Good morning. And welcome to the Restaurant Brands International Second Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] All callers will be limited to one question. Please note this event is being recorded. I would now like to turn the conference over to Markus Sturm, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone and welcome to Restaurant Brands International's earnings call for the second quarter ended June 30, 2017. A live broadcast of this call may be accessed through the Investor Relations webpage at investor.rbi.com and a recording will be available for replay. Joining me on the call today are Restaurant Brands International CEO, Daniel Schwartz; and CFO, Josh Kobza. The team will be available to answer questions during the Q&A portion of today's call. Today's earnings call contains forward-looking statements, which are subject to various risks set forth in the press release issued this morning and in our SEC filings. In addition, this earnings call includes non-GAAP financial measures. Reconciliations of non-GAAP financial measures are included in the press release available on our website. Let's begin with the agenda for today's call. Daniel will start by discussing highlights for the quarter at Restaurant Brands International and will then review performance of Tim Hortons, BURGER KING and Popeyes Louisiana Kitchen. Josh will then review consolidated financial results for the quarter. Following which, Daniel will share some concluding remarks before opening the call up for Q&A. I'll now turn the call over to Daniel.

Thanks, Markus and good morning, everyone. Thanks for joining us in today's call. I'm pleased to update you on the progress we've made in the second quarter. Our focus on providing a great restaurant experience for our guests and the hard work from our franchisees and their teams all around the world to deliver that experience, enabled us to achieve continued system-wide sales and profitability growth at all three of our iconic brands Tim Hortons, BURGER KING and Popeyes Louisiana Kitchen. This quarter, we grew our adjusted EBITDA to $531 million, up 9% on an organic basis versus the prior year's combined results of RBI, including Popeyes. The inclusion of Tim Hortons in our combined results in the second quarter of 2017 combined with continued growth at Tim Hortons and BURGER KING contributed to our adjusted diluted EPS of $0.51 per share, up from $0.41 per share in the prior year period. At Tim Hortons, we grew system-wide sales by 2.6% for the quarter largely attributable to accelerated net restaurant growth of 4.3% on the trailing 12 months. While we are pleased with the performance of certain initiatives, which contributed favorably to same store sales growth this quarter, including our recently launched espresso based beverage platform. Softness in certain product categories contributed to overall Tim Hortons' comparable sales of negative 0.8%. We had a particularly strong second quarter at BURGER KING having grown our system-wide sales on a constant currency basis by 10.6%. This growth was a result of both comparable sales growth of 3.9% and 6% growth in restaurant count on year-on-year. At Popeyes, we grew system-wide sales by 3.3% in the second quarter, which was largely driven by net restaurant growth of 5.3% for the trailing 12-month period. Increased competitive activity in the quarter combined with the lapping…

Thanks, Daniel. Before reviewing our financial results for the quarter, we wanted to clarify that Popeyes' revenues and segment income for March 28, 2017 through June 30, 2017 are included in our consolidated statement of operations for the three months ended June 30, 2017. Also, since Popeyes has formally followed a different fiscal calendar, prior year results for Popeyes may not be comparable. However, we have provided these quarterly results for informational purposes only. Our continued system-wide sales growth at both Tim Hortons and BURGER KING as well as the inclusion of Popeyes in the second quarter results of 2017 allowed us to grow adjusted EBITDA to approximately $531 million in the second quarter. This represents the consolidated year-over-year growth of 8.8% on an organic basis versus prior year combined results, as if RBI had owned Popeyes in the prior year period. Adjusted net income increased to approximately $242 million versus prior year results of $192 million primarily as a result of growth in adjusted EBITDA. Our adjusted diluted EPS for the quarter was $0.51 versus $0.41 in the prior year period. Neither, the adjusted net income nor the adjusted diluted EPS figures quoted for the 2016 period include the results of Popeyes given the acquisition occurred in March of 2017. I would note that interest expense for the second quarter includes the full quarter impact of $1.3 billion incremental financing race for the Popeyes acquisition as well as the partial quarter impact of the interest expense related to the $1.75 billion of debt that was raised in May. Starting in Q1, 2017, our tax rate and weighted average shares outstanding reflected the adoption of new accounting standards related to the tax impact from equity-based compensation. This accounting standard resulted in a positive impact on our effective tax rate for…

Thanks, Josh. This quarter, we continue to grow system-wide sales and profitability for all three of our iconic brands Tim Hortons, BURGER KING and Popeyes. While comparable sales growth for Tim's and Popeyes were softer this quarter, we believe we have the right strategies in place to grow sales for restaurant in the long run for both brands. Both are an espresso based beverage platform and the launch of our digital app excite us about the growth potential for the Tim's Canada business and we continue to make good progress expanding the brand all around the world now including with a partner in Spain. We had a particularly strong quarter at BURGER KING with improving comparable sales growth and accelerating net restaurant growth. We also made good progress integrating Popeyes this quarter and continue to be excited by the long-term potential for the brand. We very much appreciate the hard work from our franchisees and their teams to deliver great restaurant experience for guests and we're confident in our ability to create further value for all of our stakeholders for many years to come. We look forward to updating you on our progress next quarter. Thanks everyone for joining us this morning and we'll now open up the call for Q&A. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from John Glass of Morgan Stanley. Please go ahead.

Hi, thanks. This is Courtney [ph] on for John. I just wanted to dig in a little bit more on the weakness of Tim Hortons, it sounded like a lot of it was coming from the lunch day part and from your baked goods sale. Can you just comment on how the beverage platform is doing and if you're seeing positive comps at least on that day part? And then also just little bit more on the espresso based platform, you did say that you doubled the espresso based beverage unit sales, I just want to get a sense as to ROI, the franchises are seeing on that and especially given the marketing push that you have on next quarter. And then - sorry. Just on weakness that you talked about in the western part of the country that you have seen in prior quarters, is that's continuing to push yourself over?

Courtney, thanks. It's Daniel. As you mentioned, we had slightly negative same store sales in our Tim Hortons brand this quarter. And we did see some softness in the baked goods and lunch category, where some of the LTOs like for instance the Nutella platform weren't as effective as they were in the prior year. And we - as you mentioned, we did launch the espresso based beverage platform at the end of April. And we're very pleased with the results thus far. We've seen volumes as you mentioned not only double, but really build each week. We're very happy with the product quality, the speed Mac that we've been getting from our guests, from our owners as well. And it's something that we can innovate around with future innovated beverages around latte platform. So, we're really pleased with that based on the results we've had thus far as it equates to a very good payback and a very good return on our franchisees capital, which is obviously something we prioritize when we look to launch new products and platforms. And a lot of good things going on in the quarter in Canada. I think we'd mentioned in the prepared remarks that, we had done a special 150th - Canada 150th anniversary promotion, launching what's normally our Annual RRRoll Up the Rim campaign, which resonated really well with our guests in Canada and enabled us to really win this place like brand that best activated Canada's 150th anniversary. We also raised a record $13.7 million for our Camp Day and most recently, we have launched together with great work from our restaurant owners, we were able to launch our Tim's mobile app, just a few days ago and we're looking forward to building on that. With respect to the trends by region, as you had mentioned, the western part of the country was a little bit weaker in the past. We've seen that improve based on some of the actions that we've taken together with our local restaurant owners at West, based on marketing plans we put in place. We've actual seen the results there improve sequentially through the year. So, we're pleased with the performance so far and we're going to look to continue building on it.

And our next question today comes from Mark Petrie of CIBC. Please go ahead.

Hey, good morning. Actually, I just want to follow-up on the Tim's business in Canada and I guess two other topics. First, looking ahead in next year, we're going to see some pretty material minimum wage increases in key regions of Canada particularly Ontario. How do you look at the net impact to your business particularly in the context of a challenging growth environment? And then second, energy was pretty modest in the quarter much stronger LTM, but modest in the quarter and we just sort of appreciate hearing your expectations for how the rest of the year will play?

Yeah, sure. Daniel, I'll take the first question. I'll pass to Josh to talking in the development front. With - look our business faces cost pressures from time-to-time certain years wages will rise faster, then others in the certain year's commodity inflation. At the end of the day, it's our job together with our restaurant owners to drive growth in sales. And the more sales growth we can drive the better our ability on restaurant owners' ability to offset these cost inflations. So, our top priority has, is and we'll continue to be driving sales growth and if you look at where we're spending our time together with our franchise owners is on building the platforms and products they are going to enable us to drive that sales growth for many years. If it's building the espresso based beverage platform, if it's launching mobile. Tim's mobile app for order and prepay. So, a lot of these really positive initiatives that we're working on collaboratively with our franchise owners in Canada, those are what's going to enable us to positively drive sales for many years to come, to offset whatever cost pressures the business may face from time-to-time. I think maybe Josh, you want to comment on the development front and some that exciting things we have gone or around other word.

Yes, I think with respect to net restaurant growth, and if you look at where we are on the year-to-date basis to the first half, we're in a relatively similar place to where we were in that prior year. But I think what's really exciting to us is in particular what we see happing the Tim's international business, what we've set over the last couple of years is one other thing were we're most excited about as making Tim's a truly global brand and we've really made a lot of progress there over the last twelve to 18 months. We set up a number of new partnerships in the Philippines, UK and Mexico. And now we've had a chance to open up some of our first restaurants in the Philippines and UK. And those have been really successful, we have been really pleased with those restaurants and the reception that they've had. In Manila and Glasgow and I think we had another very exciting announcement today that we're going to - we signed up our fourth new project where we are going to take Tim Hortons to Spain. So, I think we've made a lot of great progress that's really, I think setting the foundation for making Tim's, a truly global brand and opening up very high-quality restaurants. And showing us as a Tim Hortons brand really does resonate with cash all around the world. So, I think we're seeing some very good signs for the future of never strong growth to Tim's

And the next quarter today comes from Patricia Baker of Scotiabank. Please go ahead.

Good morning and sort of again hit of the Canadian weakness at Tim, the indication that will be the lunch day part where you saw some softness. Are there some specific efforts and focus for the rest of the year for you to trying sort of regain the momentum on the lunch day part?

Yes, it's I think look we're always focused on driving all the day parts and there are some good plans in place and new products that we plan to launch or obviously we're not going to talk about them on the call, but what I'd say is kind of look at our performance through the quarter. We are pleased to mention that - pleased to share that that we did see for instance we did see some of the things that we're doing like the espresso based beverage, we did see that building throughout the quarter. And some of the positive momentum that we had around the annual or the special edition of the RRRoll Up the Rim campaign. We did see really some good momentum around that at the end of the quarter. And look what we're obviously we're always trying to deliver that best in class Tim Hortons experience for all of our guest and we do have a positive outlook for the balance of the year across multiple day parts.

And our next question today comes from Gregory Francfort of Bank of America. Please go ahead.

Just one question for Daniel and one for Josh. Daniel, do you think the publicity from the franchise dispute in Canada is having any impact on sales, is it possible to measure that in any way. And maybe Josh, can you talk about the underlying minimum cash needs for the business today with the brands you have and what the right capital structure might be and what's your current thoughts on capital structure? Thanks.

Now, on the first question, we don't want to speculate on any of that and what I would say is that our focus or strategy and delivering a great guest experience, working collaboratively with our restaurant owners to continue growing the brand. Innovating things like espresso, mobile app none of that changes based on this other stuff and we have a positive outlook for the brand - for the balance of the year and for many years. We're more excited about the potential for Tim's Canada today probably than ever before. And looking forward to working with our franchise using our franchise elected advisory board to continue building the brand and doing great things in Canada.

Yes, Greg, thanks for the question on cash and capital structure. I think it's a relevant question as I'm sure you lastly, we ended the quarter was about $3.4 billion of cash on the balance sheet. I think as I look at the reminder of the year, I think the most, kind of the most relevant capital structure discussions that we are having or around the first redemption date of the preferred shares and as we've talk about we obviously have a large cash balances, we're looking towards the potential redemption of the prep. And I think we've, we'll look to hopefully redeem our all of preferred shares. And I think after that, we can take another look at what the right cash balances and the right capital structure going forward.

And our next question today comes from Brian Bittner of Oppenheimer & Company. Please go ahead.

Thank you. As you look at the Popeyes' business holistically, how quickly will you be able to turn up that unit growth engine? We obviously saw what you did with the BURGER KING brand and if you took it over in 2010. When do you have the infrastructure in place and does the brand have the opportunity in place to be opening 100s more these per year going forward? And then I do have a follow-up.

Hey, Brian, it's Josh. It's interesting question. I think as we've said since we first started talking about our Popeyes, the growth opportunities for the brand is the same the number one thing that add us most excited about the opportunities to make Popeyes as a part of RBI. And I think what's exciting about it in particular is that there is an opportunity both in the U.S. and around the world. We're already growing at a fast pace in the U.S., and we think there is an opportunity to do it even more there. And perhaps even more around the world the Chicken category globally is a very attractive one. And we see no reason to why we can't be growing much, much faster. We're already having discussions with number of potential partners and a number of very large markets around the world. So, we see a big opportunity to be growing much, much faster than we are today. And we're obviously working hard to make that possible as fast as we can.

And then BURGER KING business, just with the strong same store sales there. I mean what is really in your mind causing you to stand apart from the competition at a time, when your largest competitors also performing so well? What is it internally that you're seeing that's really driving these strong sales?

It's Daniel and thanks for the question. What we said about BURGER KING in prior quarters and really regardless of how strong performance. The strategy that we'd implemented which is now nearly 7 years is been consistent all time. And if you look in the U.S. and I think our restaurant owners have done a great job renovating improving the image of the restaurants and improving quality of our operations. We've continue to come with the balanced approach delivering always making sure we delivered great value every day for our guests but also with the nice balance of premium products things like newly introduced and improved chicken sandwich or the BAKING KING. So nice balance of value and premium at the same time driving continued improvements in guest experience both with respect to operations and store renovations. And internationally where our partners in places like China, Russia and Brazil are also doing a good job executing on their marketing plans, driving continued sales per restaurant, same store sales growth. So, really pleased to see this performance across in the U.S. and at our key international markets. And every, we've come a long way on the marketing front, not just with respect to sales but also the recognition of the brand is getting and we've mentioned earlier that the brand was awarded with Cannes Lion's Creative Marketer of the Year and we won 29 Cannes Lion's awards all around the world in the U.S. and some of the important international markets as well. So, a lot of good things going on in the BURGER KING system enabling our restaurant owners to deliver great results all around the world.

And our next question today comes from Andrew Charles of Cowen & Company. Please go ahead.

Thank you. I've got two questions on the numbers. The first one is that we simplistically model Tim's distribution sales growth Tim Hortons in same store sales plus Tim's net unit growth and then the FX impact to distribution sales. And when you say the message just there is some elevated piece of mix or pricing or some of the component that's driving the sales growth. Can you explain the delta we should be thinking about the impacts distribution in sales growth? And then my second question is that Tim's G&A continues to show pretty high growth versus 2016 levels. Last quarter, you guys talked about some increased hires and some technology spend. Is there any other incremental spend we should be thinking about that's driving the 50% increase in Tim's G&A? Thanks.

Yeah Andrew. It's Josh, thanks for the question. On the first one, there is a few factors driving the sales increase. The first one as you pointed out is the growth in system-wide sales but there is also growth in retail sales which was growing faster than system-wide sales and also the launch of the espresso that's influencing the growth of sales line items there. So those two factors are driving all the faster growth in that line item. In terms of the G&A, as I think we talked a couple of times, I think it's more helpful to look at the overall kind of average number from the prior year versus the first and second quarters. Due to some changes that we had in the allocations amongst the segments at the end of last year and so that will give you a better run rate from last year.

And our next question today comes from Karen Holthouse from Goldman Sachs. Please go ahead.

Question on Popeyes kind of relates to BURGER KING. We've heard from some other companies that are so concentrated in the Southeast concerns about just sort of overall economic conditions there and consumer sentiment. Do you think there is anything to anything to that from maybe Popeyes also little bit softer and maybe tie that into any regional commentary for outperformance, under performance of BURGER KING? Thanks.

Thanks, Karen. I think what we have seen at Popeyes, we did see a little bit more competitive activity during the quarter and I think if you look at kind of what we were focused on this quarter relative to last year which in quarter. We were lapping a little bit more promotional activity from our sales last year as well. And we are working collaboratively with our restaurant owners there is well to make some adjustments to the marketing calendar to ensure that we drive positive momentum forward. We are pretty optimistic about the outlook for the Popeyes brand and just for the balance this year but for many years to come. And we are really excited for it to be part of Restaurant Brands International. We have a positive outlook with respect to tolerability in a long run together our restaurant owners to grow sales to restaurant and grow the number of restaurants, as Josh had mentioned not just internationally, but here in the U.S. as well.

And our next question today comes from Will Slabaugh of Stephens, Inc. Please go ahead.

One of you could talk about the value preposition at Tim's and Popeyes individually. It seems like that's been a big component of BK success in recent years and I am curious on either consumer - seeing at the other brands versus BK or if you generally think there is an opportunity to improve that value metric at Tim's or Popeyes?

What we said from the beginning when it comes to marketing and I guess perception of value would be concept of that. We manage our brands - our brands are all very different, we manage them very differently. At Tim's we always delivered great value every day for all of our guests and that's what Tim's has been known for, into the last 50 years and what's going to be known for the next 50 years. So, I don't think there is things that we are going to borrow from the brands to take. With respect to Popeyes, as we had mentioned before, we do offer a good mix of premium and value, I think this quarter we had a little less value competitive to the amount of value we had last year but that will fluctuate from time to time and whatever we do we're going to do whatever changes in our essence we make in the calendar we will together with our franchise owners and anything we do obviously we always look through and it is good for our guest and it is good for our restaurant owners and that's generally guides our decisions.

And our next question today comes from Dennis Geiger of UBS. Please go ahead.

Great thanks for the question. Followed what an important driver improving operations and reduced operational complexity as meant for the BURGER KING U.S. system, but can you talk a generally about the international opportunities that still exist for BK to improve operations and then I guess at Tim Hortons, how much opportunities still exist around operations and very high level what could that potentially mean for the business and results going forward?

On the BURGER KING front, obviously we are always looking - we are always striving to improve our operations even when we do improve, we always look at things that we can do better. Our partners all around the world work collaboratively with us we get guest feedback on a consistent basis, we analyze it and we prioritize it. I think different markets have different areas of opportunity based on where they are kind of in their development pace. So, I think that answer will differ from market-to-market. But obviously operations is always priority for us at running great restaurants, modernizing our restaurants. And that grows across all brands, all geographies and 365 days a year.

And our next question today comes from Jordy Winslow of Credit Suisse. Please go ahead.

Hi, thanks. This is Jordy on for Jason, thanks for taking the question. I want to circle back on lot more stores being opened at BK than at Tim's, but I appreciate that the percentage growth is somewhat similar. So, what is the right way to look at that and on your view, is there anything holding back growth at Tim's? Thanks.

Hey Jordy, it's Josh. Thanks for the question. I think the way that I would look at this is now with respective BURGER KING now we're really pleased with where we are. And if you look back in history, we are now growing about 6% of restaurant pace and about 900 restaurants over the last 12 months, which is the fastest pace, I think we've ever achieved of growth. And it's really exciting and something we're really proud of from all the team and our partners' hard work in a lot of geographies all around the world. And that's due to a lot of work that's been done over the last six years or so. A lot of time a lot of works that's been put in over a long period of time and a lot of geographies around the world. And in Tim's, I feel like we're about 2.5 years into a similar journey. You see that with us just opening up our first restaurants with some of our new partners in places like the Philippines and in the UK, and today we announced another further project in Spain with the really high quality local partner we've worked with and as over 20 years of experience in his local market so. Actually, with time, we'll open more and more great restaurants with the Tim Hortons brand, and hopefully we replicate more and more of the success that we're now seeing with BURGER KING.

And our next question today comes from Peter Sklar of BMO Capital Markets. Please go ahead.

Good morning. On the master franchise or arrangement in Spain. Can you talk a little bit about what the timeline would be, what your anticipated timeline would be to restaurant openings? And I know Spain is a large market, do you have any idea what the unit potential would be in that market?

Yeah Peter, it's Josh. Thanks. As I said, we're really excited about the fact that we've announced now. Our fourth project to take Tim's to another really exciting QSR market. As you mentioned, it's a very large quick service restaurant market which makes it really exciting one for us. We don't disclose what our targets are, but I think as we've said about other markets, anywhere we go, we want to be one of it, if not the largest players in the market. So, we have pretty ambitious goals for what we want to do and we'll be looking to open as soon as we can, and then we'll let you know as soon as we do.

And this concludes our question-and-answer session. I would like to turn the conference back over to Daniel Schwartz for any closing remarks.

Thank you. And thanks to everybody for joining us today. We really appreciate it and we look forward to updating you on our results next quarter. Thanks a lot. Have a great day.

And thank you, sir. Today's conference has now concluded. And we thank you all for attending today's presentation. You may now disconnect your lines and have a great day.