Yum! Brands, Inc. (YUM)
Q4 2009 Earnings Call Transcript
February 4, 2010 9:15 a.m. ET

Executives

Tim Jerzyk - Senior Vice President, Investor Relations and Treasurer
David C. Novak - Chairman, President and Chief Executive Officer
Richard T. Carucci - Chief Financial Officer

Analysts

Mitchell J. Speiser - Buckingham Research Group
John Glass - Morgan Stanley
Keith Seigner - Credit Suisse
Steven Kron - Goldman Sachs
Jeffrey Bernstein - Barclays Capital
David Palmer - UBS
Gregory Badishkanian - Citigroup
Mark Kalinowski - Janney Montgomery Scott LLC
Tom Forte - Telsey Advisors
Michael Sang - Wedbush Securities
Sara Senatore - Sanford C. Bernstein
John Ivankoe - JP Morgan
Joseph Buckley - Banc of America/Merrill Lynch
Steven West - Stifel Nicolaus & Company, Inc.
Jason West - Deutsche Bank Securities
David Tarantino - Robert W. Baird & Co., Inc.
Jeffrey Omohundro - Wells Fargo Securities, Llc
Jeffrey Farmer - Jefferies & Company

Presentation

Operator

Good morning. My name is Christine, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Yum! Brands 2009 Fourth Quarter 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. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key.

Thank you. I would now like to turn the conference over to Mr. Tim Jerzyk, Senior Vice President, Investor Relations and Treasurer. Please go ahead sir.

Tim Jerzyk

Thank you, Christine, and good morning, everyone. Thanks for joining us today on our call. The call is being recorded and will be available for playback. We are broadcasting the conference call via our website also at www.yum.com. Please be advised that if you ask a question it will be included in both of our live conference and any future use of the recording.

We’d also like to advise this conference call includes forward-looking statements that reflect management’s expectations based on currently available data. However, actual results are subject to future events and uncertainties. Information in this conference call related to projections or other forward-looking statements may be relied on subject to our Safe Harbor statement included in our earnings release last night and may continue to be used while this call remains in the active portion of the company’s website at www.yum.com.

In addition we’d like to make you please be aware of the next earnings date which is Wednesday, April 14, which will be our first quarter 2010 earnings will be released after the market close and our earnings conference call will follow the following morning at 9:15 AM.

On our call today you will hear from David Novak, Chairman and CEO; and Rick Carucci our CFO. Following remarks from both, we will take your questions.

And now, I’ll turn the call over to David Novak.

David C. Novak

Okay. Thanks, Tim, and good morning, everybody. Given the tough macro environment, I’m especially pleased to announce that 2009 was another strong year of performance as we continue our quest to make Yum! Brands the defining global company that feeds the world. We reported 13% EPS growth marking the eighth straight year that we exceeded our annual target of at least 10% and achieved at least 13%.

As I look back on the year, I’m really proud of what we accomplished in 2009. In a very tough year, we opened over 1400 new restaurants outside the United States while making major progress on our incremental sales layers in each of our businesses.

We improved our worldwide restaurant margins by 1.7 percentage points and operating profit grew by 9% prior to foreign currency translation. Importantly, we maintained our return on invested capital of 20% and continued to be an industrial leader.

In China, we grew our profits by a whopping 25% in 2009 on top of 28% in 2008. That’s over 50% growth in two years. The good news is that we achieved these impressive results even though our same-store sales were slightly negative as the consumer has lagged their recent economic trends. We added a record 509 new units and now have nearly 3500 restaurants.