Keith R. Siegner - Yum! Brands, Inc. Greg Creed - Yum! Brands, Inc. David W. Gibbs - Yum! Brands, Inc.

John Glass - Morgan Stanley & Co. LLC Matthew Robert McGinley - Evercore Group LLC Dennis P. Geiger - UBS Securities LLC Andrew Charles - Cowen & Co. LLC Jason West - Credit Suisse Securities (USA) LLC John William Ivankoe - JPMorgan Securities LLC Karen Holthouse - Goldman Sachs & Co. Brian Bittner - Oppenheimer & Co., Inc. Jeff D. Farmer - Wells Fargo Securities LLC Sara Harkavy Senatore - Sanford C. Bernstein & Co. LLC David E. Tarantino - Robert W. Baird & Co., Inc.

Good morning, my name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the Yum! Brands' First Quarter 2017 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. I would now like to turn the conference over to Mr. Keith Siegner, Vice President, Investor Relations, Corporate Strategy and Treasurer. Sir, you may begin. Keith R. Siegner - Yum! Brands, Inc.: Thank you, Regina. 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 those 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 section 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. System sales results exclude the impact of foreign currency. Core operating profit growth figures exclude the impact of foreign currency and special items. Our 2016 results have been restated to adjust for two items. First, as we've previously disclosed, we changed our fiscal year to better align our global reporting calendar. Second, restated results reflect the impact of new accounting standards for pension cost recognition, which we adopted in the first quarter of 2017. An 8-K was filed on April 13, 2017 with restated results. We're broadcasting this conference call via our website. This call is also being recorded and will be available for playback. Please be advised that if you ask a question, it will be included in both our live conference and in any future use of the recording. We would like to make you aware of the following changes and upcoming Yum! investor events. First, disclosures pertaining to outstanding debt in our restricted group capital structure will be filed simultaneously with the filing of our first quarter 10-Q. Second, second quarter earnings will be released on August 3, 2017, with a conference call on the same day. The remainder of our 2017 key earnings dates are available on our website. Third, this year, we will be hosting Brand Days in place of our annual investor and analyst event. The first will be Taco Bell, May 24 and 25, in Irvine, California. Now, I'd like to turn the call over to Mr. Greg Creed. Greg Creed - Yum! Brands, Inc.: Thank you, Keith, and good morning, everyone, Yum! Brands delivered: first quarter core operating profit growth of 9%; system sales growth of 5% in constant currencies; and EPS growth, excluding special items, of 17%. We are maintaining our full-year guidance of mid-single-digit core operating profit growth, which assumes high single digit underlying base operating profit growth, offset by 1.5 percentage point 53rd week headwind and another 1 to 2 percentage points headwind from the net timing impact of refranchising and associated G&A reductions. With regards to our transformation, I'm pleased to report that we remain on track with our refranchising and cost saving initiatives. These efforts are elevating our organization into one that is more focused, more franchised, more efficient, and ultimately delivers more growth. This is why all of us at Yum! are realigning our efforts toward our four growth drivers: distinct relevant brands; unmatched franchise operating capability; bold restaurant development; and unrivaled culture and talent. Today, I'll give examples of two of these growth drivers, unrivaled culture and talent and distinctive relevant brands. I'll then hand the call over to David Gibbs to provide more details on the quarter as well as an update on our two other growth drivers, unmatched franchise operating capability and bold restaurant development. Then, we'll open the call up to questions. To begin, I truly can't emphasize enough how much of a competitive advantage our culture is to Yum!. At our Global Leaders Summit in March, we brought together our top 200 leaders in the organization to coauthor how we will think, act, and lead differently to accelerate growth. A transformation mindset has taken hold throughout the organization, a culture that fuels results. The energy and excitement behind our transformation is tangible. We've already seen many new and powerful ideas arise. And collaboration across brands has never been stronger, with an amplified effort on repeatable models. I'm confident our efforts to unlock the power of Yum! will benefit all stakeholders, from franchisees to shareholders to employees. Now, I'd like to review Q1 results, beginning with KFC, which is our largest division, representing about 50% of our operating profit with nearly 21,000 restaurants in 128 countries. The division has consistently delivered top and bottom-line growth at an impressive rate. In the first quarter, total system sales grew 5%, driven by 4% net new unit growth and 2% same-store sales growth. Russia, Central and Eastern Europe, Australia and New Zealand and Latin America all grew same-store sales 6% or more, which was partially offset by France and the Middle East. All-in, solid sales in larger markets I just mentioned and firm G&A control across the division helped offset the operating profit dilution from refranchising. And core operating profits grew 13% for the quarter. At KFC U.S., same-store sales grew 2% in the quarter, all of which was transaction growth, as Georgia Gold, Nashville Hot, consistent value and distinctive relevant marketing all benefited the quarter. This quarter marked 11 consecutive quarters of positive same-store sales growth, a strong result by any measure. I'd like to spend a couple more minutes on this business, not only because of its continued turnaround, but as an example of the types of bold transformational actions we are taking here at Yum! with lessons we can apply to Pizza Hut, as I'll discuss later. The first step in the KFC U.S. turnaround was reaching a clear alignment with franchisees in early 2015 about the strategy and entering into an Acceleration Agreement, which we've discussed with you before. Second, was implementing the Re-Colonelization effort, operational excellence is at the core of success for any brand and it was for KFC's turnaround, as well, with ingredients and procedures held to a very high standard and with upgrades to equipment. Third, creative marketing around clear value constructs and innovation helped to make KFC a distinctive and relevant brand again. Now, franchisees are investing in assets, adding new sales layers, and demand from new franchisees has spiked. This turnaround has been years in the making and required a lot of hard work, but restaurants are a momentum business, and I'm confident that we can carry the momentum forward. On that note, it's those years of hard work that enabled us to introduce our global fan favorite, the Zinger spicy chicken sandwich in the U.S. last week. The Zinger has long been one of my single favorite items across the global Yum! portfolio. Unlike our competitors' products, it's hand-breaded in store for a crunchier, juicier, and more flavorful sandwich. Roughly 40% of the U.S. chicken category sales come from sandwiches. And we realize just how big an opportunity this is for KFC. With clear system alignment, excellent operations, proper sandwich equipment, and a distinctive and relative marketing, the time is right to launch this standout portable product. Kudos to Kevin Hochman and the team, and our newest Colonel, Rob Lowe, for some breakthrough work. While it may take some time to fully establish this new sales layer, we are extremely excited about its potential over the long term. Switching to KFC International, I want to highlight an example of the power of Yum! in KFC's global delivery initiative, which we're aggressively pursuing as a strategic growth opportunity. We currently deliver out of almost 6,000 stores and plan to expand this rapidly over the next few years for many reasons. Not only do consumers want it, but KFC's product is ideal for delivery, as it holds temperature and quality remarkably well. Also, the vast majority of sales are incremental, since it captures a different consumer occasion. Yum! China is world class in developing a combined delivery and digital strategy and will host a Delivery Summit for the global KFC business in China to share learnings and adopt best practices, as we convert this into a repeatable model for all markets and an incremental multi-billion dollar sales layer. Turning now to Pizza Hut, which represents about 20% of our operating profit with over 16,000 global restaurants, had flat first quarter system sales, as same-store sales declined 3% and net new units grew 2%. As you've heard from us before, we have two distinct businesses with Pizza Hut, International and the U.S. Our International business grew system sales by 6%, as same-store sales grew 1% and net new units grew 6% in the first quarter. Implementation of our repeatable model for value, which originated in Thailand, is now seeing some success in additional markets, including Malaysia and Singapore, with positive early results in the Philippines. Broadly speaking, we are rolling out distinctive and disruptive value, coupled with the best-tasting food and consistent operations to sustainably and profitably grow top-line sales across all our markets. On the development front, we saw an acceleration of opens versus prior year, driven by a Development Agreement and a large number of conversions of Eagle Boys locations in Australia by our new franchise partner. Our U.S. results, which currently represent approximately 10% of our operating profit, were disappointing. We were lapping a plus 5% from last year's $5 Flavor Menu, which made for a tough compare. But prior laps are never an excuse, and the continuation of the soft results are clearly a priority we are addressing with urgency. As such, I'm very pleased to announce that in the past few days we secured an agreement with our franchisees to accelerate a bold transformation of the Pizza Hut U.S. business. This agreement will improve brand marketing alignment, accelerate enhancements to operations and technology, and include a permanent commitment to incremental advertising. This is a win-win agreement that importantly includes explicit alignment on aggressive investment in a digital delivery-centric strategy, and in short, will make it easier for our customers to get a better pizza. David is going to go into more detail about this significant milestone for the brand in a few minutes, but I would like to point out that this is another great example of the power of Yum!. We were able to leverage important learnings from the transformation work at KFC U.S. over the past few years to enable the system to make critical step-chain investments and to reset the business. It is working at KFC, and we believe this breakthrough can unlock renewed growth at Pizza Hut in the U.S. as well. I'd like to thank the Pizza Hut franchisees for supporting this bold vision for the brand, as well as the entire Pizza Hut U.S. team, led by Artie Starrs, for their monumental efforts that led to this agreement. As with all turnarounds, this is a journey that will happen hand-in-hand with our franchise partners, and it will not be complete in 2017, but I do believe you will see the results pay off in 2018 and beyond, so stay tuned. Finally, Taco Bell started the year with very impressive results and is well on pace for its sixth consecutive year of same-store sales growth. System sales grew 12%, as same-store sales grew 8% and net new units grew 3%. Same-store sales growth was driven by 5% transaction growth at Taco Bell, outpacing the industry by 7 points on sales and about 6 percentage points on transactions. 35 net new unit openings set a first quarter record and core operating profit grew 19%. These are remarkable results that showcase how a truly distinctive, relevant brand, world-class operations, consistent innovation, and a creative approach to value can resonate with customers. To this point, our three key products in the first quarter reflected these themes and were received with tremendous enthusiasm by the consumer. First, we launched the $1 Double Stacked Tacos, which provided us with early momentum in the quarter. We then sold over 25 million Naked Chicken Chalupas, which illustrates the enthusiasm for our crispy chicken offerings. And finally, we brought back the Triple Double Crunchwrap, which was even more successful than its initial launch in 2016. Our high-low value strategy is working, achieving both price, value, and abundant value. Going forward, you can expect to see continued focus on innovation and value with our $1.49 Loaded Taco Beef Burrito and more Naked products in the second quarter. On the Taco Bell International front, I am pleased with the momentum building globally and with both growing enthusiasm for the brand and improving economics. We continue unlocking the business model by driving cost out of the supply chain and building scale with new and existing franchisees. This year, we expect to open restaurants in five new countries as we expand the cult of Taco Bell. We continue to sign Development Agreements and now have commitments for nearly 400 new restaurants under these agreements, including 100 from Yum! China, where things are off to a very encouraging start. Interest has remained strong from high quality existing and potential new franchisees across the globe. So, in summary, we are accelerating our growth as we engage long-term partners aligned with our vision, values, and passion for Taco Bell. In conclusion, we're moving forward with clear intentionality towards building a growth-oriented organization which delivers more for our shareholders. I'm very pleased with the progress made to-date, and look forward to further updating you as we continue our transformation journey. And now, our President and CFO, David Gibbs. David W. Gibbs - Yum! Brands, Inc.: Thank you, Greg, and good morning, everyone. Today, I'll cover four areas in my following remarks: our first quarter operating results; our transformation commitments, specifically how we are driving growth through our focus on unmatched franchise operating capability and bold restaurant development; our Pizza Hut U.S. Transformation Agreement; and our outlook for 2017. We are pleased with our first quarter results, where core operating profit increased 9%. These results were led by particular strength at Taco Bell, with better than expected sales and margins and solid double-digit core operating profit growth in our KFC Division. First quarter results were a strong testament to the diversity and resiliency of the Yum! Portfolio, as core operating profits grew in line with our long-term target, despite headwinds in Pizza Hut U.S. sales. EPS, before special items, grew 17%, including a 1 point negative impact from foreign currency. EPS benefited from a low tax rate associated with the new standard for equity compensation accounting, which we adopted in the first quarter. Please note that the first quarter tax rate includes an oversized impact related specifically to payouts to recently-retired employees. The new accounting standard will make it harder to predict our tax rate, given the uncertainty around timing of equity compensation payouts; however, we do expect our full year ex-special tax rate to be closer to our rate of recent years. We are on track to achieve our 2019 targets of: reducing G&A to 1.7% of system sales; increasing free cash flow conversion to 100%; and increasing our franchise mix to at least 98%. The more predictable factors helping us to reach our targets, refranchising efforts, net units, G&A reductions, and share buybacks, are all well underway and our early success is encouraging. In the first quarter of 2017, we refranchised 121 stores, including 31 KFCs, 36 Pizza Huts, and 54 Taco Bells, bringing our global franchise mix to 94%. Simply put, refranchising these stores allows us to meet three of our stated goals: decreasing our ownership mix; reducing field-level G&A; and returning cash to shareholders. While we won't provide interim targets as we work towards reaching our new franchise mix of at least 98%, I do want to share that there has been robust demand for all three brands in the U.S. and abroad. Next, I'd like to briefly touch on how we are executing against two of our four growth drivers: bold restaurant development and unmatched franchise operating capability. First, as we have discussed in the past, we are aggressively leveraging our renewed focus on bold restaurant development by attaching Development Agreements to our refranchising deals. Since we own the market-mapping capability for each brand and geography, we know how many stores to include in our agreements. Deals in the first quarter included meaningful Development Agreements, creating a strong pipeline of net new unit development. And with healthy demand from existing and new franchisees for our brands around the world, we expect this pipeline to grow. This quarter was a good example of how our transformation mindset can benefit results. We opened 141 net new units in the first quarter, which is typically the seasonally-weakest quarter of the year. Actually, 141 net new opens is 113 higher than first quarter 2016 and each of our three brands saw improvement. KFC contributed the largest portion of the year-over-year improvement, owing to strong brand momentum and economics. Pizza Hut's master franchise partner in Australia converted Eagle Boys to Pizza Huts, and Taco Bell set a record for first quarter openings. Second, even as we're reducing our company-operated store holdings, I want to be clear that operations excellence is as important, if not more important, than ever. And this is a large part of what our unmatched franchise operating capability growth driver refers to. I'd like to highlight some of the significant operational achievements we've made across the portfolio as examples of our commitment to this strategic priority. At Taco Bell, customer satisfaction hit an all-time high during the Naked Chicken Chalupa launch and continues to hold strong. Pizza Hut International's overall satisfaction scores in the first quarter increased 6 percentage points versus the prior year. This was highlighted by a 10 percentage point increase in Korea, with significantly improving speed and taste scores. The global KFC business achieved a 7% improvement in taste satisfaction over the past 12 months, while 14% fewer guests experienced a problem in 2016 than 2015. Now, I'd like to update you on our capital structure and share buybacks. As you may have seen, we successfully repriced our $2 billion term loan B in March. This reduced the associated interest rate by 75 basis points, which, after amortization of related fees and expenses, will reduce our ongoing reported annualized interest expense by about $12 million. For 2017, the net interest savings will be approximately $3 million, due to the partial year benefit of the lower rate and incremental fees and debt issuance costs, $6 million of which we recognized in the first quarter. We remain committed to maintaining approximately 5 times leverage as market conditions permit, and we are always working to optimize the capital structure, as evidenced here. As for share buybacks, we repurchased 6.8 million shares for $442 million or, on average, about $65 per share in the quarter. At the end of the first quarter, we had just under $1.5 billion remaining under our current share repurchase authorization. As we laid out at our analyst meeting, our plan is to return between $6.5 billion and $7 billion to shareholders across 2017 through 2019. Through a combination of free cash flow generation, maintaining our leverage, and cash from refranchising, we will continue to return capital to shareholders to deliver on our commitment. Before we discuss the outlook, I'd like to provide some financial highlights of the agreement we reached with our Pizza Hut U.S. franchisees. Yum! will invest approximately $130 million to upgrade restaurant equipment to improve operations, accelerate improvements in restaurant technology, enhance digital and eCommerce capabilities, and boost advertising dollars. Further, the Pizza Hut U.S. franchisees overwhelmingly voted in support of this agreement. And while we aren't going to get into specifics for competitive reasons, the agreement includes a permanent system commitment to incremental advertising and digital initiative contributions, alignment on marketing strategy, and much more. From a timing perspective, we expect to invest nearly all of the $130 million split between 2017 and 2018. Similar to our KFC U.S. Acceleration Agreement, due to the unique long-term brand-building nature of these investments, certain of these investments will be classified as special items. Of the expenses that will be treated as ex-special and recognized through our income statement, the only significant item we want to highlight relates to media spend, which we estimate will be approximately $25 million in 2017 and $12.5 million in 2018. Although this is a relatively modest investment in the scheme of Yum!, it is obviously quite significant to Pizza Hut U.S. and we are confident it will unlock significant value in years to come. Finally, I'd like to discuss our 2017 outlook, which, as Greg mentioned, is unchanged. Please note this is off of our quarterly 2016 income statement filed April 13, which adjusts for the China spin-off, our quarterly calendar change, and the change to pension expense classification which we adopted this quarter. To be clear, the ex-special operating profit base for 2016 is $1.647 billion. We forecast 2017 core operating profit should grow mid-single digits off this base, as the 53rd week lap and timing mismatches on refranchising and G&A savings impact what we believe will be a high single-digit-base underlying growth rate. And to be clear, the incremental cost associated with the Pizza Hut Transformation Agreement will not alter our full-year guidance, given our strong start to the year. So, to wrap things up, we are pleased with our first quarter results and the progress we continue to make on implementing our strategic transformation. First quarter operating profit growth was a strong and encouraging start to the year, reinforcing our confidence in the strength of our business model. We are taking the right steps to optimize shareholder value, and our disciplined decisions will set us up for strength in the near and long term. And with that, the team and I are happy to take your questions.

Our first question comes from the line of John Glass with Morgan Stanley. Please go ahead. Greg Creed - Yum! Brands, Inc.: Hi, John. John Glass - Morgan Stanley & Co. LLC: Hi, can you hear me okay? Greg Creed - Yum! Brands, Inc.: Hi, John, how are you? David W. Gibbs - Yum! Brands, Inc.: Good morning. John Glass - Morgan Stanley & Co. LLC: Good. I'm fine, thank you. First, can you just comment, David and Greg, you commented about your new Development Agreements with franchisees and that's key as you refranchise and accelerate growth. If you think about your refranchising goals over the next couple of years, how much incremental development, if you were to successfully attach those agreements to all of them, how much of that would incrementally expand unit growth versus the 3% we saw this quarter? Would it get you to 5%, for example, or is that just part of the solution to getting to that 7% system goal and some component of that's unit growth? David W. Gibbs - Yum! Brands, Inc.: Yeah, I think, as you described, John, it's really a big part of the solution to getting to incremental development. As we've talked about before, we're not going to throw out new targets for development, but the Development Agreements that we're signing from refranchising this time around with our refranchising are really quite incremental versus the previous efforts of refranchising, where we didn't undertake these kinds of Development Agreements. John Glass - Morgan Stanley & Co. LLC: And then as a follow-up, just on the Pizza Hut agreement, can you, first of all, just make clear what it is going toward? For example, are you funding some asset relocations in the United States? How much of that is a component versus the technology investment? If you could maybe provide a little clarity. I just want to make sure I understand. This is going to be reflected all in CapEx in 2017 and 2018 or some of it comes through the P&L or if there is a breakdown, can you break that down? Greg Creed - Yum! Brands, Inc.: Well, look, I'm going to let David give you some more details. Let me just give you the context of why we've made this decision on Pizza Hut and why we have signed up for the Acceleration Agreement, because I think having this context is important for everybody. If I step back two or three years, I think we've made a number of, what I call, focused bold decisions. Early 2015, along with the KFC franchisees, we reached the Acceleration Agreement in which we said we would invest $180 million through 2018. I think that's demonstrated clearly to be a wise investment. We've had 11 quarters of consecutive same-store sales growth, margins have doubled. We then separated China, as we all know. We've created these two powerful independent-focused growth companies, I think another wise decision. Around the transformation of Yum! we've set these four growth drivers, we believe, will obviously enhance our growth going forward. And now, we're focusing on another bold action, which is the Transformation Agreement with the Pizza Hut U.S. franchisees. As David said, it's a $130 million investment. From a Yum! point of view, it's modest. For a Pizza Hut point of view, yes, it's significant. And, well, I'll let David explain the details, I'm very confident that, like the other three bold actions, it will unlock significant value and long-term growth for years to come. It's the right thing to do for the Pizza Hut brand. David W. Gibbs - Yum! Brands, Inc.: Yeah, and on the financial side, as I mentioned, we're doing a little bit of priming the pump on the incremental media. And we'll be investing $25 million in incremental media from Yum! in 2017 and then another $12.5 million in 2018. There's an ongoing permanent commitment to incremental media from the franchisees that goes on after that. So, every other part of the investment would really be, at this point, classified as special. So, I think for your modeling purposes, you'll see that $25 million and $12 million (sic) [$12.5 million] (29:02) hit through our income statement. John Glass - Morgan Stanley & Co. LLC: Okay, thank you.

Your next question comes from the line of Matt McGinley with Evercore ISI. Please go ahead. Matthew Robert McGinley - Evercore Group LLC: Thanks. I have a follow-up on Pizza Hut. At Pizza Hut in the U.S., there's a big picture issue of kind of having these restaurants in the old format, which sounds like part of this plan is to fix some of that. But what are the near-term fixes or solutions that you can address to get in place so that you can revert the comps back to a more positive state over the course of this year? I know we're kind of looking for a home run solution over time, but what are the, I guess, singles and doubles that you can hit over the course of 2017? Greg Creed - Yum! Brands, Inc.: Well, I think what we've got to do is make sure the brand has what I call a delivery digital-centric focus. Obviously, there will continue to be active upgrades. It was interesting. Dave and I were out and touring a number of markets the last couple of weeks looking at the Zinger, looking at some asset actions that we've taken at Pizza Hut, and it was very clear. We were in one place and we've shut down an old Red Roof about half a mile down the road from what is now a fast-casual Delco end cap and I think sales – I may be wrong, have gone something like $14,000 to $29,000, or something like that. So, I think the assets will change. I think making sure that when we advertise a price point, we've got that consistently on air across the country, having the franchisees align behind that. In the past, we've not had necessarily great commitment, so I think part of it is making sure that when we play a value play, that every customer across the whole country gets the benefit of that. I think those are just some of the advantages that you'll see. We don't want to get into too much of the messaging that's going to occur, because obviously, this is a very cutthroat and competitive category. And I really don't want to get into the messages we're going to put out there. I just want to say that I feel very good about the messages we've got coming. I think they will resonate with customers. They will reinforce a delivery, sort of digital-centric nature, and the customers will see it as a more consistent expression across the country. Matthew Robert McGinley - Evercore Group LLC: Okay. Thank you. David W. Gibbs - Yum! Brands, Inc.: On the asset front, you asked about the assets. We have, as we've mentioned it before, we've started ramping up the pace of remodeling over a year ago as part of another agreement with our franchisees. That agreement will be modified but continue over the next several years and you'll continue to see us accelerate the pace of fixing our stores. There will be incentives for what Greg was referring to, which is the fast-casual delco model, which we're quite excited about, given the sales bump we get from that versus other asset actions. So, I think, as Greg said, there's a lot of competitive information here that we can't reveal, but there is a plan along every critical front in the battle in the pizza category, whether it be operations, technology, or assets or advertising. Matthew Robert McGinley - Evercore Group LLC: Okay. Thank you very much. David W. Gibbs - Yum! Brands, Inc.: Thanks, Matt.

Your next question comes from the line of Dennis Geiger with UBS. Please go ahead. Dennis P. Geiger - UBS Securities LLC: Great. Thanks. Greg, you've talked in the past about how an increased focus on sales can have a real notable impact on results as you complete the refranchising, as you don't have to focus on costs within the four walls as much. Granted, we're not quite there yet on the refranchising, but is the organization already preparing for that greater top-line focus? And how important of a factor do you think it was in what you saw at Taco Bell and KFC this quarter and in recent quarters? Greg Creed - Yum! Brands, Inc.: Thanks, Dennis. As I said in my prepared remarks, in March, we had a Global Leadership Summit. We took the top 200 leaders from around the world. And I think to keep it simple, we discussed the sort of the what and the why. So, we were very clear about the what, which is we're going to be more focused, more franchised, more efficient, and that we were going to accelerate growth by thinking differently, acting differently, and leading differently. David also gave a great example of why we need to do that from a financial point of view. And I came away incredibly excited that the top 200 leaders in the organization are rallying around the fact that we can get more growth out of this business. And so, it was great to obviously see the Taco Bell numbers are simply stunning. I mean, 8% same-store sales growth, 5% coming from transactions. Even the U.S. KFC business, which was up 2%, but it was 2% transaction growth. And I like sales that come predominantly from transaction growth rather than from pricing. And so, I'm very encouraged by the early start. We have a long way to go, but I do believe that we can consistently grow system sales through a combination of focus around same-store sales and focus around net new units. Dennis P. Geiger - UBS Securities LLC: Great. Thanks.

Your next question comes from the line of Andrew Charles with Cowen & Company. Please go ahead. Andrew Charles - Cowen & Co. LLC: Great. Thanks, guys, had two questions on Taco Bell. The comps are, obviously, stellar this quarter, but wanted to ask about the 80 bps of restaurant margin expansion. It just didn't seem to fully reflect the strong comps. And I know you guys did some value promotions, which were more margin-dilutive, but I would have figured that would have been offset by some of the premium innovation you did around Naked Chicken and the Triple Double. Greg Creed - Yum! Brands, Inc.: Yeah, there was some cost of sales and labor inflation in the numbers, but offset by better sales. So, I think the good news is we did get margin expansion. Last year, cost of sales at Taco Bell ran negative. They'll probably run slightly positive, around 2%, this year. Now that's coming off, I think, minus about mid-single digits last year. So, there was some inflation in labor. There was some inflation in cost of sales, but the good news was more than offset by the strength in the top-line. And, as I said, continuing to bring innovation to the marketplace, continue to be strong on value, as David said, improving operations. Again, we have been out visiting restaurants and the Taco Bells we visited, I think, were all A's. I mean, we just saw great execution. These were blind visits. No one was expecting us. Mike Grams is doing a great job improving the operating performance there, as well. So, it's world-class advertising, breakthrough innovation, great value, great operations, all of that offsetting what was some underlying labor and cost of goods inflation in the quarter. Andrew Charles - Cowen & Co. LLC: And my follow-up question was just on the fluidity of the marketing calendar. Obviously, you guys have done a nice job of balancing premium, like Naked Chicken with some value offers. Should we expect that to continue or do you remain fluid, just given the operating environment that you can lean more into one factor or the other, depending on the environment and competitive actions? Greg Creed - Yum! Brands, Inc.: I mean, the great thing is Taco Bell's got a calendar for the next couple of years, so as things happen in the marketplace – I mean, let's not kid ourselves. You'll see more "naked" products. We'd be crazy not to. But you'll always see Taco Bell doing price value. You'll see them doing breakfast. We've got good transaction growth out of breakfast again. Two year comps, I think, were like 12% on transaction growth at breakfast. So, they're doing everything right. And they have a pipeline that if anything happened, they could react to flexibly, but right now, they're executing their strategy and they're doing an incredible job executing it really well. Andrew Charles - Cowen & Co. LLC: Thank you.

Your next question comes from the line of Jason West with Credit Suisse. Please go ahead. Jason West - Credit Suisse Securities (USA) LLC: Yeah, thanks. I think you guys put up 9% core EBIT growth in the quarter and you're guiding – I think the equivalent for the year is mid-single digits on that number. I know you're lapping the 53rd week in 4Q, but is there any other reason why the business will slow a bit from here? David W. Gibbs - Yum! Brands, Inc.: Yeah, one of the other headwinds that we've highlighted is just the timing mismatch between when we're cutting G&A and getting savings versus the loss of operating profit from refranchising. I think on the last call, I highlighted that that worked in our favor last year. This quarter, those two things were about neutral. So, you see us performing at about our base underlying rate, since we don't have a 53rd week this quarter and we don't have that issue. But, as the year progresses, that will be the headwind that we described entering the year. Jason West - Credit Suisse Securities (USA) LLC: Okay, got it. And then, just a follow-up on Pizza Hut, I guess looking at the comp trends there, obviously quite a bit different from the two big competitors in the U.S. As you guys dig into those comps and look at your dine-in business versus the kind of core delivery business, is that at least a lot closer to where competitors are, just on the delivery side or are you really sort of similar on both sides of the business, because I know that dine-in has been a big overhang on that story? Greg Creed - Yum! Brands, Inc.: Yeah, we don't want to get into the specifics, but our delivery performance is better than our dine-in performance, obviously, but I think the key thing is we have a long way to go. There's a lot of difference between where we are and where we need to be. And I'm really excited that this Pizza Hut Acceleration Agreement will help us get there. It was the catalyst for change at KFC. I mean, if I step back – and I think most of you, when I took over this job, thought we'd take the under on a KFC U.S. turnaround. Hopefully, we've proven that we turned that around. And I'm equally confident that with this Pizza Hut Acceleration Agreement in place, we can do the same thing for Pizza Hut as we've done for KFC. Jason West - Credit Suisse Securities (USA) LLC: Okay. Thanks.

Your next question comes from the line of John Ivankoe with JPMorgan. Please go ahead. John William Ivankoe - JPMorgan Securities LLC: Hi, great. I'd like to stay on Pizza Hut, if I may. I think you ended 2016 with around 7,600 units. And that's versus Domino's at around 5,400 or so. So just in terms of looking at the number of units that you have, what should it be, I mean, if you were to kind of redraw the entire map of the United States and you wanted to have delivery and carry-out focused assets and maximize return at those assets, as part of the Pizza Hut restructuring or significant reduction in that unit count to get to kind of redraw the United States as it stands today? David W. Gibbs - Yum! Brands, Inc.: Yeah, John, this is David. Just one point on the unit count for clarity; some of the 7,600 units that we have are licensed units versus the 5,400 that Domino's owns. (39:34) John William Ivankoe - JPMorgan Securities LLC: Thank you. Yes, and that's probably not totally fair of me to include that, but I don't have that number in front of me. What is that? David W. Gibbs - Yum! Brands, Inc.: Our traditional unit count is more in the 6,300 to 6,400 unit range, but your question about the future asset base of the brand is a good one. I think as we pointed out in last investor discussions, new unit development for Pizza Hut still generates good returns. It's one of our better returning programs that we have because of the small box cost. We're excited about some of the new vehicles we've developed with the fast-casual Delco. And we certainly don't think that Pizza Hut should be shrinking in the United States. We think it can get back to being a growth concept. And we've market mapped out further opportunities to grow our brand in the United States. John William Ivankoe - JPMorgan Securities LLC: Okay, very interesting. And by not shrinking, could there just be the replacement of one legacy Red Roof that's closed, but just replaced by a Delco nearby? I mean, is that part of the overall strategy, if you don't want to actually lose some presentation in the market? David W. Gibbs - Yum! Brands, Inc.: Yeah, absolutely. I think that the big part of the strategy is relocating out of many of those Red Roofs, which not only are the assets not in great shape, but oftentimes, they're in the wrong part of the trade area. Greg referenced that on our trip a couple of weeks ago, we visited one of these stores where the trade area had clearly moved away from our Red Roof, where we were doing half the volume that we eventually ended up doing just by moving a half mile down the road to where more of the activity is. Now, it's not to say that there also won't, over the short-term, be a little bit of churn in the asset base. And you'll see some closures and some openings, so I can't predict the timing of the net new units, probably, over the next year or so. But I can say that the Pizza Hut team and we feel confident that there's growth opportunities for the Pizza Hut brand in the U.S., both in growing the top-line of our existing units, relocating them to more powerful assets, and penetrating new trade areas. Greg Creed - Yum! Brands, Inc.: Yeah, I think there's areas where we're not very well penetrated. The Northeast is not a highly-penetrated Pizza Hut market. I think talking to new franchisees signing development agreements in those parts of the country, I think will be a positive to the brand. And as the brand builds its top-line momentum, which we believe we will deliver, I think that will only make people even more encouraged. The good thing is we're not short of people who want to sign on to be Pizza Hut franchisees. The good news is that we've got new franchisees who believe in the story that we're selling, who know more of the details that we can't share, are signing up. And I think that's encouraging and an encouraging sign for us, as well. John William Ivankoe - JPMorgan Securities LLC: And, if I may, you quantified your investment over 2017 and 2018 for the Pizza Hut brand in the U.S., the $130 million. Could you put some context around what the incremental investment is from the franchise community? Is it a similar number? Is it many multiples of that number? Just so we get a sense of how much money is being put across the entire brand, not just from your wallet in 2017 and 2018. David W. Gibbs - Yum! Brands, Inc.: Yeah, we're not going to share specifics on that, but what I can say is they'll be investing in incremental media. They'll be investing along with us in incremental technology investments. So, this is not as if it's a one-sided investment. That's why we're all, obviously, so excited about the agreement. We all know that the partnership between the brand and the franchisees has to be right to get a business to grow. That's what we have at KFC U.S. And I think this is good evidence that the Pizza Hut franchisees and the Pizza Hut brand leadership are working in concert to bring the brand forward. John William Ivankoe - JPMorgan Securities LLC: Thank you. David W. Gibbs - Yum! Brands, Inc.: Thanks, John.

Your next question comes from the line of Karen Holthouse with Goldman Sachs. Please go ahead. Karen Holthouse - Goldman Sachs & Co.: Hey. Yet another Pizza Hut question for the day, just looking at the reported company store margins, are those reflective of what the system as a whole is seeing or would there be a reason that there is a mix difference between your owned units and franchisees? David W. Gibbs - Yum! Brands, Inc.: Yeah, I think given that Pizza Hut has light company ownership, the margins can be a little misleading. The margins in the U.S. are actually better than the margins shown there. So, the margins are somewhat pulled down by international markets with new equity stores and preopening expenses and things like that. And obviously, off of a very light number, I wouldn't read too much in it. Obviously, margins are down in the U.S. business because of the decline in sales, that's certain. But, yeah, I think the overall Pizza Hut business still has, for our franchise partners and for us, has solid margins, which we certainly believe we can grow. Karen Holthouse - Goldman Sachs & Co.: And then on the development side of things, when you're working with franchisees on attaching new unit development to refranchising and what not, what sort of return hurdles do you think they're looking for in the U.S. to be incentivized to build? David W. Gibbs - Yum! Brands, Inc.: I think it really varies by franchisee in concept, but certainly the development trade areas that we've identified as part of these agreements are ones that we think meet the hurdle requirements. And for our brands, that probably ranges from cash paybacks from three to eight years, something like that. Karen Holthouse - Goldman Sachs & Co.: Great. Thank you.

Your next question comes from the line of Brian Bittner with Oppenheimer. Please go ahead. Brian Bittner - Oppenheimer & Co., Inc.: Thanks, good morning, guys. Are you guys still confident in your journey to achieve the $3.75 of EPS by 2019? I didn't hear that in your prepared remarks. And if you are, do you still think you need an average of 5% system-wide sales growth to get there, or does it need to be more towards the 7% that you're targeting? David W. Gibbs - Yum! Brands, Inc.: Yeah, I think we are confident in our journey towards $3.75 that you mentioned. And I think I mentioned in my prepared remarks that all of our transformation initiatives are on track, with encouraging results. We've never actually thrown out a specific sales number that underlies the $3.75, other than saying that it's more like our historical rate of growth. So, I think we're excited by some of the things we're seeing at Taco Bell and the Transformation Agreement and the ability over the next few years for our sales to accelerate for all of the reasons we've talked about. But as I often point out, a lot of the stuff in getting to the $3.75 is completely under our control, share buybacks, refranchisings... Greg Creed - Yum! Brands, Inc.: G&A. David W. Gibbs - Yum! Brands, Inc.: G&A cuts. All of those initiatives we feel really good about. Brian Bittner - Oppenheimer & Co., Inc.: Okay. And Taco Bell doesn't seem to be getting too much attention today. I mean, 8% comps. When you look at that quarter, how much of that 5% traffic do you think was driven by kind of hot LTO's or how much do you think was more kind of sustained demand growth that the Taco Bell brand is swallowing? If you can maybe just give a little more color on that. Greg Creed - Yum! Brands, Inc.: They just had a great quarter. January was good. February was good. March was good. This wasn't like Naked Chicken sort of saved the quarter, and what you could save plus-8%. It was a strong across the board. We have high-low going with the $1 Double Stacked Tacos, and then the Triple Double Crunchwrap. You've got innovation in Naked Chicken Chalupa, improving operations, I think world-class marketing. I do believe that the team had turned this into a cult brand. And it's not hard to turn a $10 billion mass brand into a cult brand, but I believe they've done it. So, they had just a incredibly strong quarter, every day, every week, every month. And that's what gives us encouragement that they're doing everything right to continue to grow this business for the long long-term. Brian Bittner - Oppenheimer & Co., Inc.: And just the last question I have is the KFC turnaround, from the outside looking in, it felt like the advertising changes did a lot to kind of pump up the brand a lot more than it was prior. Do you have the same advertising agencies that work on the KFC brand that work on the Pizza Hut brand? Are those kind of crossed or do you have separate advertising agencies? Greg Creed - Yum! Brands, Inc.: No, each of the brands has a separate agency. I do agree with you that I think the Colonel campaign was a core part of why we've had a lot of success in the U.S., but, at the same time, product availability, improving operations, there's a lot of things that go into place. Definitely the Colonel campaign has worked, but to answer your question specifically, each agency in the U.S. uses a different agency. Each brand uses a different agency. Brian Bittner - Oppenheimer & Co., Inc.: Thanks, guys. Greg Creed - Yum! Brands, Inc.: Thanks, Brian.

Your next question comes from the line of Jeff Farmer with Wells Fargo. Please go ahead. Jeff D. Farmer - Wells Fargo Securities LLC: Thank you. On your efforts to accelerate system unit growth, can you provide more color on the international markets where you've seen that early traction, as well as some of the strategies that are driving that developmental acceleration? Again, just trying to get a better understanding of some of the early successes you've had and the drivers of that early success. Greg Creed - Yum! Brands, Inc.: Jeff, was this regarding Pizza Hut? I just missed the first part of your question. Jeff D. Farmer - Wells Fargo Securities LLC: Really, across all brands, it's development in terms of just accelerating development internationally, where you've gained traction, and it doesn't have to be about Pizza Hut. I'd love it if it was Pizza Hut, but across either Pizza Hut or KFC. Greg Creed - Yum! Brands, Inc.: Yeah, I think we're seeing, across the board, good net new unit growth on both KFC and on Pizza Hut. On the Pizza Hut side, we measure 13 distinct markets. I think 6 are developing and 7 have developed. And of those, 12 of the 13 had system sales growth in the quarter, the only exception being the U.S. So, I do believe we're seeing strong net new unit growth. Internationally, we delivered 6% net new unit growth in the quarter, which was a strong number, and I think KFC also delivered 4% net new unit growth. So, it's quite strong. I think, as David said, what we love is we're keeping control of the asset-mapping process. We're not giving that to the franchisees. So we're out there, we have mapped the world. We know where there's opportunities. And I think, as David said, we know that net new units is something we can control as towards our growth targets. And because the business is much more focused, as I said earlier, we're focused on four things, distinct relevant brands, unmatched franchise operating capability, bold asset development, and culture and talent. And I think because the organization is more focused, you are seeing us make progress on a broader scale than we had probably in the past. Jeff D. Farmer - Wells Fargo Securities LLC: Let me just ask it one more way, so any new strategies or learnings coming out of that global leadership conference in terms of how to accelerate development with your partners? David W. Gibbs - Yum! Brands, Inc.: Look, yeah, I think a big part of this is changing our mindset on development and really starting to think about every market, emerging and developed, as a great opportunity for us, because we've seen even in developed markets that our brands can get to much greater penetration. I mean, I mentioned in my prepared remarks on Pizza Hut, our master franchisee down in Australia just took, I think, close to 50 Eagle Boys restaurants and converted them to Pizza Huts. That's great growth in the developed market. At the same time, the Pizza Hut team is out striking a deal in Ethiopia to expand into a new country. So, you're seeing that across the board. And the Global Leadership Summit that Greg talked about was a great opportunity to really galvanize the team on this deal-making and growth mindset. And you should continue to see things like Eagle Boys and Ethiopia and new market entry and new deals come across the wire as we start to ramp up the pace of development. Greg Creed - Yum! Brands, Inc.: I mean, we have more Development Agreements for Taco Bell internationally than we have Taco Bells on the ground internationally. We've never been in that situation. We don't have 400 Taco Bells on the ground, but we have 400 Development Agreements, 100 with China. So, I'm with David. I think it's about being focused. We are really focused on distinct relevant brands. Why? Because that drives same-store sales. Unmatched franchise operating capability. Why? That drives same-store sales. Bold asset development. Why? Because that drives net new units. Focusing on those three things will drive system sales. And I think everyone came away from the global summit – the word is focused. That's what I'm going to stick with, and I honestly believe that this focus is going to pay off for us, for our shareholders, for our franchisees, and employees. Jeff D. Farmer - Wells Fargo Securities LLC: Helpful. Thank you. Greg Creed - Yum! Brands, Inc.: Thanks, Jeff.

Your next question comes from the line of Sara Senatore with Bernstein. Please go ahead. Sara Harkavy Senatore - Sanford C. Bernstein & Co. LLC: Thanks very much. I have two questions, one on KFC and then a follow-up on Pizza Hut. So on KFC, I know you had strong transaction growth in the U.S. and ahead of the industry, but globally, if I look at your comps of 2%, they were perhaps a little lower than what maybe your large QSR competitor is doing. So just trying to understand whether that should accelerate; you mentioned delivery, if that's the real driver going forward or if there are other places where maybe you can get to something closer to like a 3% comp, which I think would be kind of at the high end of your 2% to 3% for this year expectation. And then I wanted to ask about Pizza Hut and value. And, in particular, you mentioned messaging better around price point. And I'm trying to understand if that's what you did last year so successfully. So, you're lapping the 5% comp last year with the $5 Cravings menu. Is that what drove it? And if so, isn't that a lever that you can pull pretty quickly while you're undertaking all these longer-term digital initiatives? Thanks. Greg Creed - Yum! Brands, Inc.: Sure, okay, so to take the KFC one first. I think, as I said in the call, in places like Russia, Central and Eastern Europe, Australia, New Zealand, Latin America, we had more than 6% same-store sales growth. Now, as we said, it was offset by businesses in France and the Middle East. I can assure you my discussions with Roger Eaton are all about how do we use repeatable model to drive underlying same-store sales growth. We talked about the delivery summit that we're going to hold in China. That was really a collaboration between Roger and Micky about Roger saying he does believe that there is more growth upside from delivery. We've got a test going in the UK right now on delivery where in, I think, about 89 stores are testing delivery, are seeing some early positive results to that test. So, I think using the repeatable model, leveraging the power of Yum! by, in this case, taking a delivery summit with the China team and then leveraging off what some of the strong markets, consistently strong markets, I mean, Russia, Australia, Central and Eastern Europe, they've consistently delivered way above 3% same-store sales growth. So, taking those learnings, converting into repeatable models; I can assure you Roger is very focused on all of those things. So, I feel good that we can take that number from 2%-plus you said closer to 3%, which would be a nice thing. On the Pizza Hut side, yeah, I think the value discussion was less about the value price point. It was about everyone sort of, I guess, living up to the value price point in the marketplace. And we've had some price points on television that not everybody when the customer goes to order online has been able to take the benefit. And part of what this agreement is about is getting ourselves aligned that everyone honors the price point that's on television or on digital or social. So, that will be a change. I don't want to get again into the actual details of the specifics, but I do like the fact that we'll have more of the system aligned behind what the message is that we're delivering in any particular time. Hopefully, that will happen in the short-term, but, as we said, we've got a lot to do on Pizza Hut. This agreement is really just a catalyst to get it all going. And, as we said, we'll hopefully see improvements later this year and obviously into next year. So, a lot of work to do, but I think we're doing all of the right things and the KFC agreement is the reason to believe. Keith R. Siegner - Yum! Brands, Inc.: Operator, given that we're closing in on the hour, we'll take one more question, please. Thank you.

Our final question will come from the line of David Tarantino with Baird. Please go ahead. David E. Tarantino - Robert W. Baird & Co., Inc.: Hi, good morning. Just a handful of clarification questions on the guidance for this year, so, David, I guess, first, what are you thinking, as you sit here today, about the FX impact on the year? Just so we can get an idea of what the reported operating income might look like, including the FX headwind. David W. Gibbs - Yum! Brands, Inc.: Yeah, going into the year, I think our expectations was around $25 million or so. First quarter came in a little bit lighter than that run rate, and forward rates would indicate something along those lines. David E. Tarantino - Robert W. Baird & Co., Inc.: Around the $25 million or lighter than the $25 million? David W. Gibbs - Yum! Brands, Inc.: Well, like I said, we were a little bit lighter in the first quarter, but I don't think we're that precise on predicting FX, but $25 million is probably a good number to use. David E. Tarantino - Robert W. Baird & Co., Inc.: Okay, great. That's helpful. And then, I don't think you confirmed your comps guidance for the year, but can you please confirm that it is still 2% to 3% is what you're thinking globally? And then, if that's the case, I guess, how are you thinking about the composition of that across the segments? Are you thinking – you obviously delivered that in the first quarter, but with a wide range of outcomes, with Taco Bell very strong and Pizza Hut weak. Is that kind of how we should expect to see it for the rest of the year or how are you thinking that will play out? David W. Gibbs - Yum! Brands, Inc.: There are not going to be any change to our guidance for the year, as far as individual brands and breaking it down. We're not going to provide that level of detail, but certainly you can see from the results from the first quarter and extrapolate from there. David E. Tarantino - Robert W. Baird & Co., Inc.: I guess maybe I'll ask it differently then. I guess how would you characterize the degree of difficulty in hitting that 2% comp guidance if Taco Bell comes back to earth, so to speak? Keith R. Siegner - Yum! Brands, Inc.: David, this is Keith. I think the point here is we continue to be comfortable, at this point in the year, with a full-year global same-store sales growth rate at the 2% to 3%. You can see there's different ways we can get there. This quarter was a good example. And we remain comfortable with that range of guidance for the full year. at this time. David E. Tarantino - Robert W. Baird & Co., Inc.: Okay, fair enough. Thank you. Greg Creed - Yum! Brands, Inc.: Thanks, David. Greg Creed - Yum! Brands, Inc.: Okay, so I want to thank everyone for being on the call. As I said, I think we've had a strong start to the year. And I'm going to leave you all with my bet for the 143rd running of the Kentucky Derby. It's Irish War Cry. So, if you back it and win, I'm a genius. If you back it and lose, I don't want to hear about it. Thanks for being on the call. A solid start to the year; we believe we're going to have a good year. We're very excited about the Pizza Hut Acceleration Agreement. And I think if we can continue to have the Taco Bell brand perform, the KFC brand perform and then we see the upside of the Pizza Hut Acceleration Agreement, I think the long term looks bright. I'm still very encouraged that the transformation of Yum! is well underway, and we will deliver on everything that we've promised. So, thanks for being on the call, appreciate it. Speak to you all soon. Bye-bye.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.