Q4 2022 Yum China Holdings Inc Earnings Call
Thank you for standing by and welcome to the Yum, China fourth quarter and fiscal year 2022 earnings conference call. All participants are in a listen only mode that will be a presentation followed by a question and answer session.
We wish to ask a question you will need to press the star key followed by the number one of your telephone keypad I would now like to hand, the conference over to MS. Michelle Qi IR director. Please go ahead.
Thank you sorry, Hello, everyone. Thank you for joining Yum, China's fourth quarter 2022 earnings conference call on today's call are all C O Ms Joey Wat and our CFO, Mr. Andy Yeung.
Before we get started I'd like to remind you that our earnings call and investor materials contain forward looking statements, which are subject to future events and uncertainties.
Actual results may differ materially from these demand or at least what we're looking at things.
All forward looking statements should be considered in conjunction with the cautionary statement you know earnings release and risk factors included small things with MTF. This call also includes certain non-GAAP financial measures you should carefully Christie, there's a comparable GAAP measures reconciliation of non-GAAP and GAAP measures is included.
The earnings release.
Today's call includes reception Joey will talk about our journey in the past three years and discuss fourth quarter performance.
Andy will then cover the financial performance and outlook in greater detail. Finally, we will open the call too.
You can find the webcast of this call and a Powerpoint presentation, which contains operational and financial highlights.
Our web site.
We plan to host our 2023 Investor day in Shanghai in September .
Look forward to sharing more details about at least event with you in due course now I would like to turn the call over to skill you wont be Yum China.
Thank you Michelle.
I want to wish everyone, joining us today and happy and healthy.
Yeah.
So looking at the fourth quarter and full year I would like to reset with black alright.
I'll, let Jeremy.
Australia with Covid some of our key learnings.
We have done.
Sure.
I'm incredibly grateful to the entire Yum, China team worked.
It's already.
The activity and tenacity.
Have a good time.
We became a more resilient nimble business.
Better positioned for long term growth.
During the past three years we've.
We quickly put Victor.
Trumping Kim I'm third pressure.
But literally doubled from just 20% in 2019.
39% in <unk>.
Our hybrid delivery model and better trade at Ryder and enable us to capture the increase in demand.
Combined it was pick away all parameters.
Hum.
Fair enough.
Fourth quarter, I'm pretty pretty true.
Digital ordering Arthur rocket.
55 for sound Saturday 2019, so now 89.
That's the older one to Brendan.
So let's see.
Yes.
We maintain our rapid growth.
I stopped to Florida or expanded by nearly 40% of total 3800 net new stores.
KFC or pizza hut stored maintained a healthy payback.
Over a two to three years.
Respectively.
The first year profitability of news doors also incur.
New store performance was driven by a basketball still knock on wood right.
Optimize store size to secure more favorable lease terms.
Our new stores opened in 2022 modern huh.
In smaller format.
That's that's really allow us to continue to increase density in higher tier cities.
Particularly useful and helpful or delivery.
Chapter one and.
The lower tier cities.
We enhanced the coverage and agility of our world class supply chain to support business growth rate spend from 29 or 33 logistics centers, a better self sufficiency in each province.
During standard at all times, we add rail and sea freight to move our inventory come.
From a traditional trucks.
Our store inventory visibility system allows real time sales forecasting and smart inventory replenishment.
These capabilities help mitigate severe disruption, even during lockdown and minimized with age.
Okay.
Also supports our product innovation by securing the cry at scale.
Apart from our classic offering we launched over 500, new or upgraded menu items last year from regional offers for national launches.
We invest in digital and automation to improve operating transparency and consistency.
For example, we are rolling out smart order system being done sooner and careful at KFC.
The AI powered system more accurately predict demand and the demand the preparation plant to minimize stall out and race and also reduce the waiting time for customer.
It also enhances customer.
Customer experience by reducing wait times, and providing real time or to update.
And recently, we at the robotics surgery at one third of our Pizza hut restaurant Shanghai each year.
Green freeing up crews to serve customers.
We remained profitable each and every quarter.
Beginning of combating the 80 2020.
Finally, phasing cost structure and implementing austerity measures.
Cushion shock created by the volatile market situation.
In the past three years, we were able to generate one on liability in U S dollars increased cash flow and returned over 1 billion U S dollar through shareholder.
Notably I'm proud to say within this while also protecting the jobs are.
We have had no staff layoffs.
The pandemic began.
Looking back over this period, we seize opportunities improve our ability to operate in good times and bad times.
Okay before anti fragile operation.
Enable us to shine and drive long term growth in China.
Now, let me provide some highlights for the fourth quarter and full year.
Yeah.
2022 was filled with unprecedented challenges in.
In just 12 months, we manage sporadic COVID-19 ultra.
Empire City Lockdown.
Nationwide in fashion, and that's not the lifting of Covid related restrictions.
October and November Cobra fashion quickly evolved into a major regional okra.
Leading to a tightened COVID-19 related measure in December as China entered a new phase of Covid response, with a brand new challenges.
We're serving especially on rate a significant portion of our employees and rider became even faster.
Celgene in a labor shortage.
All of our stores were temporarily closed or only provided limited services.
Many residents also opt to stay at home to avoid any question or recover from them.
Tom.
I think traffic fell sharply.
During this time as always the health and safety of our employees and customers remain our top priority.
With little quickly and support our employees with the relief medicine and allergen test kit.
We have many days they do testing for all crews a rider to minimize in fashion and we're organized information of how tall and a consultation hotline for all employees.
At the same time, we took immediate steps to address the labor shortage.
Simplified menu.
Turning to operating hours and optimize labor shifts, we allocate crew resources amongst doors prioritizing stores with stronger demand and we adjust the delivery operations encourage customers to pick up older and promote package.
Sports products.
I'm thankful for our team's nimble action and amazing is tuition.
Even in this challenging corner, we deliver substantial year over year restaurant margin expansion despite lower sales.
This was achieved by our extensive scenario planning.
No efficiency improvement.
Mostly phasing initiatives and temporary relief.
We were also able to open a record 538 net new stores in the fourth quarter or 1159, net new store in the school year.
Let's move on to the brand by brand Caspian Pizza Hut continue to introduce delicious food and exciting campaign to delight our customers.
I can't see Neal categories grew with solid momentum.
Juicy whole chicken meat for trendy and Beefburger neuro humble doubled in sales in 2022.
Combined.
Agenda, right around 5% of KFC sales mix in the fourth quarter.
Nearly equal to our original recipe chicken.
We continue to introduce more flavors in these categories such as the spicy whole chicken.
H M D launched during Chinese new year.
Following the success of pokemon side that in quarter, two but yeah. Our toys in the fourth quarter also generate a huge social but these include bonds D chicken little bumpy and lumpy chicken N' pecan, Jimmy want both well already.
Ali design pet toys or toy school, you'll cat, but are quickly became very popular with customers and drove traffic.
At Pizza Hut Pizza sales grew nicely for the year, reaching almost 40 for now.
We sold over 100 million pizza in 2022 that's nearly seven pizza for a second.
Apart from our Sydney, Japan post.
Oh, and crispy pizza, we have at the crust pizza.
Customers can choose films like the Blue cheese sausage and meet flows are really shown these new launches encourage the trade out and then if that's right.
We continue to offer a stunning value for money.
So nature Valley campaign at KFC.
Crazy Thursday financing he said.
Trust excellent traffic generating over 50% more sellers on Thursdays compared with other weekdays.
They buy more save more so we're pumping continues to slow weekend, so customers love the option to mix and match and the sizable discount.
At Pizza Hut, we brought that are wildly popular to pizza for 15 line Yeah promotion in November the amazing value drove great traffic and sales uplift.
No retail packaged food per watt and flexibility during lockdown and when we were short of.
In 2022, pancakes, where sales grew 90% and reached nearly 900 million yeah.
We continue to broaden our offerings, adding some of the classics, such as Ah Ah ha and popcorn chicken Jimmy want.
Now moving on to our emerging brands, we have solid management teams and strategies in place well.
Well it would take time to fine tune and test the business model, we are making solid progress.
<unk> continues to execute its full to learn strategy, which includes Grand building menu innovation digital and delivery and all the vitamins.
Throughout the year, we introduced a new coffee flavors, such as Orange vanilla Latte with Buffalo milk.
One zero Nokia, we also ensure their sweet and savory food waste at the pair well with coffee such a cute connect though which is a stuffy love love about Chris I'll go by chance on Corso.
Loyalty members more than double the one Milan in 2020 two.
Continue contributing to our over 40% or so.
We enhanced operational efficiency optimize new soldiers on lowering upfront investment adult COVID-19 disruptions have delayed openings, Nevada reached 85 stores by the end of quarter four.
Taco Bell doubled its still kind of in 2022 291 stores, we continue to localize the manual for Chinese customer or sample of crispy, one times tackle Yeah show suite, you're stuck in a onetime raptor in place although tortilla.
Why not.
We also continue to improve the value proposition customized CRM and unit economics.
Little sheep, LNG, along with accurately impact by Covid due to death I am okay.
We use 2022 to refine their business models and strengthen on the mantle from.
Our menu marketing store models surprising to a digital initiatives.
Do you also continue to generate operating profit.
To wrap up with a new chapter of opening in 2023, we're excited to see positive momentum going into Chinese new year season with.
We took decisive action to ensure operational efficiency and purchase so they can see it was brought back a signature golden bucket syndrome.
It's a holiday favorites.
At Pizza hut, we introduce our holiday themed pizza with beef and seafood.
It's called Chow Tai Chung Gonyo Pizza, which is inspired by a popular game.
Is a gratifying to see how our delicious food play.
Important part in our customers' celebration during the holiday, yes, Covid remains a reality.
And many challenges still lie ahead, including cautious consumer spending towards holiday, while we anticipate the road to recovery will be gradual and uneven up to mistake that right are they uh huh.
We'll continue to execute our proven Oh, Gee am strategy, which assemble resiliency rose and strategic moat to capture the growth opportunity and deliver shareholder value with that I will turn the call over to Andy Andy. Thank you Joey and he laid up happy Chinese new year to everyone.
Let me share with you our fourth quarter.
As Joey mentioned, we faced an extremely fluid and challenging fourth quarter.
With a special changes in Colby condition, and we did a policy.
In late November due to rising infections and strict COVID-19 related health measures. The number of stores that were either temporarily closed off the only takeaway and delivery services, which had a peak of over 300 people.
In December .
We face a different situation when most of the COVID-19 measures well leased it.
Due to labor shortage, we had to temporarily close all Hawaii limited services at over 1300 on average and.
In such a watch how environment we talk.
Quickly action two captures all kind of Mr. Mann.
Furthermore, we controlled costs limited, Playstation and enhance productivity despite lower sales.
Our team did a wonderful job improving restaurant margin by.
<unk> almost three percentage points, despite very difficult.
Let us now go through the financials.
Unless noted otherwise.
Otherwise all percentage changes are before the effects of foreign exchange.
Foreign exchange had a negative impact of approximately 11% in the quarter.
Fourth quarter total revenue declined 9% year over year, and we bought a currency to $2 $1 billion.
In constant currency total revenues grew 2%.
The contribution of new units and the consolidation of Hangzhou KFC were partially offset by same store sales decline and temporarily temporary stall kosher.
See some cells and seem self out.
My focus and you'll be.
By Brian KFC same store sales were 97% of the prior year's level with same store traffic at 84%.
Ticket average grew 16% due to the rise in delivery mix, which has a higher ticket average and body.
These are hard things to ourselves, we're at 92% of prior year level.
Same store traffic was at 98%.
Average was at 95% driven by lowest average up delivery orders and smaller on site.
Got it.
Restaurant margin was 10, 4%.
290 basis points higher than the prior year.
The year over year increase was mainly driven by labor productivity.
Operationally efficiency and temporary relief.
These were partially offset by the south Lebanon impact, which include temporary saw culture as well as high right of course.
Hi, there will be the bottom.
We also face inflationary headwinds in commodity and labor costs.
Okay well.
Hot to protect margins during the fourth quarter, which is seasonally slow some of those impulses.
Let me go through the key items and highlights action we call.
Cost of sales was 31, 9% 60 basis points lower than prior year, we kept commodity inflation was pretty modest for the chipotle locking in prices and innovating the menu.
We also carefully planned promotional activities and reduce wastage.
Cost of Labor was 28, 8% 90 basis points higher than prior year.
This was mainly due to increased why did cost some hydro resource mix.
Lower single digit low single digit wage wage inflation and sales leverage.
This was partially offset by better labor productivity and temporary leave up $14 million.
Occupancy and other.
28, 9%.
Honey 20 basis points lower than prior year, you spiked out the leather goods.
It was mainly due to lower rental expense and other cost savings initiatives.
When I do expense as a percentage of sales.
If it if I'm right, who believe a $12 million.
So portfolio optimization and more favorable lease terms.
G&A expenses increased 2% year over year, mainly due to increased compensation and benefit expenses.
As well as the consolidation of Apache, Okay I see.
The increase was partially offset by.
By cost control initiatives.
Yeah.
Operating profit was $41 million compared to $633 million.
He appeared.
In the fourth quarter of 2021, we recorded a noncash gain of $618 million from the re measurement of our Christie health equity interest in Hangzhou KFC.
Excluding the Remeasurement gain adjusted operating profit increased 189% year over year from $60 million $40 million.
The net contributions from Hangzhou Kfc's consolidation was 12% of operating profit in the quarter.
It included the last quarter of amortization of intangible assets acquired which was about 15 months ago.
The effective tax rate was 29, 9%.
480 basis points higher than prior year.
To lower pretax income and the Hangzhou cats deconsolidation.
Try to consolidations the equity income from Jb's.
Well, it's not subject to tax resulting in a lower tax rate.
Net income was $53 million adjusted net income was $52 million.
Excluding the $4 million mark to market.
Gain on our equity investment.
In the quarter and the $9 million net loss in the prior year period.
Net income.
54%.
Due to the diluted EPS and adjusted EPS was <unk> 13 cents.
The mark to market gain in May 'twenty increased by the E. P. S by one set.
In December we acquire an additional 20% stake in Suzhou KFC JV.
Approximately $115 million.
This increased our total ownership in the JV from 72% to 92%.
For the full year 2022, we generated free cash flow up several hundred studies full mill in Dallas.
Have a lovely $668 million shareholder in cash dividend and share repurchases.
Cash cash and short term investment was $3 $2 billion.
Awesome.
In the third quarter.
The reduction in cash and short term investments was mainly due to the reclassification of about $600 million from short term investments long term time deposits.
We invested in long term.
Thank you pass it benefits some better interest rate.
Let's now turn to our outlook for 2023.
Yeah.
In January .
Most of the temporarily postal assumed almost all of it.
Our same store sales from the comparable Chinese new year holiday season were up.
Mid single digit year over year, but remain below that level.
Same store sales benefited from pent up demand, that's a relaxation of call. It policy coinciding with the Chinese new year holiday.
However, the real test will be the south who true after the holiday.
As we face more cautious consumer spending and Michael Nauman.
Yeah.
Looking ahead, we are encouraged by the new public policy.
You shouldn't you before.
But we must keep a level out and recognize that uncertainties and challenges.
Lie ahead.
All the country, we have something that photo.
So the outbreaks and the makings of new Covid buried a real possibility.
Friction.
Yeah.
We also face some macroeconomic headwinds.
Elevated commodity and wage inflation as well as softening global economic conditions.
These factors may impact, our operation and consumer spending in China.
Without sounding like a broken record we continue to expect recovery to take time.
And below Neemia and uneven.
Well 2023.
Our priority is to drive that.
At the same time, we will remain agile.
One of the lessons we learned in the recent years is the importance of planning and preparing for a wide range of.
Both to capitalize on growth opportunities and to mitigate with when he does.
[noise] installed above them, we are targeting to open 1100 shoot up in Huntington yourself.
We expect capital expenditure of $700 million to $900 million.
Organic growth muddling digital supply chain and all the infrastructure development.
That's always the quality of well he is what matters the most.
The quantity.
So we will continue our systematic and disciplined approach to investment.
Finally, we remain committed to returning capital to shareholders.
Uh huh.
Cool.
Food waste is a cash dividend of <unk> per share.
10 cents per share.
This is supported by our healthy balance sheet.
And strong cash flow.
With that I will pass you back to Michelle to start the Q&A. Thanks.
Thanks, Andy we'll now open the call for questions in order to give more people the chance to ask questions. Please limit your questions to one at a time sorry, please start the Q&A.
Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
Wish to cancel your request. Please press star two if you're honest sneak a fine please pick up the handset to ask your question. Your first question comes from Brian Bittner from Oppenheimer and company. Please go ahead.
Yes.
Thank you good morning to you.
My question is on the new stores that you've built since Covid began you built a significant amount of new stores over the last three years over 3700 up of these new stores and I know the payback on these stores are still very strong despite operating in the pandemic, which is incredibly impressive but Andy can you.
Talk about where the sales productivity and the margins on this class of stores that have been built since COVID-19, where it currently stands relative to the rest of the asset base. So we can kind of understand how to think about the model moving forward.
Okay.
Thank you Brian .
You know.
If we look at you know I'll start opening for the past two years. After you have mentioned you know we have to be morning, almost increase all heck Oh stock comp I know almost felipe, but and but nevertheless, I think if you look at the new store performance. The you know the payback here were very consistent very good forget six vials.
Yes, well I'm, sorry from cafes about two years' empathy, it's about two to three years.
<unk>.
And you know that we can watch two or three years, because even though with the satellite model, which is the new model that we have.
Perform is on par with KFC, which is about two years and then you know obviously, there's more stand up models are they paid up periods are longer.
And if you look at overall for this year at last year, you know that new store that we open you know their unit economics continue to perform very well.
If you look at you know the store that opened.
Opened recently are you know are there.
But even you know most of them are break evens within three.
Three months ago are fine.
Then you start charging bombing.
So if you look at our new store portfolio I'm sure the difference be with their existing sorry is that over the past couple years, we did no increased penetration in double T C. Whereas the white space and then we also increased density in the urban area, especially with smaller.
Bordeaux, a satellite phone model all Kathy smaller model.
We need to cater to consumers.
Menthol opinions and delivery and takeaway.
The neustar genuinely are smaller so the throughput they sort of speak with are generally less than our existing portfolio.
But we are about to start off the.
Oh patent portfolio average now, they're probably off those new so a better as we mentioned we have Lois.
The investments fall.
The small cell if you looked at it's awfully we.
We probably spent about $2 million no Paul Newsome opening and then you know now you know like we are spending.
On average about $2 million and Andy.
And then you know from a small motto is close to a one off on that.
And so and then also we have obviously improved the efficiencies our food values up and down.
As you look at the rash of module for example last year in 2022.
Like you know the fare environment throughout the year and South deleveraging, we managed to improve you know restaurant margins, especially at KFC. So so I think you know we're pretty cognizant that no we are.
We have the right format.
And I think the forces to both our sell network at a healthy pace and also maintain a very robust.
But the payback for them.
Round you started to add some color to your question.
Sure, let's see here.
Sure.
Aggressive new store opening.
Its resiliency because while we.
Emphasize how many stores we have opened in the last three years, how many are free.
3700, net new stores are actually 4800, gross you know where we're.
At the same time, we did not talk about the order and when and how many stores we have retired.
So when we open a more productive years ago, we at the same time retire the less put that's.
That's it.
And in fact, the quality of our assets or young China has improved.
The Nazis.
So just.
Has it been a highlight here for the near so fun right now we are talking about 90% there still have.
Our flexible rent, which make us more resilient.
Can you talk about the one purpose even more is this thing about our capex roughly 40, 60, 40% equipment, which we can move and 60% some cool so with them, especially with the campus. So suncor is even more than just a quarterly as you know Uh huh.
And besides this morning, so the productivity of the nearest though.
That's not true.
And the location of their stores, Massachusetts, because theyre, both in higher tier city and lower tier city. It's about 40 60 split too.
So for lower tier city.
60%, you still want that theyre at the very very effective.
And three New York City for KFC 2022 we actually enter 200 intercity and decent white space and you can imagine is a pretty good market to go for higher tier city. Our focus is on filling the gap or the system.
Queen stores to increase the density of our selling high tier cities, which is incredibly important.
Thinking about our focus on the delivery business.
So I hope that gives you a fraser.
About the new stores it turns out the quantity at anytime.
Resiliency for them.
Right.
It does thanks.
Thank you so much.
Okay.
Thank you. Your next question comes from Chen Luo from Bank of America. Please go ahead.
Yeah.
Thank you Joey and Andy Unhappy Trust me with your so before I wish My question I'd like to highlight three things if I may 1st out of the 12 quarters doing the pin debit appear at four five quarters, we actually reported a restaurant margins better than the pre pandemic level.
And despite the fact that for the four quarters, we have same store.
Like mid to high single digit same store sales decline versus 2019, whereas for Q3 last year, we actually saw more than 10% same store sales decline, but it does seem here in 2019 are apart from the one time cost relief, we have significantly rebased, our cost structure and innovated.
Just awful mess as Julia and Andy just elaborate at home and Meanwhile, we also consolidates Hangzhou and Suzhou KFC in the past three years supposedly these partial business carries higher margins than the group average.
So I think the market in general, we'd expect pretty meaningful margin expect recovery all expansion going forward.
<unk> sales start to recover.
And four point number two I also noticed that Oh priority. This year is to drive sales, but Meanwhile, the market generally P. D saw the companies are very good at balancing top line and margins.
And point number three just how we also highlight that we will be planning for multiple scenarios in a very fluid situation.
So off highly likely all these three points are now let's come to my question sources. So it is a bit long so I understand the citrus affluent but lets assume that a full tool 23.
Our macro environment, it's kind of okay. So without a doubt more mundane could be similar to that of second half of 220 and first half of two one times what.
So that we might see some pretty okay same store gives you a quick recovery, but may not be fully back toward our 2019 level and under that scenario.
Is it fair to say that Oh, we can actually bring our restaurant margin to a level largely similar to the 2019 or even a bit higher than that.
So that's my question. Thank you.
Oh thank.
Thank you for the summary, and also some risk away and also another question about virtual market potential.
We have always say no like no windows.
On a same store sales decline a genuinely that will put pressure on you know Russia margin. The overall margin, but no one berry's recovery no ourselves. We also expect some leverage to now obviously as you mentioned that weird by you know encourage.
Right.
Last patient out of the coli policy, I think which would give us a little bit more certainty a little bit more certainty about the business. The bombing in full operation and then also to the Chinese new year trading period.
So so in general I think you know, we we are cautiously optimistic.
We mentioned a couple.
Oh no the.
Market conditions and also the Covid.
Being you know like the Iot is really you know.
To us that we need to keep a level head I think if you look at the operational improvement a label to your school then and then some of that margin improvement as we've mentioned before which we are we expect you know most of them on some of them with car T U S.
As we have mentioned, we see a lot of work to be based on our cost structure over the past few years and so so if you think about you know somewhat follow up.
Labor structure Oh.
I have a bunch of all management was as cool as all that and then also you know if you think about the last we mentioned you know the rental expenses, where we also got some favorable these term et cetera, I think those will carry forward now obviously you know over the past couple of years because of Covid situation in the fourth quarter did you see a chip right. So in the fourth quarter.
We see about a $26 million of Wright, who will leave in other words, how about beef and then for the full year, we used to have about $86 million. So those are likely to go away as you mentioned, if things become more normalized and and so that would also at that time.
The other one is that we're looking in the commodity prices and labor inflation.
I think you know all the sport's half year because of the public and also the overall economic condition.
Why did we bought it in China and $2 22, a cause of that was a smaller price inflation was about low single digit in St Paul painful or labor cost inflation.
Now we feel if you looked at the boy if I could for example for chicken prices have been rising since the second half of last year and so we do expect you know a probably a low single digit in a commodity price inflation.
Next year at least in the first half this year.
Great.
And then we also expect you know Oh labor inflation.
Inflation to return to more normal pace of conversion and we think it is not.
The normal mid to high single digit you said no. So we expect that to especially when we turn to a more normal pace of inflationary pressure. There. So that's how we generally look at you know sort of like the margins and it causes bomb and as we are.
Moving to about 23 and.
Let me add some color here.
Uh huh.
Yeah.
The way that the Max nothing that's all all these.
Sure.
Cool Congress in margin.
It's just follow them.
Yeah.
If you look at our number historically cause ourselves in cost of labor.
Going forward in 20 countries.
For your modeling purposes, we cant, but because it sounds of course of labor, we have management team will try to.
Keep it relatively.
People, if we could.
Because.
You know we have to manage your inflation forecast himself, but he same time it won't be too long either you know full well it's on T 22 is about 38%.
If you go all the way back to 2016, and when we start to get lift. It is also about 29, 30%.
But the big Delta is that pizza hut actually pizza at that time right now besides on 31, 5% at that time. She thought it was only 26% and that was a cover it.
Because when the Congress sounds too low I mean, the value for money is not good enough and that's very dangerous.
So I'll go is to keep it relatively stable.
Comfortably burn you know.
The fact is that it just keep increasing and.
Our job is to manage it at reasonable level, but we have to pay our staff at a competitive price competitive wages, otherwise we won't get the stuff.
The area that over the years, we which we have improved quite a bit I would say is occupancy and other operating expenses such as rent and send me a M. P depreciation amortization that's right that's right.
So 2022 is 28, 6% and 2016 34, 2% a massive 526% delta.
That shows management teams.
Since he and focus on reducing the rent, which is always the right thing to do I would like to believe.
And also depreciation which is nonrecurring capex. So that has been awful cause them, but when we yeah and that's true for both KFC and pizza hut by the way and 5% to 6% improvement for both brands over these many years.
However, one thing I would like to emphasize again and again when we save all these money we don't just you know.
That is still the fruit or the margin, we always always always pass on some savings back to the customer.
That's the way that we felt long term business.
So I hope that that helps you to think about management.
Okay, what would the margin very cheap.
G I.
Okay.
Thank you.
That's very helpful by the way, Hey, Y'all bumbling E. POI is really cute and also I'm very amazed by the newly launched Marcia.
All she alone type of product so I'm looking forward to have a drama.
Yeah.
Sure.
Yeah Yeah.
Yeah Nicole.
Yeah.
Oh. Thank you. Your next question comes from waste helpful. From Citi. Please go ahead.
Hi, Good morning, Hi, Julien and happy new year.
I have a long term question, we had appreciated the great run down of Julius opening remarks, Shanghai, It's a journey over the past three years Hope you beauty your identity and also keep that goes in the long term target.
My questions in the past three years, you argued at cheeseburger feasible, which will protect your margin, we don't capture the digital and delivery, but when China opens the market would be more dynamic.
I just want to get a sense of whether Julian too will be more offensive.
This would be a glass you have done before in terms of demand activation because you always been stay ahead of competition. You stay ahead of competition to to reserve your cost and protecting margin during a bad time, where you'd be under the beat me up sensitive the market share gains looking for a penchant to reopen thank you.
Thank you it's helpful. I think I would like to.
And then a narrative that.
But the in the past me, yes, whether we have seen offensive or defensive I think we'd have to really [laughter] in the last three years you can see though what we just talked about earlier with Brian's question we have.
He spend a footprint by as much as 40%.
Within three years. So all of you is that we show.
Manage all their crisis and adversity.
And I think with it.
So so.
You know we are.
When we look forward from 'twenty to 'twenty three and beyond.
It's a will continue.
Our pace, which had been rather aggressive I would say.
What are the focus is.
It is true to the focus and priority is to drive sales our focus on the list delicious for their product value exciting campaign, while at the same time continue our disciplined approach to catch a little growth because if you think about the last few years.
Our our biggest constraint actually was on the south side due to disruption at all so that's about it.
So are going forward.
We will focus even more on driving south and then continue with a disciplined approach.
Which include.
Our salaried install growth.
And he talked about targeting 1100 to 1300 net new stores in 2023 secondly, optimize the store format, because that's still a lot to be done. We have we have done a I think pretty decent job of chassis in pizza hut, but let's not forget in the last three years the smaller.
Brent actually had more challenging.
Time to two.
To attest to to try yeah store format. There so that there's some different system piece I'm still model. It and we are certainly looking forward to them a bit more supportive environment for the smaller print right to grow.
And for us to invest to strengthen our strategic moat in terms of supply chain digital et cetera. So so.
I hope that gives you a sense about our focus our focus is still on resiliency, Hello, and strategic moat, and our anti fragile operation, which.
Has been proven in the past, but yes, we'll continue with strong focus on that.
Well, let me ask you know I know.
Upon which as you know when we look at our store network expansion I think we have been very disciplined you know all too.
Since the spin off right and so we're very consistent about that within that very closest to oppose ferry picking them up and anxious about post is still a you know a a mechanism right to accelerate both when you do the economics that cause long wall, Oh, you know and and decelerate when you know the.
The economics is not performing as well as mentioned before.
If you think about that from that when times are better.
All right and they're performing very well.
The stop manager themselves or their market manager themselves with proposed small fall in the mothball would be approved.
Our model Oh, why it's worth it right and so this is a classic example, if you look at our Pizza Hut Pizza hut, a young people that make up you know he was no.
What's your thinking to rejuvenate the program.
And you see you know there and that's all you do you think I don't think at that time news, arguing economic at the time was no oh can be constrained and therefore, you know you see limited.
No new Softballs for Pizza hut.
And then you know with that so that's all that's.
Sound like my motto, you see you know a pretty significant acceleration falters fall Alibaba there and so so I think you know our model and our approach is while its discipline asthmatic. It's also reflect that much you know the current economic conditions.
So it makes it which with salary and salary owing to this problem.
Thank you a couple.
Great. Thanks, looking forward to meeting both of you very soon physically thank you.
Absolutely, yeah and yeah.
Thank you. Your next question comes from Michelle Cheng from Goldman Sachs. Please go ahead.
Hi, Tony and thanks for taking my question. That's all my questions about the promotion that type of pace and the competition landscape. All we know in the past two year saga smaller players have been squeezed out significantly and there's actually a benefit all business. So going forward in the new like I'll be opening walk how shall we think of it.
All the competitive landscape changes and also on the auto side, we know they'll come off and Paul has been pretty challenging.
Are these days.
I Wonder if you are got a chance to try far off topic bag now between those promotional activities. Thank you.
Uh huh.
Hi, Michelle.
The competitive landscape I'm happy to report that I think we have been doing quite alright, I mean, probably.
From 2019, so the 2022 the ozone.
Market in our business has Uh huh.
Dropped by mid single digits.
But young China's ourselves, we hold we hold up there so what that means.
Our market share has increased.
So so far I think we have done something right.
Going forward regarding your question on promotion itself. Some momentum we always look at our promotion fraud that operation.
All in a holistic view.
How to drive sells well.
Or the focus on driving sounds we always prioritize our traffic.
And then take an average and we want kind of both.
Oh houses get both.
We will have the a series of initiatives.
The promotion and sales strategy, we always have fantastic product they call them.
It's really not very healthy just to only focus on promotion without amazing product.
I'm proud of comfort.
Therefore, even doing during the three years and then every year, we are still able to launch about 500 new products.
With or without the help of.
Our traditional marketing because we have now over 430 million members, we can only market and you probably cant remember.
And now with the new product, we have really excessive promotions is that now becoming a more effective over time, because we have.
Less promotion campaign, but more effective promotion campaign and for example, as I mentioned earlier.
First Paul Cool Crazy Thursday, amazing, but it took four years to make to Purdue is oh, if you'll come to amazing Crazy Thursday promotion and that's what really well for what date, but you know for a weekend our business has been quite challenging because it can be thier social activity.
In the last three years, so what tiny tiny to Wedbush.
<unk> soda from one P M.
Buy more save more okay, I see and then for Pizza hut.
Is that the value.
Value promotion pool.
Oh sure to pizza for 59, so fewer or more that's the promotions that drive south cause that type of margin for all shareholders.
Now you'll talk to your thinking about you probably have the hidden question. He is about price increase it is also within our plan, but we do it hopefully in a kind of a way.
We expand the range of price.
We have lower entry price point product and we also have some very high am product too.
I'm pleased the customer who would want to treat themselves I want to say for example, if the vocals beef broga. Okay C O, which is always a very interesting idea for traditional kids see.
Uh Huh Lumpiness, so I with the with the combination of multiple initiatives.
We hopefully can both drive topping maintained our margin and also a tricky with the fans for our shareholder. Thank you.
Yeah, I think he would tell you and I thank them for the comment on the pricing.
[laughter].
Thank you. Your next question comes from Anne Ling from Jefferies. Please go ahead.
Thank you Hi, Jenny Hi, Andy a couple of question here a personal regarding the the company's disclosure that 5% same store sales growth now I'm sorry, mid single digit same store sales growth in both jewelry Chinese new year.
Would you share with a second like now how is it like in a more or less similar for both KFC and pizza hut and how how does it differ at all in terms of the pace of recovery, what we should be expecting and then also if we take a look at both of our brands we have.
Increased after deliberate business, let's just use without the 19th.
So.
How would it change Oh, when we haven't been opening a will we see it like no more stabilization on this plot yep. Thank you.
My aunt well, the Chinese new year same thoughts Alan.
Single digit number I can see a bit better slightly better than pizza hut, because all the transportation hub stores.
Our stores.
Performed very well.
As we mentioned.
As mentioned in our earnings.
In our earnings release. This morning is even better than the government statistics, so that helps a lot.
And and in terms of the.
Regional difference in all regions are performing quite well.
Across all regions and lower tier cities perform better.
Judy.
But but but I have to mention is we need to be prudent.
If you look at the number because this year Chinese new year very early.
So the comparison is rather difficult.
We show you look at.
The Chinese new year, and number two including January and February .
So that that will that picture will be more and more are complete.
And in terms of deliberate business.
The increase is that it is it's good between 2019 to 20 fine jewelry and moved from 40% to 40%.
For Yum, China, However, I would also like to mention that.
So imagine my look at this business. We also look at Oh I'm this business as a whole.
Because the luxury business its still outperformed do outperform and compares with I E.
But the question is what was the city.
I I mean, I would just like to highlight the off premise sales right now Paul because he's about to pets, which I mentioned earlier and that's incredibly important and an hour.
And then it.
Because they stop all the resiliency of our business. That's that that is something that management team has worked very hard to achieve.
And that's also the reason why we have.
We have done okay in the last three years.
Of course, when the off premise business, it's as high as.
Tusa.
They help protect.
The business thinking about what's our breakeven. So that's how we think about it what's the breakeven stuff all business is right now.
You can watch all the number is oh, we only need less than 80% after.
So all things ourselves to breakeven to achieve breakeven that means even during the pandemic when when when a significant portion of our store was shot we can still achieve.
Achieved breakeven south because that sales transfer from buying through to delivery and off premise.
Even during the lockdown.
So that's the way that we look at the business and I Hope you would you guys will also look at the business.
In this way as well and and that 20% increase therefore from from 2019 to 22 is incredibly important.
If I mentioned one most of that point is if you look at our number during quarter four 2022.
Cassie.
That's better than Pizza hut, one reason it can see off premise business is much higher and pizza hut.
So protect the downside.
Much better thank.
Thank you Anne.
Interesting. Thank you.
Thank you. Your next question comes from Lillian Lou from Morgan Stanley . Please go ahead.
Yeah.
Thank you Joe Yeah, and Andy for your explanation of the situation just a very critical for a long question because that's exactly what a deal you just mentioned that KFC was pizza hut recovery pace given.
Given this our carbon steel volatile situation and Meanwhile, we are seeing a improvement off premise traffic so like for Jen on fab.
Fall of 2023 I was seeing like is it fair that we can expect that the casey's up momentum in terms of that pick up trend all will be strong. Good then pizza hut.
And especially holidays shot delivery a portion maybe normal lifestyle a bit versus last year, how does that kind of impact our forecast for same store sales school. So I I believe tragic what offsets some downward pressure on all of.
Take care sides for KFC, and Oh play situations for Pizza hut. So basically how do we picture does dynamics out in the next couple of months and also tiny 23. Thank you.
Okay sounds good.
Yeah, that's yeah, that's a very different business in a way right.
One is to us all very clear I can't catch up and the other one has very big fortunate in buying and casual dining which is very unique.
So so they will be there will be different.
We talked quite a lot about the Pepsi already so I'm going to focus on pizza hut.
In response to your question Julien.
He's not always thought the time on that for 2017.
And I'll focus that's been driving the traffic.
And then tried to sell once we get ourselves under control, we move on to make it more profitable sales for US probably later right don't you guys always do you remember.
After we get the proper and the control ban.
We work on the.
Uh Huh, there's no expansion and resiliency.
So so far this year 2022 lets not forget pizza hut opened a lot of thought this yes. This is a record opening.
Oh, Yeah for Pizza hut over 300 stores.
That's that's a.
Well at least we are very happy about it so I hope the shareholders I'd have to go about it too.
So what is next for Pizza hut is open muscle.
In Cleveland.
But.
One very important topic, what he thought was going to always have resiliency and I think as I mentioned earlier in the last question.
Yeah.
Oh from an right.
Right now can see resilience is slightly better than that and therefore, our focus on that going forward in muscle.
And better resiliency.
How can you do better.
N D.
That's how I used to them other than all of the operational improvement will continue their lifestyle.
The centralized though is fabulous I mean, right now between the satellite and the other smaller store, we have about 20% of the portfolio about 600 stores.
In this category.
So then 60. So these are very low.
So imagine Huntsville.
With very good sales productivity.
The payback is yes, but I suppose it's silke.
Well total news, so Oh, Oh, well pizza hut, okay. The three it truly is paid that well I'm Gonna studies done, yes, Oh Pizza hut business. This is the best paid that.
So our model for Pizza hut.
So you can imagine we're gonna open more piece when we open more of that that's what I saw the smallest or you can also imagine the loopnet business will also benefit.
Well, so I think I hope I hope that you can you can see our focus for the Big mall, It's very clear you know what we are doing.
Ooh and Ah, Okay, it's like running a marathon the beginning it took some time, but one yeah. It does so does speak well run it in the southern speak.
We can.
Yeah.
Thank you Terry.
Yeah.
Thank you. Your next question comes from links.
Please go ahead.
Thank you Julian Andy and congrats for another resilient culture also I have one class show, which is smaller but the whole picture. So regarding the recovery of China consumption. What we find that there is a recovery even after the Chinese new year are also shopping mall traffic and restaurant sales.
It's really good and some of it is like a maybe trying to Chongqing Changsha up I'm not sure. If it's a common situation nationwide. So things we have extensive layout in most regions and most of the detail. What is our opinion may wonder where there remain difference for recovery of Monterrey, Joseph Citi payouts in the future. Thank you.
Yeah.
So yeah. Thank you as I mentioned earlier.
You know the Chinese recovery so it is encouraging.
Momentum is good and we also so.
Good recovery across the region.
And in particular in some tier two city light, you know tangible or young or onetime shot because he thought the tourist destination.
That station destination for domestic traveling.
So they benefit from that C. N alone and then our lower tier city also benefit because people have not being able to go home for you.
So so we are happy to see that but our caution is pose pose.
Chinese new year trading.
Because wow all of these had T had P improvements are happening. We are also cautious that the value for money, they're cautious spending is also happening.
So therefore, while we are happy to see that traffic coming back we still focus a lot on.
Value promotion too to get a customer through the door.
Going for them.
We our focus right now is look at the post Chinese new year trading because particularly when they have kind of sun, a false economy and macro situation the customer spending post holiday.
Holiday might be cautious and that's not only specific to Chinese.
I spent 10 years in U K and I think that kind of consumer behavior is consistent.
Across all countries all everywhere, it's just natural human behavior. So therefore, we have that cautious optimistic.
Preparation to us.
January and February trading.
Yeah.
So it's a holistic trade into it it sounds just just January intransigent, Yeah C. G and I just want to add a little bit too so he's come in.
I think in general we are very encouraged obviously by you know the new cold coffee and then also the Chinese new year trading period, and so we are optimistic for the year.
Things are looking brighter.
But I think what we tried to say is that we do not pick sours.
All growth for granted.
We believe that you know like the steel that's going be a chunky charge ahead, we're going to work hard to drive that sounds well.
You know disciplined about alcohol extension and and so that's the only thing we say well, we we plan for the back half of the world and so that's that would be you know last couple of years, our strategy Ed will come to you that so far.
Thank you.
Thank you Joanne M D.
Thank you. Your next question comes from Ethan Wang from CLSA. Please go ahead.
Thank you good morning, Andy.
Mr. As long as supply chain, which is very important to our business unfolds during the COVID-19 and post COVID-19, but knowledge ignored march's, sometimes and so we noticed that we have made a very strong.
Strong men, who choose their carbon footprint.
<unk> Street.
Oh, sorry to our supply chain as well. So just wondering does that mean, we made.
Some changes with regard to our supply chain choice or maybe nature. That's my.
Two two hours, our country partners to choose Rocco and harvest.
Our business going forward. Thank you.
Hi, Ethan and thank you for your questions.
Oh supply chain things you know obviously you continue to be a very important competitive advantage for us and and you know he's very worthwhile long term sustainable growth.
And so so forth by changing we wouldn't get in the next couple of years will come to you our U S.
You mentioned in the previous Investor Day, we will step up investment in supply chain and other infrastructure. You know obviously, you know what would be expanding our footprint in terms of hours. So I put all of our supply chain. Our centers are and then also old including automation, but also investment you thought we'd use.
Probably put screen as you mentioned now obviously is very important for us to.
To work with our supplier base, our supplier partner to what you would I go I think if you look at climate change initiative is still a relatively new rerouting Oh, we have you know that's a lot.
And we have you know somebody that are they targeting Ah initiative no fallout plan, we had committed to you know achieving.
Cheating Oh, that's zero.
Michigan, I know 2015, and so that's a commitment that not only require us internally to make investment in and improve our operation, but also work very closely with our supplier and then in the future. We will also work closely with our consumer to Oh God.
Cause you to make a stable environments require you know everyone's involvement.
No.
It's not that we would necessarily change, but we will work together and you know all these study and encourage you to our supplier base.
Also walk through what that go with us as well so that's how how old telling you where we are we think about you know our pricing initiative you know what.
As you know that yesterday initiatives, especially country.
I have to point to at Eastern one is when we talk about and last name's surprise anyway responding to ESG. Some people naturally naturally think that oh that means a market impact and that means additional investment.
I have to emphasize that in Yum, China's philosophy that means that the imagine I must have a desired payback.
It does not mean that we just you know.
Justify the additional investment because they've been rising due to it has to be right thing to do now in the future. It has to be sustainable for the business as well. So one example is we invest a little.
Me and measurement because in there so to measure their U S H O energy.
The OE as you know this little chip equipment life and death.
It does not justify our payback because oh, okay. The thing about still economic two years three years, well, we have to you know what to us that the restaurant. So what they are doing what they can do with what was the supplier of that no.
Equipment recovery.
Get rid of the bells and whistles. So is very affordable and we we installed them in our stores and the saving is enough to justify that but they immerse myself. The payback is per person so that one's discipline.
And we also share whatever we learned with our surprised it help them with that.
0.1, 0.2 is supply chain.
I'm personally very excited about this area and my team is very very passionate about it to be calling.
Yeah, some witty fun and exciting innovation happening in the last few years here and I can share one with you during the Shanghai.
Angel Shanghai lot that we have one warehouse, while we have studies really not just a sensor to supply the chicken so different properties, we have one warehouses surprised a package.
The paper box, the fast et cetera.
Oh.
Warehouse what happened once in Shanghai.
And your high once completed all of that.
That is a serious business.
Right, how can we keep ourselves open without the.
Packaging paper, they're wrapping paper well our team.
We get the breeding team.
When when we are faced with that challenge, we came up with in a more really a solution. That's when we start to sell.
Logistics site.
And then most nearby ports within a week.
And we start to ship the packaging materials, you'll see for it.
One direction once it allows for Tianjin and then they should feel from Tianjin to cover the entire northern part of China.
One when not to control it cover the southern part of China, well, what happened to the admin about China well. That's railway railway has stopped everywhere without proper mom loved that.
So some part of the packaging material.
On the train and want to attend to and hi, everyone and yeah. Okay. So now you can imagine in a pod when we open a logistics and how we look at the top.
Now we look at the truck to rail in the sea freight.
I love It I think that's the way that we we shall do up isn't it in the past few years and going forward. It's fun. Thank you.
Okay.
Great.
Yes.
[noise]. Thank you. Your next question comes from Retzer from C. N V. I. Please go ahead.
Yeah.
Hi, Hello can you hear me.
Yes.
Hi, Uh Huh, Joey and Andy. Thank you so much for that Oh, geez, how it's all sharing and obviously I N C last year. So that's the question I would like to ask is about tornados don't pockets and I'm. Just wondering if you guys things you don't even talk about this a bit too conservative.
Obviously.
It was done really well last year on the opening and.
And more than a 1001 hundred stores last year with Covid and without Covid do you think the numbers could be a bit more higher this year and also seems sure capex spend last year. It was much lower than I know oculus extra pension.
And.
And perhaps the personal capex. So it's a much lower now and also the level of rents are still no weapons of pre COVID-19 levels and why shouldn't we take more advantage of that and also do you mind breaking down the number of store openings for the smaller brands like Oh, My gosh are intact.
Well thank you.
Yeah.
Hi, Rob. Thank you for your questions about the new store opening targets. So.
So I just want to echo.
It go a little bit about crews come comment, which is you know last year, we opened more than 18 hundreds at all.
You know the more than 11, you saw is the net.
New store that are that would be accretive.
Joe You mentioned you know obviously you know we're very disciplined and you saw if almost available so good.
So we have been you know opening new smelter quite aggressively even during the pandemic.
We also aggressively to optimize and improve our portfolio Oh, Brian and also you know in our store network and so that's why you know.
You see you know that number is left with Hunter. It's all about you know this year and as I said.
I mentioned before you know like obviously the target that we set up.
102.
You saw this year.
But.
I would say emphasized that no Oh, all company you know the quality of flow.
It's more important than accordingly.
And you know and when does it so we generally do not give like a quantitative is like you know dictate a number two of our staff and say hey, this year, you're going to open you know thousands of fall that's not the way we do it would you embed disciplined way, but what we look at these like what's reasonable you know, it's a range of Numis.
And then ultimately how many stores will be opened this week dependent on market conditions like the unit economics are as I mentioned, you know when you.
Talking all makes it because I'm really well are the.
The market is booming.
Sure you know our market manager it would be promoting you know start opening and do a proposed most awful fault.
The unit economics, good mothball would be a cool and so that would be acceleration of medically W. Without losses, but I'll pass it is not based on our customers.
At what point of view do we base all consistent.
Disciplined approach that black holes to market conditions and also the unit economics. So we have been coughing that you know if things are doing what do you mean well.
I'm sure like we well what covenants that you know I'll stop manager and they didn't make it like I said, we see very healthy very strong word, but you know what.
That's it.
I think we mentioned before you know and this year I'll focus.
Driving south southwest Oh. This is really important because that's the south are not only in New York.
But also you can pick the market. The biggest driver for margin is really felt and then when we talk about a contracted so visa will be our focus and I'm confident that.
We have a number for last few years I think we have.
No.
But also on the overall market in terms of the restaurant industry and we call. It is that you know we would be able to you know to do it in the long haul.
But I have one point to add it.
And the liver Cooney from analyst point of view.
The Capex ran the south all of these are important factor.
Open so operationally what is not mention enough.
It's important that actually is home money good store manager can we have.
Yeah.
And.
So managing it take some time to train.
And for Us.
We don't apologize for that focus because you think that culture, we emphasize Oh Gee I'm number one Oh man against that the most important people you know on occasion.
So in order to ensure quoting himself as Andy mentioned we.
We need to put all of these things under control the Capex ran operation so.
But the most important job for me and my management team and we make sure we have good store managers to run the show.
Yeah.
Right.
No.
Brian I think you know like I can see Kathy remained the largest spread for the fall opening and you've seen you know P.
So I would have accelerated store opening a Jimmy mentioned a record number in you know probably you shouldn't.
The.
A number of years.
Uh huh.
And then you we all continue to see very robust expression for Oh Lavazza right. So the author now you don't.
More than 80.
I know it's already.
Falling quite rapidly and you think about it last year as multiple fold increase.
Taco Bell also increased.
That's all it was especially in some of the Chinese cruising business will work very closely with all franchisees.
We would like to see.
Uh huh.
So 23 40 choices.
You can vote Blue chip.
Thank you.
Thank you.
Okay.
Thank you van no further questions at this time I'll now hand back to mission for closing remarks.
Yeah.
Thanks, sorry, Thank you all for joining our call today, we look forward to speaking with you on the next earnings call. If you have questions. Please reach out to contact information in the earnings release and on our website and have a great day. Thank you. Okay. Thank you.
Thank you that does conclude our conference for today. Thank you for participating you may now disconnect.
Okay.
[noise].
Yeah.
[music].
Okay.
Yeah.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yeah.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Yeah.
Okay.
Okay.
Okay.
Okay.
Yeah.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yeah.
Okay.
Okay.
Okay.
Yeah.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yeah.
Okay.
Okay.
Yeah.
Yeah.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yeah.
Yeah.
Yeah.
Okay.
Okay.
Okay.
Yeah.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
[noise].
Okay.
[music].
Yeah.
Okay.
Okay.
Okay.
Okay.
Yeah.
Okay.
Okay.
Okay.
Okay.
Yeah.
Okay.
Okay.