Good morning. My name is Athania, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Yum! Brands Second Quarter 2018 Earnings Release 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. I would now like to turn the call over to your host Mr. Keith Siegner, Vice President of Investor Relations, Corporate Strategy and Treasurer. Sir, you may begin. Keith R. Siegner - Yum! Brands, Inc.: Thank you, Athania. Good morning, everyone, and thank you for joining us. On our call today are: Greg Creed, our CEO; David Gibbs, our President and CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from Greg and David, we'll 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 Investors section of the Yum! Brands' website, www.yum.com, to find disclosures and reconciliations of non-GAAP financial measures that maybe 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. Second, core operating profit growth figures exclude the impact of foreign currency and Special Items. Third, the revenue recognition accounting standard was prospectively adopted on January 1. As a reminder, this is a GAAP required change adjusting the timing of recognition of upfront fees received from…

And your first question comes from the line of Brian Bittner with Oppenheimer & Company. Brian Bittner - Oppenheimer & Co., Inc.: Thank you. Good morning. My one question is going to be on the unit growth, I know you just came into that (29:21) 4% rate now. And if you sustain this 4% unit growth, is the composition of the growth that we're seeing across the brand now how you would expect it to continue with KFC now growing above 4%, Pizza Hut and Taco Bell both performing kind of slightly below 4%? And if you were to somehow accelerate growth from here from this 4%, what of the three brands would drive that in your view? Thanks. David W. Gibbs - Yum! Brands, Inc.: Hi. Yeah, great question Brian. I am really excited about what's going on in development. Just to put some numbers around it. Year-to-date we've opened 482 net new units versus 317 at this point last year. So we're up 165 units. As for the composition and what that might look like going forward, obviously, KFC and the level that they are performing on and the growth number of units that they're opening is fairly significant. But they still have enormous runway to keep going and take their numbers up. But Taco Bell and Pizza Hut starting from lower numbers I think can have even more room to improve their percentages in their growth rates. The Pizza Hut model with the Delcos, as we said, we're getting 90% of our growth through Delcos. It's a really efficient way to build new units with great returns for franchisees in most cases. So we see ramping that up fairly significantly and you're seeing that right now around the world. And then Taco Bell as we've said many, many times is really just scratching the surface internationally. So my guess is as we go forward you'll see the composition change a little bit with Pizza Hut and Taco Bell becoming a bigger and bigger part of unit growth and KFC taking their already very impressive numbers up further as well.

Your next question comes from the line of David Palmer with RBC Capital Markets.

Great, thanks. Good morning. Congrats on that move towards 4% unit growth. A question on delivery. With your investment in Grubhub, you're in a great position to see what's going on in U.S. delivery these days, obviously you have a big play there in Pizza and it looks like the big three pizza players in aggregate are weaker than they were in the past. Do you attribute this to non-pizza delivery hurting Pizza? And could you talk about your lift today, how delivery is going with KFC and Taco Bell and what you think that might be as you look ahead with Grubhub? Thanks. Greg Creed - Yum! Brands, Inc.: Yeah, I think we're in obviously the early days of testing with Grubhub. I think that's – I think the key thing is that we've got the systems integrated. So we're in the very early days. We are seeing what you'd expect us to see, which is incremental transactions we're seeing higher check. We've not unleashed the marketing muscle behind it, so we think there's a lot more transaction growth to get. But the transactions appear to be incremental at a much higher check. So I think in that sense we feel good about delivery. And obviously, I think that we'll obviously work with Grubhub in order to grow this opportunity. Nothing better than a new occasion and a higher check that's all good for us and we'll obviously continue to support that and make that a big deal going forward.

Your next question comes from the line of John Glass with Morgan Stanley. John Glass - Morgan Stanley & Co. LLC: Thanks. Good morning. On the Pizza Hut business globally and you talked about some operational tweaks you need to make, some marketing. But there's also a fair proportion of stores that currently don't offer delivery. So is there some sort of unlock that you can achieve early on in terms of getting some of those dine in stores to deliver? Is that a key piece to driving incremental same-store sales? And I did want you maybe just to address the prior question about delivery maybe impacting particularly some of your global Pizza Hut markets (33:19) in some markets that deliver x pizza or aside from pizzas impacting the delivery business in certain markets? David W. Gibbs - Yum! Brands, Inc.: Yeah, I mean on the question of the dine-in stores at Pizza Hut and their ability to deliver, we actually do have some dine-in stores that deliver out of the dine-in stores, we call them restaurant-based delivery. And with aggregators it does make it easier to add dine-in stores to the delivery world and have the aggregators deliver from our dine-in stores. I think Yum! China has taken advantage of that opportunity. So for us, the dine-in asset base though is very different around the world for Pizza Hut. In some cases, it's nearly white tablecloth. In other cases, it might resemble more of a fast casual kind of asset and you have to take into account on the delivery side is the back of the restaurant actually set up to deliver? In some cases it is, in some cases it isn't. In some cases, the menu is something that could be delivered, in other cases it's more of…

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

Yes. Hi. I was hoping to get an update on delivery specifically at KFC and Taco Bell in the U.S., how many units have been fully integrated into the GRUB platform from a delivery perspective on the front-end, but how much of that work is already been done on the backend as well, (36:02) a possibility to talk about your comps in the U.S. specifically, which might be the future indicator of Taco Bell and KFC stores that have received delivery, how much of an incremental boost to the business that's been? David W. Gibbs - Yum! Brands, Inc.: Yeah, look, I think as we've said a couple of times, we're pleased with the initial results that we're seeing by adding delivery into Taco Bell and KFC. Remember, Taco Bell already had a decent sized pool of stores that they experimented with delivery with another aggregator partner. Behind the scenes, we're doing all the work to integrate the systems with Grubhub, so that we can make this the fastest most seamless process for consumers and for our store employees. And we feel good about how that work is going. We're not throwing out numbers and targets and when certain number of units are going to be opened because there are several milestones we have to get through as we go on this journey. In fact, we're still trying to finalize the specific terms of the agreements that our franchisees will sign with GRUB. And then until things like that happen, we don't have complete visibility to a timeline around certain units and when they'll all be on. But as far as initial results, I think we're pleased with how things have gone.

Your next question comes from Karen Holthouse with Goldman Sachs. Karen Holthouse - Goldman Sachs & Co. LLC: Hi, another question on the delivery front, where you have been testing delivery, do you have any early data you can share in terms of delivery times that you're accomplishing or achieving? Greg Creed - Yum! Brands, Inc.: Yes. I mean, look, I think the key is as we've been trying to say, this is very early. We're in test. We haven't unleashed the marketing muscle of each of the brands in order to drive it. So I think we're seeing times that we're really happy with. So we've obviously got a very big Pizza Hut delivery business. We know what the expectations of the customers are. So I think we feel good about the delivery times that we're delivering to the customers. The transactions per restaurant are still small, but I believe that with all the work we've got from our Pizza Hut knowledge on how to deliver, that we are meeting the customer's expectations. So I feel good about that. The tests are very early, small number of stores. And I think as David said correctly, getting both KFC and Taco Bell integrated in the POS system, we don't want to be going to a tablet to order, to place an order because then you get speed issues. You get accuracy issues. We know all of that. So we would rather get the integration done right, test the integration, then unleash the marketing dollars and then drive the incrementality that we know we'll get. David W. Gibbs - Yum! Brands, Inc.: And in a good way I guess, we're fairly sophisticated when it comes to the subject of delivery. We know delivery well from our Pizza Hut business. So getting Taco Bell and KFC in, we have very high standards for where we want to ultimately get to. And while, as Greg said, we're pleased with where we're at right now in the journey, we know what ultimately the kinds of times and accuracy that you need to deliver in delivery. We're not there yet, but we're on that path to getting there with GRUB right now.

Your next question comes from Matt McGinley with Evercore ISI.

Good morning. My question is on the interplay of comp and unit growth. If over the long run, your units gravitate more towards that 4% unit growth range, why wouldn't your comp naturally gravitate more towards that 2% over the long run? Given you have 45,000 units around the world and growing at that higher rate just adds that many more units, you're going to have more cannibalization. It probably is a distraction to execution. I'm just kind of curious why the long run wouldn't look like your guidance for this year. Greg Creed - Yum! Brands, Inc.: Look, I think that being at the low end of 2% to 3% is not where I want us to be. I think we have every capability to be closer to the high end of the range. And it's probably not a surprise to anybody that based on our first half performance even accounting for the KFC performance in the UK, we have strengthened the back half calendars on all the brands. We happen to have a thing called, as David said, the marketing planning meeting last week for KFC. I sat through every one of those brand presentations. I've seen the calendar adjustments. I think that there is still opportunity for us to grow closer to the 3% than the 2% we are delivering. And I can assure you we're very focused on, obviously, continuing to grow the net new units that David spoke about, and which we're obviously happy about. But I do believe we can still accelerate our growth closer to 3% than to 2%. David W. Gibbs - Yum! Brands, Inc.: Yeah, on the specific question, it was a fair question though, as we expand will we end up with more and more cannibalization impacting same store sales growth? Actually if you think about where we're growing, mostly very much wide open spaces. We talked in our opening comments about how Pizza Hut's just entering Sub-Saharan Africa, there is new countries to enter, there's hundreds of units to build. I mean in many ways the units that you build start to produce more marketing dollars, which help you grow your topline more. Certainly at some point you'll get to saturation and you will deal with more of the impact issues that are little bit more common in the U.S. We have a very big presence in emerging markets where the markets are growing, where our unit counts are growing along with the population and with the purchasing power of the population and we really don't see a lot of concern about cannibalization from the development folks and where we're building stores.

Your next question comes from Andrew Charles with Cowen.

Great. Thanks. Dave you called out core operating profit growth in 2Q is expected to be the softest for the year, but you showed pretty good traction on G&A savings which at 1.8% of system sales in the quarter is brushing up against that 1.7% target as well as franchise and property expenses. Does the full year guidance for flat core operating profit embed accelerated levels of savings in these two line items as we look out to the back half of the year? David W. Gibbs - Yum! Brands, Inc.: I wouldn't necessarily say accelerated, obviously, as we're getting towards the end of the refranchising and most of the – we have two kinds of G&A cuts, obviously, the organic cuts that were independent of refranchising and those related to our refranchising. The vast majority of the organic cuts were made early in this journey and then we're coming to the end of the G&A reduction coming from the refranchising. We do have some annualization of G&A savings, but you're absolutely right to point out, look, we're almost at the 1.7% target. You look at the first half number and sort of double that. You get a sense for where we can get to, where we want to go, we want to get to fairly comfortably as we keep growing the top line. So, yeah, we're in good shape on G&A and that's why we reiterated all the elements of the transformation in our commitment.

Your next question comes from Jeffrey Bernstein with Barclays.

Great. Thank you very much. My question is on Pizza Hut, I guess, specifically on the U.S., just seems like the comps maybe aren't yet seeing the acceleration you had anticipated. So I'm wondering maybe if you could talk a little bit about the challenges, I think you mentioned most recently the move away from value, may be with a more of a noticeable headwind or maybe you can share any metrics related to the loyalty program and membership, and how your $130 million contribution would – where it would see the greatest benefit? Just trying to see if there any laterals to the – maybe the relative weakness we're seeing in China or whether it's just more U.S. specific? Thanks. Greg Creed - Yum! Brands, Inc.: Sure. I think there's no doubt that all three brands have to be on value, that's like given. And obviously getting back on value is critically important. I think the exciting opportunity for Pizza Hut in U.S. is to activate our NFL partnership. And obviously as we said, we renewed our NCAA partnership, and the way we look at it will be sort of owning football Thursday through Mondays. And I think there's nothing that brings America together more than football and pizza. So I think all – as we said, all the internal metrics which we talked about are improving; three minute speed if a speed improvement, obviously customer satisfaction improving. And I'm looking forward to us activating this partnership as football season gets underway. And obviously, hopefully using that to drive our brand to be more relevant, to be more distinct and then obviously the functional foundational stuff is helping us make this more easy. So, I think we're doing all the right things. We've got to deliver the results, it's sort of show-me time, but we feel good about what we've got for the back half of the year on Pizza Hut in the U.S.

Your next question comes from Dennis Geiger with UBS.

Great. Good morning. Thanks for the question. Wondering if you could just talk a little bit more about the competitive environment you're seeing in the U.S. And I guess through that value lens specifically, and sort of what impact that it's having on the brands? Just following up on your commentary Greg, just Pizza Hut and the pivot towards value in the back half, just curious how easy it is to differentiate within the category on value, and if the combination of all the enhancements you're making to the brand right now can sort of enhance those benefits from pizza value. And then just on Taco Bell, just a bit more about how all the innovative and differentiated value items that you had in the quarter, how they performed relative to your expectations and how you see the back half shaping up given the calendar if this value cycle continues? Thanks. Greg Creed - Yum! Brands, Inc.: Sure. Well, yeah, you're right. I mean value has become an important part of the industry. It's become an important part of every brand's positioning. As we talked about last week at the MPMs, I think there's also two ways to how you can communicate value: one is to apologize and one is to celebrate. I believe that we should be celebrating the fact that we can offer great value to our customers. Each of the three brands has a very clear value roadmap. I'll use U.S. dollars to talk because it will be easier, but if you are thinking about KFC, they have got $5, $10, $20. And then some of the markets where we're seeing really good performance they've got disruptive value as well. Taco Bell has got $1, $5 boxes. To your point, they're all performing very well in line with our expectations. To given an example, the fries, nacho fries which we launched essentially a la carte in the third quarter, we've been able to put them in the $5 box. I think that will enhance the appeal of the $5 box by putting one of the most popular new products we've launched. And then on Pizza Hut, it's about consistently staying on every day value and making sure that we deliver great tasting pizzas at a great price. So I think every day value will be important and I think the occasional hit of disruptive value will be important, because we've seen that where we deliver consistent every day value, it doesn't matter what the brand or what the country with the occasional disruptive value, that's the places we are winning and delivering the best same store sales growth. Keith R. Siegner - Yum! Brands, Inc.: Operator, we have time for one more question.

Your final question comes from the line of Sara Senatore with Bernstein. Sara Harkavy Senatore - Sanford C. Bernstein & Co. LLC: Yes. Thank you. Just a quick I guess two parter: one, not to belabor this, but on the value piece are you getting any pushback from franchisees just because that's been such a characteristic of the market for so long, I'm surprised that you would have pulled back on that kind of marketing last quarter, so I wasn't sure if it was driven by franchisees? And then I guess if you could just quickly comment. You mentioned disruption in the UK really to KFC but I guess you didn't allude to China. Had you expected some deceleration there because of the fact that you were able to get to the comp even with that I think was impressive, but I'm just trying to understand going forward with such a big market are you confident in the ability to offset with strength elsewhere? Thanks. Greg Creed - Yum! Brands, Inc.: Sure. Well, I think franchise economics are critical right? I like to say if you have great economics for the franchisee and great enthusiasm from the customer you've got a winning combination. So we're obviously very conscious of franchise economics. I think a good example would be Taco Bell took a la carte fries from $1 to $1.29 but they put them in the $5 box and we're going to sell a lot more $5 boxes. And so I think each of the brands has done a very good job of being conscious of the unit level economic impact. The other great thing is these businesses run off in a momentum and volume, and our ability with these disruptive value offers which are essentially protein only offers, example, in…

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