YUM - Earnings call transcript Q4 2017

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Operator

Good morning. My name is Kim and I will be your conference operator today. At this time, I would like to welcome everyone, to the Yum! Brands Fourth Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. Instructions]. [Operator you. Thank President Vice Relations, Strategy Corporate Keith of Treasurer. and Siegner, Investor

your begin may call. You

Keith Siegner

Good thank our Thank us. everyone, CFO. you, morning, Ken. and Gibbs, President call are David On today you Greg and Creed, CEO; our and our joining for

and from open we'll Greg questions. the Following to David, remarks call

Before you this I'd conference call remind started, we to includes get like that forward-looking statements.

should results statements. are uncertainties with statements that in our risk SEC. statements actual the and All conjunction to these could factors with from events to considered future subject materially the Forward-looking in statements release differ in our included be forward-looking and filings cause cautionary our earnings the

of on our basis section note addition, the find website, regarding Yum! non-GAAP refer today's the that following on Brands' presentation reconciliations to financial be may call. the In measures please Please used Investors call. today's of www.yum.com, of and to disclosures

the impact XXrd foreign sales of currency, results System the unless exclude week include First, the impact otherwise lapping of noted.

profit operating the the currency Special the growth exclude Core noted. Second, foreign XXrd include of lapping Items impact unless impact and otherwise but of week figures

be on Restaurant Lodging dates are JPMorgan the of remainder day. March David earnings X We be of will be conference call advised and available following Gibbs key earnings the at website. same conference on XXXX upcoming broadcasting future The included the on presentation for our this and will Gaming our is recorded We'd New at also Nevada. events: Roger Please in on this Management news Access aware quarter will any need Retail City. XX be America will KFC Eaton, with presenting in it XXXX you the This both in like Yum! Bank in live via ask conference being Technology of XXXX of May Conference website. March the to recorded. First XXXX, are & York Investor our released be on a Las you Consumer that the call be CEO if Forum playback. question, available Vegas call will

outstanding capital of to our fourth filing. be disclosures Group in the time XX-K quarter provided Form debt Lastly Restricted the pertaining will our structure at

to Now the to like turn Mr. call Creed. Greg I'd over

Greg Creed

was everyone. Keith full our you, good fourth morning journey. to quarter first The solid transformation year the earning a of Thank

For in reached of of as countries system delivered X% full XXrd the year, X% we new our growth, growth and XXX sales XX,XXX net a year the Yum! over in sales milestone and store is significant This restaurants XXXX with growth. territories. excluding closed global X% We've comprised same unit impact week. the the

are four our are potential and culture We with excited track with David Yum! and growth relevant you up of unrivaled about Distinctive this second capabilities. two initiatives. about our I and and the easy growth strategic Then will Today, brands long-term transformation brands follow talk talent. will on of too.

a deliver to right partnership to There your restaurant XXXX And brand easy excited and franchise to our better very unmatched our is the discuss he and make guidance initiatives. with operating having capability, at it easy brands. development While distinctive new towards progress results, a also XXXX transformation Grubhub. door. way begin relevant announce no and I'll I'm than with will our U.S.

and brands all brands the it existing U.S. more of making distinctive, in Bell's ordering easy. the to of pickup ordering come. rapidly will company, to XXXX delivery key online KFC the component by partnership to Grubhub nation's online and to mobile access important many easy partnership expand delivery all with customers is our and leading food ability with our U.S. is markets our Grubhub over This and As Taco cities. Grubhub in relevant Making offer offers a and

with technology-based system sales markets XX% and X% sales fourth to new This with standout market types Internationally, Starting on objectives growth brands. Russia several the XXXX for success year, that In distribution X% stores. XXXX is unit also had for and highlight the formats. XXrd utilization growth being feasible. are I'd and KFC, controlled row driven where through chain new new to the strong on and the quarter. the access week, market results. same in we the delivered quarter development offerings X% fourth store an been value the growth the Brazil, development same like costs X% focused with Now at unit XX% by operational to two, store grew net excluding agreements strong sales core. year of least sales new and marketing and increased XX% with and net Brazil. in store reducing also In development opened system strategies, by market grew Russia focus quarter and a our supply growth. sales on products the financially value supported significant on and The media ensure growth enhancing in coverage, on XX% growth same with the win market, focus Brazil value strong the has their is Unit Russia

Now sales to our on X% of from fourth still year the sales value where same the growth. consecutive store competitors quarter, finishing store with and US innovation the fourth but and traffic in with declining pressure we chicken same saw increased year

exciting and barbeque to XXXX way products. have Georgia off familiar flavor. with gives our [indiscernible] Hot flavors new flavor valued trends both other now an We our our innovation. and for mountain smoking and that on bullish the new value to [ph] year such our easy in showcasing existing marketing seen are female first bring the we the results disappointed This you’ve operationally around started already and with innovation with National and coronel quarter, coronel builds Gold While as

in being of plans image remodel our base nearly XXXX Additionally, asset we remodeling year stores continue current resulting asset base in with XX% end. another the at XXX by to

growth. consecutive fifth signs of will sales our about We our be positive and XXXX that year are for confident excited plan for this

X% begins demonstrating customer The hired deliver Pizza the quarter committed fast XXXX. new being to fast in XX⁰ employer choice experience ensuring fourth Next the thermal our the in drivers to strength a improving XXX,XXX sales through Pizza and Longlines drivers. hot, your of experience. delivery XX,XXX pizza the has momentum pouches same delivery remains remain is The of and delivery agreement transformation through times experience hotter. Hut, every committed Hut hot the stores in The with in the reliable we systems which enhanced the grew US, building and are the business. for

quarter and But significantly online are key the with user enhance is experience. experience platforms our over there XX,XXX car the now digital addition, through the toppers mobile reliable which the implemented enhanced during road. fourth on In new features

investment in innovation in partnership are hot forward in programs companies. We will encouraged to August confident Toyota announced thinking launched to both run. vehicle, at royalty we with by and bring the the long initial recently your the There are off innovation, another a pay Pizza doors and loyalty rewards Hut example with is Pizza trends in showcasing of our driverless

with great pleased We net is X% growth in positive fastest in to Asia align we Pizza meet to and growth reliable with and results. Hut global during one continues show strategy continue our the international of strides future growing we including and model the new for new for Indonesia The India. are trend. drive investment excited about markets casual this nearly international XXXX, are make unit Pizza Internationally, and success several in year US strong hot, pizza delivery repeatable to XXX will the and confident our get centric opening in continue and markets. with of to easier to experience the ventures net restaurants including fast our Fast Korea, to we Philippines it our asset better and in technology China value our make digital a segments the

menu the trailer products which nacho our drive originally to added products, Mexican and ability unlock dippable bold X% same we Finally, menu. Served so a we value it. excluding sales for unique buzz growth campaign at the where secret quarter. system growth innovate a Blueminatti net of ability week new value, Bell with fries our Taco menu [indiscernible] our abundant to launched innovative example can Web sales items. the highlight differentiator with society elevate apologize X% of Bell movie Fries XX in side of with Taco A grew value new strategically showcased a new to the perfect And to anyone key cheese, as nacho XXrd the $X unit to indulgence and belief, were quarter, to $X celebrate elevate. launched let's shouldn't Bells, around In of not a satisfying Taco is the stores the you the you the the ad to buck Taco and introduce X% Bell's are we warm

Taco vacation a and Taco announced for Bell. commitment consumers or X and all restaurant by Taco partnership As such was in to there announced when understand for easier to focused entered Internationally our international international record technology significant is with store ahead and an Grubhub, brand, includes importance it to restaurants XXX XXXX the becoming access curve initially a order we of recently potential remains and newly offerings both This Delivery technology great our countries Taco make milestone for setting restaurants. all of to Bell development in reached Taco and we on end the kiosks installing access. initiatives know side. self-servicing year further make either XXXX. of scheduled our We easy new Bell design order easy robust. with Bell pickup group domestic our Bell openings.

open digit of least see growth sales of is to making domestic In great markets. signed XX term. XX% on Taco In just strong XX months. long continue same single and Brazil model, additionally, to more development Brazil Bell success XX introduced the at great sales years India in new is fourth our We Taco. each Building at XXXX over store repeatable The the years beginning chicken agreements over it high naked both And consecutive XXX with international Spain innovation the we potential store launch in successful several in with growth we growth. units restaurants growth in opened same Canada, has country. than and in

us Chief [indiscernible] U.S. overseeing as technology marketing and Marketing joins marketing strategies digital and And as as Chief digital consumer U.S. [indiscernible] brand's responsible and building and talent. on initiatives. experience and the I'd as U.S. development customer joins like recent Now culture highlight additions to and is brands. made store talent Julie Taco specifically President unrivaled to driving new have and Officer responsible relevant Brand brand the food initiatives. Bell through KFC developing Officer a for innovation the and innovation, is responsible us for to we innovative [indiscernible] drive distinctive today's easy frictionless well executing for with moving additionally teams.

a towards year flow quarter The Gibbs. strong focus our great our our great and me our We are will to Officer, these transformation global others our brands, a many is I competitive summary, firmly growth iconic was strong it our to President is and David leaders Yum! Financial confident pleasure agenda welcome fourth able key successful In to are the because now Chief attract objectives. capabilities hugely achieving are culture. of results and introduce talents a we organization. advantage growth excited these behind our the they results. culture to four And gives forward believe and drive throughout the world-class so help to and catalyst and on

David Gibbs

progress discuss two our guidance, capability. you, forward unmatched initiatives Thank and will development growth results. XXXX morning bold and Greg restaurant I our our capabilities, and XXXX good operating franchise Today of towards everyone. transformation

X% year component dilution, First incremental media unit agreement. of operating growth store a within our of excluding X% each exceeded met our core am XXrd new to the spend We of XXXX XXrd we from system despite profit X% pleased headwinds growth Pizza X% week Hut full of refranchising sales and with growth results. guidance. of delivered all delivered guidance. especially Same report, and sales or week net transformation associated growth I lapping

full loaded planned for of timing and the for talk of rate do refranchising want of majority I the due year transactions. the I reform. quarter of of tax tax our and discuss Before largely year. international The repatriation than to effective lower excluding anticipated reflecting expected special was Both XXXX, to rates backend were earnings the timing fourth items about the impact our repatriation

subsequent of to most have XXth purposes, will one-time November Given require as that US part included repatriated any tax year end of toll US for date the foreign charge tagged be tax earnings our reform. industries this in to

part on anticipated tax than items million special tax is charged quarter the in charge the were toll include lower Our earnings our ex-special $XXX those did onetime for and tax rates fourth not included that for full recorded the that that XXth. Instead because repatriated year they of reform of November fourth in we was after US quarter.

at XXXX, growth expect to base of we any single digits. Now the looking high change underlying not operating do profit

However, operating will core affect profit growth XXXX. there which our are several items in

we the is seven our to difference a which is associated First, XXXX of profit and operating impact approximately and the as expect negatively dilution This operating with six similar timing to restaurants consistent expected between transformation refranchising savings result plans. G&A to profit percentage points. by

received upfront of is amortized significant the cash and required received does received. It fees gap revenue adjusting incentive business change be that from note the franchise important full to the timing to recognition to fees January of required implemented to the The change our of change solely driver accounting requiring flows. franchisees of life change recognition from our model, reflect Xst be is agreement. brands in Second win XXXX. a which recognize is the is this strength in payments over beginning of or made It's our the most upfront not will any fees Previously franchisees upfront franchisees.

we As All to we up we operating impact single forecasting strong expect this about underlying a to and operating application, want to be I negative growth is to our and result, high core because digits. flat. be profit. points percentage base two reiterate three continue in prospective operating to profit a of to profits expect Again, XXXX approximately are

XXXX However, I by be discussed. these will items onetime affected

Note XXXX to of Next, of XXXX, X net unit in currency. constant growth goal X% growth X we during sales bold from We XXX anticipate of our guidance million towards of X% is is CapEx long-term for same of growth on to run details this builds expect between in found our step million step section new a XXX XXX to be a X%. the the system website. will CapEx down X% in our is investor store $XXX CapEx growth XXXX and and of our X% and This systems be X our towards of can million. of beginning X% tracking sales our All XXXX XXXX. upon sales rate achieving and of

rate XX% reform mid we a an our anticipate effective XXs. of to historical approximately to upper result as XX% tax ongoing of tax to Finally, of compared rate

deductibility. on of While system the we largely the tax income but global provided. percentage that of is the low given new lower the our slightly intangible that XXXX the global is territorial intangible advantage move are tax able earnings. by our to the note I tax positive deductibility to benefit we a higher US taxable on of Please impacts range earned this is muted amount U.S. due low rate, anticipated take XXXX is given for U.S. somewhat expect The tax by interest cap outside on a income. as us of offset well tax a interest a applicability refranchising just which pretax higher in gains to tax drive be will as rate our primarily income This of new delayed the below to is tax high

to shareholders. growth more and make efficient Yum! designed now to to focused, franchise more to more our Turning brands transformation our initiatives deliver more

four sales long goal and accelerate helped big growth This achieving store X% drive key in why of our us on First, growth. a focus same new confidence focus we sales unit growth. term net is increased growth the system bold had capabilities positive our reason has sustained

XXXX we of $X becoming over franchise. the $X XX% fourth at ending proceeds quarter at equity our for XX% sold the during confident more exceed year to proceeds XXX units by on billion, refranchising We of from after tax in ability franchise to billion pretax our the Second, in remain franchised, journey least reach efforts. our and end

in of excluding G&A And expect way our the ended of goal of sales, company, as we as to of our more are more year efficient Each X% CapEx deliver our growth designed to $XXX representing to to Third, on these we beginning mentioned, items XXXX previously a initiatives run-rate with million. continue system X.X%. shareholders. special

we've XX.X $X.X million repurchased of an for billion $XX. average shares During at XXXX, price

our of $XXX share. paid returning total XXXX impacts to to $X.X and committed We million capital between for continue a to for to recognition and strategic evaluating in from we Further reform, a return in from repurchases were we with expect remain dividends. deliver both XXXX. shareholders $X.XX EPS billion partnership dividends revenue to least we returning we share pleased a of dividend and billion will the to Grubhub, XXXX. Additionally, XX% and tax billion a we to increase in capital quarterly $X.X in XXXX increasing our announce $X at share $X.XX that value XXXX our $X.XX After through

liquidity before our U.S. million additional is I investments fulfillment Now, drivers. ordering common to the details its drivers, want accelerate for Grubhub. primary moving delivery drive network, in to and diners, expected to with provide industry with expansion you of experience leading $XXX restaurants investment Grubhub enhance some more the to and in Yum! of the to restaurants further an stock, orders part acquiring on Yum! provide with growth

seat on access. brands long three make Yum! We unique are the term of to directors which aligns having partnership excited for our for to this strategies Grubhub includes easier a and with customers board

them. key capabilities, talked about our of and We've growth our growth you fueling decisions talked to two our Greg drivers. about to four Next and results

Now update I remaining unmatched restaurant on Bold with an franchise provide two. and want the capability. you to operating development

growth XXXX over units. opened we XXXX during development, restaurant bold First,

over three unit this a over new with YUM hours. than This the units new XXXX every net we last If new net nearly On single seven XXXX we over year basis restaurant one last the years two restaurants total than opened during is restaurants. XXX brands every combined. XXXX, you net day and open think across more about additional globe approximately means units it,

We to this are of that and commit make happen franchisees and very teams growth. the continuing this proud

speed, The At US KFC friendliness operating to and satisfaction, improving average KFC points. each capability. With XXXX and voice franchise above guest metrics standardized the program value. least unmatched among US, and to utilizes bottom moved perception measure better Next, competitors are in results from to at launch team since the feedback. overall near customer understand and needs percentage key operational XX on including a the participating of these of of metrics has taste, metrics

With to the significant with improvement pack fill up deployment. improvements with labor and house $XX operations back aid franchisees the the share be integrated attributed technology agreement of value from focus can the on up, XXXX and $X fill in lines to $XX chicken acceleration

and PM our Bell, Taco Regarding customer scores with growth in a delivering satisfaction and and future remain highest shareholders. pleased and are a made improved part with our while look X to our after XXXX up two percentage year. superior international customer and summarize, we more are improvements. become markets updating metrics these importance an confident our growing company efficient In scores satisfaction XXXX Pizza of points as guidance exceptional and at also of the restaurants continues more at GPS both towards the the - during testing tracking enhance the achieving over Hut we forward our focused, is franchised more satisfaction points record XX year. our full percentage high achieving day goal our We progress We customer understand to for pleased to drivers speed journey tracking, year over technology of experience. customer operational with customer our to you more delivery and transformation GPS to experience the To higher. first of deliver was throughout leverage experience are components with scores each prior

to Now are the take team happy questions. and I your

Operator

Instructions]. [Operator

line open. Palmer, comes first from question Your David your is

Unidentified Analyst

Eric Dave on Palmer. for Hi thanks is this

on Just second. a for development wanted touch to

you which accelerate have brands? mentioned feel Do you in development this or year increase in think an blocks your is you the I three think X% growth building I across development that could like is quarter? X on in Maybe commitments you expectation from to a your to growth place X%-unit if XXXX. as from much about you And refranchising this excited any touch that, contribute and how is how you’re contribute up then expect it commitments much follow the XXXX? to to Thanks. unit

Greg Creed

or the we units well on net XXXX so last making the we about progress the in the I quarter XXX a development itself opened up of a opened XXXX. we’re the compared to obviously excited for we’re is of growth record decade really as mentioned new Yes, quarter units XXX and last

a that’s of quarterly So increase units. XX

numbers. So, progress you making There numbers, can full year see the momentum development. behind is the we're quarterly on

getting how commitments this the about that the fourth this, of came to the along franchising As commitment. we refranchised Those until development far the with of quarter, being with XXX but done up close refranchising in the talked as refranchising we've all last development the into deals, lot hadn’t quarter. plays majority in repeatedly we're fact significant our units

up to the see think those the numbers to And because creeping us I sets development so years with starting multiyear of to there come a more reporting, benefits commitments we the but think this we're made period, several is still on that come. momentum to over we're from lot a front So, in commitments. typically development we're development the for

Operator

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

Your is open. line

John Ivankoe

I'll Hi I partnership coming if And relatively thank one. questions couple can small you I to QX do much. I only a just think if have Grubhub may. the of one very address on you small

or how Firstly, have coverage, Taco stands of what much systems KFC word the would Bell Grubhub another covered be could today. currently as percentage in Grub delivery of

different on with of for certainly to the these are longer-term and third lot platform a current Grubhub at starts the to interesting the And then or might with don't very board the an implementation of outsourced mind So, have points on Bell? be to Grub? on of you three of you Grubhub Taco the that plan KFC Grubhub. either partnership. there do point point delivery just Secondly, sales Do a your a and more opportunity those outsource that sale be reasons if inhouse perhaps model to augment you point think

Greg Creed

Let the take couple. me first

As got you U.S. discounts of with the know, in couple a we've KFC.

now, year, a -- the restaurants cover the think the of probably of just by moment, XX% Grubhub could a we'll perspective, that I delivery. couple right the From we're KFC not test will KFC deliver. of delivering So have about markets of end in all at with we're

we a and work obviously we expand those test, delivering. believe test, start have as those So, lot of

I think we've said will Taco Bell. in for the past that already we've got close the but delivering, capability to obviously XXXX Taco this Bells expand

So, obviously Bell and what really the number excited expand we're both presence that an closer customer. got of as about can in we've KFC our stores is Taco to is to that bring the we opportunity

KFC restaurants delivery, Grubhub On is our website ability Taco system, make obviously that the on just obviously Bell a and for apps Taco POS already was we for the this I at part get mentioned products the isn't we think our the question as quick ordering Hub ways And and that are partnership. apps of if can about very to joined with so. restaurants. website be Grubhub to one the Hut about the really KFC as orders that result pickup targets the the point both we’ll we're and it's to certain the work about where our to customer think consumers. brand unleash integrate Grubhub. mostly order will underway. ongoing work that And the And of I in do that. and critical into right them, agreements making about Grubhub last the a It Bell have to But systems, board coverage also the or all online POS of would the out that's relationship to you as and it and the this And they hit the possibilities power ratios to is a is working Pizza And are how seems process ongoing. diligently partnership order Grubhub aligning [indiscernible] as and are just, the now, and leverage of I Pizza conversations what our there the whether when

John Ivankoe

is just of for technological brands And it's I have, there timeline mean on difficult that? a the more lot you have years. edge marriage an do of been I feel a will, think over past like for if you that you couple

David Gibbs

agreement Yeah, there certainly reveal of done. an get the And to all this this go timelines yes big we’ll of system a and having we of think integrated is details POS work part sorts all schedules as that’s I on internal and with about all a of the this this is the CET Grubhub investment really the and but think the on for us and partnership journey for with great intention today technology announcement Board front. having a be unique we partner what is

Operator

& comes question next Oppenheimer Co. Your from from the line Bittner Brian of

Your line is open.

Brian Bittner

just ask then listen two at going both time them have I morning. in questions answers. your I’m of to John to the like good same and Thanks,

refranchising totality. ’XX and this beginning know falls be X% talked will of profits First, in in G&A you from to of you being dilution headwind these net the in neutral that said reductions process to and X would operating at ’XX of you about refranchising headwind

naturally So, XXXX question. your dilution reverses first that this still is all is mean year does a That’s thinking this that to just and where accretion? the

into guys. second guidance for simple US pretty The Thanks just operating Bell intense fit just comp how overall that we XXXX see for does environment. on guidance in its it given one, difficult the Taco and comparisons is a Yum! question as comp

David Gibbs

different there refranchising refranchising plays a is question, in of the in lot out or how on Okay obviously factors P&L.

more we’ve to which lower For as therefore their selling a Pizza are dilution proportion and cost. example, tend targeted we’ve got and gotten ahead Hut be volume in of terms less Pizza in Hut G&A have of stores a ourselves of lot

refranchising little bit we up refranchising and in that the Taco they on to the neutral balance more the comment sell is the flip the cuts out, we’ve have a KFC benefits volume this will G&A all off think So absolutely. and We’ve that organic between done math a I higher net being now to this to process point. G&A stores finish from but new still Bell and until -- got exercise all XXXX and probably this

in Now impact have XXX in quarter, on obviously there stores the was fourth we we’ll XXXX. sold an operating our profit

benefits So, between presenting savings net taking it the into and neutral will those see to math G&A dilution refranchising yes, start it's XXXX and headwinds in still the that’s versus exercise XXXX. as you factors the more said account, us for all a of

it but guidance brand but have comp we you the sales we’re On know just provided there. global comp the not wanted be Taco break by to guidance, to out Bell as going

Greg Creed

I say market seen Blueminatti competitive competitive the you’ve all and Taco has we at started we as fries a the and just with saw in $X. with launched the think have nacho just Yes, we Bell as would I $Xwhich that year been

a about So what to quick to marketplace obviously our like changes we’ve in about Bell response but for team Taco what competitive it’s obviously and the good they the I on XXXX. I marketplace is feel are calendar got

David Gibbs

on a and with through to will clarify we will a process I coverage the and on. just that once is covering good coverage. obviously turn for our comment, there be collect and And click expect Grubhub earlier very question there is about systems can we very get measure go the two coverage be all pickup quickly then that one Grubhub, in One there delivery was different want we back ways restaurants.

give general but overtime, relationships quoted a was share measures XX% of specific more by Greg I on more get specifics we'll think But that -- have of more the Grubhub. that I we think into as the We'll number. you is that We more with brand.

Operator

comes question next the from from Senatore of Sara Bernstein. Your line

is line open. Your

Sara Senatore

Yeah, you. Thank hi.

of questions a So couple please. just

and all benefits tax the the moving on there. is pieces First

total have And in is to there see Is was company with delivery then if reinvesting guidance? return It's to expected that something retained for you've from trying a for about I Yum! question of interesting contemplated franchises in it extent Hut just of of hear the level from from outsourcing much sort or which experience Grubhub your companies that I perspective? other understand some worked a work. You've to you're to of partnerships the Pizza partner partnership. do these just way. the like or so me an amount also shareholders. incrementality has inhouse to just was sort see need through any benefit to that initial certain that of And tax We

economics just to trying the for in franchises. understand the you So

Greg Creed

Sara. Thanks,

the savings, the and shareholders. returning to On tax

the you a Yum! know, into process we're As in cash flow of machine. transforming free

that generated. So, been haven’t cash have able own needs on meet we we with don't our cash to any

So to return shareholders. cash with plan is incremental reform the from transformation consistent the the to tax

that of terms franchises it set was cloud did part go have On the our to marketing what franchises, really and will we can our our economic up our commercial terms, to good going the the will for and We and for we options deal embrace a the our and and bring to scale have we ensured not understanding And that economics, in process the deal, franchises leveraged thorough it partners. Grubhub sales sure of incremental for we we us. understanding the into drive us them. deal, absolutely we franchise different make a think process economics. to profitability think we And and a this important have we're

David Gibbs

talking and and check. Yeah, restaurant they I test are manager is Orlando. extent the couple test good news got But seeing I believe to a I much [indiscernible] in believe the general they seeing they're higher going incremental think do in we Indianapolis, have do markets, in the that think moment. and Louisville, occasions they the to of think I was markets test the an to

in guys actually and by that benefit, seeing those that we're running we're and these think tests. this are girls daily the what early promises are on expanding encouraged I by markets, test encouraged a very delivery basis So,

Operator

the next Your line [indiscernible] comes of from question from Stifel.

is line open. Your

Unidentified Analyst

you, Thank just have of a good morning. questions. I couple

Grubb delivery which So, first you that to a more start having using delivery for add position non-Yum! competitive your allows investment Greg, chains are competitors concerned with Hut? stronger Pizza would

Greg Creed

an believe time pointed we certainly pick-up and which expand us. we’re coverage partnership investment Hub to lot coverage to at out and for customers. their more think know them for we management their David Grub as us access both spend opportunity obviously and gives allows opportunity a access about we’re we brands you of as know love the love you think to this We this easier expanding the their both We our on as we to use said has see you Grub model. get know I business and companies Hub obviously that the I to obviously team, that our delivery benefits making excited

David Gibbs

Pizza our as business Pizza Hut from of the are Hut seeing we’re brands consumers benefitting business. delivery, obviously And the benefitting included climb delivery a the Hut embracing are percentage Pizza

consumer's being in So, benefit very have our change with brands we’re excited from confident for model KFC this Taco about with that in today and the Hut Pizza Bell taste. delivering that we and one can

Unidentified Analyst

this, may David development Okay. stores with that were and but many fourth refranchised then the many Thank how how during missed the came I commitments -- have you quarter?

David Gibbs

mature say penetrated can opportunities, going market reveal a is less to into don’t other That’s with get put of single where commitments experience it obviously lot XXX% deals them. we in in. and it, they’re lot than deals one where every to number deal, our commitments not on through that start by And that to fully more a we’re you other follow get we development some you attach varies development the of a imagine to have we

commitments So, building these having these then constantly. I five a to very to next commitments, start are just releasing three to it’s isn’t typically significant amount, But don’t the and revise numbers to over years. them a sizeable stores want few

Operator

if Barclays. the Geoffrey Bernstein Your line next question from comes from

line Your is open.

Parekh Patel

if consumer, have A you is reforms the this the any the but research lot been Parekh standpoint of questions if done could to Jeff. had corporate asked guys about, wondering just of shift taking for Hi, a the ago maybe or in Thanks. would lower color might saw significant maybe, tax be helpful? we the where prices increase instances or consumers saw you couple benefits income, from of gas a any past in it have years past just or tax Patel for to analysis I Thanks disposable rate question. on be

Greg Creed

done research that ends pockets. more you have a their think They I in the specific any we the it, in to spend disposable with Yes, past think thing. is tax money up reform tend people around gas anything good with income their in the more I as lower people pockets prices but having haven’t so said

Operator

line comes Jason question Credit from Suisse. the of West last Your from

Your line open. is

Jason West

just that rec to for Yeah, little going sorry. excluding lower the the ’XX. to embedded is back than increase changes X% guide Okay, X guidance, EBIT are in it sounds a the which revenue like

said is clarify in that being that brands like terms the changing mean because in of I growth business. primarily refranchised of or is the in that view Just to the else are you anything want there kind your rate ’XX

Greg Creed

together hitting through revenue the I’ll six is guidance about profit. The you Well on headwinds refranchising of points, year-over-year that points, get We benefit Pizza a those things bit of Hut the agreements transformation from little headwinds. KFC and 'XX. are to for so to X to X operating again recognition are seven 'XX X actually to a points XX walk us lapping

transformed we've on the So, YumX you XX ends X what can with growth being for very how up to consistent effectively digits model. been that see high-single

Jason West

Okay.

have been X X a is So little in that than refranchising would 'XX less that maybe fair? to headwind

Greg Creed

Exactly, that's fair. Exactly.

Jason West

last then thing. and the Okay.

Greg Creed

that And from headwinds we've the percentage our dilution headwinds. that and in of talked was in to guidance. XXXX points outlined we X of clarify, points, terms as about refranchising to Just X

walk. 'XX So X X the the should versus to X to you give that in X in 'XX.

Jason West

you you're I again And and with then can a you issue the item? the back is issue that on And the sort or knowledge, non-cash a sense. make downside is for rate. our really how that your that tax type cash guess explain that just Okay of intangibles mentioned tax that holds

Greg Creed

a issue. complex. the a cash cut And that's tax is part it's of It fairly obviously

We're and tax to that is of applicability from it because to it's years. you offshore as on essentially, I get from from coming intangible delayed an digging system. of share it's as this assets. And about the forward. international to our coming mentioned that little but some to people it's not have tax territorial the obviously all bit. lot that will more assets, a we'll us a we trying into so, benefits better have go understand entity have tangible have And we offset talked designed for income

David Gibbs

us, much Greg. very you that Thank everyone joining and back for turn over Alright. to I'll with it

Greg Creed

Dave. thanks Yeah

thank you joining all today, for appreciate the it. on So, call us I

I summary, We've think of was the made QX our on that say transformation. strong I'd progress finish a solid year. great in

ensure very relevant everybody. joining us And of are excited we distinct, underlying think obviously remains strategic We're growth that easy. the I with keys about Thanks for strong our the business. in to partnership all and the Grubhub. that's

Operator

conference today's call. concludes This

You may now disconnect.

Yum! Brands (YUM) 8 Feb 182017 Q4 Earnings call transcript