $ $ Capital Spending

Quarter ended 3/31/2024

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger & Grill Division

Total

Company Sales(a)

Franchise and property revenues(a)

Franchise contributions for advertising and other services(a)

Less:

Company restaurant expenses

General and administrative expenses

Franchise and property expenses

Franchise advertising and other services expense

Other (income) expense

()

Division Operating Profit

()

Unallocated amounts:(b)

Corporate and unallocated G&A expenses(c)

()

Unallocated Refranchising gain (loss)

Unallocated Other income (expense)

()

Consolidated Operating Profit

Investment income (expense), net(f)

()

Other pension income (expense)

Interest expense, net

()

Income before income taxes

Other Segment Disclosures

KFC Division

Taco Bell Division

Pizza Hut Division

Habit Burger & Grill Division

Corporate and Unallocated

Total

Depreciation and Amortization(e)

Capital Spending

billion and $ billion in the quarters ended March 31, 2025 and 2024, respectively.

(b)

(c) million and $ million in the quarters ended March 31, 2025 and 2024, respectively, related to our resource optimization program and $ million in the quarter ended March 31, 2025 related to our brand headquarters consolidation.

(e).

(f) million of pre-tax investment losses related to the sale of our approximate 5% minority interest in Devyani International Limited during the quarter ended March 31, 2024.

Note 10 -

$ Interest cost Expected return on plan assets()()

Net periodic benefit cost (income)

$()$()

Additional loss recognized due to settlements(a)

$ $

(a).

Note 11 -

$ Less current portion of debt issuance costs and discounts()()Short-term borrowings$ $ Long-term Debt Securitization Notes$ $ Subsidiary Senior Unsecured Notes Revolving Facility Term Loan A Facility Term Loan B Facility YUM Senior Unsecured Notes Finance lease obligations $ $ Less long-term portion of debt issuance costs and discounts()()Less current maturities of long-term debt()()Long-term debt$ $

Details of our Short-term borrowings and Long-term debt as of December 31, 2024 can be found within our 2024 Form 10-K.

Cash paid for interest during the quarters ended March 31, 2025 and 2024, was $ million and $ million, respectively.

Note 12 -

billion of our variable-rate debt interest payments primarily under our Term Loan B Facility expired. Through their expiration in March 2025, these interest rate swaps were highly effective cash flow hedges.

Subsequent to the end of the first quarter, on April 4, 2025, we entered into new interest rate swaps ("2025 interest rate swaps") to fix the interest rate on $ billion of borrowings, primarily under our Term Loan B Facility, from April 2025 to March 2028. Like the expired interest rate swaps, the 2025 interest rate swaps were designated cash flow hedges as the changes in the future cash flows of the swaps are expected to offset changes in expected future interest payments on the related variable-rate debt. The 2025 interest rate swaps will result in a fixed rate of % on the swapped portion of the Term Loan B Facility (excluding debt issuance costs).

Gains or losses on the interest rate swaps are reported as a component of AOCI and reclassified into Interest expense, net in our Condensed Consolidated Statements of Income in the same period or periods during which the related hedged interest payments affect earnings.

$ $()$()Income tax benefit/(expense) ()

Total Return Swaps

We have entered into total return swap derivative contracts, with the objective of reducing our exposure to market-driven changes in certain of the liabilities associated with compensation deferrals into our Executive Income Deferral (“EID”) plan. While these total return swaps represent economic hedges, we have not designated them as hedges for accounting purposes. As a result, the changes in the fair value of these derivatives are recognized immediately in earnings within General and administrative expenses in our Condensed Consolidated Statements of Income largely offsetting the changes in the associated EID liabilities. The fair value associated with the total return swaps as of both March 31, 2025 and December 31, 2024, was not significant.

As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties will fail to meet their contractual obligations. To mitigate the counterparty credit risk, we only enter into contracts with major financial institutions carefully selected based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. At March 31, 2025, all of the counterparties to our derivative instruments had investment grade ratings according to the three major ratings agencies. To date, all counterparties have performed in accordance with their contractual obligations.

See Note 13 for the fair value of our derivative assets and liabilities.

Note 13 -

$ $ $

Subsidiary Senior Unsecured Notes(b)

Term Loan A Facility(b)

Term Loan B Facility(b)

YUM Senior Unsecured Notes(b)

(a)

(b)

Recurring Fair Value Measurements

The following table presents fair values for those assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall.

$ InvestmentsOther assets3 Interest Rate SwapsPrepaid expenses and other current assets2 $

Note 14 -

Lease Guarantees

As a result of having assigned our interest in obligations under real estate leases as a condition to the refranchising of certain Company-owned restaurants, and guaranteeing certain other leases, we are frequently secondarily liable on lease agreements. These leases have varying terms, the latest of which expires in . As of March 31, 2025, the potential amount of undiscounted payments we could be required to make in the event of non-payment by the primary lessee was approximately $ million. The present value of these potential payments discounted at our pre-tax cost of debt at March 31, 2025, was approximately $ million. Our franchisees are the primary lessees under the vast majority of these leases. We generally have cross-default provisions with these franchisees that would put them in default of their franchise agreement in the event of non-payment under the lease. We believe these cross-default provisions significantly reduce the risk that we will be required to make payments under these leases, although such risk may not be reduced in the context of a bankruptcy or other similar restructuring of a large franchisee or group of franchisees. The liability recorded for our expected losses under such leases as of March 31, 2025, was not material.

Legal Proceedings

We are subject to various claims and contingencies related to lawsuits, real estate, environmental and other matters arising in the normal course of business. An accrual is recorded with respect to claims or contingencies for which a loss is determined to be probable and reasonably estimable.

India Regulatory Matter

Yum! Restaurants India Private Limited (“YRIPL”), a YUM subsidiary that operates KFC and Pizza Hut restaurants in India, is the subject of a regulatory enforcement action in India (the “Action”). The Action alleges, among other things, that KFC International Holdings, Inc. and Pizza Hut International failed to satisfy certain conditions imposed by the Secretariat for Industrial Approval in 1993 and 1994 when those companies were granted permission for foreign investment and operation in India. The conditions at issue include an alleged minimum investment commitment and store build requirements as well as limitations on the remittance of fees outside of India.

The Action originated with a complaint and show cause notice filed in 2009 against YRIPL by the Deputy Director of the Directorate of Enforcement (“DOE”) of the Indian Ministry of Finance following an income tax audit for the years 2002 and 2003. The matter was argued at various hearings in 2015, but no order was issued. Following a change in the incumbent official holding the position of Special Director of DOE (the “Special Director”), the matter resumed in 2018 and several additional hearings were conducted.

Other Matters

We are currently engaged in various other legal proceedings and have certain unresolved claims pending, the ultimate liability for which, if any, cannot be determined at this time. However, based upon consultation with legal counsel, we are of the opinion that such proceedings and claims are not expected to have a material adverse effect, individually or in the aggregate, on our Condensed Consolidated Financial Statements.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction and Overview

The following Management's Discussion and Analysis (“MD&A”), should be read in conjunction with the unaudited Condensed Consolidated Financial Statements (“Financial Statements”), the Forward-Looking Statements and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, (“2024 Form 10-K”). All Note references herein refer to the Notes to the Financial Statements. Tabular amounts are displayed in millions of U.S. dollars except per share and unit count amounts, or as otherwise specifically identified.

In the first quarter of 2025, the Company prospectively changed its basis of presentation to round financial figures in the Financial Statements and as presented in the tabular presentations in this MD&A to the nearest whole number in millions in all instances. As a result, some totals and percentages may not recompute based on rounded figures as presented within this MD&A. Previously, amounts were presented to ensure that all numbers herein recomputed, resulting in the presentation of certain figures inconsistent with their underlying rounding.

Yum! Brands, Inc. and its Subsidiaries (collectively referred to herein as the “Company,” “YUM,” “we,” “us” or “our”) franchise or operate a system of over 60,000 restaurants in more than 155 countries and territories, primarily under the concepts of KFC, Taco Bell, Pizza Hut and The Habit Burger & Grill (collectively, the “Concepts”). The Company’s KFC, Taco Bell and Pizza Hut brands are global leaders of the chicken, Mexican-inspired and pizza categories, respectively. The Habit Burger & Grill, is a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Of the over 60,000 restaurants, 98% are operated by franchisees.

YUM currently consists of four operating segments:

•The KFC Division which includes our worldwide operations of the KFC concept

•The Taco Bell Division which includes our worldwide operations of the Taco Bell concept

•The Pizza Hut Division which includes our worldwide operations of the Pizza Hut concept

•The Habit Burger & Grill Division which includes our worldwide operations of the Habit Burger & Grill concept

Through our Recipe for Good Growth we intend to deliver iconic restaurant brands and consistently drive better customer experiences, improved unit economics and higher rates of growth. Key enablers include accelerated use of digital and technology, increased collaboration and better leverage of our systemwide scale. This is done through a framework of three pillars: being Loved, Trusted and Connected.

Loved: We grow by delighting customers with craveable food and a distinctive experience. We innovate and elevate our iconic restaurant brands that people trust and champion, resulting in relevant, easy and distinctive brands.

Trusted: We operate responsibly with consistency and efficiency in our restaurants, across our system and in our communities. This includes a commitment to our priorities for social responsibility, risk management and sustainable stewardship of our people, food and planet.

Connected: We use our teamwork, technology and global scale to serve every customer, everywhere, anytime. Our unmatched operating capability allows us to recruit and equip the best restaurant operators in the world to deliver great customer experiences. And our commitment to bold restaurant development drives market and franchise unit expansion with strong economics.

Our unrivaled culture and talent and leading with smart, heart and courage are key to our success, fueling brand performance and franchise success.

We intend for this MD&A to provide the reader with information that will assist in understanding our results of operations, including performance metrics that management uses to assess the Company's performance. Throughout this MD&A, we commonly discuss the following performance metrics:

•Same-store sales growth is the estimated percentage change in system sales of all restaurants that have been open and in the YUM system for one year or more, including those temporarily closed. From time-to-time restaurants may be temporarily closed due to remodeling or image enhancement, rebuilding, natural disasters, health epidemic or pandemic, landlord disputes, boycotts, social or civil unrest or other issues. The system sales of restaurants we deem temporarily closed remain in our base for purposes of determining same-store sales growth and the restaurants remain in our unit count (see below).

Same-store sales growth excludes, for subsidiaries operating on a monthly calendar, the extra day resulting from a leap year and excludes, for subsidiaries operating on a weekly periodic calendar, the last week of the year in fiscal years with 53rd weeks. We believe same-store sales growth is useful to investors because our results are heavily dependent on the results of our Concepts' existing store base. Additionally, same-store sales growth is reflective of the strength of our Brands, the effectiveness of our operational and advertising initiatives and local economic and consumer trends.

•Gross unit openings reflects new openings by us and our franchisees. Net new unit growth reflects gross unit openings offset by permanent store closures, by us and our franchisees. To determine whether a restaurant meets the definition of a unit we consider whether the restaurant has operations that are ongoing and independent from another YUM unit, serves the primary product of one of our Concepts, operates under a separate franchise agreement (if operated by a franchisee) and has substantial and sustainable sales. We believe gross unit openings and net new unit growth are useful to investors because we depend on new units for a significant portion of our growth. Additionally, gross unit openings and net new unit growth are generally reflective of the economic returns to us and our franchisees from opening and operating our Concept restaurants.

•System sales and System sales excluding the impacts of foreign currency translation (“FX”) reflect the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants. Sales at franchise restaurants typically generate ongoing franchise and license fees for the Company at a rate of 3% to 6% of sales. Increasingly, customers are paying a fee to a third party to deliver or facilitate the ordering of our Concepts' products. We also include in System sales any portion of the amount customers pay these third parties for which the third party is obligated to pay us a license fee as a percentage of such amount. Franchise restaurant sales and fees paid by customers to third parties to deliver or facilitate the ordering of our Concepts' products are not included in Company sales on the Condensed Consolidated Statements of Income; however, any resulting franchise and license fees we receive are included in the Company's revenues. We believe System sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates our primary revenue drivers, Company and franchise same-store sales as well as net new unit growth.

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 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;

•Net Income excluding Special Items;

•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.

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. Further, while we generally include depreciation and amortization of restaurant-level assets within Divisional Company restaurant expenses used to derive Divisional Company restaurant profit, we record amortization of reacquired franchise rights arising from acquisition accounting within Corporate and Unallocated Company restaurant expenses as such amortization is not believed to be indicative of ongoing Divisional results as well as to enhance comparability of acquired stores' margins with those of existing restaurants within Divisional results. 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 performance metrics and 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.

Results of Operations

Summary

All comparisons within this summary are versus the same period a year ago.

Quarterly Financial Highlights:

% Change

System Sales, ex FX

Same-Store Sales

Units

GAAP Operating Profit

Core Operating Profit

KFC Division

Taco Bell Division

+11

+16

Pizza Hut Division

(3)

(2)

(1)

(20)

(18)

Additionally:

•Foreign currency translation unfavorably impacted Divisional Operating Profit by $11 million for the quarter ended March 31, 2025.


	2025	2024	% Change
GAAP EPS	$0.90	$1.10	(18)
Less Special Items EPS	$(0.40)	$(0.05)	NM
EPS Excluding Special Items	$1.30	$1.15	+13

•Foreign currency translation negatively impacted our diluted EPS, excluding Special Items, by approximately $0.03 for the quarter ended March 31, 2025. Our diluted EPS, excluding Special Items, was unfavorably impacted by $0.08 for the quarter ended March 31, 2024 from after-tax investment losses.

•Gross unit openings for the quarter were 751 units.

◦Net units declined by 460 for the quarter, primarily driven by unit closures in Turkey. On January 8, 2025, we terminated our franchise agreements with franchisee IS Gida A.S. (IS Gida), the owner and operator of KFC and Pizza Hut restaurants in Turkey and a subsidiary of IS Holding A.S., after failure by IS Gida to meet our standards. As a result, 283 KFC restaurants and 254 Pizza Hut restaurants in Turkey were closed during the quarter.

Worldwide

GAAP Results


	2025			2024			% B/(W)
Company sales	$	607		$	474		28
Franchise and property revenues	785			757			4
Franchise contributions for advertising and other services	395			367			8
Total revenues	1,787			1,598			12

Company restaurant expenses	520			400			(30)
G&A expenses	302			286			(5)
Franchise and property expenses	34			31			(9)
Franchise advertising and other services expense	396			367			(8)
Refranchising (gain) loss	(5)			(5)			2
Other (income) expense	(8)			(1)			NM
Total costs and expenses, net	1,239			1,078			(15)
Operating Profit	548			520			5

Investment (income) expense, net	(1)			22			NM
Other pension (income) expense	—			(2)			(83)
Interest expense, net	120			117			(2)
Income before income taxes	429			383			12
Income tax provision (benefit)	176			69			(155)
Net Income	$	253		$	314		(19)

Diluted EPS(a)	$	0.90		$	1.10		(18)
Effective tax rate	41.0		%	18.0		%	(23.0)	ppts.

(a)See Note 3 for the number of shares used in this calculation.

Performance Metrics


Unit Count	3/31/2025	3/31/2024	% Increase (Decrease)
Franchise	59,581	58,106	3
Company-owned	1,305	1,023	28
Total	60,886	59,129	3


	2025	2024
Same-store Sales Growth (Decline) %	3	(3)
System Sales Growth %, reported	3	—
System Sales Growth %, excluding FX	5	2

Our system sales breakdown by Company and franchise sales was as follows:


	2025		2024

Consolidated
Company sales(a)	$	607	$	474
Franchise sales	14,896		14,572
System sales	15,503		15,046
Negative (Positive) Foreign Currency Impact(b)	239		N/A
System sales, excluding FX	$	15,743	$	15,046

KFC Division
Company sales(a)	$	216	$	105
Franchise sales	8,124		8,023
System sales	8,340		8,128
Negative (Positive) Foreign Currency Impact(b)	184		N/A
System sales, excluding FX	$	8,524	$	8,128

Taco Bell Division
Company sales(a)	$	263	$	240
Franchise sales	3,717		3,357
System sales	3,980		3,597
Negative (Positive) Foreign Currency Impact(b)	6		N/A
System sales, excluding FX	$	3,986	$	3,597

Pizza Hut Division
Company sales(a)	$	3	$	2
Franchise sales	3,025		3,165
System sales	3,028		3,167
Negative (Positive) Foreign Currency Impact(b)	50		N/A
System sales, excluding FX	$	3,078	$	3,167

Habit Burger & Grill Division
Company sales(a)	$	125	$	127
Franchise sales	30		27
System sales	155		154
Negative (Positive) Foreign Currency Impact(b)	—		N/A
System sales, excluding FX	$	155	$	154

(a)Company sales represents sales from our Company-operated stores as presented on our Condensed Consolidated Statements of Income.

(b) The foreign currency impact on System sales is presented in relation only to the immediately preceding year presented. When determining applicable System sales growth percentages, the System sales excluding FX for the current year should be compared to the prior year System sales.


Non-GAAP Items

Non-GAAP Items, along with the reconciliation to the most comparable GAAP financial measure, as presented below.

	2025		2024
Core Operating Profit Growth %	8		6
Diluted EPS Growth %, excluding Special Items	13		9
Effective Tax Rate excluding Special Items	19.8	%	19.4	%





Company restaurant profit	$	87		$	74
Company restaurant margin %	14.3		%	15.6		%


	2025		2024
Consolidated
GAAP Operating Profit	$	548	$	520
Detail of Special Items:
Loss associated with market-wide refranchisings(a)	—		3
Charges associated with Resource Optimization(b)	17		21
Charges associated with Brand HQ Consolidation(c)	7		—
Other Special Items Expense	2		—
Special Items Expense - Operating Profit	27		24
Negative Foreign Currency Impact on Division Operating Profit	11		N/A
Core Operating Profit	$	586	$	544

Special Items as shown above were recorded to the financial statement line items identified below.

Condensed Consolidated Statements of Income Line Item
Decrease in Franchise and property revenues	$	1	$	—
Increase in General and administrative expenses	28		21
Increase in Refranchising loss	—		3
Increase in Other income	(2)		—
Special Items Expense - Operating Profit	$	27	$	24

KFC Division
GAAP Operating Profit	$	331	$	313
Negative (Positive) Foreign Currency Impact	9		N/A
Core Operating Profit	$	340	$	313

Taco Bell Division
GAAP Operating Profit	$	241	$	208
Negative (Positive) Foreign Currency Impact	—		N/A
Core Operating Profit	$	241	$	208

Pizza Hut Division
GAAP Operating Profit	$	74	$	93
Negative (Positive) Foreign Currency Impact	1		N/A
Core Operating Profit	$	76	$	93

Habit Burger & Grill Division
GAAP Operating Profit (Loss)	$	(1)	$	(5)
Negative (Positive) Foreign Currency Impact	—		N/A
Core Operating Profit (Loss)	$	(1)	$	(5)

Reconciliation of GAAP Net Income to Net Income excluding Special Items
GAAP Net Income	$	253	$	314
Special Items Expense - Operating Profit	27		24

Special Items Tax Expense (Benefit)(d)	86		(10)
Net Income excluding Special Items	$	366	$	328


	Quarter ended
	2025			2024
Reconciliation of Diluted EPS to Diluted EPS excluding Special Items
Diluted EPS	$	0.90		$	1.10
Less Special Items Diluted EPS	(0.40)			(0.05)
Diluted EPS excluding Special Items	$	1.30		$	1.15

Reconciliation of GAAP Effective Tax Rate to Effective Tax Rate excluding Special Items
GAAP Effective Tax Rate	41.0		%	18.0		%
Impact on Tax Rate as a result of Special Items	21.2		%	(1.4)		%
Effective Tax Rate excluding Special Items	19.8		%	19.4		%

(a) Due to their size and volatility, we have reflected as Special Items those refranchising gains and losses that were recorded in connection with market-wide refranchisings. During the quarter ended March 31, 2024, we recorded net refranchising losses of $3 million that have been reflected as Special Items.

Additionally, we recorded net refranchising gains of $5 million and $8 million during quarters ended March 31, 2025 and 2024, respectively, that have not been reflected as Special Items. These net refranchising gains relate to refranchising of restaurants unrelated to market-wide refranchisings that we believe are indicative of our expected ongoing refranchising activity.

(b)We recorded charges of $17 million and $21 million during the quarters ended March 31, 2025 and 2024, respectively, to General and administrative expenses related to a resource optimization program. Over the past several years, this program has allowed us to reallocate significant resources to accelerate our digital, technology and innovation capabilities to deliver a modern, world-class team member and customer experience and improve unit economics. We expanded the program in 2024 to identify further opportunities to optimize the Company’s spending and identify additional, critical areas in which to potentially reallocate resources, both with a goal to enable the acceleration of the Company’s growth rate. Costs incurred to date related to the program primarily include severance associated with positions that have been eliminated or relocated and consultant fees. Due to their scope and size, these charges have been reflected as Special Items.

(c)During the quarter ended March 31, 2025, we recorded charges of approximately $7 million to General and administrative expenses associated with our decision to designate two brand headquarters in the U.S., located in Plano, Texas and Irvine, California, to foster greater collaboration among brands and employees. This involved relocating the KFC U.S. corporate office to a KFC Global headquarters and requiring the majority of our U.S.-based remote employees to relocate to an appropriate headquarter office. Costs incurred to date primarily include severance for the employees who have chosen not to relocate and consultant fees. Due to their scope and size, these charges have been reflected as Special Items.

(d)The below table includes the detail of Special Items Tax Benefit:


	3/31/2025		3/31/2024
Tax (Benefit) on Special Items Expense	$	(7)	$	(6)
Tax Expense - Foreign tax audit	92		—
Tax (Benefit) - Other Income tax impacts recorded as Special	—		(4)
Special Items Tax Expense (Benefit)	$	86	$	(10)

Items Impacting Reported Results and Reasonably Likely to Impact Future Results

The following item impacted reported results in 2024. See also the Detail of Special Items in this MD&A for other items impacting results in 2025 or 2024.

Investment in Devyani

During the quarter ended March 31, 2024, we sold our approximate 5% minority investment in Devyani International Limited ("Devyani"), a franchise entity that operates KFC and Pizza Hut restaurants in India, for pre-tax proceeds of $104 million. Changes in the fair value of our ownership interest in Devyani prior to the date of sale resulted in pre-tax investment losses of $20 million in the quarter ended March 31, 2024.

KFC Division

The KFC Division has 31,998 units, 89% of which are located outside the U.S. Additionally, 99% of the KFC Division units were operated by franchisees as of March 31, 2025.


							% B/(W)
	2025			2024			Reported		Ex FX
System Sales	$	8,340		$	8,128		3		5
Same-Store Sales Growth (Decline) %	2			(2)			N/A		N/A

Company sales	$	216		$	105		106		109
Franchise and property revenues	407			397			2		5
Franchise contributions for advertising and other services	149			130			15		17
Total revenues	$	773		$	632		22		25

Company restaurant profit	$	20		$	13		58		61
Company restaurant margin %	9.3		%	12.2		%	(2.9)	ppts.	(2.8)	ppts.

G&A expenses	$	80		$	83		3		2
Franchise and property expenses	16			17			8		7
Franchise advertising and other services expense	149			129			(16)		(17)
Operating Profit	$	331		$	313		6		9


			% Increase (Decrease)
Unit Count	3/31/2025	3/31/2024
Franchise	31,524	30,029	5
Company-owned	474	222	114
Total	31,998	30,251	6

Company sales and Company restaurant margin %

The quarterly increase in Company sales, excluding the impacts of foreign currency translation, was driven by the KFC U.K. and Ireland restaurant acquisition (see Note 2) in the second quarter of 2024 and Company same-store sales growth of 2%.

The quarterly decrease in Company restaurant margin percentage was driven by the margin percentages of the units included in the KFC U.K. and Ireland restaurant acquisition, partially offset by Company same-store sales growth.

Franchise and property revenues

The quarterly increase in Franchise and property revenues, excluding the impacts of foreign currency translation, was driven by unit growth and franchise same-store sales growth of 2%, partially offset by a 1% negative impact from the KFC U.K. and Ireland restaurant acquisition.

G&A

The quarterly decrease in G&A, excluding the impacts of foreign currency translation, was driven by lower headcount, partially offset by expenses related to the operation of acquired KFC U.K. and Ireland restaurants.

Operating Profit

The quarterly increase in Operating Profit, excluding the impacts of foreign currency translation, was driven by unit growth and same-store sales growth.

Taco Bell Division

The Taco Bell Division has 8,723 units, 87% of which are in the U.S. The Company owned 7% of the Taco Bell units in the U.S. as of March 31, 2025.


							% B/(W)
	2025			2024			Reported	Ex FX

System Sales	$	3,980		$	3,597		11	11
Same-Store Sales Growth %	9			1			N/A	N/A

Company sales	$	263		$	240		10	10
Franchise and property revenues	234			210			11	11
Franchise contributions for advertising and other services	160			148			8	8
Total revenues	$	657		$	598		10	10

Company restaurant profit	$	59		$	54		9	9
Company restaurant margin %	22.4		%	22.5		%	(0.1)	(0.1)

G&A expenses	$	49		$	49		1	1
Franchise and property expenses	6			8			22	22
Franchise advertising and other services expense	157			147			(7)	(7)
Operating Profit	$	241		$	208		16	16


			% Increase (Decrease)
Unit Count	3/31/2025	3/31/2024
Franchise	8,218	8,071	2
Company-owned	505	484	4
Total	8,723	8,555	2

Company sales and Company restaurant margin %

The quarterly increase in Company sales was driven by Company same-store sales growth of 7% and unit growth.

The quarterly restaurant margin percentage decrease was driven by lower margins associated with new builds outside the U.S., commodity inflation and higher labor and other restaurant operating costs partially offset by same-store sales growth.

Franchise and property revenues

The quarterly increase in Franchise and property revenues was driven by franchise same-store sales growth of 9% and unit growth.

G&A

The quarterly decrease in G&A was driven by decreased legal costs and lower headcount and salaries partially offset by higher digital and technology expenses.

Operating Profit

The quarterly increase in Operating Profit was driven by same-store sales growth and unit growth partially offset by higher restaurant operating costs.

Pizza Hut Division

The Pizza Hut Division has 19,786 units, 67% of which are located outside the U.S. The Pizza Hut Division uses multiple distribution channels including delivery, dine-in and express (e.g. airports) and includes units operating under both the Pizza Hut and Telepizza brands. Additionally, over 99% of the Pizza Hut Division units were operated by franchisees as of March 31, 2025.


							% B/(W)
	2025			2024			Reported		Ex FX

System Sales	$	3,028		$	3,167		(4)		(3)
Same-Store Sales Growth (Decline) %	(2)			(7)			N/A		N/A

Company sales	$	3		$	2		94		94
Franchise and property revenues	143			148			(4)		(2)
Franchise contributions for advertising and other services	85			88			(4)		(4)
Total revenues	$	231		$	238		(3)		(2)

Company restaurant profit	$	—		$	—		NM		NM
Company restaurant margin %	(6.1)		%	1.9		%	(8.0)	ppts.	(8.0)	ppts.

G&A expenses	$	55		$	52		(5)		(5)
Franchise and property expenses	11			5			(119)		(129)
Franchise advertising and other services expense	89			90			1		1
Operating Profit	$	74		$	93		(20)		(18)


			% Increase (Decrease)
Unit Count	3/31/2025	3/31/2024
Franchise	19,763	19,935	(1)
Company-owned	23	7	229
Total	19,786	19,942	(1)

Franchise and property revenues

The quarterly decrease in Franchise and property revenues, excluding the impacts of foreign currency translation, was driven by a franchise same-store sales decline of (2%).

G&A

The quarterly increase in G&A, excluding the impacts of foreign currency translation, was driven by professional and legal expenses associated with four franchise entities that are transitioning to new ownership.

Operating Profit

The quarterly decrease in Operating Profit, excluding the impacts of foreign currency translation, was driven by higher current year bad debt expense (including bad debt expense associated with four franchise entities that are transitioning to new ownership), timing of digital and technology related spending within Franchise advertising and other services expense, a same-store sales decline and higher G&A.

Habit Burger & Grill Division

The Habit Burger & Grill Division has 379 units, the vast majority of which are in the U.S. The Company owned 80% of the Habit Burger & Grill units in the U.S. as of March 31, 2025.


					% B/(W)
	2025		2024		Reported	Ex FX
System Sales	$	155	$	154	Even	Even
Same-Store Sales Growth (Decline) %	(3)		(8)		N/A	N/A
Total revenues	$	128	$	130	(1)	(1)
Operating Profit (Loss)	$	(1)	$	(5)	86	$	86


Unit Count	3/31/2025	3/31/2024	% Increase (Decrease)
Franchise	76	71	7
Company-owned	303	310	(2)
Total	379	381	(1)

Corporate & Unallocated


(Expense) / Income	2025			2024			% B/(W)
Corporate and unallocated G&A	$	(105)		$	(89)		(17)
Unallocated Company restaurant expenses (See Note 9)	(3)			—			NM

Unallocated Refranchising gain (loss)	5			5			2
Unallocated Other income (expense)	6			(5)			NM
Investment income (expense), net (see Note 9)	1			(22)			NM
Other pension income (expense) (see Note 10)	—			2			(83)
Interest expense, net	(120)			(117)			(2)
Income tax benefit (provision) (See Note 7)	(176)			(69)			(155)
Effective tax rate (See Note 7)			%			%	(23.0)	ppts.

Corporate and unallocated G&A

The quarterly increase in Corporate and Unallocated G&A expense was driven by higher costs associated with our resource optimization program, costs associated with our brand headquarters consolidation, higher professional fees and higher compensation.

Consolidated Cash Flows

Net cash provided by operating activities was $404 million in 2025 versus $363 million in 2024. The increase was primarily driven by a decrease in incentive compensation payments, an increase in Operating Profit before Special Items and timing of accounts receivable collections, partially offset by timing of spending on advertising and an increase in payments related to our resource optimization program.

Net cash provided by investing activities was $2 million in 2025 versus $45 million in 2024. The change was primarily driven by higher current year capital spending. The prior year proceeds arising from the sale of our approximate 5% minority investment in Devyani were largely offset by proceeds arising from the current year maturity of short-term investments.

Net cash used in financing activities was $443 million in 2025 versus $247 million in 2024. The change was primarily driven by higher current year share repurchases.

Liquidity and Capital Resources

We have historically generated substantial cash flows from our extensive franchise operations, which require a limited YUM investment, and from the operations of our Company-owned stores. Our annual operating cash flows have been in excess of $1.4 billion in each of the past four years and we expect that to continue to be the case in 2025. It is our intent to use these operating cash flows to continue to invest in growing our business and pay a competitive dividend, with any remaining excess then returned to shareholders through share repurchases. Subject to market conditions, we expect to maintain our consolidated net leverage ratio at its current level of approximately 4.0x Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") over the medium term by issuing incremental debt as our business grows. As a result, we plan to deliver materially higher capital returns going forward as compared to the past two years when we were using significant amounts of cash to reduce our debt outstanding.

To the extent operating cash flows plus other sources of cash do not cover our anticipated cash needs, we maintain a $1.5 billion Revolving Facility under our Credit Agreement which had $374 million outstanding as of March 31, 2025. We believe that our ongoing cash from operations, cash on hand, which was approximately $600 million at March 31, 2025, and availability under our Revolving Facility will be sufficient to fund our cash requirements over the next twelve months. Borrowings under our Revolving Facility had original maturities of three months or less.

There have been no material changes to the disclosures made in Item 7 of the Company's 2024 Form 10-K regarding our material cash requirements. Due to the ongoing significance of our debt obligations, we are providing the update below.

Debt Instruments

As of March 31, 2025, approximately 82% of our $11.0 billion of total debt outstanding, excluding the Revolving Facility balance, finance leases and debt issuance costs and discounts, is fixed with an effective overall interest rate of approximately 4.7%. Subsequent to the end of the first quarter, we entered into interest rate swaps (see Note 12) to fix the interest rate on $1.5 billion of borrowings, primarily under our Term Loan B Facility, from April 2025 to March 2028 which increased the fixed percentage of this total debt outstanding to 96%.

We ended the quarter with a consolidated net leverage ratio of 3.9x EBITDA. We continually reassess our optimal leverage ratio to maximize shareholder returns. We target a capital structure which we believe provides an attractive balance between optimized interest rates, duration and flexibility with diversified sources of liquidity and maturities spread over multiple years. We have credit ratings of BB+ (Standard & Poor's)/Ba2 (Moody's).

The following table summarizes the future maturities of our outstanding long-term debt, excluding finance leases and debt issuance costs and discounts, as of March 31, 2025.


	2025		2026		2027		2028		2029		2030		2031		2032		2037		2043		Total
Securitization Notes			$	938	$	884	$	595	$	590			$	737							$	3,743
Credit Agreement	$	18	28		34		1,424		438												1,940
Revolving Facility									374												374
Subsidiary Senior Unsecured Notes					750																750
YUM Senior Unsecured Notes											$	800	1,050		$	2,100	$	325	$	275	4,550

Total	$	18	$	965	$	1,668	$	2,019	$	1,401	$	800	$	1,787	$	2,100	$	325	$	275	$	11,357

See Note 11 for details on the Securitization Notes, the Credit Agreement, Revolving Facility, Subsidiary Senior Unsecured Notes and YUM Senior Unsecured Notes.

New Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates income tax disclosure requirements related to the income tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The standard is effective for the Company's Annual Report on Form 10-K for fiscal 2025 with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is permitted. We are currently evaluating the impact of the standard on our disclosures.

In March 2024, the SEC issued a final rule under SEC Release Nos. 33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rule requires disclosure of material climate-related information outside of the audited financial statements and disclosure in the footnotes addressing specified financial statement effects of severe weather events and other natural conditions above certain financial thresholds, certain carbon offsets and renewable energy credits or certificates. The standard is effective for the Company's Annual Report on Form 10-K for fiscal 2025. In April 2024, the SEC released an order staying this final rule pending judicial review of all the petitions challenging the rule. We are in the process of analyzing the impact of the rule on our disclosures should the stay be lifted.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), which requires new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions. The standard is effective for the Company's Annual Report on Form 10-K for fiscal 2027, and subsequent interim periods, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is permitted. We are currently evaluating the impact of the standard on our disclosures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes during the quarter ended March 31, 2025, to the disclosures made in Item 7A of the Company’s 2024 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on the evaluation, performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by the report.

Changes in Internal Control

There were no changes with respect to the Company’s internal control over financial reporting or in other factors that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended March 31, 2025.

Forward-Looking Statements

Forward-looking statements can generally 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. Forward-looking 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 will be achieved. Factors that could cause actual results and events to differ materially from our expectations and forward-looking statements include (i) the factors described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2 of this report, (ii) any risks and uncertainties described in the Risk Factors included in Part II, Item 1A of this report, (iii) the factors described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Form 10-K for the year ended December 31, 2024, and (iv) the risks and uncertainties described in the Risk Factors included in Part I, Item 1A of our Form 10-K for the year ended December 31, 2024. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We are not undertaking to update any of these statements.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Yum! Brands, Inc.:

Results of Review of Interim Financial Information

We have reviewed the condensed consolidated balance sheet of Yum! Brands, Inc. and subsidiaries (YUM) as of March 31, 2025, the related condensed consolidated statements of income, comprehensive income, cash flows, and shareholders’ deficit for the three-month periods ended March 31, 2025 and 2024, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of YUM as of December 31, 2024, and the related consolidated statements of income, comprehensive income, cash flows, and shareholders’ deficit for the year then ended (not presented herein); and in our report dated February 19, 2025, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2024 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of YUM’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to YUM in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

Louisville, Kentucky

May 6, 2025

PART II – OTHER INFORMATION AND SIGNATURES

Item 1. Legal Proceedings

Information regarding legal proceedings is incorporated by reference from Note 14 to the Company’s Condensed Consolidated Financial Statements set forth in Part I of this report.

Item 1A. Risk Factors

We face a variety of risks that are inherent in our business and our industry, including operational, legal, regulatory and product risks. Such risks could cause our actual results to differ materially from our forward-looking statements, expectations and historical trends. There have been no material changes from the risk factors disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized officer of the registrant.


			YUM! BRANDS, INC.
			(Registrant)


Date:	May 6, 2025	/s/ David Russell
		Senior Vice President, Finance and Corporate Controller
		(Principal Accounting Officer)

YUM BRANDS INC - Quarter Report: 2025 March (Form 10-Q)

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