Good morning. My name is Amy and I will be your conference operator today. At this time, I would like to welcome everyone to Yum! Brands' Fourth Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Vice President Investor Relations and Corporate Strategy, Keith Siegner, you may begin your conference. Keith R. Siegner - Yum! Brands, Inc.: Thanks, Amy. Good morning everyone and thank you for joining us. On our call today are Greg Creed, our CEO and David Gibbs, our President and CFO. Following remarks from Greg and David, we will open the call to questions. Before we get started, I'd like to remind you that this conference call includes forward-looking statements. Forward-looking statements are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release, and the risk factors included in our filings with the SEC. In addition, please refer to the Investor sections of the Yum! Brands website, www.yum.com to find disclosures and reconciliations of non-GAAP financial measures that may be used on today's call. Please note the following regarding our basis of presentation for today's call. First, system sales results exclude the impact of foreign currency and include our impact of 53rd week unless otherwise noted. Second, core operating profit amounts include the impact of our 53rd week unless otherwise noted. Third, our full-year 2016 and 2015 KFC and Pizza Hut Division results have been restated to include a China license fee for comparability. We're broadcasting this conference call via our website. This call is also being recorded and will be available for…

At this time, we will be conducting our question-and-answer session. Your first question comes from the line of John Ivankoe with JPMorgan. John, your line is open.

Hi, this is Alex on for John. I was hoping you could talk a little bit about your fiscal 2019 EPS goal, and given significant FX headwinds and kind of the turnaround at Pizza Hut, is there any ability for you to flex a little bit more on G&A, perhaps below the 1.7% goal? David W. Gibbs - Yum! Brands, Inc.: As far as the 2019 target for EPS, obviously, there are some FX headwinds to that, that are setting us back, but our interest rate has come in a little bit better than we expected, so there'll be pluses and minuses as we go along the journey. And as far as our pressure on G&A, I'm really pleased that the organization has embraced our effort to get more efficient and we're certainly looking for G&A efficiencies continuously as we go forward on this journey, but at this time, our long-term guidance remains the same.

All right. Thank you.

Your next question comes from the line of David Palmer with RBC Capital Markets. David, your line is open.

Thanks. Just a follow-up on your comment on EPS growth first. If we look at your three-year target, and if we go out to that 3.75%, that's a lot of EPS growth relative to the comments you made on 2017. How do you think about 2018 and 2019 just conceptually in terms of growth versus 2017? And about unit growth specifically, you talked about a modest acceleration in 2017 on unit growth. How are you thinking about that and what are you doing to stimulate unit growth further? Thanks. Greg Creed - Yum! Brands, Inc.: Obviously, our bold goal, David, is 7% system sales growth and as David outlined, we believe we can get to 2% to 3% same-store sales growth next year and 3% development. I think what's very clear is that we are much more focused on these two. So, as I work with the leaders in the organization, I would say we've raised the awareness on the importance of net new unit growth, not just in the U.S., but outside. In that context, obviously, we had a very strong year at Taco Bell. Obviously, at KFC in the U.S., we've been a net closer. I believe that by the time we get to the end of 2019, we will be a net builder of new units at KFC, so I think that will be a turnaround. We have signed significant development agreements with Pizza Hut International with a number of franchisees around the world. These are in the order of magnitude of 200 to 300 restaurants over like five years. And I think that on the KFC front, our ability to continue to penetrate in emerging markets remains. So I feel very good about our ability to continually grow our net new unit growth, and I think there's an equal focus on same-store sales growth, getting back to really understanding consumer insights, really getting to what makes the consumer different, and really understanding that what we're delivering is a food experience, not just food. And I think all of that will help us enormously. And so, I feel confident that I think we probably grew system sales around 4% last year. We are tithing at least 5% this year and I think we're definitely on our way to delivering close to the bold goal of 7% by the end of 2019.

Your next question comes from Brian Bittner with Oppenheimer & Co. Brian, your line is open. Brian Bittner - Oppenheimer & Co., Inc.: Thanks. Thanks very much. Kind of piggybacking on these questions around 2019 EPS, when you think about that plan to get there, you mentioned that you don't need 7% system wide sales growth to get there, even though that's one of your goals. So maybe you could talk about what is the system sales growth required given what you know today about all the financial controllables that you have much more certainty about. That's the first question. The second question to Greg. I was just wondering if you can take a step back and maybe talk from a high level what you really think the biggest changes taking place within the Company are as you see it as you transform pretty rapidly here from an operating company to more of a franchise company. I mean I think we see all the external, but financial benefits obviously, but maybe you can touch on some of the other points and maybe why that is giving you the confidence in the acceleration in systemwide sales growth. David W. Gibbs - Yum! Brands, Inc.: Yes, as far as the components of our journey to the 2019 EPS guidance, as we've said before, we're not going to get into specific details around sales guidance, for example, other than to just say that they're reasonable assumptions consistent with historical and our modest expectations for it going forward. I'll just remind everybody that share repurchases, things that are very much in our control, make up the vast majority of this journey, which is why we have confidence in being able to hit the targets. Greg Creed - Yum! Brands, Inc.: Yes, and to answer…

Your next question comes from the line of Sara Senatore with Bernstein. Sara, your line is open. Sara Harkavy Senatore - Sanford C. Bernstein & Co. LLC: Hi, Thank you very much. I wanted to ask about Pizza Hut, if I could, because, obviously, I think that's the one where you see the most opportunities to improve. But I guess you said, Pizza Hut is really a tale of two markets, but if I look even across globally, it is the softest business. So, my questions are what are the opportunities here? I mean are there specific markets that you could point to that really set a path and are very strong and where you could share best practices? And if you can't reaccelerate Pizza Hut, can you still deliver against your targets? Is there a strategy to refranchise that to 100%? Can you help sort of quantify the opportunities and challenges for that? Thank you. Greg Creed - Yum! Brands, Inc.: Sure, Sara. So let me just say, I think we did deliver 6% net new unit growth in Pizza Hut International last year and I know the team because of the development agreements we've already signed, very, very confident that we continue to grow net new units in the Pizza Hut world. There are some very good examples, as you mentioned, about what we are calling the repeatable model. So in Thailand, we've turned that business around. I think we've delivered at least 18% sales growth for three quarters in a row. We've obviously captured what we've done there, and as I alluded in my remarks, taking that to Korea and Malaysia. I'm excited about the master franchise agreement that we've done in Australia. The results in Australia have improved markedly. I happened to meet with the master…

Your next question comes from the line of John Glass with Morgan Stanley. John, your line is open. John Glass - Morgan Stanley & Co. LLC: Thanks, good morning. Greg, I wanted to ask you where you think delivery fits into the strategic priorities of the company right now. It's a global phenomenon across your brands and across other brands. Can you maybe sketch out how you think about it and the prioritization, how you think about it by brand and maybe where you are on a delivery percentage of sales or however you look at it by each brand and if there's countries where you are getting best learnings? Greg Creed - Yum! Brands, Inc.: Yes, well, obviously, the Pizza Hut business is a delivery business and I think in the U.S., well, through delivery and carry out, more than 90% of the sales come from that now. So the other thing I'm really excited about is Roger's commitment to take KFC and make it more of a global delivery brand. As I said in the prepared remarks, we are already in 5,000 stores doing delivery. Obviously, we have over 20,000 KFCs. The great thing about KFC is it is perfectly set up to be delivered. There is nothing better than a bucket of Original Recipe chicken in terms of a transportation vehicle, product that holds its heat, delivers well. So, in that sense, I do believe, and I know Roger believes that accelerating delivery is a key part of it. And on Taco Bell, obviously, Brian has started to roll out Taco Bell delivery. This product isn't as well set up to be delivered as the other two brands. But what is interesting is that when people want this product, they'll have it delivered. I think we're already…

Your next question comes from the line of Gregory Francfort from Bank of America. Gregory, your line is open.

Hey, guys. Just one quick clarification. On tax rate, I think the last update you guys had given was like a 26%, 27% tax rate for the new structure, but we are a little bit below that. Is that still the right number as we look out over the next couple years, or should we think about maybe a lower number? David W. Gibbs - Yum! Brands, Inc.: No, we believe that's the right number. Obviously, there's uncertainty on that as we're seeing potential changes in policy, but that is our current guidance.

Got it. And then just thinking about technology for the three brands, can you give an update on where you stand around common POS, digital ordering, potentially loyalty? Just sort of an update on the technology front for the different brands. Greg Creed - Yum! Brands, Inc.: Well, on Pizza Hut, hopefully by the end of the year we'll be at a single POS system in the U.S., which will help enormously. Internationally, we're looking at getting out of multiple POS systems down maybe one or two, so that will help dramatically. Taco Bell is almost at a single POS and back-of-house system, which obviously sets them up for eCommerce, digital, social. And KFC is obviously also making progress to get to a more aligned one system. That will help us do things like loyalty, which obviously are critical and important in the marketplace. It sets us up to obviously drive the social agenda, and I think all of that will lead to improved growth to the business going forward.

Is that more of a end of 2017 and then we start thinking about some of these initiatives kicking in in 2018 around loyalty and digital ordering as you think about sort of the outlook on timing? Greg Creed - Yum! Brands, Inc.: I mean I think, well, obviously, Pizza Hut's got a very big digital ordering business today, but I think the opportunity for us to do loyalty and things like that will obviously happen once we get to this single POS system. Taco Bell already has mobile apps you can obviously order through. I think that business isn't large yet, but what it does do is actually make the brand a relevant brand. So, it's one of those things where we may not be getting a lot of business from -eCommerce on Taco Bell, it does actually reinforce that this is a millennial-centric brand. And then on KFC, yes, I think it's not going to happen any time soon, but we definitely know we need to be in the loyalty business. And so, whether it's late this year, next year, that's probably more the timing that things will occur.

Thank you.

Your next question comes from the line of Jeffrey Bernstein with Barclays. Jeffrey, your line is open.

Great, thank you very much. I had one question and then one just reporting clarification. From a question standpoint, following up on the G&A discussion from earlier with the plans to reduce kind of to that 1.7% system sales, just wondering, as we think about the operating margins, kind of below that line, we've seen hundreds of basis points jump at each brand. Whether or not the brand is challenged or not, we've seen big jumps, which is obviously driven by the refranchising, but I am just wondering in terms of your insights, long-term goal by brand maybe, or maybe just at what point we reach a certain level where you say, you know what, it's hard to see that operating margin expand much beyond that. Just trying to see the pacing and sequencing of what appear to be very big jumps in the operating margin for each brand. And then just from a reporting standpoint, just to make sure that we're all on the same page, I mean it looks like for the fourth quarter of 2016, you adjusted to reflect the pro forma, assuming Yum! China was a franchise model for the period, but we should do the same presumably for the prior three quarters of 2016? I mean I think you had an 8-K out there that gave the 3Q 2016 year-to-date, but just want to make sure I didn't miss anything in terms of the first three quarters separately, so quarter one, two, and three by segment restated as if China was a franchisee for the full year. Thanks. Keith R. Siegner - Yum! Brands, Inc.: Okay, Jeff, this is Keith. First, on the margin question, good question. And, yes, this is all consistent with the plan. Post the October investor and analyst event, we put a slide up that actually showed pro forma for the whole transformation to at least 98%. What our restaurant level and EBITDA margins and EBIT margins would look like on a baseline of 2015. So, if you look at that, you can actually see pretty explicitly where we think those margins can get to within a vacuum. On the other front, yes, as I said in my introductory comments, we're going to get you pro forma results for the new fiscal year and for China, and we're shooting for early April. So, that will be full quarterly just like – look, I've been in your shoes and I know what you're looking for and what will be most useful. It is coming. We're shooting for early April.

I get it. I was under the impression from the press release that the adjustment you were giving by early April was just the realignment of the months versus kind of the periods you were using. I just want to make sure we are also talking about quarterly 2016, the first three quarters individually in terms of each quarter restated with China as a franchisee with the royalty payment coming in by segment. Keith R. Siegner - Yum! Brands, Inc.: Yes.

Okay. So, that's early April? Keith R. Siegner - Yum! Brands, Inc.: Restated for everything.

So at this point, we should be taking the year-to-date we have for the third quarter and doing our best to just kind of cut it up to come up with the first three quarters of 2016 and applying it by segment? Keith R. Siegner - Yum! Brands, Inc.: Yes.

Okay. Thank you.

Your next question comes from the line of David Tarantino with Baird. David, your line is open. David E. Tarantino - Robert W. Baird & Co., Inc.: Hi, good morning. My question is on the comps outlook for this year, 2% to 3% globally. That would be better than what you've been running in recent years, and in recent quarters. So just wondering what your degree of confidence in that outlook is as you sit here today and whether it requires some improvement at Pizza Hut or if you're assuming improvement in the other divisions. Greg Creed - Yum! Brands, Inc.: Thanks, David. It obviously is ahead of our run rate. As I think I said earlier, the organization is much more focused on two things, driving same-store sales and delivering net new units. So, I think just the amount of time we're spending on what do we need to do in order to deliver that growth, as we alluded to, obviously, both KFC and Taco Bell, took that sort of Q4 momentum into Q1. We've got the launch of Georgia Gold, you've got the launch of Naked Chicken Chalupa, and obviously, we've still got a lot of work to do on Pizza Hut. So, with the plans that we put together for the AOP, I feel really good about the plans across the brands, internationally, and in the U.S. It's nice to go into the quarter with some momentum. And I think this focus is really starting to pay off. And I'll be even more excited when we come out of the global management meeting and I've got the top 200 leaders to really help us think about what else could we do from a bold and courageous point of view in order to deliver even more same-store sales…

Your next question comes from the line of Carla Casella with JPMorgan. Carla, your line is open.

Hi. I'm wondering if you could just give us the baseline number for the restricted group EBITDA. I know the financials you typically put on the website, but they're not up yet. Keith R. Siegner - Yum! Brands, Inc.: Carla, we don't have that number with us right now. Give me a call afterwards and we can discuss.

Okay, great. And then one other question. Have you seen any impact on sales internationally as when we see news from Trump that's more domestic-focused or I guess that's causing any rift with international countries? Greg Creed - Yum! Brands, Inc.: I think the easiest answer is no. I'm not seeing any impact anywhere. There's obviously a lot of discussion and speculation, but I'm not seeing any impact on our business in any country so far.

Okay, great. Thanks.

Your next question comes from the line of David Hargreaves with Stifel. David, your line is open. David Richard Hargreaves - Stifel, Nicolaus & Co., Inc.: Hi, thanks. Yes, just to echo that last comment, if you guys could put restricted group EBITDA in the press release going forward since bondholders don't really – we've got a subordinated claim on Taco Bell performance. It would help a lot. It's hard to back into. Looking at the deltas in the cash from the third quarter to the fourth quarter, it was a big change and we will back into it in time, but I was just wondering if you could go over the major changes. It looks like you went from about $2.9 billion to $700 million. Could you talk about the big pieces there and then your comfort level with that cash balance? Thanks. Keith R. Siegner - Yum! Brands, Inc.: David, this is Keith. On November 3, we filed an 8-K showing a pro forma end of 3Q balance sheet and cash flow statement for Yum! excluding China. What you'll see is a lot of the cash you just referenced in the $2.99 billion related to China. So, we show you actually what it was, excluding China, as of the end of 3Q. Then, if you do the walk from that number to what we show at the end of 4Q, largely that is one quarter of dividend and the share repurchases that were accomplished through the quarter, as we outlined in our press release. Give me a call afterwards and we can clarify, but that should be all the pieces you need to get through the walk. David Richard Hargreaves - Stifel, Nicolaus & Co., Inc.: But the $700 million is pretty much what you'd expect to have…

Gentlemen, your last question comes from the line of John Ivankoe with JPMorgan. John, your line is open.

Thank you, guys, so much for taking me at the end. Thanks and for the third question for JPMorgan. The question is on Pizza Hut. In your press release, 47% of Pizza Hut sales are in the U.S. David, you made a really interesting comment that half of the units in the U.S. are dine-in assets and not really set up for delivery. So you kind of have a big chunky part of your business that's not really optimized for where the consumer is and probably where the consumer is going either. So can we talk about how to isolate that red roof asset, that dine-in asset that really does kind of complicate and make the difficulty of turning around the Pizza Hut brand very different than other platforms that exist that are delivery and carry out only? David W. Gibbs - Yum! Brands, Inc.: Well, the good news, John, is that our Delco model, our small box model, is a really good economic model. The cash paybacks from building Delcos is three to four years, on average. So, we have a way to get out of those red-roof restaurants that are holding us back. And by the way, not all of them are sub-optimized for delivery. Some of them were built more recently. Some of our dine-in stores aren't even red-roofs; they were built with a newer model. So there's a mix of assets there. But we do have an economic way to get into a better asset and, Artie Starrs, the President of the Pizza Hut U.S. business is working with the franchisees on a plan to make that happen. And unlike a lot of transformations where you can introduce a new product overnight and it's a quick fix, this one takes a little bit of time. We also have a fast-casual model, which we've talked about at previous investor meetings, which really plays into the current trend in the pizza category. We are seeing a lot of growth in fast casual. We've had a lot of success with that, albeit with a small number of units. And the franchisees and the Pizza Hut management team are excited about it and using that as another option to get into an asset that's better positioned for delivery, but also can add incremental sales through lunch day parts in this fast-casual model.

A couple of years ago, gosh, maybe it was five years ago, maybe more, you kind of drove a pretty significant contraction of KFC in the U.S. and at the back end of that contraction, you contributed some capital to KFC franchisees as well. I think it was related to ovens and maybe some other things. Do you think the Pizza Hut brand is kind of in that position where you make it a better brand, a smaller brand and perhaps you actually do step up and contribute either some OpEx or CapEx to the U.S. franchisee? Greg Creed - Yum! Brands, Inc.: I think right now we are, obviously, having a lot of discussions with the U.S. franchisees, which Artie is leading. And I think until there's an outcome, I think, as I said earlier, I think the great thing is that the U.S. Pizza Hut franchisees, as much as we do, want to obviously turn the performance around and be more like KFC and Taco Bell in the U.S. They understand that it's going to require a partnership. They understand it's going to require long-term strategic alignment. And I think how that plays out in terms of what both sides do in order to build that relationship and get ourselves strategically aligned, that is sort of, I guess, work in progress. But I am very confident that both sides want to obviously get to a better place and get this brand back into growth.

Okay. Thank you. Thanks again, guys.

This concludes our question-and-answer session. I will now turn the call back over to Greg Creed for closing remarks. Greg Creed - Yum! Brands, Inc.: So, thanks, everybody, for being on the call. I guess for me 2016 was a landmark year. We successfully spun off Yum! China, we launched this multi-year transformation plan, and we returned $6.2 billion to shareholders. I'm very pleased with the results and a solid end to what, I think, was an extraordinary year. Core operating profit increased 27% in the quarter and 13% for the year, obviously exceeding our guidance. I remain very confident in our three-year plan. So, there's no change to our long-term guidance and I'm encouraged by the early progress we're doing to unlock growth through this sort of focused four growth drivers. We're off to a running start. I think we can accelerate growth, reduce volatility, and increase capital return to shareholders. So, I guess in summary, I'm very excited about the future of Yum! And I think we represent an extremely compelling growth story and one that investors, I hope, will buy into. So, thanks for being on the call. Thanks for coming out in the horrible weather and we look forward to speaking to you all very soon. Thanks, again.

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