Good morning. My name is Marcella and I will be your conference operator today. At this time, I'd like to welcome everyone to the Q1 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Mr. Tim McIntyre, you may begin your conference.

Thank you, Marcella, and hello, everyone. Thank you for joining the call today about the results of our first quarter. Today's call will be the final one featuring CEO, Patrick Doyle. As you know, this call is primarily for our investor audience, so I kindly ask that all members of the media and others to be in a listen-only mode. In the unlikely event that any forward-looking statements are made, I refer you to the safe harbor statement you can find in this morning's release and the 8-K. As always, we will start with prepared comments from Domino's Chief Financial Officer, Jeff Lawrence, and from Chief Executive Officer, Patrick Doyle, followed by the analyst questions. With that, I'd like to turn it over to CFO, Jeffrey Lawrence.

Thank you, Tim, and good morning, everyone. In the first quarter, our positive global brand momentum continued as we once again delivered great results for our shareholders. We continued to lead the broader restaurant industry with 28 consecutive quarters of positive U.S. comparable sales and 97 consecutive quarters of positive international comps. We also continued to increase our store count at a healthy pace. Our diluted earnings per share was $2 a share, which is an increase of 59% over the prior-year quarter. With that, let's take a closer look at the financial results for Q1. Global retail sales, which are the total retail sales at franchise and company-owned stores worldwide, grew 16.8% in the quarter. When excluding the favorable impact of foreign currency, global retail sales grew by 13.1%. This global retail sales growth was driven by an increase in same-store sales growth and the average number of stores opened during the quarter. Same-store sales for our domestic division grew 8.3%, lapping a prior-year increase of 10.2%. Same-store sales for our international division grew 5%, lapping a prior-year increase of 4.3%. Breaking down the domestic comp, our U.S. franchise business was up 8.4%, while our company-owned stores were up 6.4%. Both comp increases were driven primarily by order count or traffic growth as consumers continued to respond positively to the overall brand experience we offer them. Ticket also increased during the growth. On the international front, all four of our geographic regions were again positive in the quarter with our Americas and Asia-Pacific regions leading the way. As I mentioned on the Q4 2017 call, our comps that quarter were negatively impacted when compared to the prior year, as our fiscal calendar did not include New Year's Day. That shifted back favorably in Q1 as comps globally were positively…

Thanks, Jeff, and good morning, everyone. I want to begin today's call, my final as President and CEO of this amazing organization, with gratitude towards many. I want to thank the many investors who have believed in our long-term story over the years. It's been great to interact with you along the way. I've learned from being challenged by your questions and observations over time, and they've helped us shape how we approach the business and ultimately helped us generate industry-leading shareholder returns. I want to thank all of the sell-side analysts for the time spent in understanding Domino's long-term approach and for your belief in our strategy and fundamentals. It's been great to get to know all of you. And while I'm still on the job for a couple more months, I want to also take this public opportunity to thank the tremendous second-to-none collection of people that make up our leadership team, our corporate team members, our incredible group of global franchisees, and the team members in the stores who take great care of our customers. As I've touched on in the past few months when discussing our leadership transition, the major reason for deciding it's time for me to move on is our deep bench of leadership talent, and an incoming CEO who couldn't be more prepared and ready to move the brand and business forward. I'm excited for many of you to get to know Rich Allison better in the coming months. I have no doubt that he will do an outstanding job. And beyond his skills and smarts as a leader, he's a good friend, and a great person who will represent our culture perfectly. You will hear from Rich in a few moments, but first, I'm delighted to discuss with you our first quarter…

Thanks, Patrick. I appreciate you allowing me a minute for some quick remarks on our call today. The main thing I want to do today is simply to say thank you on behalf of our entire leadership team. We are so grateful to have had the opportunity to work with you and to learn from you. Patrick Doyle is, without question or debate, the top CEO in the industry. And while Patrick leaves big shoes to fill, I am extremely excited to step into a role I feel incredibly prepared to take on, overseeing such a tremendous brand and such a talented collection of people. Patrick, thank you so much for your leadership and for our friendship over the past eight years. It is my personal goal, and that of our entire company, to carry forward the tremendous momentum around this business. To those on the call, I am also very excited about our start to 2018 and our first quarter performance. I look forward to the opportunity to lead this phenomenal brand into the future. In addition to my first earnings call this July, I look forward to meeting and getting to know many of you better throughout the back half of 2018 and beyond. So with that, and with great appreciation, I'll turn it back over to Patrick.

Thanks, Rich, I really appreciate it. I am absolutely confident that we are going to continue to do even better things around here under your leadership. So continuing my first quarter comments, and on our domestic business specifically, I am very pleased with an outstanding start to 2018. One of the things that I will miss most and continue to truly give Domino's its winning edge, is the continued energy and commitment of our U.S. franchisees. This group just refuses to be complacent or rest on their past success. Their unrelenting commitment to success related to sales, service and smart growth is inspiring. A relationship with our franchisees is second to none. Rich inherits and helped build a group of people who strongly believe in what we are trying to accomplish as a brand and as a system. Our alignment with our franchisees and our constant focus on their profitability and success is the only way we can succeed as a company. This alignment allows us to move faster as a system to take advantage of new opportunities and make investments in areas that generate future competitive advantage. Speaking of advantages, a quick note on technology highlighted by yet another recently announced forward-thinking innovation that we believe could be a game changer within our space; announced just last week, our Hotspots program is something we think could redefine delivery convenience, and adds to the long list of category firsts for Domino's. This will allow customers to order Domino's from thousands, in fact now almost 200,000, of parks, beaches, sports fields, and other places, which will now serve as official delivery locations. The ability to now deliver to spots without a traditional address and other rather unexpected sites will not only continue to drive incremental orders in the near term, but…

Your first question comes from the line of Brian Bittner from Oppenheimer. Your line is open. Brian Bittner - Oppenheimer & Co., Inc.: Thank you. Good morning. And, Patrick, it's just been such a pleasure to get to know you over the years. It's just been one heck of a run you've had, so congratulations. It's only fitting that you go out with a bang here and we're certainly all going to miss you.

Thanks, Brian. Brian Bittner - Oppenheimer & Co., Inc.: A couple of questions. Just with the fourth quarter now further in the rear view, are you able to now look back and better diagnose what that slowdown was most attributable to and what do you think is the biggest driver of this reacceleration or this improved trend that you've seen in the first quarter?

Yeah. Brian, I mean, first of all, fourth quarter was pretty darn good. We were pretty happy with it, but clearly, first quarter even got a bit better. I guess what I would say is, first, remember that New Year's Day shift so that was kind of a half a point out of Q4 and a half a point into or even a bit more into Q1, and so there's kind of a point plus of swing in the quarters right there. But if you look at it overall, our stores are executing at a very high level. They continue to do better and better on that. Our loyalty program and earn anywhere is continuing to I think accelerate the growth in the loyalty program. I think our advertising has been particularly effective in the first quarter, and I would remind you that we were lapping an incredibly big number in the fourth quarter. And normally, at the time, we're not going to talk about laps, but it was a particularly big one. So I think those are really the things, and at the end of the day, our guidance is 3% to 6% on the comps. We were happy to come in obviously over the top of that in the first quarter, but that's where we think we're going to be more often than not. Brian Bittner - Oppenheimer & Co., Inc.: Okay. Thanks for that. And just my last question. As you think about the potential to take share from smaller players going forward over a longer term, what do you think is going to be the biggest headwind for them? Why are they going to continue to donate share? Is it just an inability to compete on price, tough time competing on digital? What's the share shift driver going to be moving forward?

I think there are a number of things, but we think we've got our food right, our digital strength is clearly driving a lot of it, our discipline around pricing, and frankly our focus on the profitability of our stores is allowing our franchisees to be disciplined around price. The fact that we've been able to run a national price point for nine years now and continue to make improvements in our franchisees' store level profitability is a big part of that. And our understanding that at the end of the day if you're not bringing more customers into your stores day in and day out, it's not going to be a long-term recipe for success. So there're just a lot of things that have played into it, but our focus on the franchisees' store level profitability and putting tools in place and the digital things in place that are going to do that and, as I was just talking about DOM and how we can become a 100% digital business. Don't underestimate what a big deal that could be for store-level profitability and for customer convenience. Those are the sorts of things that are going to allow us to continue to take share. Brian Bittner - Oppenheimer & Co., Inc.: Thank you.

Your next question comes from the line of John Glass from Morgan Stanley. Your line is open. John Glass - Morgan Stanley & Co. LLC: Thanks very much. And Patrick, I'd like to add my congratulations and best wishes, too. We'll miss you here.

Thanks, John. John Glass - Morgan Stanley & Co. LLC: Can you – you did call out the international store growth moderating versus a year ago and versus prior periods. Can you just maybe amplify on your comments as to why you think that occurred, and what is it, specific market for example? And what gives you the confidence that it will end up being where it was at the end of last year or the similar growth?

John, this is Rich. We were a little slower out of the gate than normal in Q1 on store openings, but across the globe in each of our regions, cash-on-cash returns at the store level remained very, very strong. So as we look forward, we're still quite confident in our 6% to 8% unit growth guidance. In a 12-week period you can get some ups and downs, but the long-term health of the business is very solid. John Glass - Morgan Stanley & Co. LLC: All right. Thanks for that. And then, Patrick, you indicated that this voice ordering is going to be a powerful tool. Can you maybe, one, if there's a way to sort of dimensionalize how much time, either hours or percentage of labors spent on the phone at a store, so what could be removed? And remind us also if you can or maybe directionally, there's got to be enough left in check, right? Or could there be enough left in check just as there's more consistent upselling, for example, in that process.

Yes. So John, look, we are still developing this. And we announced it because I think, as of this morning, we're in about 20 stores and it gets better every day. It's the way that you iterate on this, but to accelerate the pace of improvement in this, we needed more and more data points. More and more experience, finding out more different ways that customers would order, and so it continues to get better. And so what I would say is, the biggest, most important thing is how it will help grow our top line. And it's the same as it is with all of our other digital efforts. So there is some labor savings. Although interestingly, I mean if you figure today we are north of 60% on our digital orders and about 10% of our orders are walk-in orders. So, people just walking into the store and somebody takes the order there, and those can be handled with kiosks, so that's how those are going to be digital. But you're looking at today 25% or maybe slightly more that are still old-fashioned phone orders. And think maybe three minutes average on the phone for somebody to take a phone order. But that's ultimately not the big thing. The big thing is all of the calls are getting answered. They're going to get answered in the same way. They will all be upsold, kind of to your point around ticket. But from a labor perspective, what we think is maybe most important is the fact that people are able to focus then in the stores, fundamentally, on two things; on making pizzas and on getting them out the door and taking care of customers who are coming into our stores. So it is ultimately about driving sales through better customer satisfaction. And if you're able to get an activity like taking orders entirely out of a store, it's kind of the second order effects of that, that are more important, I think, than the direct minutes saved in taking those orders. John Glass - Morgan Stanley & Co. LLC: That's great. That's helpful. Thank you.

Thanks, John.

Your next question comes from the line of Chris O'Cull from Stifel. Your line is open. Chris O'Cull - Stifel, Nicolaus & Co., Inc.: Thanks. Good morning, guys. And, Patrick, let me add that it also has been a pleasure to follow Domino's success under your leadership. I wish you well.

Thanks, Chris. Chris O'Cull - Stifel, Nicolaus & Co., Inc.: Patrick, just to follow up on your comments about the digital phone orders, what are the challenges that still need to be overcome to have this rolled out system-wide? And then I have a follow-up.

Look, it's going to continue to get better. And we're continuing to iterate on it. We've been working on this for quite a while. But there is only so much progress you can make kind of in a lab setting inside the organization. We've had it in a couple of stores for a while now. But artificial intelligence allows you to learn faster and faster, the more iterations, the more reps you can get on it. And so we are very confident that this technology is going to get there. But moving it into more stores, and that number is going to continue to increase, is going to increase the pace of learning and the pace of improvement. What's interesting though, if you think about it, if you think about Siri or Amazon Alexa or any of the natural voice platforms out there, they are covering very, very broad activity. We're talking about taking a pizza order. And it's a pretty small area for them to deal with. So if you call one of these stores and you start talking about politics or something completely off, they're going to be very confused. But if you call in and all you're trying to do is place an order for two large pepperoni pizzas and a two-liter Diet Coke, it's going to be really good and really efficient at doing that. So that's step one is continuing the iterations, and we wouldn't be rolling it into more stores if it wasn't already pretty good. But it's going to get better and better. And then the last thing is we're going to need to have the right phone systems in the stores to manage all of that, but we're pretty confident that the ROI on this will be very, very good and that the expense of that would be well warranted. Chris O'Cull - Stifel, Nicolaus & Co., Inc.: Okay. And then, Jeff, several companies have been talking about freight cost inflation. What level of inflation is the supply chain experiencing now? And will the new commissary help mitigate higher delivery costs for it?

Yeah, Chris, so just on food basket inflation, we're still anchoring to the 2% to 4% for 2018, but what the stores in the U.S. will experience lines up pretty much with what we're seeing in the rest of the industry. Not really a surprise there, and one that, to the great credit of our franchisees and our corporate stores, they've been able to really get the sales to help leverage and offset that increase. As far as delivery cost of the supply chain system that we have, we were pressured in Q1 on some labor and delivery costs. And just to be clear, we've been clear on this, we have opportunities to get better in that part of the business. We're investing heavily in that area, but this is not just for capacity, but hopefully to get some additional efficiencies. And at the end of the day, that benefit all accrues to the franchise operators and their P&L. If you remember, we share half of our profits in the U.S. and Canada with our franchisees, and so we're all aligned behind that business. We're going to add the capacity, as we mentioned, with the northeast center coming online in the fall. And again, as I look at the margin forecast there, I've told you before. I don't expect any wide shifts up or down on a percentage basis once we bring the new capacity online. Chris O'Cull - Stifel, Nicolaus & Co., Inc.: Okay. Great. Thanks, guys.

Thank you.

Your next question comes from the line of Will Slabaugh from Stephens, Inc. Your line is open.

Yeah. Thanks, guys. And I'll echo my congrats to Patrick as well. I had a question on carryout. So you guys have obviously been focusing on that, and it's been growing, as you mentioned, at a faster rate than delivery the past few quarters. And the percentage of carryout, though, still remains below peers. So I'm assuming that has something to do with the real estate, among others. So can you talk about the potential to continue improving real estate sites and maybe anything else that I'm forgetting about that may continue to be an opportunity in carryout looking forward now that the remodels have largely played out?

Yeah. So the best way to improve our real estate locations is to have more of them closer to our customers. And it's something we've talked about a bit before, which is customers are not willing to drive more than a half a mile or a mile to get their own pizza. They might be willing to let us deliver from further away. In fact, they are willing to let us deliver from further away. So, when we add these new stores, as we have been doing, while there is a little bit of cannibalization on our delivery business, each of these new stores is 100% incremental on our carryout business, which is, again, a reflection of what I was saying about how far are customers willing to go for carryout. So as we add stores, that's going to help. We've gone through a lot of the relocations of existing stores in the U.S. There's still some to go, but that's, frankly, going to be much less of an effect for our customers than just simply building more stores, getting them closer to our customers. And if you look at big carryout-focused chains within the restaurant industry, so you look at Starbucks or you look at McDonald's or some of these other players, you're going to see a much greater density of stores than we have today. And as we focus more on this, we're realizing that there was something to that, that they've understood that people are only willing to go so far to get a cup of coffee or a hamburger. And the same thing is true if they're going to get a pizza from Domino's.

Makes sense. And if I could kind of flip that question around a little bit, you mentioned delivery actually grew faster this quarter than carryout. Was there anything that you did in particular in this quarter to help drive that shift or do you view that more as organic?

It is all about our execution on delivery. And we do that extraordinarily well. You will probably find research out there already about the customers' experience with the third-party aggregators. And we remain confident that we are better at delivery than anybody out there, that we are doing it for better value for our customers. It's a hotter pizza when it's getting to them. It is a superior experience. And so there's a lot of talk about delivery and that may be helping to grow our delivery business as people understand that the best place to get food delivered is from the original delivery aggregator, Domino's Pizza.

Great. Thank you.

Your next question comes from the line of Karen Holthouse from Goldman Sachs. Your line is open. Karen Holthouse - Goldman Sachs & Co. LLC: Hi. Thank you for taking the question. Really two for you, first, on the company side of things, unit growth in the first quarter was really stronger than we've seen in a long time. And sort of being careful to extrapolate 12 weeks, was there anything sort of special to this quarter with five unit openings or is that a fair pace to think about for the balance of the year? And then, going back to sort of delivery versus carryout, inclement weather has been a pretty broad topic of discussion through earnings thus far. Do you think that that might have helped drive growth on the delivery side of the business and/or any comment on just sort of weather as an overall contribution to the comp in the quarter?

Yeah. Thanks, Karen. So, first, you know us. We never use weather as an excuse or as a driver because it just doesn't play into our business that much, that it ever gets to the point of being material, so really nothing in that. That doesn't mean that there aren't nights or a couple of days when we get really busy in one region, but our analytics all tell us, over the course of a quarter, with all the different geographies, it just kind of averages out into a couple of tenths here or there, but it's just not a big material effect on our business. For our corporate stores, you are going to see us opening corporate stores, but what you will also see is us occasionally buying and selling some corporate stores as well. But we believe strongly in our unit economics. Our stores generate a strong return. And everything that I just said about the system in general is equally true on our corporate stores, which is we need more of them covering territories that we are already in. And I'll give you an example. We opened a couple of stores in New York City and Bronx, Brooklyn, and Queens are a 100% corporately owned. And we added a couple more in there. We already cover all of the territory, and we know that we can cover it better by having more restaurants there. So part of the ongoing thing, you're not going to see us grow our corporate store counts materially, but we do see an opportunity to build some more in geographies that are already in, and some of that may be offset from time-to-time with some sales on geographies that may be a little further out. Karen Holthouse - Goldman Sachs & Co. LLC: Great. Thank you.

Your next question comes from the line of Alton Stump from Longbow Research. Your line is open.

Yes. Thank you. Good morning. And of course I'll pass on my congrats to you as well as Patrick. It's been quite a run.

Thanks, Alt.

I think most of my questions about the U.S. have been asked, and obviously it was a great quarter. Congrats on that. But just as I was looking internationally, it was also a strong quarter there. Been some choppiness obviously over the course of 2017. I was kind of look over the last few quarters here, I just kind of look ahead into the rest of 2018, is there any reason to believe it could be a more consistent performance from a same-store sales standpoint internationally than what we saw last year?

Hey, Alt. This is Rich. You know one of the things that we're seeing, which is very encouraging for us in the international business in Q1 is that all of the same-store sales growth was driven by order count or transaction growth. You may recall some of the choppiness we had back in 2017 we spoke about the fact that we were a little concerned that maybe we had gotten off on value in a few of our markets and had some issues with the growth coming more from ticket as opposed to transaction count. I'm really pleased to say that in the first quarter the growth was all driven by transaction count. So, that renewed focus back on value gives me optimism about our ability to continue to perform solidly in that 3% to 6% same-store sales growth range.

That's helpful. Thank you, Rich. I think that's all I've got.

Your next question come from the line of Gregory Francfort from Bank of America. Your line is open.

Hey, guys. I thought the comments on the move to a potentially 100% digital business were very interesting and I was wondering if you could flush out a little more how you think that happens over time. And then sort of where the cost savings are? Is that just on order intake in labor? Is it that you can change sort of the investment cost in the box? And then just operationally how that could work? Is that kiosks that would replace sort of someone in the store taking the order? Just flushing our sort of your longer term thinking on that and then maybe the timing of when you think that happens, I'd be very interested in.

Yeah. Greg, what I'd say from a timing perspective, it's still going to take a little bit of time, but the team is working fast. We've got some pretty clear metrics that I'm not going to share right now, but pretty clear metrics on what success looks like, but certainly at the top of the list is the customer experience and customer satisfaction. But then the rollout on that is first going to happen only after we know that it is performing better than we can perform today with the existing systems that we have in place. And in terms of how it comes into the store, it looks like any other digital order coming into our store. So, the order just comes up on the make line screen automatically and they won't know whether or not that came from voice, or from a tweet, or a laptop, or an app, or anything else. It just drops straight into the store. And what I would add to that is that is one more reason why we are so confident about our business model and our integration of the ordering and the restaurants and the delivery system. There is no handoff that has to happen where mistakes can be made. It just drops straight into our one point of sale system. So all of these foundational things that we've been doing, having one point of sale system, one online ordering system that is able to funnel all of these things in, this funnels into that exactly the same way, so the order just drops on to the make line and the people making great pizzas get to work on fulfilling that order.

And maybe just one follow-up on the Hotspots. How do you expect stores or your franchisees to sort of tailor delivery fees to Hotspots? Is it possible for you to go no fee on those or what's the plan in terms of the delivery fees on those orders versus maybe traditional delivery orders?

Yeah. Well, first franchisees set their pricing. They control that. But I think the answer is you're going to see delivery fees there be identical to their regular delivery fees. That's what I would guess is going to happen, but obviously they control their delivery fee.

Great. Thank you for the thoughts.

Your next question comes from the line of David Tarantino from Baird. Your line is open. David E. Tarantino - Robert W. Baird & Co., Inc.: Hi. Good morning. And congratulations, Patrick. My question's on the unit growth in the U.S. It seems to be accelerating each quarter. And I just wanted to maybe ask about sort of overall appetite among the current franchise base to continue accelerating investment in new units. And just at a high level, do you think you can sustain this mid-single digits or move it even higher as you think about the next few years? Thanks.

Hi, David. This is Rich. The reason that we're seeing stronger unit growth in the U.S. really is driven by one fundamental thing. And that is strong cash-on-cash returns at the store level. And stores don't get built because of numbers that are in contracts or because we push franchisees to do it. They get built because the returns are there over time. And what we've seen as we have really focused on growing franchisee profitability over time is that the returns are very strong. You combine that with some incentives that we offer to the franchisees, and the result is you get a cash-on-cash return that is better than three years without an incentive and approaching two years with an incentive. And our franchisees have voted with their wallets and decided that that's a terrific investment for them to make. David E. Tarantino - Robert W. Baird & Co., Inc.: And, Rich, have you seen a change in mentality on this since the tax reform bill was passed? Are franchisees now gearing up to do more investment based on that dynamic? Or is it just more based on sort of what's been the recipe all along, which is good cash flow at the unit level?

So really, the primary reason, David, is that strong cash flow. Our franchisees averaged about $135,000, $136,000 in EBITDA at the store level in the U.S. last year. But over and above that, most certainly a lower tax rate, and therefore, better after-tax returns certainly helped on the margin, to put a little bit more incentive in there for the franchisees to grow. David E. Tarantino - Robert W. Baird & Co., Inc.: Great. Thank you very much.

Your next question comes from the line of Matthew DiFrisco from Guggenheim Securities. Your line is open.

Thank you. And it's always a challenge for the operators there with my last name and the firm name. So, good job. A question here, a lot of detail about the digital, Patrick, that you are talking about getting to potentially 100%, it's been a while since you gave us an update. I think you crossed 60%, you've always said better than 60%. Can you give us an update on where you sit? Are we north of 75% now as far as digital?

No. Stick with north of 60%, but the key is, it's going to be 100%. And what we are doing with all of the data remains an incredibly important part of what we are doing to drive the business. But it continues to grow, but now we've figured out a way that we can get this to be in a fully digital business. And I can't give you a timeframe on when that's going to happen, but I can tell you it's going to happen.

Well, I guess with the delivery pickup and also with the step up in the delivery growth, is that correlated with the, maybe an acceleration in digital? I know you don't want to give us milestones or anything, but historically when you've expanded your digital you've also seen the check grow. You've had better personalization driving demand, so I wondered, is this correlated with it, and expansion or a reacceleration of digital winning more share of your sales and that's also driving delivery?

Well, what I would tell you is, number one, overall it just continues to move up as it always has. But the other thing is, more and more of our carryout business is digital now. And it used to be that there was a very big skew on digital to being about delivery. We've put emphasis on putting more and more of our carryout business that direction. Our loyalty program now being earned anywhere definitely plays into that. So overall it continues to grow and it's helping our business as it has helped it in the past.

Excellent. Thank you so much.

Your next question comes from Peter Saleh from BTIG. Your line is open.

Great. Thank you, and congrats, Patrick, on an outstanding career. I just wanted to ask about delivery versus carryout. I know you said that delivery grew faster this quarter than your carryout, despite the fact that your marketing creative was really focused on the carryout business. So, is there any sort of governor for the growth on the delivery side or are you finding enough drivers to continue this growth on the delivery side?

Our guidance is 3% to 6%. That is where we think we're going to be. But no, I mean, look, we continue to see a lot of opportunity if – we are proud that we are now the largest player in pizza. But tonight, five out of six pizzas sold in the U.S. are going to be from somebody other than Domino's. Globally, if you add in our international, 9 out of 10 are going to be sold by somebody other than Domino's. So, our share is so low today and you've got a category that is growing a little bit in the U.S. and a bit more than that outside of the U.S. There is clearly lots of room for growth ahead.

Great. And then I think in the past you guys had discussed carryout being a separate occasion. Now that you've had a little bit more data and more time to look at it, you still feel like it's a fairly separate occasion with about maybe a 15% overlap?

Yes, that's about right.

All right. Thank you very much.

Your next question comes from Jeremy Scott from Mizuho. Your line is open.

Hi, thanks. Was hoping to talk a bit more about the Hotspots. It seems to be a very intriguing solution to address a bunch of different issues, even outside of the areas that you're initially targeting. So I had a multipart question. First, just wondering if you have an early idea of potential sales lift as you study this launch? I would imagine that we're talking about predominantly incremental customer transactions or interactions and assuming you're going to put some marketing dollars to work. Second, if this were to become a huge success and you innovate your way towards better targeting the customer on the street, would this change your world view on store density, carryout mix? And then third, in the context of your comments that delivery is complicated and hard, where do you really see this going? I understand targeting beaches and parks, but what about campuses and other locked down locations?

Yeah. So I'll take the last part of that first. Yes. On all locations. The big thing is we need to keep it safe for our drivers, which is why the stores actually set these up and can control the time so that they're not being sent to a hotspot in an alley at 3:00 a.m. We want to make sure that we're able to deliver safely and the most important delivery that our drivers make is them coming back safely at the end of the night. And so that's why we've got some control around or complete control around where these deliveries are going to be made. Yes, I think there's clearly going to be some incrementality to that as with most things that we're investing in. We're not given a projection as to exactly how much incremental we think we're going to get out of it, but we're excited about it. And in terms of how that plays into the overall, it does open up a lot of exciting things and the fact that we can target specific spots and lat-longs and make deliveries fundamentally anywhere plays into kind of providing ultimate convenience for our customers. So we've been talking about our Anywhere suite of ordering and the fact that you should be able to interact with any technology. We also think you should fundamentally be able to get a Domino's pizza delivered to any location where you're going to want it and that includes campuses and all the different things we've talked about.

Great. Thanks. And then just operationally, maybe talk about the differences you might see in hotspot deliveries. Would there be more order batching? And then how do you work it out between different franchisees that may be targeting the same, or different locations that may be targeting the same hotspot?

Yeah. So they have defined delivery areas as part of their contract. So each address is attributable to one store, and that remains the same. So if the hotspot that they have designated is in their territory, they're the one's who set it up, and it is theirs to service. And so that's not going to change.

Great. Thank you.

Your next question comes from the line of Stephen Anderson from Maxim Group. Your line is open.

Good morning, everyone. And, Pat, congratulations to you. To the point, I want to ask a question about the takeout guarantee that has launched very recently. I just wanted to see if it's something that's been tested and if you've seen in any test markets any incremental increase in the takeout orders after the guarantee.

Well, you've seen some things in international I think around takeout guarantees. But there are ways to put more certainty around timing for people so that they can make sure that the pizza they're going to get is coming straight out of the end of the oven. You've got the carryout insurance that we've been talking about in the U.S., which is, look, if something goes wrong with the delivery on the way home, we want you to be satisfied with your overall experience. But yeah, there are ways that we're looking at it, how can we make that carryout experience even better, even more predictable, and making sure that the customer is getting the hottest possible pizza right out of the end of the oven when they come in to get it, so more to come on all of that.

Right. Thank you.

Thank you, Stephen.

Your next question comes from the line of Matt McGinley from Evercore. Your line is open.

Thank you. On the company-owned stores, the dynamic for the past few years has been you have pretty strong comp, but the margins have declined on labor inflation and some other items, but this quarter you had a pretty strong comp and you had flat margins. So the question is where are you at with labor deployment? And is there something you're doing differently or that we should think about the future of that business where you have reasonably strong comp where we don't see that same sort of a margin decline?

Hey, Matt, it's Jeff. Yeah, you're exactly right. They were flat as a percentage, obviously, up in dollars, as they continue to grow that business. Really can't say enough about those almost 400 stores that we have in the corporate portfolio, what they were able to achieve in the first quarter. As you know, there are places that we're at that have some pretty significant minimum-wage pressures, other regulatory pressures, that are a real headwind for the business. And for those guys to kind of as a whole portfolio, corporate stores fought their way to an even percentage margin, was just a great result, and we were thrilled with that. You've also got other things bouncing around in there. Obviously, as well, beyond labor, they had to overcome a little bit of food, things like that. So, we look at that business, it's a high ROI business. Make no mistake, we still like being 97% franchise, but using those corporate stores to provide good return, develop leadership talent, test some things out for the betterment of the system, all great reasons to have those. And again, getting back to your question, the fact that they were able to sell and work their way out of some pretty significant headwinds, we believe is a big win for us in that business.

Got it. On the G&A guidance for the year, you had $380 million to $385 million previously and you dropped that to $370 million to $375 million, but in the Q the ASC 606 impact looked like it was about $4.5 million. And if I run rate that, it should be around $20 million for the year, but the guidance only dropped by $10 million. So was there something else in there that the core G&A ticked up a little bit and that is a net of the revenue recognition change? Or am I just thinking about that wrong in terms of a run rate?

No. You're all over it. And it was, first and foremost, about kind of the re-class there, but there were some things in the businesses we accelerate around all of the technological initiatives that we talked about as well as performance-based comp. Obviously, we got off to a pretty strong start. Little bit of an offset there, and so the $370 million to $375 million is the number that we would tell you right now we're comfortable with for that G&A line item what's locked in there. But no, there were a couple of puts and takes there, but the most important one was the re-class.

Okay. Thank you.

Thanks, Matt.

Your next question comes from the line of Jeffery Bernstein from Barclays. Your line is open.

Great. Thank you very much. Patrick, hope our paths cross again, whether inside or outside the restaurant industry.

Thank you, Jeff.

Life wouldn't be the same if we didn't talk a little bit about delivery from the aggregators. And obviously, you guys seem to be holding up extremely well on that front. So if it's really not having much of an impact on you, yet every other call we're on and independents are talking about it as well. They're claiming that they're seeing success from a sales perspective, even though they might be feeling it from a profit or cost perspective on the other end. But where do you think the share is coming from? I mean should we just assume that the category is seeing an uptick or are these other restaurants deceiving themselves because they're just losing in-store sales? And it just seems like everyone's after delivering and everyone's succeeding in it, but I don't see how that's possible.

Jeff, honestly, I think it's a bit of prisoner's dilemma. If you aren't doing it, you may lose some sales, but you are not seeing a restaurant category that is growing faster than it was prior to this. And if almost everybody is now doing it, and it is not accelerating the overall growth of the restaurant category, then I would argue it is not, in total, incremental. For an individual brand, if they don't do it and everybody else is doing it, then that may cost them a little bit. But the question is, what does it cost their margin to be adding that in if it is not adding to the overall growth of the restaurant category. And I think that's where we are.

Interesting. Thank you very much. Congrats again.

Thanks, Jeff.

Your next question comes from the line of Sara Senatore from Bernstein. Your line is open. Sara Harkavy Senatore - Sanford C. Bernstein & Co. LLC: Thank you. Just a couple of follow-ups on the U.S. business, if I may, at the top line. First, you said that advertising was particularly effective in 1Q. And I was just wondering if you could characterize it maybe it was more value driven, similar to what you said about international, just with the more traffic-weighted comp this quarter versus last quarter. I'm just trying to understand if it was a pivot in that direction, and, if so, what drove that? And then the second question I had is I know consolidation remains a big story. And you mentioned five out of six pizzas are sold by somebody who's not Domino's. But it just seems to me that you have a really good quarter, typically one or both of your big competitors is struggling. So, I mean, I guess what is the conviction that it isn't from the large competitors just because if I look at a sort of an average for the industry, the big three, if you will, it's been more consistent with sort of the mid-single-digit range that I might expect.

Yeah, so a couple of things. So first on the advertising, you know, we test everything and our analytics team is terrific. And we know exactly how the advertising affects our business. And we know that our advertising was a little bit more effective in Q1 than it was in Q4. The other thing that played into it, and to your point kind of about competitive activity and all of that, one of the things that probably helped us a bit in the first quarter is we have a lot of equity around two medium, two tops for $5.99. We have built that equity over nine years, and we kind of own that price point in the minds of our customers. And it is altogether possible that some of our competitors matching that price point helped our comp a bit in the first quarter. So I think that played in a little bit as well into the first quarter. Not in a big way, but I think at the margin, it was probably a bit helpful for us. Sara Harkavy Senatore - Sanford C. Bernstein & Co. LLC: Okay. Thank you.

Your next question comes from the line of John Ivankoe from JPMorgan. Your line is open.

And my question was exactly on that point. When the competition was running two medium, two top for $5.99 during those television advertised weeks, not only did you not see a negative impact, you actually may have seen a positive one?

Yeah.

Okay. All right. That's great. And I guess what is that, I mean, I don't want to say that that makes you over-confident, but is there anything that you think about that the competition can do to you that you can't not only completely sendoff but even benefit from? I mean, certainly some number of years ago when competitors used to copy each other's promotions, it actually used to have an impact. And now evidently they're actually benefiting you. So, I mean, what are I guess the competitive risks, if any, that you think about?

Look, we've got good, big competitors that have smart people working there, and I certainly can't predict the things that they're going to do that are going to be effective that are going to grow their business. The only thing I know is that we count on the fact that they're going to do it, and they're going to figure things out, and their businesses are going to grow and get better. And that's what causes us to wake up in the morning and feel a need to run even faster, because we are not going to underestimate their ability to do good things within their businesses. And I think you're seeing a lot of activity at our largest competitors right now, and we'll see kind of how that plays through. What I would tell you about the specifics of the two medium, two-tops for $5.99 and how that differs from the past, we've been running that for nine years. There is equity for Domino's in that offer. If people see that offer, the first thing that's going to happen is they're going to be thinking about us. And so it is a different circumstance than if everybody back in the old days, everybody was doing different offers and cycling in and out of it. It's different when you've built real equity in one specific offer.

Okay. Thank you. And then the final question on the balance sheet, obviously given your interest rates and I'm sure demand for your debt securities, you could have put even more debt on the balance sheet and done an even larger capital return in the future. So what was the decision that went into the recap that you did, considering that you presumably could have put on more at still attractive prices?

Yeah. John, it's Jeff. We went out, as I mentioned in the prepared remarks, and just got great reception again from the lending community for our credit and our story. All I would like to point out that we've been doing this now for a generation. We (76:03) higher leverage in the QSR industry, and no one's performed better over now a 20-year period. So I think that accrues benefit for us and our shareholders certainly. This particular opportunity, I didn't originally think we'd be back in the marketplace this soon, having done a deal just last summer, but we've got a really good problem, which is we continue to throw off just a bunch of organic cash flow and we know to optimize the capital structure here that requires additional, longer-term, fixed-rate debt. And so market was still very good. We got up to – if you use the Q4 trailing 12-month EBITDA, it got us closer to 6 turns. The problem was Q1 was a bunch better than Q1 last year, so that's why we're at 5.8 already. And so again, we're trying to get more regimented around this with smaller deal sizes a little bit more often. And so lengthening the weighted average life of our capital structure, adding more long-term fixed rate debt at the rates we see, all green lights, all will accrue value to the shareholders. And to the extent that we can continue to create really high-quality organic capital out into the future, I think you'll see us committed to staying properly leveraged and lower that weighted average cost to capital.

Thank you.

Thanks, John.

Your final question comes from the line of Brett Levy from Deutsche Bank. Your line is open.

Good morning. Thank you. And Patrick, all the best.

Thanks, Brett.

If we could talk a little bit more about the penetration and the fortressing, just how we should be thinking about it not just from a timing or an impact, but also what kind of percentage of growth is a reasonable expectation? And how does the margin profile differ? And does it also allow you to possibly go in with smaller footprints in some of these more deeply penetrated markets? Thank you.

Yeah. So Brett, at our January meeting we talked about the fact that we think we've got 8,000 stores in the U.S. that we can get to over the course of the next decade or so. So that gives you a sense of how much we think we can do, but as you build more stores, you grow your carryout business, you also increase the efficiency of your delivery, so you're giving better, hotter pizzas to your customers. And so we think there's a real opportunity around that, and it's part of why we're doing it. But at the end of the day, the biggest, most important way to think about it is it has to be improving the economics for our franchisees overall. And the reason we're building more stores is because it makes sense for our franchisees to be doing that, and those economics are ultimately what's going to drive the long-term growth on the business.

There are no further questions. At this time, I turn the call back over to the presenters.

All right. Thank you. And listen, thanks, everybody, and the team looks forward to discussing our second quarter 2018 results on Thursday, July 19.

This concludes today's conference call. You may now disconnect.