YUM - Yum! Brands, Inc.

Operator: Hello, everyone. Thank you for joining us today for the Yum! Brands 2025 Third Quarter Earnings Call. My name is Sammy, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand over to your host, Matt Morris, Head of Investor Relations, to begin. Please go ahead, Matt. Matthew Morris: Good morning, everyone, and thank you for joining us today. On our call are Chris Turner, our CEO; Ranjith Roy, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from Chris and Roy, we'll open the call to questions. Please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the cautionary statements in our earnings release and the risk factors discussed in our SEC filings. Please refer to today's release and filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures. Please note that during today's call, system sales and operating profit growth will exclude the impact of foreign currency. For more information on our reporting calendar for each market, please visit the Financial Reports section of the IR website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. We would like to make you aware that our fourth quarter earnings will be released on February 4 with the conference call on the same day. Finally, I want to express my appreciation to those investors who have willingly shared their perspectives on our strategy and communication. Your thoughts are important to us. I will make myself available to listen to your views as well as share those with our management teams. Now I'll turn the call over to our CEO, Chris Turner. Christopher Turner: Thank you, Matt, and good morning, everyone. With this being our first call since David's retirement, I want to recognize his exceptional leadership over the past 5 years as CEO and his many strategic contributions throughout his remarkable 36-year career at Yum!. David will continue to serve as a trusted adviser through next year. On behalf of our team members, employees and franchise partners, I want to sincerely thank David for the lasting impact and strong foundation he's built as we carry Yum! into the future. As I take on the role of CEO, I've spent the last few months meeting many of Yum! stakeholders, including many of our leaders, Board members and largest franchise partners to better understand where Yum! is leading the industry and where Yum! has even greater potential. I've spent time in our restaurants, serving our consumers and listening to team members and general managers. Finally, I've met with many of our top shareholders to hear how Yum! can unlock even more value. Speaking with our incredible team has reinforced how important a strong culture and performance mindset are to driving robust results. Yum! invests meaningfully in our talent and gives employees opportunities to work across functions and brands providing Yum! with the most experienced and tested leaders in the industry. Combining the best leaders with the world's most loved, trusted and connected restaurant brands is a winning formula. It's no surprise that few companies are executing at our level with Taco Bell delivering industry-leading 7% same-store sales growth and KFC on track to add nearly 3,000 new restaurants on a gross basis around the world, which would set a new record for annual gross development for the brand. It is also clear there is a consistent theme that success in our industry depends on anticipating and adapting to changing consumer needs. That's a tremendous opportunity for a company like Yum! that already benefits from scale, talent and the ability to innovate. With this in mind, I see 3 areas where I'll focus additional energy to raise the bar on our growth. First, we are a consumer-first business, and we must stay as relevant to the next generation of consumers as we are to our core. Second, franchisees are the lifeblood of our system, and we can do more to leverage our global scale to strengthen their store-level economics. Third, Yum! has pursued a differentiated technology strategy that gives us unmatched operational agility and control. I want to extend those advantages across more restaurants to benefit consumers, franchise partners and team members alike. To this end, I recently announced a series of leadership changes. These included expanding the role of Taco Bell's CEO, Sean Tresvant, to include that of Yum! Chief Consumer Officer, with responsibilities that will include oversight of Collider, Yum!'s in-house consumer insights agency. Jim Dausch, Global Chief Digital and Technology Officer of Pizza Hut, was promoted to Yum! Brands' Chief Digital and Technology Officer and President of Byte by Yum!. Ranjith Roy, who goes by Roy, Yum!'s Chief Strategy Officer and Treasurer, was promoted to Chief Financial Officer. Roy had previously spent more than 15 years with Goldman Sachs, leading investment banking relationships for restaurants, food and tech businesses. We also intend to add a Chief Scale Officer to Yum!'s leadership team, who will focus on leveraging Yum!'s scale to maximize franchise returns and drive stronger restaurant profitability. We also announced this morning that we have commenced a process to explore strategic options for the Pizza Hut brand. Our objective is to maximize value for Yum! and position Pizza Hut and its franchise partners for greater success. Pizza Hut holds key structural advantages, strong brand equity, experienced franchise partners and meaningful scale, which give it a unique opportunity to reclaim the leading position in the highly fragmented pizza market. We believe a different approach, including but not limited to, a sale of the business would allow Pizza Hut to realize its full potential. More broadly, I'm encouraging the brand teams to play more offense through bold actions, particularly when we see opportunities to accelerate development. In that spirit, we announced our plans to complete the acquisition of 128 Taco Bell restaurants located across the Southeast U.S. in the fourth quarter. Buyout opportunities of this scale are unusual to come by in the Taco Bell system. This acquisition provides our team with an opportunity to improve and accelerate Taco Bell profitability, expand strategic leadership within the Taco Bell system and unlock significant unit development in the region. Of course, this acquisition provides immediate and significant EBITDA growth at an attractive multiple in the context of the Taco Bell system. I want to reiterate that there is no change in strategy regarding our asset-light model. Now let me turn to our third quarter results. Yum! delivered another strong quarter with system sales up 5% and core operating profit up 7%. Between KFC and Taco Bell, we've delivered 5% unit growth, 7% system sales growth and 11% segment operating income growth. At KFC, which represents 53% of our divisional operating profit, we delivered 14% core operating profit growth, driven by 6% unit growth and 3% same-store sales growth. Several KFC international markets are delivering exceptional results, including the U.K. market with same-store sales up 9% on 6% transaction growth and South Africa delivering 7% same-store sales growth on record youth engagement. Several markets like South Korea and Brazil posted double-digit transaction growth within the quarter. Turning to the U.S., which represents 12% of our KFC Global system sales, we have taken bold steps over the last 18 months to reengineer our strategy, bolster our talent and pilot new approaches. The new President of KFC U.S., Catherine Tan-Gillespie, has been driving KFC's comeback plan with new marketing tactics and products focused on increasing consumer relevance, which have led to a 2% growth in same-store sales this quarter. There is still a long journey ahead, but we're pleased with Q3's momentum. As a separate plank in the strategy, we're excited about the continued progress to refine and thoughtfully expand the Saucy pilot in the Southeast region. Let me briefly touch on KFC's unit development, which remained broad-based and energized by strong franchise engagement. I recently made a trip to Italy to visit our new franchisee, where I saw firsthand how critical having the right 3C partner is in driving powerful change. Since joining our system in 2023, our franchisee, COB, has doubled the number of stores and improved AUVs to $2 million. I was pleased to be there when the team unveiled its Italian flagship restaurant featuring 2 floors in Rome with prime real estate between the Spanish steps and the Trevi Fountain. Similarly, our new franchise partner in South Korea is delivering unbelievable results. That team reported their third consecutive quarter of double-digit sales and traffic growth and is set to have 5x the net new unit growth they had in 2024. Our strongest partners are expanding into new and adjacent markets, as is the case in Brazil, one of KFC's largest underpenetrated growth markets. Our highly capable 850-unit Latin American partner, Juan Carlos Serrano, is building commissaries and piloting more efficient asset formats, laying the foundation for sustainable, scaled growth ahead. Finally, I recently returned from China, where our largest partner, Yum! China, runs the most efficient and advanced restaurant operation in the world, leading to significant market share wins over the competition. Overall, KFC's development pipeline remains robust. White space remains abundant and our well-capitalized, capable and committed franchise partners remain growth hungry. At Taco Bell, which represents 36% of our divisional operating profit, same-store sales grew 7%, reflecting continued progress on the journey laid out at the Taco Bell Consumer Day to drive $3 million U.S. average unit volumes by 2030. Innovation, distinctive value offerings and digital engagement drove this remarkable performance. In the U.S., Taco Bell introduced innovation-led buzz like the Tony Hawk and Bad Birdie collaborations, compelling value like the $3 Grilled Steak Burrito and expanded its beverage platform with the launch of Refrescas and Baja Blast Midnight. Digital mix hit another record and digital sales grew 28% year-over-year. Next year, the U.S. team will add more weeks of crispy chicken, fries and beverages to expand everyday occasions, balanced with a refreshed cravings value menu and elevated guest experience. Turning to Taco Bell International. Same-store sales growth accelerated again with momentum building as the team executes against its magic formula and strategic priorities laid out at the Taco Bell Consumer Day in March. This quarter, the team expanded to 2 new markets, Greece and Ireland. During my trip to Europe, I stopped to visit our largest international Taco Bell franchise partner, Ignacio Mora-Figueroa and his amazing Taco Bell Spain team. I saw firsthand how the team keeps building relevance and scale. Shifting now to our goal of building the world's most trusted brands, stepping into the role of CEO has been both humbling and energizing. I couldn't be more excited to start this next chapter of Yum!'s growth with a renewed focus on what makes us extraordinary, led by our people and our culture. Our commitment to trust and connection extends beyond our restaurants. It's reflected in how we show up in our communities. In September, we celebrated Community Impact Month. Employees at all 3 of our U.S. campuses volunteered to help more than 15,000 people in communities across the United States. Our teams fought childhood hunger, packing more than 6,000 weekend meals for kids who need the most, donated blood with the American Red Cross, prepared food with local food banks and packed hygiene and laundry kits for those in need. Hundreds of volunteers touch thousands of lives. That's the power of Yum!, serving up good everywhere there's a KFC, Pizza Hut, Taco Bell and a Habit Burger & Grill. One month in as CEO, and I'm inspired by the commitment to excellence across our system from our franchise partners to our restaurant teams and leaders. Together, we are building on Yum!'s solid foundation to continue delivering strong, sustainable growth. And going forward, we will be laser-focused on accelerating growth around the world, backed by our 2 biggest brands, KFC and Taco Bell. With the dedication of our people, power of our brands and a clear strategic vision, I am confident that we are entering an exciting new chapter of growth and long-term value creation for Yum! and our stakeholders around the world. With that, Roy, over to you. Ranjith Roy: Thanks, Chris, and good morning, everyone. I'm excited to share our results today and to connect with many of you in the months ahead. It is an honor to transition to the CFO role, having served as Yum!'s Chief Strategy Officer and Treasurer. My connection with Yum! goes back more than 15 years. I partnered with Chris during my time at Goldman Sachs, where I was Yum!'s strategic adviser. And prior to Chris, I partnered with David Gibbs, Greg Creed and David Novak during their tenures, giving me a deep appreciation for Yum!'s enduring brands, franchise partners and talent. Prior to joining Yum!, during my time as CFO at Goldbelly, I guided the company from being a tech start-up to being a capital-efficient high-growth retailer, reinforcing my belief in the power of evolution. It's an energizing time to step into this role as Yum! strengthens its position as the global franchisor of choice. The QSR industry is evolving rapidly. Scale and technology are defining success around the world, and these shifts play directly into Yum!'s strengths. I look forward to continue working with Chris to advance our strategic priorities and drive sustainable growth for our franchisees and shareholders. I'll start with third quarter results before discussing Yum!'s balance sheet and liquidity position, the Taco Bell store acquisition and guidance for the year. During the third quarter, we grew system sales 5% with 3% unit growth and 3% same-store sales growth. Digital sales are growing quickly across our markets with Yum! reaching $10 billion in digital sales and digital mix of approximately 60%. On restaurant level margins, Taco Bell U.S. delivered 23.9% margins, 50 basis points higher year-over-year despite a 1 percentage point headwind from double-digit beef inflation. Taco Bell's restaurant margins benefited from strong top line growth fueled by, among many factors, the expansion of Taco Bell's category entry points like Crispy Chicken and Refrescas. Beef inflation will remain a headwind through year-end, though we take some comfort in beef prices declining 10% since exiting the third quarter. For KFC, the team delivered 13.7% restaurant-level margins, 120 basis points higher year-over-year, driven by significant improvements in both KFC U.K. and KFC U.S. margins. Moving on to expenses. Ex special G&A was $268 million, up 7% year-over-year as we lapped lower incentive compensation accruals in the third quarter of last year. Reported G&A of $282 million included $14 million of special expenses. And finally, third quarter core operating profit grew 7%, leading to ex special EPS of $1.58, up 15% year-over-year. Moving to development. we opened 1,131 gross new units globally, a Q3 record with KFC opening 760 units or a store every 3 hours. KFC's momentum remained broad-based and energized by strong franchise engagement. China, India, Thailand, South Korea and Mexico led the way, each demonstrating the strength of our playbook and the scalability of our brand. Overall, KFC's development pipeline remains robust. White space remains abundant and our well-capitalized, capable and committed franchise partners remain growth hungry. At Taco Bell, development accelerated this quarter with 74 gross unit openings, well above Q3 levels of last year. Taco Bell International continued to build momentum, adding 27 gross new units and successfully launching 2 new markets, Greece and Ireland. On the back of accelerating sales, we remain on track to deliver 100 international net new units this year, reflecting energized franchise partners, compelling brand marketing and improving unit level economics around the world. Early development plans for next year offer promising signs of further unit growth. At Pizza Hut, we built 289 gross units this quarter. We delivered gross builds across 31 countries with strength in China, the U.S. and India. We've been pleased with Pizza Hut's gross unit openings as the brand is a leader in new builds within the pizza category globally in all but 1 quarter over the last 4 years. However, gross builds have been partially offset by elevated closures through Q3, largely isolated to a reduction in footprint in a small number of markets, including Turkey. These closures were largely tied to specific franchisee matters impacting operational execution. Turning to technology. As we continue to work on making our restaurants more connected to drive growth and operational excellence across the Yum! system, Jim Dausch, our new Chief Digital and Technology Officer, will help accelerate the next phase of our transformation, but our focus remains the same, building the industry's leading restaurant technology platform that enhances guest experience, simplifies operations and strengthens franchisee economics built around easy experiences, easy operations and easy insights. I'll provide a brief update on the progress across these 3 pillars. Within easy experiences, we're creating more frictionless, engaging consumer journeys across our brands. At KFC, global digital sales mix reached 63%, supported by kiosk adoption and aggregator partnerships. Byte Commerce, our scalable and global web and mobile app ordering platform, continued to unlock the creativity of our digital marketing teams by enabling viral promotions or daily drops that drive high transaction velocity, such as Pizza Hut's $2 Personal Pan, Tuesday offer this quarter. Byte Commerce expanded to Pizza Hut Canada, Kuwait and France this quarter, building on earlier launches in Pizza Hut U.K., Mexico and Peru. Finally, Byte Connect, a product that streamlines order and menu integration with third-party delivery partners has expanded to KFC U.S., Taco Bell U.S. will add this service next year. Under easy operations, we are simplifying restaurant operations and giving teams better tools to deliver fast, accurate and friendly service. Byte Coach, which delivers AI recommendations to our store managers, was deployed to an additional 4,000 KFC restaurants internationally this quarter, bringing the total to more than 28,000 restaurants across the Yum! system. Beginning next year, we'll add further AI capabilities to Byte Coach to provide restaurant general managers individualized guidance to help improve store-level performance based on inputs from a combination of operations, consumer feedback and store audit data. Within easy insights, our data and analytics capabilities are providing better visibility and faster, more actionable insights across brands. In addition to building more AI capabilities into the Byte ecosystem for our franchisees, consumers and restaurant general managers, we are also excited about using AI at the enterprise level to build Byte in a more efficient manner. Currently, 1/3 of our developers are regularly using AI developer tools and realizing significant productivity gains. By early 2026, substantially all of our Byte software developers will be using AI tools to write better, safer and more efficient code for the Byte platform. Next, I'll provide an update on our balance sheet and liquidity position. Our capital priorities remain unchanged: maximize shareholder value through strategic investments in our business, maintain a strong and flexible balance sheet, offer a competitive dividend and return excess cash to shareholders. Net capital expenditures for the quarter totaled $73 million, reflecting $21 million in refranchising proceeds and $94 million in gross capital expenditures. We expect our net leverage ratio to end the year at approximately 4x, consistent with our commitment to hold leverage at approximately 4x. As announced in September, we completed successfully a $1.5 billion issuance of Taco Bell senior secured notes with a weighted average coupon of just under 5%. Proceeds were used to repay 2026 debt maturities and to prefund our Taco Bell acquisition. During the quarter, we repurchased approximately 244,000 shares for a total of $36 million, bringing our year-to-date repurchases to $372 million. As Chris shared, similar to the successful KFC U.K. acquisition last year, we saw an exciting opportunity to invest in the business and acquire 128 Taco Bell U.S. stores in the fourth quarter. The total cash outlay is expected to be approximately $670 million, largely financed with cash on hand. In 2026, we expect the stores we're acquiring to contribute approximately $70 million in incremental EBITDA and add 1 point to Yum!'s operating profit growth after the impact of depreciation and amortization, including reacquired franchise rights. Due to timing and modest transition costs, we don't expect this deal to contribute to core operating profit in 2025. Additionally, the Taco Bell team can step up U.S. equity development in this market beginning in 2027. Over the long term, we anticipate profit growth for this estate to exceed Yum!'s long-term growth algorithm. As Chris mentioned, while retaining our asset-light strategy, we are investing where we see outsized strategic benefits and financial returns. Now let me share our latest outlook for the balance of the year. As you heard from Chris, both KFC and Taco Bell are taking share from our competition. We expect KFC to achieve record gross unit openings on a full year basis and Taco Bell to deliver strong international development. At Taco Bell U.S., despite the impact of beef inflation, we expect our full year restaurant level margins to fall within our guidance at 24%, with global reported margins landing slightly below the U.S. level. We expect Q4 ex special G&A to grow by a mid-single-digit percentage rate year-over-year, finishing the year in line with our full year guidance. To summarize, KFC and Taco Bell, which make up roughly 90% of our divisional operating profit, continue to perform exceptionally well with sales momentum that has continued into Q4. Together, we expect these brands to be on track or ahead of our original full year plan for unit growth, sales growth and core operating profit growth. This performance is further backed by a strong execution of Byte and disciplined G&A management across the enterprise. Below the line, we expect full year interest expense to land in the range of $505 million to $515 million, incorporating the impact of our recent debt issuance. Lastly, at current rates, we expect FX to represent approximately a $15 million tailwind to reported operating profit in Q4. Finally, turning to our Pizza Hut division. We remain focused on strengthening business performance. That said, as we prepare the business for a potential transaction, our Q4 results may see some impact from actions involving isolated franchisee situations. Taking this and Pizza Hut's year-to-date performance into account, full year 2025 Yum! performance may land slightly below our algorithm. We will record expenses tied to the strategic options review as a special item. Since this is an active process, we will not be providing further comments on the status of our review. In closing, we remain focused on continuing to deliver relevant value, distinctive innovation and rapid digital transformation, the combination that keeps us resilient regardless of macro conditions. We are confident in the strength of our strategies, the agility of our franchisees and the power of our business model to drive sustainable growth over the long term. With that, operator, we are ready to take questions. Operator: [Operator Instructions] Our first question comes from David Palmer from Evercore ISI. David Palmer: Great. Congrats to everybody on their promotions and appointments. It's cool to see Sean getting more responsibility in a way you're bringing back the band together with Sean and Scott, probably touching base more on the global KFC brand. I wonder how you're thinking about the opportunities and must get rights for KFC now that perhaps Pizza Hut may not, after this review, be the focus area or the problem area that it was for the company. KFC might be a focus area for Sean by default. And so I just wonder, maybe it's worth giving a little bit of a review of what he will be and Scott will be thinking about for that brand. The U.S. chicken market is competitive, but KFC's begin -- it looks like a bit of a turnaround. What can solidify that turnaround? And it looks like the U.K. is doing great. Canada slowed a bit. Any sort of review of KFC would be helpful. Christopher Turner: Yes. Thanks, David. Obviously, KFC, our largest global brand and an incredible powerhouse, in particular, outside of the U.S., where we've seen tremendous growth over many years, modern, vibrant, relevant QSR brand in so many markets, opening a new restaurant every 3 hours. That's the surest sign of health in a restaurant brand. And you talk about the leaders there. Scott was the President of Taco Bell U.S. working closely with Sean, right before our Taco Bell Investor Day earlier this year, Sean -- Scott made the move over to take the CEO position in KFC Global. So you can be assured that he is bringing many of the big ideas around brand relevance from Taco Bell, digital growth and relevance to consumers, food innovation. He is bringing many of those ideas over. Of course, that Taco Bell Investor Day highlighted how Taco Bell was focused on driving AUV growth. They laid out a plan from $2.2 million to $3 million in 2030, and Scott was part and parcel of building that plan. So you can imagine he's going to be thinking the same way in KFC globally, sustaining the unit development momentum and continually ensuring our brand is relevant to consumers. You saw the numbers in KFC U.K. this quarter, plus 9 same-store sales, really incredible results there. Turning to the U.S. We did a lot of work over the last couple of years. The KFC brand, we want to be on a better trajectory in the U.S. We really assess what it would take. We did a lot of testing and investigation. We think it starts with brand relevance. And that's why we put Catherine Tan, one of our biggest marketing thinkers, previously the Global Chief Marketing Officer for KFC into that role. Early days on the turnaround, but we're pleased with the green shoots. You saw them take a different approach to social marketing with the launch of Spicy Wings and Wedges. We got great engagement, brought a lot of new consumers who hadn't engaged with the brand in more than a year to KFC. So a long journey ahead, but we're pleased with the progress in KFC U.S. Operator: Our next question comes from Dennis Geiger from UBS. Dennis Geiger: Great. Congrats, Roy and to the others on well-deserved promotions. I wanted to ask a bit more about the sizable outperformance at Taco Bell, in particular, relative to the industry. And perhaps maybe sort of any early look into how you're thinking about how that momentum rolls into next year, given, I think, Chris, some of the comments you made about what sounds like more weeks of crispy chicken, fries, beverages. It seems like some news on the Cravings menu, maybe the guest experience. Any additional insights as we kind of look to next year at that momentum continuing? Christopher Turner: Yes. Look, the Taco Bell business continues to take share in the U.S. A lot has been written about the consumer. We're not seeing consumer pullback in the Taco Bell business. We do think the consumer in the U.S. is cautious, but incredibly resilient. And the consumer is telling us that in Taco Bell, they are looking for 3 things: First, craveable food; second, a convenient and easy experience; third, unbeatable value. And Taco Bell provides the combination of those 3 in a way that no other brand can. So if you look across Q3, you saw Crispy Chicken, you saw Nacho Fries, you saw beverages with Baja Blast Midnight. So you add those to the tremendous core that we have, the craveability is clear. Convenience, fastest drive-thru experience in QSR. Voice AI stores were up 14% from the previous quarter, continue to drive the digital journey at Taco Bell, which supports a convenient experience. And then, of course, Taco Bell has always provided the best value in QSR. Go to the Cravings value menu, you can find plenty of items below $2, $3, tremendous items or go to the Luxe Cravings Boxes, $9, it's the only value meal in QSR where you'll find strong innovation. So it's that combination, coupled with the Taco Bell buzzy brand that is resonating with consumers and delivering what they need. And as a result, we saw growth across all income bands, and we saw more younger consumers and more families coming into the brand during Q3. Looking forward to Q4 and beyond, it is really that broad-based set of strengths, all of those drivers and those factors that give us confidence as we look to 2026 for the brand. Again, we are on track or ahead of our plan that Sean laid out to get to $3 million AUVs by 2030, and you'll continue to see those layers come to life in 2026. Operator: Our next question comes from Danilo Gargiulo from Bernstein. Danilo Gargiulo: Chris, thank you so much for supporting the Italian economy. I wanted to ask you a question on your strategic priority. I mean you mentioned strengthening the franchisee store level economics. And in a moment, we were seeing the deterioration of 4-wall EBITDA in the restaurant space and potentially even more labor headwinds coming in with the tighter labor migration policies. I mean, it could be quite meaningful to see stabilization and improvement into the 4-wall economics for your own franchisees. Now usually, the best results are coming when incentives are aligned and responsibilities are shared. So I was wondering if you can share, first of all, what goals you have in mind in terms of like the hurdle EBITDA growth for your own franchisees, the time line for that and how you're planning to incentivize your teams along that? And then finally, what kind of levers do you see to strengthen the franchisee P&L? Christopher Turner: Yes. Thanks, Danilo. The lifeblood of our system and our unit development growth is franchisees and strong unit economics. We have a large number of markets where we have incredible paybacks. You'll hear our franchisees talk about 2- to 3-year paybacks in our biggest development markets. So we want to sustain the incredible returns that we see in those markets. But we've got other markets where there is white space, opportunity for unit growth that we can unlock by getting stronger unit economics. And we think the keys to doing that are leveraging Yum!'s global scale. Now look, we do a good job leveraging our scale in many places today. Our RSCS partners in the U.S. leverage our purchasing scale across all 4 of our brands in the U.S. But globally, we can do more to leverage our supply chain scale. That's why you see our Yum! global supply chain team coming together using that scale to help drop dollars to the bottom line for our franchise partners. Our Byte acceleration can be a part of this. We know we've got to get Byte into more international markets faster, that helps to drive both top line and bottom line growth for franchise partners through the productivity that Byte enables. And so those would be the kind of levers. And this is also in part why we announced the creation of the Chief Scale Officer role to give us a focused leader who is helping to make it easier for our franchisees to plug into that scale around the globe. So that's our focus, and the outcome should be strengthening or accelerating unit growth over the long term by unlocking those white space opportunities. Operator: Our next question comes from David Tarantino from Baird. David Tarantino: Chris, my question is about your strategic outlook. And I was curious to get your thoughts on how you envision the growth profile for Yum! if you were to sell the Pizza Hut business. Do you think this leads to a faster ongoing growth profile for the company? I know we can do the math on that looking backward, but just wanted to get your thoughts on how you think about it looking forward. And if you could also, as part of the answer, comment on whether you would be interested in making any other portfolio moves longer term, such as maybe adding another growth asset to the portfolio? Christopher Turner: Yes. Thanks, David. Look, Yum! is going to remain laser-focused on growth in all of our markets around the globe. Our 2 biggest brands, KFC and Taco Bell, nearly 90% of our global divisional operating profit. They are the ones that drive the bulk of our growth, and they will continue on the trajectory that they're on now. KFC will remain a strong unit developer. We think all of the scale initiatives that we just talked about will help us to unlock additional growth there. And then, of course, we talked earlier about Scott and his focus on driving AUVs and same-store sales growth using many of the levers that were employed at Taco Bell day in and day out in the U.S. Taco Bell U.S., we just talked about the drivers of its strength in Q3 and beyond. Taco Bell International, plus 6% same-store sales growth in Q3, you dig into some of those markets, we're seeing tremendous same-store sales strength in a number of Taco Bell international markets. And of course, I was on the ground in Spain just a few weeks ago, our largest Taco Bell international market, where we see the continued evolution and building scale in that brand outside of the U.S. So I think all of those things lead to that journey toward accelerating Taco Bell international unit growth. So those are all the factors underpinned by Byte that should allow us to continue to sustain or accelerate growth in those 2 big brands. From a portfolio standpoint, it's our job to constantly think about the portfolio. Obviously, we announced the strategic review today. No other changes at this time. We're going to be focused on completing that strategic review. Operator: Our next question comes from Andrew Charles from TD Cowen. Andrew Charles: Taco Bell obviously continues to be stellar performance this quarter. Just love an update on Live Más Café now you've integrated this into one of your stores. And in particular, what needs to happen for that to be rolled out more broadly? Christopher Turner: Yes. We're excited about the bold bets that we made across brands last year. A couple of those focused on the growing beverage space. Quench across 3 markets in KFC. We'll continue to add new markets there. But on Live Más Café, we think there's a big opportunity for Taco Bell to both strengthen its attachment on beverages, but through Live Más Café, add a new consumer use case, which is the destination beverage visit. we started with Live Más Café in San Diego. As of now, we have 13 that are open. We are headed toward about 30. That's our pilot group. We are seeing good consumer response in these stores. We're very pleased with how Live Más Café is performing. Of course, we want to see it at scale with those 30 units. But assuming we get the kind of results that we expect to see in that pilot, you could expect us to lean into Live Más Café growth around the system. That's one of the drivers of the long-term growth plan for Taco Bell. We are already getting benefit for the entire system from Live Más Café. So the Refrescas that we talked about in Q3 across the system, that was a lift and shift from the piloting that we did in the first Live Más Café. So we will also be working to bring benefit from the Live Más Café effort to the entire system even before the rollout of the cafe. Operator: Our next question comes from Christine Cho from Goldman Sachs. Hyun Jin Cho: Chris and Roy, congrats on your new roles. You did reiterate your long-term goals, but is 5% kind of still the right anchor as you think about the underlying unit growth ahead? What are some of the major factors that you're watching for that could impact the pace of expansion going forward? And where do you see kind of the most notable white space opportunities globally, both in a market and a brand perspective? Christopher Turner: Yes. From a development perspective, our development trajectory remains strong. So far this year, we've had 95 countries with development versus 90 at this point last year. KFC gross is ahead of where it was at Q3 last year. So gross development, I think, is the top sign of health in a franchise system, and we said we're on track for a record year this year in KFC gross development. Taco Bell net new units are up almost 30% versus last year. So it reflects the trajectory that we have in Taco Bell, both in the U.S. and internationally. Of course, we want to sustain and accelerate on both fronts. The lifeblood of this is strong unit economics. And as we shared earlier, we think through stronger unit economics in markets with white space, we can sustain and/or accelerate that path. We shared a couple of examples of where unlocks have occurred in KFC. We talked about Italy. This demonstrates when you get focused on having the right partner and focused on AUVs and unit economics, you can get an unlock. In that market, we got a couple of competitors that have significantly more locations than we do. But in the 2 years since we changed the partner, we've doubled the unit growth, on a great trajectory. We're now opening the flagship location, which will further sustain. Korea is another example. We shared the example in South Korea, where a change in partner has dramatically changed the pace of unit growth. When you step back, we shared, for example, at KFC, we think there can be at least 75,000 KFCs around the globe. Honestly, there's white space opportunity in just about every market for KFC. Ranjith Roy: I'll also add, Christine, on the -- we make a lot -- we talk a lot about KFC development. But on the Taco Bell side as well, if you look at what happened in the most recent quarter, acceleration in same-store sales growth globally which gives us a lot of faith in the pipeline that we see for Taco Bell International in 2026 and beyond. And you look at the acquisition we're making in the Southeast United States because we actually see opportunity for white space for Taco Bell in the U.S., and this is a step that we're making in that direction. Operator: Our next question comes from Brian Bittner from Oppenheimer & Co. Brian Bittner: Chris, I'd just like to go back to the announcement of Yum! initiating that the review of strategic options for Pizza Hut. I know you can't obviously speculate on the potential outcomes. But can you maybe walk us through the catalysts that culminated in the company making this announcement today? Is it as simple as you stepping into the CEO role and this being a part of your vision to unlock value? Or was this something in the works for a while? Just additional thoughts on the steps that got us to today's announcement on the formal review would be helpful. Christopher Turner: Yes, Brett. We are always evaluating what is best for each part of our business. Let me start by reiterating a few things about Pizza Hut. It is an iconic global brand that has incredible strength. It's got the best tasting pizza in QSR. It's got a global footprint, well north of 100 countries. It has an amazing set of franchise partners in markets around the globe. It's got meaningful scale. And that's translating to strong performance in a number of our Pizza Hut markets. In fact, if you look at gross development, if you go back over the last 4 years, Pizza Hut has had the highest gross unit development in the pizza QSR space in every quarter for the last 4 years, except for one. There's a lot of amazing strengths that Pizza Hut has. That said, we're always focused on what is best for the brand and what is best for our franchise partners. And in that spirit, we do think the business can be positioned for even greater success in the future. And in some markets, there may be a multiyear effort that is required to reposition it as the leading pizza brand in those markets. And it's possible that those efforts may best be done under a different structure, potentially under outside ownership. And so that's what we'll be testing as we go through the review of strategic options. And that's why we're initiating that now. It's obviously been a very thoughtful process that has led us to this announcement. We can't speculate on the exact timing of how this plays out. We'll evaluate all of the options and all of the paths, and we will share more as we have something definitive to share. I know there's going to be lots of questions about that process. But at this time, we just can't provide further comments. Operator: Our next question comes from John Ivankoe from JPMorgan. John Ivankoe: The purpose of the large Taco Bell franchisee in the Southeast and your specific mention of them being mature and having growth opportunity in the market, got me thinking about some of the large refranchising that happened 20, 25, even 30 years ago when you guys came out of PepsiCo way back when. And just a question of -- it's one thing to kind of have the best growing current franchisees over 20 to 30 years, but maybe thinking about some generational steps that could potentially happen for the next 5, 10, 20 years in terms of really restarting growth. We're driving growth in a number of your different businesses, not just around the U.S., but also around the world. So the question really is what kind of opportunity that we may have, maybe taking some of these very successful legacy businesses that have just been in business for so long, 20, 30 years, maybe finding some other partners that are committed not just to running a great business, but growing a great business from a unit perspective. Do we have opportunity to optimize? Christopher Turner: Yes. John, let me start. We remain an asset-light business that grows through franchise partners. Our franchisees are the lifeblood. They do an incredible job operating around the globe, 1,500 franchisees, the vast majority who are well capitalized, capable and committed to our brands. Let me just start with that context. What you've seen here is an opportunity in a geography where we thought -- our data would say there's an opportunity for a lot more Taco Bell stores. And so we thought this was an opportunity to make this acquisition. We can help to unlock unit development in the region. Of course, it comes with the immediate EBITDA lift as we look to 2026 and immediate operating profit growth as we go to 2026, and it solidifies our operational capability, which already is very strong in Taco Bell U.S. And of course, that's an important part of how the overall business operates. We do -- I'll just give one example, innovation testing in our equity estate is really, really strong and a really important part of our food innovation process at Taco Bell. So I think this is a unique opportunity. There are other instances where we are initiating some bold actions through our equity stores. In Saucy, we took on the first store, we'll be moving to a little over 10 units in Florida. We're making those investments because we think that's the right thing to do to understand and pilot that concept. And then, of course, as part of the Live Más Café journey, we're -- we've invested in a few of the Live Más Café expansion stores. So it's a very strategic use of that capability. But at the broadest level, we remain asset-light, and we will grow through our franchise partner. Matthew Morris: Operator, we have time for one more question. Operator: Our last question today will come from Jeffrey Bernstein from Barclays. Jeffrey Bernstein: Great. Roy, I just had a question for you. In a franchise model like this, a lot of the focus comes down to the G&A spend. I'm just wondering how you think about that line item. It's currently, I think, 1.7% of system sales, I think you're among the leaders in terms of managing it at a very low level. But I'm just wondering your thoughts on the biggest opportunity to either double down on certain investments, maybe spend a little bit more versus perhaps curtailing elsewhere. Just wondering how you think about that G&A line item. And I ask that just obviously, you're new to the role, but as we think about 2026, is there any reason why the long-term core operating profit growth target of 8% would not be reasonable as we think about it today? So just love to get your broader thoughts. Ranjith Roy: Jeff, that's a great question. 4 weeks into the role, I will admit that I don't know exactly where all the G&A is buried, but I will tell you my observations on how we've managed G&A in the past and the limited amount of change that we see from our strategy going forward on G&A. First of all, I'd observe our G&A growth overall in the past 2 years has been minimal and very disciplined. Second thing I'd observe is we're on track for mid-single-digit G&A growth this year, including incentive comp resets. So we've been very disciplined this year on G&A. Third, I think we'll continue to be disciplined as we navigate through the strategic review process. And as that process plays out, we'll come back with more guidance. But at this point, you should expect no change to our discipline on G&A, which we've been managing while making investments into the business in terms of growth. Christopher Turner: Great. Okay. Well, I think we're at the end of the call. So thanks, everyone, for joining. I'll just close with a couple of thoughts. I want to reinforce Yum! remains laser-focused on growth powered by our iconic global brand. Yum! provides our investors with exposure to KFC, the leading growth brand across international markets, which delivered 14% divisional operating profit growth this quarter, combined with Taco Bell, one of the most exceptional brands in the U.S., which is providing durable, defensive long-term growth via sustainable market share gains. We will continuously raise the bar. We want to keep our brands relevant. We want to elevate franchisee unit economics to unlock even more development, and we'll continue to deploy Byte. And all of that is underpinned by the best talent, the best franchise partners in the industry. In short, we're tremendously excited about our future. Thanks, everyone. Operator: This concludes today's call. We thank everyone for joining. You may now disconnect your lines.

Operator: Hello, everyone, and thank you for joining the Yum! Brands 2025 Second Quarter Earnings Call. My name is Sammy, and I'll be coordinating your call today. [Operator Instructions]. I would now like to hand over to our host, Matt Morris, Head of Investor Relations, to begin. Please go ahead, Matt. Matthew Robert Morris: Good morning, everyone, and thank you for joining us today. On our call are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the cautionary statements in our earnings release and the risk factors discussed in our SEC filings. Please refer to today's release and filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures. Please note that during today's call, system sales and operating profit growth will exclude the impact of foreign currency. For more information on our reporting calendar for each market, please visit the Financial Reports section of the IR website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. We would like to make you aware our third quarter earnings will be released on November 4 with a conference call on the same day. Now I'll turn it over to David. David W. Gibbs: Thank you, Matt, and good morning, everyone. Thank you for joining us today. Before we dive into this quarter's results, I want to acknowledge that this will be my final earnings call as CEO before I officially pass the baton to Chris on October 1. As one of the biggest champions of our brands and having personally recruited Chris to Yum! many years ago, I am thrilled that the Board unanimously elected Chris as our next CEO, yet again demonstrating the strength of Yum!'s internal talent. I couldn't think of a better person to lead this company. To ensure a seamless transition, I will serve as an adviser until the end of 2026. Now turning to the second quarter results. I'm proud that Yum! Brands delivered another strong quarter in a tough consumer environment. System sales grew 4%, driven by strong unit growth at KFC International and persistent market share gains at Taco Bell U.S. with both businesses delivering positive transaction growth. Yum! delivered 386 net new units, including 871 gross openings, reflecting the enduring appeal of our brands and the strength of our diversified system. This quarter, Yum! achieved a new digital sales milestone with digital mix reaching 57%, 7 percentage points higher year-over- year. Notably, KFC's digital sales grew 22% and mix climbed to over 60%. Digital sales growth is undeniably due to the continued expansion of digital channels and the global rollout of Byte in which we made additional progress in international deployments and new service offerings across our U.S. portfolio. We also made strides with expanding AI-driven personalized one-to-one advertising for which having a high digital mix will become a massive strategic advantage. I'll now discuss the strategic drivers that underline our commitment to being the most loved, deeply connected and always trusted brands for consumers around the world. Afterwards, Chris will provide a deep dive on our second quarter results, balance sheet position and capital strategy, followed by our current outlook for 2025. Starting with KFC. KFC contributes 52% of Yum!'s divisional operating profit with KFC International accounting for 85% of our international operating profit. KFC International grew same-store sales 3%, driven by strong performance in key markets, including South Africa, Spain, Canada, Japan and the U.K. Even with a solid overall top line performance, we have opportunities to improve performance in underperforming regions such as the U.S. and parts of Europe, where challenges stem from gaps in value perception, inconsistent consumer experience and innovation that has not fully resonated with consumers. As a first step, KFC U.S. recently introduced the Kentucky Fried Comeback campaign aimed at striking the right balance between innovative, relevant products and strong consumer value. In Europe, the teams are focused on delivering distinctive product offerings and meaningful partnership activations that resonate with local consumers, along with tailoring individual and snacking occasions in the EUR 3 to EUR 5 price range. On March 1, Scott Mezvinsky assumed the role of KFC's CEO, bringing fresh energy and a clear vision for the brand's next chapter. Scott has articulated a compelling strategy focused on energizing the brand, enhancing its cultural relevance and deepening consumer engagement worldwide, leaning on his findings at Taco Bell. A key pillar of his approach involves modernizing the brand to attract younger consumers in part by leveraging local standout innovations like the Korean barbecue chicken sandwich inspired by Squid Game in Spain, a product the team has recently introduced in select additional European markets as part of ongoing efforts to learn and scale regional successes. Scott is encouraging boldness and creativity in innovation and marketing. As an example, the United Kingdom elevated KFC's visibility and appeal with a younger audience through successful launches such as the Dirty Louisiana Burger and strategic cultural partnerships like Limitless Live, the U.K.'s largest free music event, leading to a 5% increase in same-store sales. Moving to Taco Bell, which accounts for 37% of our divisional operating profit, with Taco Bell U.S. accounting for 82% of Yum!'s U.S. profit. Taco Bell delivered 4% same-store sales growth, outpacing the limited service category in the U.S. by 4 percentage points. I'm thrilled at the progress Taco Bell made to elevate and broaden its menu with new occasions, including its focus on crispy chicken and an expanded beverage lineup. This quarter, Taco Bell reintroduced crispy nuggets and unleashed full flavor and full-size versions of Crispy Chicken in the innovative new items to start Q3, such as the Crispy Chicken Taco and Crispy Chicken Burrito. The success of growing our chicken sales layer is undeniable with total chicken sales up over 50% in 2 years. We expect the momentum in chicken to continue as Crispy Chicken becomes a permanent platform in 2026, while the momentum behind new occasions will continue with shredded beef later this year. As for beverages, the team has bold ambitions to make beverages as iconic as their food, aiming for $5 billion in total system sales by 2030. At the very start of Q3, they took a significant step with the release of a nationwide lineup of flavorful Refrescas and announced plans to expand its innovative beverage concept, Live Mas Cafe. Despite executing an unprecedented level of limited time offer innovation, Taco Bell's order accuracy has improved and maintained exceptional drive-thru performance in the U.S. Internationally, Taco Bell's momentum remained robust. Same-store sales grew 5% in Europe with double-digit increases in Canada and India. Moving on to Pizza Hut, which accounts for 11% of Yum!'s divisional operating profit. In the U.S., innovation with Cheesy Bites and Ranch Lover's Flights mixed well with existing consumers, but an insufficient value message amid a competitive value landscape resulted in transaction softness. The team has learned from this and going forward, the U.S. team is establishing compelling value propositions, including the recent launch of Wing Wednesday and Tuesday's $2 personal pan pizzas. Following the recent new mobile app launch this year, the team plans to double down on mobile app acquisitions to start the third quarter. Internationally, Pizza Hut grew same-store sales 2%, driven by the Middle East recovery, positive transaction growth in the U.K. and strong performance in South Asia. Habit Burger and Grilled year-over-year system sales trends in Q2 declined 1%, consistent with the trend observed in Q2 last year. The decline reflects continued softness in consumer demand with some impacts associated with the recent events in the L.A. area. The team improved this value offering through compelling weekly offers to our CharClub members and the launch of Gotta Habit Meal Deals in June in select markets priced at $6, $8 and $10. Encouragingly, this emphasis on brand-right abundant value lifted sales starting in June, and that positive momentum has continued into July. Looking ahead, I'm optimistic that increased marketing investments will further support sales momentum and build on the traction we're already seeing. In fact, recently, for the second year in a row, Habit has been ranked the #1 best burger and #1 best side for our Tempura Green Beans and now it's been named the #1 best fast casual restaurant by USA Today's 10BEST Readers' Choice Awards. We continue to push the boundaries of what's possible with bold strategic initiatives to keep us ahead of the competition and future- proof our business. At Taco Bell, Live Mas Cafe is part of the team's bold bet to go after the $25 billion beverage category in the U.S. and will bring a new layer of hospitality and culinary creativity to the brand. The cafe was inspired by Gen Z's love for curated, customizable drinks and offers over 30 signature beverages from Churro Chillers and specialty coffees to Refrescas and Dirty Mountain Dew Baja Blast Dream sodas. With a Live Más Cafe, our test store has seen a significant increase in transactions while more beverage users are visiting the cafe and choosing to dine in. The team announced last month that they will expand Live Mas Cafe within existing Taco Bell restaurants to 30 locations across Southern California and Texas by year-end. In the U.S., we are moving forward with plans to expand our one unit test of Saucy. We will open several additional test units by end of year near our existing Orlando location. We continue to be encouraged that weekly sales have averaged materially higher than the pre-existing KFC since opening and that we're connecting with a younger demographic as 1/3 of Saucy consumers are under age 30. We have a lot of learning ahead of us, and we are eager to leverage the invaluable consumer insights relevant for our larger KFC U.S. system. In the connected pillar, our progress continues to accelerate, leading us to become the world's most connected restaurant platform. Digital sales now total a record portion of our system sales. In Taco Bell U.S., 41% of our orders are digital, fueled by loyalty offers and unique digital activations like Mike's Hot Honey Tuesday Drop and Feed The Beat Record Club Box. Taco Bell's unique activations helped grow active loyalty consumers nearly 45% year-over-year. Across the organization, AI is supercharging our marketing. Over 200 million AI-generated communications have been sent this year, delivering up to 5x incrementality compared to traditional approaches. This is not just marketing evolution, it's a revolution, and we're only getting started. In addition, as our systems become more connected, we're finding more opportunities to strengthen our operations. For instance, this quarter, we completed the conversion to a more advanced voice of the consumer product that helps aggregate consumer reviews from social channels and third-party delivery platforms and allows us to integrate such insights into Byte Coach to deliver more effective operations routines to restaurant general managers. Corporate citizenship and sustainability play a key role in ensuring our brands remain trusted everywhere we operate. We recently issued our 2024 Global Citizenship and Sustainability Report, which highlights our efforts across our people, food and planet pillars. Highlights from the report include achieving 89% of Yum! approved suppliers being certified or on the path to global food safety initiative recognized certification. Yum! also now sources 94% cage-free eggs across 25,000 restaurants, including in the U.S. and Western Europe. Additionally, we reduced emissions by 25% on an absolute basis for company-owned restaurants and corporate offices since 2019. These are just a few examples of how we are future-proofing the world's largest restaurant company. Congratulations to the teams around the world who are driving this important sustainability work every day. Your efforts are making a real impact on our business and our bottom line. I'd also like to highlight a few programs that Yum! and our brands invest in that help people by building careers, connections and strong communities. Pizza Hut Sri Lanka's An Equal Slice for Everyone program offers up to 6 months of training for youth to gain restaurant skills and certification before joining the workforce. In Thailand, KFC's Bucket Search helps youth who left school regain confidence, explore vocations and return to education. This program has impacted the lives of hundreds of young people since 2023. I'm immensely proud of the work that is being done around the globe to ensure Yum! Brands is positively impacting the markets where we operate and the people who live there. To close, I want to extend my deepest thanks to our restaurant teams, franchisees and support centers across the globe. Despite the challenges we faced in the second quarter, driven in part by softer consumer sentiment, our results stand as a powerful testament to the strength of our global brands and the dedication of our people. I'll share more final thoughts after Q&A, reflecting on my nearly 4 decades at Yum!, including the past 6 years as CEO. It has truly been an incredible journey. I've had the privilege of working alongside the best talent and franchisees in the industry and feel the same way about the analyst and investor community. Your partnership, insights and long-term perspective have pushed us to become a better company, better positioned for sustained long-term success. We've expanded our iconic brands by opening an additional 22,000 stores. And together, we've navigated both challenges and milestones in our shared commitment to building a culture rooted in growth, purpose and performance. We've built industry-leading digital capabilities we once thought unimaginable and dramatically accelerated the pace of unit development. As I look ahead, I couldn't be more confident that Yum! is well positioned to continue to deliver sustainable growth and long-term value for our shareholders. Thank you. With that, Chris, over to you. Christopher Lee Turner: Thanks, David, and good morning, everyone. I want to start by saying how truly honored and excited I am to step into the role of CEO of this incredible organization. David recruited me into Yum!. And while I'm deeply grateful for that, I'm even more grateful for the way he has led. Over the past 6 years, he has guided our system through a global pandemic, geopolitical instability and inflationary pressures unlike anything we've seen in recent memory. And through it all, together with our teams and franchisees, he has delivered; transforming our digital capabilities, reigniting development and laying a strong foundation for the future. I'm thankful he will continue advising me and the company as we turn the page to Yum!'s next chapter. Let me now turn to our second quarter financial results. We achieved solid system sales growth of 4%, driven by 3% unit growth and 2% same-store sales despite the tough consumer backdrop. Digital sales grew an astonishing 18%, thanks to our ongoing expansion of digital channels and Byte deployments, pushing our digital mix to a record 57% or up 2 points from last quarter. Total restaurant level margins were 16.3%, down roughly 150 basis points year-over-year due to an unfavorable commodity lap at Taco Bell and KFC's higher mix of overall restaurant profit from our newly acquired U.K. stores. Since our acquisition of 216 restaurants in the U.K. last year, we've been very pleased with the progress we're making on improving the margins in those restaurants where sales performance has been ahead of our projections. However, this quarter still reflects the anticipated negative impact of those stores on year-over-year company margins. Ex special G&A expense was $274 million, up $18 million or 7% year-over-year. This level of expense was in line with our plan and included lapping lower incentive comp from Q2 last year. Reported G&A was $302 million and includes $28 million in special expense, primarily relating to our ongoing resource optimization program and recent office consolidation. Franchise and property expense increased $16 million, driven by incremental spend tied to our global franchise convention that we hold every 2 years as well as lapping prior year bad debt recoveries at KFC. Lastly, Yum!'s core operating profit increased 2% to $646 million. Second quarter ex special EPS was $1.44, up 7% year-over-year. Reported EPS was $1.33. Moving to development. We opened 871 gross new units in the quarter, largely consistent with Q2 of last year and translating to 386 net new units. At KFC, we opened 566 gross new units across 58 countries, fueled by China, India and Japan. We feel good about the development momentum with the long-term global white space remaining highly attractive, particularly in Europe and East Asia, where the opportunity is vast. At Pizza Hut, we opened 254 gross new units across 32 countries with growth led by China, the U.S. and India. Pizza Hut's openings were just ahead of last year's Q2 pace. Taco Bell delivered a notable acceleration this quarter, opening 50 gross new restaurants or twice the number in Q1. 18 of those openings were in international markets across 9 countries. The team remains on track to meet its commitment of 100 international net new units this year, led by unit growth in the U.K. and Spain as well as planned entry into several new markets. I'll now discuss our connected brand strategy that continues to revolutionize digital and technology across our system, strengthening operations, enhancing consumer experiences and unlocking new insights. As one example of the power of Byte, let me share with you a new tool we've developed, which we call Byte Connect. Byte Connect is Yum!'s menu and order integration platform for third-party delivery providers, which launched in Q2 and is now scaling across our Pizza Hut U.S. system, saving our franchisees significant cost. This service is typically provided to restaurant companies at a significant cost per order by a third party, but we are able to offer it to our franchisees using the Byte stack at a more affordable price. This platform serves as the essential infrastructure for all our brands to better support our sizable third-party delivery business. Byte Connect reduces order cancellation and is priced at a discount relative to similar capabilities in the market. Byte Connect is a great example of the power of the Byte platform. We are able to build innovative new capabilities like Byte Connect and scale them quickly to all brands, leveraging the common technology chassis provided by Byte. Equally as exciting is how AI is accelerating our innovation time line. By leveraging developer AI tools, we reduced the time of Byte Connect ideation to national launch from an estimated 9 months down to 3 months. Another key aspect to our connected strategy is our industry partnerships. Our current voice AI solution now in 600 restaurants continues to enhance our team member and consumer experience and is outperforming everyone in the industry. That said, we are always looking to raise the bar. The partnership we announced last quarter with NVIDIA plays a key role in our Byte strategy as we collaborate on cutting-edge models and technology. We have exciting plans for the next 6 months, including expanding our internally developed voice AI solution developed on the NVIDIA stack to our first drive-thru restaurant in Q3. Now let me highlight the significant strides across our Easy Experiences, Easy Operations and Easy Insights pillars. Starting with our Easy Experiences pillar, which is focused on making consumer interactions more seamless. We've continued the expansion of Byte Commerce, scaling our web and app ordering platform to Pizza Hut Canada and Mexico this quarter, while preparing for 2 additional Pizza Hut markets by year-end. Early results from Pizza Hut Mexico are strong. The market is seeing nearly 40% month-over-month app transaction growth since the launch of Byte Commerce in Q2. Within Easy Operations, we're focused on simplifying the restaurant team member experience through solutions like Byte Kitchen and Fleet, Byte Coach and Byte Inventory, more than 30,000 restaurants now have AI informing restaurant manager decisions. For Byte Coach, we've rolled out additional AI features, including dynamic routines, which incorporate feedback from a wider catchment of consumer reviews to inform store-specific routines. The significant adoption of Byte Coach across our system provides us with a scale platform to deliver AI recommendations that take the guesswork out of running a restaurant to our RGMs and team members. As David mentioned, Byte Coach is now powering operational excellence across nearly all Pizza Hut stores globally, excluding China. Lastly, within our Easy Insights pillar, we're harnessing our powerful data ecosystem to drive smarter, faster decisions across the organization. As part of our AI-driven personalization strategy, we launched a proprietary consumer insights product tailored for international markets this quarter in Pizza Hut U.K. This platform will enhance the consumer journey by offering more relevant personalized item suggestions directly within the cart. We plan to expand this offering to 3 additional markets by year-end. Next, I'll provide an update on our balance sheet and liquidity position. Net capital expenditures for the quarter totaled $54 million, reflecting $17 million in refranchising proceeds and $71 million in gross capital expenditures. During the quarter, we repurchased approximately 740,000 shares for a total of $108 million, bringing our year-to-date repurchases to $336 million. This reflects our commitment to returning excess capital alongside a prudent approach to credit facility utilization while we plan the refinancing of our 2026 debt maturity over the coming months. Our net leverage ratio ended the quarter at 3.8x. As I previously shared, subject to market conditions, after the refinancing, we expect to maintain a net leverage ratio of approximately 4x over the medium term by issuing incremental debt as our business grows. Overall, our capital priorities remain unchanged. We continue to focus on maximizing shareholder value through strategic investments in the business, maintaining a strong and flexible balance sheet, offering a competitive dividend and returning excess cash to shareholders. Now let me share our latest outlook for the balance of the year. The global operating environment remains dynamic and complex. Our teams are staying agile with their marketing playbooks and leveraging key strengths, including digital capabilities and operational scale. At Taco Bell U.S., which represents over 80% of our U.S. operating profit, we're on track to deliver 24% to 25% restaurant level margins. Development trends are encouraging across the portfolio. While there's no observable impact to our development pipelines, we are expecting inflation pressures across several key building products sourced from Mexico and Canada. Fortunately, 90% of Yum!'s development occurs outside the U.S., unlike many of our competitors, so our exposure to the impact of tariffs on the business is limited and with industry-leading margins, Taco Bell is not expecting a material change to paybacks. In fact, we expect to meet or exceed the total number of gross builds from last year for all brands, leading us to 4% unit growth or 5%, excluding the Turkey market exit. Moving to G&A. We expect G&A, ex special and ex FX, will land at the high end of our previously guided mid-single-digit increase due to one-off expenses related to an accelerated CEO transition and KFC's headquarter consolidation. In Q3, we expect G&A to increase double digits, owing to lapping the significantly reduced incentive comp booked in Q3 last year, with Q4 G&A growing near the low end of our full year guide. Subject to market conditions, we do expect refranchising gains will help offset some, but not all of those expenses. While this reduces some contingency in our profit guide, we still expect to achieve 8% core operating profit growth, excluding the 53rd week this year, with Q4 in double digits, in part due to easing compares related to our elevated bad debt last year. Below the line, we expect interest expense to land between $500 million and $520 million, excluding the interest from any incremental debt. Finally, on FX, at current spot rates, we expect a $20 million tailwind to GAAP operating profit for the remainder of the year. To close, I am incredibly proud of how our teams are navigating this dynamic environment, staying fast, consumer-focused and forward-looking. Our second quarter results reflect strong development momentum, continued growth in digital sales and healthy same-store sales increases driven by rising traffic and our twin growth engines. As I prepare to step into the role of CEO, I'm spending time with our leaders and teams, Board members and franchise partners and rolling up my sleeves in restaurants alongside our amazing frontline teams to reflect on our strengths and where we can raise the bar. Throughout this process, I've become even more energized by the possibilities ahead and by the privilege of leading this world-class organization, home to iconic brands and incredibly talented people. I'm confident that together, we'll build on our momentum and shape an even stronger future for Yum!. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question comes from David Tarantino from Baird. David E. Tarantino: First, David, congrats on a great career again and wish you well in your retirement. I've enjoyed working with you. And Chris, congrats on your new role as CEO. My question is really about the guidance for this year. I think, Chris, you mentioned maybe removing some cushion. I forgot the exact words, but just wanted to get your thoughts on your degree of confidence in getting to that 8% operating profit growth for the year? And I guess, what are the puts and takes that could push it one way or another in the back half? Christopher Lee Turner: Yes. Thanks, David. I appreciate the kind comments about David and my new role. David's done an incredible job, and it's a big honor for me to step into his big footsteps. As we look into the back half of the year on the profit plan, we remain on track to deliver our full year algorithm of 8% core operating profit growth. I'll start with sales. The back half doesn't require a dramatic sales acceleration versus the first half. Just solid performance, roughly in line to slightly ahead of where we were in the first half. So then you get to the big drivers of profit in the second half in terms of that versus last year. First is company store profit. While we're primarily asset-light, our own stores do matter. We had strong company store profit growth in the first half, and we expect even stronger company store profit growth in the second half. That's driven in part by Taco Bell, where you heard us mention that we still expect to land on Taco Bell U.S. with 24% to 25% margins on the full year, which implies a bit of a back-half-weighted plan on margins there. We also expect continued improvement in our KFC equity estate, those KFC U.K. stores that we acquired last year. As you can imagine, in the second half, we were digging in, optimizing those. We're seeing better performance and we expect that to continue into the second half, also better performance in other parts of the KFC equity estate, including in Australia. The other big bucket are some discrete items. So last year, in the back half, we had about $30 million in bad debt exposure from a couple of situations. One, our franchisee in Turkey and Germany and another Pizza Hut situation in Europe. So there's a $30 million bad debt expense that we expect to lap this year. And as I mentioned, we've got refranchising gains and the plan there is a bit backloaded in the year. So in total, that's $40 million in tailwind in the back part of the year. If you think about the shape on Q3 and Q4, the biggest G&A lap will happen in Q3. That's why we shared that we expect double-digit G&A increase in Q3. That's simply because last year, when we adjusted for incentive comp, the biggest adjustment was in Q3. We had some true-ups for Q1 and Q2. So we expect profit growth to be stronger in Q4 than Q3 this year. Operator: Our next question comes from David Palmer from Evercore ISI. David Sterling Palmer: Congrats, David, on your career, a lot of value creation over your time. And best to you, Chris. I wanted to follow up on all of your comments on tech capabilities and maybe invite you to speak about what your examples or your top tech platform initiatives will do to comps or other metrics that you think people would care about Yum! shareholders. So for example, you mentioned hyper-personalized digital marketing, perhaps being in ramp mode, that sounds pretty exciting. How important could that be to comps? You've, in the past, talked about Taco Bell rollout of AI-enabled drive-thru. How is that coming along? And how important can that be? When could that be the majority of drive-thru orders? And then you listed all those things you're talking about with Byte Connect, Byte Commerce, Byte Coach, maybe what is that doing for profitability or some other metrics that ultimately will lead to unit growth acceleration? Christopher Lee Turner: Yes. Thanks. As we look at the Byte strategy, we are very pleased with the progress, and we're very pleased with the impact that it's having on the business. If you go back to the Taco Bell Consumer Day earlier this year, we shared some data there that had the correlation of digital sales mix change at the store level in Taco Bell and the correlation between that and absolute top line dollar sales growth at the store level and EBITDA growth at the store level for our Taco Bell stores in the U.S.. Very strong correlation on both, which we think demonstrates the impact that Byte has on both top and bottom line. And of course, Taco Bell U.S. is where we have the most components of Byte implemented versus any other brand country combination around the globe. As you mentioned on top line, AI-enabled marketing is a big component of that. We're excited about the piloting that we're doing there. We've got 11 different use cases that we've laid out. 7 of those are in action right now. We shared in my earlier comments that we're seeing significantly higher return on targeted communications through that. Of course, the bigger driver of top line growth through digital are just making an easier experience for consumers, allowing them more easily to customize their orders and more easily to expand check size. Everywhere we increase digital mix, we see higher check sizes and higher frequency from our consumers. Of course, consumer insights and loyalty will be a big part of that as well. On the operational side and helping our franchise partners ensure they have strong unit economics, I actually got to experience this working in a Taco Bell restaurant a couple of weeks ago, spent a Saturday working with the team there. The technology that makes the lines flow easier was really easy to use. And then I was working at the window and got to wear the headset and listen in on voice AI interacting with our consumers. I've known from the team that it was doing a good job. I was actually amazed at how seamless those consumer conversations were. In wearing the headset for 1.5 hours to 2 hours, there was only one of those conversations where we needed to intervene from a team member in the store and the voice AI made that job dramatically easier, and that's why we're seeing lower turnover in restaurants where we've implemented voice AI. So lots of good things happening with Byte, but we are still in the early phases of generating the value from it. We've got more to do to get it around the globe, and we're excited to continue that journey. Operator: Our next question comes from John Ivankoe from JPMorgan. John William Ivankoe: David, I look forward to seeing you on the senior tour. I have no doubt with maybe an extra round or 2, you'll be able to make it and probably win a few tournaments. So the question which I have is obviously thinking about the company's overall free cash flow generation and the future capital intensity of the business. As we think about longer-term models, should the company benchmark CapEx as a percentage of system sales, CapEx as a percentage of revenue? Obviously, there's a lot of different moving pieces, especially from a tech spend perspective, that could influence CapEx. But I wanted to see if we could begin to think about just overall capital intensity of Yum! and how much future company unit development might influence the overall business strategy and CapEx specifically? Christopher Lee Turner: Yes. Thanks, John. In terms of the capital strategy, nothing is changing in terms of Yum! being an asset-light company. That's what we came out of the transformation with as one of the guiding principles of the company. We're still at 2% restaurant ownership. In fact, over the last several years, we have grown the overall estate faster than we have grown our company-owned estate. And so it's important for us to continue to acquire stores periodically to ensure we have strong capability from an operations standpoint. But whenever we do that, we typically are buying high AUV, high-performing restaurants. And there's also a strategic reason that might go along with it. We may pick up a few stores in one geography and then we see that as an area where we potentially could unlock new development. And we always see strong returns, immediate EBITDA increases whenever we do that and then strong returns over time. So I think we're going to continue to be a very capital-efficient company. On the tech side, all of the investments that we make there, we want to ensure that those are high return for our shareholders as well. And since many of the benefits of those flow to the bottom line of our franchisees, they share in those investments over time. So no dramatic change in terms of us being an asset-light company. Operator: Our next question comes from Christine Cho, Goldman Sachs. Hyun Jin Cho: Congrats, David, on such a successful career. And congrats, Chris, on your new role as CEO. You've announced your plans to scale the Live Más Cafe to 30 locations by end of 2025, and we did see some step-up in beverage focus across several QSR competitors as well. Could you kind of walk us through how you're approaching that $5 billion long-term beverage opportunity for Taco Bell and how you plan to differentiate your offerings versus peers? Any further color in terms of scale, time line, required investment or some of your key learnings from the pilot so far would be appreciated. David W. Gibbs: Thanks, Christine, and thanks for everybody's nice comments on the retirement, particularly John's comments on my golf game, although I will not be playing on the senior tour. Beverages is one of those things that I think we're incredibly excited about. It's no secret that the industry has been embracing beverages in the last few years, and you've seen a lot of success with some of our competitors. Nobody is more naturally positioned to succeed in beverages than Taco Bell. We already have a proprietary beverage with Baja Blast that's wildly successful. So what you saw with the opening of our first Live Más Cafe is putting a lot of our theories and ideas about beverages into action and doing it in a big way, not just a small addition to the menu. And the results were obviously stellar and prompted us to really lean in and create a plan to be much more aggressive in beverages at Taco Bell, which leads to the test units that you've talked about. So you've got the Live Más Cafe test, which we truly believe will then lead to a broader expansion in the system. And then you also have what you saw in Q2, which is the launch of Refrescas, which was part of the success that Taco Bell had in Q2. And I would add, while Taco Bell is sort of leading the way on getting into the new category entry points on beverages for Yum!, we see the same opportunity for KFC. And KFC has their own program, Quench, which is now going into test. I'm very excited about the impact that, that can have on the business. Operator: Our next question comes from Dennis Geiger, UBS. Dennis Geiger: Congratulations, David, terrific career. Very much appreciate the partnership over the years. And of course, Chris, congrats, well deserved. Wondering if you could talk a little bit more about the difficult consumer environment in the U.S. that you both referenced. Any commentary on maybe the low-income consumer in particular or any other notable consumer cohort pressure to call out? And more importantly, how the brands in the U.S. are positioned to win with those consumers? David W. Gibbs: Yes, sure. Yes. Obviously, it's well documented that the U.S. is a challenged environment to operate in right now in our industry. Others have talked about that. Obviously, we are playing a little bit of a different game at Yum!, given that more than 80% of our profit in the U.S. comes from Taco Bell. And in many ways, this sets up as a really nice environment for Taco Bell. You're seeing it in the results. The data that we look at about consumer behavior shows clear trade-in from consumers in fast casual into the Taco Bell brand. And when you even pull apart the income bands, although I know the lower income consumers are pulling back, that's been well documented by our competitors. We aren't seeing that at Taco Bell. In fact, we've had -- if you pull all the income bands in Q2, we've had sales and trans growth across all income bands at Taco Bell very consistently, very little difference from one income band to another. And I think it's just more evidence of the power of the Taco Bell model and our ability to take share in this environment, even though it is a pressured consumer. Just a little bit more on Taco Bell's performance. I found this stat the other day, which I was sort of proud of. Only if you take the top 10 companies that are publicly traded, top 10 restaurant brands in the world, Taco Bell is the only one that has had positive quarterly sales for 5 years in a row. This year, we haven't had a single negative week for Taco Bell. So most people are reporting negative quarters. We haven't even had a negative week for Taco Bell. And while the 1-year numbers can be a little choppy based on some unusual lapse from last year, we've been very consistent on a 2-year basis in that plus 9%, plus 10% same-store sales growth. And honestly, in Q3, we expect to see sequential improvement in our 1-year same-store sales growth and consistent 2-year performance coming out of Q1 and Q2. So the brand is truly on a roll. Why is that? It's because of all the great innovation, Crispy Chicken, what we did with Refrescas, improving ops, the value menu, $5.79, all of that contributed to Q2. But what gets me most excited, which I'm going to be excited to be watching from the sidelines is what we have coming in Q3 and Q4. In the next few weeks, we'll be launching Baja Blast Midnight at Taco Bell. We've got $3 Burritos coming. We've got Cheesy Street Chalupas. And then in Q4, we're bringing back the Decades menu, and we even have [indiscernible] house coming back, which I know is a favorite of a lot of our customers. So there's lots to get be excited about Taco Bell despite the softer U.S. consumer environment. In fact, in many ways, we welcome that environment because we're taking share from the competition and Taco Bell is clearly on a roll. Operator: Our next question comes from Brian Bittner from Oppenheimer & Company. Brian John Bittner: And of course, congratulations, David, on your inspiring career at Yum!. And of course, a big congrats to you as well, Chris. I think it's pretty clear that the Byte by Yum! platform is a very unique catalyst for your business relative to the competitive set. And I know there's different components to it. But can you help us understand how many units have the full platform today? And what does the cadence of the rollout look like as you go across your global portfolio through 2026? And what do you see as just the greatest unlocks going forward for your Byte by Yum! platform for the franchisees? Christopher Lee Turner: Yes. Good question. I think we've shared previously that about 25,000 restaurants around the globe have some component of Byte operating in them today. But in a number of cases, that is just 1 component or 2 components today. The place where we have the most components of Byte operating in one brand-country combination, as I mentioned earlier, is in Taco Bell. So the expansion journey is 2 things. One, on restaurants that already have some components, getting them to the full Byte ecosystem. And that's really when we see the power of the seamless integration across the elements in Byte spanning the consumer experience, the team member experience and the insights that we can generate. Of course, there's another piece, which is getting into new markets where we haven't started to deploy Byte yet. We've made a lot of progress in the U.S. But as we shared on the last call, it was at our global franchise convention in Sydney earlier this year, where we really made the Byte unveil to our global franchise base. And we essentially hosted what was a trade show event where those franchisees from around the globe were able to spend time with Joe Park and our technology leaders who are building and developing and deploying each part of Byte. There's now significant demand from those franchisees, and we are in conversations with them to help them understand how we could bring those to life in their market. So there's still some steps to go through in terms of ensuring that the Byte capabilities are ready to deploy in each specific geography. And then, of course, there's some implementation work to be done. So this will be a process that we will work through, but we're looking for ways to accelerate that. And right now, we believe that demand for Byte is not our problem. It's how do we work through that process to get deployment. Operator: Our next question comes from Sara Senatore, Bank of America. Sara Harkavy Senatore: Great. I'll add my congratulations as well to both of you. I wanted to just maybe clarify a couple of comments, if I could. The first is, I think you mentioned Byte Connect is priced at a discount to 3p offerings. Trying to understand, is that because the cost to you is lower because of your scale or something else? Or is this effectively kind of a subsidy to franchisees? And the reason I ask is because I think a conversation that's ongoing is about kind of tech costs as they show up in your G&A perhaps. And I wanted to see if there's been kind of a shift in the philosophy or maybe just understand it. And then the other clarification is I think there was a mention that Taco Bell is taking share from fast casual. Does that mean you're not seeing it come from other traditional QSRs? I had thought that fast casual maybe was just too small to explain kind of how robust the performance has been. Christopher Lee Turner: Yes. Thanks, Sara. Let me start with the first one on Byte. And let me start with a couple of sort of high-level statements about Byte. First, it is the only multi-brand, multi-market restaurant technology platform built by restaurateurs for restaurateurs. And as part of that, our commitment to our franchisees is to give them leading-edge capabilities at a price that is better than they can get on the market. And so if we think about Byte Connect, there are some other solutions on the market built by tech companies, not restaurant companies that many of our franchisees are accessing today at a certain price. Through our internal development, which allows us to accomplish the same functional objectives for our franchise partners, because of our scale, we're able to offer that to our franchise partners at a lower cost than they could get on the market. So that creates a competitive advantage for them. It actually helps their P&L. They end up spending less in total on tech as a result whenever they migrate over to Byte Connect. And of course, given that, that benefit flows to their P&L, we expect our franchise partners to share that investment with us through the fees that are generated into Yum!. And that, of course, is part of how we're bending the curve on the G&A impact of our tech strategy on our P&L. So all part of how we leverage our scale and our tech capability and expertise, our ownership and our talent for the benefit of our franchise partners. David W. Gibbs: Yes. I'll take the second part of the question. And just further on Byte Connect, to answer your -- the pointed question, Sara, our goal is not to subsidize anything. Our goal is to provide stuff to our franchisees at a dramatically lower price that we can still cover our costs and then some. That is what -- Byte Connect is a great example. The cost of what we're charging for that is dramatically lower than what the largest third party in the marketplace charges for that service. And yet, it's something we internally developed with a few resources. So the math works for that. As far as Taco Bell share, I was only sharing the context of -- the stealing from fast casual was really in the context of the question about the consumer and consumer behavior. I think that demonstrates that you're seeing people trading in from other concepts and that they're pressured financially. However, with Taco Bell's performance, it's clear we're taking share from a lot of competitors, not just in fast casual, we're taking it from the QSR industry in general. And obviously, when we look at this environment, it's one that not only can we win and we can really thrive and really take market share, put ourselves in a better position going forward. Christopher Lee Turner: Operator, we have time for one more question. Operator: Our final question will come from Brian Harbour from Morgan Stanley. Brian James Harbour: Congratulations again to both of you. I guess could you just elaborate on the comments -- there were separate comments, but I think you talked about value perception at KFC and you talked about sort of, I think, value menu lineup at Pizza Hut. What needs to be done differently there? And I'm not sure if those were comments that apply across different markets? Or is this sort of a broader opportunity for those 2 brands? David W. Gibbs: Yes. I think the comments on value, clearly, this is an environment -- softer consumer environment all around the world where value matters. Value never doesn't matter, but it's a particular importance in this environment. And what we're seeing around the world is we can win when we have that -- when we do value the right way. Taco Bell with $5,79, creating value menu is a great example, but we have all sorts of other examples all around the world. And I think Scott Mezvinsky coming out of the Taco Bell world, where they play value better than just about anybody else in the industry has been quite helpful to him spreading that gospel at KFC around the world, and you're starting to see some of the results from that as we go into Q3 and the second half of the year, we're seeing the business strengthen on the backs of embracing value in this environment. I think with that, I'm just going to close out real quickly. I appreciate all the nice comments today from everybody. I really have enjoyed working with all of you. And as I reflect on my tenure as CEO and my career with Yum!, obviously, I'm proud of so much that we've done to create shareholder value, improve the business, the work we did to dramatically ramp up the pace of development, going from a laggard to a leader on tech. The strength of our twin growth engines today has never been stronger and well positioned for success. But when you pull all of that apart, it all comes down to the people in this organization. The culture and talent at Yum! is the best in the industry, really the best, not just about any company that there is out there. Our ability to attract, develop and retain people is what sets us apart, and it's why we've achieved so many great things over the years. That is at all levels of the company. It's our franchise partners. It's from our team members all around the world up to the leadership team that runs this company. The best example that I can think of that is Chris Turner. He joined 6 years ago and our ability to even attract him and get him to come join Yum! was a real coup. And you can see from his career here, he's had a massive impact on the company as CFO. Nobody is better positioned to take over this company than Chris. I'm so excited to be able to stay connected to him as an adviser and watch him lean in on new growth strategies to take the business to new heights and accelerate the pace of growth. And nobody will be cheering this company on more strongly than me. I'm excited about the next chapter of my life as I move into retirement and proud of the company that we've built and the future of it could not be brighter. Thank you so much for your time today. It's been a pleasure. Operator: This concludes today's call. We thank everyone for your time. You may now disconnect your lines.

Operator: Hello, everyone, and thank you for joining the 2025 First Quarter Earnings Call. My name is Sami, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand over to your host, Matt Morris, Head of Investor Relations to begin. Please go ahead, Matt. Matt Morris : Good morning, everyone, and thank you for joining us today. On our call are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the cautionary statements in our earnings release and risk factors discussed in our SEC filings. Please refer to today's release and filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures. Please note that during today's call, systems sales and operating profit growth will exclude the impact of foreign currency. For more information on our reporting calendar for each market, please visit the Financial Reports section of the IR website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. We would like to make you aware our second quarter earnings will be released on August 5 with the conference call on the same day. Now, I'll turn it over to David. David Gibbs : Thank you, Matt, and good morning, everyone. I'm thrilled to report that we delivered a strong first quarter with core operating profit up 8%, fueled by exceptional results from our twin growth engines, Taco Bell U.S. and KFC International. The success evident in the performance of these two businesses reflects significant and durable competitive advantages, including the operational advantage provided by our AI powered digital platform, Byte by Yum! Our ability to quickly integrate new technology that leverages Yum!'s vast proprietary data sets into our digital ecosystem, along with an ability to scale and grow with highly capable 3C partners, is an enormous competitive advantage in the global restaurant space. Earlier this quarter, I announced my intention to retire next year after what will be a 37 year career with the company. I reached this decision after much reflection in recognition of the great work that has been done over the last year to set up the business for long term success. With the business in a position of strength, this feels like the right time for a transition. And having a year to identify a successor ensures, we can do so thoughtfully and seamlessly. I'll be working closely with the Board to ensure a smooth leadership transition. That said, I couldn't be more excited about the direction of the business and the momentum we're seeing across our key growth engines to start the year. Let's start with our twin growth engines. First, Taco Bell U.S. delivered a staggering 9% increase in same-store sales, an impressive achievement, especially against the backdrop of soft industry trends. Notably, this quarter, Taco Bell saw a significant expansion in consumer penetration, reflecting our efforts to elevate our positioning and broaden our relevance, which helped us to grow traffic low-single digits. Taco Bell's digital momentum is also accelerating. Byte by Yum! has reduced system limitations, empowering Taco Bell's world class advertising team to push creative boundaries. One area in marketing with enormous potential is the expansion of AI driven decisioning to enable personalized experiences for consumers. For example, we are testing the use of these tools to enable us to deliver one-to-one communication to our consumers. Recall at the Taco Bell Consumer Day, the team shared that they expect to generate over $225,000 in additional per store sales by 2030 or an approximate 10% increase to AUVs through expanded digital channels and loyalty membership. What truly sets Taco Bell U.S. apart, however, is its unique ability to deliver compelling value while improving store level margins, a rare combination in the industry. This winning combo helped drive an astounding 16% increase in operating profit for the quarter. With such a stark contrast in performance versus the industry, it's no wonder Taco Bell was once again named the number one franchise by Entrepreneur Magazine's Franchise 500 for the fifth consecutive year. This honor reflects Taco Bell's brand strength, loyal consumer base and the confidence of our franchise partners. Our other twin growth engine, KFC International, also earned top honors for the second consecutive year as Entrepreneur Magazine's fastest growing international franchise. Additionally, with 554 growth openings across 50 plus countries, KFC International outpaced its first quarter development plan. KFC International posted accelerating same-store sales and strong gains in brand perception, driven by bold investments in value, crave worthy new offerings and distinctive media and innovative partnerships. Globally, KFC International achieved low single-digit traffic growth, including in markets like China, which delivered its ninth consecutive quarter of traffic growth. This quarter also highlighted strong progress in the bold initiatives designed to meet the next generation of consumers and add new layers of growth. At Taco Bell, our first Live Mas Cafe, a specialty beverage concept featuring drinks like chillers, agua frescas, coffees and more alongside the classic menu launched in December and is off to a phenomenal start. The test location has experienced a 40% sales lift with guests purchasing over 300 specialty beverages daily on average. Energized by this strong performance, we are planning a rapid expansion this year. Look for an exciting update on Live Mas Cafe from Taco Bell in the coming weeks. We piloted Quench by KFC in 38 restaurants in the UK, the first KFC market to experience our innovative entry into the fast growing specialty beverage category. A globally led initiative born from insights by Collider Labs, Yum! Strategy branding and innovation consultancy, Quench features 10 handcrafted drinks across four specialty drink categories: lemonades, refreshers, shakes and iced coffees. Early results have been promising with participating restaurants seeing growth in both transactions and beverage sales, outperforming previous specialty drink offers. Building on this momentum, we have expanded the pilot to Australia, where results are already exceeding forecast and driving incremental traffic. Plans are in motion to scale to additional markets in the coming months. In the U.S, our bold new concept, Saucy, is exceeding expectations. Sales are at more than double the U.S. system average, placing this Saucy location among the top 15 locations in the KFC U.S. system. We're planning a phased expansion to at least 20 stores, targeting sites that allow us to unlock marketing synergies through geographic proximity. I'll now discuss the strategic drivers that underline our commitment to being the most loved, deeply connected and always trusted brands for consumers around the world. Afterwards, Chris will provide a deep dive on our first quarter results, balance sheet position and capital strategy, followed by our outlook for the balance of 2025. Starting with our loved pillar and our brands that champion consumer experiences. The KFC division, which accounts for 51% of our divisional operating profit, grew system sales by 5%, driven by 6% unit growth and 2% same-store sales growth. Internationally, we reset core value across several markets while modernizing the brand through menu upgrades and breakthrough innovation, including the Double Down Zinger in the UK, Crispy Naan in France and Zinger Nachos in Australia. Sustained investment in the value layer improved our net value score by seven points versus our largest competitor. Relevant partnerships and new media strategies also drove a 2 point gain in brand perception among younger consumers globally. A number of markets experienced meaningful momentum, including Canada, where same-store sales accelerated to 6%, reflecting strong consumer engagement following a collaboration with Mike's Hot Honey. Korea delivered 13% same-store sales growth and double-digit transaction gains, fueled by expanded lunch and snacking options and higher delivery sales. Africa recorded 8% same-store sales growth, supported by improving consumer sentiment and effective value led promotions. U.S. performance was driven by a double value promotion, $5 bowls and the $10 Tuesday bucket, leading to low single-digit transaction growth. Taco Bell, which accounts for 37% of our divisional operating profit, delivered an exceptional quarter with system sales up 11%, fueled by impressive same-store sales growth of 9%. Top-line performance was driven by low single-digit traffic increases across all income cohorts. The brand generated strong buzz with the success of its Crispy Chicken Nuggets, Milk Bar Churros, Cheesy Dipping Burritos, and Steak and Queso Crunchwrap Sliders. The $5, $7 and $9 luxe boxes offered compelling value, with the $9 luxe cravings box featuring rotating limited time innovations. Taco Bell also expanded category entry points with bold offerings like Caliente Cantina Chicken and Steak Nacho Fries. We've now seen multiple quarters of rapid adoption in digital with mix reaching 42% and sales growing 37% year-over-year. In March, Taco Bell hosted both its Consumer Day and Live Mas Live events, spotlighting the brand's bold innovation and powerful fan connection. At Consumer Day, the team unveiled the ambitious global R.I.N.G., Ring The Bell Strategy, outlining a compelling long term vision to drive sales, improve margins, expand its footprint and accelerate digital growth. Live Mas Live brought together top social media influencers and die-hard Taco Bell fans for an immersive celebration of the brand's boldest new menu innovations and experiences. The event buzzed with excitement, blending exclusive tastings, live entertainment and behind the scenes access to what's next for Taco Bell, including exclusive limited edition merch collaboration and awards for its most loyal supporters. Pizza Hut, which represents 12% of our divisional operating profit, had system sales decline 3% in Q1. The decline in system sales was primarily attributable to disappointing same-store sales performance in the U.S. Excluding the U.S., same-store sales were positive for the quarter with meaningful improvements across Asia, Europe and The Middle East. In the U.S, sales started soft in January and improved through February and March, with the last few weeks showing sequential gains in revenue and transaction growth. The U.S. business faced an intense competitive environment. To drive momentum, Pizza Hut U.S. leaned into group occasions with its Stuffed Crust and Wings promotion and Ultimate Hut Bundle, both of which increased check and attracted new users. During the Super Bowl, the Ultimate Hut bundle helped deliver Pizza Hut's highest ever digital sales per restaurant. Looking ahead, Pizza Hut U.S. Will focus on its 3D strategy: distinctive offerings for group occasions, dependable everyday value through platforms such as the $7 deal levers and disruptive innovation to gain share in a competitive market. Habit Burger and Grill system sales growth was flat this quarter. Tempura Avocado Wedges launched this quarter and became one of the brand's highest performing side LTOs in recent history. This quarter, Habit shifted its marketing to focus on brand fame, including an amplified social media presence and a Super Bowl placement that drove 10 million total impressions. Looking ahead, Habit is in the early stages of expanding local restaurant marketing through on the ground field teams. Strong same-store sales growth in Florida, Washington and New Jersey reinforced our confidence in the brand's long term growth potential and the impact of market specific engagement. Moving to our Connected pillar, we're advancing our ability to serve every consumer everywhere at any time. Earlier this year, we announced Byte by Yum!, our proprietary suite of AI-powered software as a service products designed to deliver integrated, seamless technology across our restaurants. This strategic investment is delivering results with digital sales up 12% year-over-year. As mentioned previously, Pizza dot U.S. achieved its highest Super Bowl sales ever with every digital order processed through Byte Commerce, marking a major milestone in our digital transformation. This success highlights the scalability and reliability of our platform. We're also seeing stronger consumer engagement, including a $4.5 million quarter-over-quarter increase in KFC loyalty members. At Taco Bell, active loyalty membership grew 45% year-over-year, fueled by unique experiences like build your own Luxe Box and the Spring Break Fan Favorite Vote. Looking ahead, we're excited about our new partnership with NVIDIA, which will accelerate the development of innovative AI technologies across Yum! Worldwide. Chris will share more about this shortly. The cornerstone of Yum! Brands is our unrivaled culture and talent, and I would like to congratulate two executives who are taking on larger leadership roles. Meg Farren, who was previously GM of KFC UK and Ireland, was promoted to the position of President of Taco Bell North America effective February 10; and Catherine Tan-Gillespie, formerly the CMO and CDO for KFC U.S, became President of KFC U.S. Effective April 1. I am confident Meg and Catherine will help lead these storied brands to even greater success. Speaking of the talent in the Yum! System, we recently witnessed the company's collaborative culture in action when nearly 1,000 people attended our global franchise convention in Australia. The four day summit was attended by world class franchisees from all over the globe, with some traveling more than 10,000 miles to attend. The power of each brand and Yum! Collectively was on display demonstrating the advantages our system has in driving profitable growth for franchisees and Yum! alike. This strong sense of unity and shared purpose among our global franchise partners is also reflected in the way the company integrates responsibility and community impact into its core values. Those efforts were recognized by the Conference Board, which presented the company with its Corporate Responsibility Award on April 23. The award celebrates organizations that have fully embedded responsible business practices into their core strategies, driving business efficiencies and creating long term value. To wrap up, I'm thrilled with our first quarter results, which clearly demonstrate the strength of the Taco Bell brand and the momentum in KFC. Our recent investments in KFC to enhance our value proposition, modernize our brand and update our menu are delivering sustainable improvements and top line trends. I left our global franchise convention knowing Yum! is simply one of the best positioned QSRs with an unbelievable international franchise base that is more than ever committed to grow their portfolios and capitalize on the strong financial returns offered by our brands? For investors and as a long term shareholder myself, the bold initiatives we're taking that will give us a leading edge in all markets is an aspect to our story that can't be ignored. And I look forward to sharing the continued progress in that pursuit and unlocking the multiple unique levers for profitable growth. With that, Chris, over to you. Chris Turner : Thank you, David, and good morning, everyone. Today, I'll discuss our first quarter financial results, our balance sheet and capital strategy, and our outlook for 2025. As David mentioned, we are off to a good start in 2025 with momentum in our top line, impressive growth in digital mix, and strong profit flow through to the bottom line. First quarter system sales grew 5%, driven by 3% same-store sales growth and 3% unit growth. Ex special G&A expenses were $274 million up 3% year-over-year. Reported G&A was $302 million and includes $24 million in special expenses related to our resource optimization program that is unlocking efficiency in the organization along with investments related to our brand headquarters consolidation. Yum!’s core operating profit was $586 million up 8%, highlighting the strength of our global multi-brand portfolio. Delivering an 8% core operating profit is a strong result in a complex consumer environment driven by the contributions of our twin growth engines. Taco Bell delivered 16% core operating profit growth led by double-digit system sales growth and strong profit flow through on flat G&A. KFC grew operating profit 9% driven by 5% system sales growth and lower G&A, a good example of the impact of the strategic actions we've taken to remove duplicative work across the system. At Pizza Hut, first quarter operating profit growth was negatively impacted by 7 percentage points or approximately $6 million due to expenses associated with transitioning stores from four franchise entities to new ownership and by three percentage points due to timing of technology spending within franchise advertising and other services expenses. One important driver of Yum! Overall performance is our store level margin performance, particularly for our largest equity estate, Taco Bell. Taco Bell's magic formula allows it to deliver category leading value, while also maintaining industry leading margins. The expansion of Taco Bell's Luxe Cravings Box lineup at $5, $7 and $9 price points delivered exceptional value across income levels, with the $5 Luxe Box becoming a massive win with low income consumers. As we announced at Live Mas Live, we expect Taco Bell U.S. Full year margins to come in at 24% to 25%. At Habit, restaurant level margin performance was commendable with an impressive 310 basis point improvement year over year despite meaningful labor headwinds in California. Another factor supporting store level margins across all brands is the acceleration in digital sales. At Taco Bell, digital mix reached 42%, while Habit expanded digital mix 10 points, driven by kiosk sales increasing to 17% of mix, up from 10% last year. First quarter ex special EPS was $1.30, reported EPS was $0.90 including an unfavorable tax impact of $0.33 relating to a tax reserve in a foreign jurisdiction. Finally, in general, our business has minimal supply chain related tariff risk as most markets source within their country or with countries where there is not currently tariff risk. As a result, we expect tariffs to have an immaterial impact on our system wide supply chain. Our global scale offers our system advantages to drive supply chain efficiencies and our expert teams are partnering with suppliers and franchisees on the limited items where there is potential impact. Now, on to development. While Q1 development reflects previously signaled and planned closures including in Turkey and across Pizza Hut, unit development in the first quarter was in line with our forecast and we are on track to deliver 5% unit growth excluding Turkey this year. Our development engine remains healthy with 751 new stores opened in Q1, roughly in line with Q1 last year across 68 countries. KFC led the way with 528 openings, the second highest for a first quarter in their history, driven by growth in China, India, Japan and Thailand. Globally, KFC offers highly attractive paybacks with the global average below five years and even stronger paybacks in markets like China, Thailand and The Middle East. Pizza Hut delivered solid development with 198 new units across 34 markets, while Taco Bell added 24 gross units. Taco Bell's net unit development in Q1 reflects planned phasing, closures in Malaysia and the closure of remaining restaurants in China's Tier 2 cities. As announced at Taco Bell Consumer Day in March, the team is on track to deliver 100 international net new units this year, with growth strongest in the UK, Spain and India. Lastly, Habit continues to improve at store level paybacks and is exploring opportunities to capitalize on lower cost conversions from fast casual brands closing stores in its core markets. As a reminder, the termination of our franchise agreement in Turkey resulted in 537 closures, 283 KFC locations and 254 Pizza Hut locations. As shared on our last call, the Pizza Hut team also accelerated planned closures or engaged with franchise partners to strengthen our system, specifically in markets such as Chile, the UK and the U.S. Notably in the U.S. and UK, we facilitated a transfer of more than 200 stores to more capable franchise partners. In Latin America, recently, the Serrano Group signed a binding agreement for majority ownership in a joint venture with IMC, our KFC franchisee in Brazil. The Serrano Group is one of our world class 3C partners who started with their first KFC store in Ecuador and now manages nearly 800 stores across six countries in Latin America. Over the past three years, they've opened 183 new stores, leveraging a sophisticated supply chain that includes in house commissaries and chicken processing facilities. We believe this strategic deal paves the way for accelerated unit growth in a large and underpenetrated market. As David mentioned, earlier this month, we hosted our Global Franchise Convention in Sydney, Australia, bringing together franchisees from around the world. The energy and enthusiasm were unmistakable. Over several days, we aligned on brand strategy, covering everything from world class development capabilities to cutting edge marketing analytics, while showcasing the power of our global network and the competitive advantage that comes from sharing best practices across markets. We also celebrated franchise partners who delivered outstanding results, underscoring the strength of our system. The chance to speak with so many of our franchisees made it clear that sentiment in the Yum! System is strong with many eager to grow their portfolios and help to reinforce one of Yum!’s greatest advantages, a network of strong corporate minded franchise partners who see opportunity and are willing to invest even in times of macro volatility. I'll now discuss our connected brand strategy that continues to revolutionize digital and technology across our system, strengthening operations, enhancing consumer experiences, and unlocking new insights. Byte by Yum!, with emphasis on both foundational and AI driven capabilities, was showcased extensively at the franchise convention and our D&T leaders engaged in meaningful one on one conversations with our largest and most strategic franchisees, deepening relationships and reinforcing our shared vision for growth. We held in-depth product demonstrations for our Byte platform and highlighted some of the unique innovations only possible with an integrated technology stack. As a result of this, we have overwhelming interest from our franchisees in adopting Byte in their restaurants. Completing the rollout of Byte in our U.S. brands remains a top priority in 2025, but given the level of interest, we're beginning to work with our international franchisees on how we can scale Byte into their markets in an accelerated fashion over the coming years. We are also thrilled to announce our partnership with NVIDIA this quarter, a milestone that enables us to accelerate the development and deployment of cutting-edge AI technology solutions across our system. We're focusing on three key areas of the business: voice automated drive through and call center operations to deliver more natural and seamless ordering experiences for our consumers, computer vision technology to enhance back of house and drive thru efficiency through real time analytics, and advanced restaurant intelligence to equip general managers with personalized action plans that drive operational excellence. These innovations will enhance operational performance, support our teams and elevate the guest experience across our brands. We believe AI will become the new operating system of restaurants, and our partnership with NVIDIA positions Yum! At the forefront of that revolution. Now, let me highlight the significant strides across our easy experiences, easy operations, and easy insights pillars. Starting with our easy experiences pillar, where we prioritize delivering frictionless consumer experiences. This quarter, Pizza Hut UK, powered by the launch of our Byte Commerce platform, achieved impressive digital momentum with a 67% year over year increase in mobile app transactions. In 2025, we're set to scale Byte Commerce to four new Pizza Hut international markets and introduce AI powered personalization to drive higher average order value and accelerate transaction growth. KFC is also making strong progress in this area with kiosks now representing its largest digital sales channel, accounting for nearly 50% of all digital sales excluding China, highlighting the growing consumer preference for this convenient ordering option. Turning to our easy operations pillar, where we're focused on optimizing operations to support and empower our team members. In Q1, we expanded Byte Restaurant Coach to an additional 5,000 stores. The Byte Coach's digital routine tools and training have enabled more proactive, consistent, and scalable performance management across our restaurants. At Taco Bell U.S, we onboarded an additional 1,500 restaurants to Byte's Back of House platform, bringing the total stores live to 3,000. This continued momentum reflects strong operator engagement and meaningful progress toward building a fully connected kitchen ecosystem that drives efficiency and data informed decision-making. Lastly, under our easy insights pillar, we're leveraging data to drive smarter, more informed decision making. Our U.S. brands are harnessing our powerful data engine and first of its kind cross brand consumer data platform to deliver personalized marketing campaigns, which for our first test through the email channel delivered 2x the improvement in consumer engagement compared to traditional email marketing. Since the end of last year, we've expanded AI-driven marketing use cases across our brands, further embedding intelligence into how we engage and convert consumers. These advancements are driving smarter targeting, increased efficiency, and stronger returns on our digital marketing investments. Next, I'll provide an update on our balance sheet and liquidity position. Net capital expenditures for the quarter totaled $56 million reflecting $15 million in refranchising proceeds and $71 million in gross capital expenditures. Throughout the quarter, we repurchased approximately 1.56 million shares for a total of $228 million. Our net leverage ratio ended the quarter at 3.9x. Subsequent to quarter end, we took advantage of a favorable window of interest rate volatility to enter into a new three year interest rate hedge, reducing our exposure to interest rate risk on $1.5 billion of variable rate debt for which hedges had recently expired. As a result, we expect $10 million in interest rate savings versus our planned interest expense for 2025, which had contemplated higher interest rates on that debt. As I shared on the last call, subject to market conditions, we expect to maintain our net leverage ratio at approximately 4 times over the medium term by issuing incremental debt subject to market conditions as our business grows. Overall, our capital priorities remain unchanged and focus on maximizing shareholder value through strategic investments in the business, maintaining a strong and flexible balance sheet, offering a competitive dividend and returning excess cash to shareholders. Now, let me share our latest outlook for the full year. 2025 is shaping up to be a complex year to navigate given economic uncertainty and geopolitical challenges. However, we believe this is another year that will demonstrate the resilience of our business model. In the U.S, Taco Bell, which represents approximately 80% of our U.S. profit, is incredibly well positioned to navigate this environment as the value leader with an opportunity to take share from higher priced competitors. Its robust innovation pipeline, including the return of crispy chicken nuggets in Q2, reinforces our view. Internationally, we are seeing that KFC, which represents 85% of our international profits, is recovering from the Middle East Conflict and gaining momentum around the world. More broadly, the strength of our diversified portfolio of four brands and more than 155 countries, combined with our well capitalized 3C partners, allows us to manage country specific challenges and continue investing through uncertainty. Given these advantages and after a strong Q1 performance, we remain confident in our plan to deliver 8% core operating profit growth this year, excluding the lap of the benefit of the 53rd week in 2024. As for the shape of the profit growth this year, in Q2, we expect to experience lower profit growth in part due to 1x expenses such as our global franchise convention. As a result, we expect second half operating profit growth to be higher than the first half, landing us on algorithm for the full year. Finally, on FX, with the U.S. dollar's recent move lower, at current spot rates, we expect a $10 million tailwind to GAAP operating profit for the remainder of the year. To close, while the near term macro environment remains uncertain, our leaders at Yum! are focused on the long term opportunity, the vast underpenetrated white space around the globe. We're making significant progress toward becoming a more efficient, adaptable and data driven organization. And in a challenging consumer environment, we remain energized by the momentum behind bold initiatives like Live Mas Cafe, Saucy and Quench, each offering distinct avenues to grow our top line and expand market share. Our 98% franchise structure, global footprint, and consistent cash generation give us flexibility and confidence no matter the near-term noise. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question comes from Brian Bittner from Oppenheimer. Brian Bittner: Thank you and good morning. My question is on KFC International. It's obviously a very important driver of the Yum! model and it was very encouraging to see the same-store sales for KFC International accelerate in the first quarter to that 3% level. We're sensing some worry by investors out there that perhaps American brands like KFC could be seeing softness outside the U.S. from geopolitical dynamics, although it's really hard to find evidence of that happening. So I would love for you to address your take on this and how you're thinking about the sustainability of KFC's improved trends moving forward? David Gibbs : Thanks for your question, Brian. Yeah, we agree. We are encouraged by what we are seeing out of KFC International. You mentioned the 3% same-store sales growth. Actually, there was an issue with Ramadan timing that negatively impacted the quarter and if you backed out China, our sales internationally were up 5% same-store sales. And that growth is actually quite widespread. If you look at the table in our earnings release, you can see system sales was up in all 10 markets that we measure. So, we are sort of putting the issues from the Middle East behind us in most of the world and feel good about the recovery there. And we have not seen, and we are we obviously monitor this and any other kind of consumer change behavior. We have not seen any anti-American sentiment impacting our stores. One thing I will say is, I think the team is doing an amazing job navigating this environment. They're leaning in a little bit more on value. The Canadian market was up strongly this quarter, leaning in on the $5 price point. Korea did a buy one get one free. I mentioned some of the innovation they're doing that we're doing around the world. In the UK, we launched the Double Down Zinger Burger and stole share from competitors in France. We had a really creative offering. I think I mentioned in the prepared remarks the Crispy Naan Burger that drove really strong sales growth, outdistancing the market and taking share from others. So, there's a lot to like about the recovery, for KFC globally. It's widespread, and sets us up for a good year on KFC. Operator: Our next question comes from David Tarantino from Baird. David Tarantino: Hi, good morning. Chris, I wanted to ask about the full year guidance. And I appreciate your comments on your confidence in achieving the 8% operating income growth. But I wanted to ask related to the back weighted nature of that, your degree of confidence in the second half acceleration in the profit growth, and what gives you that confidence in light of maybe an uncertain macro backdrop? Chris Turner : Yes. Hey, thanks a bunch, David. If we look at the full year, we're off to a good start in Q1, 8% core operating profit in Q1, despite the impact of the strategic moves that we mentioned at Pizza Hut. If I think about the rest of the year, company store margins were on plan in Q1, but Q1 is seasonally low. So if we look at the full year, we expect to be on plan in terms of our company store profit margins. Full year we mentioned on Taco Bell at 24% to 25%. Pizza Hut, if you look at the quarter, those strategic moves, and the timing that we mentioned, it was about an $8 million impact. So big for Pizza Hut, but small in the grand scheme of things at Yum! And if we look at the back part of the year on Pizza Hut, we've got some favorable profit laps that the team thinks that they can lap. And if we look at our full year plan right now for Pizza Hut, we expect to get to roughly flat profit on the full year. Obviously, we're working to drive sales every day. We're pleased with Q1, but our plan isn't dependent on sequential acceleration on same-store sales in the U.S. throughout the year. We've got plenty of levers to drive the full year profit. We're confident in the 8%. Operator: Our next question comes from Dennis Geiger from UBS. Dennis Geiger: Great. Thanks guys. I wanted to ask you another on broader international or sort of impacts from the global macro environment, but specifically on store development across the portfolio. Could you talk a little bit more about that unit development outlook for the year and thinking sort of what sounds like a strong trajectory excluding the planned closures? It sounds like franchisees are in a good spot, returns are encouraging, but any additional commentary on sort of the confidence in the development outlook even if the macro would have a downturn, your confidence there to kind of continue to hit numbers? Chris Turner : Yeah, we're confident in the development plan. As we said, we were just in Australia with our global franchise convention. The mood was incredibly upbeat despite all the complexities around the globe. Our franchisees are confident in the future of our brands. And of course, as you know, our franchisees are larger and more sophisticated and well capitalized on average than franchisees and other systems. So they think long term and they invest through near-term noise. If you look at the year, gross openings in Q1, for the company were higher than in 2023. So we're off to a good start on gross. Really what we had were the planned closures in Turkey and the strategic closures in Pizza Hut. Of course, those closures were significantly lower volume than our systems averages, so the economic impact wasn't significant on those. KFC, second highest Q1 ever from a gross build standpoint. We opened in 53 countries in Q1 versus 43 countries last year. Paybacks remain strong, in KFC. If you go to Pizza Hut, obviously Q1 was lower than normal given all the factors that we just described. But if we look at the next three quarters, for the remainder of the year, we expect net development will be higher year over year. So, on a full year basis, we feel good about the development plan, we feel good about the confidence of our franchisees. David Gibbs : Yeah. And I'll just add, you caught China's call this morning, they reiterated their confidence in their development plan and their guidance, which obviously is a big part of our development plan. Operator: Our next question comes from David Palmer from Evercore ISI. David Palmer: Thanks. David, congratulations on what will be I just was checking this out on your bio that you're going to have a 37 year career at Yum! And yet somehow you still seem pretty young. So good job and well done on that. That's pretty incredible. At Taco Bell, I wanted to ask you, Chris on Byte. It feels like early days in a good way for Byte, not just at Taco Bell, but for Yum! As an enterprise and for your franchisees with other systems. And what I wonder is, right now, maybe this is a period of investment in that you're going to be training models like your voice AI, for example, in the drive thru. It's going to be getting better. So maybe the benefits today are going to be a fraction of what they'll be as that those models get stronger and more robust and the fidelity is greater and you get to over 90% fulfillment and those things could happen more rapidly than we think. Maybe it's one or two years and you have something that even becomes an external revenue source for Yum! as you're sharing these tools and becomes sort of an AWS for you guys. So maybe a comment on that. And then separately on Saucy, we visited that concept, down when we were at the ICR, and it's great concept. I wonder what you're going to do with that. That was a converted KFC, but that kind of looks expensive. Do you -- it's doing big volume. So maybe it becomes a growth concept in and of itself, but maybe you can find some ways to sprinkle a little Saucy onto your existing KFCs in somewhat more of an approachable price point. Chris Turner: Thanks, David. Two good questions. I'll start on Byte. The $1 billion we've invested in our digital technology strategy over the last several years is 1 of the best investments that Yum! has ever made, and you're seeing it come to life. We shared a lot of the data and insights from the impact on the Taco Bell system at the Live Mas Live and then the Consumer Day event just a few weeks back. The data is indisputable. Where we see by helping to drive digital mix expansion, you see faster top-line growth and faster bottom line growth for our franchisees. And we're really just getting started. We've made a lot of progress in the U.S., but at our global franchise convention, Joe Park and the team did an incredible job bringing Byte to life, and we had a ton of interest from franchisees there. So we're looking forward to how we grow by outside of the U.S., and that's our priority is to continue to deliver for our system. As you say, as we incorporate AI, the acceleration should continue in terms of the impact that we can deliver. I won't rule out someday that we may be able to serve restaurants beyond the Yum! system, but our priority right now is serving our franchisees in the system. If I go to Saucy, as you said, it's a great experience, a great start with the concept Saucy by KFC down in that one store in Orlando. We're 4 months in, lots of learnings, but we're very pleased with the start, as we said on the call, 1 of the highest performing stores in the KFC system in the U.S. We are looking at multiple avenues to expand. Of course, we always over the long term, grow with our franchise partners. So you could expect in the long-term franchise stores and company stores, but we're being very methodical, making sure we pick the very best partners to work with, and we want to scale it while preserving the unique identity that comes to life when you're there in that restaurant, plus we've got to scale the supply chain and real estate that goes along with it. So more to come as we go for it on Saucy. Operator: Our next question comes from Danilo Gargiulo from Bernstein. Danilo Gargiulo: I want to ask a question beyond the dual engine approach. So it's very clear the dual engine of growth is working exceptionally well. But for an acceleration further, you maybe need to lean more into the remaining 20% of the operating profit, so KFC U.S. and Pizza Hut. And this might be offering outside returns given that there is a relatively compressed expectation from investor base. So can you expand more on the 3D strategy? And by when do you expect to see same-store sales and traffic to be more sustainably positive? David Gibbs: Yes. Great question, Danilo. Obviously, the twin growth engines are what powers our long-term algorithm. But that doesn't mean that we are incredibly excited about that other 17% and what it can do to further accelerate our growth. Taco Bell International, in particular, is really starting to get a lot of traction. One of the things that came out of this global franchise convention was just massive enthusiasm from our existing franchise base at Pizza Hut and KFC and starting to get more involved with Taco Bell as we're seeing more success around the world. So we talked about that we'll get to 100 new units this year, but their plans are much more aggressive as we go forward, and that will start to become a meaningful contributor to our growth model. In the U.S., KFC International -- KFC U.S. actually had positive transaction growth this quarter. And I think with Catherine-Tan coming in to lead that business, some of the work that's being done on that traditional business as well as the opportunity to leverage Saucy, as David Palmer noted, I think there's lots of reasons to be excited about the future of KFC U.S. And then finally, at Pizza Hut, Pizza Hut in a tough category right now in QSR in the U.S. and certainly the pizza category with everybody reporting negative sales is pressured. But we've obviously seen Pizza Hut have significant growth in years past when they do -- when they get the offerings right for consumers like with melts and value. I know Carl Laredo, who just assumed that the leadership role of Pizza Hut U.S. last year around this time, has got big plans to grow the brand and accelerate expansion in the U.S. And internationally, Aaron and the team have -- as we've commented, have got pretty good positive same-store sales growth last quarter internationally. And lots of reasons to be excited about the recovery that's occurring there coming out of the Middle East. So we don't -- we manage each and every business that we have as a growth business, invest in it and have robust plans for their growth going forward. it's -- we talk about the twin growth engines, obviously, because that's the majority of where our profit comes today. Operator: Our next question comes from John Ivankoe, JPMorgan. John Ivankoe: The question is on the NVIDIA partnership. Really what Yum! expects to accomplish, I guess, both in the short term and the medium term? And if you can help educate us what is exclusive or proprietary or unique between NVIDIA and Yum! that you will be able to take advantage of that presumably many others in your industry that you compete against will not be able to? David Gibbs: Yes. Thanks for the question, John. Obviously, we're incredibly excited about the partnership with NVIDIA. This has been over a year in the making. I was there were in the first meeting with their team when we started to discuss this. And you can see their eyes light up when they start to realize the capabilities that we had at Yum! that we built with thousands of people in our tech department. In terms of what we're working on, obviously, a lot of that is going to be proprietary. What we've said publicly is we're working with them on voice AI. We're working with them on vision, and we're working with them on analytics. But we have 40 different AI initiatives that are staffed and distinct projects at Yum! right now. So there's a world of opportunity for us to work together. And I think they recognize that in the restaurant space, there's nobody that's built the capability that we have. We're the perfect partner for them. The relationship is off to a fantastic start. And as I think somebody said earlier, we really just scratched the surface on what we can do with the tech that we've built. It's been a $1 billion investment. We've built this Ferrari, now it's -- we're just starting to get it out on the track and hit the gas. So I'm excited about the impact that we can have on all parts of our business across the customers, employees, franchisees and their profitabilities. It just has -- it's a virtuous cycle. The bet that our tech gets, the more we can do with it. Operator: Our final question comes from Andrew Charles from TD Cowen. Andrew Charles: Great. And just to echo David, congrats on the story career at Yum! Very encouraging Taco Bell performance in the first quarter and a very tough U.S. domestic backdrop. I'm curious, is it realistic to expect that Taco Bell is up 10% performance on a 2-year basis can persist throughout 2025? David Gibbs: Yes. First of all, Andrew, thank you for the comments on my career, and thank you for acknowledging what is the absolutely standout quarter for Taco Bell, plus 9% when we're seeing everybody else reporting negative numbers, and we know the industry is flat to negative. And to the point about while the trends continue, obviously, I'm not going to give very specific guidance for the full year on exactly where Taco Bell sales are going to end because we're constantly navigating a changing environment. But I will say in terms of April trends, we have seen a general continuation of what we saw in Q1. I know this is a tough operating environment for everybody else in the industry. It just is probably an environment that favors Taco Bell, and that's what you're seeing. They're firing on all cylinders. We talked about it in the prepared remarks how their penetration is going up. So we're bringing more customers into the brand. That's with things like Cantina Chicken, which launched a year ago and is bringing light and lapsed users into the brand. The value that we're offering really stands out in this environment. Nobody else has the $5, $7 and $9 box offerings we have, coupled with the cravings value menu. And then, of course, the hallmark of Taco Bell is their innovation in things like Crunch Wrap sliders. We can go have an event like Live Mas Live and unveil our innovation for the entire year and not have to worry about anybody copying it because nobody sells anything close to what we sell. And that is a very enviable position in the industry. It's why we call Taco Bell a category of 1 brand. And yes, we are seeing a continuation of the trends into Q2, although our lap obviously gets much harder as we start to lap Cantina chicken, so the 1-year numbers have come down a little. So we're excited about the impact of Taco Bell is going to have this year, but really the way it's set up for success, very much fueled by the digital work that Chris has been talking about. David Gibbs: So just to wrap up, I think this was another quarter that demonstrated the strength of the Yum! business model, the resiliency of that model. In 2024, we delivered on our 8% core operating profit commitment when most of our competitors were not able to given the international challenges. And we did it again this quarter, again, with a backdrop of a lot more challenges and the softer U.S. consumer. The consistency of our growth, I think, is the envy of the industry. Our twin growth engines are firing in all cylinders, and the milestones that we reached this quarter on digital, I think we'll look back as incredibly important. The launch of Byte by Yum!, the reaction that we've gotten from the international franchise community, the partnership with NVIDIA, the $1 billion investment is really starting to pay dividends, hitting 55% digital sales this quarter numbers that would have been unheard of just a few years ago. So we're off to a good start for the year, and I'm excited about finishing this year really strong. Operator: This concludes today's call. Thank you very much for joining. You may now disconnect your lines.

Operator: Welcome, everyone, to the Yum! Brands 2024 Fourth Quarter Earnings Call. My name is Lauren, and I will be coordinating your call today. There will be an opportunity for questions at the end of the presentation. [Operator instructions] I will now hand you over to Matt Morris, Head of Investor Relations to begin. Please go ahead. Matt Morris: Good morning, everyone. And thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the cautionary statements in our earnings release and the risk factors discussed in our SEC. Please refer to today’s release and filings with the SEC to find disclosures, definitions, and reconciliations of non-GAAP financial measures. Please note that during today's call, system sales and operating profit will exclude the impact of foreign currency. Our fourth quarter results included an extra week for business units report on a period calendar basis, however, all figures stated on this call will exclude the extra week. For more information on our reporting calendar for each market, please visit the financial reports section of the IR website. Finally, our in-person Taco Bell Consumer Day has been rescheduled for Tuesday, March 4, in New York City Taco Bell Consumer Day will take place in the morning and will be preceded by Taco Bell's iconic Live Moss Live event. Due to limited capacity, attendance for both events will be by invitation only. Direct requests can be made by contacting the investor relations team. Now I'd like to turn the call over to David. David Gibbs: Thank you, Matt, and good morning, everyone. I'm incredibly proud of what Yum! brands accomplished this past year. Despite industry-wide challenges, we continue to deliver strong results, underscoring the resilience of our business model, the power of our iconic brands, and the strength of our world-class franchise partners. Our momentum is clear. We achieved remarkable milestones, generating over 50% of our system sales through digital channels, surpassing 60,000 total units globally, with more than 30,000 at KFC alone, and generating more than $1 billion in core operating profit from the Taco Bell Division for the first time ever. Taco Bell US delivered an incredibly strong year and one that significantly outperformed the industry, showing clearly that Taco Bell is a category of one brand. Our financial results reflect the strength of our business with full year core operating profit growth of 8%, reinforcing the power of our growth strategy and the durability of our business. One of the biggest drivers of our success, and a major unlock for our future, is our proprietary technology platform. In 2024, we accelerated our technology transformation by integrating our digital and technology teams into a unified global team. Additionally, we are thrilled today to introduce Byte by Yum!, our comprehensive collection of proprietary software-as-a-service products that enables our restaurant to deliver faster, more seamless experiences for consumers, while streamlining operations and empowering teams. Integrating our best-in-class, yet previously disparate solutions into a comprehensive, easy-to-deploy solution will help accelerate platform adoption. KFC, Pizza Hut, and Taco Bell, US, all currently operate on our Byte digital ordering platform, and 25,000 Yum! restaurants across the world are using at least one Byte by Yum! product. As we continue to raise the bar on digital convenience and engagement, we are seeing clear results. Our digital sales grew approximately 15% in 2024, and we're just getting started. With the strength of our brands, the power of our technology, and the dedication of our franchisees and teams, we are well-positioned for another year of strong growth ahead. I'll now discuss the strategic drivers that underline our commitment to being the most loved, deeply connected, and always trusted brands for consumers around the world. Afterwards, Chris will provide a deep dive on our fourth quarter results, balance sheet position, and capital strategy, followed by our outlook for 2025. Starting with our loved pillar and our brands that champion consumer experiences, we're pleased to report that our twin growth engines, Taco Bell US and KFC International, delivered 7% system sales growth and 14% core operating profit growth in the fourth quarter. These two businesses, which represent approximately 80% of our divisional operating profit, continue to be powerful drivers of our long-term success. At KFC, which accounts for 49% of our divisional operating profit, units grew 7% driving system sales growth of 3% for the full year, despite a 2% decline in same-store sales. In the fourth quarter, same-store sales were flat year-over-year, with international same-store sales improving to plus 1% and sequential momentum building throughout the quarter. We're especially encouraged by strong recoveries in the Middle East, where same-store sales experienced significant growth and robust performance in Africa, Latin America, and Canada, all of which saw mid- to high-single-digit same-store sales growth. In Africa, comps rose 9%, driven primarily by increased traffic as the team successfully executed a multi-pronged marketing approach, emphasizing boneless and core abundant value offerings while also expanding beverage sales. Latin America's strategy, leaning into everyday value and disruptive promotions, broadens its consumer reach and increased frequency, driving a 6% year-over-year same-store sales increase in Q4. We also saw notable quarter-over-quarter momentum in several key markets, including a five-point improvement across our Asia business, excluding China. Looking ahead to 2025, we remain focused on deepening market penetration by expanding relevant product offerings, including tenders, nuggets, twisters, and sandwiches, while enhancing our value perception. This will involve refining pricing strategies and identifying key category pricing thresholds to ensure we remain at the top of the consumer's consideration. Turning to Taco Bell, which accounts for 37% of our divisional operating profit, the brand continued its strong momentum in 2024, with full year system sales up 6% fueled by exceptional same-store sales growth. Taco Bell not only gained dollar share of total industry spend, but also increased consumer frequency across all income segments, reinforcing its broad consumer appeal. This momentum carried into the fourth quarter, with same-store sales rising 5% year-over-year, outpacing the U.S. industry by five percentage points, driven by the successful execution of Taco Bell's magic formula. The Decades platform, which brought back five of the brand's most in-demand nostalgic menu items, generated strong product innovation, brand excitement, and exclusive merchandise for loyalty members. The team also underscored value leadership with the $7 Luxe Box, one of the most compelling value offerings in the industry. At Taco Bell International, same-store sales grew 3% in Q4, marking the strongest quarter of the year. Several key markets, including the U.K., Spain, and India, saw notable sales lifts after successfully refocusing on brand buzz and disruptive value promotions to drive transactions. Taco Bell's consistent market outperformance, innovative product pipeline, and strategic value positioning set the stage for continued strong growth in 2025. Turning to Pizza Hut, which represents 13% of our divisional operating profit, full year system sales declined 1%, including 2% net new unit growth. In the fourth quarter, same-store sales growth improved 300 basis points sequentially. We saw standout performance in India from successfully driving brand buzz and consumer engagement with innovative limited-time offerings like the Momo Mia Pizza, while also leveraging aggressive value deals to boost frequency in trial. In the US, sales remained under pressure due to more value competition across both the QSR industry and the pizza category. We've seen that everyday value offerings, such as the $7 deal lovers, effectively drive repeat visits from existing consumers. However, to attract lighter-lapse consumers, we must lean further into disruptive and distinctive value promotions. Looking ahead to 2025, our focus will be on striking the right balance between everyday value and disruptive campaigns to engage a broader consumer base. Additionally, we are committed to enhancing the digital experience with improvements to our app platform that will elevate engagement and bring value to the forefront of the consumer journey with Pizza Hut. With the right mix of innovation, value, and digital improvements, we are confident in our ability to strengthen Pizza Hut's relative brand positioning and reinvigorate top-line momentum. At Habit Burger & Grill Division, full year system sales grew 1% driven by unit growth. Encouragingly, same-store sales trends improved in the fourth quarter, fueled by a successful marketing campaign highlighting Habit's recognition as the number-one burger in America by USA Today Reader's Choice. The team will continue to leverage this momentum, emphasizing its suite of award-winning menu items, including the Double Char burger and number-one ranked side, Tempura Green Beans. Beyond top-line growth, we are pleased to see operational efficiencies, translating it to improved profitability. The ongoing labor productivity initiatives launched in 2024 have driven notable improvements in labor throughput, allowing us to reduce restaurant labor expense as a percentage of sales by 150 basis points, despite higher labor rates in California. As a result, restaurant-level margins reached 10% in 2024, 150 basis points higher year-over-year. This progress underscores our commitment to enhancing operational efficiency, strengthening brand equity, and positioning Habit Burger for sustained growth in the year ahead. As we embrace a bolder, more creative approach to innovation, we are taking decisive steps to elevate the consumer experience and meet the evolving preferences of the next-generation consumer. At KFC in December, we opened Saucy by KFC, a flavor-forward test-concept restaurant in Orlando designed for the next generation of boneless chicken lovers. The menu features tenders and sandwiches paired with 11 irresistible sauces complemented by a diverse 11 beverage lineup, including teas, freezes, and refreshers. Early engagement has been promising, reinforcing our belief in Saucy's potential to drive sales and enhance brand relevance. At Taco Bell, we are testing Live Más Cafe, an in-store beverage-focused cafe featuring specialty drinks like chillers, Agua Refrescas, coffees, and more. Consumer response has been strong, with the cafe concept driving meaningful incremental sales. These innovations reflect our commitment to staying ahead of consumer trends, enhancing brand differentiation, and creating new avenues for growth. While these are only one-unit pilots today, we plan to expand both test concepts this year to better understand their long-term growth potential and role in our portfolio. Moving to our connected pillar, we're advancing our ability to serve every consumer everywhere at any time. The strong momentum in digital sales in 2024 is a testament to targeted brand initiatives, loyalty conversion strategies, and continued deployment of our proprietary tech platform. Yum! Digital Sales grew approximately 15% to over $30 billion, underscoring the impact of our digital-first approach. At KFC, excluding China, digital sales surged more than 20%, driven by expanded kiosk adoption. With more than 50% of stores outside China equipped with kiosks at yearend 2024, our teams are focused on reaching 70% penetration by 2026. As digital engagement grows, so does our loyalty opportunity. At KFC, we are scaling our global loyalty program, now live in 14 markets, and early data is promising. Loyalty members show a 12% increase in visit frequency after joining. Loyalty remains a high potential growth area, and in 2025, we will sharpen our focus on optimizing program effectiveness. This includes expanding the adoption of loyalty technology across our portfolio, ensuring we continue to deepen consumer engagement and drive repeat visits through personalized, data-driven experiences. At Yum! we take great pride in our unrivaled culture and talent, including our deep bench of amazing leaders. I'd like to start by congratulating Scott Mezvinsky who will assume the role of KFC division CEO on March 1st. Scott started 20 years ago as an analyst at KFC US and has had multiple positions at both KFC and Yum! including key market leadership roles with KFC around the globe and is currently the President of Taco Bell. Scott's innovative approach and strategic vision have significantly contributed to the success of Taco Bell and I have full confidence that his leadership will drive KFC to new heights. I would also like to recognize and thank Sabir Sami for his years of service and the tremendous impact he made at KFC. Sabir exemplifies what it means to lead with heart, smart, and courage and how these qualities can drive performance. Under his leadership, KFC experienced remarkable growth. As part of our commitment to fostering trust with consumers, communities, and partners, we continue to look for new ways to make our packaging reusable, recyclable, or compostable. KFC US, Taco Bell, and Habit recently participated in the Petaluma reusable cup pilot, which was a strategic opportunity for Yum! to better understand the feasibility of reusables. In addition, Pizza Hut completed the first two of three phases of its initiative to increase pizza box recycling. This project aims to educate consumers about recycling pizza boxes and encourage positive changes in their behavior. Although the pilot is currently limited to one market, we hope that proactive communication about recycling will inspire positive consumer action. Before handing it over to Chris, I want to emphasize that delivering 8% core operating profit growth in a challenging year for the QSR industry while navigating discrete sales headwinds in select global markets is a testament to the resilience of our business model, the power of our brands, and the world-class talent we have leading our businesses around the globe. Looking ahead to 2025 and beyond, we are more confident than ever in our ability to create long-term value leveraging these core competencies. We are taking bold, decisive actions to evolve our organization, positioning ourselves to capitalize on next generation growth opportunities. At the same time, our investments in 2024 involving technology innovation and operational effectiveness will make us more agile and resilient to ensure we emerge even stronger in the next phase of our journey. Everything we do at Yum! is anchored in our mission to grow iconic restaurant brands loved by consumers, connected through teamwork, technology, and our global scale, and trusted everywhere we operate. We are privileged to steward a portfolio of world-class, globally recognized brands backed by a high margin, recurring free cash flow business model operated by best-in-class franchisees that fuels long-term growth and delivers compounding shareholder value. With that, Chris, over to you. Chris Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our 2024 financial results, our balance sheet and capital strategy, and our outlook for the upcoming year. Starting with the fourth quarter, system-wide sales grew 5%, driven by 5% net new unit growth and 1% same-store sales growth. Our topline trends strengthened in the fourth quarter, fueled by our twin growth engines as well as improvements in Taco Bell International and Pizza Hut International. Taco Bell's very impressive performance in the U.S. outpaced the market significantly. At KFC International, a sharper focus on digital engagement, everyday value platforms, and disruptive value offers led to a two-point sequential acceleration in same-store sales growth in markets outside of the Middle East, Indonesia, and Malaysia. In the Middle East, KFC saw a strong recovery in transactions, with traffic showing strong growth and same-store sales increasing by a notable percentage. By December, transactions had largely rebounded to pre-conflict levels. In China, KFC continued to expand its market share, with these gains further accelerating in the fourth quarter. We remain highly confident in our long-term potential in China, supported by our strong partnership with Yum! China, the largest and most capable restaurant operator in the world. Turning to our cost-line items, ex-special G&A expenses were $319 million, reflecting a 7% year-over-year decline. Reported G&A included a $27 million special expense related to our resource optimization project and costs for our German acquisition and Turkey termination. Restaurant-level margins improved by 20 basis points year-over-year to 17.6%, reflecting strong gains at both Habit and Taco Bell. As a result, core operating profit grew 12% due to higher restaurant-level margins and lower G&A spend. Ex-special EPS for the fourth quarter was $1.52. Moving to our full year results, we achieved 5% net new unit growth in line with our long-term aspirations. Same-store sales declined 1% for the year, impacted by broader global consumer sentiment, particularly in markets affected by the Middle East conflict. Ex-special G&A was $1.1 billion, down 6% year-over-year. Through our resource optimization program, we aim to drive greater efficiencies, enhance collaboration across the organization, and eliminate duplicative work across brands. As a result, we removed approximately $25 million in G&A expenditures in 2024, translating to $50 million on an annual basis, some of which we flowed to the bottom line, and some we reinvested into organizational capabilities that drive future growth. As we transition to a more streamlined, digital and technology organization with increased productivity, and as we continue to deploy our capabilities across our system, we're bending the curve on the net P&L impact of our digital and technology investments. Shifting to restaurant profitability, total restaurant-level margins stood at 16.8%, with Taco Bell achieving 24.3%, its second highest full year margin rate behind 2020. Habit restaurant-level margins improved to 10%, rising at 150 basis points year-over-year and over 500 basis points relative to 2022. Notably, despite higher labor rates in California, Habit's labor costs as a percentage of company sales decreased 150 basis points year-over-year, thanks to strategic labor model enhancements and process optimization. As a result of these moves and the hard work of our teams, we achieved core operating profit growth of 8%, a strong result given the macroeconomic challenges. This reflects the resilience of our multi-brand global franchise business model. Our effective tax rate ended the year at 23.5% outside of our previously communicated range of 21% to 23% due to higher tax expense on the gain realized when we sold our investment in Devyani in 2024. This profit growth drove a 4% increase in EPS to $5.39, excluding special items and the 53rd week impact, but including a higher year-over-year tax rate impact of $0.19, as well as an additional $0.18 headwind due to the combined impacts of year-over-year Devyani net investment losses and current year foreign currency translation headwinds. Moving on to our robust development engine, we opened over 1,800 new units in Q4 and more than 4,500 for the year, reinforcing the strong investment appeal of our brands and the high confidence of our franchise partners and the long-term growth potential of our brands. KFC led the way, opening a record nearly 2,900 new units this year across 97 countries, with 16 markets opening 25 or more stores. This year, the brand saw its highest ever store openings with record builds in China, South Africa, Japan, the Philippines, Italy, and Chile. At Pizza Hut, the team opened 512 units in Q4 and 1,280 for the year, driven by expansion in China, India, Saudi Arabia, and Canada. In line with our modernization efforts, Pizza Hut introduced a new US restaurant design concept in November, replicating elements of its successful digital forward model from international markets. This format aligns with evolving consumer expectations by featuring an open kitchen, self-access pickup cabinets, and a digital drive-through with a streamlined menu of high demand items. Taco Bell continued its expansion, adding 347 new units, including 234 in the US and 113 internationally. Turning to the Middle East specifically, the resilience of our business in the region is evidenced by the fact that we opened 171 new stores in 2024 across our KFC and Pizza Hut brands, excluding Turkey. Thanks primarily to our largest partner in that region, Americana. On a net new unit basis globally, in total, we delivered 1,301 net new units in the quarter and 2,757 for the year, reflecting the strength of our gross openings, partly offset by an uptick in closures of primarily low volume, low royalty stores tied to underperforming markets. Nothing is more important than maintaining high standards and protecting the reputation of our brands. In this regard, last month, we terminated our franchise agreements in Turkey and reacquired the master franchise rights for Germany, which will result in the removal of 284 KFC and 254 Pizza Hut stores in Turkey from our unit count in Q1. From time to time, we remove franchisees from our system when they cannot meet our standards. In those situations, the closing units are typically well below our system average AUVs. As a result, and as was the case with Turkey, the financial impact is typically not significant to our ongoing financial performance from such terminations. These transitions create long-term opportunities for new growth-minded franchise partners, and we are actively searching for the right 3C franchise partner to reopen the Turkey market and drive future success. As a reminder, we had a similar situation in Saudi Arabia in 2020, and that market is now seeing strong growth. I'll now discuss our connected brand strategy that continues to revolutionize digital and technology across our system, strengthening operations, enhancing consumer experiences and unlocking new insights. Through Byte, we are making significant strides across our easy experiences, easy operations, and easy insights pillars, paving the way for a more connected, data-driven, and efficient future. We continue to focus on delivering frictionless consumer experiences under our easy experiences pillar. In 2024, we made excellent progress deploying our Byte digital ordering platform, formerly the Yum! Commerce platform. Taco Bell, KFC, and Pizza Hut in the US are all now powered by our Byte digital ordering products with Pizza Hut US substantially completing its transition in Q4. We also migrated three Pizza Hut international markets, including the UK, onto the Byte digital ordering platform in 2024. In the UK, the platform facilitated over 50% digital transaction growth on the app channel and drove faster processing times than the previous system. In 2025, we plan to expand our Byte digital ordering platform to five additional markets while introducing AI-driven personalization and our omni-channel loyalty software. The Byte digital ordering platform and its seamless connection with our Byte restaurant technologies make it easier for consumers to place digital orders while reducing complexity for our team members. Within easy operations, we empower franchisees with our best-in-class Byte restaurant management platform to enhance efficiency and optimize operations. In 2024, we more than doubled the number of stores using Byte's restaurant coach mobile app, formerly SuperApp, to over 20,000 KFC and Pizza Hut locations across 120 countries. This mobile app simplifies routine audits and operations and is the scale platform we will use to deliver AI-driven recommendations to our team members. Meanwhile, our Byte kitchen and delivery system, formerly Dragontail, is now live in over 8,000 restaurants across multiple markets with full implementation planned for KFC US and Pizza Hut US in 2025 and continued expansion globally. At Taco Bell US, we continue to launch our Byte back-of-house technology, formerly Trax restaurant management system, and reached over 1,500 restaurants in 2024 with plans to scale it across the entire system in 2025. Lastly, I'll discuss our easy insights pillar. Our AI and data-driven approach is redefining how we engage with consumers. Our rich hub of transactional detail is combined with operations data, guest experience data, and consumer data to power our AI strategies. One area we continue to be excited about is AI-driven marketing to enable hyper-personalized messaging and experiences. Already, our US brands are leveraging AI to execute targeted campaigns with early tests on email promotions resulting in a doubling of consumer engagement compared to traditional approaches. This breakthrough is just the beginning. We expect to scale AI-driven personalization across all brands and digital channels, creating more relevant and engaging consumer interactions. With Byte’s rapidly expanding capabilities, we are building an intelligent, integrated digital platform that strengthens our brands, enhances consumer experiences, and empowers our franchisees. As we scale these innovations, we are confident they will drive long-term growth, deeper consumer connections, and a more efficient operating model across our global system. The future is digital, and we are leading the way. Next, I'll provide an update on our balance sheet and liquidity position. Net capital expenditures for 2024 totaled $208 million, reflecting $49 million in re-franchising proceeds and $257 million in gross capital expenditures. In line with our commitment to deliver shareholder value, today we announced an increase in our quarterly dividend to $0.71 per share. Throughout the year, we repurchased approximately 3.3 million shares for a total of $440 million. Combining dividends and share buybacks, we returned $1.2 billion to shareholders in 2024. Our net leverage ratio ended the year at 4.0x, with our debt balance remaining largely unchanged. Given our continued confidence in Yum!’s future trajectory and that our leverage has drifted lower by a full turn, we plan to deliver materially higher capital returns going forward than in the past two years. Specifically, in subject to market conditions, we expect to stop deleveraging and maintain our net leverage ratio at approximately 4x over the medium term by issuing incremental debt as our business grows. Overall, our capital priorities remain unchanged and focus on maximizing shareholder value through strategic investments in the business, maintaining a strong and flexible balance sheet, offering a competitive dividend, and returning excess cash to shareholders. Looking ahead to 2025, we remain confident in our long-term growth trajectory while acknowledging some near-term headwinds. Our Q1 unit growth will reflect the 538 units exited in Turkey. We will also, in Q1, move forward with expediting closures of a number of Pizza Hut restaurants in a few markets, resulting in an incremental 200 closures. Despite the resulting decline in our unit count during the first quarter relative to the end of 2024, we expect full-year unit growth in 2025 to reach at least 4% or 5% when excluding the one-time Turkey-related closures. As always, our unit growth is more heavily weighted to the fourth quarter. We anticipate same-store sales performance will improve in many markets, supported by stronger value perception scores and an ongoing sales recovery in markets affected by the Middle East conflict, and we anticipate another strong year of sales performance at Taco Bell U.S. We expect G&A to increase by a low single-digit percentage, excluding the headwind from the reset of below target incentive compensation experienced in 2024. Including this one-time headwind and assuming an on-target bonus expense, we expect G&A to increase by a mid-single-digit percentage in 2025. We are pleased to share that this G&A profile, coupled with the previously mentioned unit and sales growth drivers, leads us to plan another very strong year of core operating profit growth, delivering on our long-term algorithm target of 8%. Turning to items impacting net income, excluding the impact of the previously mentioned potential incremental debt issuances, we expect interest expense to fall between $500 million and $520 million. Regarding our expected tax rate, we, like other multinationals, are seeing ongoing increases in foreign income tax rates and are increasing our forecasted range for taxes to 22% to 24%. In summary, we are optimistic about the year ahead, with strong brand momentum across our portfolio as we enter 2025. As Matt mentioned, we are thrilled to host Taco Bell's Consumer Day in New York City on March 4, where we will showcase Taco Bell Live Más Live and unveil the brand's ambitious growth plans. Originally scheduled for an earlier date, we decided to reschedule this event to prioritize the safety and well-being of Los Angeles residents affected by the devastating California wildfires and to avoid distracting from the ongoing recovery and rebuilding efforts in that community. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question today comes from Dennis Geiger from UBS, Dennis Geiger : Great, thank you. I wanted to ask a bit more about international and sort of the solid results and improvement that you saw through 4Q. If you could touch to some extent on the health of international franchisees, perhaps how that impacts your growth trajectory expected through ‘25, and maybe just any kind of characterization of international conditions, the markets you're in. Are they improving? Is it stabilization? And you're just kind of taking share. Any commentary on that would be helpful. Thanks, guys. David Gibbs: Yes, hi, Dennis. Thank you for the question. Obviously, international is a complex environment for us in the last year, but the good news is things are improving and we feel a lot of confidence going into 2025. I would break, let's take KFC since it's one of our twin growth engines and their international business, I would break it down into three parts. The first is those markets that had a high impact from the conflict in the Middle East. That would be the Middle East markets plus Malaysia and Indonesia. You can see for the full year, our sales, system sales were down 12% in those markets. But in Q4, we were up 11%. We're regaining momentum, we're getting the lapse that are obviously much more favorable. But that obviously had a fairly significant impact on our full year numbers. The flip side of that is there's a number of markets we're tracking where we believe there was no impact. If you look at all those no impact markets in aggregate, the full year system sales growth was 9%. That is very encouraging that within unimpacted markets, our business is performing very strongly at KFC. Now if you look at the performance in Q4, it actually accelerated. It's up to 10% system sales growth. So those two things sort of offset each other, and then you've got all the markets in the middle. And just a comment or two on the markets in the middle, there are a lot of markets where we are seeing where we saw some impact on a trade area by trade area basis, not market-wide, but just trade areas depending on the communities they serve. Those markets are also recovering. An example of that would be a market like India that in Q4 saw a five point swing in same-store sales growth to the better. So we're seeing the improvements in the trade area by trade area impacted markets we're seeing them in the fully impacted markets from last year and we, as you added all up for last year was 4% system sales growth but as we go into next year obviously that creates easier lapse and momentum in the business. Chris, I know you'll maybe you can talk a little bit to franchisee health. Chris Turner: Yes, Dennis on Franchisee Health, you step back we obviously aspire to be and we believe we are the best franchisor in the world in the restaurant industry. Top three spots in the entrepreneur franchise ranking last year, Taco Bell many years in a row being the head of the Franchise 500 and the number one indicator of global franchise health is the gross unit trajectory that we have 4,500 units this year even when we lost a little bit of the gross unit upside from the Middle East situation that's the ultimate test. Always a few situations that we're working you saw a couple of those have good resolution, Americana acquiring the Pizza Oman business and so we're continuing to stay close to our franchisees around the globe but feel good about the overall health of the franchise base. Operator: Our next question comes from Brian Bittner from Oppenheimer. Brian Bittner: Good morning. Thanks for taking the question. You talked about 2025 being in an on algorithm year for core operating profit growth of at least 8% and you also mentioned or hinted that unit growth may be a bit below the 5% algorithm because of the Turkey closings in 1Q. So just curious how are you modeling the makeup of that small gap? Do you anticipate same-store sales to be a bit above the algorithm maybe as KFC International recovers? It seems like G&A based on your commentary is not going to be a big tailwind like it was in 2024. So just any additional details on the 2025 algo that you are willing to give would be appreciated. David Gibbs: Yes, as far as the algorithm goes, as you can imagine, you can get to the outcome of the algorithm, 8% core operating profit in a number of different ways as we have varying royalty rates around the world. The Turkey closures, for example, aren't much of a headwind because that entire Turkey business in aggregate was a $200 million sales business and with non-material royalty income. So I think the parts of the business that we feel really good about are going to drive our growth this year. And those are our twin growth engines, the recovery in KFC International, that I talked about just a second ago. And then Taco Bell US, a strong fourth quarter, far out distancing the category, a lot of momentum in the business. I don't want to steal our thunder from the Consumer Day that's coming up in just a couple of weeks, March 4th in New York City. But when you take a look at those two twin growth engines and what they're able to do, I think we feel quite confident in our ability to hit that 8% core operating profit number. Operator: Our next question comes from David Tarantino from Baird. David Tarantino : Hi, good morning. My question's on your G&A outlook longer term. Chris, I was hoping maybe you could frame up where you think that could go as a persona of system sales now that you, I think you mentioned bending the arc on some of the impact from the tech investment. So should we expect that to move lower over time or I guess any way to frame that up would be helpful. Chris Turner: Yes, thanks, David, but we're proud of the results that we've achieved with our resource optimization program, coupled with the progress with Byte by Yum! on bending the curve of the net P&L impact of those digital and technology investments. And you saw the result and how that played out in G&A this year. Of course, that was coupled with our incentive comp because of the Middle East trends being below plan. So as we look to this year, you're going to see, as we said in the comments, low single digit percentage increase, which I think is in the ballpark of a normal increase for a scaled asset light franchise or and then on top of that, we've got about a $35 million year-over-year lap on the reset of that incentive comp. But I think if we go long term, we're going to continue to get leverage on our G&A as we grow the top line. And so to your point, over the long haul, G&A, as a percent of system sales should continue to come down. We of course are going to make investments in things that drive the long-term health of the business. We're doing that in AI right now, organizational capabilities around supply chain. So we're always thinking about long-term health, but yes, in general, we're going to get leverage over the long term. Operator: Our next question comes from Gregory Frankfurt from Guggenheim. Gregory Francfort : Hey, thanks for the question. My question's just maybe going back to what you want Scott to do with the KFC US business and how you envision him maybe making his stamp and improvements there. Is this a new product, a new cycle kind of calendar? Is it asset upgrades? Is it kind of a bolder rethink of the box and the format? Just any thoughts on what he can do and what you're envisioning that sort of improvement to look like. Thanks. David Gibbs: Thanks Gregory. Yes, as far as Scott coming in and taking leadership with the KFC brand globally, there's a lot of excitement. Scott's worked all around the world for KFC, knows the business from the inside out, worked at multiple functions. Fantastic leader, has built a great resume of experiences and success at Taco Bell. And we couldn't be more excited about him assuming leadership of KFC. As far as his fascinating part about all this is he started at KFC US 20 years ago. So he sees the brand in all these countries around the world and grounded in the KFC US business going back as far as 20 years. I think he's got a lot of thoughts about ways to strengthen that business, which will let him describe to you as we get further into this journey. But the big issues are just more modernizing the experience for consumers, leading into digital, which that work has already started. You've seen what we're doing and you saw some of the press around our saucy concept, which certainly the initial results from that, to put it mildly, have been very encouraging. So we're going to expand that test pretty dramatically this year to try to get a better read on how elements of that or how that solution would play for the KFC US long-term business. So there's a number of things working between digital and concepting and menu innovation that I think Scott will be perfectly positioned to help lead and help refine. Operator: Our next question comes from David Palmer from Evercore ISI. David Palmer : Thanks and agree on those comments on Scott. Congrats to him on that promotion. Wanted to ask one about the technology stuff and Byte. I think Yum! brand is a little different than that fast food franchise or peers and the level of vertical and internal build-out of tech capabilities. And obviously it might be different in terms of tech fees for the service. So maybe I'm wrong in drawing that distinction between Yum! and the peer group, but it's obviously a different strategy for the company and it's one that's exciting going forward. Could you just talk a bit about the arguments for and against this type of thing for the franchisees versus an outsourced model? And then what Byte can do for you and your profit growth in ‘25 in long-term? Thanks. David Gibbs: Yes, thanks for the question, David. And it's one of the aspects of the business that we are really excited about. We just issued the press release this morning about Byte. So it's a little bit of a coming out party in terms of how we talk about it. My experience working in this business for 35 years is when you're beholden to third party platforms on technology. It's very difficult and it creates a lot of friction in the business. So we go back 10 years. This strategy was started back then as I came into the CFO role and wanted to make sure that we controlled our destiny with the belief that the largest restaurant company in the world, we should have the best technology in the world for our franchise partners at the lowest possible cost. And that we've been on a mission to bring that to life over the last few years. We've done that through acquisitions of world-class technology. We've done that through some in-house development. And one of the really important aspects of this, which is in the release, but I just want to highlight, is the way that we have now built a tech stack that works together. There are a lot of people that operate restaurants where you might have dozens of different tech vendors that you're trying to coordinate with to get to your restaurant to work every day. Think about the complexities of that and trying to get those different disparate platforms to all work together. It's very difficult. We've experienced that firsthand. By building our own tech stack and making that investment, we're giving our franchisees a much more turnkey solution that gives us more capability in terms of how we can grow sales, make the experience easier for the employees in the restaurant. And that is what's behind putting everything under the Byte umbrella and making sure it all works seamlessly together. We now have all the components to do that. It's been rolled out in parts of the world, as you saw from the numbers. Taco Bell US is the head of the rest of the world in terms of rolling it out, you're seeing the results we're getting there, but the rest of the world is going to catch up. So we're very excited about it. When Chris Turner joined us, he brought in a lot of expertise in this area too, and has been the architect along with Joe Park. And then prior to Joe, Clay Johnson on all of this. So I'll let Chris say a few words as well. Chris Turner: Yes, David, just building on your point that this is a natural milestone on our journey. Keep in mind that the overall purpose of the journey is to deliver advantage capabilities with advantage economics to our franchisees that will drive faster top line and bottom line growth for both the franchisees and for Yum! That's what's driving all of this. And of course, Byte, as David said, just indicates the underlying spirit and increasingly the reality of the seamless integration between the elements and the ecosystem. Plus it makes it easier for us to communicate that integrated ecosystem. I'll give you a couple of examples of how that speed comes to life. You heard us talk about on the last call and on this call, our AI-driven marketing personalization efforts that we were able to stand up very quickly across all three brands in the US because they all have Byte digital ordering in place. Historically, that would have taken us a lot longer to do. And we would have done it at different places across each of those brands because of all the integration work with third parties that would have been required. And so that's enabling speed on bringing new capabilities to market. That integration between elements of the Byte ecosystem is also one we were able to move so fast with voice AI at Taco Bell as an example. So we will continue to drive the strategy. We still got a long way to go in deploying Byte across markets around the globe, but we started with our largest brand country combinations in the US. So as we continue to get adoption, that helps us to reduce the impact on the P&L of our investments, but it was the right thing for us to do the last few years to invest ahead on behalf of our franchisees to build and acquire this ecosystem. As David mentioned, Taco Bell US is the place where we have the most of the elements in place today. And I think it's undeniable that it is adding to Taco Bell's top line success and the bottom line success for our franchisees. Operator: Our next question comes from Brian Harbour from Morgan Stanley. Brian Harbour: Yes, thanks. Good morning, guys. I wanted to ask about that topic, too. Is sort of bringing under one umbrella, are you suggesting that there's a pretty significant acceleration and roll out of that this year? Have you sort of accounted for the net impact of that in the guidance that you provided? And I guess you point to Taco Bell US, which is doing very well. Is there any other kind of like illustration in the other brands that you can point to for this is where these technologies are really driving sales or if you sort of separate out some of the markets, have you seen that visible impact? David Gibbs: Yes, so we do think that bringing together under the Byte umbrella, again, reflecting the underlying integration that we're building will help us to accelerate over the long term and how we deploy. It makes the deployment faster and it makes it easier to communicate to our franchise partners, the benefits of the overall ecosystem. So, yes, we will continue to drive deployments. Of course, at the same time, we think that those deployments will turn into acceleration and top line growth and acceleration and improvements in unit economics, which supports the unit development story. KFC International, as an example, has had tremendous growth in digital ordering and part driven by kiosks. Every time we convert to digital sales, we hit higher check size, we get increase in frequency, and we get productivity benefits in the restaurant. We talked about KFC loyalty now in 14 markets. France, as an example, we had loyalty sales increase by 40%. So, elements of the overall strategy are coming to life and helping us to drive improvements in the business around the globe, but there's more to come as we do that. Of course, at the same time, as we flow this into the economics. We will need to continue to make investments in the next generation of capabilities to stay at the leading edge. Operator, we’ve time for one more question. Operator: Our final question today comes from John Ivankoe from JP Morgan. John Ivankoe: Hi, thank you. The question is on the unique challenges and opportunities you may have of attracting and retaining technologists, best-in-class leading edge technologists, and Byte by Yum! Obviously, being a restaurant analyst, we haven't quite lived through the gold rush of people searching for AI talent and what have you, but it does certainly appear that that's ongoing in many different companies around the U.S. and around the world. So talk about maybe something special or unique you can do to attract and retain the best, not just kind of today, but as this technology and the demand for talent evolves. Thank you. David Gibbs: I'm glad you asked that question, John. It's probably something that I was a little bit concerned about myself early on in this journey. But the great news is if you think about Yum! known for being one of the great developers of talent in industry, our culture, the growth that our businesses are experiencing and will be experiencing, this is a very attractive place to work. And we are seeing that we are able to attract great talent. Obviously, Joe Park is already becoming an industry icon and leading our technology work. We're not seeing very high turnover in technology, and I can tell you that team is pumped. This announcement today is the result of a lot of their hard work put by together, and we have people looking to come into Yum! all the time and join the technology team. They've got a really exciting journey and they've got the best case scenario wide open space, lots of funding and backing and all of our 60,000 plus restaurants to roll this technology out to and it is one of our competitive franchises in every part of the business, so we could attract the best talent in the industry and that is true in technology. I want to thank everybody for the time on the call today. As we talked to investors, one of them had a great way to describe Yum! which I’ll just sort of quote. You are a quality compounding investment with diversified global exposure in the more resilient, less discretionary consumer space. And I think that is really well put and what you saw in 2024 is exactly that. We delivered our 8% core operating profit goal despite some massive headwinds and we did that because we’ve talented leaders around the world. We’ve some amazing iconic brands and amazing franchise partners. And that will not change. That is our strength and as we go into 2025, as we mentioned, all of that is adding up to momentum at the end of Q4, moving into 2025. And tremendous confidence in our twin growth engines, the ability of those growth engines coupled with Byte and some of the other things we talked about to drive accelerated growth. I’m looking forward to seeing everybody in New York City on March 4th, so if you haven’t reached out to our IR team and if you want to attend, please do so, we love to see there. Operator: This concludes today’s conference call. Thank you for joining everyone. You may now disconnect your lines.

Operator: Welcome, everyone, to the Yum! Brands 2024 Third Quarter Earnings Call. My name is Lauren, and I will be coordinating your call today. There will be an opportunity for questions at the end of the presentation. [Operator Instructions] I will now hand you over to Matt Morris, Head of Investor Relations. Please go ahead. Matt Morris : Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and 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 our earnings release in the relevant sections of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call, losses and sales growth and operating profit growth results exclude the impact of foreign currency. As a reminder, several of Yum! Brands business units report on a period calendar basis, including all U.S. and Canada brands, KFC U.K. and KFC Australia. When forecasting 2024, please keep in mind this year will include an extra week in the fourth quarter for those entities. For more information on our reporting calendar for each market, please visit the Financial Reports section of the IR website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. We would like to make you aware of upcoming investor events. Our in-person Taco Bell Consumer Day will be held Tuesday, January 28, in Downtown Los Angeles. Taco Bell Consumer Day will take place in the morning and will be preceded by Taco Bell's iconic Live Moss Live event. Due to limited capacity, attendance for both events will be by invitation only. However, direct requests can be made by contacting IR at yuminvestormailbox@yum.com. Our fourth quarter earnings will be released on February 5 with a conference call on the same day. Now I'd like to turn the call over to David Gibbs. David Gibbs: Thank you, Matt, and good morning, everyone. Despite the complex consumer environment around the globe, our team managed to grow profits 3% year-over-year with the quarter bringing to light the real strengths of our twin growth engines, Taco Bell U.S., which meaningfully outperformed the industry on comp sales and KFC International, which meaningfully outperformed on unit growth. Although the U.S. QSR industry experienced negative traffic trends in Q3, Taco Bell U.S. posted an impressive 4% increase in same-store sales and led the industry in Q3 on value perception among all QSR users. Taco Bell delivered another quarter of significant market share gains driven by the execution of the brand's magic formula involving brand buzz, value, category entry points and digital engagement. Taco Bell's competitive advantages in innovation, value leadership at compelling price points and strong consumer connection are clear reasons why the brand remains a category of one when it comes to winning with consumers in any economic environment. Our other twin growth engine, KFC International, delivered 9% year-over-year unit growth, an incredible result that led all major competitors and that reflects the underlying power of the brand and the confidence of our franchise partners in the future of our business. KFC International's development was diverse, spanning 64 countries. Furthermore, gross unit openings year-to-date are up nearly 150 units over last year. Building on this momentum, KFC is enhancing its core capabilities to ensure growth over the long term by establishing 7 centers of excellence focused on restaurant design, customer insights, market planning, food innovation and more. These centers will drive operational and marketing excellence while leveraging the brand's scale, strengthening a competitive moat that has helped KFC grow successfully around the globe in 150 countries, an achievement that few global brands have ever accomplished. It is no secret that the global macroeconomic environment remains complex. In many parts of the world, our brands are delivering outstanding growth and outperforming the competition. We continue to see strong sales growth in KFC regions such as Africa, Latin America and the Caribbean and parts of both Europe and Asia. In South Africa, where our KFC sales are up strongly, our teams have improved our value proposition, limiting recent price increases to 1% in comparison to nearly high single digits in affected local competitors. In some other geographies, our permits did not meet our expectations, and our teams are working with our franchise partners to reestablish strong value offerings, all while safeguarding franchisee profitability. The complex consumer environment that exists in many markets around the globe has contributed to pronounced regional sales variations, which has caused our system sales growth to fall short of our long-term algorithm this year. The most pronounced regional headwinds continue to be in the Middle East, Indonesia and Malaysia, stemming from the impact of the Middle East conflict. In these markets, KFC same-store sales declines have generally ranged between 15% and 45% throughout the year, including Q3. We are fortunate that the vast majority of our restaurants are in the hands of highly scaled and well-capitalized franchisees around the globe, including Americana, our largest partner in the Middle East, who can weather temporary headwinds like this over extended periods. However, in a few isolated cases, the scale and duration of these sales impacts are affecting the financial health of our less scaled or less well-capitalized partners, particularly those whose restaurants have been most heavily impacted by the Middle East conflict. We are working closely with those specific partners to help them navigate the challenges and implement tactical and strategic changes, including pricing studies, introducing new value offerings and adjusting development schedules to improve profitability and position business for healthy growth in the future. As we mentioned on the second quarter earnings call, the same geopolitical pressures have grown to meaningfully, but less severely impact certain markets beyond the Middle East, Malaysia and Indonesia. As an example, we have seen in the U.K., Australia and New Zealand that KFC same-store sales performance in certain individual stores has been significantly impacted. Importantly, these specific pressures have been location specific and not indicative of broader global trends. Specifically, our KFC markets, excluding China that we believe were not materially impacted by the Middle East conflict, reported an encouraging low single-digit increase in same-store sales. As we shift to the U.S., the overall QSR industry is navigating a complex consumer environment. Of course, our scale and digital capabilities are an even bigger advantage right now and our powerhouse Taco Bell business, which represents 75% of our U.S. profit, is thriving. While our Pizza Hut and KFC businesses are more challenged in this environment, we have fantastic leaders in place in these businesses who are working through revised strategies to create a step change in the results. Overall, we achieved 5% unit growth year-over-year, an impressive outcome considering the obstacle faced by our teams. Closures have temporarily increased this year, primarily in markets dealing with impacts from the Middle East conflict and in China. Despite the strength in our gross unit openings in this tough environment, the risk of an increase in closures of lower volume units affected by the Middle East conflict could impact our Q4 net new unit growth and put at risk our ability to deliver our 5% unit growth target. Given the lower volume nature of these units, we would not expect a material financial impact from their closure. While 2024 unit growth will reflect a temporary reset on unit closures, we're encouraged at the pace of our gross unit openings that Chris will discuss in more depth and as we look at our 2025 pipeline, see no change in pace behind our gross opening momentum, giving us confidence in the strong fundamentals of our brands. Now let me highlight our relevant, easy and distinctive brands, or RED for short, in more detail followed by our unrivaled culture and talent and good growth strategy. I'll then turn it to Chris to provide further updates on our third quarter results, including our bold restaurant development, unmatched operating capabilities and balance sheet position and capital strategy. Starting with the KFC division, which represents 50% of our divisional operating profit, system sales grew 1% as significant unit growth was offset by the aforementioned Middle East conflict impact and transaction softness in several regions navigating constrained consumer spending. Such challenges have led competitors to introduce incremental value offers, namely to capture low ticket transactions in markets such as the U.K., France and India. The good news is that despite category headwinds, we are gaining or holding share in several of our largest international markets as well as seeing positive transaction growth in markets like Mexico, Poland and Korea. We're also sustaining high system sales growth in larger regions like Africa and Latin America and the Caribbean, where we benefited from product innovation and more stable consumer environment. Helping KFC to remain agile has been the focus of its robust digital strategy. Digital mix, now over 55%, grew 3 percentage points over the previous quarter on expanding kiosk and click-and-collect channels. In the U.S., limited time offers underperformed expectations due to a more intense competitive environment, particularly within the chicken QSR category. In Q4, the team will focus on strengthening its value proposition and has recently introduced boneless innovation like original recipe chicken tenders. Additionally, the team will capitalize on the success of the KFC Rewards membership growth, which has contributed to digital sales growth over 20% from last year. Moving on to Taco Bell, which contributes 37% of our divisional operating profit. System sales grew 5%, driven by a 4% increase in same-store sales. This quarter, Taco Bell gained momentum with the launch of the Cheesy Street Chalupas, marking the brand's first innovation on the canteen chicken platform. Further momentum came from the reintroduction of the Cheez-It and investing behind the $7 Lux cravings box. The team tapped into cheesy Street Chalupa innovation to drive delivery sales by offering exclusive access to an aggregates premium members, which led to 7 daily sales records for the aggregator during the quarter. Toward the end of the quarter, the team made the strategic move to make breakfast optional for our franchise partners, providing greater flexibility to spend our marketing dollars more effectively on growth drivers such as Cantina Chicken and our cravings value venue. These are platforms where our marketing spend has had significant success building new and very profitable sales layers. We expect the net impact from these changes to be less than a 1-point headwind to same-store sales growth. We intend to reintroduce breakfast in the future with a bolder, more distinctive Taco Bell approach. In another strategic priority involving growth through its loyalty program, Taco Bell drove impressive advancements with 90-day active loyalty users increasing by 50% year-over-year. On the digital front, where Taco Bell U. S. has implemented the majority of Yum!'s digital and technology platforms, digital sales grew an amazing 30% year-over-year. Internationally, Taco Bell focused on executing its 3 core pillars, brand, food and value, leading to positive same-store sales growth for the quarter. Very encouragingly, that momentum has continued into Q4. To strengthen brand relevance, the team is connecting more with local cultures, including most recently in the U.K. with the launch of encore hours, allowing stores to stay open late near music venues to serve fans after shows. We were also pleased to see our first equity store opened in the U.K. in late October with a very encouraging consumer response, giving us confidence in our accelerated investment in the brand internationally. Clearly, Taco Bell International has the potential to be a third growth engine for Yum! for many years to come. At Pizza Hut, which represents 13% of our divisional operating profit, system sales declined 1% as the same-store sales decline of 4% was partially offset by 2% unit growth. The third quarter started strong in the U.S. with momentum from my hot box and a robust marketing plan for the Chicago Tavern Style Pizza, which translated to positive traffic growth for the full quarter and ahead of the QSR industry. However, product news and bounce-back offers were not sufficient to compete against deep value offers in the market. Throughout the quarter, several markets became more intentional in pursuing value, including China, India and countries within the Middle East. As an example, in some of our pressured markets, we shifted towards a lower price point value over abundant value. At the same time, we are making progress in repositioning the brand over the long term, most recently hiring a new Chief Brand Officer, and have plans to improve and expand our consumer relationship management and loyalty platforms next year. Lastly, at Habit Burger Grill, while overall sales remained under pressure during the third quarter, there were encouraging signs of momentum as the quarter progressed. Same-store sales trends improved each period in the quarter as the team leveraged recent accolades, including being recognized as having the #1 grilled chicken sandwich by daily meal and the #1 fast food burger inside by USA TODAY. These accolades were impressive, given many of the other contenders have a broader national presence with larger store footprints. Clever marketing efforts, combined with refinements to have its media mix using Yum!'s proprietary marketing analytics platform, successfully ignited consumer excitement driving visits to the brand to experience the award-winning Double Char and tempura green beans. I'm pleased to see this positive momentum continue into the fourth quarter. Now I'll turn to our good growth strategy, starting with our people pillar. A hallmark of Yum! and a key driver of our performance is the strength of our talent base, including our deep bench of amazing leaders always ready to take on bigger roles. I'd like to start by congratulating Erica Burkhart, who was recently promoted to Chief Legal Officer and Corporate Secretary for Yum!. Erica is a seasoned and respected leader throughout Yum!, who has been with the company for over 20 years. She leads by example and has earned the trust of her peers and teams alike, providing invaluable insight and counsel on key initiatives across Yum! and our brands. I would also like to recognize her predecessor, Scott Catlett, for his years of service and the tremendous impact he made at Yum! and our brands as he starts a new chapter outside of the company. Additionally, as we progress on our journey to becoming the leading global digital restaurant company, I'm pleased to announce Joe Park has been named President of Yum!'s Digital and Restaurant Technology Ecosystem in addition to his overall Chief Digital and Technology Officer role. He's doing a fantastic job bringing our vision to life for a fully collaborative digital and technology team across Yum! and is reinventing how the team works to drive increased consistency and efficiency in tools and processes as well as greater deployment of AI-driven capabilities, leveraging our global data assets and scaling our proprietary technology. Also during the quarter, for the first time in over 2 years, we brought nearly 200 of our most senior leaders from around the world together for our Global Leadership Summit. Our technology leaders at the Summit made up the largest functional group, demonstrating our focus on leaning into our digital leadership and our investments in AI. We showcased the progress we're making on our good growth journey and what we're doing behind the scenes to reinvent how we run the business by better exploiting our scale to drive future growth. Moving on to the planet pillar of our good growth strategy. Just last month, we published our annual global citizenship and sustainability report. This report highlights Yum!'s long-standing dedication and continued progress and investments in our 3 priority pillars of people, food and planet. We are on track to reduce our greenhouse gas emissions by nearly 50% by 2030 and continue to make progress around sustainable packaging building upon our harmonized cross-brand packaging policy. In closing, in a difficult operating environment, we are encouraged by the underlying strength of the fundamentals of our business. Stepping back, our twin growth engines are demonstrating what makes them special through share gains at Taco Bell U.S. and strong franchisee investment in unit expansion in KFC International. Despite the numerous headwinds, we are proud of the resilience of our overall business model and our ability to deliver 6% core operating profit growth year-to-date. Importantly, our teams are making great progress in ushering our brands into the [indiscernible], leveraging Yum! scale and digital and technology capabilities to improve sales and operations, leading to improved franchisee profitability and value creation for our shareholders. With that, Chris, over to you. Chris Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers, our balance sheet and capital strategy, and provide an update on our outlook for the remainder of the year. Turning to our third quarter financial results. System sales grew 1%, driven by 5% unit growth. As the third quarter progressed, sales trended below our expectations due to a more challenged U.S. environment, soft trends in China and continued pressures from the Middle East conflict. Ex special G&A was $252 million for the quarter, less than anticipated due to lower performance-based compensation. Reported G&A was $263 million, including $11 million of special expense related to our ongoing resource optimization program. Restaurant-level margins were 15.8%, modestly below levels from last year, partially due to KFC U.K. and Ireland equity restaurants acquired in the second quarter. Core operating profit grew 3%. Third quarter ex special EPS was $1.37. Our ex special tax rate was higher year-over-year at 24%, translating to a $0.09 year-over-year EPS headwind. Now on to development. In the third quarter, we achieved a significant development milestone, surpassing 60,000 restaurants worldwide. Overall, we increased our unit count by 547 units, reflecting 1,029 gross openings and 482 closures. KFC drove Yum!'s unit growth with the team opening 685 gross units led by China, India, Thailand and Japan. Notably, we've seen an acceleration this past year in net new unit expansion in markets like Italy, the Philippines and South Africa. Most of our key KFC markets report paybacks less than 5 years, and as a result, we continue to see a strong appetite by franchisees for unit growth. In Saudi Arabia, for example, we expect our store count this year to grow by nearly 30 restaurants with paybacks still under 3 years despite conflict-related sales pressures. Turning to Pizza Hut. We added 63 units this quarter, driven by 292 gross unit openings offset by 229 closures. New unit openings were led by China, India and the United States. Taco Bell added nearly 50 gross units, led by the U.S., while 14 other countries contributed to growth. Recall, Yum! China went through a portfolio restructuring earlier this year, resulting in 60 closures in the first half of the year. Excluding China, Taco Bell International's unit count increased 7% year-over-year. Last month, we also opened our first store in Bosnia and our first equity store in the U.K. We expect to open several equity Taco Bell U.K. stores by year-end, providing a fantastic test bed to generate insights to guide the business model, including an innovation, pricing, technology and restaurant experience. Moving to our digital and technology initiatives. We continue to make great progress on both of the parallel phases of our journey. Recall, the first phase is focused on acquiring, building and scaling a comprehensive suite of platforms to enable ownership of our data, control of the digital ecosystem speed of innovation and cost advantages. These foundational platforms include aside, our young, cloud-first point-of-sale system, our e-commerce engine, our delivery optimization platform, Dragon Tail, Super App, an integrated restaurant management platform for team members, restaurant general managers and area coaches, and a scalable global data platform that houses over 80% of our transaction data. In the second phase, we are focused on maximizing the value creation potential of our platforms through AI and by leveraging our extensive data assets. We believe we are still only scratching the surface of the full value creation potential of our capabilities with exciting innovations, including One Touch labor scheduling and inventory management, consumer feedback dashboards, quality control monitoring and personalized AI-driven marketing, to name a few. Let me now discuss additional digital and technology accomplishments for Q3 across our easy experiences, easy operations and easy insights pillars. I'll begin with our easy experiences pillar, focused on providing frictionless experiences to our consumers. Taco Bell is currently working on 2 significant digital initiatives in the drive-through, voice AI and loyalty program enhancements. Drive-through voice AI continue to scale across our network with many franchisees eager to test this new innovation. To date, we have processed over 2 million successful orders with the system now in place in over 300 Taco Bell U.S. stores, making Taco Bell the largest QSR voice AI brand in the world. For loyalty, Taco Bell is using its connected ecosystem to allow loyalty consumers to identify themselves at the drive-through and kiosk, enabling personalization of their ordering experience and earning and redeeming of loyalty rewards. This was rolled to 160 stores in Q3, and we're encouraged with early results, which clearly show an increase in sign-ups and in daily loyalty transactions all without an impact to speed of service. As required enablers of these technologies, we have accelerated deployment of digital menu boards to now over 6,000 restaurants. Digital menu boards will be a Taco Bell brand standard in 2025, along with Yum!'s proprietary point-of-sale system side. Our other key initiative under this pillar is the rollout of Yum!'s e-commerce engine. We completed migration of a substantial portion of Pizza Hut's U.S. traffic in the quarter and are on track to complete migration by year-end. We also recently launched the Yum! e-commerce engine in Pizza Hut U.K., our second international Pizza Hut market, and will target 2 new Pizza Hut international markets before year-end. Next, I'll discuss our easy operations pillar, where we continue to deploy our world-class technology to provide our franchisees and team members with the capabilities to operate their stores more effectively and efficiently. This quarter, we started to expand Super App to KFC U.S. now having reached 50 countries and nearly 5,000 KFC and 8,000 Pizza Hut stores with the technology. We are planning to nearly double the KFC penetration by year-end. Recall, Super App is our modular restaurant management platform that offers a suite of products to managers and team members to simplify their jobs and improve operations. This quarter, we also reached significant scale for our AI-powered labor scheduler, now in use in over 5,000 Taco Bell U.S. stores, driving significant improvements in labor planning accuracy and labor efficiency. At Taco Bell, we now have AI-powered forecasts, driving both our labor scaling and inventory management processes. We expect to scale these solutions to our other brands throughout 2025. Lastly, I'll discuss our easy insights pillar. This quarter, we successfully launched personalized AI-driven marketing campaigns that relative to traditional digital marketing campaigns generated significant increases in consumer engagement, leading to increased purchases and a reduction in consumer churn. This innovation has the potential to greatly improve our marketing return on investment and allow us to extract the unique benefits of our proprietary global data hub, and we expect it to be broadly and easily scalable across brands. Next, I'll provide an update on our balance sheet and liquidity position. Net capital expenditures for the quarter were $34 million, reflecting $52 million in gross CapEx and $18 million in refranchising proceeds. We repurchased 2.1 million shares totaling $277 million. Our net leverage ratio ended the quarter at 4.1x. As a reminder, we have no debt maturities until 2026. Our capital priorities remain unchanged: investing in the business, maintaining a resilient balance sheet, offering a competitive dividend and returning excess cash to our shareholders. Before I close, let me touch on the outlook for the balance of 2024. We expect Q4 core operating profit growth to be mid- to high single digits, excluding contributions from the 53rd week, which we expect will add approximately $35 million. Of course, precise forecasting is difficult in this environment. To finish with guidance, we expect Taco Bell fourth quarter company-operated store margins to be in the range of 23% to 24% and lastly, our Q4 net interest expense to be just under $140 million. Taking into consideration the challenging environment, I am incredibly proud of our team's perseverance to open approximately 4,500 gross new restaurants or roughly 1 store every 2 hours, an envy at restaurant industry. Into next year, we'll continue our focus on capturing the global white space opportunity that offers significant runway for our iconic brands. I'm excited by our continued progress in transforming Yum! into a digital multi-brand powerhouse. We look forward to seeing many of you at our upcoming Taco Bell Consumer Day in January, where we'll further unpack many of these exciting digital and technology initiatives. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question comes from Gregory Francfort from Guggenheim Securities. Gregory Francfort: My question is going to be on operating profit growth, but thanks for the thoughts on the fourth quarter. I think that leaves you a little bit below the 8% growth for this year. I guess, as you look out to next year, how confident are you in getting that back up to 8%? And what's the bridge maybe from what the outlook looks like this year to what might be the contributors next year? Chris Turner: Yes, Greg. Hey, this year, year-to-date, we’ve got 6% core operating profit growth in a really challenging environment. So when we step back and look at that, we think that demonstrates the strength and resilience of our business model. The main change from the last time we updated you on the last call is that our sales didn’t meet expectations in a few key markets, including China and the Middle East, where we have outsized exposure. And as a result, we tempered our expectations in Q4. Of course, that on a full year basis, if you flow through, [indiscernible] about Q4, we likely will end the year below our operating profit algorithm for 2024. But of course, the main driver of that was this conflict situation. Without that, we would have had a very strong year and been on or above the algorithm. And of course, we delivered that while still investing in things that drive the long-term health of the business. Big investments in digital and AI. We talked about voice AI progressing rapidly, marketing-driven AI, 40 other AI-driven projects that are happening in the business. So that resilient business model and investing in the long-term growth of the business. We’re still working through the plans for 2025. We’ll share an update, as we always do, on the next call. But there’s no major things that are unusual right now as we look at that 2025 plan. But when we think about the long-term trajectory of the business, our dual growth engines continue to perform and our digital capabilities continue to power the business. Operator: Our next question comes from Brian Bittner from Oppenheimer. Brian Bittner: Just a confirmation question and then a follow-up on Taco Bell, just on the guidance for the fourth quarter as it relate to mid- to high single-digit core operating profit growth. Are you able to talk about the base case for global same-store sales that does underpin that outlook by any chance? And just on Taco Bell, very strong relative performance, obviously, with your 4% same-store sales. And you mentioned that you were the best ranked by consumers in value within QSR during the quarter and it obviously happens at a time where the industry got way more aggressive. So just curious how you protected or even expanded your value positioning in this environment? And is there any new value ideas in the hopper as we move into 2025, particularly as a few large QSRs are eager to put more permanent value on their menu? David Gibbs: Yes. Thanks, Brian. I’m glad you pointed out the Taco Bell’s strength, it’s obviously something we’re incredibly proud of. And you can see that strength is evident in the U.S. with the plus 4. We were also positive in international. And the other thing I’ll share is that, that momentum has continued into Q4. A lot of it is what you said. It has to do with the unique way that Taco Bell can provide value with products that nobody else has. Really, if you think about it, Taco Bell can provide a product that is a value product, that’s an innovative product and that can help our franchisees margins. That’s an incredibly powerful set of tools that we have in our toolbox that our competitors don’t. As we move forward, of course, Taco Bell has always got ways to bring in new value. Right now, you’re seeing us launching the decades menu and then you can get some of those products within the $7 Lux Box, for example, which is a unique way to bring innovation and value to consumers. So I think we’re very confident in Taco Bell’s ability to win in this environment relative to our peers. As far as sales guidance and everything for the quarter, it’s obviously a difficult environment to forecast sales globally. But as I said, the trends that we saw in Q3 are continuing into Q4. Operator: Our next question comes from Jon Tower from Citi. Jon Tower: Great. I appreciate all the color you provided in the gross unit openings for the brands across the globe. I was hoping maybe you could drill a little bit more into the net unit number. David, I think you mentioned that there's a potential risk of not hitting the 5% this year. And then maybe specifically drilling into, you do have pockets of weakness across the globe. And I think you had mentioned some of the smaller operators having a hard time keeping the lights on. How should that inform the thinking regarding '25? Is there an opportunity to perhaps consolidate some of those closures into '24, such '25 is a cleaner year? And/or are there opportunities to consolidate some of those stores into larger operators within markets such that your net unit number is not under too much pressure? David Gibbs: Yes. I have a couple of things on development, and then I'll let Chris give them a little more detail. If you think about it, 2024 is obviously a very challenged year in terms of the impact to our sales in certain parts of the world and some of the consumer pull back. So for us, we're incredibly proud that this year does showcase how resilient business model is and the capabilities of the vast majority of our franchisees to continue to grow and invest in the business in this challenged environment, like American, our franchisee in the Middle East, you would think that this business would have disrupted -- this situation would have disrupted them more than it has, but they just reported. They're positive operating profit in this environment, continuing to develop. That is a unique strength of Yum! in terms of the capability of our franchisees around the world. And 2024, as difficult as it is, really is allowing us to showcase that and let that part of our business model really shine. Americana has got about 2/3 of the stores of the Middle East, so most of our stores are in very good hands. As far as the risk that we signaled on net new units, just to clarify and give you a little more detail, that was risk to the 5%. Right now, the numbers that we're looking at roll up in the 4.5% to 5.0% range. So we would still round to 5% on algorithm. But closures are obviously a little elevated this year. If you're going to have a little bit of a shortfall, you'd rather have see this strong gross development mostly continuing and then closure of some lower volume stores. If you think about the closure rate, it's probably about another 0.5% of our store base. So this is not some widespread issue to your points about struggling -- other struggling franchisees. It really isn't a widespread issue. It's just a few stores, lower volume that might have closed in the future where those closures were pulled up. I'll let Chris give you a little more color on it. Chris Turner: Yes, John, let me give you a little more color on the change in net new unit trajectory first through a couple of lenses. First, if we just look at the deceleration in net new unit growth from last year to this year on a geographic perspective, we see that about 40% of the change in trajectory comes from countries and markets in our business that are directly impacted by this conflict situation. There’s another 25% that are markets that have some impact from the conflict, not as much as those core markets, but that gives you about 2/3 of the change in net new unit trajectory that is in some way tied to the conflict situation. So that gives you a little bit of bound on it. And of course, history would say we typically work through these situations over the long term. Another way to look at it, David mentioned a little bit higher closures this year. As we said before, when units closed in our system, they tend to be lower volume units. And we see that again this year. The average unit volume of the units that are closing this year is about 60% of our global average unit volume. And so when you actually look at the system sales contribution of our net new unit growth this year, it’s going to be basically the same as the system sales growth contribution from our higher net new unit rate last year. So the economic implications of this aren’t that big on our business. So that gives you a couple of additional ways to just think about this change in net new unit trajectory. The other thing I'll add, you asked about specific franchisee situations. As David said, our global franchise base is strong. Americana in the Middle East region has – the majority of our stores is navigating this very well. In fact, in the 22 countries in the specific Middle East geography, we only have 2 countries right now where we’re working with franchisees to transition the business into better hands. One of those processes is pretty far along. Another one, we’re working with the franchisee to either address some challenges in the business or to get it into the hands of another owner. There’s some complexity always in the beginning of those situations, we might have some unit closures might have some onetime accounting adjustments that come with it. But our history would say that we typically end up getting the business into 3C franchisee hands, and that sets the business up for long-term growth and health. Operator: The next question comes from Dennis Geiger from UBS. Dennis Geiger: Great. Recognizing it's too early to talk about '25 specifically. Wondering if you could just comment high level about how you think about managing profitability as well as the team has in '24 if macro pressures continue? Maybe specifically, can you talk a little bit about G&A growth and how you think about that generally looking ahead and perhaps the ability of the divisions to continue managing cost and profitability? Chris Turner: Yes. As I said earlier, we’ll give more of an update on the 2025 plan when we get to the next call. As I mentioned, there’s nothing that’s significantly unusual right now as we’re tumbling that plan. As we think about the puts and takes, our twin growth engines continue to perform in a strong way. We’ve shared that our gross unit outlook for next year is similar to this year. On the G&A front, we’ve made productivity moves this year. We’ll continue to get some benefit from those. Of course, we will have a reset of our incentive comp. So those are a couple of factors that we’ll look at there. But if I think about the long-term trajectory of our business, there’s a lot to be excited about, in particular, with those 2 primary growth engines. Taco Bell continues to outperform in any sort of economic environment in the U.S. KFC International 9% unit growth in Q3 continues to build units outpacing its competitors, and our digital story continues to strengthen. So if you look over the long term, there’s a lot of reasons to be excited and confident in our business model. Operator: The next question comes from David Palmer from Evercore ISI. David Palmer: I wanted to maybe double-click on a couple of the digital initiatives. You highlighted the AI-enabled digital marketing that you talked about, Chris, and David mentioned the AI-enabled drive-throughs in the release. On the digital AI marketing, is that hyper personalized push marketing in the app and other? You mentioned it was a nice lift where you're rolling that out. Could you maybe give some more color about what that lift was and where the rollout is across your brands? And on the AI voice drive-thrus in the U.S. I'm wondering if that could be a nice profit driver for Yum! Brands. Any reason that would not scale quickly in 2025 and any offsets to the fees that you'll collect there? Chris Turner: Yes. Great. These are 2 initiatives that we’re very excited about. I’ll provide a little more color on the AI-driven marketing. This is something we’re doing in a coordinated way across our 3 large brands in the U.S. We’ve run pilots in each of the brands. I’m not going to share any specific numbers on it. But I can tell you what enables it is our digital ecosystem. And it’s really what we call the AI factory within that ecosystem that leverages our massive data assets that we’ve built, which enable us to know our consumers. If you think about in the Taco Bell environment, it leverages the fact that we have the POS in the store, the digital menu boards and the ability to actually bring these to life at the store and through our loyalty programs and through our connections with customers in the app. So we’ve got many ways to bring it to life, but it essentially allows us to do more personalized tailoring of offers and to learn and refine much more rapidly than we could before. So we’re excited about the potential of this. We’ll continue to bring it to life across the brands and across markets as we progress. On the voice AI side, really, we’re driven by how do we enhance the consumer and customer experience in our restaurants and how do we enhance the team member experience. And so far, the results in Taco Bell with voice AI have been outstanding on both fronts. The customer response has been very positive, and our team members really enjoy having what they call an extra pair of hands in the restaurant to help them operate the store. Our rollout pace this year has been much faster than we originally envisioned going into the year, and I think that speaks to how our operators are seeing the capability and how our franchisees are seeing the capability. Operator: The next question comes from John Ivankoe from JPMorgan. John Ivankoe: In your prepared remarks, you really did touch on many digital initiatives, many of which have yet to get to the hands of franchisees fully, especially on a global basis. So the question is on the previous Yum! language bending the curve on G&A. If there's not further opportunity in '25, you talked about it there is, longer term, how much of an opportunity do we have to use fee collection from franchisees that will significantly drive their own profitability and ease of running their own businesses to kind of think about fee recapture, if you will, on a basis points of franchisee sales basis. I mean your sales base is so big, collecting even 50 or 100 basis points of franchise sales would obviously be very significant in terms of your total G&A spend. So I wanted to see if we could have an opportunity today to kind of think about the longer-term potential of that? David Gibbs: Yes. Thanks, John. Just a couple of high-level comments on that. I know you and David asked a similar question in that regard. Our goal with technology is to give our franchisees the absolute best technology in the industry, better than any of our peers at the lowest possible cost, better than they can get anywhere else. That is our north star when it comes to tech. We know that if they get that tech in their restaurants and it drives sales and drives improvement in their business models, like voice AI is doing improving their margins by cutting labor, they’ll build more stores, top line will grow more. And that’s the best way for us to leverage technology to drive profitability in the business. Of course, we’re making investments. We will recover those investments. But voice AI is a great example. We’re providing that to our franchisees at what we believe is a much lower cost than our competitors in the industry are having to pay for other third-party solutions. And we will continue to do that, and that is our mission. Operator: The next question comes from David Tarantino from Baird. David Tarantino: My question, David, I think you mentioned that as part of your response to a question, that the comp trend you saw in the third quarter carried over into Q4. I just wanted to make sure that, that comment was directly related to Taco Bell and not the global business. And I guess, secondly, I was wondering if you could comment on the KFC segment, and the comparison does get quite a bit better or easier in the fourth quarter, but I know you still have some macro pressures you're dealing with. So any sort of directional commentary on the KFC business and how we should think about that for the fourth quarter would be great. David Gibbs: Yes. On Taco, if the comment was on Taco Bell in terms of sales trends where we sit in the quarter, we feel good about being able to continue the momentum from Q3, but in the U.S. and internationally. Now of course, Taco Bell is a little bit easier to forecast because Taco Bell’s global store footprint is really unaffected by the conflict. It’s a lot harder to forecast KFC. What I will say is we haven’t really gotten to the point where even though we’re past the 1-year anniversary of the conflict, we haven’t gotten to the point where it really started to impact sales. So we don’t know how sales will behave once we get to that lap. But certainly, the lap will get better, and that should lead to a change in the trajectory of the KFC sales. Operator: That is the end of the Q&A session. So I'll now hand over to David Gibbs for closing remarks. David Gibbs: Great. I appreciate everybody’s time today. We’re excited about the upcoming January 28 Taco Bell Investor Day. So if you don’t have that circled on your calendar, please do, and we’re looking forward to seeing you out in Irvine, in California and L.A. then for that meeting. We’ve got a lot of exciting stuff to share about Taco Bell. Thanks for everybody’s time today. Operator: This concludes today's conference call. Thank you for joining, everybody. You may now disconnect your lines.

Operator: Hello, and welcome to the Yum! Brands 2024 Second Quarter Earnings Call. My name is Lauren, and I’ll be coordinating the call today. There’ll be opportunity for questions at the end of the presentation. [Operator Instructions] I will now hand you over to Matt Morris, Head of Investor Relations, to begin. Please go ahead. Matt Morris: Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we’ll open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the cautionary statement in the earnings release and the risk factors included in our filings with the SEC. In addition, please refer to our earnings release and the relevant sections of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call, all system sales growth and operating profit growth results exclude the impact of foreign currency. As a reminder, several of the Yum! Brands business units report on a period calendar basis including all US and Canada brands, KFC UK and KFC Australia. When forecasting 2024, please keep in mind this year will include an extra week in the fourth quarter for those entities. For more information on our reporting calendar for each market, please visit the Financial Reports section of the IR website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. We would like to make you aware of the upcoming Yum! investor events and the following. Our third quarter earnings will be released on November 5th with the conference call on same day. Finally, on our last call, we shared the timing for our talk about consumer date originally planned for December of this year. We are finalizing a revised date for early next year. Please stay tuned for more details and invitations to follow. Now I'd like to turn the call over to David Gibbs. David Gibbs: Thank you, Matt, and good morning, everyone. Despite continued challenging operating environment, I'm pleased Yum! was able to deliver 10% growth in core operating profit this quarter, thanks to our team's strong execution and progress on the initiatives laid out on our last call. While we take comfort in improving global trends and still expect the first quarter warrant the low for same-store sales growth, significant volatility remains, and we recognize sales in some markets are not where we want them to be. The impacts from the Middle East conflict, in addition to a more cost-conscious consumer, have presented headwinds to same-store sales. Despite these tougher waters, we are confident we will deliver on profit growth in line with our long-term algorithm for 2024 and are set up for continued strong growth in 2025. Fortunately, we are well-positioned to navigate these consumer headwinds given the strength of our brands and reputations for value no matter the environment. Nonetheless, ensuring we provide consumer’s affordable options has been an area of greater focus for us since last year with all of our brands having offered disruptive deals and introduced or reintroduced the track of everyday value with examples in the US such as KFC's Taste of KFC deals, Pizza Hut's $7 Deal Lovers, and Taco Bell's Cravings Value Menu. As a result, our brands experienced improving trends relative to the first quarter in the US market, and we continue to refine our offerings in international markets to recapture similar momentum. The second quarter offered signs of improving fundamentals. For example, at Taco Bell, we've begun to see sensitivities to check management stabilize to improve from Q1 into Q2, and have witnessed year-over-year check growth led by items per transaction. Internationally, KFC markets excluding China, that we believe were not impacted materially by the Middle East conflict, reported an encouraging mid-single-digit increase in same-store sales. Across our system, our 2024 commodity inflation has come in lower than we expected heading into the year, helping our franchise partners navigate recent sales volatility. Furthermore, momentum in the critical and strategic areas of our business remains strong. This includes robust increases in digital sales, progress leveraging our scale, continued deployment of our proprietary technology ecosystem and efficiency improvements in our cost structure from efforts underway in the next phase of our journey to be a leading global digital restaurant company. Our twin growth engines, Taco Bell US and KFC International, helped Yum! deliver 3% system sales growth driven by market share gains at Taco Bell US and strong unit growth at KFC International. Combined, these two powerful business units delivered 7% operating profit growth. At an individual level, unmatched innovation fueled Taco Bell US' 7% increase in system sales with Cantina Chicken performing above our expectations. Taco Bell is a clear standout in today's environment, not only achieving same-store sales growth well ahead of the QSR category, but delivering restaurant-level margins near a record high. In addition, Taco Bell's same-store sales grew mid-single digits across all income cohorts, proving that craveable innovation even at a higher price point wins with today's consumers. At KFC International, on a quarter-over-quarter basis, same-store sales showed strong improvement on a two-year trend, and unit growth in the quarter was an impressive 9% year-over-year as franchisees take advantage of strong paybacks. I know from experience, this powerful brand is not constrained by expansion opportunity, but rather its growth and success are tied closely with having the right franchise partner. This is why we are very intentional about who we choose to allow into our system. For example, our new franchise partner in South Korea took over in April 2023 and has drastically improved performance with same-store sales up 17% this quarter. In that vein, the KFC team is tirelessly working to give our franchisees the tools to succeed, including furthering the expansion of SuperApp and the KFC global loyalty program, which is now live in 14 markets. Now I'll discuss our relevant, easy and distinctive brands or RED for short, followed by our unrivaled culture and talent and good growth strategy. Chris will provide an update on our second quarter results, followed by our bold restaurant development, unmatched operating capabilities and balance sheet position and capital strategy. Beginning with the KFC division, which accounts for 49% of our divisional operating profit, we grew system sales 2% led by 8% unit growth. Our same-store sales were down 3%, largely on account of scattered pockets of weakness in a number of markets relating to the Middle East conflict and underperformance in the US market. This quarter, we did not see any improvement in the most directly impacted markets. If Q2 trends hold, the pressure on same-store sales growth for the set of directly impacted markets will begin to abate as we lap the prior year's sales impact beginning in November. Beyond the most significantly impacted markets of the Middle East, Malaysia and Indonesia, we've seen sales impacts from the Middle East conflict surface in several other markets based on store performance comparisons across neighborhoods. In other parts of the world, we witnessed trends improved from the first quarter, including Canada and Central and Eastern Europe, while South Africa's transactions began to improve during the quarter. Another exciting development in the quarter was Yum China celebrating its 200th KCOFFEE, which consists of an adjacent storefront that is part of an existing KFC, allowing a reduced investment and lower operating costs from sharing KFC kitchen facilities. The Yum China team has averaged one new KCOFFEE per day since the beginning of 2024. While these do not count as new units in our system, they are a driver of future same-store sales growth. This quarter, we acquired 216 KFC restaurants in the UK and Ireland, and we have started to optimize restaurant operations there. Lastly, KFC digital sales, excluding China grew nearly 20% with an impressive 40% growth in kiosk sales. Moving on to the Taco Bell division, which represents 37% of our divisional operating profit. US same-store sales grew 5%, outpacing the US QSR industry by a wide margin. Taco Bell executed its winning formula this quarter through introducing a variety of compelling innovations such as the Cheez-It and Secret Aardvark fries. The second quarter also reflected sales contribution from the Cantina Chicken menu, our foray into an elevated chicken offering and a new platform to innovate around. Since the platform launch, Taco Bell's chicken sales mix has increased 10 points with nearly one in four orders, including a Chicken Cantina item. Another part of the team's winning formula is digital in, which digital sales continue to grow at a breakneck pace. In Q2, Taco Bell's loyalty sales were up over 30%. At Taco Bell International, the team is working on building brand relevance. It is still early days in many markets and trends remain volatile, but we remain confident in the long-term opportunity. A restored emphasis on value has forced our teams to be creative with a more limited national marketing budget. In more mature markets within Europe, which accounts for over 40% of Taco Bell International system sales, we saw encouraging signs of improvement with the introduction of value offers. Next, I'll discuss our Pizza Hut division, which accounts for 14% of our divisional operating profit. System sales were flat this quarter and units expanded 3% year-over-year. International same-store sales remained negative in part because of a stalled recovery in Malaysia and Indonesia. We're encouraged Pizza Hut same-store sales trends have improved four points from last quarter with progressing trends in the US and encouraging recoveries in Thailand and Hong Kong. Around the world, our team is actively expanding My Hut Box and introducing Melts, including most recently in India and Thailand. Both platforms lift underdeveloped day parts, expand individual meal occasions and provide attractive price points to our consumers. Since joining Pizza Hut as CEO in 2021, Aaron Powell has assembled an amazing team and is providing strong leadership to drive efficiency, increase accountability, reduce complexity and align the brand to consumer trends. In the US, momentum accelerated throughout quarter with an increase in weekly per restaurant average transactions attributable to a number of value-based promotions and the launch of My Hut Box. Lastly, at the Habit Burger Grill, second quarter system sales declined 1%. Habit's restaurant count increased 5% year-over-year as a result of new regulations in Habit's home market of California that have raised the cost to business, Habit's leadership team has been focused on protecting profitability to remain competitive. Those efforts led to a comprehensive store level labor optimization effort, which contributed to an impressive 520 basis point expansion of restaurant level margins from the first quarter, despite a double-digit increase in restaurant level labor rates in California stores. Same-store sales growth remained suppressed, but we're encouraged by the improvement from first quarter trends despite a more challenged regional backdrop. Subsequent to quarter end, I was pleased to learn Habit's Double Charred Burger, reigned supreme in USA TODAY's 10 Best Readers' Choice Award for Best Quick Service Burger, landing the number one spot and beating out all other QSR and better burger competitors. Now I'll turn to our good growth strategy, starting with our people pillar. One of Yum!'s hallmarks is our people-first culture, which drives recruitment of amazing talent and also builds a deep bench of leaders within the organization. I'm excited about the great work going on at Pizza Hut from a talent perspective, where we recently welcomed Carl Laredo, as the brand's US President. Carl is a seasoned marketing leader with deep experience in delivering impressive results at some of the world's largest and best-known brands. We also welcomed former PepsiCo Executive, Kalen Thornton, as Global Chief Brand Officer, leading the Pizza Hut division's global brand strategy and marketing, including harnessing the power of engaging consumer connections across physical and digital touch points. It is also rewarding to see leaders from Yum!'s deep bench of talent assume bigger roles. Melissa Friebe recently joined Pizza Hut US, as Chief Marketing Officer, after spending 27 years at Taco Bell in various finance, marketing, insights and brand strategy positions. In addition to recruiting and promoting talent and professionals, we're furthering our culture of collaboration and building capability across our company in powerful forums such as KFC's annual global marketing planning meeting. KFC gathered marketing leaders, franchise partners and vendors from around the world to share best practices and consumer insights to keep our iconic brand RED, discuss innovative strategies and sale of delicious products from various markets. Moving on to the planet pillar of our Good Growth strategy. We are making progress on our global goal of reducing greenhouse gas emissions nearly 50% by 2030 with a focus on renewable energy and energy efficiencies in our restaurants and ongoing collaboration with our food suppliers. For example, KFC has reduced emissions by focusing on key areas such as cooking and holding systems, refrigeration and cooling and lighting while Pizza Hut and Taco Bell are collaborating with partners to reduce on-farm emission and encourage sustainable practices. In terms of packaging, we are making progress against our global goals with many markets eliminating unnecessary plastic items like straws, cup lids, stirrers and cutlery. And finally, we're also making a meaningful impact in the communities we serve by continuing to unlock opportunities. As an example, in Thailand, KFC partnered with non-profits and the Thai government to launch the country's first-ever flexible learning curriculum to help students who dropped out of school, gain critical job and entrepreneurial skills. To wrap up before handing over to Chris, we are pleased our second quarter built to a 10% growth in core operating profit despite system sales system sales pressures. While our teams work to improve system sales trends, we are confident the investments we are making in tandem to be more agile, resilient and stronger as part of the next phase in our technology journey will lead to a promising year in 2025. All these efforts underscore our commitment to be the franchisor of choice and deliver more, better, faster, cheaper and safer technology services to our partners. I'm excited about our plans to harness the power of AI, including the expansion of drive-through Voice AI technology with plans to roll this capability out to hundreds of Taco Bell US stores by year-end in addition to testing with KFC in an international market. We are hard at work driving the next phase of our technology journey to unlock future growth by strengthening our business resilience and ensuring we deliver exceptional shareholder value in the years ahead. With that, Chris, over to you. Chris Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers, our balance sheet and capital strategy, and provide an update on our outlook for the remainder of the year. Beginning with our second quarter results. System sales grew 3%, driven by 5% unit growth. Consumer sentiment relating to the conflict in the Middle East continued to pressure system sales growth in the quarter. The recovery trajectory we observed in Q1 for the Middle East, Malaysia and Indonesia, flattened in Q2. And while hard to precisely quantify, we continue to observe conflict-related impacts in a broader set of markets. Despite these pressures, Yum! delivered an impressive 10% core operating profit growth, reflecting the resilience of our scale, global, multi-brand business model, increasing benefits of our digital and technology strategy and the expert management of the business by our leaders around the globe. A prime example of factors underpinning our resilience was profitability in our 488 company-owned Taco Bell stores in the US, our single largest estate of company-owned stores, representing approximately half of our total global company-owned store revenue. Store level margins were 25.6% with mature stores achieving over 27%, reflecting the strength of the Taco Bell business model and its magic formula, which enables the brand to simultaneously deliver an outstanding consumer experience, tremendous consumer value and exceptional store-level margins for our franchisees and Yum! Importantly, Taco Bell operations leaders are taking advantage of the continued growth in digital sales mix, which is now 35% to further digitally enable our operations in ways that not only improve consumer and team experiences, but also improve labor productivity. Another contributor to profit growth was improved expense leverage. As we shared in January, we expected throughout the year to see the benefits of our ongoing resource optimization program, which strategically leverages our scale to free up general and administrative expense for reinvestment in future growth drivers such as AI, which will benefit both Yum! and our franchisees in addition to some beneficial onetime G&A expense overlaps. Second quarter ex-special G&A expense was $256 million, down 9% year-over-year. Reported G&A was $281 million, reflecting $25 million of special expense related to our resource optimization program. We expect to generate additional savings on an ex-special basis from the resource optimization program in the second half of the year. Reported operating profit increased 6% as foreign currency translation continued to be a headwind with a $12 million negative impact in the quarter. Historically, given our global footprint, foreign currency translation has at times been a significant tailwind to our reported operating profit and at other times, a headwind. Since interest rates in the US began to rise in Q1 2022, our current annual operating profit reflects a headwind of nearly $180 million in foreign currency, equivalent to roughly one year of operating profit growth under our long-term growth algorithm during that period. Second quarter ex-special EPS was $1.35, reflecting a $0.20 negative impact from a higher year-over-year tax rate and lower year-over-year investment gains. Additionally, foreign currency translation unfavorably impacted Q2 EPS by $0.03. Moving on to our bold restaurant development growth driver. Yum! opened 894 units, the second highest number of Q2 gross openings in Yum!'s history, leading to our unit count expanding 5% year-over-year, contributing 4 points to total system sales growth. In the quarter, we transferred certain rights related to the trademarks of the Gino's Pizza and Telepizza brands in Latin in Latin America to our local franchisee, enabling our teams and Latin America to focus exclusively on driving growth in the Pizza Hut brand. As a result, we removed 120 low volume and low royalty rate units associated with those brands from our store base in exchange for nominal compensation. Excluding the impact of this transfer, our unit growth was 6%. Our growth remains diversified across brands and countries with 195 brand country combinations contributing growth during the last 12 months. Moving to brand-specific development. In the KFC division, we opened 598 units across 57 countries. This brings our year-to-date gross openings in KFC to 1,107 units, a new all-time record for KFC for the first half of the year. China, India, Thailand and Japan led development. Over the last year, we've seen positive development trends in South Africa, the Philippines and Brazil. In the quarter, we closed on the transaction to purchase 216 stores in the UK and Ireland, one of our highest average annual unit volume markets. Our total equity estate at KFC is now 434 stores, the majority of which are located in the UK market. The Pizza Hut division opened 236 units across 30 countries. Pizza Hut's year-over-year unit growth is trending higher from this time last year for several of our largest markets, including China and Japan, which is offsetting closures in the US and the conflict-related slowing of development in Indonesia and Malaysia. At Taco Bell, we opened 56 units this quarter, including 17 new units in our international markets across 10 countries. Our US gross openings are running higher year-over-year for the first half, and we expect international store growth to pick up in the second half of the year. Excluding China, Taco Bell international unit count was up 7% year-over-year. Moving to our digital and technology initiatives. You will recall that on our last earnings call, David and I discussed our journey to become the leading global digital restaurant company. The first phase of this journey is focused on acquiring, building and scaling a comprehensive suite of owned platforms that enable ownership of our data, control the digital ecosystem, speed of innovation and cost advantages through scale leverage. Within this phase, we are accelerating deployment of our foundational platforms, such as the Poseidon POS system, Yum! e-commerce platform, Dragontail, SuperApp and our Global Data Hub. In the next phase, we are focused on maximizing the value creation potential of our platforms through AI and leveraging our extensive data assets. Data is becoming a crucial differentiator, enabling us and our franchisees to generate better insights and make better decisions. We believe we are still only scratching the surface of the full value creation potential of our capabilities. Let me now discuss additional digital and technology accomplishments for Q2 across our easy experiences, easy operations and easy insights pillars. I will begin with our easy experience pillar, focused on providing frictionless experiences to our consumers. As you recall, last quarter, we discussed plans to expand drive-through Voice AI technology to more Taco Bell stores. I'm excited to announce that given our encouraging early results, the team has accelerated the rollout. And as of today, we now have this technology operational in over 100 Taco Bell stores. We plan to scale the technology to several hundred stores by year-end, while the pilot test is underway in KFC Australia. In our tests, we have witnessed consistent consumer experiences and higher team member productivity. This technology leverages digital menu boards, which will be a Taco Bell brand standard in 2025 and Yum!'s proprietary point-of-sale system, Poseidon. On the e-commerce front, we have made significant progress in implementing the Yum! commerce platform at Pizza Hut US. We are currently transitioning to this platform at Pizza Hut in the UK, which will be the second international Pizza Hut market to operate on the Yum! commerce platform with Pizza Hut Canada next in line. Next, I'll discuss our easy operations pillar, where we continue to deploy our world-class technology to provide our franchisees and team members with the capabilities to operate their stores more effectively and efficiently. We have fully deployed our Poseidon point-of-sale system within Taco Bell US and are in the early stages of incorporating this system into the KFC US estate. With respect to Dragontail, our AI-enabled restaurant management system, we plan to have the system rolled out to nearly the entire Pizza Hut US system by year-end. As an example of Dragontail's impact, in the first 1,000 Pizza Hut US stores to implement the technology, we have measured a 7% increase in overall consumer satisfaction due to hotter and fresher pizzas leading to improved consumer frequency. Finally, we are in the process of scaling SuperApp, our restaurant General Manager support app at Pizza Hut US, and we plan to achieve the 10,000 store milestone across KFC globally by year-end. Lastly, I'll discuss our easy insights pillar. We deepened our AI pursuits this quarter, taking steps to unlock the benefits of our R.E.D 360 database and engage with an innovative start-up in the AI-driven personalization space to leverage our massive first-party data assets. This partnership covers the application and integration of a deep learning AI approach known as reinforcement learning, which we expect to be broadly and easily scalable across brands. This partnership will focus on our basic CRM channels and in the future, may extend to our other consumer sales and communications channels, for instance, paid media. Next, I'll provide an update on our balance sheet and liquidity position. As a reminder, our capital priorities are guided by maximizing shareholder value and include investing in the business, maintaining a resilient balance sheet, offering a competitive dividend and returning excess cash to our shareholders. Net capital expenditures for the quarter were $31 million, reflecting $50 million in gross CapEx and $19 million in refranchising proceeds. Our net leverage ratio ended the quarter at 4.1 times. We have a strong balance sheet and no debt maturities until 2026. During the second quarter, we are pleased to have resumed share repurchases by buying back $50 million in our stock, which for context is the same value of shares repurchased during the entire year of 2023. Going forward, absent any attractive investment opportunities like our recent acquisition of KFC UK restaurants, we plan to continue to return excess cash flow to shareholders through share repurchases. Finally, I'll discuss our outlook on the balance of 2024. We remain on track to achieve 5% unit growth for the full year despite the extended impact the Middle East conflict. On a global basis, our planned number of gross unit openings for the full year is expected to be similar to our number of gross openings in 2023. We should also note some certainty on the future path in the Middle East markets. For example, there are approximately 210 restaurants currently temporarily closed across the Middle East, Malaysia and Indonesia. While there are plans in place to reopen some of those restaurants starting later this month and throughout the second half of the year, there is risk that some could close permanently pending the future trajectory the conflict impact. These stores have not been producing royalties while temporarily closed, but our reported unit count would be negatively impacted if these stores were to permanently close. With respect to company store profitability, we expect full year Taco Bell company-operated store margins to be in the range of 23% to 24%. Regarding G&A. Excluding 53rd week, we now expect ex-special G&A expense to be lower on a year-over-year basis by a low single-digit percentage. As for sequencing, Q3 G&A will be higher year-over-year as we lap last year's recovery of cyber-related insurance proceeds and as we incur costs relating to our Global Leadership Summit. Finally, despite updating our balance of year sales outlook to reflect the continued softness we're seeing tied to the Middle East conflict, we remain confident that we will deliver at least 8% core operating profit growth on a full year basis excluding the benefit of the 53rd week. I'm very proud of the work our teams continue to do to position Yum! as a resilient growth business going forward and to further cement Yum! as the global franchisor of choice. We are making incredible strides toward our distinctive digital and technology ambitions, our 50% plus digital sales mix and our continued rollout of distinctive digital and AI technologies are testaments to that pursuit. In markets around the world, we have the privilege of working with outstanding 3C that is capable, well-capitalized and committed franchisees who want to grow with our system and our iconic brands. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question comes from David Tarantino from Baird. David, your line is muted. Please proceed with your question. David Tarantino: Hi, good morning. My question is on your outlook, given all the cross currents we're seeing in the macro environment. And I was wondering if you could maybe elaborate on how you're thinking the same-store sales could progress with the second half plays out. And I know you have easing comparisons, but there's a lot of a lot of uncertainty in a lot of markets that you called out. So just wondering, if you could provide some context on how you're thinking about it within your 8% profit growth or core profit guidance for the year? Thanks. David Gibbs: Yeah. Thanks, David. I think our thinking hasn't changed, although we learn more, obviously, every week. As I think we said beginning of the year, as we progress through the year, we see sequential improvement every single quarter in same-store sales growth. Obviously, Q4 becomes a much easier lap as we start to lap the Middle East conflict. Q3 is actually a slightly harder lap for Taco Bell, but in general, an easier lap for Yum! And, therefore, we are -- we continue to forecast an improvement quarter-to-quarter in same-store sales growth, tough to forecast. But we know we have all the right levers to pull, and our brands are performing well despite some of these challenges. I mean, KFC International, for example, is up 11% on a two-year basis despite the Middle East impacts. You saw what Taco Bell did in Q2, I think there's a lot of reasons to be optimistic. But as you say, a choppy environment. We know we can get through it this year and then obviously get to much easier laps next year. Operator: Thank you. Our next question comes from Jon Tower from Citi. Jon, please go ahead. Jon Tower: Great. Thanks. I was hoping to dive a little bit in the G&A because obviously, that seems to be a mover on the core operating profit growth for the year. And I was hoping you can maybe provide a little bit more color on some of the puts and takes through the first half, and then what you see in the back half unfolding? And specifically, how we should think about this piece of the business growing into 2025, should we expect it to return back to normal cadence, especially if incentive comp resets again? Chris Turner: Yeah. Thanks, Jon. Look, I think what you're seeing happen this year is the plan that our management team has been driving is playing out as expected. If I were to kind of sum up what we're doing, we're reallocating and streamlining our G&A to drive faster and more efficient growth for Yum! and for our franchisees. And there's a few buckets of levers that are driving that. Of course, we've said that there are some one-time benefits this year on a net basis with the full year. The second, digital and technology is an important area here. So we talked about that this year, we're starting to bend the curve. And what we mean by that is, over the past few years, we invested ahead on behalf of our franchisees, which burdened the P&L a bit. But as we get more and more adoption of our platforms and we have fee income from that, it reduces that burden. We also acquired four companies, hired a lot of people in the last several years. Those capabilities are maturing. And as we mature, we find ways to operate more effectively internally to organize better, and that allows us to get more done at lower cost, which benefits Yum! and our franchisees. And we've got strong governance of tech spend in place. I think the third area is productivity in other parts of the business. We've been driving this resource optimization program. We're finding ways to operate more effectively in parts outside of D&T. Now in some cases, that's enabled by becoming a more digital company. And then finally, as we said in the remarks, our GMs are doing a really good job driving their plans as they see how the business is on pulling around the globe. So those are factors that are driving the G&A trends this year. Now it's important to note that we are reinvesting at the same time. We're putting investments into AI. We mentioned on the last call, 40-plus AI projects in motion. We're investing in areas like our marketing capabilities, supply chain and then culture and talent. So at the same time, we're driving the long-term health of the business. If you look to 2025 and beyond, we're going to continue to get leverage on the G&A line. You set aside year-over-year factors like changes in incentive comp, we expect to get good leverage on the G&A line, and I think you'll see a normal growth rate in terms of G&A for an asset like a company ours. Operator: Thank you. Our next question comes from Andrew Charles from TD Cowen. Andrew, please go ahead. Andrew Charles: Great. Thank you. I have a two-part question on Taco Bell. I'm looking to understand how you retain Taco Bell's US 2Q same-store sales strength as you shift promotional -- to new menu items away from Cantina Chicken while the remainder of the drive-through segment intensified the focus on value. And the bigger question is that can you share your confidence in the ability to hold Taco Bell's 2Q to your trends in the back half of 2024? Thanks. David Gibbs: Sure. Obviously, Taco Bell is a lot of really positive results coming in, in Q2, and we feel good about we feel good about Taco Bell for the balance of the year. Why do we feel so good about the brand? First of all, in this environment where the consumer is probably pulling back a little bit, being the always on value brand. Remember, Taco Bell's Cravings Value menu is always on. It's got 10 items. They're unique items that nobody else in the industry has. And they're not like junior-sized versions of a core item. They're unique. They stand in their own right. They're incredibly craveable. That has served us well, and it really put a moat around when it comes to value. In addition, we have onetime offerings like the Luxe Box at a $7 price point, which is an incredible amount of great tasting food for that price. So we have a great way to play value that makes it hard for others to compete. And then when you couple that with things like the Cantina Chicken launch in Q2, which is really a platform that we'll continue to innovate off of as we move forward. You saw in Q3, we just launched the Cantina Chicken Cheesy Street Taco Chalupas that are off to a good start. That's an example of what we can do with that menu. We'll probably rehit Cantina Chicken in Q4. And then you've got all sorts of other great things going on at Taco Bell like speed of service, improving loyalty program launches. So hopefully, again in the sense of confidence we have in Taco Bell as we move forward. And in this environment, I think we're really seeing Taco Bell stand out from the crowd, outperforming the QSR industry by a wide margin. Operator: Thank you. Our next question comes from Brian Bittner from Oppenheimer. Brian, please go ahead. Brian Bittner: Thanks. Good morning. Congrats on navigating a challenging backdrop. You delivered 8% core operating profit growth year-to-date, despite negative same-store sales year-to-date. And this operating profit growth in the first half is on par with the full year guidance, of course. And I know the environment is still challenged, but there reason to believe that overall, Yum! will have better sales trends in the second half versus the first half as comparison these as we've talked about on this call. And G&A is going to remain favorable in the second half. I know there's some timing differences between the third quarter and fourth quarter. But is there an opportunity for profit growth to accelerate in the second half? Is the guidance for 8% now that you've already had that in the bag in the first half, possibly conservative? Or is there anything maybe I'm not looking at in the second half versus first half that I should be more aware of? Chris Turner: Yeah, Brian, as we said on the call, we remain confident in delivering at least 8%. Of course, as you mentioned, it's a complex operating environment. There are lots of unknown still yet to unfold in the back part of the year. But as David said, we do have sequential improvement in the forecast quarter-to-quarter from a sales standpoint. And as we said, we expect full year G&A to be balanced. We're going into the back half of the year with a good starting point here at the midpoint. And it's our job to deliver as much profit growth as possible, while still investing in the long-term health of the business. And so that's what our management teams are focused on doing, driving the short-term and the long-term simultaneously. Operator: Thank you. Our next question comes from Dennis Geiger from UBS. Dennis, please go ahead. Dennis Geiger: Great. Thank you. I wanted to ask a little bit more about the strength of global unit development. Obviously, some macro pressures out there, but impressive growth, even still, particularly at KFC. Could you talk a little bit more about how the brands and the franchisees are effectively managing the challenges, continuing to open restaurants at a solid rate? And specifically, if there's anything else to offer on visibility that you've got into development looking ahead, including how that pipeline looks, et cetera? Thank you. David Gibbs: Yeah. Thanks, Dennis. The development picture is really one that is strongly encouraging. When you think about the impact of the conflict on sales in particular markets, we are still seeing quite widespread growth all around the world. I think I mentioned in my remarks, about two-thirds of our brand country combinations over the last 12 months have built a store. There's a lot of countries that are quite small that don't even have an opportunity to build a small store. So that is impressive right there that it's widespread. As we mentioned, our ability to open gross units looks like going to be very similar to what we did in 2022 and 2023. Now we would like that number to go up every year. So there's probably some small impact from the Middle East that's showing up in that gross unit line. And potential for some, as Chris mentioned in his remarks, potential for some additional closures, perhaps greater than normal the second half of the year. But any stores that would close, particularly in the Middle East markets would have been lower volume stores that people are just pruning their portfolio. We expect the full year impact from development in terms of the ability to drive additional system sales to be very similar this year to last year. So the development story is good. Why is that? Because I think the franchisees have a lot of long-term confidence in the strength of our brands and their businesses around the world and they're getting good paybacks. We meticulously track the paybacks in every market around the country to make sure that our franchisees are getting good returns on their investments. Operator: Thank you. Our next question comes from Brian Harbour from Morgan Stanley. Brian, please go ahead. Brian Harbour: Yeah, thanks. Good morning guys. I think you mentioned in your prepared remarks just some broader impacts of some of the Middle East issues. I was curious what markets you're referring to with that. And I guess, just more broadly, could you comment on like Europe or some of the other markets that you sometimes highlight has been stronger or weaker? And if there is anything to call out there? David Gibbs: Look, I think in general, we've highlighted, obviously, the Middle East markets have been impacted in addition to Indonesia and Malaysia in terms of significant markets for us. Beyond that, we're not going to -- first of all, it's very hard to pull out the impact because it can be trade area trade area by in a given market. But you can imagine the types of markets that would be further impacted. And it's not -- but it's not a precise science. We just know them from the stories that we're hearing from the field some of the data that we see trade area by trade area in markets that the impact is a little bit broader than just the Middle East and Indonesia and Malaysia, but very hard to measure. I think the important thing is, despite all that, I mentioned it at the start -- the Q&A, we've seen 11% two-year same-store sales growth for KFC around the world. If we back out and just take a look at some of the markets where we know there's very little impact from the Middle East, we're seeing mid-single-digit growth for KFC. And then places like LA&C, which really are a clean read on our business ex-Middle East, no impact at all, we're seeing -- they put the second -- KFC put up a second consecutive quarter of plus 13% same-store sales growth that's on top of 10% last year. So it's 23% same-store sales growth in Latin America for KFC. You can tell that the foundation of our business is really quite strong. And we're getting through this headwind from the Middle East really as best as could be imagined. Matt Morris: Operator, we have time for one more question. Operator: Thank you. So our final question comes from Danilo Gargiulo from Bernstein. Danilo, please go ahead. Danilo Gargiulo: Thank you. I have a question on the sustainability of margins at Taco Bell. So the margins are quite impressive in the context of the labor pressures you're seeing in California, the value -- spend from consumers. So how sustainable do you think these margin improvements are at Taco Bell? And what incremental levers do you expect to deploy going forward? In other words, wouldn't be able to talk about maybe 26%, 27% margin in the next two to three years? Thank you. Chris Turner: Yeah. Thanks, Danilo. Look, I think the Taco Bell margin story is very impressive in the context of a value-oriented environment. The Taco Bell business is serving consumers, creating buzz in the market, bringing great innovation to bear and delivering value when consumers need it. And yet you're seeing us maintain these industry-leading margins. That comes from leveraging our scale on our food purchases and our franchisees take advantage of that scale. And I think in the long run, you'll see us continue to be more and more productive in terms of how we operate the restaurants. As we become more and more digital, 35% digital mix, you heard us talk about Voice AI, which is accelerating at a faster pace than we expected just three months ago. And that is just one more example of a digital lever that allows us to provide a great a great customer experience, team member experience and be more productive in back of house. Lots of other things happening on that front, I think it sets up well for us to continue to be able to provide strong value to consumers and great margins for -- for our franchisees and our company stores going forward. David Gibbs: Well, thank you, everyone, for your time today. I appreciate all the questions. Obviously, we're proud of the results we put up this quarter despite headwinds but we're even more proud and excited about the future as we go into the second half of this year and into 2025. Inflation is moderating, margins are getting stronger, our brands are getting stronger in this environment, Taco Bell putting up really good numbers. The work that we're doing behind the scenes to reinvent how we run the business, to reallocate G&A, to really lean in on our digital leadership and our investments in the AI, the laps are getting easier. We talk about our twin growth engines and how they performed this quarter. But also this quarter, I spent some time with our international Taco Bell franchisees at Taco Con, where we get everybody together from around the world to talk -- compare marketing calendars and the excitement at that convention about the future of Taco Bell was incredibly strong, the quality of the partners that we have for that brand, and although we're not calling that one of the growth -- the twin growth engine today, it's clear that the future for Taco Bell International is quite bright and another reason to be excited about the future. So a quarter that I think demonstrated the resilience of our business model and the strength of our brands and excitement about the future as we go into Q3. Thank you, everybody, for your time. Operator: This concludes today's conference call. You may now disconnect your lines.

Operator: Hello, everyone, and welcome to the Yum! Brands, Inc. 2024 First Quarter Earnings Call. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions]. I will now hand over to your host, Matt Morris, Head of Investor Relations to begin. Matt, please go ahead. Matt Morris: Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and 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 our earnings release and the relevant sections of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call, all system sales growth and operating profit growth results exclude the impact of foreign currency. On our last earnings call, we announced that we signed an agreement to acquire 218 KFC franchise restaurants in U.K. and Ireland. The transaction closed on April 29. As a reminder, several of Yum! Brands business units report on a period calendar basis, including all U.S. and Canada brands, KFC U.K. and KFC Australia. For business units that report on a period basis, first quarter same-store sales growth excludes the benefit from the additional day of sales owing to Leap Day. When forecasting 2024, please keep in mind this year will include an extra week in the fourth quarter for those entities. For more information on our reporting calendar for each market, please visit the Financial Reports section of the IR website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. We would like to make you aware of upcoming Yum! investor events and the following. Our second quarter earnings will be released on August 6 with a conference call on the same day. Finally, please mark your calendars for an in-person Taco Bell Consumer Day on December 10 at the Taco Bell headquarters in Irvine, California. Stay tuned for more details and invitations to follow. Now I'd like to turn the call over to David Gibbs. David Gibbs: Thank you, Matt, and good morning, everyone. I'm pleased to report that Yum! grew core operating profit 6% this quarter despite a challenging operating environment, demonstrating the resilience of our business. As we communicated last earnings, 1Q should represent our most challenging sales quarter this year as we work through tough year ago laps, return to a more normal inflationary environment and navigated discrete consumer demand pressures. While the impacts from the Middle East conflict have been scattered and difficult to measure, we've begun to see improvement in the most impacted markets. Taco Bell U.S. outperformed the industry on same-store sales and delivered industry-leading margins, while 1Q unit openings at KFC International set us up for a strong unit growth story in 2024. We continue to make significant progress scaling our proprietary digital and AI-powered platforms and are excited by plans to accelerate deployment. Digital sales continued an upward trajectory approaching $8 billion and were up 11% year-over-year. Through continued kiosk deployment, greater adoption of click-and-collect and stable third-party aggregator sales, digital mix improved 5 points and, for the first time ever, represented over 50% of system sales in Q1. We now have $30 billion in annualized digital sales, which by itself would represent one of the largest restaurant companies in the world. Overall, despite a more challenged operating environment, we have reached impressive new milestones and remain on track to deliver on our long-term growth algorithm target of at least 8% core operating profit growth for the full year. Now I'll discuss our Relevant, Easy and Distinctive brands, or R.E.D. for short, followed by our Unrivaled Culture and Talent and Good Growth strategy. Chris will then provide an update on our first quarter results, followed by our Bold Restaurant Development, Unmatched Operating Capabilities and balance sheet position. Starting with the KFC division, which accounts for 51% of our divisional operating profit. KFC grew system sales 4% this quarter, owing to an 8% unit growth and a 2% decline in same-store sales. The same-store sales pressure was partially attributable to impacts from the conflict in the Middle East, which have begun to ease, and we expect a 2-year trend for KFC International overall to accelerate in the same quarter. We saw strong top line growth in other parts of the world including Latin America, Africa and Greater Asia. System sales in Latin America grew 22% on the heels of a strong marketing calendar and continued success of the KFC original nugget. In Africa, system sales grew 11%, thanks to 5% same-store sales growth driven by product innovation and 6% net new unit growth. In Greater Asia where system sales grew 8%, we recently partnered with a new franchisee in Korea, who is driving transaction growth with a calendar focused on core, value and expanding consumer access, which resulted in a 26% growth in same-store sales. At KFC U.S., same-store sales were pressured from unfavorable weather events and chicken value promotions from QSR competitors. Moving on to the Taco Bell division, which represents 35% of our divisional operating profit and 75% of our U.S. divisional operating profit. System sales at Taco Bell U.S. grew 4%, led by 2% same-store sales growth and a strong outcome on top of last year's 9% same sales growth. Sales improved throughout the quarter after difficult weather events in January. Taco Bell focused on key levers within its magic formula to drive growth, including building brand buzz, providing value to our consumers and expanding into new category entry points. We know that when we execute on this magic formula, Taco Bell puts itself at the center of the cultural conversation. There was no better example of this than the Live Mas live event Taco Bell held in Las Vegas to share its upcoming innovation calendar, an industry-first event. Of course, it was not surprising that Fast Company named Taco Bell the Most Innovative Company in Dining and #8 overall. Early in the quarter, the team launched a new cravings value menu and ended the quarter with a successful launch of the Chicken Cantina menu. The cravings value menu features industry-leading value with 10 items priced under dollars providing consumers with craveable everyday value offering. Nearly 1/3 of transactions contain an item off the cravings value menu and, when purchased, 80% have at least one other item added, translating to a nearly 10% check uplift compared to non-cravings value menu checks. The impressive performance of such product launches is compounded by Taco Bell's ability to deliver industry-leading margins on top of a great consumer experience. At Taco Bell International, system sales grew 6% this quarter. The team is focused on building brand category awareness globally. This included markets such as Canada and Latin America where the team elevated the core menu and launched the Chicken Cantina menu to expand their consumer base. Next, at the Pizza Hut division, which comprises 15% of our divisional operating profit. During the first quarter, system sales declined 4% with 5% unit growth and a 7% decline in same-store sales. The year-over-year growth rate in same-store sales was suppressed from difficult year ago lapse and the ongoing impact from the conflict in the Middle East. The team continued to focus on the individual meal occasion this quarter with the India market launching the Melts platform. At Pizza Hut U.S., same-store sales declined 6% as we lapped the launch of Melts and Big New Yorker Pizza. However, the 2-year trend was positive and improved from last quarter. Lastly, at The Habit Burger Grill, for the first quarter, system sales declined 2% with 6% unit growth. Margin trends improved throughout the quarter with a combination of initiatives leading to a 60 basis point improvement in store level margins year-over-year. Now I'll turn to our Good Growth strategy, starting with our people pillar. Effective June 1, Alex Barsk will join KFC Global as the new Chief Financial Officer. Alex is joining from Pizza Hut, where she most recently served as global CFO. Alex joined Pizza Hut in 2015 and has held several leadership roles across strategy, finance, development and supply chain. Alex's transition is another great example of Yum! leveraging its talent across brands to help share unique learnings and experiences. To round out our people pillar, I'd like to congratulate and thank Yum's! Senior Vice President of Finance, Corporate Controller and my friend, Dave Russell, who recently celebrated his 25th anniversary at Yum! with today marking his 100th quarterly earnings announcement. Dave has been with the company since 1999, always serving as a trusted leader who brings his deep knowledge and analytical perspective to our finance and accounting function. Thank you, Dave, for your dedication to our growth over the last 25 years, and I look forward to your continued partnership in the future. Before I hand it over to Chris, I would like to share a few thoughts on the future of our digital and technology strategy given we achieved an important milestone this quarter with more than half of our sales coming from digital. You'll recall that the first phase of our journey to become the leading global digital restaurant company began in earnest in 2019. That first phase focused on building or acquiring a comprehensive suite of owned platforms, spanning Easy Experiences, Easy Operations and Easy Insights and accelerating deployment of those platforms across our brands and markets. While we still have further to go in deploying these platforms, we have achieved critical mass in several areas. Taco Bell U.S., one of our twin growth engines, has achieved the most extensive deployment of key platforms, including the Poseidon POS system, the Yum! e-commerce platform and the AIM, inventory management platform. Our other primary growth engine, KFC International, has been accelerating the rollout of those same platforms and is our leader in deploying in-store kiosk technology. Pizza Hut, of course, has been our leader in deploying Dragontail to thousands of restaurants around the globe. Behind the scenes, our global data hub houses data generated from these platforms. The deployment of our capabilities in this first phase of our journey has driven the dramatic increase in our digital sales from approximately 20% in 2019 to over 50% now. The impact of this growth has been significant. To share just a couple of examples of impact, our consumers enjoy more convenient and frictionless experiences, leading to high frequency and check sizes. Our franchisees enjoy significant productivity benefits as their team members no longer spend time taking orders and payments for half of all transactions, leading to stronger unit economics. We believe we are still only scratching the surface of the full value creation potential of our capabilities. While the first phase of work in deploying our platforms will continue, given the critical mass we have achieved, we have initiated a second parallel phase in our technology journey. This second phase will focus on maximizing the value creation potential of our platforms through the acceleration of AI capabilities in combination with fully leveraging the immense data assets we now own. With our platform-driven approach, we can now more easily integrate AI capabilities across our digital ecosystem. We currently have more than 40 AI initiatives in progress across the company spanning marketing, operations, insights, engineering and our internal back-office functions. While many of these initiatives will remain confidential for now, one example that we have shared publicly is voice AI to enhance our consumer experience. We've been testing this capability at the drive-thru in 5 Taco Bell stores in California. We are expanding that test to 30 stores in Q2 based on positive consumer feedback. Another example is our piloting of AI-powered technology in our Super App restaurant general manager support tool, making it even easier and faster for managers to access critical operational information to make better decisions. Of course, our Dragontail platform was the first AI-enabled next-gen restaurant operational system to enhance the consumer and team member experience in a multichannel fulfillment environment. As an example of how we are elevating the use of our data assets, in Q1, we launched the R.E.D. 360 U.S. Consumer Data Insights system. As of Q1, both Pizza Hut U.S. and Taco Bell U.S. have integrated into the system and KFC U.S. will integrate in the second quarter. This system allows us to leverage insights into consumer behavior across our brands in the U.S. After full deployment, R.E.D. 360 will be the first scaled cross-brand U.S. restaurant consumer data engine in the quick service industry and will pave the way for unique insights and personalization opportunities on digital and social channels. For those who may have missed it, Joe Park, our Chief Digital and Technology Officer, was recently interviewed in The Wall Street Journal, bringing to life many of these plans as we become more focused on pursuing AI and data-driven innovation. As we do all of this, we are also continually innovating how our technology teams work internally to better leverage our scale so that we can continue to bend the curve on the net investment impact of these digital and technology initiatives. To sum it up, we are excited about having ramped up this second phase in our journey and are doubling down and pursuing the ultimate goal of our digital and technology strategy, which is to better serve our franchisees, providing them with more, better, faster, cheaper and safer technology while simultaneously delighting consumers and maximizing Yum! shareholders' returns. We will continue to provide updates on both phases of our journey on future calls, organized around our easy capability framework. In closing, as I look back over the quarter, I'm proud of our teams and their ability to navigate any environment as our brands stand for unmatched value and convenience, providing a range of products and price points to meet any consumers' needs. Our resilient business model, coupled with our strategy to leverage our technology platforms on a global scale, gives me confidence we will continue to improve both franchisee and Yum! economics. Looking ahead, our initiatives to become an even more nimble and data-driven organization are underway, and I'm excited for the shareholder value we will create. With that, Chris, over to you. Christopher Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our financial results, our Bold Restaurant Development and Unmatched Operating Capability growth drivers, followed by an update on our balance sheet and capital strategy. Starting with our results. First quarter system sales grew by 2% driven by 6% unit growth. As we communicated on our last call, we expected the first quarter to be our most challenged from a same-store sales perspective due to prior year lapse, a return to a more normal inflationary environment and discrete consumer demand pressures, including markets impacted by the Middle East conflict. We believe the markets most impacted by the conflict collectively created a low single-digit headwind on Yum!'s overall Q1 same-store sales. Despite these challenges, I'm pleased to report Yum! delivered 6% core operating profit growth exceeding our internal plan and demonstrating the resilience of our profit model. First quarter ex special general and administrative expenses were $265 million, down 4% year-over-year, a continuation of the G&A momentum we had in the fourth quarter. Reported G&A was $286 million and includes $21 million in special expense related to ongoing resource optimization, which we expect to generate additional savings in the second half. Reported operating profit included a 2-point impact in the quarter from foreign currency translation. First quarter ex special EPS was $1.15, which includes negative after-tax impacts of $0.08 from investment losses and $0.03 from foreign currency translation. As a reminder, we shared on our last call the intent to purchase 218 KFC U.K. and Ireland stores. We're excited to report we officially closed this acquisition at the end of April. These stores have average unit volumes above $2 million and healthy store level cash margins. We expect the addition of these units to provide approximately $40 million of incremental EBITDA in the 12 months after acquisition while the benefit to our operating profit will be largely offset over the next several years due to depreciation and amortization, including amortization of reacquired franchise rights. Now let me share greater detail on our first quarter unit growth in the context of our Bold Restaurant Development growth driver. Yum! opened over 800 units in the first quarter. We reached the incredible milestone of opening KFC's 30,000th restaurant globally. As the #1 brand on Entrepreneur Magazine's Top Global Franchise rankings, KFC continues to demonstrate strong desirability among global franchisees with a new store opening every 3 hours. We continue to see an incremental store opportunity of 50,000 KFCs over the long term. Across the global system, the outlook for development in 2024 is strong. We expect to continue to open units in a broad range of markets, which last year included over 100 markets, and to cross the 60,000 unit milestone. Further solidifying Yum!'s position as the world's leading multi-brand restaurant franchisor. There are several reasons we remain confident in these trends. First, we entered 2024 with broad-based development momentum. In Q1, we grew units across 81 brand-country combinations. Second, we have large, committed franchisees who have entered into more unit development commitments for 2024 than in each of the prior 2 years. Approximately 80% of 2024 exceeded new builds for KFC outside of China are part of development commitments. Third, the development white space remains massive. We have just 6% of the global QSR market. China is a prolific developer and serves only 1/3 of the China population. In India, which is the fastest-growing global economy, KFC and Pizza Hut have been the fastest and third fastest-growing QSR chains, respectively, since 2019. Finally, our brands unit economics remain attractive across key markets where scale and first-mover advantages put our franchisees in a position of strength. Scale leads to unique advantages including access to alternative financing solutions, dedicated development teams and in-depth market knowledge. Scale also offers operating advantages. For instance, our largest partner, Yum China, has AI-enabled digital tools to allow its restaurant general managers to oversee multiple restaurants, creating unmatched savings that can be passed to consumers. The Serrano Group based in Latin America and Ramcar based in the Philippines run their own poultry processing facilities in addition to distribution capabilities, giving them cost and reliability advantages. At a brand level, KFC has food innovation kitchens in Canada, the U.S., Latin America and the Caribbean, United Kingdom, Thailand, Australia, South Africa, India and Singapore. Perhaps underappreciated, our global innovation capabilities are real sources of differentiation. Moving now to the digital and technology front. Recall that our vision is to empower our franchisees with leading-edge technology solutions with advantaged economics. As David put it, we want to deliver more, better, faster, cheaper and safer technology to our franchise partners. We are advantaged by owning important foundational platforms such as our Poseidon POS system, Yum! e-commerce, Dragontail, Super App and our global data hub, and the impact of these platforms will grow exponentially as we deploy more of them to more stores. Data is becoming a crucial differentiator, enabling us and our franchisees to generate better insights and make better decisions. On this front, quick service restaurants will benefit disproportionately because of the high frequency nature of our consumer visits, which results in more data. Within quick service, a few characteristics will separate us from our competitors, including our multi-brand portfolio, our scale and global footprint, our ownership of key platforms and the increasing integration between our platforms. We will leverage our data for insights and to drive more effective marketing and loyalty engagement, and we will deploy advanced AI tools to all aspects of our business. As we leverage our scale more and more in these areas, we can be faster, cheaper and safer through consistency and standardization across our environment. Let me now discuss the digital and technology accomplishments for Q1 across our Easy Experiences, Easy Operations and Easy Insights pillars. Beginning with our Easy Experiences pillar. We continued to onboard Pizza Hut U.S. to the Yum! e-commerce platform with a full cutover planned by Q3, followed by 3 Pizza Hut international markets by year-end. For Taco Bell U.S., where the Yum! Commerce platform is fully operational, we have accelerated viral promotions and have seen Taco Bell's digital ordering capacity increase tenfold relative to the legacy system. Within Easy Operations, the expansion of our world-class technology products and platforms continued. We expanded Poseidon to 1,800 Taco Bell U.S. restaurants, bringing our total to over 7,000 restaurants. We onboarded over 500 Pizza Hut restaurants onto the Dragontail AI platform, bringing our system total to over 7,000 restaurants. In the near future, we plan to nationally roll out Dragontail's kitchen display system and Poseidon to our KFC U.S. restaurants. Finally, our custom-built Super App, which provides smart, automated routine management tools for our restaurant managers, is now used in nearly 9,500 Pizza Hut and KFC restaurants with significant expansion plans underway for KFC. For the third pillar of our Easy Strategy, Easy Insights, KFC and Pizza Hut have continued to scale a new experienced management program allowing the brands to draw insights from an expanded source of consumer reviews across digital channels, including third-party aggregators and social media in addition to guest survey responses. KFC is now live in 10,000 restaurants and has seen a fivefold increase in per-store data points. Pizza Hut expanded this service to 7,000 restaurants across more than 50 countries. Talking about all of the tremendous advancements underway excites me about the future. This work will be vital as we embark on further innovation behind voice AI, restaurant automation and better leveraging our loyalty programs. Next, I'll provide an update on our balance sheet and liquidity position. Net capital expenditures for the quarter were $38 million, reflecting $49 million in gross CapEx and $11 million in refranchising proceeds. Our net leverage ratio ended the quarter at 4.1x. In the quarter, we sold our minority investment in Devyani for $104 million, representing a $73 million increase in value since acquisition. Our cash balance ended at $652 million, reflecting proceeds from the Devyani investment sale and modest accumulation in cash to finance the KFC U.K. acquisition. With the KFC U.K. deal behind us, our cash balance will return to a normalized rate of around $400 million, excluding the unrepatriated Devyani proceeds. Thereafter, with no significant debt maturities in 2024 or 2025, we plan to use our excess free cash flow primarily to fund share repurchases, absent accretive investments we choose to make. I will reiterate that our capital priorities are guided by maximizing shareholder value. This includes investing in the business, maintaining a resilient balance sheet, offering a competitive dividend and returning excess cash to our shareholders. Subsequent to the quarter end, we renewed our pro rata credit facility, including our revolving credit facility and Term Loan A. We were pleased to renew the $2 billion facility with the same pricing and terms that we achieved in 2021 while also increasing the revolver from $1.25 billion to $1.5 billion. Now let me discuss our latest outlook on full year 2024. We are confident that 2024 will showcase a strong unit development story at or above 5% unit growth, led by KFC International as franchisees capitalize on our brand's attractive paybacks. In the U.S., Taco Bell continues to balance core everyday value to cater to a more discerning consumer across income groups with premium innovation to attract new consumers. We expect full year Taco Bell company-operated margins to be in the range of 23% to 24%. Excluding the 53rd week, we now expect ex special G&A to be flat to down slightly for the year, including incremental G&A associated with the KFC U.K. acquisition. Finally, we are confident we will deliver at least 8% core operating profit growth excluding the benefit of the 53rd week. To close, I am incredibly proud of the progress we have made over the last few years in the areas to which we dedicated our focus and internal resources. Our team continues to manage through industry challenges to position us for a strong year and deliver our long-term operating profit plan, reinforcing the resilience of our business, strength of our talent and commitment to our shareholders. Going forward, we are moving to solidify ourselves as the multi-brand franchisor of choice through a more efficient adaptable, data-driven organization. We are only in the early innings of unlocking the value of our unmatched data, which will help power our aspirations and deliver sustained, above-market shareholder returns. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question goes to Jon Tower of Citigroup. Jon Tower: Encouraging to see the G&A curve bending. I was hoping you could maybe drill into some of the puts and takes there. Obviously, there were some offsets this quarter with some charges. But curious if you could give us a little bit of context around what's flowing through that line to help move it lower and maybe where you anticipate this moving over the long term for the business. I think historically you've talked about the idea of potentially reaching -- or at one point in time, having that sit at about 1.7% system-wide sales. Is that still a target that you think is reasonable? Or do you feel like you can even move that further as we continue to grow this digital business over time? Christopher Turner: Yes. Thanks, Jon. Good question. First, let me just reiterate a couple of details on the G&A guidance. So we expect that ex special G&A on a 52-week basis will be flat to slightly down. As we mentioned on the last call, that assumes a target level of incentive compensation. So that's one factor that could move as we go through the year. But on the factors and levers that help us to achieve that plan first, there are some onetime factors at play. Examples of that include lapping the cyber event last year, a couple of small remnants of the Russia overlap and some lapse of incentive-based compensation last year. Now on the other side, we do have some expenses related to the acquisition of the stores in the U.K. We expect that will add just under $10 million to our G&A in year. But those are the [ best ] set of factors. If we go to the longer-term levers that we're pulling, we continue to drive our resource optimization program, which has allowed us to find efficiencies in legacy parts of the business, part of which we've used to fund investments in the D&T strategy. You saw some special charges this quarter which included the impact of some of those moves that we make, but that helps to drive productivity in the business going forward. And finally, as you say, we continue to bend the curve on the impact of our D&T investments on the P&L. This happens as we deploy more and more of our technology through increased franchisee adoption. And of course, we're continuing to better leverage our scale and how we operate internally in digital and technology, which is allowing us to do more together across the business. All of that is in service, delivering more, better, faster, cheaper and safer technology to our business, as David said earlier, but bending that curve is a part of the long-term plan. Operator: The next question goes to Brian Bittner of Oppenheimer & Co. Brian Bittner: You reiterated your 2024 target to grow core operating profit in line with your long-term algorithm of at least 8%. And that's impressive given the first quarter where comps were negative and core operating profit growth was below the full year outlook. And I'm assuming this was always built in the plan because of the tough comparisons, and I realize you have a lot of G&A flexibility to hit your operating profit targets. But the question is what's the global same-store sales base case that you're thinking is required for the rest of the year to comfortably reach your operating profit goals. David Gibbs: Appreciate the question, Brian, and I agree. Hitting 8% in this choppy environment, we're proud of our ability to expect that kind of a result. And I think it speaks to the resilience of our business model and the talent of our leaders. As you know, we don't provide quarter-to-quarter same-store sales guidance, particularly in an environment like this. We're preparing for various scenarios to get to the 8% number. Obviously, one of the lever -- one of the strong levers we have to pull to get to the number is on the development front. And we feel really good about the pipeline that we have in place in development from our partners around the world, and that's something much more so than same-store sales because we can count on to get to the 8%. But as far as forecasting same-store sales growth in this environment, obviously, it's very difficult given the impact that we're seeing. Operator: The next question goes to David Palmer of Evercore ISI. David Palmer: I was just hoping to get some more color on international, KFC International, Pizza Hut International. What were some of the highlights and lowlights on same-store sales trends in terms of your brand geography combinations? And more importantly, I'm curious about your reality for 2024 given the exit rates of brand geography combinations. Has any of these changed for the better or worse? How are you feeling about things versus perhaps just a few months ago? David Gibbs: Thanks, David. Yes. Look, we feel great about our twin engines of growth, right? 80% of our profit comes from Taco Bell U.S. and KFC International. In the international business, to your question, 85% of our profit from KFC International. And if you look at the areas of the world that are less impacted by the Middle East, like Africa, for example, our system sales, you'll see in our release, was up 22%. Latin America, less impacted, really no impact, up 11% -- I'm sorry, Latin America, up 22%; Africa, up 11%. I recently actually made a trip to Africa this quarter with our team and was just blown away by the progress we're making on the ground there, where we're the leader in the industry, and we're widening our margin in terms of that leadership. Whether it's South Africa, which we visited, or Kenya where we've got franchisees that used to be part of our -- the company's system, who's building our brand the right way there, launching breakfast, the employer of choice in the country, leveraging menu innovation to take and actually inspiring some of our innovation around the world. So if you look at places like that, the business is real healthy and doing well. The other -- the impacted parts of the world are obviously much more challenged. But we still see impressive results for KFC International growing system sales 6% in this environment. And if you adjust for Middle East, that's 8%, 9% kind of system sales growth. And very importantly, we highlighted this in the earnings release, KFC International with net new unit growth up 10% shows the strength of the quality of the development pipeline that we have, which obviously bodes well for the future of the brand. But as far as the international consumer goes, it's probably more of an emphasis on value than there has been in past quarters. We're seeing the same thing in the U.S. That's one that we know with KFC, we're well equipped to navigate. Operator: The next question goes to John Ivankoe of JPMorgan. John Ivankoe: I was hoping to get maybe just a little bit more color on bending the curve on digital and technology spend, especially how it might influence '25 and '26 type of total G&A growth. I mean, I think this has been one of the more kind of debated topics of this -- on the Street as -- are we just talking about a lower rate of growth? Or might we actually see declines in dollars in '25 and '26 as you leverage the platform? And the follow-up to this, and I think it's very related, acquiring technology, building technology is one thing. But of course, maintaining technology with best-of-class technology talent, especially kind of at the leadership end, might be something different. So I just wanted to get your thoughts in terms of acquiring some of this tech talent and Yum!'s ability to both attract and retain this talent going forward as they may have other projects to work on in the future. Christopher Turner: Thanks, John. Look, if you go back over the last few years, we saw the importance of digital and technology to Yum's! future and we invested ahead on behalf of the system to build those capabilities and put them in place across Easy Experiences, Easy Operations and Easy Insights. We thought that was the right thing to do for the business, and it did create some pressure on the G&A line as we did it. As we deploy our platforms to more and more markets and we get increased adoption, of course, that happens when our franchisees see the business cases coming to life and the improvements in their economics and the way the technology impacts their consumers and their team members. And we're, as we shared on the call, continuing to drive those deployments. In fact, we're now starting to bundle some of those deployments. At Taco Bell, for instance, we are driving both the AIM inventory management in addition to the Trax back-of-house system at KFC U.S. We'll be deploying the Dragontail kitchen display system along with the Poseidon POS system. So we're bundling those together. And as we create more and more examples and proof points of the impact, as we talk to franchisees in additional markets, it becomes easier to prove the business case that our technology is delivering. So that's what supports the long-term deployment path as we move forward. Obviously, we have to continue to make investments in things like AI, better leveraging our data, as David mentioned, and as you said, in continuing to enhance the existing platforms that we have. But as we bend the curve, that reduces the net P&L impact over time. And so in the long run, we expect us to get increasing leverage on our G&A and the G&A as a percent of system sales should come down over the long run. Operator: The next question goes to Brian Harbour of Morgan Stanley. Brian Harbour: Maybe just following up on that. You spent a lot of time discussing all of these tech initiatives. I think it's probably a little bit harder for us to sort of observe that in terms of comp impact, margin impact. Obviously, we don't kind of see franchisee profitability. But are there any examples you can give of, for example, e-commerce was deployed in certain restaurants and you saw a certain uplift in sales or franchisee profits, what happens to those when you deploy that tech bundle that you just mentioned? I think that would just sort of bring it to life more for us. Christopher Turner: Yes. Great question. Look, in all of these deployments, this is us partnering with our franchisees and, of course, they co-invest to bring these platforms to their businesses and they only do that when they see a strong business case. So if you take Taco Bell U.S., which is the one market where we deploy the most of our platforms in combination, I think the tremendous sales results there as they've gone from essentially no digital sales in 2018 to well into the 30% mix now demonstrates the power of the combination of those platforms. In every market around the globe, as we shift sales from nondigital to digital channels, we see increases in check size, we see increases in frequency. Now as you said, you don't see all of our franchisees' P&Ls. But on the productivity side for our franchisees, I think our development momentum is the best proof point that digital is adding to unit economics. That's the driver of us continuing to set records on unit development around the globe, and the digital and technology impacts on their P&L is an important part of that. So all of that is enhancing the business model. But as we said, we think we're just getting started on the value creation potential from these platforms and capabilities. David Gibbs: Yes. And just to get in, if you're looking for specifics, as you can imagine, when we move people to digital ordering, we see an uplift in check in almost every case, whether it's kiosk or online. When we move people to things like Dragontail, we know we get a -- for Pizza Hut, we know we get a 4-minute savings on delivery time of pizzas and we know we can get drivers to deliver more orders per hour by using it. So to the point of your question, the measures and the financial results from the rollout of these things, there are use cases all over the place for how this improves unit economics for franchisees, which ultimately is the heart of our business. The better their unit economics are, the more they build, the more they can afford to offer the right prices and value to customers and so on. Operator: The next question goes to Dennis Geiger of UBS. Dennis Geiger: Specific to the U.S., I'm wondering if you could speak a bit more to how you think about the trajectory of the brands with some of those tougher comparisons and the weather headwinds behind you, even if it's at sort of a higher level. And sort of maybe how do you think about how the brands are positioned in the U.S. in a seemingly difficult environment and whether there's sort of any notable strategy shifts that you guys contemplate in an environment like this, be it on value or otherwise? David Gibbs: Yes. Thanks, Dennis. I think we referred to this somewhere but I'll -- just for completeness, so in Q1, obviously we had a lot of impact by the weather during the quarter. Our business generally improved sequentially during the quarter. Taco Bell, as you know, is 75% of our U.S. operating profit. Taco Bell improved throughout the quarter. And into Q2, we are seeing an acceleration of same-store sales growth trends. So we're feeling good about how Taco Bell is positioned. Remember, they just launched the Cantina Chicken menu at the end of Q1. So we're excited to share the results of that. But suffice to say, it's been well received by consumers. And we think Taco Bell is incredibly well positioned for what I would describe as a more normal consumer environment today. Customers care more about value in the U.S.. Taco Bell, we know from the industry data that value is more important and that others are struggling with value and that Taco Bell is a value leader. You're seeing some low-income consumers fall off in the industry. We're not seeing that at Taco Bell. So a really favorable setup for Taco Bell, which you probably can say about any environment that they operate in given the strength of the brand. And for Pizza Hut, obviously, the lapse in the quarter were unusually large. We always intend to lap anything with positive sales. We didn't do that at Pizza Hut U.S. But we are positive on a 2-year basis and we actually did see an acceleration of Pizza Hut's 2-year trends in Q1 versus Q4. I'm excited about the calendar that Pizza Hut has for the balance of the year as well in the U.S. For KFC, it's a different story. The KFC brand in the U.S. has been struggling. And I think we're excited about some of the work that's going on behind the scenes to really boldly reset the brand in the U.S. We have a great playbook for KFC, which is our global business, our international business [ is on fire ], as I talked about before, the underlying business. We know how to bring that brand to life to connect with consumers around the world, and we have to do a better job of that in the U.S. It's a small part of our operating profit. Obviously, it doesn't really move the needle in the Yum! growth equation, but it is something that's a high priority for us as we move forward. Operator: The next question goes to Sara Senatore of Bank of America. Sara Senatore: First, a quick follow-up and then a question. Just about the impact from the Middle East, you said it was dissipating. I was just curious if you're doing anything specific to do that like brand marketing, that type of thing, or if it's just a matter of time? The question is about unit growth over time and sort of how that translates into system-wide sales maybe this year and beyond. As some of these AUVs are coming in lower as you think about your long-term algorithm, how should we think about that either this year kind of hitting the long-term algorithm from a top line perspective or over time? David Gibbs: Sure. Thank you, Sara. The first part of your question, no, I don't think we're doing anything special. We've obviously had a lot of experience in the past being -- with the global footprint we have of dealing with different issues around the world, and we have a sense for how these things recover. But everyone is different and time is usually the answer to most of those problems. As far as unit growth goes, yes, it is true that a lot of times when we're building, we're building particularly with our footprint and our emphasis on development. We're building in emerging markets which tend to have lower average unit volumes. That's how we built the powerhouse business in China back in the day and it's how we're building out markets like India, which tend to have lower volumes. But we're also excited about a lot of the development agreements and new franchise partners that we're getting in Western Europe, for example, and some other markets around the world, which are much higher volume markets. And I think it will always be a mix and it will probably always tend to be lower volume than our typical average volume. And that's fine because these are markets that tend to start out with lower volumes and grow faster than a traditional market, and we've seen that all around the world over the last few decades as Yum! has built out its footprint. Operator: The next question goes to David Tarantino of Baird. David Tarantino: My question is on your results in the context of the sales performance. I think you mentioned that the operating profit in Q1 was slightly better than your expectations. I was curious to know how the sales are progressing relative to the expectations you might have had when you gave the guidance originally. And then in particular, I guess, was Q1 about what you expected, better than what you expected? And then secondly, David, if you could give us some sense of whether you have line of sight to global comps performance turning positive either in the second quarter or in the second half of the year? David Gibbs: Thanks, David. Obviously, we didn't anticipate the weather impacts in the U.S., for example, in Q1. So it generally was in line with what we expected, perhaps just a tad weaker. But to the point of your question, as we go into Q2, as I mentioned earlier, the Taco Bell business is picking up strength. We are generally on track with our projections for the year, which is why we feel comfortable with our operating profit commitment and the long-term algorithm. But it is going to be a challenging year, and we have a great team out there tackling the challenges. And in any one of these challenging years, it's always an opportunity to grab market share as well. We're doing that through development with the pace of development that you're seeing. And I'll just close with a few comments about the business. We talk about this a lot, but I think this was a quarter that really demonstrated how resilient this business is and how we can navigate just about anything thrown our way. The fact that we're sitting here in this first quarter in this choppy environment and we're able to put up 6% core operating profit growth and reconfirm that 8% plus target, I think, is a testament to the levers that we have to pull and the talent we have around the world. Our twin growth engines which are 80% plus of our operating profit, Taco Bell U.S. and KFC International, their underlying strength of their business is obvious when you look at the 10% unit growth at KFC or you look at Taco Bell's performance with low-income consumers in a value environment and the acceleration we're seeing in 2Q. Our development machine, we actually just put up the second highest quarter for gross development in Yum's! history, obviously on track to meet or exceed that 5% development target. And then very exciting, the digital inflection point. Passing 50% digital is something I don't think people thought was possible just a few years ago this quickly. It's a real testament to the quality of the teams that we put together. And as you can see from our prepared remarks, we are not at all resting on that as a key accomplishment as we lean in on things like AI and the use of our data to separate ourselves from the rest of the industry. I'll leave you with one final fact which I heard just the other day which really goes to the core of what we are and the strength of our business. Since January of 2021, 25% of all the Yum! units in the world have been built. That's how new our asset base is. That's how fast we're developing. Think about the impact that, that has on the consumer in terms of how fresh and modern our brands are. Since January '21, 25% of our store base has been built. We don't see that slowing down at any time soon. And in a choppy environment this year, we're very confident that we can get through it, strengthen our business and come out of it delivering that 8% core operating profit growth. Thank you for your time today. Operator: Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.

Operator: Hello, and welcome to Yum! Brands, Inc. 2023 Fourth Quarter Earnings Call. My name is Charlie, and I'll be coordinating the call today. [Operator instructions] I'll now hand you over to our host, Matt Morris, head of investor relations to begin. Matt, please go ahead. Matt Morris: Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and 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 our earnings release and relevant section of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call, all system sales growth and operating profit growth results exclude the impact of foreign currency. As a reminder, several Yum! Brands decision to report on a period calendar basis including all U.S. and Canada brand, KFC UK, and KFC Australia. When forecasting 2024, please keep in mind that this year will include an extra week in the fourth quarter for those entities. For more information on our reporting calendar for each market, please visit the Financial Reports section of IR website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. We would like to make you aware of upcoming Yum! Investor Event in the following. Our first quarter earnings will be released on May 1st, the conference call on the same day. Finally, please mark your calendars for in-person Taco Bell Consumer Day in December at Taco Bell Headquarters in Irvine, California. Stay tune to for details and invitation to follow. Now I'd like to turn the call over to David Gibbs. David Gibbs: Thank you, Matt. And good morning, everyone. Before I discuss our results, I want to express our continued concern for those impacted by the ongoing conflict in the Middle East. We continue to prioritize the safety and well-being of our franchisees and employees in the region. Turning to 2023, it was a remarkable year for Yum! Brands as we crossed the $60 billion system sales threshold and exceeded all aspects of our long-term growth algorithm. Despite facing numerous challenges around the world, our incredible teams delivered another exceptional year of growth across our business. We set an industry development record for the third straight year. We made massive strides in scaling our proprietary digital and AI-driven ecosystem, and we continued to build a talent base that I believe is the best in the industry. We delivered 6% unit growth, 10% system sales growth, and 12% core operating profit growth. We entered 2024 having opened just shy of 10, 000 net new restaurants over the past three years and are well on our way to reaching 60, 000 restaurants this year. This growth would not be possible were not for our world-class franchise partners who continue to deploy their own capital based on their confidence to invest behind the long-term potential of our brand. Along with the record-breaking success we've had on development, our digital strategy has helped propel top-line results and improve bottom line profits. Digital sales approached $30 billion in 2023, up 22% year-over-year, with mix now exceeding 45%. At the same time, we have accelerated the deployment of our proprietary technologies to optimize back-of-house operations and make it easier to run our restaurants. In doing so, we are equipping our franchise partners with distinctive capabilities that differentiate them from the competition, especially in emerging markets. I'll now share some more details on the fourth quarter specifically. During the quarter, top line sales were impacted by the conflict in the Middle East region with varying degrees of impact across markets in the Middle East, Malaysia and Indonesia. This represented a low single digit headwind to Yum!’s overall fourth quarter same-store sales growth. This trend has continued into the first quarter and we expect the sales impact to decrease over the course of 2024. Key to our growth is the performance of our twin growth engines, KFC International and Taco Bell U.S., which account for approximately 70% of Yum! system sales and roughly 80% of Yum!’s division operating profit. In 2023, KFC International opened nearly 2,700 new restaurants reaching 10% growth with restaurants opened across 96 countries. More than 80% of unit growth came from our 15 publicly traded franchisees. Entering 2024, I have strong confidence in the durability of KFC's global expansion, for which we continue to see an incremental 50, 000 restaurant opportunity over the long term. On a global basis, Taco Bell crossed the $15 billion system sales milestone this year, reflecting the growing scale of this powerhouse brand. Turning to Taco Bell U.S., which contributes more than 75% of our U.S. divisional operating profit, the brand maintained its two year same-store sales trend in the fourth quarter, outperforming the QSR industry. Taco Bell continued to deliver industry-leading margins at 24% this year, while at the same time leading the QSR industry in several key value perception indicators. Now, I'll discuss our Relevant, Easy and Distinctive brands, or RED for short, followed by our unrivaled culture and talent and good growth strategy. Chris will then provide an update on our fourth quarter results and balance sheet position, followed by our bold restaurant development and unmatched operating capabilities. Starting with the KFC Division, which accounts for 50% of our divisional operating profit and will soon cross the incredible milestone of 30,000 units. For the year, system sales grew 12% with 8% unit growth and 7% same-store sales growth. For the quarter, KFC achieved 7% system sales growth, owing to 8% unit growth and 2% same-store sales growth. Sales trends decelerated during the quarter in several markets as a result of the conflict in the Middle East. KFC China grew system sales by an impressive 20% during the quarter. We had several other standouts markets this quarter, including 16% system sales growth in Latin America and 13% system sales growth in both Africa and Thailand. In Latin America, we targeted new consumers and day parts using compelling value offers, and we expanded our KFC original nuggets. In Africa, the team boosted its breakfast day part with new beverages, including signature coffees at a great price. The Thailand market saw strong transaction growth driven by smart value offerings across all day parts. At KFC U.S., same-store sales were flat this quarter, with trends on a two year basis remaining consistent from the prior quarter. In Q1, the team has planned a range of exciting initiatives, including the Smash'd Potato Bowls, the first bowl innovation since 2019, and the rollout of KFC's first loyalty rewards program. Moving on to the Taco Bell Division, which represents 36% of our divisional operating profit. At Taco Bell U.S., fourth quarter same-store sales grew 3% and 15% on a two year basis, outperforming the QSR industry by three points. Taco Bell U.S. faced tough laps early in the quarter, but finished the year strong with comps up over 5% in the final period. The quarter included a record digital sales mix, which reached 31%, up 7 points year-over-year. Growth in kiosk sales was a large driver, with in-store kiosk sales mix increasing 15 points from Q4 last year. Optimizing our digital channels is also contributing to growth in Taco Bell's loyalty program, with active loyalty users growing 17% in 2023. The team plans to bring exciting enhancements to the loyalty program in the second half of 2024 to capitalize on digital engagement and provide an easier experience for customers to earn and redeem points. While not surprising, I'm always proud to see our incredible Taco Bell team's efforts being recognized, with Entrepreneur Magazine naming the brand the number one franchisor for the fourth year running, and with Nation’s Restaurant News crowning Taco Bell the 2023 brand icon. With an unprecedented range of exciting innovations launching this year, including at least one new product every five weeks, twice the rate of 2023, I'm confident Taco Bell will remain a brand icon for years to come. At Taco Bell International, we delivered 14% unit growth this year. The majority of this growth was contributed by our big four scaled markets including Spain which opened 19 new units this year and is on track to reach 150 units in Q1. As we enter 2024, we will work with our franchise partners in these markets to build brand and category awareness with Mexican food, particularly in Europe and Asia, leaning into fan favorites and expanding protein offerings. Additionally, we are working on scaling and entering new markets that will enable a broader base from which to grow. Next at the Pizza Hut Division, which comprises 15% of our divisional operating profit and will soon eclipse 20, 000 units. In Q4, system sales grew 1% with 4% unit growth and a 2% decline in same-store sales. Sales trends decelerated during the quarter in several markets as a result of the conflict in the Middle East. For the full year, system sales grew 5%, including 4% unit growth and 2% same-store sales growth. At Pizza Hut International, same-store sales were flat for the quarter. The team continues to roll out Melts across the globe to build the individual eater occasion. Strength in the aggregator channel continues to be a bright spot across several markets, including Canada and Latin America. Buy-one-get-one deals coupled with aggregator promotions drove transaction growth in Canada during the quarter. In Latin America, the promotion of our own digital channels in Brazil combined with the New York style pizza helped boost sales for that market. At Pizza Hut U.S., same-store sales declined 4% for the quarter while growing 1% for the full year. The Melts launch and the promotion of the Detroit-Style Pizza in the prior year contributed to a difficult lap this quarter. Pizza Hut U.S. will face another challenging lap in Q1 as same-store sales increased 8% last year, reflecting a full quarter of sales from the Melts platform and the Big New Yorker. However, we expect performance trends on a two year basis to improve in the first quarter. In Q1, the team will launch two limited time offers, including Hot Honey Pizza and Wings, a perfect pairing for fans to enjoy in the run-up to the Super Bowl. In the months ahead, the team will be announcing some exciting innovations to the melts platform. Lastly, at the Habit Burger Grill, for the full year, system sales grew 6%, led by 8% unit growth. Reflecting on 2023, Habit's new leadership team focused on improving all elements of Habit's operations, including expediting a robust kiosk rollout, implementing a sales-driven labor optimization model, and harnessing Yum!’s Co-op purchasing group to lower procurement costs and rationalize SKUs. As a result of these efforts, the team achieved a 380 basis point increase in full year store level margins despite softness in sales. Now I'll turn to our good growth strategy, starting with our people pillar. We take great pride in developing our talent and ensuring we have a strong bench to drive performance and we were thrilled to be recognized in Time Magazine's inaugural list of the Best Companies for Future Leaders, with Yum! ranking an impressive 32nd among U.S. companies. The strength of our talent is evident through Sean Tresvant's official transition to Taco Bell Division CEO on January 1st. Sean joined Yum! in 2022 and is a visionary business leader with a proven track record of driving transformative brand building through his previous role as the Taco Bell Global Chief Brand and Strategy Officer. I'd like to again congratulate Sean as he takes the helm at Taco Bell and I'm confident he and the rest of the team will continue to successfully deliver the brand's long-term global growth strategy. I'd also be remiss if we didn't take another opportunity to recognize Mark King for everything he did as Taco Bell Division CEO to set the brand up for future success, including hand picking Sean as his successor and ensuring that Taco Bell would be in more than capable hands. On behalf of the entire Yum! system, I want to thank Mark for his people first leadership that drove strong results, inspired restless creativity and solidified Taco Bell's unique brand identity that makes it an undisputed global icon. Additionally, Pizza Global Chief Technology officer Joe Park will be moving into the Yum! Chief Digital and Technology Officer role currently held by Clay Johnson, who will continue as a Senior Advisor. I want to thank Clay for his incredible leadership since joining Yum! in 2019, including developing our digital and technology capabilities from the ground up and establishing Yum! as a clear leader in technology in global QSR. Since joining Yum! Joe formed our first ever long-range innovation team before moving on to Pizza Hut, our most digital brand, where he partnered with our global operations and technology leaders to deliver new levels of ease to our customers and improved unit economics for our franchisees. I'm confident he is the perfect person to lead us into the next chapter on our digital and technology journey. Moving on to the Planet pillar of our good growth strategy, in 2023 we remain focused on efforts under our priority areas of greenhouse gas reduction and sustainable packaging. We've made progress on our goal of reducing greenhouse gas emissions nearly 50% by 2030 through investments in renewable energy and energy efficiencies in our restaurants and through ongoing commitments with our food suppliers. In terms of packaging, we are increasing our global use of more widely recyclable plastics in our consumer packaging and we continue to remove plastic packaging in the form of bags and cutlery in addition to eliminating styrofoam. Our continued progress in sustainability has been underscored by several recent recognitions, including being named to the 2024 Dow Jones Sustainability Index North America for the eighth consecutive year and being listed by Newsweek as one of America's Most Responsible Companies for 2024. Before I wrap, I want to pay tribute to our incredible partners at Yum! China. In December, my team and I traveled to Shanghai to meet with CEO Joey Wat and her executive team. That trip reinforced our view that Yum! China is without question the world's most capable restaurant operator. They enable rapid growth and structural cost efficiencies through their dynamic development capabilities and their robust in-house supply chain. Our team sampled amazing new menu items in their innovation kitchen, and we saw firsthand the digital capabilities that enable Yum! China to engage with an astounding 470 million members in its loyalty program. These advantages enable consistent paybacks of two to three years in KFC and Pizza Hut despite evolving market conditions, further testament to their clear competitive advantages in the market. As I look back over the last year, the unique advantages of our diversified system shone through, while the business faced persistent inflation across the globe and navigated shifts in consumer sentiment stemming from regional conflicts. We responded with a focused determination to execute our growth plan, including growing units in 110 countries, meaningfully scaling our technology systems, deepening collaboration across our brands, and delivering both sales and profits well above our long-term growth algorithms. We're confident 2024 will be another banner year with a number of exciting sales driving opportunities, such as enhancing the range of protein offerings at Taco Bell, expanding new category entry points, and significantly boosting the impact of our loyalty program. With a world class team, globally iconic brands, industry leading franchisees, and a relentless appetite for growth, the future is brighter than ever and I am confident that we will continue to maximize value for our shareholders. With that, Chris, over to you. Chris Turner : Thank you, David, and good morning, everyone. Today, I'll discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers, followed by an update on our balance sheet and capital strategy. As David mentioned, 2023 was an exceptional year with Yum! exceeding all components of our long-term growth algorithm. Full year, same-store sales grew a very robust 6%. We opened 4, 754 gross new units, the equivalent of 13 restaurants a day, or one restaurant roughly every two hours. KFC set a brand development record, opening over 2, 700 new units across 97 different countries. I also want to extend congratulations to the Yum! China team, who crossed 10, 000 KFC restaurants this quarter with nearly 40% of those restaurants built in the last three years. Turning to our results, full year system sales grew 10%, with fourth quarter system sales up 5%, led by 6% unit growth and 1% same-store sales growth. Yum!'s twin growth engines, KFC International and Taco Bell U.S., grew system sales 12% this year. Fourth quarter, ex-special, general and administrative expenses were $344 million, down 4% year-over-year due to strict cost control. Reported G&A was $353 million for the quarter, including $9 million in special expense related to an ongoing resource optimization project. For the full year, ex-special, general and administrative expenses were $1.17 billion. Core profit grew 8% for the quarter and 12% for the full year. Reported operating profit included a negligible impact in the quarter from foreign currency translation and a $49 million headwind for the full year. Our ex-special tax rate was 26% in the quarter and slightly under 21% for the full year. Fourth quarter, ex-special EPS was $1.26, a decline year-over-year stemming from a $0.23 headwind from fluctuations in our quarterly tax rate that drove our effective tax rate above our guided range in 2023 and below our guided range in 2022. Full year, ex-special EPS was $5.17, a 14% increase year-over-year. Now, let me share some greater detail on our fourth quarter unit growth in the context of our bold restaurant development growth driver. Yum! opened just shy of 1, 900 units in the fourth quarter, with approximately 87% of that growth coming from our international markets. The KFC Division was the largest driver, finishing the year with units up 8%. China, India, Thailand, South Africa, and Spain drove KFC's development this year and were part of a group of 15 countries that grew unit count by more than 25 restaurants. In December, we were pleased to announce that we signed an agreement to acquire 218 KFC restaurants from our largest franchisee in the UK. This is an exciting opportunity for us to purchase restaurants with average unit volumes above $2 million and healthy store level cash margins in a market where we have an exceptional local management team who run our existing KFC UK equity store base. We expect the addition of these units to provide approximately $40 million of incremental EBITDA in the 12 months after acquisition, while the benefit to our operating profit will be largely offset over the next several years due to depreciation and amortization, including amortization of reacquired franchise rights, which will be reflected in store level margins post-acquisition. We anticipate this transaction to close during the second quarter. At Pizza Hut, the division opened 575 units for the quarter and nearly 1, 600 units for the year, a record for the brand. There were 73 markets that contributed to the brand's development. China, India, Turkey, Japan, and Canada led Pizza Hut's growth internationally with more than 900 units opened across those countries. The Taco Bell division opened 201 units in Q4 and 417 units for the full year. In the U.S., unit development was also on fire with 244 gross new units. Our longer-term growth engines that include Habit and Taco Bell International opened 208 units on a combined basis and grew unit count by 12%. We finished 2023 with unit growth occurring in 110 countries. We now have units in 293 brand country combinations, providing an unmatched level of diversity geographically, as well as in consumer preference with leading brands in the chicken, pizza, and Mexican categories. Looking ahead, we expect development in 2024 to continue at a robust pace. In the first half, KFC will reach an incredible 30, 000 units and Pizza Hut will top 20, 000 units. At KFC, we enter 2024 with more development commitments than last year. We recently returned from an inspiring visit to China in December and were reminded of the incredible runway for KFC's growth in the market, where Yum! China has over 10, 000 KFC restaurants, yet serves only one-third of the population. Taco Bell International will continue to expand their footprint, though the growth rate will temporarily slow as the brand looks to stabilize same-store sales performance in emerging markets and partner with franchisees to optimize site selection, leveraging KFC and Pizza Hut market mapping data. Moving on to our unmatched operating capabilities growth driver, which I'll speak to through the lens of our digital strategy involving our easy experiences, easy operations, and easy insights pillars. 2023 was a landmark year for successfully scaling our suite of proprietary technologies across our global restaurant base. Beginning with our easy experiences pillar, we have successfully deployed our Yum! Commerce platform to KFC U.S. and Taco Bell U.S. and are continuing to onboard the Pizza Hut U.S. system. Looking ahead, we will start to deploy this platform to two Pizza Hut International markets in the first half of 2024. Kiosks remain an important priority in delivering a consistent customer experience, driving ticket uplift, and streamlining our restaurant operations. Globally, we've increased our kiosk penetration in KFC restaurants by 70% over the past year outside of China. We ended the year with kiosks in approximately 500 KFC U.S. restaurants, a huge step up from nearly zero only two quarters before. Our KFC Latin America markets also began the rollout of kiosks using our proprietary TicTuk platform this year and planned to triple the restaurant count in 2024. Within easy operations, this quarter, we continued to fire on all cylinders, significantly expanding the rollout of our world-class technology products and platforms. Poseidon, our proprietary point of sale system, which was expanded to an additional 1, 700 Taco Bell U.S. restaurants, resulting in 5, 000 restaurants having been onboarded this year. We also ramped up the deployment of our Dragontail AI platform with an additional 1, 000 locations onboarded this quarter and over 4, 000 new restaurants added for the full year. We now have Dragontail in place in nearly 7, 000 restaurants across Pizza Hut and KFC. Our 2024 rollout will include launching Dragontail in nearly 6, 000 more restaurants. Further evidence of our ability to scale software globally at a rapid pace. Our AI-driven automated inventory management system is now being used in 90% of our KFC U.S. locations and roughly half of our Taco Bell U.S. restaurants, driving more seamless and more accurate inventory ordering processes for our restaurant managers. More than 3, 000 additional restaurants across KFC, Taco Bell and Pizza Hut will be onboarded to the automated inventory management system in 2024. Finally, our custom-built SuperApp, which provides smart, automated routine management tools for our restaurant managers, is now used in over 8, 500 Pizza Hut restaurants globally, and KFC has plans to roll this out to approximately 6, 000 restaurants in 2024. For the third pillar of our easy strategy, Easy Insights, we are fully leveraging our unique global scale to bring new insights and enable even smarter and quicker decision making. This year, we expanded the reach of our Yum! GlobalData Hub, which captures the vast majority of global transaction level sales data and other key operational and customer metrics. In 2024, our Easy Insights team will develop and test new AI-driven capabilities that pull from the GlobalData Hub and integrate into our own technology platforms, including personalized upsell recommendations for customers ordering on our digital platforms, intelligent menu pricing recommendations, and dynamic restaurant routines for general managers. Stepping back, it's incredibly encouraging to see this digital ecosystem come to life in our restaurants. By the end of 2024, we are likely to have our Taco Bell U.S. restaurants operating substantially all of these key technologies through the Yum! ecosystem. From the Poseidon Point of Sale system to the Yum! Commerce Platform, our automated inventory management software, and the Tracks Restaurant Management application, truly a power brand powered by world-class technology. Next, I'll provide an update on our balance sheet and liquidity position. Our net leverage ratio ended the year at 4.2x, down from 5x last year. As we had previously shared, we had planned for our net leverage ratio to drift lower during 2023 based on pausing new debt financing, paying our $279 million revolver balance in Q1, and retiring a $325 million bond maturity in Q4. Our capital expenditures for the quarter, net of refranchising proceeds, were $103 million. Our net capital expenditures for the year came in at $225 million, reflecting $60 million in refranchising proceeds, and $285 million in gross CapEx. For the full year, we repurchased approximately 400, 000 shares, totaling $50 million. With the November bond maturity behind us, and no significant debt maturities in 2024 or 2025, we will return to using our excess free cash flow to fund the share repurchases and any accretive investments we choose to make, for example, the UK KFC acquisition. In addition, we were pleased to recently announce an 11% increase to the dividend. I will reiterate that our capital priorities are guided by maximizing shareholder value. This includes investing in the business, maintaining a resilient balance sheet, offering a competitive dividend, and continuously evaluating the optimal use of our excess cash. Finally, let me shed some light on how 2024 is shaping up. Despite a more challenging operating environment, including the impact of the conflict in the Middle East, we expect to deliver our long-term growth algorithm in 2024. This includes core operating profit growth to be at least 8%, excluding the benefit of the 53rd week. We have a strong unit development pipeline thanks to attractive and reliable paybacks and growth-minded franchisees, which gives us confidence in our ability to deliver strong system sales growth. For the shape of the year, we expect top line trends in Q1 to be the most challenged, with same-store sales trends improving sequentially as laps ease and a range of sales driving initiatives take hold. We expect full year, Taco Bell company operated margins to be in the range of 23% to 24%. We anticipate flat, ex-special G&A growth as we manage spend across the organization. Remember that G&A can vary due to the nature of our performance-based compensation plan. Lastly, we expect our full year tax rate to be in the range of 21% to 23%. To close, I am incredibly proud of our performance this year. Sales trends became a little more challenging in the second half, and yet we delivered profit growth above our algorithm as our teams quickly adjusted marketing calendars to meet demand and kept a strict focus on managing costs. It is our team's relentless focus to stay vigilant on all areas of the business that gives me confidence, we will deliver our long-term growth algorithm in 2024. The unbeatable combination of our iconic brands, best-in-class franchisees, and resilient business model will enable us to deliver growth and shareholder value creation for years to come. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question comes from Gregory Francfort of Guggenheim. Gregory Francfort: Hey, thanks for the question. I mean, the question I had as we look into 2024 there's obviously been some pockets of weak around the world, but in terms of your development, you touched a little bit the first half and some of the milestones you're going to reach. What do you think about the pace of development globally in 2024 and 2025? Do you expect that to kind of hold around this 6% range or any thoughts there would be helpful? David Gibbs: Yes, thank you for the question, Gregory. Obviously, in our prepared remarks, and I'll reiterate in my comments now, we are very confident in the pace of development. The pipeline has never looked better for us. Obviously, it varies country by country, but franchisees are getting great returns. You heard yesterday, Yum! China commit to continued strong growth and the great returns they're getting through development. Even Pizza Hut US is picking up the pace of development. We see lots of reasons to be hopeful, and we have a lot of good visibility into the pipeline, the development agreements that we've struck with franchisees and the way we're evolving our asset types, I think is another tailwind for us on development. Like we mentioned when we were in China, we've seen this new model that they've come up with, the satellite Pizza Hut Delco store, which we believe they can blow out and be a real growth driver for them. It's just one example. Operator: Our next question comes from Brian Bittner of Oppenheimer. Brian Bittner: Thanks. Good morning. As it relates to 2024, Chris, you said you expected to be a year that you're going to perform in line with your algorithm, of course, meaning that you can grow your operating profits at least 8% excluding the extra week. I just want to dive a little more into this and your confidence around it. I know unit growth is a source of confidence. Clearly, you've outlined that on today's call. But what about the same store sales required to get to that algorithm? Just given the ongoing headwinds from the Middle East, potentially more challenging US environment, how do you think about what's required from the same source of sales perspective after the first quarter as it relates to the need for them to accelerate. Thanks. Chris Turner : Yes, thanks, Brian. If we talk about the algorithm this year and our confidence in delivering it, I'll start by reiterating our primary growth driver, which David just talked about on development. Obviously, one of our strongest pipelines in recent years, lots of reasons to be excited about development continuing at or above that 5% in the algorithm. We talked about from a same store sales standpoint, we expect sequential improvement through the year. Our two primary growth drivers, KFC International and Taco Bell U.S. continue to have strong positions in their markets around the globe. Obviously, we've got the Middle East headwind that we mentioned that we'll deal with. We expect sequential improvement throughout the year. And so we're confident in the trajectory on that piece. But then you get to the 8%, at least 8% core operating profit growth, which is really what the algorithm is intended to drive. And that's where we've got, even more levers at our disposal. So we mentioned that we expect flat G&A year-over-year which reflects, how we're managing that component of the P&L. And so we've got, confidence in the actions that we're taking there. There's a component of that around our digital and technology approach as our capabilities become more and more mature. We get more and more leverage out of those capabilities. And of course, we're doing all of that in service of our franchisees where we're building leading edge capabilities at the lowest cost for them and we've invested ahead. But we also mentioned the productivity programs that we continue to drive, which in the past few years have been used to fund those incremental investments in D&T. But we're going to continue to drive those productivity improvements. And then, finally, we're lapping some larger than normal incentive programs that will help from a G&A standpoint as well. So you add it all up. We're very confident in delivering that at least 8% core operating profit growth in our algorithm. Operator: Our next question comes from David Palmer of Evercore. David Palmer: Thank you. And good morning. Lots of great stuff on this call. I don't know if this is going to be something you can answer this call, but maybe something for the future. Your digital sales growth and mix increased very strong at 22% growth this quarter you said. And I just wonder how incremental you think that growth is to sales or other benefits that you see in terms of loyalty and even labor efficiency. So I know we would all be very open to hearing how incremental that is. Obviously, a quarter like this when you have a lot of headwinds and noise, but maybe for a future call, even if you don't have that handy. But another separate question may be easier to answer. You talked about the two year trend accelerating for Pizza Hut U.S. in the first quarter. And even if we were to say that was a couple points of acceleration on a two year, that could imply a flat comp starting in the second quarter on a year-over-year basis. I wonder if you think that that sort of stabilization in comps is a reasonable expectation for Pizza Hut starting in the second quarter. Thanks. Chris Turner : Yes, thanks so much. I'll start with digital. So yes, look, our digital capabilities continue to drive actually all elements of our algorithm. They support strong unit economics. As you heard, we continue to expand the easy operations capabilities which make our restaurants easier for our team members to operate. And it helps our franchisees drive productivity. And so that is helping us ensure that our franchisees continue to have strong unit economics which allows them to invest in building new stores. If you look at that 10% global system sales growth for the full year, we think digital played a big part of that, both on the unit side and on the same store sales side. And then, as I said, from a profitability standpoint for Yum!, as those capabilities continue to mature, we can get more and more leverage out of our digital technology teams and capabilities in-house. And so that's part of us bending the curve on those investments that I mentioned in our G&A plan for the year. So again, we're very pleased with the progress on the digital front and we still have, a lot of that journey ahead of us, and we described big plans this year to continue to accelerate the roll up. David Gibbs: Yes, I'll talk about pizza, but on the digital front, one thing I really want to emphasize is just the talent we've been able to attract to the digital space, both at Yum! and at the brands, is unbelievable. We are becoming a talent magnet in digital. It's a great place to work. We're investing behind this. Our franchisees are quickly adopting it. And even though we're at $30 billion of sales and growing fast, we're still in the early innings of what this can do to the business and the way it can transform us. So we could not be more excited about digital. And we will continue to report on the various metrics, loyalty, and things like that as we go forward and keep you guys informed on the journey. On Pizza Hut, yes, obviously, sometimes we forget. We look at one year numbers without really looking at the full picture. Q1 for Pizza Hut U.S., we have an enormous lap. And obviously, I have to take that into account as we launched melts last year, very successfully, and are now rolling that around the world. But we certainly are planned for Pizza Hut U.S. to be positive for the year. The team has a number of things planned for the calendar as we go forward. And we love the fact that Pizza Hut globally hit a new record on that new unit development and is becoming a bigger and bigger contributor to that part of our growth. And certainly Yum! China last night talked a lot about the great success and the wide runway they have for Pizza Hut in that market. Operator: Our next question comes from Jon Tower of Citi. Jon Tower: Great. Thanks for taking the question. Quick clarification on the question. On the G&A guidance for ‘24, is that just on a dollar basis? Can you maybe just level set us where that, what your expectation is? Is it flat on a 52-week basis or, obviously you've got an extra week in some of the divisions? And then the question itself is more along the lines of, how franchisees -- how are you are working with franchisees to probably approach pricing in 2024, I guess more focused on the U.S. there, given that's the market where I think there's some incremental pressure on the lower income consumer. But, how are you guiding them to think about it given some of the pressures on labor that are going to be manifesting themselves throughout the year? Thanks. Chris Turner : Yes. So the G&A, we ended the year ex-special at $1.17 billion. We expect to be flat on that in the 52 weeks. So there should be an apples-to-apples, comparison on that commentary run plan. David Gibbs: Yes. And as far as, the U.S. consumer and pricing, just some good news to share there at least from a Yum! perspective, as we think about the U.S. consumer, the best way for us to look at it is obviously through the lens of our Taco Bell business, which is a vast majority of our U.S. sales and profits. Throughout 2024, we saw a slight outperformance from our restaurants that were in low 2023, restaurants that were in low income trade areas versus the rest of the business. So with the low income consumer, I know there's been a lot of talk about, are they dropping out? Certainly for Taco Bell, that actually, looks, it looks like we're doing a great job of holding onto them. In fact, in both the entire year and in Q4, we saw the low income consumer trade areas outperform the rest of the business. And I think that speaks to the strength of Taco Bell in this environment. It is a value leader in so many ways. When you talk to consumers about value, they win on every value perception score. And they can do value with innovation, which is also a great combination. And they can do value while having industry leading margins. So you think about the room that we have to compete with everybody else in the category. I really, really like our position with Taco Bell. Obviously, as we move into Q1, we've got tougher laps, U.S. weather, really played havoc on sales early in the quarter. And as we've said, it's going to be the lowest quarter of the year. But we think this environment is one that obviously we can thrive in the U.S. and there will be less pricing to the point of your question. But it's not going to slow Taco Bell down in terms of being able to connect with consumers and grow transactions. Operator: Our next question comes from Jeffrey Bernstein of Barclays. Jeffrey Bernstein: Great. Thank you very much. Just following up on that, you did talk about a more challenging macro into ‘24. And I assume that's above and beyond the Middle East. So specific to the U.S. again, just any change in behavior you're seeing at any of your three core brands, consumer trading around the menu. Specifically, I know that from television advertising each of three big brands has what appears to be pretty compelling value offers. I'm just wondering how those value offers are performing the consumer demand for them, maybe the mix shift of value today, however, you define that versus where it's been in years past. Any color on that would be great. Thank you. David Gibbs: Sure. Yes, just to build on my comments about the Taco Bell business in the U.S. and how it's set up to thrive in this environment, the value menu that we've recently tweaked in the U.S. to be $3 and under is actually over indexing a little bit with consumers versus test and expectations, which isn't a bad thing because it's a real competitive advantage for us and it's designed to maintain franchisee profitability. So there may be some small shifts in consumer behaviors, but as I said on previous calls, we just are slowly returning to a more normal operating environment where value is always important in the category as is convenience. And food innovation and great ability. And we think we just win on all those fronts with Taco Bell and why we're excited about 2024. Operator: Our next question comes from David Tarantino of Baird. David Tarantino: Hi. Good morning. I just want to come back to your comp outlook for the year. And I know you mentioned it several times, some of the reasons you expect things to maybe get better as the year goes on. But I'm hoping that you can maybe elaborate on your view there, whether you think it's the macro getting better, or you think it's more what you have in your initiative pipeline. And then I guess a second part of the question would be if that doesn't materialize the way that you anticipate, do you have levers to pull to still deliver the profit growth you're expecting for the year? Thanks. David Gibbs: Well, in terms of the comp outlook, obviously the Middle East creates some uncertainty for the environment. And Chris just talked about one of the levers that we have to pull, which is improving our efficiency and holding G&A flat year-over-year. But the bigger picture is we're really excited about the initiative that each of the brands has going just to give you a glimpse. Taco Bell in 2024 is going to have twice the innovation on the calendar that they had in 2023. And I've obviously seen a lot of this innovation and have excited about the impact it's going to have with consumers. I mentioned the fact that in the US, it's a brand that thrives in a value environment. But around the world, just to give you some more color on Q4, we have positive transaction growth in Q4 despite the impact that the Middle East had on our overall business. So we think the year sets up where, obviously, the Middle East is a big variable, but putting that aside, we think the year sets up to be another great year for Yum! all around the world with sales growth. And a lot of it is driven by us leaning in more on what we call category entry points, opening up new lines of business for us. I'm excited in a couple of days to head to South Africa to see the great work that that team is doing in terms of launching breakfast and the beverage work that they're doing that's really having a positive impact on their sales. But we've got stories like that going on all around. Chris Turner : And then David, as you mentioned, we do have multiple levers to ensure that we land the ultimate component of the algorithm, which is at least 8% core operating profit growth. We've talked about the flat G&A plan, and we also referenced in the comments some of the productivity projects that we have going on. So we're laser focused on that component as well and have plenty of levers we can pull. Matt Morris: Operator, we have time for one more question. Operator: Our final question of today comes from Dennis Geiger of UBS. Dennis Geiger: Great. Thanks, guys. Just another on Taco Bell, I guess, David, in light of the strength and the multiyear trends in December and then the initiatives that you highlight, I guess is it fair for Taco Bell given the fact that you're seeing pretty good strength across consumers for the brand plus the initiatives that you could see sort of a widening market share or traffic share outperformance gap at Taco Bell this year given the environment and given the plans you have in place, if anything, to share on that? David Gibbs: Yes. Thank you, Dennis. Yes. So look, Taco Bell in Q4 just to put a little bit more numbers around it, put up a two year number of a plus 15, again, going back to sometimes we forget what we were lapped and we were lapping massive Mexican pizza performance. They were able to lap that and grow on that in a challenging consumer environment. We think that favors them. And absolutely what you said is absolutely true. We're constantly looking to gain market share. And the Taco Bell business has been doing that for now for many years. And we think this is an environment that favors them. So it couldn't be more excited about the growth that Taco Bell has ahead of it in the U.S. And we've really just begun with that brand. And I'm excited about Sean and the team we've got in place to lead that. I'll wrap up by one of my fun facts that, we get hit with so many of them as we're preparing for these calls. But if you're not aware, in the last three years, 25% of all young restaurants have been built. And you're talking about brands that have been 50 to 70 years old and older, but yet in the last three years, nearly 25% of our restaurants were built in the last three years. It gives you a sense for, first of all, how the condition of our asset base around the world and how new it feels given the age of the brands, but also the commitment that our franchisees have to this business. They're investing their capital in building those stores. And we always talk about net new units. That's gross new units. A lot of those stores were placed, the stores that had reached the end of their useful life. So it shows their commitment to the next 20-30 years of the brand and they are fantastic partners. They've always been our competitive advantage. We're seeing that even just managing through the Middle East and how Americana has done such a good job of that. And we couldn't be more excited given the development pipeline, the commitment that our franchisees have and the strength of our brands as we head into 2024. Thank you for your time today. Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.

Operator: Hello all and welcome to Yum! Brands, Inc. Third Quarter 2023 Earnings Call. My name is Lydia and I'll be your operator today. [Operator Instructions] I'll now hand you over to your host, Matt Morris, Head of Investor Relations. Please go ahead. Matt Morris: Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris will open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially on these statements. All forward-looking statements are made only as of the date of this call and 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 our earnings release and relevant sections of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call all system sales growth and operating profit growth results exclude the impact of foreign currency. For more information on our reporting calendar for each market, please visit the financial reports section of our website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. Looking ahead, our first quarter earnings will be released on February 7th with a conference call on the same day. Now, I like to turn the call over to David Gibbs. David Gibbs: Thank you, Matt, and good morning, everyone. Before I go over our third quarter results, I'd like to express our deep concern for those affected by the ongoing violence in Israel and Gaza. The safety of our people in the region is our utmost priority and in addition to staying in close contact with our local team members and franchisees, our franchise restaurants in the region are only open when it is safe for staff and customers. The Yum! is supporting affected employees and contributing to humanitarian organizations that are providing critical aid. Our heartfelt wishes for the safety and well-being of innocent civilians and families in the region impacted by this conflict. Turning to our third quarter results, which once again reflect our ability to grow our iconic brands globally through our recipe for good growth. I'm proud to share that we delivered 10% system sales growth, led by 6% same store sales growth and 6% unit growth. We set a Q3 record on unit development, opening an incredible 1,130 gross new units in the quarter. Our digital sales growth remains on fire, with sales up more than 20% year-over-year and digital sales setting a record by exceeding $7 billion. Our third quarter core operating profit grew an impressive 16%. KFC International and Taco Bell US, which collectively contribute approximately 80% of our divisional operating profit, fueled this quarter's growth. Together, these twin growth engines delivered a remarkable 13% system sales growth in the quarter. KFC International has the most units among quick service restaurants in 60 countries and has been adding more absolute units than any other retail brand in the world since 2021. Of course, Taco Bell US is in a class of its own in the domestic QSR category as a culturally iconic brand and clear leader in value perception with the most crave-worthy food in the industry. Taco Bell has unmatched menu flexibility, exceptional pricing power, industry-leading unit economics, and world-class franchise partners. Both businesses are performing at extremely high levels and have ambitious plans to accelerate their growth to even greater heights. Now let me discuss the quarter's results in greater detail through the lens of two of our growth drivers, relevant, easy, and distinctive, or Red Brands, and unrivaled culture and talent. Red Brands are the cornerstone of our strategy and the way we bring this to life continues to evolve as consumers' behaviors shift and new trends are established. Over the past quarter, we've made significant progress in three specific initiatives: building sales layers through new category entry points; leveraging technology to drive brand loyalty; and delivering exciting value offers to broaden appeal. Our brand teams are galvanized around these three focus areas, and we are highly encouraged by the results these areas are driving in our divisions, which I will now highlight. Starting with the KFC division, which grew system sales 12% this quarter, driven by 8% unit growth and 6% same-store sales growth. While much of KFC's recent momentum has been led by emerging markets, this quarter we saw a broad-based strength across a more diverse group of geographies, further proof of our ability to win in any macro environment. A few markets with standout same-store sales growth performance include Africa at 9% growth, Australia with 9% growth, and Latin America and Caribbean at 8%. KFC's hand-breaded original recipe nuggets are a global innovation platform and represent a new category entry point to attract individuals and families. After a successful launch in the US, we expanded nuggets to our Latin America and Caribbean market this quarter and saw incredible consumer reception that helped drive significant sales. The team plans to expand the offering to several more places around the world. KFC Africa delivered their 11th consecutive quarter of same store sales growth with a combination of abundant value offers, strong e-commerce sales, and the relaunch of their breakfast campaign driving this quarter's performance. Finally, I want to highlight our KFC Australia business as they continue to deliver fantastic performance with kiosk sales growing more than 90% compared to last year and the advent of a highly personalized value campaign that drove significant own channel sales. The KFC Global team is also making great progress in expanding its loyalty program around the world, including in the US, where we soon expect to launch KFC Rewards. Next I'll discuss our Taco Bell division, which delivered 11% system sales growth in Q3, led by 8% same-store sales growth and 5% unit growth. At Taco Bell US, system sales grew 11% with an impressive 8% same-store sales growth and 3% unit growth. The Taco Bell team leveraged its magic formula that encompasses a balanced set of commercial strategies including building brand buzz, unparalleled value, mass occasions, and digital initiatives to grow transactions during the quarter. They delivered unparalleled value with the return of fan favorites like the $5 box, an amazing platform at a compelling price point. Though Taco Bell featured a great value promotion in the quarter, value purchases remained within range of the brand's intended 10% mix target. This, combined with exciting innovation and brand buzz, helped the brand maintain its industry-leading margins of 24%. A key component of the magic formula is mass occasions, the brand's personal expression of building new category entry points. One such example is the growth in chicken offerings, which the team plans to further expand with the launch of its Cantina menu. We're excited about the impact these new menu items will have as we roll out these offerings in 2024. Another component of this brand success is digital, which includes loyalty. While a Taco Bell loyalty customer already spends 40% more per year than a traditional customer, the consumer feedback we've received indicates that we can do an even better job at creating more obvious and exciting ways to both earn and redeem rewards. Starting next year, Taco Bell will enhance its loyalty program and provide easier access across channels to earn and redeem points. Additionally, members will enjoy more exclusive experiences, including more digital innovation, early access to new products, and loyalty-enabled experiences. Eventually, the team will integrate its loyalty program with digital menu boards to create an even more personalized experience. Taco Bell International delivered 16% system sales growth driven by 23% unit growth and 1% same store sales growth. A key contributor to Taco Bell's International business has been robust digital sales, which increased nearly 45% year-over-year this quarter. The Global Taco Tuesday campaign that launched in June continued to drive customer engagement around the globe, bringing greater brand awareness and equity with consumers. The international markets are focused on amplifying National Taco Day and providing consumers with both craveable food and everyday value. Turning to the pizza division, which grew system sales 4% driven by 4% unit growth and 1% same store sales growth. International same store sales grew 2%, driven by transaction growth in China, continued momentum in melts, and more strategically activating aggregator partnerships in international markets. Same store sales results in the US were flat as Pizza Hut leaned into its long-term strategy to build new category entry points through individual meal occasions with products like melts and wings. This quarter, Pizza Hut US teamed up with the Teenage Mutant Ninja Turtles to relaunch our Big New Yorker Pizza and deliver pizzas into the New York City subway stations, leading to over 1 billion media impressions. As we head into the fourth quarter, the Pizza Hut US team launched a late night initiative, strategically expanding operating hours in more than 1,000 restaurants to give consumers even more ways to access the brand. To wrap up with the Habit Burger Grill, system sales grew 4%, driven by 8% unit growth. The new Habit leadership team is settling in well and has placed a distinct focus on building strong unit level economics to set the brand up for long-term success. Of note, the team is developing a new cost-effective packaging range designed for off-premise occasions along with a new prototype store to optimize CapEx and pre-opening costs. The habit is set to launch its first everyday value platform in November called Simple Crafts after a successful test this quarter. We have tremendous confidence in the long-term prospects of this brand and are encouraged by the improvements that the team is making to deliver success in the future. Now, I'll turn to our good growth strategy, starting with our people pillar. We've held powerful forums this quarter supporting our unrivaled culture and talent growth driver, including a leadership development conference for underrepresented talent and a new program aimed at preparing high potential female talent to be part of the next generation of senior leadership. In addition, we're furthering our culture of collaboration and building capability across our company. Recently, a cross-brand group of leaders gathered for the first Red innovation experience in our innovation lab, where they learned design thinking and real-time problem-solving through new age innovation techniques. We're also making a meaningful impact in the communities we serve through our global unlocking opportunity initiative to create more equality. For example, in the UK, KFC partnered with a nonprofit with the goal of having one-third of its new hires be at-risk use. In Sri Lanka, Pizza Hut is investing in the development of 30 vocational and technical training facilities to prepare youth for careers in the QSR industry. In terms of our planet pillar and our focus on reducing greenhouse gas emissions, we're educating suppliers through the supplier leadership and climate transition, a consortium of multinational companies created to accelerate climate action in the supply chain. Many of Yum!'s poultry, beef and dairy suppliers in key markets have joined this program or already have emissions reduction goals. These are just a few of the examples of the great work of our teams, earning us recognition like Newsweek's 2023 America's Greenest Companies. Overall, we're incredibly pleased with our results for the quarter and year to date. Our strategy is clear and the emphasis we are placing on building sales layers through new category entry points, leveraging technology to drive brand loyalty, and delivering exciting value offers to broaden appeal is going to drive our business forward even faster. As we conclude our internal annual operating plan reviews and look forward to 2024, it's clear we have the very best teams in place and are perfectly set up to capture an even greater share of a growing global QSR market and deliver compelling shareholder value going forward. With that, Chris, over to you. Christopher Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our financial results, our bold restaurant development, and unmatched operating capability growth drivers, followed by an update on our balance sheet and capital strategy. I'll begin by discussing our strong results for Q3. We achieved 10% system sales growth, driven by 6% same store sales growth and 6% unit growth. Our digital sales channels continue to grow with digital sales setting another record this quarter, exceeding $7 billion, an increase of more than 20% year-over-year. Core operating profit grew an impressive 16%. Taco Bell delivered another quarter of exceptional performance, achieving 24% restaurant-level margins, while simultaneously driving transaction growth. Global ex-special general and administrative expenses were $263 million, lower than expected, in part, due to timing, with some expenses shifting into the fourth quarter. Our ex-special tax rate of 19% was lower year-over-year. Lastly, our EPS excluding special items, was $1.44 per share. Ex-Special EPS was positively impacted by $0.05 of unrealized investment gains related to our investment in Devyani. I'd now like to give a little bit of color on the remainder of the year. We're proud to say that we continue to expect that our results will land well above our long-term growth algorithm for the full year, including achieving low double-digit core operating profit growth. On the fourth quarter specifically, we now expect an operating loss at Habit of approximately $10 million, largely driven by restaurant asset impairment charges, which will be higher than we had initially expected due to anticipated impacts from the California Assembly Bill 1228 previously referred to as the FAST Act. Even with the previously mentioned timing shift of G&A expenses, we still expect fourth-quarter G&A to be slightly lower year-over-year. Moving to reported operating profit, we now expect foreign currency translation to represent a $45 million to $55 million headwind on a full year basis. Finally, we expect our ex-special full year tax rate to land at approximately 20%. Next, I'll cover our bold restaurant development growth driver. We are on track to finish 2023 with net new unit development similar to the record-breaking performances of the last two years. This quarter's 6% growth in unit count, led by a Q3 record of 1,130 gross new openings across 65 countries, reflects the continued success of our multi-year effort to accelerate development across our brands. By now, you've seen the announcement at Yum! China's recent investor conference raising their unit growth expectations for our brands in China. This announcement highlights continued strong returns on new restaurant development in our brands, in combination with the best in class development capabilities that Yum! China's leadership team have built in the market. More broadly, we continue to see excitement for our brands all around the world. As an example, in Vietnam, a market with a high population, but relatively low Yum! restaurant penetration, our unit count increased by over 40 units versus last year, reflecting 16% growth. In total this quarter, KFC achieved 8% unit growth, including 664 gross new units, a Q3 record for the brand. This was led by Yum! China, along with our franchisees in India, Sapphire and Devyani, and IS Holdings in Turkey. At Pizza Hut, we opened 383 gross new units with more than 30 markets contributing to this growth. Our Taco Bell division opened 74 gross new units led by the US, China, and India. In the midst of a higher interest rate environment, our world-class 3C franchise partners are stepping up and investing to grow share. One of those exceptional franchisees is the [Serrano] (ph) Group, our partner for KFC in multiple countries in Latin America. In just the past three years, the Serrano Group has opened over 100 net new units, quadrupling their store count from the past 10 years and building world-class assets that reflect how dynamic and tech-forward our brand is in this region. Building a network of growth-minded franchise partners is no easy task. It requires persistent effort to identify and engage with like-minded partners to consistently deliver on brand standards, growth ambitions, and mutually shared financial objectives, all of which add up to long-term profitable growth for all parties and a competitive advantage for our brands. While we focus on having the right partners, we also work to ensure we have the right restaurant formats and economic models in place. All of our brands are laser-focused on delivering industry-leading franchisee returns by continuously optimizing new store CapEx, as well as maintaining a flexible portfolio of formats that meet the unique needs of each trade zone in which we operate. Taco Bell's newest small box design, GoMobile 2.0, now open in El Paso, Texas, builds on the original GoMobile concept. This new design leverages digital capabilities to create more touch points for consumers to order and pick up in a seamless manner. Moving on to our unmatched operating capability growth driver, we continue to focus on delivering a seamless digital experience for our consumers, enabling easier operations for our team members and harnessing our expansive data to make fast and informed decisions. We frame up this approach through three lenses: easy experiences; easy operations; and easy insights. Within easy experiences, we successfully rolled out the Yum! Commerce platform to the Taco Bell system last quarter and are in the process of rolling the platform out to the Pizza Hut US system. Transitioning our brands onto Yum! own platforms allows us to scale new capabilities at a rapid pace and build out an ecosystem of proprietary platforms that are designed to work together in a secure and seamless fashion. Our primary focus is to deliver leading edge capabilities to our franchisees with advantaged economics. And our franchisees continue to co-invest with us as we develop and roll out our solutions. One exciting area of growth is the implementation of in-store kiosks. We now have kiosks in nearly 40% of KFC stores outside of China, all of our Taco Bell US locations, excluding licensed stores, and almost 70% of our Habit locations. Looking forward for our KFC stores outside of China, we expect to drive a 20-point increase in our kiosk penetration next year on the way to reaching the vast majority of stores by the end of 2026. Kiosks not only drive a higher check compared to our traditional front counter, but also drive higher margins through operational efficiencies and generate new opportunities to leverage customer data and create personalized ordering experiences. Within easy operations, we're on track to have our recommended ordering technology, which we're calling AIM, or Automated Inventory Management, rolled out across our KFC US system by year end. As a reminder, this is an in-house developed AI module that predicts and suggests the quantity of each product a restaurant general manager should order. We now have AIM in place at over 7,000 U.S. Restaurants, including 2,700 KFC US Restaurants added over the past quarter. There is also great momentum behind the Dragontail rollout. We have deployed Dragontail, an AI-driven production and delivery sequencing platform to nearly 1,400 Pizza Hut US stores as of the end of the quarter and are on track to have Dragontail deployed to around 8,000 restaurants globally by year end. Further proof of our unique ability to scale Yum! own technologies around the world. We have made significant progress in 2023, building, testing, and refining our proprietary technology platforms. In 2024, we will further scale these platforms and continue to realize the value of our owned tech ecosystem. Finally, we are excited about the new technologies. Our Red innovation team is in the early stages of piloting in restaurants to support our franchisees and free up team member time to allow them to focus even more on delivering world-class customer experiences. First, we are testing a voice-enabled AI drive-through platform in a couple of our restaurants in California that elevates the drive-through experience, increases speed, productivity and efficiencies, and generates automated upsell recommendations. Second, we have developed a proprietary automated drinks fulfillment system that frees up team member time and increases drive-through speed and accuracy. We've designed these technologies to integrate seamlessly with our proprietary Poseidon point of sale platform and we look forward to continuing to test, refine, and pilot these capabilities. Wrapping up with our easy insights pillar, I'm very excited by the progress we have made in building the infrastructure and engineering capabilities required to harness the power of our global data assets. We continue to expand the Yum! global data hub, which captures the vast majority of global transaction level sales data and other key operational and customer metrics. We believe this centralized hub is a key asset and differentiator for Yum! as we develop leading AI capabilities. In 2024, our easy Insights team will develop and test new AI-driven capabilities that pull from the global data hub and integrate into our own technology platforms. Some examples of these AI-driven capabilities include personalized upsell recommendations for customers ordering on our digital platforms, intelligent menu pricing recommendations, and dynamic restaurant routines for restaurant general managers. Finally, we will begin activating our US cross-brand customer data platform in Q4 and throughout 2024. This cross-brand platform gives us unprecedented visibility into the ordering behaviors of millions of customers across our four brands, and will also be a breakthrough source of learnings for Collider, the high-impact, boutique, insights consultancy that we acquired in 2015. Lastly, I'll provide an update on our balance sheet and capital strategy. As a reminder, our capital priorities remain unchanged. Invest in the business for the long term, maintain a resilient balance sheet, pay a competitive dividend, and maximize shareholder value by returning excess capital through debt paydowns and share repurchases. Net capital expenditures for the quarter were $31 million, reflecting $57 million in gross CapEx and $26 million in refranchising proceeds. Our net leverage ratio ended the quarter at 4.4 times. Furthermore, our current outstanding debt has a weighted average maturity of six years, and our greater than 90% fixed debt ratio remains highly attractive in the current market environment. To wrap up, we're very proud of the results in this quarter. We are on a clear path to achieving double-digit core operating profit growth for the full year. We continue to strengthen our position as the global franchisor of choice, a testament to the success of our business strategies and industry-leading talent. We're proud of our incredible continued momentum on unit development and are excited as we further accelerate our tech deployments and AI initiatives to meet the demands of consumers both today and tomorrow. With that, operator, we are ready to take any questions. Operator: Thank you. [Operator Instructions] Our first question today comes from David Tarantino of Baird. Your line is open. David Tarantino: Hi. Good morning. David, my question is on the broader consumer spending backdrop that you're seeing. I'm just wondering if you could maybe comment on some of your major markets and what you're seeing, I guess, exiting the third quarter as we've seen some signs that the environment is going to get a bit more challenging in places like the U.S. and in China? So just wondering if you could opine on what's happening with the consumer and also talk about what, if anything, you're changing in your strategy to address that? Thanks. David Gibbs: Yes. Thanks, David. I guess, I would start by saying, if you haven't picked up on it, this is our fifth consecutive quarter of double-digit system sales growth globally. So when you think about the consumer and what we're seeing in our business, obviously, it's a pretty good trading environment for us, and that momentum continued into Q3. And I'll also share that, that momentum is continuing into Q4. So now, part of that is the way that we're managing through some of the consumer pressures around the world. And certainly, you talked about China having their challenges. But there's challenges in every market. The UK, for example, we've got a lot of consumers faced with variable rate mortgages that's pressuring them. So our local UK team has put in place a program to have a Twister of the Day for GBP1.98, which is really resonating with consumers. And they're having in the midst of a good strong year in the UK. In Latin America and Caribbean, I was just down in that market with our great franchisee [Juan Carlo Serrano] (ph), visiting our stores in Colombia and Chile, looking at a new model that they've developed using a commissary which really improves the efficiency of our stores and the quality of product to allow us to provide even more value to customers in a pressured consumer environment. So certainly, there are pressures out there, but our franchisees, I think, do a better job than most by far, of navigating those pressures. I know what's on a lot of people's minds is what's going on in the US. It's well documented that there is more pressure on the US consumers doing loan payments coming due. And certainly, our industry has softened a little bit, but the industry is doing better than most industries, if you look at any of the industry-specific data. For us, though, the US is a much more favorable situation because Taco Bell is the majority of our sales and profits in the US. You saw the great results we put up for Taco Bell in the US this quarter. On a one and two year basis, sales accelerated in Q3. But really importantly, and this wasn't in the prepared remarks, I know you'll find it of interest, if we break down the Taco Bell stores in the United States by income demographic, we see really consistent 2% to 3% transaction growth across all income levels. So our stores in lower-income trade areas are performing well with good transaction growth, just like our stores in high-income trade areas. I think that speaks to the way Taco Bell can play value with things like the $5 box. And how also in a pressured consumer environment, we're probably benefiting a little bit from some trade down in those higher income trade areas. So, our lens on the consumer is obviously biased, but we're putting up strong results. We're seeing plenty of demand and we, once again, I think, are demonstrating we can thrive in any environment. Operator: Our next question comes from John Ivankoe of JPMorgan. John Ivankoe: Hi. Thank you very much. Obviously, you continue to talk about the Yum! owned proprietary technology platforms, which really are geared for making it easier for franchisees to run stores and, of course, more profitable as well. And over years, I mean, certainly, you're doing much more of that, not less. And the rollouts are continuing, and I imagine new programs will be developed in the future. Can you kind of talk about maybe the context of Yum! as a technology services provider. And should we, in our models, longer term, start to think something like percentage of franchise system sales that you can actually earn as this technology service provider for your franchisees? Christopher Turner: Yes. Hi, John. Look, our Yum! technology strategy, which we reengineered in 2018 and launched in 2019 has driven tremendous results in the system. We were at roughly $12 billion in digital sales in 2019. We'll be close to $30 billion this year, just tremendous growth. And we like everything about those digital sales dollars. Our customers, they have higher checks, higher frequency whenever we transition sales to digital, plus we get all of the benefits in terms of more efficient operations, which help our franchisees sustain strong unit economics. So the primary focus of all that is to drive profitable growth for Yum! and our franchisees. And of course, our top priority there is to give our franchisees leading-edge tech capabilities with advantaged economics. That's what we're focused on doing. Now we have invested ahead of that. I think we shared at the Investor Day in December that over the last three years, we've shifted an incremental 10 points of G&A toward digital and technology. So we've made investments. We've continued to do that. But as we implement, and you see this fast pace of implementations continuing to accelerate, franchisees do share in those investments in the form of fees tied to those technologies. Of course, they do that because they see benefits flow to their bottom line. The business case on these technologies are strong. As we collect more and more of those fees, that will alleviate some of the P&L burden of the technology investments. We're not going to provide forecasts on how we see that playing out, but that will be one dynamic in the P&L. Operator: The next question today comes from David Palmer of Evercore ISI. Please go ahead. David Palmer: Thanks. As maybe a follow-up to that, and then I have a primary question, maybe you could give a feeling of what from here you think will be the biggest lifts from perhaps a technology hub that you talked about, quantify perhaps some areas where you think in 2024 and beyond, we'll see the biggest help to comps or franchisee margins. And I just wonder also on Taco Bell, you mentioned a new loyalty relaunch. I think that, that brand, a lot of people would think would be in a great position to gain share and perhaps in accelerating degree in 2024. Do you agree with that? And then if that were to happen, what would be the biggest reasons for that? You mentioned loyalty, but perhaps there's some other things in the hopper. In the past, you talked about lunch being an area that you wanted to win in. So I just wanted to discuss a little bit about Taco Bell. Thanks. David Gibbs: Yes. Let me share some thoughts on technology to start, and then we'll shift over to Taco Bell. So on the broader technology program. As I mentioned, we like everything about those digital sales dollars as we continue to grow the digital business. We made tremendous progress. But as we've also said, I still feel like we're in the early innings of getting maximum impact out of the broader digital strategy. Of course, it goes across easy experiences, easy operations, easy insights, and we're still in the early days of bringing all of those elements together in common stores. And we really think there'll be a multiplicative effect as we implement more and more of these technologies together. If I just took, for example, the labor productivity benefits, helping our team members make their jobs easier in the stores, focus more of their time on customers and help our franchisees drive productivity, as you bring more of these elements together, you're able to take advantage of more of those productivity benefits. So as we start to layer the Poseidon POS, which makes running the front end easier, as we continue to take digital sales higher, which reduces the workload burden on taking orders and taking payments, you get higher accuracy on order taking, which reduces some of the rework and back of house. And then you bring on things that we mentioned earlier, voice AI at the drive-thru, fizz automation in terms of automated drink fulfillment, which works with the Poseidon POS, you really start to see a vision for the future where you've got a really great customer experience that you're delivering with high productivity for the franchisees. So we expect on this to continue to build and build. If we go to Taco Bell, you mentioned the loyalty program. Loyalty, more broadly, across our brands is a key focus area. We've been at north of 50% of all of our stores around the globe as part of a loyalty program, and that is continuing to grow. We've now implemented in the Middle East. KFC US is coming on later this year, and we continue to refine the way our loyalty programs work. You mentioned Taco Bell. They are now starting to really leverage the insights that we've generated from the early days of that program to refine the program over time. And we've implemented the Red 360, which is the first time we're bringing together insights across our brands in the US. So that will be a driver of Taco Bell growth. More broadly, on the strategy, as you mentioned, category entry points or use occasions is a big focus. We think there's a massive opportunity at lunch. We continue to focus on breakfast. You've probably seen the ads recently during sporting events. So all of those are part of the bright future ahead for Taco Bell. Operator: Our next question comes from Andrew Charles of TD Cowen. Please go ahead. Your line is now open. Andrew Charles: Great. Thanks. Another Taco Bell question. Obviously, very encouraging 3Q performance and commentary about the start of 4Q. I was hoping you could elaborate on the Cantina menu coming in 2024. I recall this menu item driving success in 2012, but was more upscale compared to US consumer that you guys noted is increasingly seeking value today. So, can you help just us better understand the difference between the upcoming menu versus the one launched a decade ago? David Gibbs: Sure. Look, I think one thing Taco Bell does incredibly well in the industry is constantly change and evolve to consumers taste. I wouldn't draw an exact parallel to the past Cantina menu. This is more about the chicken Cantina menu or Cantina chicken in terms of what that protein can do for us and launching a different version of our chicken. So I think the team's excited about the impact they can have. But there's lots of reasons to be excited about what Taco Bell is doing in 2024. As Chris mentioned, all the impact that the tech can have, the insights we're going to glean from data. Taco Tuesday, now that we've established that in the way that we can leverage that going forward. The momentum we're getting in breakfast, what we can do with loyalty. The business is, obviously, somewhat on a roll. If you look at the results from the last quarter, and I mentioned those trends are continuing. And so much of that gets right back to the great talent that we have at Taco Bell. Sean Tresvant is taking over and he's got a great team in place and if you've seen the actual detailed plans for next year, you'd be as excited as I am. I obviously, not going to share a lot of the proprietary stuff. But things line up well for a strong 2024 for Taco Bell. Operator: The next question comes from Brian Mullan of Piper Sandler. Please go ahead. Your line is open. Brian Mullan: Hi. Thanks. Another one on Taco Bell, but this one is just specific to the international business. At the Investor Day last year, you shared a goal to get to 2,500 locations as quickly as you can. Related to that, as we look out over the next year, what kind of annual case do you think you can get to from a gross openings perspective? And then if you could just comment on the opportunity for Taco Bell in China, specifically, may be your level of optimism there, that would be great to hear your current thinking. David Gibbs: Yes. Obviously, Taco Bell International is an exciting part of the growth equation for Yum!. We don't provide brand-by-brand development targets, and so we're not going to waver from that. But you know our overall development goals are incredibly ambitious, opening up a new unit every other hour around the world. And as you can see from this quarter that we set a record on development this quarter. As far as Taco Bell in the various markets around the world. Yes, I just got back from a trip to Spain, where I spent some time with our great franchisee in Spain, one of the early adopters of Taco Bell that got to scale quicker than other mark. And you can see, he's done an amazing job of building a moat around the business and creating a differentiated brand much like in the US and now they're reaping the benefits from that and have very aggressive expansion. But when any time you're taking a brand global that's been traditionally a US brand, you're going to -- it's not going to be an even path all the way to the top. There's going to be ups and downs, some market take off, other markets take a pause. So I think in aggregate, we're very excited about the opportunity for Taco Bell around the world. We think it can be a meaningful growth driver in our equation long term. But we're going to make sure that everywhere we go, we're helping our franchisees build the brand the right way, take whatever time that takes, like we did in Spain and the UK to establish the brand in a way that ensures its long-term success. Operator: Our next question comes from Jon Tower of Citi. Please go ahead. Jon Tower: Great. Thanks for taking the question. Just curious, either David or Chris, perhaps you could shed some light on what you think could happen with the NLRB recent joint employer ruling? It's set to go into effect on 12/26 of this year. And curious to know what your thoughts are, whether or not it does go into effect and how it might impact the relationship between franchisee-franchisor in the US over time and potential impacts on your own P&L? David Gibbs: Yes. Sure. Yes. Look, I'd start big picture. We've been navigating regulatory environments in 160 countries around the world, and they're always constantly changing. And certainly, the NLRB recent ruling and whether or not that goes into effect, it will have an impact on us. But it's nothing that I don't think we can -- we'll have trouble navigating in the long term. Look, I've seen our business grow around the United States. I've known -- a lot of our franchisees are good friends of mine for decades. I've seen them start as team members and grow to become successful small business people. And I do think the franchising model is one that's great for our country. It's living the American dream. It's good for the communities that we serve. And we oppose anything that threatens that model, and I know that there is opposition to that ruling in terms of whether it will actually take effect at the end of the year. But it's really less of an issue for Yum!, if you think about the landscape that we operate in. Our franchisees tend to be much larger. We tend to run more of a decentralized model globally and even in the US because our franchisees have a lot more capability. So I have no doubt that whatever the rules are that we have to operate by, we will be able to, as we've proven all around the world over many, many decades. But this one, obviously, in the short term is something we oppose and we'll have to see how it plays out. Operator: Our next question today is from Dennis Geiger of UBS. Please go ahead. Dennis Geiger: Great. Thank you. Wondering if you could comment a little bit more on both KFC and Pizza Hut in the US. Solid gains in general over the years from the work the teams have done. But wondering if you could just frame up how to think about how the brands are positioned in the US right now within their respective categories? And where they can go given some of the opportunities that you've highlighted. Thank you. David Gibbs: Sure. Yes, obviously, we're really pleased with the progress we're making on both of those businesses. Pizza Hut US, for example, has been taking share in the category now for, I think, third consecutive clear. And that -- from all the things that we've talked about on these calls and that you're all seeing in the marketplace, the way that they play the aggregators versus their competition, the way they're launching new products and new forms like Melts, which brings in a new consumer. More recently, you probably saw the announcement about late night and how we're owning that part of the category. So, Aaron Powell and David Graves, their teams are really leaning in and they're on their front foot with Pizza Hut. It's a tough category, of course, but one we're really pleased with the progress we're making. Similarly, KFC, you've seen us do things like launch nuggets and lean in more on the boneless. That's a huge opportunity. It's no secret that chicken is a growing category. We've got the world's greatest chicken brand. We're set up for success there as we evolve our business. And the team that we've got in place there, also a relatively new team, I think, is doing an amazing job of rolling out those kinds of programs that will lead to incremental sales, incremental category entry points as we talked about earlier on the call. So both businesses, I think, poised for lots of growth. Matt Morris: Operator, we have time for one more question. Operator: Thank you. Our final question today comes from Brian Harbour of Morgan Stanley. Please go ahead, Brian. Brian Harbour: Yes. Thank you. Good morning. I was going to ask about Pizza Hut as well. And if you could provide any comments on kind of delivery versus carryout performance, also how -- if a third party is still kind of a growing channel for you? And then I know there's disparities by market, which is growing faster. And what explains some of them do you think that in the US I think it's fair to say that competition is quite significant right now and will be into next year, but do you think that the US can grow on a same-store basis next year? David Gibbs: Yes, obviously, we believe Pizza Hut can and will grow sales. In terms of delivery, one aspect of this maybe is underappreciated is the fact that we now have delivery as a service where we can outsource some of our deliveries through our aggregator partners, that actually was one of the unlocks for us to go after late night when it may have been a little bit harder for us to staff with drivers, being able to hand off those deliveries to our aggregator partners allowed us to extend our hours. I think it's just another proof point in what a nice job the team is doing in thinking through the strategic benefits we can get from the various relationships we have in the category. But here, in a world where the consumer might be a little bit more pressure, obviously, carry out is playing a bigger role and lower price points will play a bigger role in the pizza category. That's one of the reasons why Melts, I think, has landed so well and will be a big part of the growth for Pizza Hut going forward. I appreciate everybody's time today. Obviously, this is a quarter that we're incredibly proud of, much like the last few quarters and never gets old, keep continuing to put up double-digit top line growth and strong bottom line growth. I'll just end with a few comments about what we saw as we went through our internal annual operating plan reviews in the last few weeks. It's something that you guys don't get a glimpse into. But I can tell you, the spirit in the rooms that -- when we met with the teams, the talent in the room that's displayed, and the way that everybody is sort of on their front foot now, we've got the -- all this work that we've done on technology over the last few years, firmly planted so that we now have something that we can leverage in a much bigger way to grow sales. I think our franchisee partnerships have never been better. And all of that adds up to what I thought were incredibly inspiring plans going forward to take market share, grow our businesses the right way for the long term and continue to put up results like you saw this quarter. So we're incredibly excited about the future. We look forward to talking to you on the next call about a little bit more detail about plans for 2024. Thanks, everybody, for your time today. Operator: This concludes today's call. Thank you for joining. You may now disconnect your lines.

Operator: Hello, everyone, and welcome to the Second Quarter 2023 Yum! Brands Incorporated Earnings Conference Call. My name is Emily, and I'll be coordinating your call today. [Operator Instructions] I would now turn the call over to Jodi Dyer, Vice President of Investor Relations. Please go ahead, Jodi. Jodi Dyer: Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and 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 our earnings release and relevant sections of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call, all system sales growth and operating profit growth results exclude the impact of foreign currency. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. Looking ahead, our third quarter earnings will be released on November 1, 2023, with the conference call on the same day. Now I'd like to turn the call over to David Gibbs. David Gibbs: Thank you, Jodi, and good morning, everyone. At our Investor Day last December, we shared our long-term vision for Yum! to deliver accelerated global growth. I am proud to say that our second quarter results are further evidenced by our ability to execute against this vision. Through Yum!’s differentiated capabilities our bold restaurant development engines including 1,025 gross new units in the current quarter, and our distinctive digital capabilities, which drove record digital sales fueled the second quarter’s 13% growth in system sales. I'm especially pleased to report that based on our strong year-to-date results and the continued momentum we see in our business, we expect to deliver full year 2023 results, well above our long-term growth algorithm. I'll cover the few high-level thoughts on our second quarter results before sharing some additional details through the lens of the relevant, easy and distinctive brands, and unrivaled culture and talent pillars of our Recipe for Good Growth framework. Chris will then provide some additional color on our second quarter results, followed by an update on our bold restaurant development and unmatched operating capabilities, Growth Pillars. For the second quarter, we delivered same-store sales growth of 9% and unit growth of 6% with KFC setting the pace with a remarkable 19% system sales growth on the foundation of our industry-leading development momentum, distinctive marketing campaigns and relevant new product layers, such as the launch of original recipe hand breaded chicken nuggets here in the US. And as I'm sure you've all heard, Taco Bell, in partnership with another global icon, LeBron James successfully liberated Taco Tuesday in a way no other brand could mimic. As we also discussed in December, our Recipe for Good Growth strategy will be powered by digital and technology. Our distinctive digital capabilities, which enable easier experiences and greater access to our iconic brands continues to unlock incremental sales through higher spend and frequency, as well as incremental profitability for our system. On that note, I'm pleased to report another quarter of double-digit growth resulting in $7 billion in digital sales, representing over 45% of our global system sales. Turning back to our Recipe for Good Growth and our iconic Red Brand, let me start with the KFC division, which represents 50% of our divisional operating profit. Second quarter system sales growth of 19% was driven by 13% same-store sales growth and 7% unit growth. Widespread transaction growth and a strong recovery in our China market as Yum! China detailed in the results earlier this week, powered our same-store sales growth. However, even outside of China, is the global same-store sales growth was up an impressive 10% in the quarter, KFC represents our largest digital business globally on a dollar basis and showed continued momentum with strong year-over-year growth in both digital sales and mix. Among KFC's emerging Markets, I'd like to highlight our Middle East team for the work they did to drive system sales with a focus on their core menu and new snacking product offerings and the South Africa team for their efforts to grow the breakfast layer through a bold marketing campaign with Trevor and Noah. Thanks to unlocking additional customer use occasions, compelling value offerings and continued digital growth both markets posted strong same-store sales growth. Among our developed markets, Western Europe led the way with strong results in check and transactions by balancing disruptive value and core menu items. Turning to KFC U.S., same-store sales grew 5%, improving sequentially with the combination of product innovation and an always on value strategy. Building our first quarter, momentum behind wraps, KFC U.S. launched hand breaded original recipe chicken nuggets to expand its off the bone chicken offerings leveraging the learnings from our significant off the bone business at KFC International. This product innovation was met with an immediate positive consumer reaction, resulting in over 100 million nuggets sold in the first eight weeks after launch. These boneless offerings appeal the younger and new KFC customers and builds upon an already well-established sales layer following the successful launch of the chicken sandwich in 2021. Moving on to the Taco Bell division, which represents 35% of our global divisional operating profit and roughly 75% of our U.S. divisional operating profit. Once again, I'm thrilled to share more external recognition of Taco Bell's brand power and relevance with the brand's inclusion on the Time 100 list of the world's most influential companies. This category of One Brand remains ever relevant by pushing boundaries and introducing and reintroducing exciting and craveable menu items and always being part of the cultural moment and conversation. Congrats to the entire Taco Bell team and our incredible franchisees for yet another well-deserved honor. For the second quarter, Taco Bell's global system sales grew 7% led by 4% same-store sales growth and 5% unit growth. Taco Bell continues to execute its magic growth formula through a balanced set of commercial strategies including building brand buzz, unparalleled value, mass occasions, and digital initiatives. This quarter, the team launched a campaign to liberate Taco Tuesday in a first-ever global Taco Tuesday, campaign spanning 19 markets in partnership with a true global icon LeBron James. The campaign created massive brand buzz with engagement, and mentions in one week for taco Tuesday Liberation surpassing the entirety of the highly successful Mexican Pizza relaunch last year. Other promotions in the quarter contributing to Taco Bell’s winning magic growth formula includes both our $5 Cravings Creo and Deluxe Build Your Own Cravings Box that help sustain our strong consumer value proposition and maintain over. 25% margins. In addition an expansion of trading hours with strong growth at both the breakfast and late night dayparts, helped Taco Bell’s second quarter results. Finally, the team continues to create incremental demand for their digital channels. In the U.S., digital sales increased almost 35% year-over-year with kiosks now deployed in 100% of Taco Bell stores. Taking all of this into account, it is no surprise Taco Bell continues to be a leader in value perception, while also delivering amazing unit economics. For Taco Bell International, system sales grew 18%, driven by development momentum. The global Taco Tuesday Campaign, which launched in June and will continue through the third quarter, leverages Taco Bell's, US cultural leadership building brand equity and consumer awareness with a consistent look and feel around the world. I also want to highlight Taco Bell’s continued progress against our Recipe for Good Growth strategy that included raising $20 million so far this year through its Round Up fundraiser. Throughout the quarter to the Taco Bell Foundation donated these funds to over 400 non-profits and nearly 1,000 live mass scholarships. Next I'll discuss the Pizza division, which accounts for 14% of our divisional operating profit. System sales grew 7% for the quarter, driven by 4% same-store sales growth and 4% unit growth. Pizza Hut International grew system sales 11%, led by 6% same-store sales growth and 5% unit growth. The individual occasion continues to be a growth driver largely on incremental transaction growth from the Melts platform, which in the US has proven to be a self-sustaining layer at an attractive entry price point. Since launching in the U.S. late last year, Melts has now reached 35 markets, up significantly from the 11 markets in the first quarter, now in over half of our global store base. Melts is delivering encouraging early results alongside My Box, our other international individual occasion product offering. Our team is focused on providing distinctive value offerings across markets such as the Super Limo Abundant Value deal in the UAE and the National Pizza Party promotion in Australia. Pizza Hut U.S. grew system sales 2%, driven by 1% same-store sales growth. In the U.S., we introduced new flavor profiles to our Melts platform, providing yet another reason for customers to order from Pizza Hut. The Habit Burger Grill division grew system sales 9% on 7% unit growth. The Habit team continues to lean into its menu strategy of Culinary Forward limited time offerings, highlighting its craft brand positioning through their elevated craveable offering. We continue to expand access points for our customers with the rollout of kiosks now in over 60% of stores on average kiosk sales peaked 10% higher checks, compared with front counter sales and excellent profit flowthroughs, yet another proof point of the value from converting to digital sales. Moving to our unrivaled culture and talent growth driver, which continues to be the foundation of our success, to start, I'd like to recognize Taco Bell division CEO Omar King, who will retire at the end of the year as we celebrate the legacy that Mark will leave at Taco Bell we're thrilled that Sean Tresvant will become the CEO of the Taco Bell division effective January 2024. Sean joined Taco Bell's Chief Brand Officer two years ago and earlier this year, expanded his role to Global Chief brand and Strategy Officer. With Sean's clear vision and strong track record of driving transformative red innovation, I'm confident the Taco Bell will continue to successfully execute its long-term global growth strategy. This is a great reminder of how people are truly at the center of everything we do, which is also reinforced in our Global Citizenship and Sustainability report, which was published last month. The report outlines our strategic investments in socially responsible growth, risk management and sustainable stewardship of our three priority pillars of people, food and planet. I'd like to take a moment to highlight work on key issues across each pillar, including the quality, packaging, and carbon reduction. We remain committed to our purpose of unlocking opportunity in part through our $100 million commitment over five years that we announced in 2020 to knock down barriers to equity inclusions, education and entrepreneurship around the world. Through our unlocking opportunity initiatives, we have funded and activated more than 30 social impact programs in 11 countries, enabling markets to develop localized programs to deliver meaningful change in communities where we operate. We also continue to make progress towards achieving gender parity and leadership roles by 2030, with 43% of global leadership roles held by women in 2022. These are just two examples of the great progress we've made and that how Yum!’s commitment to its people first culture has never been stronger. In addition, we continue to make progress around sustainable packaging, building upon our harmonized cross-brand packaging policy that was introduced last year. Furthermore, we've had great success as we March toward our climate goals to reduce our greenhouse gas emissions by nearly 50% by 2030. To-date, our teams have achieved a 57% reduction in greenhouse gas emissions at corporate restaurants and offices, coupled with a 28% reduction at franchise restaurants. Reflecting on the first half of the year, our teams have put forward an impressive set of results. And looking forward, the picture we see for the second half of the year will be similarly strong. Our confidence comes from our Recipe for Good Growth strategy and the fact that category leaders Taco Bell US and KFC International drive 80% of Yum!’s divisional operating profit. The vast majority of our U.S. operating profit is driven by Taco Bell, the leading brand in both cultural relevancy and affordability, while globally, KFC is positioned with unmatched scale advantages and growth by the franchise partners eager to capitalize on opportunities in their markets and widen their competitive mode. In an uncertain environment, we know that consumers make decisions with value in line with good news is that our brands have always stood for tremendous value in addition to convenience, experience, and craveable food. This is a winning combination that will continue to differentiate us from our competitors and when coupled with our Recipe for Good Growth strategy, I am confident that we can continue to deliver on our long-term vision for accelerated global growth in 2023 and beyond. With that, Chris, over to you. Christopher Turner: Thank you, David and good morning, everyone. Today, I'll discuss our second quarter financial results and our bold restaurant development and unmatched operating capability growth drivers before turning to our capital strategy. I'll begin with our second quarter results. We delivered 13% system sales growth, driven by 9% same-store sales growth and 6% unit growth. Digital sales improved at all four of our brands with total digital sales up nearly 30% year-over-year. Core operating profit for the quarter grew 12%. Taco Bell store level margins were an impressive 25.6%. We continue to expect full year Taco Bell company-operated margins to be similar to margins in 2022. Taco, Bell's ability to deliver such strong margin performance, despite mid-single-digit inflation, once again demonstrates the power and resilience of their business model and preserves their compelling unit economics, which remain near an all-time high. For Habit, company-operated margins improved to 11%, thanks to better leverage of Yum!’s purchasing scale, as well as efforts to improve store level labor productivity. We're encouraged with the margin improvement progress at Habit and we’ll continue to invest in the long-term growth of the business and as a result, we expect a small operating loss for the division this year. Ex-special general and administrative expenses $280 million, in line with our expectations. The Ex-special tax rate for the quarter was 18%. Finally, our second quarter EPS, excluding special items was $1.41 per share. Second quarter EPS was positively impacted by unrealized investment gains of $0.09, relating to our investment in Devyani, offset by a negative foreign currency translation impact of $0.05. Given our strong first half results, and continuing momentum into the second half of the year, I'm happy to report that we expect on a full year basis, to over deliver on all components of our long-term growth algorithm. We expect full year 2023 core operating profits to grow low-double-digits, which is ahead of our long-term guidance of at least 8%. We expect second half G&A expenses to be modestly higher, relative to our initial plan, primarily attributable to above target incentive compensation accruals resulting from our strong performance and which we began recording in Q2. As a reminder, employee incentive compensation is tied to internal performance targets, linked to components of our long-term growth algorithm. The accrual we book throughout the year can go up or down depending on our performance. Consistent with our prior GNA guidance, we still expect our year-over-year G&A growth to be lower in the second half of the year. Balance of year, we expect the third quarter year-over-year G&A growth rate to look similar to the growth rate in the first half, followed by a year-over-year decline in the fourth quarter. Finally, we've faced a $44 million, foreign currency headwind year-to-date and our current forecast is for little to no FX impact to reported operating profit in the balance of the year. Now moving on to Bold Restaurant Developments, we opened 1,025 gross new units during the quarter contributing to 6% unit growth. We are encouraged by the excitement among our growth ready franchise partners who see broad consumer appeal for our brands and enormous white space opportunity in their markets and who are enthusiastic about Yum!’s unmatched operating capabilities. We continue to expect that the benefits of our scale and the health of our franchise system will allow us to further widen our development advantage relative to the industry. As you've heard me say before, the Yum! system is made up of world-class franchise partners who are truly 3C, Committed, Capable and well-capitalized. As a result, we expect 2023 will be another incredible year of development similar to 2021 and 2022, which were both industry record-setting years. Let me share a few highlights of our unit development in the quarter beginning with the KFC division, which opened 600 gross new unit. Yum! China's development momentum re-accelerated 375 gross new units opened this quarter, putting their year-to-date development ahead of last year's pace. The remainder of KFC's unit growth was widespread across markets, led by India, The Middle East, and Asia. As for the Pizza Hut division, the team opened 357 gross new units, led by China, India, Spain, Turkey, and the US, with each opening at least 20 units. In June, The Flynn Restaurant Group announced its first international expansion with an agreement to acquire Pizza Hut, Australia, which owns approximately 260 Pizza Hut units. This is a great example of a 3C partner eager to grow within our system. For those unfamiliar with the Flynn Restaurant Group, they are the largest franchise operator in the U.S. restaurant industry with roughly 2,400 restaurants, including nearly 300 Taco Bells and nearly 1,000 Pizza Huts. For some perspective, in 2022 Flynn accounted for roughly 20% of the Pizza Hut U.S. new builds and their overall, same-store sales growth significantly outperformed the rest of the U.S. system. Taco Bell development remains on track for another record-setting year with 63 gross new units, including 27 in international markets across eight countries. Totaling it all up, Yum!s first half unit development reflects nearly 1800 gross new units, a fantastic result that demonstrates the resilience of Yum!’s development engine, despite a more challenging macro environment. Next, I'll turn to our unmatched operating capabilities that contribute to our position as the global franchisor of choice. This includes our distinctive digital strategy to unlock improved customer experiences that lead to faster sales growth and better store level margins. With that, let me discuss the three pillars of our digital strategy. Beginning with the Easy Experiences Pillar, this quarter, the KFC US team leveraged the Yum! commerce platform, which was first launched with KFC. U.S. in 2021 to enable a Diablo for limited time promotion in partnership with Activision Blizzard and offered customers exclusive in-game rewards in exchange for KFC purchases. By leveraging our in-house technology, we were able to build the necessary infrastructure and integration to support this exciting gaming promotion in a matter of weeks. Previously, the process would have taken months with significant third-party expense. This quarter, we achieved a significant milestone in expanding the Yum! Commerce platform as Taco Bell U.S. migrated its digital traffic onto the platform. All of Taco Bell's web, mobile, and Delivery-as-a-Service digital transactions are now processed through this platform. Additionally Pizza Hut Peru became the first international Market to begin using the Yum! commerce platform this quarter. We will continue to migrate additional brands and markets to the Yum! commerce platform over the coming quarters, including Pizza Hut U.S. throughout 2023 in several international markets. Within the Easy Operations pillar, we continued to expand adoption of both recommended ordering and our Yum! point-of-sale system. As you may recall, recommended ordering is an AI machine learning module that predicts and recommends the quantity of each product a restaurant general manager should order. Recommended ordering was deployed in another 800 stores this quarter and is now live in over 4400 KFC and Taco Bell U.S. stores. Our Yum! Next-Generation Cloud First point-of-sale system improves operational efficiencies and enhances team member effectiveness. Taco Bell U.S. is leading this rollout having deployed this system to 1,000 stores this quarter and targeting 5,000 stores by year-end. Finally, for our Easy Insights pillar, we are advancing our digital strategy and using a new customer data platform solution to provide a unified view of customers across our US brands and third-party aggregators. This will enable us to improve digital experiences for our customers and ultimately increase customer frequency. Eventually, this and other internal programs will provide the infrastructure to unlock personalized marketing, joint branding and future automation. This is the latest step in our vision to One Day Achieve 100% of sales powered by digital. Lastly, I'll provide an update on our balance sheet and liquidity position. As a reminder, our strategy is to enable growth, while maximizing shareholder value. In doing that, our capital priorities remain unchanged, investing in the business for the long-term, maintaining a resilient balance sheet, paying a competitive dividend and maximizing shareholder value by returning excess capital through debt paydowns and share repurchases. Net capital expenditures for the quarter were $34 million, reflecting $60 million in gross CapEx and $26 million in re-franchising proceeds. Our net leverage ratio declined to 4.7 times, reflecting our previously stated intention to allow net leverage to drift modestly lower this year. Keep in mind, we have an upcoming bond maturity of $325 million in November of this year, our only maturity until 2026. Furthermore, our current outstanding debt has a weighted average remaining term of six years and our greater than 90% fixed floating ratio is attractive in the current market environment. We paid down $164 million on our revolver, leaving a minimal balance at the end of the quarter. We continued to evaluate the best use of our excess capital and at current interest rates, we believe funding our upcoming debt maturity before share repurchases best optimizes shareholder value. To round out our prepared remarks, I'm incredibly pleased with our strong, year-to-date results and continued momentum giving us confidence, we will deliver full year 2023 results well above our long-term growth algorithm. Our brand teams and franchise operators remain vigilant in the pursuit to maximize performance and in turn deliver exceptional shareholder value. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question today comes from the line of Dennis Geiger with UBS. Dennis, please go ahead. Your line is now open. Dennis Geiger : Great. Good morning folks and thank you. I wanted to ask a question on the 2023 outlook commentary for growth well ahead of the low double-digits. Could you touch, maybe a bit more on the momentum that you spoke to heading into the second half including any sort of visibility that you have into the top-line, which I think is particularly encouraging in the current environment? And then, any additional puts and takes to profitability beyond the helpful callout that you mentioned on the call? Thank you. David Gibbs : Yeah. Look, as far as the second half of the year, obviously, we're confident. We're well above algorithms. We confirmed that in our prepared remarks, just to give you a little visibility in why we feel that way, Taco Bell U.S. for example has got very strong momentum as we come into Q3. They've launched value. And if we look at all of our businesses on a two-year sales trend, which I think evens out some of the anomalies. We see basically a continuation of what we saw in the first half of the year. Christopher Turner: And then, Dennis, on the profit trends, we mentioned that we now expect full year core operating profit to be low-double-digits. And I think we gave a lot of color in my comments earlier on the drivers of that around G&A and expectations in the back part of the year continuing trends from the first half in Q3 and then a year-over-year decline in Q4. We're also pleased to have improving margins in our company operated store based. You saw a 200 basis point improvement there in our biggest - driven by improvements in our biggest store bases and we're going to continue to manage that. I don't think there's anything else to call out in terms of color on back part of the year. Operator: Our next question comes from the line of Brian Bittner with Oppenheimer & Co. Brian, please go ahead. Your line is now open. Brian Bittner: Thanks. Good morning. You've consistently said that Yum! brands is built to showcase blue chip like resiliency, positioned to win in any environment and that dynamic seems to be proving out with 9% same-store sales growth in the second quarter. And you seem to be pointing to a continuation of healthy trends. Can you just help us understand what the drivers currently are for this resiliency? And if you believe the macro has indeed become more challenged recently across your portfolio despite obviously, continuation of very strong results? Christopher Turner: Sure. And I appreciate the commentary. Just, as far as, why are we able to navigate this kind of environment? Look, I have a lot of confidence in our brand leaders and our marketing teams around the world in so many ways we're writing the playbook for how to build brands in this industry. We have Collider which is an internal group that provides so much to us in terms of our - the inside time and consumer behavior. And I think that'll just shows up in the way we build these brands being top 100 brands in the world. As far as the macro challenges, this is an environment that I would say is a more than normal operating environment. We've come out of a series of years where things have been a little bit more different than we've ever had in the past. But I wouldn't, call it a difficult environment to operate in. One way to think about it is, just to breakdown, our markets between developed and emerging. In the developed markets, we saw mid-single digit sales growth is quarter. It's a stable positive environment and we're past really inflation peak in most markets, obviously, in the US that's been well documented. And this is an environment where we can succeed. Value is rising in importance. But we have solutions and in many ways, our leaders with our brands. KFC for US, for example, in the quarter, their most growth was seen in their low-income consumers, because they had always on value for the quarter, as I mentioned in my prepared remarks. So we can win in this environment and develop markets. Similarly, Western Europe has been documented as a challenged environment for a lot. For us, we had good results there. Our French and German markets did a great job of mixing innovation and value, and delivering strong growth there. So, developed markets, little bit more of a return to normal, more stable and our brands are built to win in those markets. In emerging markets, it's a little bit of a different story. We're seeing double-digit sales growth for the quarter. Little bit more vary, but in general, we're not past the peak of inflation in a lot of these markets. So, we're still taking pricing some of these markets over that inflation, able to pass it on to consumers. But very importantly, we've got positive transaction growth in those markets. So, we're still growing our share in the industry, at the same time, we're navigating a little bit more challenging environment in those emerging markets. But when you add it all up, as you said, we've proven to to demonstrate how resilient our brands are and how we can operate really in any environment and win. Operator: Our next question comes from the line of Jon Tower with Citi. Jon, please go ahead. Your line is now open. Jon Tower: Great. Thanks for taking the question. I want to zero in on the commerce platform that you're expanding across number of the brands including Taco Bell now and some of the others that across the globe are hopping onto the platform. Does the company collect any sort of fees from franchisees hopping onto this platform? And if so, how should we think about it rolling into the P&L over time? Christopher Turner : Yeah, Jon, we are excited about the progress that we're making on all aspects of the digital strategy. And so, you're asking about the e-commerce platform, which is a core part of our Easy Experiences capability set. And we talked about some of the benefits that we derive whenever we platform systems like this. We think it really, ultimately drives faster profitable growth for our franchisees and for us the ways that you do that, we talked about the Diablo 4 experience in KFC U.S. It allowed us to implement a marketing campaign much faster than we normally would. And, of course, as you get that platform, across more markets, across more brands, we talked about the big milestone, implementing in Taco Bell, you then are able to implement campaigns in multiple geographies or multiple brands much more quickly, because you don't have to build integrations for each discrete technology platform that we've had previously across the business. In addition, you've got this robust capabilities. At the base as you build tailored front-ends that are relevant to each market and brand on top. So at the end of the day, we're driving profitable growth for our franchisees and for us through this strategy, franchisees obviously benefit from that and they share in the investments that we make through our digital fees that we have in certain markets. But at the end of the day, if this is an ROI driving move for both our franchisees and for us. Operator: Our next question comes from the line of John Ivankoe with JP Morgan. John, please go ahead. Your line is now open. John Ivankoe: Hi, thank you. Obviously, quick service in the US and in Europe has been driven by a very high amount of average ticket increase over 2019, at least. And a lot of that has been price but also the consumer trading up on the menu larger sizes. What have you premiumization, there's been a lot of different factors of that. I was wondering if you, kind of see - I don't know if I want to see risk or opportunity for kind of an unwind of that to some extent. Obviously, quick service over time is firstly the franchisors of quick-service have been very focused on driving incremental transactions, because it's very rare where an incremental transaction doesn't drive incremental profit. So, do we have an opportunity, I guess over time to kind of think about a higher transaction-driven model, higher dollar profit-driven model that actually might sacrifice percent margin. I mean, it's we came off a such an unusual period, ticket growth over the next four years. I am wondering kind of how you see the future in terms of the direction of ticket and transactions? David Gibbs: Yeah, thanks for the question, John. You're absolutely right. Obviously, one of the first things that got disrupted in the pandemic was sort of transactions and ticket size. The one thing I would add to the list as you mentioned is also party size. As we became much more of an off-premise delivery business, we did see a number of parties per ticket go up. So that neither translated to a slight decline in transactions, but not in the number of eaters in our business. But the great news is for this quarter, we had good transaction growth in our businesses. And that's what I when I was talking about a more return to normal. We are seeing more individual meal occasions let the party sites go back down which I think it's just the reality of coming out of the pandemic. And our business is growing transactions and growing share all around the world. So, I think you're probably right. We're going to get back into that kind of environment and that just not to sound like a broken record, but I feel like we're winning playing that game. Operator: The next question comes from David Palmer with Evercore ISI. David, please go ahead. Your line is open. David Palmer: Thank you. What's alike in the quarter with the unit growth, the KFC results, that the 30% digital sales growth too. I'm wondering, though I know there's going to be some curiosity about Pizza Hut, particularly in the US. And then just maybe a comment about whether you see this thing - this division being an ongoing stable same-store sales grower. I wanted to ask because a lots happened and there has improved marketing, innovation like Melts, the third-party delivery, the systems and a lot more profitable today, but big competitors now doing business with third-party delivery and comps were slower in the quarter. So, also I'm sure there's going to be some curiosity about how you think the brand will do in a slowing economy. So, any sort of thoughts about how you think that brand is positioned well, to be an ongoing same-store sales positive brand? Thanks. David Gibbs: Great. Thanks for the question. I'll take the first and then I'll let Chris talked about the aggregator landscape. First of all, on Pizza Hut, big picture, 7% system sales growth in the quarter is on algorithm. There you can see our nice contributor to Yum!’s overall growth and really importantly, they're gaining share in the category. If you do the numbers on relative to some of their peers. So, we love what’s going on at Pizza Hut. And a lot of that is the leadership team, Aaron Powell, and the team that he's built leading that brand are doing a lot of things differently. You're seeing them innovate with things like Melts, which is bringing in a lot more individual occasions, accessing incremental business for us. The other thing about the way they're operating, which gives me a lot of confidence in the future is, we're able to run brand like a global brand. That hasn't always been the case. So what you saw with Melts for example, is they are now already in over 50% of the stores around the world. That's sort of unprecedented for us to be able. You want something in the US, it works pretty well, but every market got their own challenges. You got supply chain challenges. You got different business cases. But they've got the whole world united sharing data, sharing best practices and that is only leading to a stronger business for us at Pizza Hut. So, we I think we're pretty happy with where we are at pizza, particularly when you're on algorithm and gaining share, that's a pretty good starting point. I'll let Chris talk a little bit about that aggregator space and how we're thinking about the competitors there. Christopher Turner : Yeah, look, on the aggregator front by zoom way out at a Yum! level, we're very pleased with our aggregator approach around the globe and the result that's produced in each of our brands and in large number of markets around the globe. In Pizza Hut, and specifically in Pizza Hut US, we implemented last year and we've been pleased with the incremental customers that we found on the marketplaces and the incremental delivery capacity that we've been able to utilize when needed. Of course, keep in mind, this was always our strategy. I wasn't here in 2018 when the leadership team started this aggregator strategy. But recall that, we knew that team knew that aggregators would have an impact on the industry. We wanted to be where the customers wanted to transact with us and we made an investment in one of the aggregators that gave us a front row seat to understanding how this space would evolve. And remember, it was our Pizza Hut CEO who actually sat on the Board of that aggregator. That experience helped to define our strategy. We always intended to implement in Pizza Hut and it's gone as planned. And of course, going forward, we think we have some differentiating capabilities that will help us sustain our competitive advantage in pizza with the aggregators. One of those is Dragontail, which helps to optimize the delivery operations in our restaurants including our interface with the aggregators, plus, we've got some first-mover advantages around marketing expertise and talents in that space that we think will help us continue to drive that business going forward in Pizza Hut. Operator: Our next question comes from the line of Brian Harbour with Morgan Stanley. Brian, please go ahead. Your line is now open. Brian Harbour: Yeah. Good morning. Thank you. I just wanted to ask about some of the kind of cost trends that your franchisees are seeing. Obviously, we can kind of see your company store margins. Be curious if that’s also true for a lot of your franchisees on food cost? Is some of that favorability starting to show in other markets? Or do you think that'll be more about 2024 as they sort of past weekend placements? David Gibbs: Yeah, good question. Our focus is on ensuring that we always providing strong relative value to our customers. And that our franchisees always have strong unit economics in the long run. That second piece of course is a key driver of our differentiated development capability. If we think about where unit economics are around the globe, they are still very strong. Now from a market-to-market standpoint, you've got puts and takes in terms of the timing of when inflation is hitting the market. The nature of it. In developed markets, we believe we're past the point of peak year-over-year inflation. And that's part of what David was mentioning in terms of a return to a more normal operating environment. In some emerging markets, that those inflationary ways were a bit delayed relative to developed markets. But in all markets, we are using our scale to offset as much of those inflationary pressures as we can. We're optimizing business model with the franchisees and of course, we use pricing as needed to help ensure the unit economics remain strong while still providing that strong relative value. You think about our development results in the quarter up to 1,025 units open. That's the best evidence that unit economics remain strong. Our 3C franchisees continue to put their capital to work. Jodi Dyer : Operator, we have time for one more question, please. Operator: Thank you. Our final question today comes from the line of David Tarantino with Baird. David, please go ahead. Your line is now open. David Tarantino: Hi. Good morning. My question, Chris, is on the G&A outlook. I was wondering if you could, I think you gave us an actual dollar number the last time. I was just wondering, if you could maybe clarify what that number looks like now with the higher bonus accruals? And then, I guess secondly, just as you think longer term about G&A, if you could just update us on your thoughts on where that should sit on a long-term basis as a percentage of system sales. That would be great. Thanks. Christopher Turner : Yeah, thanks, David. Overall, on G&A, we take a lean philosophy. We talked about that before and that implies that we will invest in areas that drive long-term growth, help in the business and we're going to be efficient on everything else. We came into the year that was - with a plan that was consistent with that philosophy. That plan is largely intact. But as we said in the back part of the year, we will see modestly higher G&A relative to that initial plan. And the primary driver of that is higher incentive comp owing to our strong performance. Of course, as you think about next year, that incentive comp resets each year. But that's been the primary driver on the change in the plan. We talked earlier about the color on the back part of the year around Q3 looking similar to first half and then a year-over-year decline in Q4. But net-net it’s on the full year we expect G&A leverage and of course, our long-term algorithm implies G&A leverage in the business. So, I think it's - that gives you a pretty good picture of how we're thinking about it and how the results are playing out. David Gibbs: Thanks Chris and I'll wrap up. I do want to thank everybody for being on the call and just reiterate, this was another really strong quarter for Yum! with widespread growth all brands contributing, system sales at all of our brands were 100 above algorithm and that 19% percent system sales number at KFC is something to be proud of. And we're doing, we're getting those results the right way. It's all about the digital growth, the development, our franchisees being profitable, and a lot of that comes back to the talent that we have at Yum! I was pleased to announce this quarter that, Sean is taking over for Mark. Very few companies have that kind of talent in place to just step in and we know we won't miss a beat and he'll take the business to a higher level of Taco Bell. I will share one fun stat with you if you haven't done the math on this, just in the last two and a half years, we have added 10,000 new gross unit to the Yum! system. That's nearly 20% of our stores were built in the last two and a half years. Do you think about our brands with 60 plus years operating history, but they couldn't be more new and fresh to consumers and they couldn't really be performing any better if you think about the results for the quarter. So, truly astounding. I want to thank all of our team members and our franchise partners that helped bring that growth to life every day. And thank you all for being on the call. Operator: Thank you, everyone, for joining us today. This concludes today's conference and you may now disconnect.

Operator: Hello, everyone, and welcome to the First Quarter 2023 Yum! Brands Earnings Conference Call. My name is Bruno, and I'll be the operator of today. [Operator Instructions] I would now like to hand over to your host, Jodi Dyer, Vice President of Investor Relations. Please go ahead. Jodi Dyer: Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and 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 our earnings release and relevant sections of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call, all system sales growth and operating profit growth results exclude the impact of foreign currency. Please also note the following financial reporting treatment related to our exit from Russia. As a reminder, as of the beginning of the second quarter of 2022, we elected to remove the Russia business from key performance metrics. For the purpose of this call, all references to system sales growth and unit growth results for the quarter are adjusted to remove our Russia business from the prior year base. This negatively impacted both our worldwide unit growth and worldwide system sales growth by two percentage points. These units were removed from our same-store sales calculations and, thus, do not impact same-store sales results for the first quarter. All GAAP figures reported continue to include the impacts of Russia operations for KFC for the full quarter. These GAAP figures primarily include royalty revenues from continued franchise operations and G&A to support our Russia business. Additionally, our GAAP G&A includes expenses incurred relating to the transfer of ownership of the business. As a result of our decision to exit our Russia business, we have re-classed net operating profits from the operating segments in which they are earned subsequent to the start of the conflict to corporate and unallocated and reflected those net operating profits as a special item within the other income and expense line. As a reminder, in April, we completed the exit of the Russia market by selling the KFC business in Russia to Smart Service Ltd., including all Russian KFC restaurants operating systems, master franchise rights and the trademark for the Rostik brand. Beginning in the second quarter, the Russia business will no longer be reported in our GAAP results, including franchise revenue and G&A. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. Looking ahead, our second quarter earnings will be released on August 2, 2023, with the conference call on the same day. Now I'd like to turn the call over to David Gibbs. David Gibbs: Thank you, Jodi, and good morning, everyone. Our first quarter results provide further proof of the power of our portfolio of iconic brands. Both the diverse nature of our global footprint and the advantages of our business model enable us to thrive in any environment. Our incredible teams and franchise partners delivered another strong quarter with 13% system sales growth driven by 8% same-store sales growth and 5% unit growth. A strong set of commercial strategies that balance compelling value and craveable, distinctive products fueled our first quarter sales momentum. We continue to execute on our digital strategy to create more seamless, personalized experiences to drive greater customer engagement and easier access to our brands. These efforts resulted in broad-based acceleration in digital sales growth, leading to a record quarter for both digital system sales of nearly $7 billion and a digital sales mix that exceeded 45%. Importantly, our core operating profit grew 11% in the first quarter, including a one point headwind from the removal of Russia profits, giving us great confidence in delivering on our long-term growth algorithm this year. Before I discuss our first quarter results, I wanted to provide an update on Russia. In April, we announced the completion of our sale of the KFC Russia business to Smart Service Ltd., including all Russian KFC restaurants, operating systems, master franchise rights and the trademark for the Rostik's brand. As part of the sale and purchase agreement, Smart Service has agreed to retain our company employees in Russia. With the completion of this transaction, we have ceased our corporate presence in Russia. Now I'll discuss our first quarter results through the lens of our Recipe for Good Growth framework. I'll begin by talking about our Relevant, Easy and Distinctive brands or R.E.D. for short, and our Unrivaled Culture & Talent. Chris will then share the details of our first quarter financial results before discussing our bold restaurant development and unmatched operating capabilities. First, let's discuss our iconic R.E.D. brands, beginning with the KFC Division, which represents 50% of our divisional operating profit. First quarter system sales grew 15%, driven by 9% same-store sales growth and 7% unit growth, reflecting broad-based strength. Globally, KFC is consistently executing its winning recipe of menu innovation, disruptive value, expanding category use occasions and doubling down on digital initiatives. We were pleased to see strong year-over-year growth in our KFC China business. As usual, Joey Wat and her team did a great job navigating the complex operating environment as consumers became more mobile in the quarter and KFC was there to meet their needs. Additionally, our International, ex China same-store sales, grew 11%, fueled by strong transaction and check growth. We attribute this exceptional performance to strong value offerings, the continued return of dine-in traffic, digital initiatives and strategic third-party partnerships. We've seen sustained momentum across many of our emerging markets, including Latin America and the Middle East. Additionally, we've seen renewed strength in many European markets where the team is promoting value at several price points to appeal to a broader customer base while innovating around our core menu offerings. The focus at KFC U.S. is targeting new audiences and category use occasions by using relevant value and product innovation, as demonstrated with the introduction of boneless offerings, including the return of the DoubleDown sandwich and launch of two for $5 wraps in the first quarter and the national launch of the much-anticipated chicken nuggets early in the second quarter. Moving on to the Taco Bell Division, which represents 34% of our divisional operating profit, before I get to results for the quarter, I want to highlight that Mark King was recently named the 2023 Restaurant Business Leader of the Year for the incredible progress Taco Bell has made, growing the brand while expanding unit economics and strengthening relationships with franchisees under his leadership. Seeing our world-class talent recognized more broadly across our industry gives all of us at Yum! Great pride. Taco Bell first quarter system sales grew 12%, led by 8% same-store sales growth and 6% unit growth. These incredible results build on years of sustained top line strength as the team executes on its consistent growth formula, which leverages the combination of brand buzz with unparalleled value offerings, buzz occasions and digital initiatives. This quarter, Taco Bell created customer buzz around craveable product offerings that included the Crispy Melt Taco and the Grilled Cheese Burrito while still providing everyday value through $2 Burritos on the Cravings Value Menu. Strong demand for the Grilled Cheese Burrito is a fantastic example that proves Taco Bell can win in the big burrito category and participate in higher price points while maintaining value leadership. Taco Bell U.S. is leaning into its digital initiatives to drive customer engagement, with year-over-year digital sales up approximately 60%, leading to an 8-point improvement in its digital mix. Taco Bell recently launched delivery-as-a-service through its mobile app to create easier access for our customers to get our craveable products. Additionally, the team also continues to make progress against our Recipe for Good Growth strategy with the ongoing condition of their packaging suite to more recycle-ready options. Taco Bell International grew system sales 25% in the quarter, driven by continued development momentum and strong value proposition through core menu innovation offerings. Next, I'll discuss the Pizza Hut Division, which accounts for 17% of our divisional operating profit. System sales grew 10% for the quarter, driven by 7% same-store sales growth and 3% unit growth. Same-store sales growth accelerated sequentially from the fourth quarter, driven by China and continued strength in the U.S. Pizza Hut International, which accounts for 9% of our divisional operating profit, grew system sales 10%, led by 5% same-store sales growth and 5% unit growth. Following the successful launch of Melts in the U.S., the team launched this breakthrough product in 10 additional markets, including the U.K., Canada and several markets in Latin America. I'd like to recognize our global pizza team for their collaborative efforts to scale this winning innovation quickly. Our markets not only shared consumer insights and product innovation at unprecedented speed, but the operations team also used augmented reality to expedite training of our international team members through our intelligent coaching app. Pizza Hut U.S., which represents 8% of our divisional operating profit, achieved 10% system sales growth with 8% same-store sales growth and flat unit growth. Melts, in combination with the Big New Yorker in the quarter, helped to drive positive transaction growth by attracting new and repeat customers. The team continues to expand strategic partnerships and is now integrated with the three major food aggregators in the U.S. We view aggregator marketplaces as an additional channel to provide customers greater access to our brand, while also attracting an incremental customer. The Habit Burger Grill Division grew system sales 8% with 8% -- the Habit team continues to focus on expanding its abilities through mobile app user base and partnering with third-party aggregators. Before moving on to our Unrivaled Culture & Talent, I want to take a moment to thank Russ Bendel and celebrate his accomplished career in the restaurant industry as he plans to retire next month. Russ' passion for restaurants has always shined through and anyone who knows Russ knows that what he really values above all else is people. Everyone is a friend to Russ, and he is loved by all who have had the privilege to work beside him, whether in a kitchen or an office. We recently announced that Russ's successor is former KFC Global Division CFO, Shannon Hennessy. Shannon is an exceptional leader, and we're excited to have her drive the next chapter of growth for Habit and continue Russ' focus on people. More broadly on our Unrivaled Culture & Talent growth driver, we've held powerful forums this year that galvanized our franchisees and top talent around our Recipe for Good Growth. In February, we hosted our 11th International Franchise Convention in Singapore, bringing together our global brand leadership teams and many of our 1,500 franchisees from around the world. Having attended this convention for many years, I've never seen this level of unity and enthusiasm for growth, particularly as it relates to development and broad strategic alignment with our franchise community. Our franchisees are some of the most growth-minded entrepreneurs in the world, and the international franchise convention was an opportunity to learn from, recognize and celebrate each other's achievements. Our partnership with our franchisees is as strong as it's ever been. We are strategically aligned to keep our iconic brands R.E.D. and our global growth momentum strong by leveraging the investments we've made in consumer insights, our digital ecosystem, innovative technologies and data analytics. Additionally, we are focused on unlocking opportunities for our people and communities while promoting equity inclusion and belonging across all aspects of our business. We were proud that many of our leaders, including myself, participated in the Women's Foodservice Forum as we focus on elevating all voices and achieving gender parity globally by 2030. We also announced the launch of Franchise Fast Start, the program funded by Lafayette Square to provide lending support to expand Yum! franchise ownership in underserved communities in the U.S. As a result of our efforts, we've recently been named to Newsweek's America's Greatest Workplaces for Women and Forbes America's Best Employers for Diversity List. To wrap up, I'm always thrilled to start the year with fantastic momentum, especially when the strength is broad-based across our global portfolio. I remain confident in our ability to navigate any economic environment as our brands stand for unmatched value and convenience, providing a range of products and price points to meet all customers' needs. We are poised to maintain our robust sales momentum given our pipeline of R.E.D. product innovation, accelerating digital sales, strengthening operational execution and compelling value across our global portfolio of iconic brands. With that, Chris, over to you. Christopher Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers followed by our capital strategy. I'll begin with our first quarter results, which reflects strong fundamental performance across all of our core financial metrics. We delivered 13% system sales growth driven by 8% same-store sales growth and 5% unit growth. Core operating profit growth for the quarter came in at 11%, which includes a one point headwind from the removal of Russia profits. Reported operating profit includes a $27 million negative impact from foreign currency translation. We expect foreign currency translation to be a $10 million to $20 million headwind to second quarter operating profit. Our digital sales accelerated across our three global brands, leading to a record quarter with nearly $7 billion in digital sales. We are confident our digital strategies are working, considering we reached a new high in our digital sales mix, exceeding 45% this quarter. Taco Bell store level margins were 22%, flat year-over-year, ex special, general and administrative expenses were $278 million, in line with our expectations. As we previously mentioned, we expect our year-over-year G&A growth will be higher in the first half of the year. The ex special tax rate for the quarter was 19%. Our first quarter EPS, excluding special items, was $1.06, roughly flat over the prior year. First quarter EPS was negatively impacted by unrealized investment losses of $0.07 relating to our investment in Devyani and foreign currency translation impact of $0.08. As David mentioned, we completed the sale of our Russia business last month. Beginning in the second quarter, the Russia business will no longer be reported in our GAAP results, including franchise revenue and G&A. For modeling purposes, KFC Russia's quarterly franchisee fee revenue and G&A have averaged approximately $20 million and $5 million, respectively, over the last few quarters. We are pleased to see inflationary pressures, staffing challenges and supply chain disruptions abate in the U.S. as we return to a more normalized operating environment. While we've seen similar trends in some international markets, there are others where our franchisees continue to face outsized inflationary pressures. We continue to partner with our franchisees to protect restaurant-level profitability while ensuring we maintain strong relative value for our customers. We're encouraged by trends in commodity inflation and labor availability as both bode well for the health of our franchise system, which is the foundation of our industry-leading development engine. Now moving on to Bold Restaurant Development, we opened 746 gross new units during the quarter. Full year 2023 is shaping up to be another incredible year of development, similar to 2021 and 2022. But it's important to note the quarterly cadence of development will be weighted more heavily towards the second half of the year. As we've said before, we have great line of sight into our development pipeline, with over 80% of 2023 planned units at KFC and Pizza Hut outside of China committed with well-capitalized road-ready franchise partners. Let me share a few highlights of our diverse development drivers, beginning with the KFC Division, which opened 385 gross units this quarter. China, India and our Latin America markets led the charge this quarter, with each opening more than 20 units. I'd like to recognize our KFC team in the Philippines for their efforts to drive our good growth solar panels to build more sustainable restaurants. As for the Pizza Hut Division, the team opened 271 gross units this quarter, including the China, India and Turkey markets each opening more than 20 units. As we had anticipated, we exited our Pakistan Pizza Hut franchise partner and closed all 77 stores in the market. We are committed to partnering with capable, committed and well-capitalized franchisees. In some instances, the best thing for our brands and business in the long term is to exit a market and reopen with the right 3C franchise partner, which is exactly what we plan to do in this situation. Turning to Taco Bell. The team opened 79 gross units in Q1. The Taco Bell team continues to leverage unique store designs to enhance both the digital and drive-through experience for our customers. Taco Bell International is off to a record-breaking start, with 46 units opened this quarter, and Taco Bell China becoming our fourth international market to cross the 100-unit threshold, along with Spain, the U.K. and India. These top four markets accounted for 60% of new builds this quarter, illustrating the power and scale to drive accelerated growth. In summary, we remain confident in our ability to maintain our industry-leading development momentum. Next, I'll discuss our unmatched operating capabilities and the three pillars of our digital strategy: Easy Experiences, Easy Operations and Easy Insights. First, our commitment as a franchise-first organization and unmatched operating capabilities are contributing to our position as the global franchisor of choice. We mentioned on our fourth quarter earnings call that Taco Bell was ranked #1 in Entrepreneur Magazine's Franchise 500 ranking in North America. Building on that recognition, this last week, Entrepreneur Magazine announced its 2023 top global franchise rankings and our three largest brands made the top five, led by KFC in the #1 spot. Moving on to the pillars of our digital strategy. Beginning with the Easy Experiences pillar, we continued to enhance our digital ordering capabilities and launched new ordering channels. In fact, Tictuk completed its single largest market deployment for chat ordering to date this quarter. Customers are now able to order KFC across 1,000 stores in South Africa using WhatsApp. Early results in the market show this new ordering channel is sticky, with more than 40% of users placing multiple orders in the first 90 days after launch. Within the Easy Operations pillar, Dragontail launched in over 1,000 orders across KFC and Pizza Hut this quarter, led by the Pizza Hut U.S. system, which doubled its store count to reach approximately 1,000 restaurants in total. Additionally, KFC Canada launched nearly 400 restaurants on the platform. Restaurants that implement Dragontail consistently see improvements in product quality and customer satisfaction scores as the order sequencing algorithm and driver dispatch capabilities ensure customers' favorite Yum! products arrive hot and fresh. Additionally, the first quarter marked an exciting collaboration milestone for our restaurant technology teams. The core platform that powers Hut Bott, Pizza Huts Coach in your pocket application that supports over 20,000 Pizza Hut managers in 85 countries will now be managed centrally by Yum! digital and technology. This shift allows us to scale mobile-first technology for our restaurant managers more quickly across our brands and ensures continued product enhancement and future AI-based innovation under the Yum! Super App banner. Finally, for our Easy Insights pillar, we rolled out recommended ordering to nearly 600 additional stores and are live in over 3,600 stores in KFC and Taco Bell U.S. Recommended ordering is an AI module that recommends the quantity of product a restaurant manager should order each week. It reduces the time restaurant managers spend ordering product, improves forecast accuracy and reduces waste and time-consuming off-cycle orders and cross-store transfers. At Taco Bell, we have seen a 70% reduction in off-cycle orders and store transfers which frees up our managers to focus on delivering great guest experiences. Lastly, I'll provide an update on our balance sheet and liquidity position. Our capital priorities remain unchanged: invest in the business, maintain a resilient balance sheet, offer a competitive dividend and continuously evaluate the optimal use of our excess cash. We constantly revisit the allocation of our capital to optimize shareholder returns. Our net leverage ratio ended the quarter at 4.9x. As a reminder, we expect our leverage ratio to drift modestly lower this year. Our net capital expenditures for the quarter were $57 million, reflecting $5 million in refranchising proceeds and $62 million in gross CapEx. As it relates to our share buyback program, during the quarter, we repurchased approximately 400,000 shares at an average share price of $129 per share, totaling approximately $50 million. To close, we're incredibly pleased with our results for the quarter. With a great start to the year, we're confident in delivering on our long-term growth algorithm in 2023. Our relevant and iconic brands consistently demonstrate that they are uniquely positioned to thrive in any macro environment and create lasting shareholder value. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question comes from Gregory Francfort from Guggenheim Securities. Gregory Francfort: The first one I had, I update your comments on staffing environment and the labor environment getting better sounds like globally, but also definitely the U.S. Are you seeing changes in wage inflation in your core markets and in the U.S. market? Or is it mostly staffing? I'm just curious. Any more details you can provide there would be helpful. Christopher Turner: Yes, good question around the labor environment. If you step back at a macro level, we think about this in developed versus emerging markets. And in our developed markets, we have had some labor challenges that have been well publicized, not only in the restaurant sector, but in all sectors over the last couple of years. Those labor challenges are abating. We're seeing application rates increase, retention rates continue to increase, and our staffing levels are back to at or near 2019 levels. And we've seen labor inflation abate in those markets which is helping our franchisees from a margin standpoint. If we go globally, because of the position of our brands and the employment markets in those emerging markets, we really haven't had big labor challenges there. And we've seen less labor inflation throughout the last three to four years, and that trend continues. I'm sure there's some pockets for franchisees who are dealing with that, but in general, the Yum!'s culture and focus on talent, plus the way that our franchisees have led their teams during the last couple of years, plus our digital innovations in our Easy Operations area, which make running the restaurants easier, are all contributing to an improving labor environment. Operator: Our next question comes from Brian Bittner from Oppenheimer. Brian Bittner: As it relates to your core operating profit in the first quarter, it was very strong 11%, very strong start to the year. And interestingly, it actually doesn't really incorporate yet a strong recovery from China. So as it relates to your guidance core operating profit of at least 8% for the year, kind of in line with your long-term algorithm, I'm wondering if you can unpack whether this is possibly tilting a bit conservatively after your strong results in the first quarter? Or maybe you can guide us through the puts and takes as the year unfolds with your core operating profit. David Gibbs: Yes. Thanks, Brian. Obviously, it was a strong quarter from a core operating profit standpoint. And as you say, we have further upside as we step through the year if China's results continue. As you know, our long-term algorithm is just that. It's a long-term algorithm over many years, and we don't revise it every quarter. But clearly, we have -- we've gotten off to a strong start to the year, and we feel good about how the year is shaping up. Importantly, we just raised that algorithm last year at our investor conference, and I love the fact that we've started off the year beating all the components of the algorithm. Operator: Our next question comes from Jon Tower from Citi. Jon Tower: I was hoping you could offer some insights from your end on what's going on in the franchisee environment, specifically in the U.S. I think there's a growing concern, particularly with what's happening with regional banks, that franchisees might have difficulty accessing capital and therefore perhaps having challenges growing in the U.S. I think your brands are positioned differently and you guys are in a different spot than smaller competitors, but I was hoping you could kind of dive into that a little bit, please. Christopher Turner: Yes. Thanks, Jon. Good question. I'm going to step back and start at a global level. And if you think about our development, keep in mind more than 90% of our development is outside of the U.S. And when you think about where that development is driven, we shared at the Investor Day that 60% of our global development is driven by 15 publicly traded franchisees. If you go look at the financial factors on those franchisees, you see that they've got, on average, less than one turn of leverage. The two largest have significant cash on hand with no debt. So the financial health, in general, of our 3C franchisee base around the globe is very strong and we think gives us a competitive advantage in this sort of environment to continue to strengthen development ;whereas competitors whose franchise systems aren't as strong, we think, will be at a disadvantage. If I drill into the U.S., keep in mind that Taco Bell is the vast majority of our development in the U.S. Our margins at Taco Bell U.S. have continued to be strong. You saw our restaurant margins this year were a slight improvement versus last year. So we continue to drive strong growth at Taco Bell with strong margins. Those are strong returns on those new units. So we feel like we're in a very competitively advantaged position relative to that issue. David Gibbs: We really haven't heard anecdotes and stories of franchisees getting concerned about accessing capital. Operator: Our next question comes from John Ivankoe from JPMorgan. John Ivankoe: I think a pretty consistent theme that's emerging for 2023 are some of the bigger, well-capitalized, more desirable brands that are really coming back and focusing and enforcing on operational standards that maybe were back to '19 levels or even maybe even better than '19 levels as their systems are so desirable and so many people want to be a part of them. So it's always hard to talk about multiple brands across the global business, but can you kind of grade, if you can, your operational execution across the brands? Do you see any big pockets of opportunity? And not really problems, any big pockets of opportunity that you see out there of just saying, hey, execution is obviously a very important part of the Yum! business and you have some significant pockets of opportunity that could really move the needle from this point going forward as we're now post crisis. Christopher Turner: Yes, Jon, I'd say, in general, we all know that providing a great customer experience at the restaurant is critical to our business. And if you look at our sales growth results, double-digit growth in -- from a system sales standpoint for all three of our big global brands, we feel like, in general, we're doing a very good job of that. Are we always looking to improve? Of course. I go to our digital capabilities as one example of how we're elevating operations. You go to that Easy Operations pillar, one of three areas of our digital strategy, and we talked about we continue to implement tools that make the restaurants easier to operate and then improve the customer experience. Dragontail being a great example. David and I were in the U.K. just a couple of weeks back, and we got to see in Pizza Hut how Dragontail times the pizzas coming out of the oven, with the delivery drivers getting to the restaurant, that's translating to better customer experience. They're getting hotter, fresher pizzas faster. So that's just one example of how we elevate on that front. Where we do have small pockets of significant improvement opportunity, we manage those situations, and we referenced that on the call. We talked about the Pakistan situation where we felt it was the right move to make a move in our franchise base. The strength of our overall global development gave us the room to do that. But that's just one example of where we made a targeted change to improve our operations. David Gibbs: The only thing I would add is the last few years have obviously been a challenging operating environment. I think at the end of the day though, it has made us stronger as an operator, and I feel better about the quality of our ops around the world today than I have at any point in my long career. We're clearly headed in the right direction. We have leaders at the brands such as Sabir Sami at KFC, who was the Chief Operating Officer of KFC. So we're putting a very strong emphasis on operations. We know that, that can pay off. The other component of this is, as Chris mentioned, getting the right franchisees in. In the U.S., as you know, we had a big change in terms of the ownership of our largest Pizza Hut franchisee, that's having a very positive payoff for us at Pizza Hut because they're running the stores better and a great reminder of how important it is to have the right franchise partners. Operator: Our next question comes from Dennis Geiger from UBS. Dennis Geiger: Given the momentum that you've got in the business and across the brands, eve in a tough environment, I'm just wondering if you could talk a little bit more about the momentum that you expect to continue going through the rest of the year, particularly in the U.S. And within that, just wondering if you could touch high level at least on pricing presumably rolling off some in the U.S. and sort of how you think about the traffic outlook and, therefore, the overall outlook for sales momentum to continue. If you could touch on that. David Gibbs: Yes. Thanks, Dennis. Obviously, we had a strong start to the year with Q1. And we don't normally comment on trends intra-quarter, but what I will say is we're off to another strong start in Q2. No significant change in momentum from Q1. Of course, the puts and takes will look different. Some businesses are doing a little bit better than in Q1. Some have tougher laps. But it gives us a lot of confidence that our teams are doing all the right things to connect with consumers. And this environment is a healthy environment for us, particularly with our brands. When you talk about the U.S. consumer, Taco Bell is just so well positioned to weather any kind of -- there was some kind of pullback, as you saw from the strength they had in Q1, their ability to offer value menu offerings under the Cravings Value Menu, but also offer innovation like the Grill Cheese Burrito for people that might be trading into the category if the economy started to soften. So from where we sit, we feel really good about the momentum in the business. And the pricing actions that you referenced were -- will probably start to roll off a little bit. But at the same time, we've seen inflation abate. I'll give you another good fun stat. In Q1, KFC, as you know, rolled out those $5 wraps. The strongest sales that they saw in a customer segment in Q1 were with the lowest-income consumers. So the part of the business -- the part of the consumer base lifting sales was from low-income consumers because they did a great job connecting with them through that offering. Same thing could be said with Pizza Hut under 6.99 melts. So we know we have all the tools in our arsenal to win in these competitive environments. Operator: Our next question comes from David Palmer from Evercore. David Palmer: Wondering if you could provide any details on the ongoing sales recovery versus pre-COVID levels for key KFC International markets. We don't often get to see some of the country-level statistics. And I'm wondering how you're thinking about that multiyear recovery. Where is it still accelerating? And perhaps if it's slowing in certain places, why would that be, maybe shifting patterns between delivering at home or other consumer weakness perhaps cropping up here or there. David Gibbs: Yes. Just talking in terms of trends, David. You saw from the sales breakouts in our release that we've got widespread system sales growth at the numbers that we report. In fact, the vast majority of the businesses that we track are up double digits. I think we identified early on in the pandemic that developed markets were doing a little bit better than emerging markets. And then that sort of flipped more recently as emerging markets have recovered. They've been the one sort of leading the charge. And we're now entering a phase in which I think we're sort of more back to the normal cadence of developed markets and emerging markets contributing to our growth. So obviously, we have 300 brand country combinations we could talk about a lot of different ones, but I think that gives you a pretty good sense of what the landscape is like. And that's why we've talked a number of times today already about returning more to a normal cadence in the business, which is good for us. Operator: Our next question comes from Andrew Charles from TD Cowen. Andrew Charles: Great. I recognize that 1Q is a season-light development quarter, but can you speak to the sequential cadence of growing 5.9% net restaurant growth in 4Q that fell a bit to 5.3% in 1Q, excluding Russia. 1Q certainly exceeded the 5% ongoing guidance, but it was perhaps a bigger step down than we were expecting. So you guys spoke about the robust development commitments. And so I'm just curious, I mean, do you expect that the percentage of year-over-year growth is going to pick up perhaps as 2023 progresses? Christopher Turner: Yes. Thanks. Good question. If we talk about Q1 specifically, I think all the factors that David mentioned around our confidence in long-term development trajectory still hold. We've got strong new economics. We've got tremendous franchise partners. We've got lots of white space out there. And we've got the best development teams in the business. If I go into Q1, keep in mind, don't read too much. We said that this year would be more weighted towards later parts of the year. But in Q1, we put up 746 gross new units. That's our second-highest total ever. That reflects that our franchisees are investing to build restaurants. And that was despite what you heard on the Yum! China call yesterday, which is they were dealing with delays related to the Chinese New Year, delays in contract signing and building permitting that were tied to COVID. And they talked about their view on the strength of their pipeline going forward. If I go to the net new unit side, one of the things that we're doing is we're using our strength in growth development to advance our assets to strengthen our global asset base. I talked about how we, in certain cases, strengthen the franchisee base with the Pakistan situation. Another thing we're doing is continuing the Pizza Hut asset transformation where when we close a unit, we're opening another one in the same trade area that is a stronger, higher-performing unit. And the third thing we're doing is when we have a few low-volume units that need to be cleaned up, we'll take advantage of opportunities to do that. But in general, we remain really confident about the long-term trajectory. And as I said, we expect this year to look similar to 2021 and 2022. David Gibbs: Yes. I mean the only thing I'll add is we know how important development is to our growth algorithm. Obviously, this is a big focus of ours. We think we have upside. Any numbers that we set out, throw out there, and that's our focus is how do we keep on trying to beat these numbers. And obviously, we've been pretty clear that don't draw too many conclusions from one data point at the beginning of the year historically is not correlated. And it was a strong quarter. It was a really strong quarter. So we're proud of what happened in Q1 and feel good about 2023 looking just like '21 and '22. Operator: Our next question comes from Jeffrey Bernstein from Barclays. Jeffrey Bernstein: Noticing, as I think about your brands, the single customer serve opportunity, it feels like Taco Bell has always been about serving individuals rather than big portions of big families. But does seem like there's been a major change in menu strategy elsewhere. KFC, just recently between the sandwiches, the nuggets and the wraps, all for individuals and Pizza Hut seemingly doing well with the Melts. I'm just wondering if you can maybe just talk about the mix of business for each of your brands for family versus single-serve and maybe whether these new products change your mix of sales by daypart. I would think that would help build the lunch business, especially at Pizza Hut. But presuming this is a conscious decision at all brands, just wondering if you can give some high-level thoughts on the mix of business or family versus singles and daypart opportunity. David Gibbs: Yes. A good question. And you're spot on, obviously. Our goal obviously is to be there for our customers for every occasion, not just for family meals or just for individual meals. Pizza Hut has a very conscious strategy through Melts in the U.S., which has gotten a lot of the headlines, but also an offering that they have called My Box, which is an individual meal offered around the world to go after more individual occasions. Pizza is obviously traditionally a family-sharing occasion. So Pizza Hut and KFC with buckets tend to skew more towards family sharing. And Taco Bell with their multiple individual items that you can piece together for your own meal, skew more towards individual meals. And that's why at the beginning of the pandemic, you saw Taco Bell rolling out family meal options because that became the preferred way that people were accessing our brands early in the pandemic during lockdown. So they're continuing to lean in on ways that they can capture more of the family sharing occasion. And then Taco Bell -- and then Pizza Hut and KFC are leaning more on individual meals. Obviously, nuggets, the $5 wrap deal and other offerings we have around the world, the launch of sandwiches more recently, are all designed for individual meals. Operator: Our last question comes from David Tarantino from Baird. David Tarantino: Just a couple of clarifications, Chris, on the outlook. First, on the unit growth commentary, you said you expect this year to look a lot like the last two years. Are you talking about net unit growth or gross opening? So I guess your net unit growth has been close to 6% ex Russia in the past few years. So I just wanted to clarify that. And then secondly, I was wondering if you have an update on your G&A guidance for the year. Christopher Turner: Yes. Thanks, David. First, on development. Of course, our long-term growth algorithm specifies 5% net new unit growth. We've been a little ahead of that. And we're working hard to continue our development momentum. And as we've said multiple times on the call, we continue to have real confidence in our ability to deliver that type of net new unit growth into the future. On G&A, just a couple of things. First, note that about $4 million of our reported G&A in Q1 was classified as special. So then when you look at the ex special year-over-year increase, we had said on the last call that this year, our year-over-year increases would be weighted a little more to the beginning of the year. There are really two factors that drove that. So coming into the year, we had obviously planned to make some targeted investments in G&A in specific parts of the business to support our long-term growth strategies. The second part, we did encounter some expenses that we were not anticipating prior to the year primarily related to the cyber event that we had in January. But still, when we step back and we look at the plan for the full year, we still expect full year G&A to land at approximately $1.15 billion, and we'll provide further updates on the Q2 call as needed. David Gibbs: Well, thanks, everybody. I appreciate all the good questions. And obviously, we're excited about the strong start to the year, the momentum that we have continuing into Q2 and the fact that we've raised our algorithm and are beating it on all measures today. Look forward to updating you on our progress on our Q2 call. Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Thank you.

Operator: Hello, everyone, and welcome to the Yum! Brands, Inc. 2022 Fourth Quarter Earnings Conference Call. My name is Charlie and I'll be coordinating the call today. [Operator Instructions]. I will now hand over to your host, Gavin Felder, Chief Strategy Officer and Interim Head of Investor Relations, to begin. Gavin, please go ahead. Gavin Felder: Thanks, operator. Good morning, everyone, and thank you for joining us. As a reminder, I will be covering for Jodi Dyer while she is on maternity leave. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, please note that this call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this call and 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 our earnings release and relevant sections of our filings with the SEC to find disclosures, definitions and reconciliations of non-GAAP financial measures and other metrics used on today's call. Please note that during today's call, all system sales growth and operating profit growth results exclude the impact of foreign currency. Please also note the following financial reporting treatment related to our exit from Russia. As a reminder, as of the beginning of the second quarter, we elected to remove the Russia business from key performance metrics. For the purposes of this call, all references to system sales growth and unit growth results for the quarter are adjusted to remove our Russia business from the prior year base. This negatively impacted our worldwide unit growth by 2 percentage points and our worldwide system sales growth for both the fourth quarter and the full year by 2 percentage points. These units were removed from our same-store sales calculations and thus did not impact same-store sales results for the fourth quarter or full year. All GAAP figures reported continue to include the impact of Russia operations for KFC for the full quarter and year, and for Pizza Hut prior to our transfer of that business to a local operator in the second quarter. These GAAP figures primarily include royalty revenues from continued franchise operations and G&A to support our Russia business. Additionally, our GAAP G&A includes expenses incurred relating to the transfer of ownership of the business. As a result of our decision to exit our Russia business, we have reclassed net operating profits from the operating segments in which they are earned subsequent to the start of the conflict to corporate and unallocated and reflected those net operating profits as a special item within the other income and expense line. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are broadcasting this conference call via our website. This call is also being recorded and will be available for playback. Looking ahead, our first quarter earnings will be released on May 3, 2023, with the conference call on the same day. Now I'd like to turn the call over to David Gibbs. David Gibbs: Thank you, Gavin, and good morning, everyone. 2022 truly was a landmark year for Yum!. In spite of the challenges from significant spikes in commodity inflation and pockets of labor shortages, our world-class teams and franchisees partnered together to deliver another year of amazing growth. We achieved record-breaking industry development, opening 4,560 gross units that translated to nearly 3,100 net new units, beating our prior record set just last year and ending the year with over 55,000 restaurants globally. For the full year, system sales were up 8% and core operating profit was up 6%, which includes a 2-point headwind from the removal of Russia profits this year. Perhaps the most impressive performance came from Taco Bell, finishing 2022 with same-store sales growth of 8%. Taco Bell also bucked the industry trend on margins, holding company operated margins flat from last year despite elevated industry-wide cost pressure. KFC International delivered a record year, opening approximately 2,400 gross units and nearly 2,000 net new units, translating to 9% unit growth. Combined, these 2 parts of the business account for approximately 80% of our divisional operating profit. We finished the year on a high note with system sales growth of 10% in Q4, driven by 6% same-store sales growth and 6% unit growth, contributing to 22% core operating profit growth, which includes a 2-point headwind from the removal of Russia profits this year. Such incredible performance under highly challenging conditions underscores the tremendous confidence I have that even after a remarkable 25 years of growth as a public company, our best days are clearly ahead of us. Before I discuss our 2022 results in detail, I wanted to give a brief update on our planned exit from Russia. As mentioned during our Q3 call, we have a signed purchase agreement to transfer ownership of our Russian KFC restaurants, operating system and master franchise rights to an existing KFC Russia franchisee. We expect the transaction to close following satisfaction of all closing conditions. Following the closing, we will have ceased our corporate presence in Russia. I also want to acknowledge the devastating impact of the earthquake that happened earlier this week, affecting our teams in Turkey. Our people remain our #1 priority, and I want to recognize the effort from our franchisee, Ilkem Sahin, as he and his team worked to prioritize people's safety as they navigate through this tragedy. As we shared at our recent Investor Day, our strategy is guided by our Recipe for Good Growth. And today, we will discuss our 2022 results through the lens of that framework. I will talk about 2 of our growth drivers: namely our Relevant, Easy and Distinctive Brands, or R.E.D. for short; and our Unrivaled Culture and Talent. Then I'll provide an update on our efforts to drive the good agenda across our brands and our business. Chris will then share the details of our fourth quarter financial results before discussing our Bold Restaurant Development and Unmatched Operating Capabilities growth drivers. I'll start by discussing our iconic R.E.D. brands. Beginning with the KFC division, which accounts for 49% of our divisional operating profit. KFC full year 2022 system sales grew 9%, driven by 7% unit growth and 4% same-store sales growth. Q4 system sales for KFC increased 10%, thanks to 7% unit growth and 5% same-store sales growth. Results were unfavorably impacted by COVID-related challenges in China. Excluding China, our KFC business continues to grow at an unbelievable pace with same-store sales growing 9% in the quarter, driven in part by our world-class franchisees and continued impressive momentum in our emerging markets. At KFC's International business, which represents 44% of our divisional operating profit, Q4 system sales grew 11%. Several markets showed stellar results. In Japan, for example, KFC is synonymous with the Christmas holiday family meal. And this year, Japan system sales over the Christmas period grew 16% year-over-year. Africa drove double-digit same-store sales growth in the quarter and continues to benefit from several customer-facing digital initiatives. To build on that success, our South Africa team will continue to roll out kiosks with a goal of installing them in 95% of our stores by 2023. Moving on to our Taco Bell division, which represents 35% of our divisional operating profit. On a global basis, full year system sales grew 11%, driven by 8% same-store sales growth and 5% unit growth. This team continues to deliver industry-leading results, and coupled with the incredible array of talent in place and our strong franchisee partnerships, it should be no surprise that Taco Bell earned the top spot on Entrepreneur magazine's Franchise 500 Ranking for the third year running. Moving on to our fourth quarter results. Taco Bell U.S. grew system sales 14%, underpinned by an exceptional 11% same-store sales growth. The powerful momentum from previous quarters continued with the relaunch of the cult classic Mexican Pizza for which we provided early access to our loyalty members. We ended the year with around 45 million Mexican Pizzas sold, an impressive number considering they were only available for 4 months of the year. We also made encouraging progress in our breakfast layer, building on high-profile branding partnerships such as Doja Cat in Q1 and Davante Adams in Q3. Taco Bell brought in Pete Davidson to help drive consumer buzz for breakfast. This led to 9% transaction growth for the daypart. Overall, Taco Bell did a terrific job this quarter at balancing both ends of the consumer spectrum by featuring premium products that our consumers crave, such as the Grilled Cheese Burrito with sharply priced items like Nacho Fries. At Taco Bell International, Q4 system sales grew 23%, driven by 29% unit growth and 4% same-store sales growth. Q4 closed a truly breakthrough year for our international business, which has now crossed the 1,000-unit mark. To put this speed into some historical context, Taco Bell International has built 40% of its current estate within the last 2 years. It wasn't just our development engine on fire this year, many of our markets reached double-digit same-store sales growth in 2022, including some of our largest markets with India, up 33%; Thailand, up 36%; and Spain, up 20%. Next, at the Pizza Hut division, which accounts for 16% of our divisional operating profit, our full year system sales grew 3%, led by 4% unit growth and flat same-store sales growth. Pizza Hut International, which accounts for 9% of our divisional operating profit, achieved system sales growth of 4%, driven by 6% unit growth and a 1% decline in same-store sales in the fourth quarter. Results were heavily impacted by the ongoing COVID-related challenges in China. Ex-China, our same-store sales remained healthy, growing 4%. Several markets showed noticeable strength, including Japan, where same-store sales grew 10%, owing to a strong holiday performance and recent product launch of Tuscani pasta bowls that featured a local flavored twist. At Pizza Hut U.S., which accounts for 7% of our divisional operating profit, Q4 system sales grew 5%, driven by 4% same-store sales growth and flat unit growth. The strength in the quarter was driven by a combination of factors that included new advertising to highlight both premium and value offerings, growth partnerships with aggregators and the success of the new Melts product. Melts over-indexed to predinner time frames and individual occasion tickets and helped to recover the lower household income base due to its strong value proposition. Lastly, 5 distinct national marketing campaigns on Uber Eats and DoorDash helped aggregator transactions grow 30% in the quarter. Lastly, at the Habit Burger Grill, the team continues to make progress on setting up the business for long-term growth. Habit's burgeoning digital channel finished the year strong with digital mix ending at 35%, a truly impressive level after only launching in 2020. I'm pleased to share that Habit is now 18% franchised, which is up 5 points from last year. With $2 million average unit volumes and a compelling growth strategy, I'm confident in the long-term growth of our newest brand. And now on to our Unrivaled Culture and Talent Growth drivers. Our hallmark at Yum! continues to be our people first culture, which drives retention and recruitment of amazing talent. Highlights in 2022 included bringing our top 250 leaders from around the world together for a Global Leadership Summit and celebrating the important role our world-class talent has played as we marked our 25th anniversary as a publicly traded company. Internally, we continued to promote talent naming a President of the Habit Burger Grill and a new President of KFC U.S. Externally, we attracted top talent, welcoming a new Global Chief Brand Officer for Taco Bell, a new Global Chief Operating and Transformation Officer for Pizza Hut and a new Chief Corporate Affairs Officer for Yum!. When it comes to all the good we do, we released our 2021 Recipe for Good report during the year, detailing our strong progress around our 3 priority areas. With our science-based targets to decrease greenhouse gas emissions by 46% by 2030, we decreased emissions against our 2019 baseline by approximately 24% for company-owned buildings and our corporate restaurants, while our franchisees decreased emissions by 20%. Regarding better packaging, we published a new global harmonized packaging policy with a focus on eliminating unnecessary packaging, shifting to more sustainable materials and supporting better recovery and recycling systems. We increased the number of women in senior leadership globally to 42%, which keeps us on track to achieve gender parity and leadership globally by 2030 in alignment with Paradigm for Parity. We were pleased Yum! received industry-leading rankings on the carbon disclosure project and inclusion on the 2022 Dow Jones Sustainability Index North America, the 2023 Bloomberg Gender-Equality Index and Newsweek's list for America's Most Responsible Companies and America's Greatest Workplaces for Diversity. To wrap up, I'm thrilled with our 2022 performance, particularly given many of the unpredictable obstacles our team had to navigate. Our results continue to reflect a resilient, diversified business and the strength of our portfolio, led by our iconic brands. I'm confident we will continue to execute with superior performance and deliver industry-leading growth, all of which will help to maximize value to our shareholders. With that, Chris, over to you. Christopher Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our financial results, our Bold Restaurant Development and Unmatched Operating Capability growth drivers, followed by our capital strategy. As David mentioned, 2022 was a year of huge milestones for Yum!. The resilience and winning mindset shown by our teams around the world helped us open a record-breaking 4,560 gross units or 3,076 net new units on a full year basis. These development numbers put full year unit growth at 6%. System sales for the year grew 8%, driven by strong international same-store sales growth for KFC and another stellar performance from Taco Bell. Full year core operating profit grew 6%, which includes a 2-point headwind from the removal of Russia profits this year. Fourth quarter system sales growth of 10% was in line with the update we shared at our Investor Day, driven by 6% same-store sales growth and 6% unit growth. Core operating profit grew 22%, which includes a 2-point headwind from the removal of Russia profits this year. Reported operating profit included a negative $42 million foreign currency translation impact in the fourth quarter and a negative $118 million impact to the full year. Ex special general and administrative expenses came in at $357 million and approximately $1.1 billion for the full year. Taco Bell store level margins were 23%, flat year-over-year. Taco Bell paid additional discretionary bonuses to its store-level employees, given the strong performance for the year, which impacted quarterly margins by approximately 50 basis points. Taco Bell's full year store level margin was 24%, near the upper end of its 23% to 24% historical pre-COVID margin range. Fourth quarter ex special EPS was $1.31, a 29% increase versus the prior year. EPS growth was positively impacted by core operating profit growth of 22% and a lower current year tax rate. This was partially offset by the year-over-year impact of a current year mark-to-market loss on our equity investment in a franchisee in India, lapping a prior year gain as well as the aforementioned negative impact of foreign currency. The ex special tax rate in the quarter was 12%, due in large part to the release of a valuation allowance associated with deferred tax assets that we now believe we will be able to utilize. Our full year ex special tax rate was 21%, in line with our full year expectations of 21% to 23%. Now let me share greater detail on our fourth quarter unit growth in the context of our Bold Restaurant Development growth driver. This quarter, we opened 1,830 gross new units, resulting in 4,560 gross units opened for the full year or the equivalent of more than 1 new restaurant every 2 hours. Nearly 90% of new store openings in 2022 occurred outside the United States across 112 countries, proof that our diversified development engine is stronger than ever. Starting with KFC, the team opened 997 gross new units in the fourth quarter with China, India and Thailand leading the charge. The Pizza Hut division had incredible development results, opening 571 gross new units in Q4 with 5 countries contributing more than 25 units, namely India, Indonesia, Canada, China and Turkey. The Taco Bell division opened 253 gross new units in Q4 and 496 restaurants for the full year. In fact, Taco Bell U.S. opened 250 gross new units this year, the second highest annual amount ever. For 2022, Taco Bell International set a record with 246 gross new units, exceeding the prior record of 179 units set last year. I'm thrilled to report we crossed the 1,000 Taco Bell unit threshold internationally and we soon expect to have 4 countries that have over 100 units with China joining Spain, India and the U.K. Lastly, Habit added 33 gross new units in 2022, representing a year-over-year growth rate of 10%. This level of growth, which includes a significant number of company-owned units create some short-term noise in company-owned restaurant margins due to the inclusion of preopening expenses and the depressed margins that are normal during the initial months of operations before new stores reach maturity. Average margins for Habit stores opened more than a year remain much stronger than our overall reported Habit company store margin. To finish with development, as we head into 2023, we remain confident that we will maintain our strong momentum. We exited 2022 with record site registrations for new units at Taco Bell U.S., and we have over 80% of 2023 planned units at KFC and Pizza Hut outside of China committed with well-capitalized, growth-ready franchise partners. Next, I'll discuss our unmatched operating capabilities and the 3 pillars of our digital strategy: Easy Experiences, Easy Operations and Easy Insights. I'll start with an update on our Easy Experiences pillar, which focuses on delivering seamless customer experiences through proprietary technology and dedicated operational programs. In 2022, we expanded the rollout of Tictuk, our conversational commerce and e-commerce platform across our network and finished the year with Tictuk in over 3,200 stores across 49 markets. We processed millions of digital orders in 2022 with Tictuk continuing to prove it can bring in incremental customers and drive digital sales. This is evidenced by the chat ordering launch in KFC Mexico where more than 90% of users who transacted on the chat channel had previously not placed a digital order on other channels. We plan to roll out Tictuk to more than 1,000 new stores in 2023, including its white label e-commerce platform, which went live in Pizza Hut Chile and Taco Bell Canada in Q4 2022. Moving on to our Easy Operations pillar, which centers on the team member and franchise partner experience. The rollout of Dragontail is ramping up in Pizza Hut U.S. with over 450 stores onboarded by the end of 2022 and plans to reach up to 1,000 stores by the end of Q1. Globally, we expect to have Dragontail in over 7,000 stores by the end of 2023. At Pizza Hut U.S., we have completed the integration of 2 major aggregator channels into our point-of-sale system. And at Taco Bell U.S., we have fully integrated our delivery as a service partner into our store's technology system. These integrations are important in helping our team members process delivery orders with new levels of ease. Lastly, I'll cover our Easy Insights pillar, which leverages the power of data and analytics to allow our teams to make smarter decisions. I want to highlight 2 key initiatives that our Yum! decision sciences team have been working on, namely Recommended Ordering and Cook Schedule. Recommended Ordering is an artificial intelligence, machine learning module that predicts and recommends the quantity of product for a restaurant manager to order each week with the goal of reducing product waste and intra-store transfers of inventory. The product has been rolled out to 3,000 U.S. stores across Taco Bell and KFC. Cook Schedule is a similar module that helps predict the correct amount of food and timing to cook product to accurately meet demand. The team is working primarily with KFC on this initiative with plans to pilot in an international market soon. Finally, I'll provide an update on our balance sheet and liquidity position. Our net leverage ratio ended the year at 5x, including a small balance on our revolving credit facility that was used to support share repurchases in the fourth quarter. We will enter 2023 with no significant maturities until 2026 and approximately 94% of our debt fixed, excluding our revolving credit facility balance. I will reiterate that our capital priorities are guided by maximizing shareholder value. This includes investing in the business, maintaining a resilient balance sheet, offering a competitive dividend and continuously evaluating the optimal use of our excess cash. To that end, I am also pleased to announce that this week, our Board of Directors approved an increased quarterly dividend of $0.605. Our capital expenditures for the quarter, net of refranchising proceeds, were $99 million. Our net capital expenditures for the year came in at $206 million, reflecting $73 million in refranchising proceeds and roughly $279 million in gross CapEx. With regard to our share buyback program, we repurchased 4.1 million shares in the quarter at an average share price of $119 per share, totaling approximately $486 million. For the full year, we repurchased 10 million shares at an average price of $119 per share and totaling $1.2 billion. Overall, we are extremely pleased with these results given the complexities our teams faced. Navigating such challenges with industry-leading performance affirms the confidence we have to deliver our recently raised long-term growth algorithm of 5% unit growth, 7% system sales growth and at least 8% core operating profit growth. Looking to 2023, we wanted to provide a few guardrails for modeling purposes. First, we expect to deliver on our long-term growth algorithm with healthy unit growth momentum continuing into 2023. We expect Taco Bell company operated margins to be in line with full year 2022 margins, and we expect our 2023 G&A to be approximately $1.15 billion, in line with the guidance provided at Investor Day. In terms of the shape for the year, the year-over-year growth in G&A will be highest in the first half, largely owing to the timing of our G&A expense plan across the year. Based on rate expectations as of today, we expect our interest expense to be up approximately 10% year-over-year and for our leverage ratio to drift modestly lower in 2023. Finally, we expect our full year tax rate to be 21% to 23%. To close, we are extremely proud of the performance of our brands over the past year and look forward with excitement to deliver another year of compelling growth and shareholder value in 2023. With that, operator, we are ready to take any questions. Operator: [Operator Instructions]. Our first question comes from David Tarantino of Baird. David Tarantino: My question is about the profit outlook for 2023. And I was wondering how you're thinking about the puts and takes related to potential upside or offsetting factors. And in particular, I was curious about the China business. It seems like there's potential for China to recover and be additive to your overall profit algorithm for this year. And I was curious to get your view on whether that would be an upside lever or you would think about potential offsets to that factor for this year. Christopher Turner: Yes. David, thanks. Good question. As we look forward to next year and beyond, we're still confident in the future. As we shared at Investor Day with the raised algorithm, we feel confident in the trajectory of the business and nothing has changed in that outlook as we come into 2023. As you mentioned, the China component of our sales, you heard Yum China talk last night about being cautiously optimistic. So we'll continue to work with them. But in the long run, we are very bullish on the China market as it comes out of COVID, but of course, the timing of that is uncertain as they shared on the call last night. Of course, to the extent that we have rebound in that China sales, it does come at a lower royalty rate as you factor that into the plan for the year. The other elements, I think, are in line with the -- with what we shared in the algorithm. You heard the guidance that we shared on G&A for next year. And so our focus is on driving that growth. And of course, every day, it's our mission to come in and over deliver on that algorithm if we can. Operator: Our next question comes from Dennis Geiger of UBS. Dennis Geiger: Thanks, Chris, for that color on G&A for the year. Helpful. Wondering, David or Chris, if you could speak just a bit more to the strength that you're seeing from a sales momentum perspective globally and the resilience really across the brands in the current macro, and how that guides sort of how you're thinking about 2023 if consumer pressure increases. I mean strength at Taco Bell, KFC non-China, International, Pizza Hut U.S. even momentum building. Just any additional color given the last several month's momentum for how you think about '23, particularly if globally, the macro situation gets worse. David Gibbs: Yes. Strength is a good word, Dennis, and it really was widespread, as you mentioned. We feel great about the fact that all of our brands are really on a roll right now. You saw that in the results for the quarter. And the consumer environment, much like my comments last quarter, remains a positive environment for us generally globally. Obviously, there are pockets of challenges when you have things like lockdowns in China last year, but that flips to be a more -- potentially a positive for this year. But the consumer in the U.S., on the high end, we're actually seeing more frequency from that consumer, and we're seeing possibly driven by a little trade down into our brands, which is all good. And then on the lower end, as I mentioned last quarter, consumers are starting -- there's a little bit more interest in value, which our brands are perfectly positioned to deliver on. You're seeing that with our menu offerings. Taco Bell with the Cravings Menu and $2 burritos, the new Melts product at Pizza Hut, which is screaming value. KFC just rolled out wraps as you guys are probably aware of at a great value price point. So I think the environment sets up well for us. From a consumer demand standpoint, more of the same. And then on the labor side, we're seeing an increase in applications, stores returning to their pre-COVID operating hours, which is great that we're able to staff the stores now appropriately. So when you mix it all together, we like the environment we're in. I also saw some data about grocery inflation in December being pretty high. So I think relative to alternatives, we're still a very attractive option. Operator: Our next question comes from Andrew Charles of Cowen. Andrew Charles: Great. David, a little bit of segue to my question. Can you talk about your philosophy for how you plan to balance pricing versus value for Taco Bell U.S. in 2023? If I recall from the Investor Day, you tend to take most of the price on new menu innovation as largely premium. I was wondering for way to perhaps get more aggressive on value, if you need it, while preserving the strong margins the brand has reached. And perhaps you can just remind us as well what was the level of pricing for Taco Bell U.S. in 4Q as well? David Gibbs: As far as Taco Bell and the amazing job that they do, segmenting their consumers and providing each consumer what they want. That's what we talked about at Investor Day. And obviously, Taco Bell has some amazing value offerings that have been in their menu now for quite some time, on the Cravings Value Menu. But it doesn't -- it's targeted to a certain set of consumers and halos the entire business. So as the environment gets more competitive, we're already in the value game at Taco Bell, and we're already doing a great job. I don't see us changing anything. Well, we're connecting and we're winning because of value. That's why you saw the great numbers that we just put up in the quarter. But the brand with amazing margins, steady year-over-year, just has all the tools at its disposal to navigate any kind of environment and deliver great margins, great top line sales growth and a great proposition to consumers. Operator: Our next question comes from David Palmer of Evercore. David Palmer: Congrats on the very strong unit growth. I wonder how you're thinking about EBIT margin over time. In 2022, it was 32%. And it's been near 35% before, but business mix is always changing. I wonder though, how you think about that margin over time. Do you think you could get back to 35% or so in the next few years? And I'm thinking about certain flow through like a China license fee recovery could be very good incremental margins. And so I'm just wondering how you're thinking about the potential for that EBIT margin. Christopher Turner: Yes. Thanks, David. I think in general, we focus on delivering the algorithm and the profit growth that's embedded there. If you think about puts and takes on EBIT margin, obviously, from a core operating profit standpoint, you do have to consider the royalty rate mix. I mentioned earlier, to the extent if any of our lower royalty rate markets were to grow faster than the others, you have to take that into the account in the modeling. We did talk about at Investor Day, our philosophy on G&A and how we're going to have a lower G&A growth rate going into next year than we've had the last few years. So we're going to be managing that carefully in 2023. And then of course, when you go to reported profit -- reported operating profit, you have to take into account FX. And FX was a headwind this past year. Pretty hard to predict. Nobody has the crystal ball on that. I will share that right now, as we look to 2023, FX will continue to be a headwind for us based on our current estimates, primarily in the first half. But we think on a full year basis, our best estimate is between a $30 million to $40 million headwind going into the year. We'll continue to update that as things change. So it's our push to drive the strong profit growth implied in the algorithm, and that's where we're focused. Operator: Our next question comes from Jon Tower of Citigroup. Jon Tower: Just two quick ones. G&A came in a bit higher than I think guidance had -- or you guys have been targeting for guidance. I just wanted to confirm, maybe there were some one-timers in there. Is there something else that might have hit that line? And then outside of that, we heard from another number of other operators that 2023 started off on some strong footing in the U.S. and frankly, across the globe. So I guess I'm asking if there's any reason to believe that Yum!'s brands wouldn't have been participating in that strength globally. Christopher Turner: Yes. First, on G&A in Q4, we had reported G&A of $1.140 billion but that included special expense. We had approximately $20 million in special expense. So we landed broadly in line with our full year plan, a little bit to the high end of our planned range. There were a number of small items, none of them major, but I'll give you 1 example. As we had to split out the Russia business to prepare for sale, we lost some of the fixed cost leverage in our European G&A. But again, going into next year, as I mentioned earlier, the philosophy that we shared at the Investor Day still holds. We are focused on having a lean G&A model while investing in the things that drive long-term growth and health and we'll have a lower G&A growth rate into 2023. In terms of how 2023 is shaping up, as I said earlier, there's nothing that we're seeing at the start of the year that dampens our confidence in delivering our long-term growth algorithm this year and beyond. Operator: Our next question comes from John Ivankoe of JPMorgan. John Ivankoe: I was looking for a little bit -- a more detailed color in terms of what's happening at a consumption level in some of your major markets between your dine-in or in-store type of traffic, delivery traffic. Are you actually seeing consumers trade down in your opinion to your brand? Are you seeing your core customers come more often? Is there any slippage at all on the lower income consumer? Just kind of, I guess, a little bit more color in terms of -- I know it's always hard talking about a big global business with 3 and now 4 brands, but if there's anything that you can really provide some more detail in terms of what's going on below what's obviously very good aggregated results. David Gibbs: Yes. Thanks, John. It is hard to talk about a business where we have 290 different brand country combinations versus 290 different stores. But in general -- we obviously saw a shift to off-premise consumption during the pandemic. We've seen some of our on-premise consumption come back, but really for none of our brands is back to where we were, which isn't a bad thing given the efficiency of operating an off-premise model. Our ability with new unit development to build slightly smaller stores that are more efficient with better returns for franchisees. As far as the consumer, I've mentioned this earlier, but I'll -- it does depend -- if we're looking at the U.S. or other developed markets, the environment is still positive, just very similar to what we saw last quarter. We are seeing some increase in our higher-frequency customers -- or higher income customers coming more frequently. And some of that is no doubt due to trade down into our brands. On the lower end, we're not seeing the low-income consumer drop out of our business. What we're seeing is probably a little bit more focus on value, and that's been the trend, that's been continuing throughout 2022 into 2023. And we're there for them with our brands with perfect offerings for them. And in emerging markets, obviously, earlier in the pandemic were a challenge. They've come back now and our emerging developed markets are performing roughly similar around the world. Gavin Felder: Operator, we have time for one more question. Operator: Our final question of today comes from Gregory Francfort of Guggenheim. Gregory Francfort: I just want to ask about Pizza Hut U.S. I mean it seems like the business has picked up the last few quarters. And I'm curious if you're seeing share gains or increased pricing. Or just -- any thoughts on what's going on there would be helpful. David Gibbs: Yes. I'm glad you asked about Pizza Hut U.S. We're really proud of what the team is doing and the success they had in the quarter and the momentum they're building in the business. I know the franchisees and the team are working incredibly collaboratively. And I do believe getting share gains in the category and attracting new consumers. They're doing that a couple of different ways. Number one, how they're playing aggregators with the partnerships with the aggregators and how we've integrated into our IT systems, we're seeing a significant lift in our transactions with aggregators. We started the year with about 5 transactions per store through aggregators. Now we're up to close to 50 by the end of the year. That's a massive progress and obviously, helping us access some consumers that weren't using the brand. But it's also the look tone and feel of the advertising. You'll notice that that's changed. It's a much more modern contemporary approach, which is connecting well with consumers. And then finally, it all comes down to the product. The launch of Melts has been very successful for the brand, attracting younger consumers to different occasions than would traditionally use Pizza Hut. So that all adds up to a very positive story for the Pizza Hut U.S. business. And thank you for the question. I think with that, we'll wrap it up. And I think the numbers speak for themselves. It was another incredible quarter and wrapping up a great year despite many challenges. I'll point out, we actually closed the year with over 4,500 gross new units being built. Take the 4,100 we built last year, that's 8,600 gross new units. That means 1 out of every 6 locations you see around the world was built in the last 2 years for our brands. I think that shows the momentum that we've got in the business. Our Yum China team talked about the great returns they're getting from their new unit development last year, coupled with the top line growth that we're seeing in existing stores, and there's a lot to be excited about as we head into 2023. Thank you for your time today. Operator: Ladies and gentlemen, thank you for joining today's call. You may now disconnect your lines.

Operator: Hello, everybody, and welcome to today's Yum! Brands, Inc. 2022 Third Quarter Earnings Call. My name is Drew, and I'll be coordinating your call today. [Operator Instructions] I'm now going to hand over to Gavin Felder, Chief Strategy Officer and Interim Head of Investor Relations to begin. Please go ahead. Gavin Felder: Thanks, operator. Good morning, everyone, and thank you for joining us. As a reminder, I will be covering from Jodi Dyer while she is out on maternity leave. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, I would like to remind you that this conference call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this announcement and 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 our earnings releases and relevant sections of our filings with the SEC to find disclosures and definitions of non-GAAP financial measures and other metrics that may be used on today's call as well as reconciliations of non-GAAP financial measures. Please note that during today's call, full system sales growth and operating profit growth results exclude the impact of foreign currency. Next, I'll provide an update on the financial reporting treatment related to our exit from Russia. As a reminder, as of the beginning of the second quarter, we elected to remove the Russia business from key performance metrics. This negatively impacted our third quarter unit growth by two percentage points and our system sales growth by three percentage points. Additionally, these units were removed from our same-store sales calculations and thus do not impact same-store sales results for the third quarter. For the purposes of this call, all references to system sales growth and unit growth results for the quarter are adjusted to remove our Russia business from the prior year base. We continue to include Russia in GAAP measures for KFC, including royalty revenue and expenses to support the Russia business and expenses incurred relating to the transfer of ownership of the business. As a result of our decision to exit our Russia business, we have reclassed net operating profits from the operating segments subsequent to the start of the conflict to corporate and unallocated and reflected as a special item within the other income and expense line. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are 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 about our live conference and in any future use of the recording. We would like to make you aware of upcoming Yum! investor events and following. Disclosures pertaining to outstanding debt in our restricted group capital structure will be provided at the time of our Form 10-Q filing. We will be hosting an Investor Day in person on Tuesday, December 13, 2022 at the New York Stock Exchange. The event will also be webcast via our website at investors.yum.com. Fourth quarter earnings will be released on February 8, 2023, with the conference call on the same day. Now I'd like to turn the call over to David Gibbs. David Gibbs: Thank you, Gavin, and good morning, everyone. Our strong top line momentum this quarter highlights clear demand for our iconic brands. We delivered 10% system sales growth underpinned by 5% same-store sales growth and 6% unit growth. While the broader macro environment evolves, our brands continue to thrive by being distinctive, creating excitement for consumers and by delivering exceptional value and convenience. The investments we have made in areas such as consumer insights, marketing analytics, and new technology platforms allow us to act with pace and confidence to meet the needs of consumers around the world. I'm particularly thrilled about the performance of the KFC and Taco Bell division that were both standout performers this quarter. KFC did an excellent job in driving transaction growth through its omnichannel approach, leading to a sequential improvement in comps from the prior quarter. Taco Bell is winning, thanks to its ability to generate and amplify standout moments in culture and translate the resulting top line growth into impressive restaurant-level margins. I'm also excited to share that we opened a total of 979 gross units across 74 countries, proof that our development engine is powerful and diversified. As these results show, our committed and well-capitalized franchise partners are seeing opportunities to invest in the growth of our brands for the long term. Next, I want to provide an update on our Russian business. As Gavin mentioned, we have a signed purchase agreement to transfer ownership of our Russian KFC restaurants, operating system and master franchise rights to an existing KFC Russia franchisee. Following the completion of the transaction, we will have ceased our corporate presence in Russia. I want to say that I'm incredibly proud of how our local teams have managed through this extremely difficult time and prioritized the safety of our people in the region. Our number one priority is our people, and they will always be at the center of every decision we make. Now I'll talk about two of our growth drivers; our Relevant, Easy and Distinctive Brands, or RED for short, and our unrivaled culture and talent. Then I'll provide an update on our Recipe for Good. Chris will share the details of our third quarter financial results before discussing our bold restaurant development and unmatched operating capabilities growth drivers. First, I'll discuss our RED brands. Beginning with the KFC division, which accounts for 51% of our operating cost. System sales grew 12%, underpinned by 7% same-store sales growth and 7% unit growth. As these results prove this business can perform well in a multitude of environments, even as certain pockets of the local portfolio that experience tightened macro pressures. At KFC's International business, which represents 46% of our operating profit, our system sales grew 14%, driven by an 8% increase in same-store sales. This represents a significant acceleration from the 1% same-store sales growth in the second quarter. We saw notable strength in the Middle East, India and Africa, thanks to momentum across our digital channels and a focus on operations and value. Our Middle East market is truly on fire, where system sales grew an impressive 46% with strength across all channels, including a ramp-up in the use of kiosks and Click & Collect. Our India market saw system sales grow 45% during the quarter with customers enjoying the convenience-driven 7-minute Express takeaway guarantee. In Africa, where system sales grew 31%. The team is focused on providing an easy and convenient digital experience for consumers. They've done an outstanding job rebranding their Click & Collect channel, as well as rolling out kiosks across the market to drive sales, underpinned by talent sharing offers like the all-in-one fees. At KFC US, we brought back our famous $5 Mac & Cheese bowls as a value-oriented item this quarter. The reboot of this much lost product helps drive a positive 2% same-store sales comp. Additionally, for a limited time, we launched a $6, two-piece drum and thigh, which has driven positive results in a meaningful sequential improvement in transactions. Moving on to our Taco Bell division, which represents 34% of our operating profit. We saw extremely strong momentum with system sales growing 9%, led by 6% same-store sales growth and 5% unit growth. At Taco Bell US, system sales grew 8% for the quarter, undermined by a 7% same-store sales growth and 2% unit growth. The brand is bringing to life is one-of-a-kind venue through creative innovation in a way that only Taco Bell can. This was most evident with the team adding products to its $2 creating menu, such as the Cheesy BB Burrito, while innovating with premium offers like the grilled cheese burrito. Taco Bell is a brand is truly relevant, easy and distinctive with the unique ability to stand for value with the current economic environment, you have a broad enough range to appeal to consumers across every demograph. As we enter the fourth quarter, we're even more excited about the momentum in Taco Bell US with the relaunch of the Mexican pizza, which occurred in mid-September. At Taco Bell International, system sales grew 26%, driven by 30% unit growth and 5% same-store sales growth. In the third quarter, five markets delivered double-digit system sales growth, marking another milestone in Taco Bell's international expansion journey. Year-to-date, we've opened 111 net new units, almost double the number opened at this point last year. We're driving scale in key markets, helping our franchisees leverage their size to optimize marketing spend, expand development capabilities and gain local sourcing efficiencies. Next, at the Pizza Hut division, which accounts for 15% of our operating profit, our system sales grew 5%, led by 5% unit growth and 1% same-store sales growth. At Pizza Hut International, which accounts for 8% of our operating profit, system sales grew 6%, underpinned by 8% unit growth and 2% same-store sales growth. Across our markets, we are focused on finding ways to expand our reach to become a more everyday brand. For example, as a leading everyday value offering, the Pizza Hut India team launched a fun flavor pizza costing roughly $1. More broadly, the My Box value platform is proving to be a key traffic driver through innovation and giving customers the option to customize with new entrees and sides. The platform helps us lean in on the individual meal and [indiscernible] and is now live in over 50 countries. I'm also pleased to say that our emerging markets are seeing a recovery in traffic and demand, as we lap the impact of COVID. Pizza Hut US, which accounts for 7% of our operating profit, saw system sales growth 2%, driven by 1% same-store sales growth. A key focus for this business has been to provide our customers with the ability to access our brands wherever they are. As part of this initiative, we continue to partner with third-party aggregators and integrate them into our POS systems with 90% of our system using at least one-third party marketplace. In addition, we are working to ensure we have the right value offerings to meet consumer demand and maintain franchisee profitability. This effort led to the introduction of items such as the $6.99 medium one topic Pairs deal and the return of the Big Dinner Box as an abundant family value offering. Lastly, as the Habit Burger Grill, same-store sales trends on a three-year basis have sequentially improved since the second quarter. Additionally, we continue to see consumers download our mobile app, leading to a 10% increase in app downloads since last quarter. Digital sales at the Habit now account for 33% of mix. The team is making good progress, growing new sales channels and forming direct relationship with our customers. Moving on to our unrivaled culture and talent growth driver front. As we've mentioned on previous calls, we have been celebrating our 25th anniversary as a publicly-traded company in various forms throughout this year. I'd like to acknowledge the important role our unique people-first culture and world-class talent have played in our success over the last 25 years. Our culture, which is focused on recognition and collaboration, is a key differentiator across our portfolio of iconic brands. It continues to drive retention and recruitment of amazing leaders who are developing others, growing their careers and ensuring the continued strong performance and success of our brand. I'm proud of Yum!'s deep bench of outstanding leaders and how our commitment to growing our people from within has driven a healthy increase in promotions and new opportunities for our teams. Our culture continues to attract top external talent as well. We recently welcomed former Mars Inc. Executive, Allyson Park, to our global leadership team as Yum!'s Chief Corporate Affairs Officer, overseeing communications and public policy as well as our ESG strategy, an area of increased importance as we continue driving our recipe for good. At Pizza Hut, we welcomed former Starbucks executives Shannon Garcia as the brand's Global Chief Operating and Transformation Officer, a role that will evolve the way in which the brand works with its markets to add value and operate with a digital-first mindset. These are just two examples of the incredible talent that our culture enables us to attract from outside and within our industry. When it comes to our Recipe for Good, we continue to invest in critical work that's focused on our three priority areas of people, food and planet. I'm proud of our commitment and the progress we're making on the execution of our ESG jet. For example, when it comes to our climate efforts, we moved Yum!'s US offices as well as all of our company-owned restaurants to renewable electricity. We're now conducting a global study on renewable energy markets to identify low-carbon solutions at our restaurants worldwide. And in August, Pizza Hut US announced an exciting partnership with Dairy Farmers of America on an innovative farm-level sustainability project to provide participating farmers with the technology and data needed to help reduce greenhouse gas emissions. With iconic brands and unmatched scale, I truly believe that we're in a unique position to make a significant impact in the areas we are prioritized. To wrap up, I'm excited about the momentum in the business that we demonstrated this quarter. The power and resilience of our brands was clear as we continue to prove we can perform well in any environment. With our diversified global scale, world-class franchise partners and unmatched operating capabilities, I am more confident than ever in the future success of our business. With that, Chris, over to you. Chris Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers, followed by our capital strategy. I'll begin with our third quarter financial results. System sales grew 10%, with broad-based strength evident across our portfolio. Same-store sales grew 5%, while units grew 6%. Core operating profit grew 8%, which includes a 3-point headwind from the removal of Russia profits this year. Ex-special general and administrative expenses came in at $259 million, tracking in line with our expectations for $1.1 billion of G&A expense for fiscal 2022. Impressively, our Taco Bell store level margins were 24% trending above third quarter last year and above pre-COVID levels. With respect to reported operating profit, FX had a negative $39 million impact and we now expect a full year FX headwind of approximately $100 million. Third quarter EPS, excluding special items was $1.09, an 11% decrease versus the prior year. In addition to a three percentage point impact from foregone operating profits in Russia, EPS growth was also negatively impacted by nine percentage points from the aforementioned FX, nine percentage points owing to a higher tax rate and six percentage points from lower year-over-year unrealized gains associated with our investment in Devyani. Our next special tax rate this quarter was higher than usual at just under 27%, largely due to adjustments recorded in the quarter associated with prior year taxes. Given these adjustments, we now expect our full year tax rate to land between 23% and 24%. Overall, given the same strength of our global business, we continue to expect to grow core operating profit in the mid single-digit range for the full year. As we mentioned on the past two quarterly calls, whereas not for the loss of Russian profits, we would expect core operating profit growth to be high single-digits this year, in line with our long-term growth outlook. Now let me share some more detail on unit growth and our bold restaurant development growth driver. This quarter, we opened 979 gross new units with encouraging momentum across our brand portfolio. At KFC, we opened 485 gross new units with China, India, the Middle East and Thailand leading the charts. Our Pizza Hut International division saw incredible development progress this quarter, opening 344 gross new units, setting a third quarter development record. This puts Pizza Hut International's year-to-date gross openings at 879 units, which is 280 units ahead of this time last year. China, India and Turkey led Pizza Hut development with each market adding more than 30 gross new units. The Taco Bell division opened 98 gross new units this quarter, led by strong international development, achieving a Q3 record of over 50 gross new units. For Taco Bell International, I'm excited to share that this quarter, both the India and UK markets joined Spain in the ranks of countries that now exceed 100 units. While Taco Bell US development remains robust, we expect international development to lead Taco Bell's unit growth this year. Despite the uneven macro pressures across our markets, our development remains strong as our franchisees use market disruptions as opportunities to grow. We are partnering closely with our franchisees to navigate challenges in the supply chain and higher construction costs. We are leveraging both our sourcing expertise and scale to secure equipment and realize favorable pricing on key items. Our teams are highly focused on balancing long-term profitability for our franchisees and offering value for our customers. With the power of our well-capitalized and committed franchise system and the unique global scale we have at Yum!, we remain confident in our ability to grow in any economic environment. Next, I'll discuss our unmatched operating capabilities and the three pillars of our digital strategy, easy experiences, easy operations and easy insights. I'll start with an update on our easy experiences pillar, which focuses on delivering exceptional customer experiences through technology and dedicated operational programs. QSR Magazine ranked Taco Bell and KFC in the top 3 for fastest in drive-thru times the US. In fact, Taco Bell drive-thru times were 9 seconds faster year-over-year. KFC division kiosk sales also stood out this quarter with a more than 40% increase in sales year-over-year and 6% system sales mix, an impressive result considering that only 15% of KFC restaurants currently have kiosks. We are also encouraged that the TikTuk platform is expanding beyond chat ordering with its e-commerce engine with a front and backend website and mobile app that is serving some of our smaller international countries. We recently went live with TikTuk's e-commerce engine in KFC Mexico and saw an increase in conversion rates post launch. We expect TikTuk's e-commerce engine will be live in 18 countries by year-end. Moving on to our easy operations pillar, that centers on the team member and franchise partner experience. We completed the integration of our second delivery aggregator into the Pizza Hut US system this quarter, building on our initiative to partner with third-party aggregators and provide our customers with more options to access our brands. Further adoption of third-party aggregators for delivery as a service has also helped ensure that we can meet customer expectations during peak delivery hours and save valuable time for our team members who can then spend more time elevating the customer experience. Additionally, the global rollout of Dragontail's Smart kitchen management and driver tracking system continues to progress at an impressive rate. Lastly, I'll cover our easy insights pillar, which leverages the power of data and analytics to allow our teams to make smarter decisions. Quantum, the marketing analytics company, we acquired last year continues to roll out to markets around the world. We are now leveraging Quantum's media optimization platform across nearly 60 brand-country combinations, covering more than 60% of our system sales. Notably, Pizza Hut Australia has seen a double-digit increase in return on media spend after deploying Quantum's advanced media mix analytics platform. Our brand teams are also using Quantum's expanded suite of tools in areas such as customer analytics, pricing optimization and market intelligence. Next, I'll provide an update on our balance sheet and liquidity position. Our net leverage ratio ended the quarter at 5x, despite the exclusion of our Russia business. Though capital markets continue to adjust the higher interest rates, we are proud of the work our treasury team has done to put us in the enviable position of having no significant maturities over the next three years and approximately 94% of our debt fixed. As we've said before, our capital priorities remain consistent: invest in the business, maintain a healthy balance sheet, pay a competitive dividend and returning the remaining excess cash to shareholders via share repurchases. Our capital expenditures for the quarter, net of refranchising proceeds were $51 million. Our full year expectation for net capital expenditures is now approximately $200 million, reflecting $5 0 million in refranchising proceeds and roughly $250 million in gross CapEx. With regard to our share buyback program, we repurchased 1.4 million shares in the quarter at an average share price of $116 per share, totaling approximately $157 million. Additionally, during September, the Board of Directors approved a new share repurchase authorization of up to $2 billion through June 30, 2024, that will take effect upon exhaustion of the current authorization. To close, I'm excited about the continued growth we saw this quarter and the momentum in our diversified development across the portfolio. This once again shows that our iconic brands and world-class franchise partners are well positioned to navigate any economic environment. Before wrapping up, I'd like to remind everyone that our Investor Day is taking place in person at the New York Stock Exchange on December 13. We look forward to seeing you then. With that, operator, we are ready to take any questions. Operator: Thank you. We will now start today's Q&A session. [Operator Instructions] Our first question today comes from Dennis Geiger from UBS. Your line is now open. Dennis Geiger: Great. Thanks for the question. I wanted to ask about the strength in the US business and maybe David or Chris, could you talk a little bit more about what you're seeing across the brands in the US? What you're seeing from a consumer behavior standpoint? And I guess really, how that guides how you're thinking about the resiliency of the brands in the US going forward. Thank you. David Gibbs: Yes. From a consumer standpoint, obviously, you saw the top line results we reported this quarter. We're very pleased with them. They're very strong. So, generally around the world, we're not seeing any concerns from a consumer standpoint. Then, if you dig deeper into what's going on in the US, it's been well documented that there's a little bit of a K-shaped recovery. And we're seeing a little bit of that. We're higher in consumers having a little bit more demand. But the great thing about our business is our brands are so well positioned to succeed in any environment. And in particular, our business is 80% globally based on Taco Bell US and KFC International. Those two businesses make up 80% of our profit. They're incredibly well positioned to deliver value to consumers and with appealing brands. So in the US, this K-shaped recovery, there's a little bit of K-shaped demand for value on the high end. The demand is more for premium value. That's why you're seeing us do things like the Double Stay Grill Cheese Burrito at Taco Bell, which is at a higher price point than normal, but still a great value and a big part of our success in Taco Bell. And then on the low end, in Q3, KFC go back to Mac and Cheese bowls with some success that moves the needle. So, that's value offering, but at a price point that's appealing to a line consumer, but still not just discounting our core product, something interesting that consumers are [indiscernible]. Cravings menu in Taco Bell, the same thing, where we're offering burrito for $2. As far as the consumer environment for us and our industry and for our brands, which are particularly well suited to navigate, it looks good. Now, I know in other industries like in other parts of retail, if you bought some furniture a couple of years ago, you probably pulled your demand forward and that they're not going to have the same demand today. We don't have that issue in our industry because if you bought lunch two years ago, that's not influencing your decision today. And your decision today is more determined by how we stack up versus your options. We know that we're a really attractive option versus grocery, which is experiencing a lot of inflation. So this is a good environment for us. Operator: Our next question today comes from John Glass from Morgan Stanley. Please go ahead. Q – John Glass: Good morning. Chris and David, is 6% unit growth, the new 5%? I guess I'm thinking about durability of that growth rate as you think out and just remind us one, when you think about sort of targets for growth rate, what's the time horizon? Ultimately, the base effect of large numbers catches up with such a large system. So is it a three-year target, five-year? How do you sort of frame that internally? And Chris, can you also just talk about cost of capital, cost of debt has gone up. Is that a worrisome impediment to growth over the immediate term as the rate environment changes? Thanks. A – David Gibbs: Thanks, John. I'll take the first part of that and then let Chris talk about some of the capital issues out there. Look, I don't think the law of large numbers. If we're anything close to catching up on that and ours, we continue to put up impressive development numbers. You saw this -- the numbers this quarter and our year-to-date numbers today are roughly in line with what we had last year at this time, showing -- which was a record for us and for the industry, we believe, showing the strength of our development, and it is broad-based. The amount of development that's occurring outside of China continues to climb nearly 60% now, and that's in 74 countries last quarter. So this is broad-based. We think we have tons of opportunities around the world for all the foundational reasons you would want. The returns that our franchisees are getting are strong. Taco Bell, being voted the best franchise opportunity out of the 500 that are ranked in the US. And then Yum! China, I think last night on their earnings call talked about the great two-year KFC paybacks and three-year Pizza Hut payback. So with those kind of returns, we're going to continue development. We have visibility into the pipeline and we feel good about it despite all the challenges in the environment. As far as the pace of development, we're pleased with the strength that we have and even in the face of losing the development that we had in Russia. So the development story is good, and we know it's a big part of Yum!'s growth equation going forward. I'll turn it over to Chris, just for a few comments on the capital challenges. A – Chris Turner: Yeah. So John, on the capital side, I'll take it in two buckets. One, just following up on David's comments around franchisees and unit development. Just a couple of additional thoughts there as it relates to capital. David mentioned in many of our markets around the globe, we had very strong returns that are significantly higher than interest rates or even with small moves in interest rates. These are still highly attractive investments for our franchisees to make. And keep in mind that our franchisees on average compared to many other systems are larger, more sophisticated, more well-capitalized and more growth-minded. They're able to look through near-term noise in the market and actually take advantage of these types of disruptions in the marketplace to accelerate their growth. And so we're very pleased with the state of our franchisee base and our partnership with our franchisees, plus we have the strongest development team in the business. So we're working with them to navigate through that, but we feel good. In terms of cost of capital, for our balance sheet, our balance sheet at Yum! remained strong and very resilient. I think we proved that as we navigated the last few years. We're proud of the cash that we return to our shareholders. And we're set up well right now in this higher interest rate environment. We have no maturities, as we mentioned earlier, through 2026. 94% of our debt is fixed. We've also, over the last few years, created more capacity in some of the lower cost areas of our capital structure that we could access if needed. Right now, we're at five times leverage. But to be clear, going forward, we're not wedded to five times leverage. We're going to do what optimizes returns for our shareholders. We review our strategy regularly with the Board. So when it comes time, the next time that we would consider issuing debt, we'll look at where rates are at that time, we'll look at a set of other factors, and we'll make a decision on when the issue or whether to grow into a slightly lower leverage ratio. But just know, we're going to do what optimizes returns for our shareholders. Operator: Our next question is from John Ivankoe from JPMorgan. Please go ahead. John Ivankoe: Hi. Thank you. Also a capital question, if I may. Obviously, there's a lot of focus on new unit development as there should be. Clearly, the same-store sales around the world, particularly KFC International really does support underlying franchise system that should. And I'm sure is doing very well. But the question is on the existing base of assets, especially the existing base of assets that might be 10-plus years old. I mean just how the overall system is from a capital perspective, are there any major projects that are happening in some major countries around the world that maybe we just haven't heard about? And does it make sense? Would it make sense for Yum! to co-invest with its franchise system around the world. Obviously, we all see the US, but you have a lot of big countries around the world where maybe putting some capital in the existing base of assets could be something that could drive longer-term brand value and shareholder value as well? Thanks. Chris Turner: Yes, a good question on the existing asset base. We're -- as we just discussed, a tremendous unit grower, but we also want to make sure that our current asset base remains fresh and relevant provides a great experience for our customers. Of course, whenever you're growing at 6% units. Every year, that's a new chunk of new stores that are being added to the system. Plus we have programs with our franchisees where they got requirements around remodeling and keeping the asset base fresh. In terms of the responsibility for that, that lies with our franchisees. And it's part of their approach to being in our business, investing in stores. They know they've got to make investments over time to continue to keep the asset base refreshed, and our brands are working hard with the franchisees to do that. Operator: Our next question comes from Jon Tower from Yum! [ph]. Your line is now open. Unidentified Analyst: Hey, this is Jon. How is it going? Just a quick question. We heard from one of your larger global competitors about the need to potentially offer franchisee relief to some of their partners in Europe over the next, say, 12 months or so. The picture is kind of reminiscent of what we heard during COVID times due to the inflationary pressures in that market. So I'm curious to learn what you're hearing from your operators in that market and what they're doing to price for the potential volatility ahead? And frankly, maybe if you could even frame your own operating profit exposure to that region, that would be helpful as well. Chris Turner: Yes. So obviously, in Europe, right now, there are some challenges, particularly on energy inflation, they're facing, our franchisees. Europe is an important growth market for us in the long run. We have meaningful but moderate exposure in the context of our global portfolio. Europe as a geography, is about mid-teens percentage of our sales and our operating profit. The business continues to be strong from a top line perspective there. If you look at KFC Europe, we had 25% system sales growth in Q3. Now the UK was a little bit of a different story where those energy inflation is a bit more pronounced, and you've got that holiday overlaps continuing throughout the year. So we had slight negative sales there. Same thing in the Pizza Hut business, strong in other parts, UK a bit more impacted, but we are working closely with our franchisees. We know this is going to be a challenge for them to navigate. And we manage the business on a franchisee-by-franchisee basis. So our teams in Europe are partnering with them setting the commercial plans for the business to help navigate those inflationary challenges. Operator: Our next question is from David Tarantino from Baird. Please go ahead. David Tarantino: Hi good morning. My question really is about the sales strength you saw for both KFC and Pizza Hut, especially when you factor out China. You saw a pretty material acceleration in the comps relative to pre-COVID levels. So I guess, on a three-year comp basis, a pretty big step-up. And I wonder if you could just talk about what you think drove that step up from the second quarter and how sustainable that trend might be? Thanks. David Gibbs: Yes. Thanks, David. I'll just comment on a couple of things. And of course, in the speech, I already mentioned the foundational things that are driving our business that will continue to drive it this quarter and in future quarters. Like the progress that we're making on technology and digital. But beyond that, I guess what I would highlight is outside the US, while we had good growth in both developed and emerging markets. Our emerging markets are really starting to perform strongly. We were plus 20 in emerging markets outside the US ex-China. So that was a big driver and that was expected. We talked about this on previous calls that as these markets recover from COVID, we expected outside growth. The really encouraging thing about that is that's actually plus 16% versus 2019. So not just a recovery but real growth versus the 2019 baseline and then in the US, obviously, Taco Bell has been a steady high performer, but KFC, I think did a better job on value with the Mac & Cheese Bowl this quarter. Pizza Hut, as we've talked about in previous quarters, has done – has made progress on embracing third-party aggregators to solve some of that delivery challenge. So, we saw a meaningful improvement in their trends on delivery sales. So that all added up to as you mentioned, good strong growth around the world. Operator: Our next question is from Andrew Charles from Cowen. Please go ahead. Andrew Charles: Great. Across the US portfolio, you guys are obviously leading to the value across all three brands. And I'm curious how you see the industry evolving as we look at the end of 2022 and into early 2023. Do you expect the domestic quick service industries focused on value to further intensive buy and a difficult traffic backdrop or do you think value activity is going to be challenged by just the high COGS and robust labor backdrop? David Gibbs: Yes. Look, it's hard to predict anything over the last few years in this environment. The one thing that I can predict though, is our brands are incredibly well positioned to navigate any environment. We've demonstrated that over the last few years, and I feel confident as we move forward. Value does seem to be more of a factor today than it might have been six or nine months ago. And that's just more of a return to normal for the industry, rather than it is an exaggerated emphasis on value. But as I mentioned in my earlier comments, the scale that we have, our purchasing ability, the appeal of our brands, the fact that the vast majority of our business is at Taco Bell US and KFC International piece, that are so strong and so successful at navigating that give us great confidence that we will be able to continue to thrive in any environment. And there is a little bit more of an emphasis on this premium value, which is good for the industry where without products that aren't at the absolute lowest price can still be very appealing to consumers as long as the overall equation, the experience, the convenience, the credibility of the food is all there. Gavin Felder: Operator, we have time for one more question. Operator: Our last question today will be from David Palmer from Evercore. Please go ahead. David Palmer: Thanks. Question on Pizza Hut US. What have been the learnings with regard to third-party delivery marketplaces and drivers as a service, the contribution to growth from that, but also, what concerns did you have going into it with your franchisees? And how has it played out versus your plan? And then related to the unit growth thing, I'm wondering, you highlighted Pizza Hut International having a strong unit open opening quarter, but I'm wondering about the US stabilizing and how you're feeling about that being a driver to your net opens as we go into '23? Thank you. Chris Turner: Yes. Thanks, David. On Pizza Hut US first. As David mentioned, the addition of aggregators has been one part of solving the delivery capacity challenge that we mentioned earlier in the year. We talked about how at the beginning of the year, we view this more as a capacity challenge than a demand challenge. And we've used our relationships with the aggregators, both being on their platforms and working with them on delivery as a service as one mode to solve that. Plus, I think we've mentioned that we have also adjusted some of our hiring practices and our HR practices or our franchisees have to attract more drivers into their jobs, things like reducing the time it takes to apply for a job at Pizza Hut. Both of those have contributed to us having significantly more delivery capacity in the market. If you look at Q2, we had a 23-point gap between our carryout growth and our delivery growth. In Q3, we actually extended our carryout growth, but the gap narrowed to 17 points. So that means delivery was significantly higher, and I think that's just attributable to both of those levers, giving us more delivery capacity into the system. There's one other benefit from the aggregator platforms, which is we get an incremental customer, who sees us on those marketplaces. And so that's probably been a bit of an impact there as well. And we've mentioned earlier that we've seen franchisees who adopted these faster run a little bit ahead of the system. So, I think that is part of what's driving growth in the Pizza Hut US system. A – David Gibbs: On the unit growth question, obviously, we had strong unit growth in Taco Bell US, Pizza Hut US, and KFC US have stabilized. And in the long run, we expect all of our markets around the globe to be focused on driving units. And so the teams are working on strategies to do that. But right now, those businesses are in a stable place from a unit standpoint as you see in the results this year. End of Q&A: David Gibbs: Yeah. To wrap up, obviously, a very strong quarter for Yum!. We're pleased with the results, led by our great teams in the field. We've got an investor conference coming up, and it's actually the first investor conference that we've had in four years given the delays from COVID. So we're really eager to get to spend some time with all of you in New York on December 13. In particular, we've got some new leaders in the business that you'll get to hear from live in person for the first time very excited about letting them tell the great growth stories that we have going on all around the world. A great quarter, and thanks for your time today. Operator: That concludes today's conference call.

Operator: Hello, everyone and welcome to the Yum! Brands 2022 Second Quarter Earnings Call. My name is Seb and I will be the operator for your call today. [Operator Instructions] I will now hand the floor over to Jodi Dyer, VP, Investor Relations. Jodi Dyer: Thanks, operator. Good morning, everyone and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we will open the call to questions. Before we get started, I would like to remind you that this conference call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this announcement and 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 our earnings releases and relevant sections of our filings with the SEC that by disclosures and definitions of non-GAAP financial measures and other metrics that maybe used on today’s call as well as reconciliations of non-GAAP financial measures. Please note that during today’s call, all system sales and operating profit results exclude the impact of foreign currency. Next, I will provide an update on the financial reporting treatment related to the exit of our Russia business. During the second quarter, we completed the transfer of the Pizza Hut business to a local operator who had initiated the process of rebranding to a non-Yum! concept. Given the transfer for Pizza Hut and our progress for the full exit from Russia for KFC, we have elected to remove the Russia business from key performance metrics. Specifically, 1,165 units in Russia and their associated system sales were removed from our total unit count and total system sales respectively as of the beginning of the second quarter. This negatively impacted our reported second quarter unit growth by 2 percentage points and our reported system sales growth, excluding foreign currency by 2 percentage points. Additionally, these units were removed from our same-store sales calculations and thus do not impact our same-store sales results for the second quarter. However, we continue to include Russia and GAAP measures in the second quarter for Pizza Hut prior to the date of transfer and for KFC for the entire second quarter, including royalty revenue and all expenses to support the business and one-time expenses related to the transfer of ownership of the business. As a result of our decision to exit the Russia business, we have reclassed net operating profits from the operating segment subsequent to the start of the conflict to our corporate and unallocated segment and reflected as a special item within the other income and expense warrant. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are 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 any future use of recording. We would like to make you aware of upcoming Yum! investor events in the following. Disclosures pertaining to outstanding debt in our restricted group capital structure will be provided at the time of our Form 10-Q filing. Third quarter earnings will be released on November 2, 2022 with the conference call on the same day. Finally, as a reminder, we will be hosting an in-person Yum! Brands Investor Day on Tuesday, December 13, 2022 at the New York Stock Exchange. Please stay tuned for more details. Now I’d like to turn the call over to Mr. David Gibbs. David Gibbs: Thank you, Jodi and good morning everyone. Our second quarter results are a testament to the resilience of our iconic brands and the power of our highly franchised business in this complex operating environment. System sales grew 5% after adjusting for the exclusion of our Russia business, driven by sustained development momentum. We opened 781 gross new units in the quarter, with broad-based contributions from each of our brands. Additionally, we delivered positive same-store sales growth while lapping last year’s growth of 23%, the strongest quarter of same-store sales growth in Yum!’s history. We are pleased with the continued growth in our digital business with sales of nearly $6 billion fueled by the adoption of our global platforms and capabilities. Our unmatched global scale and digital capabilities are key differentiators in the restaurant industry and these competitive advantages enable us to thrive in any environment. I will now share a few global trends from the quarter. As Yum! China shared on its earnings call last week, COVID-related restrictions continued throughout the quarter, significantly impacting second quarter results. However, trends outside of China, remains strong. Our consolidated same-store sales, excluding China grew 6% for the quarter. Despite a complex consumer landscape in the U.S., Taco Bell U.S. knocked it out of the park with 8% same-store sales growth. The team achieved these results through exceptional execution of a well-balanced marketing agenda that sustained brand buzz, distinctive product news and compelling value offerings and that was all supported by operational improvements and a focus on elevating the digital experience. Additionally, emerging markets, excluding China, continued to recover to pre-COVID levels, driven by the reopening of dining rooms and growth in our digital business. In fact, same-store sales growth for emerging markets, excluding China, was up 22%, a 4 point acceleration from the prior quarter. We remain confident that we are well positioned to win in this environment given our iconic brands that customers love, strong consumer value proposition, scale advantages, expanded digital access and sophisticated franchise partners with unmatched operating capability. Before I provide an update on our growth drivers, I’d like to share an update on our ongoing process to exit Russia. Last month, we shared that we completed the transfer of ownership of our Pizza Hut business in Russia to a local operator who has initiated the process of rebranding locations to a non-Yum! concept. As for our KFC restaurants in Russia, we are in advanced stages of transferring ownership, operating systems and master franchise rights, including the network of franchise restaurants to a local operator who will be responsible for rebranding locations to a non-Yum! concept. Upon the completion of this process, we will have fully exited from Russia. Our franchisees and team members in Ukraine continue to demonstrate incredible fortitude through this conflict. And I am proud to report that nearly all of our stores in Ukraine have reopened to serve the people of Ukraine, while ensuring the safety of our team members. Now, I will talk about two of our growth drivers, our Relevant, Easy and Distinctive brands or RED for short and Unrivaled Culture and Talent. Then I will provide an update on our Recipe for Good. Chris will share the details of our second quarter financial results, including an update on our capital strategy before providing an update on our unmatched operating capabilities and bold restaurant development growth driver. Let me begin with our Relevant, Easy and Distinctive brands. Our KFC division, which accounts for 49% of our operating profit, grew system sales 1% this quarter, driven by 3% unit growth and a 1% decline in same-store sales. Adjusting last year for the exclusion of Russia, KFC division system sales growth was 4%, with 7% unit growth. Continued sales weakness in China contributed to significant year-over-year pressure in the quarter. Excluding China, our same-store sales grew 7%. So China remains difficult to forecast, pressures gradually improved throughout the quarter. However, as Yum! China said last week, given the recurrence of COVID outbreaks, the sales recovery will likely be non-linear and uneven. It’s been well noted that many developed markets experienced increasing macro pressures and headwinds to consumer spending this quarter. In addition, the U.S. and UK markets faced tough compares due to government stimulus last year. While KFC U.S. faced difficult laps from stimulus and the successful launch of the chicken sandwich platform, we are pleased to share that same-store sales growth improved sequentially throughout the quarter. However, the macro pressures were not felt consistently across all developed markets in our portfolio. For example, Australia grew system sales 7% as same-store sales growth doubled from the prior quarter. This strong demand has followed the introduction of modern menu, which highlights our uniquely craveable products and contemporary value offerings. Turning to our emerging markets, which delivered remarkable results in the quarter. I’d like to highlight India, the Middle East and Latin America. In India, where system sales grew 103%, the team continued to advance their digital ecosystem and provide consumers with disruptive value offering. System sales grew 41% in the Middle East driven by accelerating digital sales that grew approximately 70% year-over-year even as dine-in sales continued to recover. The launch of Click & Collect functionalities, including QR code ordering via the KFC app in several of our Middle East markets helped drive these results. The Latin America market achieved 32% system sales growth, propelled by a well-balanced marketing strategy, including a focus on product innovation and dedication to value offerings, while advancing digital capabilities following the launch of the KFC mobile app and kiosks. Our diverse global portfolio is one of the many reasons we have great confidence we are well positioned in the current environment. Turning to our Taco Bell division, which accounts for 36% of our operating profit, system sales grew 10%, driven by 4% unit growth and 8% same-store sales growth. Taco Bell continues to fire on all cylinders as evidenced by the broad-based strength of its second quarter results. For Taco Bell U.S., system sales grew 9%, driven by 8% same-store sales growth and 2% unit growth. Taco Bell remains a culture leader in the industry successfully executing on its strategy to inspire and enable the world to live mass through innovative marketing campaigns, buzz-worthy brand news, distinctive products and strong value offering. Despite significant inflation, Taco Bell maintained restaurant margins by leveraging its pricing power for premium products and craveable LTOs, while still providing consumers with everyday value through a broad range of price points such as those items featured on the Cravings Value Menu. The return of the Mexican pizza as an LTO this quarter is a prime demonstration of these strengths. Taco Bell’s most loyal fans were granted early access, increasing the average loyalty registrations 15x during the 2 days of early access and fueling 10% growth in loyalty members in the quarter. Demand for the Mexican pizza was 7x previous levels, reaching over 20 million pizzas sold nationwide, with some stores selling out within a week, creating a sustained positive halo for the brand. Given the overwhelmingly positive reaction from our customers, we are excited to bring back the Mexican pizza in the fall when it will become a permanent fixture on the venue. At Taco Bell International, system sales grew 31%, owing to 27% unit growth and 9% same-store sales growth. 5 of our 7 European markets saw double-digit same-store sales growth, thanks to the balanced execution of everyday value and disruptive value, while also continuing to grow brand awareness. Taco Bell International is building on its development momentum and now meaningfully contributes to the division’s total unit growth. Moving on to the Pizza Hut division, which accounts for 15% of our operating profit. Q2 system sales were flat, driven by 4% unit growth and a 3% same-store sales decline. At Pizza Hut International, which represents 8% of our operating profit, system sales grew 3%, led by 7% unit growth and a 2% decline in same-store sales. As I mentioned before, COVID lockdowns in China led to sales softness in the quarter. Excluding China, Pizza Hut International same-store sales grew 6%. I’d like to highlight two of our leading markets for the quarter, India and Latin America. India system sales grew 79%, a 35 point acceleration from the prior quarter, driven by further recovery in dine-in sales and home meal replacement strength. System sales grew 18% in the Middle East, where the team has successfully executed a balanced strategy of offering everyday value and customized products, with particular success from the MyBox offering. MyBox offers a compelling entry price point that is well positioned to serve the individual eater and lunch occasion and is now live in nearly 50 markets. At Pizza Hut U.S., which represents 7% of our operating profit, system sales declined 3%, driven by flat unit growth and a 4% decline in same-store sales driven in large part by continued operational challenges in our delivery business. We made progress expanding system-wide adoption of third-party delivery as a service to help address our delivery driver capacity constraints to meet consumer demand. As of the end of Q2, approximately 55% of our U.S. locations have implemented delivery as a service, up from 40% at the beginning of the quarter. Additionally, we are leaning into our aggregator partnerships by joining third-party marketplaces so our consumers can access our craveable food wherever they shop. As of the end of Q2, roughly 70% of eligible stores have opted into using at least one aggregator marketplace, up from approximately 45% at the beginning of Q2. Finally, the team shifted promotional focus towards compelling value to address the needs of the consumer. Lastly, the Habit Burger Grill grew system sales 10%, driven by 15% unit growth and 4% same-store sales decline. During National Burger month, Habit provided exclusive offers through its mobile app, resulting in a 10% increase in mobile app installed, while also highlighting its culinary inspired innovation, which included the spicy green beans a spicy twist on its signature, Tempura Batter green beans. Moving on to our Unrivaled Culture and Talent growth driver. We continued to see growth of our unrivaled talent with Tarun Lal being named President of KFC U.S. and Shannon Hennessy taking on a new role as President of the Habit Burger Grill. Tarun is a prime example of growth from within joining our organization 25 years ago and serving in various leadership positions. He is not only a best-in-class operator known for driving breakthrough results. He is also a driver of our culture. I am confident Tarun’s leadership and winning partnership mindset with our franchisees will be an asset as we drive the next chapter of growth for the KFC U.S. business. Shannon joined Yum! a few years ago as a KFC Global CFO and immediately hit the ground running. She has a unique ability to work across functions and bring people together and solve problems, drive change and deliver meaningful results for our business. She is also a standout culture leader with a commitment to growing talent and to advancing equity inclusion and belonging. When it comes to our recipe for good, we recently published our Annual Global Citizenship and Sustainability Report, which highlights our strategic investments in socially responsible growth and stewardship of our people, food and impact on the planet. The report includes updates on our key commitments, including our social purpose and how we have awarded more than $50 million in grants to nearly 30 social impact programs globally. This is accomplished through Yum!’s unlocking opportunity initiative, the Champions equity and inclusion, education and entrepreneurship for frontline restaurant teams and communities around the world. It reinforces our industry leading commitment to food safety as well as our efforts to respond to customers’ evolving preferences and improve the nutritional value of our menu items. Finally, the report also highlights our environmental commitments, including our science-based targets to reduce greenhouse gas emissions nearly 50% by 2030 as well as a newly harmonized packaging policy across our brands that commits to moving all consumer-facing plastic packaging to be reusable, recyclable or compostable by 2025. To wrap up, our performance continues to demonstrate the power of our unmatched global scale in a challenging operating environment, thanks to the advantages of our unrivaled talent, global development capabilities and expanding technology platforms and capabilities, our iconic brands continue to drive consistent growth. Our best-in-class teams and franchise partners are committed to serving up the most loved, trusted and fastest growing restaurant brands in the world. With that Chris, over to you. Chris Turner: Thank you, David and good morning everyone. Today, I will discuss our financial results, our bold restaurant development and unmatched operating capability growth drivers and our capital strategy. I will begin with an overview of our second quarter financial results. Adjusting last year for the exclusion of Russia in our reported results, system sales grew 5%, underpinned by 6% unit growth and 1% same-store sales growth. Despite more severe inflation this quarter, our teams achieved strong performance demonstrating the resilience of Yum!’s business model. As you may recall, we shared during our last earnings call that Q2 core operating profit growth would look similar to Q1, given continued softness in China, a full quarter impact from lost Russia profits and a headwind from normalized G&A spend in comparison to 2021. I am pleased to report that we exceeded our previous guidance with core operating profit down 1% for the quarter owing to outperformance at the Taco Bell division. Ex special general and administrative expenses were $252 million tracking in line with our expectations for $1.1 billion of G&A expense for fiscal 2022, consistent with our previous guidance. Despite double-digit labor and commodity inflation in the U.S., Taco Bell, company-owned restaurant margins of 26% were in line year-over-year and 200 basis points ahead of the pre-COVID Q2 2019 margins. This is a testament to the brand’s pricing power and the operational efficiencies the team continues to achieve both contributing to best-in-class unit economics. The FX impact to reported operating profit was $23 million, nearly double our expectations shared on our first quarter earnings call. We now expect the full year FX headwind to reported operating profit to be approximately $70 million to $90 million and expect similar amounts in Q3 and Q4 as those reported in Q2. Finally, EPS, excluding special items, was $1.05, a 9% decrease year-over-year. However, there was a $0.13 impact to EPS driven by items that are non-operating in nature including higher foreign currency exchange, an increase in our effective tax rate and a decrease in the value of our investment in Devyani International Limited. I’m pleased to report that given the strength across our diversified portfolio, we are reiterating our fiscal 2022 guidance that we shared on our first quarter earnings call. As a reminder, other than core operating profit growth due to the removal of Russia profits, we expect to deliver on all parts of the long-term growth algorithm this year. With this impact, we anticipate full year core operating profit growth of mid-single digits. And as we previously mentioned, that profit growth is weighted to the second half of the year, especially the fourth quarter, largely owing to timing of G&A expense in comparison to 2021. Next, I’ll discuss our unmatched operating capabilities through the lens of our digital strategy, easy experiences, easy operations and easy insights. First, I’ll provide an update on our efforts to create easy experiences for our customers. This quarter, Taco Bell franchisee, Border Foods, owned and operated by the Engler family, opened one of the most revolutionary restaurant formats in the industry’s history, Taco Bell Defy. Taco Bell Defy features one of the most innovative drive-thru experiences yet. It’s the first of its coming two-story restaurant design, featuring a proprietary vertical list to transport iconic, craveable Taco Bell menu items straight from the kitchen to pans. This is on top of unique digital check-in screens for mobile orders that enable a differentiated, fun and seamless experience for consumers. Taco Bell Defy boast many features that could show up in future Taco Bell restaurants given it is a hit with consumers and performing well. At KFC Africa, the team doubled kiosk penetration in its store footprint with significant commitments to further deploy across the majority of the system by year-end. Kiosks served to modernize our assets, improve customer experience and drive greater insights into customer behavior. Additionally, we continue to deploy chat and e-commerce products across our global portfolio and surpassed 2,400 stores in 43 markets this quarter, serving KFC, Pizza Hut and Taco Bell. Earlier in the year, Pizza Hut Germany launched its new e-commerce website fully powered by Tictuk. Germany has seen impressive early results, including a 15% increase in conversion rate and a €2 increase in average ticket when compared to previous performance on aggregator platforms in the market. We are seeing similar success stories across the markets where it Tictuk is live. Next, I’ll provide an update on our efforts to enhance the team member experience as part of our easy operations initiative. Pizza Hut International reached 25 markets using the Dragontail system, bringing global adoption of this platform to 28 markets across both KFC and Pizza Hut brands. We also made significant progress during the quarter in the rollout of digital order pickup shelves, including adding shelves at 100 more Habit Burger Grill stores. Approximately two-thirds of our Habit Burger Grill stores are now equipped with pickup shelves. Taco Bell also has joined our other brands in the U.S. to deploy pickup shelves which are now fully deployed across company-operated stores with plans to roll out across the rest of the system by early 2023. Expanding options and ease for off-premise consumption improves the customer, delivery driver and team member experience. Finally, I’ll discuss our efforts around easy insights. Our data and analytics experts, along with Quantum, the AI-based marketing analytics team we acquired last year, continue to scale a Quantum media optimization tool, while also developing additional AI and machine learning products that drive performance for Yum! and our franchisees. As an example, they are currently partnering with Taco Bell and KFC U.S. to test and deploy an inventory management tool that helps our restaurant managers more accurately forecast food and supplies. The tool is driven by our cutting-edge demand forecasting platform. Based on encouraging early results, we plan to scale this platform throughout the remainder of the year. Moving on to our bold restaurant development growth driver, we sustained our robust development momentum this quarter. At KFC, we opened over 400 gross new units, reaching nearly 1,000 gross new units opened year-to-date. China, India and the Middle East led development this quarter, each opening more than 40 gross new units. It’s worth noting that the year-to-date development pace is attributable to a broad contribution from our emerging markets outside of China. At Pizza Hut, we opened nearly 300 gross new units leading to over 600 gross new units opened year-to-date. The Pizza Hut division remains on pace to set another development record this year with significant contributions from India, China and Indonesia. For the third consecutive quarter, Taco Bell International Development outpaced Taco Bell U.S. development, opening 46 net new restaurants in Q2 and 67% year-to-date. For the first time, full year Taco Bell International development is on pace to surpass U.S. development this year. Our broad-based development continues to be driven by healthy unit economics, significant white space and our world-class franchise partners who are committed to growth. This global development momentum, coupled with the visibility we have into our development pipeline, gives us line of sight to deliver unit growth within our long-term growth algorithm range of 4% to 5%. Next, I’ll provide an update on our balance sheet and liquidity position. Our capital priorities remain unchanged: invest in the business, maintain a healthy balance sheet, pay a competitive dividend and return the remaining excess cash to shareholders via share repurchases. We ended the quarter with cash and cash equivalents of $412 million, excluding restricted cash. On April 1, we closed on a new $1 billion 5.375% YBI bond due in 2032. The majority of the proceeds were used to call our $600 million, 7.75% YBI bond due in 2025. We closed the quarter in line with our net leverage target of 5x. We have a well-positioned capital structure and debt guideline for a high inflation environment, considering approximately 94% of our debt is fixed with no significant maturities for the next 3 years. Capital expenditures for the quarter, net of refranchising proceeds were $38 million. Our full year expectation for $250 million in net capital expenditures remains unchanged, now reflecting $65 million in refranchising proceeds and up to $315 million in gross CapEx. With respect to our share buy program. During the quarter, we repurchased 1.3 million shares at an average share price of $118 per share, totaling approximately $150 million. In closing, I’m pleased with the resilience of our performance in the quarter. The structural advantages of our business model and our unmatched scale uniquely positioned us to navigate complex and uncertain macro environments with incredible stability. I remain confident that our global portfolio provides investors a high-quality, best growth opportunity with visibility into consistent compounding returns. With that, operator, we are ready to take any questions. Operator: Our first question comes from David Tarantino from Baird. David, please go ahead. David Tarantino: Hi, good morning. My question, David, is about just the overall macro environment you’re seeing? And I know there is a lot of talk about pressures on consumer spending and potentially a global recession. And my question for you is, one, if you could share your thoughts on where we stand relative to that debate. And then any insights on how you’re planning the business now versus maybe you were at the start of the year in light of some of those pressures? David Gibbs: Sure. Thank you, David. I commented on the last earnings call, and I think it remains true today. This is truly one of the most complex environments we’ve ever seen in our industry to operate in because we’re not just dealing with economic issues like inflation and lapping stimulus and things like that, but also the social issues of people returning to mobility, they have to lock down, working from home and just the change in consumer patterns just to mention a few. So against that incredibly complex backdrop, I think these issues play out differently in each market. So it’s very hard to talk about generalities with the consumer. But one generality we’re seeing internationally is really the emerging market consumer is returning. We mentioned the 22% increase ex China in our emerging markets. Obviously, that’s a flip from early in the pandemic when those markets were hit hard. We like that tailwind in our business, and I think that that’s going to help lift us as we go and developed markets are fairly stable on overall performance as well. But in terms of the global consumer, we do think they are getting more cautious. We are leaning more in on value offerings all around the world and that also is playing out in the United States. If you look at the U.S., I think what’s happened over the last quarter is this the low-income consumer pulling back has become more pronounced. We’ve seen that in our business and we’re reacting accordingly. So we know the formula to win in any environment for us is to have a lot of brand buzz, to have product news and to have great value. You got to – you can’t pick one of those things, you got to deliver on all three. So when you ask how we’re planning, that’s how we’re planning and making sure in particular that we have the value offerings. Taco Bell is a great example of it this quarter when they obviously had a great brand buzz with the Mexican Pizza LTO, and that was also a great product news. But not to be left behind you, they did a great job on value with the cravings menu and the $2 Burrito offerings. All of that added up to a blowout quarter for Taco Bell, obviously. And we think we can win and thrive in any environment. So the changes in consumer behavior are really going to get us off our game. If we stick to our formula, we know we can win. Jodi Dyer: Next question please. Operator: Our next question comes from Sara Senatore from Bank of America. Please go ahead. Sara Senatore: Great. Thank you very much. I just wanted to ask a bit about some of the technology that you mentioned and specifically having some of these systems in other markets. Could you just talk about the value of having global platforms? Is it that you can leverage some of the development costs or are there other operational benefits? And then specifically to Dragontail, is this something that can help you partner with third-party aggregators to help solve some of the delivery bottlenecks that you have in terms of allocating orders between in-house delivery and aggregators. So, just a little more color on that and the labor shortage? Thank you. Chris Turner: Yes. Thanks, Sara. Our digital strategy continues to work. We like just about everything about those nearly $6 billion in digital sales. And we continue to progress, the nearly $6 billion even came after removing the Russia sales. Russia had a strong digital market. So it gives you a sense that our digital business continues to thrive. The 40% digital mix tells you that the customers are seeing the value and the easy experiences that we’re providing. So even as they are starting to come back to the dining rooms more and more, they are continuing to interact with us in a digital manner. And then you touched on the operational benefits, which is really part of our easy operations plan in our digital strategy and how technologies like Dragontail are helping us to operate better. Dragontail, we mentioned continues to expand. Our franchisees continue to adopt Dragontail in a number of markets. We are now up to 28 markets north of 3,300 stores that employ Dragontail. Whenever we implement, we see a significant improvement in customer experience. And you hit on the exact – one of the exact places where we see that benefit is coordinating those delivery orders and ensuring that we have a fresh product coming right on the oven or the prior because we are now in three KFC markets right at the time when the delivery driver gets to the restaurant. That’s what helps us to get a fresher hotter product to the customer. So, there are other benefits of Dragontail as well. You see that it helps to communicate the team members in the back of house when we are reaching a peak period in the restaurant, for example, and they can move into different operating modes to respond to that. We have been doing lots of piloting in additional markets including here in the U.S., and we are going to continue to push Dragontail. Of course, that also speaks to the fact that our franchisees see the value in it. They only implement this when they see the value of working in their stores and in their restaurants. So, we continue to be very confident in our digital strategy and continue to invest, but believe we are getting a high return on that investment. Jodi Dyer: Next question please. Operator: Our next question is from David Palmer from Evercore ISI. Please go ahead. David Palmer: Thanks. Phenomenal quarter from Taco Bell. I wanted to ask about Pizza Hut and KFC in the U.S. That quarter probably would be peak for family meal demand comparisons and stimulus comparisons. And I would also guess that the food costs would be peaking in that quarter as well, and making it – correct me if I am wrong, but I just wondered, you made some commentary about how the quarter progressed for those brands, but I wanted to get your – maybe you could add some more detail about the outlook for those domestic brands, both in sales and also franchisee cash flow. Thanks. David Gibbs: Thanks David. Yes, obviously, we had a difficult lap in the U.S. in Q2 basically lapping stimulus. KFC was also lapping the launch of the chicken sandwich. I think we did comment in the prepared remarks that the cadence during the quarter for KFC got better as the quarter evolved. And then at the end of the quarter, they launched Mac & Cheese Bowls to more directly address the value issue I talked about earlier. Same thing with Pizza Hut as the quarter went on. They introduced a $6.99 deal. Both of those have launched well. And look, it’s hard to predict anything, but I tend to agree with your statement that we are probably pass peak inflation and obviously, the lap that we had in the quarter was one of the most difficult we have ever had at Yum!. We were lapping a plus 23% on a global basis. So, the fact that we came out of that quarter with positive sales was really encouraging. Jodi Dyer: Next question please. Operator: Our next question is from Andrew Charles from Cowen. Please go ahead. Andrew Charles: Great. Thank you. David, excluding Yum!’s exit from Russia, it was another robust quarter for global development 6% and as you sit here today with long-term annual guidance for 4% to 5% development and speaking to the broad-based strength and diversity of historic development, do you need to see to help raise more guidance? David Gibbs: Look, appreciate – I think the development piece, we have been talking about a lot. And obviously, we just continue to put up great numbers on the development front. One of the things I am really encouraged about in the quarter and really for the year is, first of all, we are up year-over-year on net new unit openings for the first half of the year. We are also up in terms of the mix of where those openings are coming from with more development coming from outside of China, which has historically, obviously been our biggest developer. So, the development is becoming more widespread, to answer your question about what do we need to see to think about raising guidance. We want to see a continuation of that trend, continuation of building the pipeline for future years. But certainly, development, a real highlight of the quarter, it was widespread in terms of a number of countries. And we are also seeing the Pizza Hut and Taco Bell start to play a bigger role in our development formula as well as have it down the road. So, we think we are going to have even more diversity in our development as we move forward. We are obviously cautious in this environment though as we have learned over the last 2.5 years in terms of what it means for our business. So, at the appropriate time, we will relook at our guidance. Obviously, the other impressive thing for the quarter is not only did we lose the Russia units that are in our unit count, but we also lost the planned development for Russia, which I don’t think people think about. We were supposed to open over 100 units this quarter. But yet, we are still sticking with being able to hit our range and being inside of hitting the range of 4% to 5% unit growth despite all of those enormous headwinds. Jodi Dyer: Next question please. Operator: Our next question is from John Glass from Morgan Stanley. Please go ahead. John Glass: Thanks very much. On Taco Bell, if you are willing, can you talk about either the benefit to comps from the Mexican pizza or the percent mix or something so we can get a sense of how that contributed to the sales? And how do you think about sustainability once that promotions ended. Maybe you can talk about day-parts. Have you seen strength or weakness in certain day-parts and maybe if there has been a change in usage of the value menu, maybe you are getting a benefit from trade down to those value items, any other color just on how we think about sustainability of Taco Bell beyond this quarter? David Gibbs: Sure. Thanks John. I mentioned this earlier, but really, the benefit of things like the Mexican pizza is the connection it has with consumers the love they have for the product and the halo it provides to the brand. It’s just as much about the buzz that, that creates and the relevance it creates for our brand as it is about the discrete amount of sales that we had during the weaker or that we have the product in store. And I think that is really our formula. We have got to be the most relevant brands in the industry and connecting with consumers the way Taco Bell has done in Q2. And you can see the results when that happens. So, to answer your question, it really wasn’t about the exact sales during that period of time, contributing to the quarter as much as it was just how relevant and connected to pop culture and our consumers Taco Bell is the way they brought the mix compete back, the way they marketed it. But certainly, there is a love for the product, and we know when we introduced it in the fall that we will get actual discrete sales benefit that might translate into a couple of points of sales. Jodi Dyer: Next question please. Operator: Our next question is from Jon Tower at Citi. Please go ahead. Jon Tower: Hey, great. Thanks. I just had a question on the expansion in the 3PD with – you have had U.S., I am curious obviously, the number of restaurants opting in has moved up quarter-over-quarter. Just curious if you can give us some sort of insights as to how that’s performing for the brand with respect to contribution from a same-store sales standpoint or even getting the message out there to consumers more broadly about the brand’s value. And then separately, I believe that the company is pushing a – or the brand is pushing a $6.99 carryout promotion right now. Is that something that the company views it in LTO or more of a permanent fixture on the menu to address value? Chris Turner: Yes. Thanks Jon. I will take first, the expansion of the delivery partnerships. As we said in Q1, we saw a similar dynamic in Q2 where we believe we have got not as much of a demand problem. Demand remains strong. Our carryout business was up strongly, but we saw declines again in the delivery business. And so that’s what we are focused on addressing it, the availability of drivers to deliver the product whenever a customer wants to order through that channel. We talked about last quarter, we were starting to implement changes. Some of those are internal where we are changing things like our hiring practices to make a faster hiring process because that’s what folks who are in the market for driving jobs look for. But we also talked about how the partnerships with aggregators can help us as well. So, if you think about the 55% where we ended the quarter on delivery as a service, that was an expansion throughout the quarter. The 70% on marketplaces. That number represents 70% who were on at least one marketplace. We only have about 35% who are on multiple marketplaces. So, we still got further to go on implementing marketplaces across the business. But if we look at the franchisees who have been implemented both of those they are running mid-single digits ahead of those who haven’t. So, we are continuing to see an impact here from reaching incremental customers and from giving us that delivery capacity that we need to serve that channel. On the $6.99 promotion, really what that reflects, going back to David’s point on the state of the consumer in the U.S., we know we have got to have value options and more full range pricing on the menu. And this was a move by the team to give that value to the customers who needed it and to just give us a little bit more breadth and range on menu prices. So, we still have great craveable products that they can trade up to, but we also want to have value there for the customers who are looking for it. Jodi Dyer: Operator, we have time for one final question, please. Operator: Thank you. Our next question comes from Dennis Geiger, UBS. Dennis, please go ahead. Dennis Geiger: Great. Thanks very much. Just wondering if you could speak a bit more to the international business and perhaps at a high level, where do you think you are now from a recovery standpoint relative to thinking about some of the macro challenges out there, particularly in the emerging markets ex China? Thank you. David Gibbs: Yes. Obviously, we are excited about the growth in international and the future for our international business. In particular, Taco Bell, you saw they put up over 30% system sales growth. The development machine at Taco Bell is really hitting on all cylinders internationally. And we are proving that with focused effort, the right team against, Julie Masino and her team are doing an amazing job, the right franchise partners that we can get to scale that needs Taco Bell international markets, and they can be massive growth drivers for Yum!. We should get to the end of the year with over four markets at the 100-plus unit count, which that’s what we know to be the tipping point for really accelerated growth down the road. But in general, international is really a tale of a lot of different stories. And you are seeing that best exemplified by – China is still in lockdown, and we are – it’s hard to sell product when you have a lot of the market locked down. But as I have mentioned earlier, the exciting thing is that we have got – 20% of our business is in emerging markets like China. That business is on fire. As we anticipated, it’s recovering from COVID and lockdowns with increased mobility and new capabilities on the digital front that Chris talked about. And that’s really driving our business there, and that should be a growth driver. And we should see the same thing play out in China down the road. All the while our developed markets remaining stable and growing and even coming off of tough laps as they were doing better in the previous years. So, I think it all sets up to be a nice growth driver for Yum! for many years to come. Yes. And so with that, I am going to just close the call, thanking everybody for their time. Obviously, reiterating it was a strong quarter despite all these well-documented headwinds. If there is ever a quarter to demonstrate how resilient Yum! is and our business model is stronger than ever, this is this. The same themes continued from previous quarters with digital and development, both being really strong and those teams are doing an amazing job. We have got this emerging market tailwind now that I just talked about. And then Taco Bell, one of the things we didn’t mention is they grew sales. They delivered 26% margins, and they did it with essentially flat trend. So, all that pricing that they took, clearly still value for consumers, which bodes well for the future, up 20% versus pre-pandemic, up 20% at Taco Bell on a 3-year basis. So, when you got 26% margins and you are up 20%, you got a lot of happy franchisees and once again, amazing resilient business. This quarter demonstrates we can thrive in any environment. Thanks, everybody, for your time today. Operator: This concludes today’s conference call. Thank you all very much for joining. You may now disconnect your lines.

Operator: Welcome to the Q1 2022 Yum! Brands Earnings Conference Call. My name is Ruby, and I will be your moderator for today's call. [Operator Instructions] I will now hand over to our host, Jodi Dyer, VP of Investor Relations, to begin. Jodi Dyer: Thanks, operator. Good morning, everyone and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, I would like to remind you that this conference call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this announcement and 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 our earnings releases and relevant sections of our filings with the SEC to find disclosures and definitions of non-GAAP financial measures and other metrics that may be used in today's call as well as reconciliations of non-GAAP financial measures. Please note that during today's call, all system sales and operating profit results exclude the impact of foreign currency. Additionally, as it relates to our Russia business, our operating results for the first quarter continue to reflect revenues and expenses related to Russia within their historical financial statement line items and operating segments. However, we have reclassed net operating profit attributable to Russia for the month of March that had not yet been redirected to humanitarian efforts as of the end of the quarter from the operating segments in which it was earned to our corporate and unallocated segment. Those operating profits have been reflected within other income/expense and reflected as a special item. David and Chris will provide additional context in their prepared remarks. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are 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 upcoming Yum! investor events and the following. Disclosures pertaining to outstanding debt in our restricted group capital structure will be provided at the time of our Form 10-Q filing. Second quarter earnings will be released on August 3, 2022, with a conference call on the same day. Finally, we will be hosting an in-person Yum! Brands Investor Day on Tuesday, December 13, 2022, at the New York Stock Exchange. Stay tuned for more details. Now, I'd like to turn the call over to Mr. David Gibbs. David Gibbs: Thank you, Jodi, and good morning, everyone. Before I go over our first quarter results, I'd like to begin by sharing an update on our business in Russia and Ukraine. As a company that puts people first in every decision, I'm incredibly proud that we have made the safety and well-being of all those impacted by the tragedy in Ukraine as the top priority. I want to personally thank our many dedicated team members and franchisees working hard to navigate through this deadly conflict and manage our business in the most complex and challenging geopolitical environment in recent history. I'm proud of how our people in the surrounding regions have banded together and are doing everything possible to support impacted Ukrainian refugees, team members and franchisees, some of whom have overcome incredible challenges and have reopened a number of stores to serve food in communities where it is safe. Additionally, the Yum! Brands Foundation made a donation to the Red Cross to support those affected by the crisis. We activated the Yum! Disaster Relief Fund to support Ukrainian franchise employees and are matching employee donations to organizations providing relief in Ukraine, including UNICEF, the Red Cross, the World Food Programme and the International Rescue Committee. We previously announced the suspension of all investment and restaurant development efforts in Russia as well as operations of company-owned KFC restaurants and that we are finalizing an agreement with our Pizza Hut master franchisee to suspend all restaurant operations. In addition to these actions, we have begun a process aimed at transferring ownership to local operators while, in the interim, we continue to redirect any profits from Russia operations to humanitarian aid. This is not a decision we take lightly and I know that it will be a complicated process to execute these transactions. We will update you on this process during our second quarter earnings call. Chris will provide more details around the financial impact from Russia on the quarter. I'll now discuss our first quarter results, which illustrate the resiliency of our highly franchised diversified growth model. Our first quarter system sales growth of 8%, driven by both unit development and same-store sales growth, is a testament to our iconic brands and the unmatched operating capabilities of our world-class franchise partners. We set a first quarter development record, opening nearly 1,000 gross units, supported by positive unit growth at each of our brands. Our continued same-store sales momentum was fueled by our brands executing our Recipe for Growth strategy by providing relevant value, access via new channels, distinctive products and a strong brand voice, all supported by our digital and delivery capabilities. Our digital channels continue to accelerate with digital sales of approximately $6 billion, a new first quarter record, reflecting an increase of 15% year-over-year. Importantly, we set a new digital mix record, now exceeding 40%. In this complex and highly inflationary operating environment, we and our franchisees remain focused on maintaining long-term profitability by leveraging our scale and strategic pricing actions while still offering our customers convenience and value. The many competitive advantages of our unrivaled talent, our sophisticated franchise system and the power of our business model give me great confidence that we are well prepared to navigate these complexities and deliver robust global growth. Let me share a few global trends from the quarter. As Yum China shared on its first quarter earnings call last night, COVID-related lockdowns impacted restaurant operations and depressed sales in that market, temporarily delaying an eventual recovery. However, our results outside of China remains strong. In fact, excluding China, both our KFC Division and Pizza Hut International same-store sales were up 10%, which would result in consolidated Yum! same-store sales excluding China of 6% for the quarter. We're pleased with the continued momentum in our developed markets as they lap strong results from last year and we're excited about the continued resurgence of emerging markets, with same-store sales excluding China of positive 18% for the quarter. We continue to be encouraged by the global consumer recovery underpinned by returning consumer mobility, creating a tailwind for our on-premise dining while we sustain our off-premise business. Next, I'll discuss two of the four Recipe for Growth drivers: Our Relevant, Easy and Distinctive brands or RED for short; and our Unrivaled Culture and Talent. Then I'll discuss the progress we've made on our Recipe for Good. Turning to our first growth pillar: our Relevant, Easy and Distinctive brands. Starting with the KFC Division, which represents 51% of our operating profit. First quarter system sales grew 9%, driven by 8% unit growth and 3% same-store sales growth. To illustrate the strength of the KFC brand around the world, I thought I'd highlight a few markets that showed meaningful improvement in the quarter, specifically the Middle East, Latin America and Africa. Our Middle East market delivered 40% system sales growth, fueled by robust transaction growth. Our marketing teams led with a healthy balance of new products with the launch of the Messy Burger as well as innovative value-focused flavory items such as the Twister Blaze. These items drove both value perception and new customer acquisition. Additionally, the team's focus on meeting the needs of our customers through digital and off-premise channel growth while the dine-in business bounces back fueled our strong results. Latin America is another standout market. This quarter, system sales grew 34%, thanks to our team hitting on all fronts. All countries in the market deployed a balanced marketing calendar focused on value to drive velocity and transaction while taste campaigns continued to build brand strength. This came to life for consumers in January with the Genius Menu value ladder that's helping recover the individual occasion. In March, the Latin American market launched the Kentucky Fried Chicken sandwich for the first time, which drove over 10% growth in the sandwich category. Another market worth highlighting is our Africa business, which has been incredibly resilient as system sales grew 25%. Results were fueled by a continued traffic recovery, leading to transaction growth ahead of pre-COVID levels, a sign our value-driven strategy that offers successful price points resonated well with customers. Finally, in the U.S., our KFC team is working hard to maximize convenience for the customer and focusing marketing efforts on creating greater awareness of our off-premise channels, including Quick Pick-up services and our white label delivery offering. The incremental sales layers we've built over the past two years, including our digital ordering channels and the chicken sandwich platform, contributed to top line growth this quarter in the face of a difficult operating environment. Additionally, we offered Beyond Fried Chicken in the quarter, which elevated the brand and boosted relevance, resulting in more media impressions than any other product launch in the brand's history. A consistent theme across each of these four markets is the continued growth of digital transaction and the ability to execute an omnichannel strategy. Moving to the Taco Bell Division which represents 32% of our operating profit. First quarter system sales grew 8%, driven by 5% unit growth and 5% same-store sales growth. Taco Bell U.S. system sales grew 7%, driven by 2% unit growth and 5% same-store sales growth. I thought I'd start by celebrating Taco Bell's 60th anniversary as a brand. Given the brand's role as a culture leader in the industry, it's easy to forget its experience and heritage, all of which makes us even more confident in the brand's ability to navigate any economic environment. Taco Bell is executing on its strategy to inspire and enable the world to live más by remaining relevant, easy and distinctive to its customers. On the relevance front, Taco Bell continued to champion customer value with new offerings to meet all occasions, including the introduction of $2 burritos on the new Cravings Value Menu, adding to Taco Bell's existing $1 menu offering. The combination of Taco Bell's new Cravings Value Menu with its box and combo offerings positions Taco Bell well to serve the needs of all customers. Beyond value, Taco Bell was actively marketing craveable distinctive foods, from its limited-time crispy chicken wings to the return of our fan favorite Nacho Fries. Additionally, the return to the Super Bowl with Doja Cat marked the distinctive cultural moment in the quarter. We're building on this cultural moment with a long anticipated and much celebrated upcoming return of the Mexican Pizza which Doja Cat announced in April. Taco Bell International system sales grew 37%, driven by 26% unit growth and 12% same-store sales growth. We continue to build brand momentum in multiple markets, including the U.K., Spain and India. Our new strategy to reach scale in a few key markets has driven brand awareness, thereby improving new unit returns that lead to accelerated growth. Next, the Pizza Hut Division which accounts for 18% of our operating profit, saw first quarter system sales grow 3%, driven by 5% unit growth and flat same-store sales growth. At Pizza Hut International which represents 11% of our operating profit, system sales grew 10%, underpinned by 7% unit growth and 5% same-store sales growth. We opened 283 gross units, setting a Q1 record. With further easing in COVID restrictions, we saw strong contributions from India and Latin America, where system sales were up 44% and 18%, respectively. At Pizza Hut U.S. which represents 7% of our operating profit, system sales declined 6% for the quarter, attributable to a 6% decline in same-store sales and flat unit growth. While consumer demand remains strong, sales softness in the quarter stems from our delivery channel where capacity constraints limited our ability to meet demand. This was driven by staffing challenges, mainly from delivery driver shortages that have been felt across the industry. The team is prioritizing restaurant operations, including a focus on improving staffing levels, restoring operating hours, increasing online ordering availability and more effectively leveraging the use of our overflow call centers. Additionally, in early Q2, we completed the integration of delivery as a service into our point-of-sale system. This is leading to accelerated system adoption, allowing us to leverage third-party aggregators to augment our own delivery drivers. Another action item we're taking is expanding customer access to the Pizza Hut brand via aggregator marketplace. We are excited about the potential incremental growth from aggregator marketplaces based on outperformance we're seeing from existing franchisees using this channel. Lastly, at The Habit Burger Grill, first quarter system sales grew 17%, driven by 13% unit growth and 3% same-store sales growth. To streamline restaurant operations for team members this quarter, we promoted operationally easy to execute customer favorites such as our Patty Melt and the Santa Barbara Charburger. We continued to lean into digital-only promotions and saw a strong response to our delivery and app-only campaigns in the quarter that ultimately drove an increase in app downloads and active app users. Even as consumer mobility improved in the first quarter, our digital sales across multiple channels increased sequentially, continuing to demonstrate the stickiness of these ordering options. Moving on to our Unrivaled Culture and Talent growth driver. We kicked off the celebration of our 25th year as a publicly traded company with several powerful forums that galvanized our top talent around engagement and development. For the first time in five years, we brought our top 250 leaders from around the world together for our Global Leadership Summit. Our technology leaders at the summit made up the largest functional group which speaks to the investments we've made in differentiated technology capabilities and growth-oriented functions. We also showcased the progress our brands have made putting our Recipe for Good priorities at the center of our future growth, not only with less carbon and less packaging and waste but also by making equity and inclusion come alive across every aspect of our business, from our talent to our brand marketing to our suppliers and franchisees. Additionally, we were proud to take many of our aspiring leaders to the Women's Foodservice Forum, where our Chief Operating Officer and Chief People Office, Tracy Skeans, serves as chair. It was wonderful to see Yum! so prominently represented in a forum dedicated to growing women in our industry, something truly important to us as we're increasing the number of women in senior leadership globally and are on track to achieve gender parity in leadership by 2025. Finally, a group of our diverse leaders gathered in Washington, D.C. to discuss how we inspire and advance equity, inclusion and belonging across all levels of our organization. When it comes to our Recipe for Good, we invest in critical work that's focused on our three priority areas of people, food and planet. Just last month and as part of our larger climate strategy, Yum! joined the Supplier Leadership on Climate Transition global consortium which was created to accelerate climate action throughout supply chain. Our climate work has started to take shape in markets such as KFC U.K., where they have partnered with the University of Liverpool to develop a road map to achieve net zero carbon and zero waste. To wrap up, this continues to be an incredibly challenging operating environment but my confidence in our future remains high given the resilience of our iconic brands across our global diversified portfolio. Our unmatched global scale provides us unique competitive advantages, including our sophisticated supply chains with cross-brand purchasing power, strong marketing and consumer insights, expanding digital and technology capabilities and our capable, committed and well-capitalized franchisees that are willing to invest in the long-term growth of the business. This quarter's results continue to demonstrate the power and sustainability of our business model while we continue to deliver lasting value for our stakeholders for years to come. With that, Chris, over to you. Chris Turner: Thank you, David and good morning, everyone. Today, I'll discuss our financial results, our Bold Restaurant Development and Unmatched Operating Capability growth drivers and our solid balance sheet and liquidity position. I'll start by discussing our financial results. Our first quarter system sales grew 8%, driven by 6% unit growth and 3% same-store sales growth, reflecting our continued global momentum. During the quarter, we opened 997 gross units, a Q1 record for Yum!. Core operating profit decreased 5% for the quarter, including a negative impact from Russia of 1%. Ex special, general and administrative expenses were $252 million, tracking in line with our expectations for $1.1 billion of G&A expense for fiscal 2022 and a return to our normal quarterly cadence. Despite inflationary headwinds, we maintained company-owned restaurant margins of approximately 22% at Taco Bell, in line with Q1 2019 pre-COVID margins. Finally, EPS excluding special items was $1.05, representing a 1% decrease year-over-year. Next, I'll address the impact to our first quarter results from the Russia conflict in Ukraine. We previously announced the suspension of all investments and restaurant development efforts in Russia as well as operations of company-owned KFC restaurants and that we are finalizing an agreement with our Pizza Hut master franchisee to suspend all restaurant operations in that brand. In addition to these actions, we pledged to redirect profits from operations in Russia to humanitarian aid. Our core operating profits in Russia declined versus the first quarter of last year, negatively impacting our Yum! core operating profit growth by 1 percentage point. Finally, as David previously shared, we have begun a process aimed at transferring ownership to local operators. We will plan to provide additional updates on the process on our next earnings call. Given the rapidly evolving operating environment, we wanted to provide our latest thoughts on full year results and the shape of the year. We remain confident in the strength of our business and our ability to achieve our long-term growth algorithm in future years. In 2022, the underlying momentum of the business gives us confidence that we can still deliver on the same-store sales, unit growth and system sales aspects of our long-term growth algorithm. Were it not for the loss of Russia profits, we would deliver on all elements of our long-term growth algorithm in 2022. However, losing 3% of full year core operating profit from the exclusion of Russia profits puts us outside of our high single-digit core operating profit range this year, with our current forecast closer to mid-single-digit core operating profit growth. With strength in many key markets, continued emerging market recovery and strong development momentum, our teams will continue to strive to overdeliver against our current forecast. We'll keep you updated as the year progresses. As a reminder, given the shape of our anticipated G&A spend in 2022 in comparison to 2021, we expect our G&A expense to remain a headwind to Q2 core operating profit growth and a tailwind to second half core operating profit growth. Additionally, we expect continued softness in China and a full quarter impact from the exclusion of Russia profits. Therefore, we now expect Q2 core operating profit trends to be similar to Q1 and we remain on track with our prior expectations for high-teens core operating profit growth in the second half of the year. While our system sales and operating profit results shared during today's call excluded the impact of foreign currency, we wanted to provide a brief update on the impact in the quarter and the anticipated impact on both our second quarter and full year results. For Q1, our reported operating profit was unfavorably impacted by $14 million due to foreign currency translation. Based on current exchange rates, we expect FX to reduce second quarter reported operating profit by approximately $12 million to $14 million and reflect a headwind to full year reported operating profit of approximately $30 million to $45 million. This is directional guidance as rates will likely change as we move through the year. Moving on to our Bold Restaurant Development growth driver. I'm excited to share that we had another quarter with each of our brands reporting strong positive unit growth. During the quarter, we opened 997 gross units, resulting in 628 net new units, a Q1 development record for Yum!, contributing to 6% unit growth over the last 12 months. We wouldn't be able to achieve these record-breaking results without broad-based contributions from multiple markets across each of our brands. In fact, we had over 500 gross units and 261 net new units opened outside of China, contributing to 5% unit growth in the rest of world year-over-year. Both KFC Division and Pizza Hut International delivered another exceptional development quarter with 587 and 283 gross units opened, respectively. While Yum China continues to be our lead developer, there were significant contributions from each of these brands in India, Asia, the Middle East and Latin America. Taco Bell remains on track for another record development year with growth in next-gen assets in the U.S. and additional markets reaching scale internationally. On that front, we're excited to share that Yum China has committed to expanding the Taco Bell brand which will allow even more people to live mass as we build our brand identity globally and grow our footprint in that market. To that end, we now expect to have three more markets to cross the critically important scale threshold of 100 units by the end of 2022, joining Spain which reached that milestone in 2021. The global development landscape is increasingly complex. But the sophistication, scale and capabilities of our teams and franchisees provide competitive advantages that allowed us to deliver yet another quarter of record unit openings. The visibility into our development pipeline remains strong. Now, I'll discuss our Unmatched Operating Capability and the three key elements we're leaning into: Easy Experiences, Easy Operations and Easy Insights. Before I provide an update across our Easy pillars, I want to comment briefly on our global supply chain. Our supply chain teams continued doing an amazing job building supply chain contingencies and acting as needed to secure product availability, including restaurant equipment which is necessary for new store openings. Additionally, I'm proud of how our sourcing teams are leveraging our scale and cross-brand purchasing power to help our franchisees and equity stores manage costs in this highly inflationary environment as an important lever in maintaining long-term profitability. This scale combined with our operating experience and learnings from exposure to over 155 markets around the world create a unique competitive advantage for us as we navigate these inflationary pressures. Starting with Easy Experiences. With continued reopening trends in markets around the globe, a frictionless experience remains front and center for the consumer. With that in mind, we are constantly adding new convenient ways for our customers to access our brands. KFC U.S. and The Habit Burger Grill have made digital ordering even easier. Customers can now order via the app and pick up their food from a specific cubby or shelf within the restaurant. This enables a quicker and more seamless experience that eliminates the need to wait in line at the counter or in the drive-thru. Quick Pick-up is fully deployed across the KFC U.S. system and roughly 1/3 Of the Habit stores currently have dedicated pickup shelves, with plans to expand more broadly in the coming months. In addition, Taco Bell U.S. recently launched a similar program in their equity stores and will continue to deploy it across their systems more broadly in the coming quarters. Both delivery and early tests of Quick Pick-up continue to free up drive-thru capacity for the Taco Bell system which helped fuel their ninth consecutive quarter of average drive-thru times under four minutes, with a sequential improvement from their fourth quarter drive-thru speed. Internationally, we have exciting projects in early stages, including our KFC Australia business which is piloting a drone delivery program that gets our finger-licking good products to our customers' home or office in less than 15 minutes on average from when it's ordered. Next, I'll move on to Easy Operations, in which we are focused on streamlining operations for our team members and franchisees. We are installing a new kitchen display system and smart hub and leveraging our cloud-based point-of-sale system in our Taco Bell locations with the goal of modernizing the employee experience and providing more digital capabilities within our restaurants. These systems separate out delivery orders from standard drive-thru orders, allowing for improved visibility and execution in the restaurant by our team members. At KFC U.S., we're improving back-of-house operations by expanding our Mobile Manager, a back-of-house suite of applications which simplifies ordering, inventory management and digital order fulfillment, enabling our team members to spend more time focusing on the customer experience. Pizza Hut continues to make progress putting technology in the hands of its team members through continued global expansion of Dragontail, HutBot and the 360 Coach platforms. Given the driver staffing challenges we're experiencing in the Pizza Hut U.S. business, we're piloting the Dragontail platform in over 100 of our U.S. stores to improve the efficiency of our delivery network. We're excited by the early results and the platform is working as we hoped given the outstanding performance we've seen in other markets around the world. We're in conversations with our franchisees to expand this cutting-edge platform across the U.S. system. Third, I'll discuss Easy Insights, in which we focus on using data and analytics to drive more effective marketing and leverage our insights to enhance the customer and team member experience. At Taco Bell U.S., we continue to experiment with new and innovative ways to engage with our consumers through LTO programs such as the Taco Lover's Pass which helped fuel growth in loyalty memberships during the quarter and which drove customer frequency. Kvantum continues to scale its media mix marketing tool which was recently used in several Pizza Hut International markets to drive incremental sales with a more efficient use of marketing spend. Additionally, we continue to build targeted artificial intelligence and machine learning-based tools, including an exciting new pricing tool that is being piloted in select international markets. Next, I'll provide an update on our strong balance sheet and liquidity position. We ended the quarter with cash and cash equivalents of $365 million excluding restricted cash. On April 1, we called our $600 million 7.75% YBI bonds due in 2025. The repayment was funded by the issuance of a new $1 billion 5.375% YBI bond due in 2032. We were especially pleased with the strong demand and execution in light of the rate environment and volatility in the financial markets. With the recent bond offering which closed subsequent to the quarter, our consolidated net leverage is roughly in line with our target of 5x. Our capital priorities remain unchanged: invest in the business, maintain a healthy balance sheet, pay a competitive dividend and return the remaining excess cash to shareholders via share repurchases. Capital expenditures, net of refranchising proceeds, during the quarter were $18 million. We continue to expect net capital expenditures of approximately $250 million for the full year, reflecting roughly $100 million in refranchising proceeds and up to $350 million of gross CapEx. With respect to our share buyback program, during the quarter, we repurchased 3.4 million shares at an average share price of $121 per share, totaling approximately $407 million. In closing, I'm pleased with the results of the quarter. We opened a record number of units for the first quarter, driving impressive system sales growth. We remain committed to advancing our digital and technology capabilities, leading to enhancements in both the team member and customer experience. And I'm confident in our team's and franchisees' ability to win in a dynamic and complex global landscape. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question is from Dennis Geiger of UBS. Dennis Geiger: I was wondering if you could talk a little bit more about the brands in the U.S., how they're positioned right now and I guess, really what you're seeing from the customer in recent months. Have behaviors changed at all? Anything that you would call out there? And I guess, most importantly, just kind of looking ahead. David, I think you spoke to the resiliency and how Taco Bell and some of the brands can navigate a tough consumer spending environment. So just wondering if you could speak a little bit more to that, please. David Gibbs: Yes, sure. Thanks for the question, Dennis. Just as far as the consumer, I would say that the U.S. demand is generally strong. But this is a really complex environment. I know a lot of people talked about the K-shaped recovery and bifurcated with higher income consumers in better shape than lower income. I think that's true but I think that's probably a little bit of an oversimplification. I don't know in my career if we've seen a more complex environment to analyze consumer behavior than what we're dealing with right now. From an economic standpoint, you've got inflation, rising wages. You've got the funkiness of the stimulus lap -- that we're lapping from last year. But you've also got all these societal issues, like mobility coming out of COVID, consumer reaction to war in Eastern Europe, working from home, changing consumer patterns. All of this makes for a pretty complex environment to figure out how to analyze it and market to consumers. And that's a great part about Yum!. We've got the scale and the talent to do that better than we think anybody else in the industry and navigate that complexity with our internal divisions like Collider, which is an expert on consumer behavior; Kvantum helping us figure out how to navigate the immediate landscape to market to those consumers; and all of our marketing and talent -- marketing talented leaders in the U.S. and around the world. So complex environment, but as usual, convenience and value matters in this environment. And we believe we're leaders across our brands in that regard. You're seeing that result really in all the brands in Q1 in the U.S. The challenge obviously at Pizza Hut was less of sales performance, it's simply just due to demand -- the demand is there but simply due to our ability to meet that demand with drivers. This has been documented by others. But generally, as you mentioned, resiliency is a key feature of our brands. And going forward, we actually feel really good about our ability to navigate this environment and continue to prosper. Operator: Our next question is from John Glass of Morgan Stanley. John Glass: Chris, just inside your new mid-single-digit core operating profit ex -- with the impact of Russia, what are you assuming China does in that? I suspect that's another pivotal piece. What gives you confidence in that reacceleration in the back half? I understand comparisons are easier. And just when you look at that guidance, 6% unit growth is above that long-term reset target. Is that a realistic view for this year? Or was the first quarter just unusually good and that's not necessarily the right run rate? Chris Turner: Yes. Thanks, John. On the profit side, we feel really good with the profit plan for the year. We laid out the shape on our last call. We said the first half was going to be roughly flat. Of course, we now have a Russia impact. I think, that was one point in Q1. And of course, if you think about the lost profit growth in Russia, that actually gets you closer to a couple of points. And as you mentioned, the China impact. As you heard on their call, the business there is softer than expected, so that's had a bit of an impact. And we expect that going into Q2 as well. But -- so Q2 is going to land about where Q1 is. But those are the two primary drivers. And of course, when we think about the full year, we still think Russia is the one driver that takes us off of our algorithm from a profit standpoint for the year. Of course, we're going to work hard to try to overdeliver against that plan. So in general, we feel really good about the profit plan with a little bit of noise there on those two factors. In terms of development, we feel great about the pipeline. Our Q1 was strong, but the pipeline looking to the rest of the year remains strong as well. And of course, it's our job every day to come in and find ways to overdeliver against that 4% to 5% unit guidance. Of course, keep in mind, we had 100 net new units from Russia last year. Even without the 100 net new units, we still feel good about delivering on that part of the algorithm. Operator: Our next question is from Jon Tower of Citi. Jon Tower: Just two real quick for me. Just going back to that unit growth piece specifically. Can you talk about perhaps how management incentives across the company may have been realigned in recent years to kind of focus more on this growth aspect of the business, the unit growth side, specifically across the brands? And then secondarily, drilling down specifically into Pizza Hut U.S. and the move to 3PD, using it as a sourcing and fulfillment platform. Can you comment on the decision to move that way specifically? Why do the fulfillment side using 3PD and potentially giving up that competitive advantage that the brand holds from a delivery standpoint? David Gibbs: Thanks, Jon. I'll take the first question. Chris will comment on Pizza Hut. As far as unit development, obviously, we're very proud of the progress that we've made. And yes, we have actually introduced some new incentives company-wide around development. We thought it was important to just unite ourselves and our franchise partners to take advantage of, frankly, an environment that's really favorable to us. Our brands have gotten stronger over the last two years in general. Our business model is stronger. And there are really great opportunities to expand our footprint in a lot of economies around the world where there have been some discounts to available real estate. And you're seeing all of that come together through the use of incentives with our team and with - in some cases, in franchise markets. And that's all leading to an increase in the pace of development that we're proud of. And as Chris mentioned, we have visibility into the pipeline and believe it will continue. Chris Turner: Yes. And on the second part around Pizza Hut U.S. and the shift to using third-party delivery, as David said earlier, we still see strong demand in the Pizza Hut U.S. business, but it's primarily a challenge of being able to fulfill it with the labor challenges around drivers in particular. That's the most pronounced challenge that we have from a labor perspective in the U.S. So that's part of the driver for continuing to shift to additional modes of being able to deliver. And we're doing that by adding in both delivery as a service, which is basically still having sales through our website and apps, but then fulfillment, leveraging those third-party drivers during peak periods when we need extra capacity to help us address some of those hiring challenges for drivers. But as we mentioned, we're also working with the aggregator partners on the marketplaces. And that's just part of our strategy for wanting to be ubiquitous, be everywhere that our company -- our customers want to do business with us. And we're seeing, in the early going on that, incremental growth from those channels. In fact, we've got one of our leading franchisees who has already moved on to those platforms and is running 4 points or so ahead of the system which is primarily driven by the incremental customers that they're finding on those platforms. And of course, the way we negotiate the economics in those deals, in the U.S., we really are indifferent in terms of where the sales fall. We ensure that our economics are roughly the same across channels. So we want to be there wherever our customers want to do business with us. Operator: Our next question is from David Palmer of Evercore. David Palmer: That was an interesting comment just right then. You said it was -- the franchisee was 4 points better than the average, so down low single digits as opposed to down 6%. Is that the type of thing you were seeing when they did that third-party collaboration? Chris Turner: Yes, yes, running 4 or 5 points ahead of the system. And the vast majority of that we attribute to the incremental customers that they're finding through the platform. David Palmer: And do you think that that's going to be -- the majority of the system will be doing something similar to that franchisee by the end of the year? And I guess I'm wondering if -- this is a little crystal ball-ish but do you think that the third-party delivery adoption will be fairly universal within the U.S.? And do you anticipate on top of that some sort of labor easing being a path forward here to flat to positive comps for the U.S.? Chris Turner: Well, in terms of the strategy to address these challenges, David Graves and Aaron Powell, who are doing a great job dealing with this very dynamic environment, those are a couple of key parts of their strategy for dealing with this. And we'll be implementing the delivery as a service, as we mentioned in the earlier comments, over the next two to three quarters. And then, of course, the franchisees each have a decision on how to work with aggregators but we do that under our umbrella agreement. And we expect that those kinds of gains continue to show up in the results. Obviously, I think more and more are going to be choosing to move in that direction. So the implementation will take a while but it's certainly part of the strategy for dealing with this really dynamic environment. David Palmer: And then, just one last question is do -- what is the sort of mix that you get? Like that franchisee, for example, what sort of mix do they get from third party when they get that type of improvement? And I'll pass it on. Chris Turner: It's still too early to tell. This is something that has just been implemented over the last few months, so still too early and still too limited a sample size, I think, to draw conclusions on a broad basis. But as we said, if you look at our business, there is this fulfillment challenge. Our carryout business was actually up in the quarter. So the primary challenge was on the delivery business. And so these strategies are directly pointed at that biggest root cause that's getting in the way of being able to serve and fulfill full customer demand. Operator: Our next question is from John Ivankoe of JPMorgan. John Ivankoe: I did want to revisit some of the comments on economics which is -- clearly, I mean, these brands have been around long enough in the U.S. and globally that, I guess, there are enough maybe previous experiences that we can maybe pick and choose from historically. So in environments where consumers' costs have risen faster than their incomes and obviously, there are so many costs that are rising for the consumer, where does the consumer or where might the consumer typically cut back? Is it in visitation? Or is it in ticket? And I guess this is kind of the first point. Secondly, if it is ticket, when you guys look back '22 versus '19, how much of that average ticket gain do you think was actually frothy, the consumer that maybe traded up or added on or larger sizes, what have you, to unsustainable levels versus how much average ticket do you think may naturally come out of the business as the consumers still use the QSR brands for all the obvious reasons but can just find back ways that you'd basically revert to the mean in terms of what they actually buy and how they use the various brands? David Gibbs: Yes. Thanks for the question, John. Obviously, the -- on the ticket, I think the biggest driver of the ticket increase over the last few years has actually been party size rather than premiumization, although they're both drivers. So as we see mobility return, individual meals return, that could bring down ticket without necessarily implying consumers are trying to cut back on cost per eater. But as far as the consumer and how's their behavior in this environment, some of the other things to think about are the fast casual category has grown a lot. We expect that if there's cutting back, that there'll be some trade down from fast casual back into QSR which will be favorable for us, particularly Taco Bell which I think is well positioned to capture some of those visits. But it all comes back to this theme of the QSR industry is built on convenience and value. Convenience and value win in any environment, particularly when you couple it with our great brands and innovative products that we're constantly introducing. And you saw Taco Bell's performance in Q1 in the U.S., plus 5%, one of the better numbers for the major QSR chains. And then you saw the growth that we're getting in Taco Bell internationally. So, I think we feel like we've got momentum and this environment is not going to get us off of it but we're going to have to do what we always do which is continue to pivot and evolve our offerings to meet consumers' needs. Talk about a great example, 70% of our U.S. profit, they've been leaning in on the Cravings Value Menu which is $1 and $2 price points. And that's working to meet the needs of consumers with less money to spend. But at the same time, they've been able to take price across the rest of the menu on their combos and more premium offerings and that's working as well. John Ivankoe: And if it's appropriate to comment, is there any near-term change just in the last month or two from consumers that are closest -- geographically closest to the crisis in Russia and Ukraine? Obviously thinking about some of the Central, Western or -- European markets in terms of how that consumer may have reacted due to some of these terrible events. David Gibbs: Yes. No, surprisingly, our business in Europe and you can see it from the numbers, is doing quite well. So we're not seeing -- to the point of your question, we're not seeing an impact on adjacent businesses. We're seeing the prevailing factor there is just sort of return to mobility in Europe and the recovery of our businesses that were suffering more at this time last year. Operator: Our next question is from David Tarantino of Baird. David Tarantino: Chris, I wanted to come back to your profit guidance for the year. And I think you mentioned multiple times that you're working hard to overdeliver versus that plan. And I wondered if you could just elaborate on what factors that you see could drive upside to the plan. If you were to see upside, where would it come from in your view? And then secondly, I guess, to balance the discussion, where do you see the greatest risk to the current plan? Chris Turner: Yes. Thanks, David. As with all elements of our algorithm, we're always working to find ways to overdeliver. We called out the one primary driver which, on profit, creates a headwind this year which -- going into Q2, Q3, Q4, we're going to lose 3 points of operating profit plus the planned growth in Russia as we exclude those from the results and direct any profits from Russia towards humanitarian efforts. So that's the big headwind, of course. In the early going, as we said, this China softness is probably a little bigger than expected. I don't know the long-term trajectory there. You would think at some point in the long term, China will rebound and that business should see growth. But I'm sure the timing on that is uncertain. If you think about other puts and takes, I think emerging market strength. If you look at our 18% same-store sales growth in emerging markets, that's a great sign of recovery and a big important part of our business. So that's a place where you might see upside. Of course, on the flip side, we'll continue to navigate the really dynamic environment around inflation, pricing and how those are playing out in each of our markets around the globe. Right now, we think we're dealing with those incredibly well. Our scale gives us advantage and gives our franchisees advantage in dealing with those. But -- a very dynamic environment but we feel really good about the overall profit engine of the business. Operator: Our final question this morning is from Brian Mullan of Deutsche Bank. Brian Mullan: Just kind of a big picture question but do you see any potential one day for a cross-brand loyalty program at Yum!? Is that something that you think could potentially work in the quick service restaurant industry in the U.S.? Or conversely, are there some reasons why that wouldn't work or wouldn't be a good idea maybe from a consumer perspective or a franchisee perspective? Chris Turner: Yes. So Brian, good question. Loyalty is becoming an increasingly important part of our business, increasingly important part of our digital experience that we provide to customers. More than half of our restaurants around the globe are part of a loyalty program. Taco Bell in the U.S. is a great example of how we're driving excitement through loyalty. That's what we did with the Taco Lover's Pass. And that helps to drive app downloads and people signing up into the program and we continue to see significant growth in membership in that program. Pizza Hut obviously in the U.S. has a large and very impactful loyalty program. And KFC has great loyalty programs in a number of markets around the globe. So we're going to continue to focus on that, implementing it in markets where it makes sense. Interesting question. Obviously, we thought about it in terms of cross-brand loyalty. Right now, we're focused on maximizing the value of our brand-focused loyalty programs. But obviously, as our data and analytics capabilities continue to evolve, all sorts of possibilities are out there in the future. But for the time being, we'll remain focused on brand-specific loyalty programs. David Gibbs: So thank you, everybody. I appreciate your time. Just to wrap up, it was another strong quarter obviously with good top line sales growth, all brands growing. The development numbers, obviously, we continue to set records which we're very proud of. And that's widespread, right? All of our brands grew at least 5% on a net new unit basis in the quarter. Another digital sales record which we keep saying on every call and we just keep on delivering on. And then this time, we passed that important milestone of 40% digital mix. And I just think, in total, the quarter represents our brands all around the world are healthy and can perform in any environment. This is certainly one of the most challenging ones we've ever had to deal with, proving the resiliency of our business model. Thank you for your time. Operator: This concludes today's call. Thank you for joining. You may now disconnect your line.

Operator: Good morning and welcome to the Fourth Quarter 2021 Yum! Brands, Inc. Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jodi Dyer, Vice President, Investor Relations. Please go ahead. Jodi Dyer: Thanks, operator. Good morning, everyone and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President, Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, I would like to remind you that this conference call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this announcement and 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 our earnings releases and relevant sections of our filings with the SEC to find disclosures and definitions of non-GAAP financial measures and other metrics that may be used on today's call as well as reconciliations of non-GAAP financial measures. Please note that during today's call, all system sales and operating profit results exclude the impact of foreign currency. We will no longer be providing an update on temporary store closures as we ended Q4 with less than 1% of our stores temporarily closed. As a reminder, temporary store closures only include stores that were fully closed as of the end of the quarter but have or are expected to reopen. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are 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 upcoming Yum! investor events and the following. Disclosures pertaining to outstanding debt in our restricted group capital structure will be provided at the time of the Form 10-K filing. First quarter earnings will be released on May 4, 2022, with the conference call on the same day. Now, I'd like to turn the call over to Mr. David Gibbs. David Gibbs: Thank you, Jodi and good morning, everyone. As we reflect on 2021, I couldn't be prouder of the collective accomplishments of our world-class franchise partners and collaboration of our global teams, guided by our Recipe for Growth and Good. While the last two years have been the most challenging operating environment we've ever navigated, we exit 2021 stronger than ever with over 53,000 global restaurants. Compared to 2019, we've nearly doubled our digital business. System sales have grown over $5.5 billion and operating profit has grown over $200 million. Additionally, since 2019, we've added another iconic brand and closed on three technology acquisitions, all while launching our global Unlocking Opportunity Initiative with a $100 million commitment over five years investing in equity and inclusion, education and entrepreneurship, the cornerstones of our Recipe for Good. In 2021, we opened 3,057 net new units, driven by 4,180 gross unit openings, with meaningful contributions from each of our brands, marking the strongest growth year in our history and setting an industry record for unit development. To put that into context, as the world's largest restaurant company, we opened a new restaurant on average every two hours. This speaks to the health of our business; iconic brands; capable, committed and well-capitalized franchise partners; and strong unit economics. This is yet another significant development milestone on our ongoing growth journey, providing customers with access to our brands through a variety of restaurant formats and on- and off-premise ordering channels. Now more than ever, we've leaned into the structural advantages of our diversified global portfolio by leveraging our unmatched global scale, sophisticated supply chains, marketing and consumer insights expertise and our growing digital and technology capabilities to fuel growth and deliver strong results. Even as dining room sales recovered throughout the year, we continued to grow our digital sales that reached a record $22 billion in fiscal 2021, an increase of approximately 25% over 2020, suggesting a more permanent shift to digital channels. We ended the year with over 45,000 restaurants offering delivery, representing more than a 25% increase year-over-year. We galvanized our digital and technology strategy and accelerated the development of our ecosystem with both internal investments and the closing of the Kvantum, Tictuk and Dragontail acquisitions. Our teams remain focused on elevating the customer experience, expanding our off-premise capabilities and empowering our team members with tools to make it easier to run our restaurants, all ultimately fueling improved unit economics. Expectations of our customers, team members and franchisees have forever changed due to the experiences over the past two years and we continue to challenge ourselves to exceed their rising bar. I'm confident we're poised to lead the industry as we embark on the next chapter of our growth journey. Today, I'll discuss our 2021 results showcasing a few examples across our brands for two of the four pillars in our Recipe for Growth: our Relevant, Easy and Distinctive Brands or R.E.D. for short; and our Unrivaled Culture and Talent. Then I'll share progress on our Recipe for Good. Chris will share our fourth quarter results and provide an update on the other two pillars of our Recipe for Growth, Bold Restaurant Development and Unmatched Operating Capability, as well as an update on our strong balance sheet position and capital allocation strategy. To begin, full year 2021 system sales grew 13% with same-store sales growth of 10% or 3% on a two year basis and 6% unit growth. Each of our brands recorded positive same-store sales growth for the year and contributed to broad-based development strength. Full year core operating profit increased 18%, driven by same-store sales growth and the impact of unit development throughout the year. As we ended the year, COVID outbreaks and resulting government restrictions limiting mobility continued to impact sales in a few key markets, primarily in Asia, presenting a headwind to fourth quarter results. However, our sales momentum remained strong with continued global recovery as evidenced by our two year global same-store sales excluding Asia up 10% on a two year basis, accelerating sequentially from last quarter. Next, I'll talk about our four R.E.D. brands. I'll begin with KFC which accounts for 52% of our divisional operating profit. KFC full year 2021 system sales grew 16%, driven by 11% same-store sales growth and 8% unit growth. Q4 system sales increased 10% with 5% same-store sales growth or 3% on a two year basis. We continue to see ongoing recovery in emerging markets as evidenced by the fact that more than half of our 13 global KFC regions delivered system sales growth in excess of 25% for the full year. KFC International Q4 same-store sales grew 6% or 2% on a two year basis. Sales remained strong throughout the quarter despite regional impacts from COVID variants, with momentum holding in many recovered markets more than offsetting heavily impacted markets including parts of Asia and Western Europe. Common themes fueling top line growth in the quarter include off-premise and digital capabilities, newsworthy products and a strong value offering. KFC U.S. Q4 same-store sales grew 4% or 12% on a two year basis. Strong top line momentum was fueled by strength in group occasions, growth in the digital channel and the success of our chicken sandwich. The chicken sandwich continues to perform well for the business and now makes up roughly 9% of our sales mix as of Q4, a strong improvement from a 1% mix last year. Our sandwiches are served straight from the fryer and hot to our guests. We expect the chicken sandwich platform to continue to be a significant driver of our positive sales momentum for the business going forward. Next, Taco Bell which accounts for 32% of our divisional operating profit. Before delving into results, I'd like to congratulate the entire Taco Bell system for ranking number one in the Franchise 500 for the second year in a row, beating our peers as well as impressive concepts in other industries. Entrepreneur magazine which produces this list, recognized Taco Bell for it's franchisee collaboration and innovation. This recognition is further evidence of our intentionality to be the world's franchisor of choice. Now I'll discuss our results for the year. Taco Bell full year 2021 system sales grew 13%, driven by 11% same-store sales growth and 5% unit growth. Fourth quarter system sales grew 11% with same-store sales growth of 8% or 9% on a two year basis, reflecting an acceleration from Q3. Taco Bell kicked off the quarter by introducing the new Cantina Crispy Melt Taco and later in the quarter brought back the Grilled Cheese Burrito, featuring a grilled and bubbly blend of real cheddar, mozzarella and pepper jack cheeses. Additionally, the team kept value front and center with the launch of a new Crave More Value Menu featuring the $2 burritos. In addition, we launched a new lineup of toasted breakfast burritos as a way to welcome customers back to our breakfast day-part. Taco Bell fans continue to adopt digital ordering channels as we set digital sales records in both the U.S. and international this year. We will continue to bring distinctive products to life through our digital channels with early access to new products, digital-only campaigns and loyalty rewards. Moving on to Pizza Hut which accounts for 16% of our divisional operating profit. Full year 2021 system sales grew 6%, driven by 7% same-store sales growth and 4% unit growth. Q4 system sales grew 4% with same-store sales growth of 3% or 2% on a two year basis. Overall, we saw an inflection in the growth trajectory of the Pizza Hut brand this year, a testament to the hard work of our team members and franchise operators and a reflection of the overall health of the system. Pizza Hut International Q4 same-store sales grew 4% while same-store sales declined 3% on a two year basis. Key markets that contributed strong performance in the quarter included Africa, Canada, India and the U.K. The brand remains focused on emphasizing easy through embracing continued growth in off-premise channels through utilization of both first- and third-party delivery networks. Pizza Hut U.S. Q4 same-store sales grew 1% or 10% on a two year basis. The team continues to bring iconic pizza that customers love to market in relevant and distinctive ways. In the fourth quarter, Pizza Hut received strong recognition for an influencer-based marketing campaign that resulted in Pizza Hut being named a 2021 culture driver by TikTok. Additionally, we brought back a fan favorite, the Triple Treat Box, offering customers a convenient and value-oriented family meal option which drove sales in the quarter. Lastly, the Habit Burger Grill achieved full year 2021 system sales growth of 24%, driven by a 16% same-store sales growth and 11% unit growth. Q4 system sales increased 20% with 11% same-store sales growth or 5% on a two year basis. To showcase their chef-inspired innovations, The Habit Burger Grill reintroduced the Chicken Caprese Sandwich on garlic ciabatta bread with garlic aioli during the quarter. As dining rooms have reopened over the course of the year, Habit team members welcomed customers back into the restaurants while continuing to serve customers through their digital and off-premise channels. Now, I'll discuss our Unrivaled Culture and Talent growth driver. The hallmark of Yum! is our people-first culture which drives retention and recruitment of amazing talent. We remain committed to growing our talent from within and recruiting top external talent, as you've seen from some of our recent internal promotions and leadership transitions. This past quarter, we were excited to welcome former Nike Executive Sean Tresvant to serve as Taco Bell Chief Brand Officer while former Nintendo Executive Nick Chavez joined KFC U.S. as Chief Marketing Officer. The past two years have allowed us to build a strong foundation centered on our culture, talent and unwavering relationships with our franchisees. The collaboration with our franchisees has never been more powerful as we're aligned more than ever on the future growth trajectory of the business. Finally, I want to give an update on our Recipe for Good and the work we're doing around our three priority pillars: planet, food and people. When it comes to our planet pillar, 2021 was a milestone year. We announced science-based targets to reduce greenhouse gas emissions nearly 50% by 2030 and pledged to achieve net zero emissions by 2050. We are expanding our foundational requirements for green building standards for new unit builds and advancing our corporate office and company-owned restaurant footprint to renewable energy. In terms of our food, we remain focused on food safety and listening and responding to customers' evolving preferences and improving the nutritional value of our menu items. We continue to introduce relevant and distinctive plant-based offerings from KFC's national launch of Beyond Fried Chicken in the U.S. to Pizza Hut offering Beyond Italian Sausage Crumbles in Canada. Finally, on the people front, we're committed to investing in Yum!'s social purpose focused on unlocking opportunities for our people and communities while championing equity, inclusion and belonging across all aspects of our business. Just last week, we announced the Yum! Franchise Accelerator, a groundbreaking partnership with the University of Louisville and Howard University to train and advance underrepresented minorities and women interested in building a career in the restaurant industry. Not only is this a priority for Yum! but unlocking opportunity remains a focus for our brands as well with the recent launch of the Taco Bell Business School. As a result of our elevated commitments and transparent disclosures, we've received notable recognition this quarter, including being named to the Dow Jones Sustainability Index North America for the fifth consecutive year and being named on Newsweek's ranking of America's Most Responsible Companies. I'm incredibly proud of our Recipe for Good and know that this work is more important than ever when it comes to building resilient and relevant brands for the future. As I take a moment to reflect on the past two years, I'm extremely proud and grateful for the significant accomplishments and collaboration across our teams to both serve our customers and community while fueling growth for our franchisees and shareholders. We're entering 2022 which marks Yum!'s 25th anniversary, with confidence in our Recipe for Growth and Good strategies and I'm energized for what lies ahead. I'm certain we'll continue to build the world's most loved, trusted and fastest growing restaurant brands while delivering lasting value for our stakeholders. With that, Chris, over to you. Chris Turner: Thank you, David and good morning, everyone. Today, I'll discuss our fourth quarter financial results, Bold Restaurant Development and Unmatched Operating Capability as well as our strong balance sheet position and capital allocation strategy. I'll begin by discussing our financial results. We finished the year strong, opening a record-breaking 4,180 gross units or 3,057 net new units, resulting in 6% unit growth for full year 2021. A robust 10% same-store sales growth helped us achieve 13% system sales growth, driving full year core operating profit growth of 18%. That is a tremendous outcome given the inflation, labor, supply chain and consumer mobility challenges our brands faced in the back half of the year particularly in Q4. Q4 results also reflect impressive performance. System sales grew 9%, led by same-store sales growth of 5% or 4% on a two year basis, accelerating from Q3. Strong underlying profit growth was masked by elevated G&A levels owing to higher incentive compensation as a result of our strong full year results and the normalization of Taco Bell company-owned restaurant margins in the quarter as previously signaled. We anticipate quarterly variability in our company-owned restaurant margins as we remain focused on balancing relative value for our customers while protecting margins in the long run. To that end, full year 2021 Taco Bell company-owned restaurant margins were in line with our historical range of 23% to 24%, virtually unchanged relative to 2019 levels. This demonstrates our ability to drive strong top line results while managing profitability in an inflationary environment. Our Q4 ex special EPS was impacted by two items. First, we recorded a $35 million pretax gain on our investment in Devyani International Limited. Second, we had a higher-than-normal tax rate for the quarter due to a tax reserve related to a prior year filing position that was challenged. And so our Q4 results were in line with our internal expectations and culminated in full year results that exceeded all elements of our long-term growth algorithm. Moving on to our Bold Restaurant Development growth driver. We opened 1,678 gross units in the quarter or 1,259 on a net new unit basis, resulting in nearly 4,200 gross units opened for the full year which is a record for Yum! and the restaurant industry. That equates to over 100,000 jobs created worldwide last year alone. We're able to achieve these record-breaking openings thanks to contributions from each of our four brands and incredible franchisees around the globe. China continues to be the biggest developer. However, we continue to see broad-based strength across our portfolio, evidenced by over 2,500 restaurants opened outside of China this year. In fact, we saw new restaurants built in over 110 countries this year, a step-up from prior years, signaling our development engine is diversified and stronger than ever. At KFC, the brand delivered a record development year, led by significant contributions from China, India and Russia. Overall, KFC International opened over 2,400 gross units and nearly 2,000 net new units during 2021. At KFC U.S., after several years of same-store sales growth and strengthening unit economics, we have a much stronger foundation now on which to grow in the future as evidenced by the inflection point in developments with the system moving to positive unit growth in 2021. Taco Bell reported a strong development year in both the U.S. and international. In the U.S., Taco Bell reached an impressive milestone, ending the year with over 7,000 restaurants and ample white space for future developments. During the fourth quarter, Taco Bell celebrated más international expansion as Spain was the first market to surpass 100 units. We believe this development threshold unlocks accelerated growth, fueled by the benefits of scale, including supply chain advantages as well as marketing and brand awareness. We're confident in what the future holds for Taco Bell International, particularly as scale ties directly to profitability. Pizza Hut International delivered a record year in development with all international business units reporting net positive growth, led by China and India. Continued improvement in unit economics and a more HMR-focused footprint are drivers of the broad-based unit growth. Pizza Hut U.S. continues to make progress on it's development journey and is poised for future growth, thanks to improved unit economics and a healthy franchise base. Finally, The Habit Burger Grill restarted their development engine this year with 23 net new units. Our brands are entering 2022 from a position of strength with plans to continue exceptional growth, owing to our world-class operators and franchise partners. We're confident in our future growth engine given our broad-based strength, improved unit economics and the visibility we have into our development pipeline. I want to say a huge thank you to our development teams and franchise partners for all the hard work it takes to open nearly 4,200 restaurants in a single year, let alone a year with ongoing COVID and supply chain-related challenges. Next, I'll talk about our Unmatched Operating Capability growth driver. We remain focused on leveraging our digital and technology strategy to elevate both customer and team member experiences by leaning in on three key elements: easy experiences, easy operations and easy insights. Starting with easy experiences. We expanded our digital ordering channels, including chat ordering via Tictuk, to nearly 2,000 stores at year-end, an increase of roughly 60% since our acquisition in the first quarter. We also saw digital sales at KFC U.S. grow approximately 70% year-over-year, fueled by our delivery service channel and e-commerce platform that launched nationwide in early 2021. We continue to invest in technology platforms focused on delivering a frictionless experience for our guests, including the launch of Quick Pick-Up at KFC U.S. in the fourth quarter that allows guests to bypass the drive-thru and grab their digital orders from cubbies inside the restaurant. The outstanding sales growth across our digital channels is evidence that our customers continue to expect and opt for easy access to our brands. Now moving on to easy operations which are focused on making it easier for our team members to run the business and ensure a superior customer experience. I want to highlight the exceptional operating performance of our brands, starting with Taco Bell, whose team members were unwavering in their commitment to deliver a superior customer experience. In 2021, Taco Bell's drive-thru times were two seconds faster year-over-year and the fourth quarter marked the eighth consecutive quarter of an average drive-thru time under four minutes. This truly is an impressive performance considering labor availability challenges. Additionally, the Dragontail order and delivery platform is now live in 2,800 stores in 21 markets across KFC and Pizza Hut, up from 13 markets last quarter and 9 markets from the end of 2020. Dragontail allows us to tap into the power of artificial intelligence to streamline the end-to-end food preparation process and optimize delivery routes for drivers. At Pizza Hut International, we continued deploying HutBot, our intelligent coaching app designed to enhance both the team member and customer experience by digitizing routines and insights into operational efficiencies. When HutBot is deployed and used effectively, it's proven to increase customer satisfaction scores. We ended the year with HutBot live in over 6,000 Pizza Hut locations in 70 markets. To round out our technology strategy, our easy insights platform provides us with invaluable knowledge about our consumers, enabling us to enhance the customer relationship. When we acquired Kvantum, a leading AI-based consumer insights and marketing performance analytics business, in the first quarter, it was operating in 13 markets. We have since tripled Kvantum's footprint to over 45 markets. We will continue to prioritize initiatives that lead to incremental sales growth and improved unit economics for our franchisees. The impressive adoption rates of these technology platforms are evidence of our franchisees' confidence in the investments we made to advance our digital and technology ecosystem this year. We're confident these investments have created a meaningful competitive advantage and will be a point of differentiation for Yum! as we serve the elevated expectations of customers. Now for an update on our strong balance sheet position and our capital allocation strategy. We ended the year with cash and cash equivalents of $486 million excluding restricted cash. We closed the year temporarily below our net leverage target of 5x as a result of our strong earnings growth. Capital expenditures, net of refranchising proceeds, were $55 million during the quarter and $145 million for the full year. The full year consisted of $230 million in gross CapEx and $85 million in refranchising proceeds. We paid a healthy quarterly dividend of $0.50 per share or approximately $600 million for the full year. With respect to our share buyback program, during the quarter, we repurchased 5.6 million shares at an average share price of $128, totaling $720 million. For the full year, we have repurchased 13 million shares at an average price of $122, totaling $1.6 billion. As we look to 2022, our capital priorities remain unchanged: invest in the business, maintain a healthy balance sheet, pay a competitive dividend and return excess cash to shareholders via share repurchases. We remain committed to maintaining our asset-light business model of at least a 98% franchise mix. Going forward, we expect strong returns from our equity store investments to continue and like our franchisees, see attractive opportunities to invest in unit development. Capitalizing on these opportunities, we expect net capital expenditures for full year 2022 to be approximately $250 million, reflecting up to $350 million of gross CapEx and $100 million of refranchising proceeds. In the long run, we expect our refranchising proceeds to offset our new store investments as they have in the past. But in the near term, new store investments may exceed refranchising by $50 million to $100 million annually, primarily driven by our strategy to accelerate growth of The Habit equity estate. We were pleased to announce earlier this week an increase in our quarterly cash dividend of 14% to $0.57 per share in 2022. The recovery of our business in 2021 and proven resilience of our free cash flow supported this increase, reflecting a two year double-digit CAGR, in line with our historical earnings growth and dividend increases. I'd like to wrap up by providing color on the shape of 2022. I'm pleased to share that we expect to deliver full year growth in line with our long-term growth algorithm which includes 2% to 3% same-store sales growth and 4% to 5% unit growth, culminating in mid- to high single-digit system sales growth leading to high single-digit core operating profit growth which excludes FX. Reflecting on 2021 results, we had several quarterly drivers that created lumpiness in the shape of the year, creating noise in our year-over-year lapse in 2022. We expect our full year G&A to be approximately $1.1 billion but our G&A spend will return to a more balanced quarterly cadence relative to 2021. Given the shape of our anticipated G&A spend throughout 2022 in comparison to 2021, we expect G&A to be a headwind to operating profit growth in the first half and a tailwind to growth in the second half of 2022. Due primarily to these timing factors related to G&A, we are expecting roughly flat core operating profit growth in the first half and high teens core operating growth in the second half, culminating in full year high single-digit core operating profit growth, in line with our long-term growth algorithm. Finally, on our 2022 effective tax rate. Although it's difficult to forecast with precision at this time, we continue to believe 21% to 23% is the appropriate range but there are factors that could move us toward the high end of the range. We'll continue to provide updates as appropriate. Overall, I couldn't be prouder of the results for the year. Looking forward to 2022, I'm confident we're poised to take share and deliver on our long-term growth algorithm, driven by our expanding competitive advantages tied to our unmatched global scale, investments in our digital ecosystem and world-class franchise partners. I'm looking forward to the year ahead and the continued success of our iconic global brands while delivering consistent earnings growth for shareholders. With that, operator, we're ready to take any questions. Operator: [Operator Instructions] The first question comes from David Tarantino with Baird. Please go ahead. DavidTarantino: Hi, good morning. My question is on your outlook for 2022. And Chris, I think you mentioned that you're planning it to be on algorithm for comps and unit growth. And specifically on comps, 2% to 3%, it looks a little maybe conservative in light of the fact that many of your markets will still be cycling some issues related to COVID, so arguably could see a recovery phase as you move through the year. So I just wanted to ask if you could give some context to that 2% to 3% outlook and whether you view that as a baseline that could prove conservative or if there are any offsets that we should consider as we think about the year. Chris Turner: Yes. Thanks, David. I think we view all of our brands as having strong momentum coming out of 2021. Our long-term growth algorithm is just that, it is our long-term algorithm and we feel confident in delivering it in 2022 and beyond. You do have lots of puts and takes around the globe in terms of lapse, in terms of where Omicron is in any of our given markets but we feel good about the momentum that each of our brands have. And so we're always going to strive to deliver the algorithm and find ways to beat it. And so that's going to be our aspiration but the long-term algorithm sort of defines the plan. Operator: The next question comes from Jared Garber with Goldman Sachs. Please go ahead. JaredGarber: Hi, thanks for taking the question. Actually, somewhat of a follow-up to the prior question just on the comp algorithm as we look to next year. It looks like in today's results, the average weekly sales growth across the brands didn't exactly line up with sort of the comp growth so there was some noise in between those numbers. And I wonder if that maybe is what's driving potentially some of that -- what David said as some conservatism in the comp algo. So I just wanted to understand maybe if there's any specific drivers there, if it's just lapse on a year-over-year basis in some of these markets or if it's maybe lower productivity units that are being opened. Any color there would be really helpful. Chris Turner: Yes. So when we think about how same-store sales and net new units add up to overall system sales growth, on that net new unit number, there are always going to be some factors like timing of when the stores open within the quarter, where we see stronger sales in -- or stronger growth in markets that may have slightly different AUVs than the overall average. But that's what's driving that difference. But overall, as we say in the algorithm, 2% to 3% same-store sales growth, 4% to 5% net new unit growth translating to mid- to high system sales growth is how we think about it. Operator: The next question comes from Sara Senatore with Bank of America. Please go ahead. SaraSenatore: Thank you very much. Just a two part question on the digital sales and some of the technology investments. First, on the digital sales mix, could you just talk about -- you said it's structurally your sustainably higher mix. How is that playing out by brand or channel? Is this coming from delivery which is lower margin or order ahead which is higher margin, just as I think about the shape of the business going forward? And then you are investing for Pizza Hut on digital and technology. Can you just give a little more color on this? Is this sort of pass-through where fees show up in revenues and the costs show up in G&A? Or are you kind of investing ahead of the curve to support franchisees? And will that likely persist? Chris Turner: Yes. So first, if I take the drivers of the $22 billion in digital sales, it's been broad-based. We've seen strength across all of our brands and we're seeing strength across all of the channels. So delivery has continued to grow. Carryout has grown over the two years where people are using click and collect. And of course, as people have come back to the dining rooms, we've seen growth in the kiosk business which has rebounded at Taco Bell, for example. So we're seeing strong growth across all of those channels. And of course, on a brand-by-brand basis, you've got real strength in each one. KFC, if you go ex-China, was up 46%. Taco Bell in the U.S. is approaching 20%, Taco Bell International with a 40% mix. And of course, Pizza Hut is sustaining their strength on digital. So it's just a really great story. Clearly, those strong digital numbers come as a result of the investments we've been making and our strategy around digital because we knew this was the future of the industry. As we've said before, COVID accelerated those trends and we're glad that we were in a great position to be able to capitalize on it. But whenever you nearly double your digital sales in two years, I think that's evidence that those investments are paying off. And of course, our franchisees are co-investing with us to help make that happen but they're doing that because they're seeing strong returns from those investments in their business as well. So, I think overall story is we're getting a strong return and we're very pleased with the digital results and we're going to continue to drive that. Operator: The next question comes from Dennis Geiger with UBS. Please go ahead. DennisGeiger: Great. Thanks for the question. Wondering if you could talk a bit more about some of the industry challenges in the current environment, even as you're managing them well, what you're seeing globally but particularly in the U.S. across staffing, impacts on operations and sales. And I guess more importantly, how do you think over the coming quarters and going forward as some of these industry challenges ease and the headwinds potentially turn to some tailwinds for the business as it relates to hours, et cetera? David Gibbs: Yes. Thanks for the question, Dennis. Obviously, this is a challenging environment to operate in, in our industry. That's been well documented. Q4 was more of the same of that and that extended into the early part of this year. As far as Omicron goes in the U.S. specifically, it does feel like we're moving to a better place. I was just on the phone with our chief operating officers yesterday, comparing notes across brands and there were some really similar themes of we're past the peak impact of Omicron, applications for team members are starting to come back up. So we think that the challenges and the impact on our restaurant hours may start to slowly abate over time. As far as the global picture, what we're seeing internationally is through most of the COVID pandemic, we had, had a more severe impact in our emerging markets. They were less well equipped to deal with the challenges of COVID. That's starting to change a little bit and we're starting to see the gap between the developed markets and emerging markets narrow. As you know, Yum! has outsized exposure to emerging markets. So even though we put up some amazing numbers over the last two years through this, we've been held back by those emerging markets. As that gap starts to narrow, we can see that there can be some strength in emerging markets to help strengthen our overall sales picture internationally, where, of course, 2/3 of our restaurants reside. But it's always a challenge to predict and forecast in this environment. We've all learned that over the next two years. But quite optimistic right now that both internationally and domestically, the business is heading to a better place. Operator: The next question comes from David Palmer with Evercore ISI. Please go ahead. DavidPalmer: Thanks. Good morning. Heck of a unit growth year in '21 with 4,200 gross opens; I think it was 6% net unit growth, at least as far as an exit rate. I was wondering if you could give a hint as to where you could see globally, by brand, by region, some areas of acceleration and perhaps moderation in unit growth. For example, it's amazing that 1,800 of the 4,200 gross opens were from China. And I think there's some people concerned about economic headwinds there. And then you mentioned that Pizza Hut U.S. was no longer a drag to the unit development. So hoping for some highlights and lowlights as you look ahead. David Gibbs: Glad you talked about the new unit development, David. For me, it's an amazing accomplishment at Yum!. In my 32 years in this business, I've never seen anything like it obviously. The growth rates are industry records, Yum! records. It was widespread. It's across all brands. It's occurring in the vast majority of our countries which is really encouraging. And the question about where do we see softness going forward, it's a great question. I can tell you that there's no countries that we're worried about pulling back on development. We see all of our countries that are developing today being able to continue to develop at the pace that they're at and even accelerate. India is one I would highlight. We opened 335 units in the country of India on the strength of some development agreements with really great partners across all of our brands. Obviously, there's a huge opportunity for Yum! in India and one that should be accelerating. But even in the U.S., we're starting to see the momentum develop in our Pizza Hut and KFC businesses, who historically haven't been contributing net new unit growth. We're optimistic about that. And Taco Bell U.S. is back to developing at a really fast pace like in the early days of Taco Bell and we see that accelerate. But Taco Bell International is probably one of the most exciting stories we have right now. We've talked about it a lot and you're seeing over 160 net new units built on a base of 600 entering the year. That's a 26% growth. That's pretty impressive and we see that accelerating. Spain, for example, passed 100 units on the ground. We know when you get to that 100-unit tipping point, you see an acceleration but we have other markets poised to do the same. Operator: The next question comes from John Ivankoe with JPMorgan. Please go ahead. JohnIvankoe: Hi, thank you. And I apologize if I missed this. Have you gone back and looked at the fourth quarter system sales and determined how much the labor environment may have actually constrained system-wide sales growth, whether that's in the U.S. or global, it's up to you how we talk about that, just in terms of having less hours in the store that -- the store than you would have -- labor hours in the store than you would have liked? Are you actually having less store hours than you would have like, perhaps even day-parts in certain cases than you would have liked, I guess, is the first part of the question. And then secondly, we talked about easy operations and you mentioned a few things that you were doing at the store to help your franchisees. Are any at the point now where stores can be more efficient from a labor perspective where they can do the same or even more customer counts on a reduced level of labor? Or might that come from future initiatives that you are working on? Chris Turner: Yes. Great questions, John, on the labor front. As David mentioned earlier, it's obviously been a challenging environment but kudos to our teams, our franchisees for navigating through that. And I'm thankful that we have such a strong culture that goes from top to bottom, to our stores in Yum! that our franchisees help bring to life. So if we think about your specific question on how it impacted our sales in Q4 and coming into Q1, first, it's important to put this in context, that these labor challenges are most pronounced in the U.S. And of course, the U.S. is 40% of our business. There are a couple of markets, say the U.K., Australia, that are also experiencing some pressures but they are most pronounced in the U.S. So our global footprint provides us a natural advantage in this type of environment. But obviously, let's dig into the U.S. where we know those challenges have been tough. We did see some constriction of hours across the brands in Q4 as our franchisees dealt with the Omicron impact on staffing availability. The nature of that impact varied from brand to brand. For example, in Pizza Hut, you saw it really constrained delivery hours because of the challenges in staffing those driver positions. I think it's been well documented that's a challenge for the pizza category and we've seen other folks talk about that challenge. But that's an area where it was particularly pronounced, particularly coming into early January. I think the good news is we believe, as David said, that we're past the peak probably two or three weeks ago and things, we've been talking to our COOs yesterday, have gotten significantly better in the last couple of weeks. All of that has had a small but real impact on sales but again, trend coming out of that's much better. I will say that in terms of dealing with it, our franchisees have been focused on all of the levers that you would expect but we think the one that differentiates us is the culture that we have in the restaurants that causes our team members to want to stay. Second part of your question around efficiencies. I think the Taco Bell example of how we've driven more volume through the drive-thrus while reducing service times is the best example of how we're bringing efficiency to life in the restaurants. We are doing a number of things on the technology front, whether it's Dragontail, other systems. We have an innovation team that is in place. And of course, our core ops process teams are always improving processes in the restaurants. So things are in motion; there are things that have been implemented. And in the long run, we think there's a lot more to come. Jodi Dyer: Operator, we have time for one question. Operator: Thank you. The last question comes from John Glass with Morgan Stanley. Please go ahead. JohnGlass: Thanks. Good morning. I wanted to ask about KFC International. I was struck by how strong the comps were on a one and two year basis despite the fact that China was down 12%. David, I know you commented earlier about some of those key markets but just maybe unpack that a little bit in terms of what offset that decline in China which is an incredibly important market for KFC. And if you're willing to talk about how you think about the China recovery in your plans for '22 just broadly. Is it a recovery story? And is that embedded in your plans or not? David Gibbs: Yes. As far as KFC International, obviously, that's a really positive story for us and more than most, benefits from that turnaround in some of our emerging markets. You saw markets like India put up some really incredible numbers as they've recovered from COVID. And that also gives us confidence that some of these markets, as we get more on the other side of COVID, are going to really start to take off. Look, this idea of forecasting specific countries and how they're going to do, I think the benefit of Yum!'s model is how diverse we are across brands, across countries all around the world. We're not reliant on any one country. I'm glad you pointed out that even with softness in China, that we can put up numbers like we did this quarter. And we think that's the exciting part of the business as we head into 2022. We've got this diverse business model that is stronger than ever. We've been through over the last two years some amazing challenges. But all they've done is really proven that our business is resilient, that our talent is the best in the industry and that our business model is one that franchisees want to invest behind in a huge way. You saw that in the numbers this quarter on net new units. That gives us a lot of confidence in our ability to maintain top line momentum and profit strength as we go forward and truly, the team is incredibly excited about the future. Thank you all for your time today on the call and look forward to talking to you on the -- and sharing Q1 results. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good morning. And welcome to the Third Quarter 2021 Yum Brands earnings conference call. All participants will be in listen-only mode. Should you need assistance, [Operator Instruction]. After today's presentation, there will be an opportunity to ask questions. [Operator Instruction] Please limit yourself to when we 1 question. Please note this event is being recorded. I would now like to turn the conference over to Jodi Dyer, Vice President Investor Relations and CFO digital and technology. Please go ahead Jodi Dyer: Thanks operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, I would like to remind you that this conference call includes forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this announcement and 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 our earnings releases and relevant sections of our filings with the SEC to find disclosures and definitions of non-GAAP financial measures and other metrics that may be used in today's call, as well as reconciliations of non-GAAP financial measures. Please note that during today's call, all system sales results exclude the impact of foreign currency and references to temporary store closure only include stores that were fully closed as of the end of the quarter, but have, or are expected to reopen. For more information on our reporting calendar for each market, please visit the financial reports section of our website. We are 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 about coming Yum investor events and the following. Disclosure pertaining to outstanding debt and our restricted group capital structure will be provided at the time of the Form 10-Q filings. Fourth quarter earnings will released on February 9th, 2022, with a conference call on the same day. Now, I would like to turn the call over to Mr. David Gibbs. David Gibbs: Thank you Jodi and good morning, everyone. I'm pleased to share our strong third quarter results, underpinned by record-breaking unit development, continued strong digital sales, and the adaptability of our brands to meet the needs of our consumers in an ever-changing environment. During the third quarter, we delivered 5% same-store sales growth, or 3% same-store sales growth on a year basis. Despite a challenging operating environment due to the ongoing COVID pandemic, I'm extremely proud that we opened 760 net new units. A Q3 record with broad-based strength across our portfolio. While Yum China continues to be a leader in development, we opened 379 net new units across the rest of our portfolio, roughly equivalent to our Q3 2019 global net new units, including China. Our continued positive development momentum this quarter is a testament to the strength of our iconic brands fueled by a strong unit economics and a healthy, well-capitalized franchise system primed for sustained growth. Now will discuss our Q3 results and 2 of the 4 growth drivers that underpin our recipe for growth. Our relevant, easy, and distinctive brands for red, for short, and our unrivaled culture and talent. I will also share an update on our ESG agenda, which we call our recipe for good. Then Chris (ph), will talk about our other 2 growth drivers. Our unmatched operating capability and bold restaurant development in addition to providing more details on our third quarter financial performance and our strong Balance Sheet and liquidity position. First a few highlights from the quarter. Overall young third quarter systems sales grew 8% led by same-store sales growth of 5% on a two-year basis, same-store sales grew 3%, which includes the impact of around 500 stores or 1% temporarily closed due to COVID as of the end of Q3. COVID restrictions that limited mobility in a few markets primarily in Asia, had a significant impact on sales. However, our sales momentum remain strong as evidenced by the fact that our global two-year same-store sales growth excluding Asia, accelerated since last quarter. Sales strength continued in many developed markets, including the U.S. U.K and Canada, with significant recoveries seen across Europe as restrictions is throughout the quarter. We've also seen pockets of strength in our portfolio of emerging markets, including the Middle East, Latin America, Africa, and India, to name a few. As we've previously shared, looking across the more than 150 countries in which we operate, our recovery will neither be consistent from country to country, nor linear within a country reinforcing the competitive advantages of our diversified portfolio and our ability to serve customers through multiple on and off premise channels. A key growth driver for our business remains the continued acceleration of our digital and technology strategy, including how we leverage our global scale with technology investments to enhance the customer and employee experience, strength in restaurants unit economics, and provide a competitive advantage for our franchisees. We're seeing strong and sustained momentum through our digital and off-premise channels across our global business, even as customers return to our dining rooms. We posted over 5 billion in global digital sales with a near 40% digital mix during Q3. We continued to expand delivery capabilities across the globe, setting a record this quarter with over 41,000 stores offering delivery to our customers. Most recently, we acquired dragging tails systems, which will allow us to tap into the powers of artificial intelligence to streamline the end-to-end food preparation process and further enhance our delivery capabilities. Where we've deployed Dragontails cutting edge technology, we found that it makes it easier for team members to operate and run a restaurant and helps our franchisee strengthen store operations, all resulting in a better customer experience. This is the perfect segue way to talk about our 4 RED [Indiscernible]. Starting with the KFC Division, which accounts for 52% of our operating profit, Q3 system sales grew 11% driven by a 6% same-store sales growth, and 7% unit growth. On a 2 year basis, Q3 same-store sales were up 1%, which included the impact of 1% of the stores being temporarily closed due to COVID. At KFC International same-store sales grew 6% during the quarter. Same-store sales declined 1% on the 2-year basis. As previously mentioned, increased COVID case counts and limited mobility to a few key Asian markets, pressured top-line trends in the quarter. This quarter, several Western European markets joined the group of resilient market leading the recovery where sales have fully recovered to pre -COVID levels. Strong digital and off-premise growth, newsworthy products, and doubling down on value offerings have fueled top-line growth in these markets, coupled with the continued strength of the Chicken category across the QSR segment goal. Next at KFC U.S. same-store sales grew 4% during the quarter while same-store sales increased 13% on a two-year basis. The continued success of our chicken sandwich and the strength of the group vacation remains significant drivers of our same-store sales growth. Additionally as of July, our year-to-date digital sales in the U.S. surpassed our full-year 2020 digital sales, which speaks to the results we're seeing from our investments in this critical growth channel. Now onto the Pizza Hut Division, which accounts for 17% of our operating profit. Q3 system sales grew 4% driven by 1% unit growth and 4% same-store sales growth For the division, 2 year same-store sales grew 1% during the quarter, which included the impact of 1% of stores being temporarily closed as of the end of Q3, 2021. Pizza Hut international, same-store sales grew 6% during the quarter. On a 2-year basis, same-store sales declined 4% while our Pizza international business continues to be pressured given our substantial value index that sustained strength in our off-premise business, as reflected by 21% same-store sales growth on a 2-year basis bodes well for the future of the brand and continues to fuel franchisee interest in investing in assets focused on serving the all-premise occasion. Our markets continued to demonstrate what it means to be read by focusing on strong value propositions and innovative partnerships, including Beyond Meat product offerings in 2 markets this quarter. At pizza in U.S., we continued to see positive momentum with 2% same-store sales growth. On a 2-year basis, same-store sales grew 8%, and the off-premise channel grew 17%. Pizza Hut continues to delight customers by bringing only from Pizza Hut premium innovation with the launch of the Edge Pizza and the return of the successful Detroit Style Pizza in Q3. Additionally, we promoted the big dinner box during back-to-school season for operating easy dinner solution for our Pizza Hut customers. Moving onto Taco Bell, which accounts for 31% of our operating profit, third quarter system sales grew 8%, driven by 3% unit growth and 5% same-store sales growth. 2 year same-store sales growth was 8% for the quarter. Taco Bell continues to focus on long-term growth opportunities by expanding into multiple category entry points, including the re-launch of breakfast in August and the fried chicken category with the Crispy Chicken Sandwich Taco during the quarter. Meanwhile, Taco Bell International remains focused on their visions to make tacos cool around the world, while also ensuring the brand is culturally relevant in each market. In the UK, we gave away three tacos to the country to celebrate England advancing to the finals in the European Championship. Players on the English team even tweeted on behalf of the brand, resulting in Taco Bell being 1 of the top trending brands on Twitter during the final. And finally at the Habit Burger Grill, we saw our system sales grow 19% during the quarter, driven by 11% same-store sales growth and 7% unit growth. On a 2 year basis, same-store sales grew 7%, which included the impact of about 1% of stores being temporarily closed as of the end of June 3. We continued to see strong results through our digital channels, even as customers returned to our dining room. During the quarter, we launched the culinary forward balsamic grilled chicken and asparagus salad that highlighted our unmatched chargrilled chicken and seasonal ingredients. Now I'll discuss our unrivaled culture and talent growth drivers. The whole market beyond was our people first culture. We have tremendous leaders across our organization that have been developed internally to lead our brands. And because of our culture, we're able to attract world-class external talent. This quarter we had the opportunity to announce some exciting internal promotions with planned leadership transition. First, Tony Lowings, CEO of KFC, will be retiring on March 1st, 2022. I want to thank Tony for his more than 25 years working at Yum!. He has embodied what it means to be a people first leader throughout his career, and will no doubt leave a lasting legacy on the KFC brand. Tony's (ph) successor will be Sabir Sami KFC's Global Chief Operations Officer, who is an incredibly well-respected, and experienced leader who has played a pivotal role in the KFC Global Business. Sabir's promotion to CEO of KFC provided an opportunity to elevate another internal talent with Dyke Shipp stepping in as President of KFC, after serving as KFC's Global Chief People and Development Officer. With their combined experience of over 40 years with Yum!, both Sabir and Dyke will assume their new roles effective January first 2022. I couldn't be more confident in our ability to continue to unleash the power of this iconic brand with both Sabir and Dyke leading KFC. Next, we recently announced that David Gibbs, Pizza Hut, U.S. General Manager, will be promoted to President of Pizza US. effective January 1st, 2022. Alongside Kevin Hockman, David has helped architect the Pizza Hut, U.S. strategy and is the right person to lead the way forward for the brand by continuing to partner with our franchisee. With this promotion, Kevin Hockman, Interim President of Pizza U.S. and President of KFC U.S. will return full-time the KFC U.S. I would like to thank Kevin for his unwavering commitment and leadership over the past 2 years as he led the Pizza U.S. business and franchisees for a critical turnaround that has shown tremendous progress to date all while simultaneously taking KFC U.S. to new heights. These internal promotions demonstrate that our deep bench of experienced leaders is a real competitive advantage for us across the restaurant industry. Lastly, we recruited significant external talent with the appointment of Aaron Powell as Chief Executive Officer at Pizza Hut. Aaron joined us from Kimberly-Clark where he most recently led their Asia-Pacific business. We're thrilled to have Aaron join our leadership team with his season CPG executive experience and believe his leadership alongside [Indiscernible], David Graves, will help fuel the brand growth strategy. Equally as important as our recipe for growth is our recipe for good. I could not be prouder of the progress Yum! Brands have made this year in sharpening the focus and execution of our ESG agenda, particularly on climate action and sustainable packaging, alongside our global unlocking opportunity initiatives to tackle inequality. We are advancing our plans to reduce greenhouse gas emissions across our global system and supply chain by nearly half by 2030 while we work to implement, learn from and scale pilots for reusable, recyclable, and compostable packaging in the front of our restaurants to meet our 2025 public commitments. Across all programs, we're focused on building a resilient business for the future with purpose and sustainability as the core. Our iconic brands and unmatched scale put us in a class of our own. We're competitively advantaged given the size and capabilities of our franchise system. And I'm thrilled with our teams as we continue to be nimble and meet the consumer where they are. Overall, I'm proud of how our business is performing and I'm confident that we're positioned to win in a post-COVID world. With that, Chris, over to you. Chris Turner: Thank you, David. And good morning, everyone. Today, I will discuss our financial results. Our unmatched operating capability, and bold restaurant development growth drivers and our solid balance sheet and liquidity position. I will start by discussing our financial results. Our results year-to-date through Q3, highlighted by 15% system sales growth, translating into strong core operating profit growth of 26% demonstrate the resilience and strength of our economic model. The continued momentum reflected in our results, reaffirms our confidence in delivering on an annual basis the long-term growth algorithm we reinstated on our last call. Specifically 2% to 3% same-store sales growth plus 4% to 5% net new unit growth, translating to mid to high single-digits system sales growth and high single-digit operating profit growth. In the third quarter, specifically, Yum! system sales grew 8% driven by 5% same-store sales growth, or 3% on a 2-year basis, which includes the impact of about 1% of stores being temporarily closed as of the end of Q3. We delivered 4% unit growth year-over-year, which included a record of 760 net new units this quarter. core operating profit increased 3 percent for the quarter. In line with our internal expectations, when accounting for 1-time items that impacted comparability. The largest of these items was the [Indiscernible] of last year's bad debt recoveries, which accounted for a 5 point headwind to core operating profit growth. EPS, excluding special items, was $1.22 representing a 21% increase compared to ex special EPS of $1.01 in the third quarter last year. Reflected in our ex-special EPS this quarter is an investment gain on our approximate 5% investment in Devyani International Limited, an entity that operates KFC and Pizza Hut franchised units in India. Our minorities stake in Devyani was acquired in lieu of cash proceeds upon the refranchising of approximately 60 KFCs in India during 2019 and 2020. During the third quarter Devyani completed an initial public offering and we began reflecting the change in fair value of our investments in our results during the quarter. This resulted in $52 million of pre -tax investment gains on our approximate 5% stake, which added $0.16 to EPS but did not impact our core operating profit. During Q3, we had bad debt expense of $3 million. As a reminder, we had large quarterly swings and bad debt last year due to COVID, and we're lapping $21 million in bad debt recoveries in the third quarter of last year, resulting in a year-over-year headwind of 5 points or $24 million to core operating profit growth this quarter. We expect core operating profit growth to be negatively impacted again in Q4 as we lap bad debt recoveries of $8 million in the fourth quarter last year. Our general and administrative expenses on an ex special basis for the quarter were $249 million. On a full-year basis this year, we now estimate consolidated G&A will be approximately $1.05 billion, an increase of about $60 million above our incoming expectations for the year, driven entirely by our above target incentive compensation based on our strong business performance. Our commitment to be an efficient growth Company that leverages fixed costs with our unique scale benefits is unchanged. We expect our G&A to system sales ratio to move back to 1.7% next year on a full-year basis. Finally, we note that Taco Bell Company store margins have begun to normalize in the back half of this year due to increased staffing in our restaurants as we return to our historical daypart mix, wage investments and recent commodity inflation. While there will be quarterly variability due to the dynamic environment, we are confident in our ability to consistently deliver Taco Bell Company store margins in line with our historical pre -COVID levels for full-year 2021 and beyond. Next, I'll discuss our unmatched operating capabilities. We continue to invest in our technology strategy to expand both our digital capabilities and restaurant technology solutions. We're prioritizing making it easier to operate our restaurants, ultimately driving efficiencies in our stores to enhance franchise unit economics, while also improving the customer experience. To that end, during the quarter we closed on the acquisition of Dragontrail systems, a restaurant technology Company that enhances both the team member and customer experience. Dragontrail usages innovative technology that streamlines the order management process in the restaurants and optimizes delivery routes for drivers, resulting in our customers receiving the freshest possible products. Thus far, the Dragontrail solution has been deployed in 13 markets and over 1,700 stores across the Pizza Hut system. Many Pizza Hut restaurants leveraging Dragontrails platform have already seen a positive impact on sales, orders fulfillment, and customer satisfactions force, including product freshness and delivery times. I recently participated in virtual store visits in the U.K. and in Latin America where franchisees demonstrated benefits of the dragon tales system and shared their team members excitement. Another example of how our technology investments yield enhanced operating performance is Taco Bell 's continued execution of its all access technology initiative. This connected suite of core restaurant technology solutions is used to optimize operations and create a frictionless customer experience. These strategic efforts contributed to Taco Bell 's 7th consecutive quarter with drive-thru times below 4 minutes, enabling the brand to serve more customers through the drive-thru, while also delivering a great customer experience. Moving onto our bold restaurant development growth driver, I am thrilled to discuss how we delivered another record development quarter with 760 net new units, including meaningful contributions across multiple geographies at our KFC, Pizza Hut, and Taco Bell global brands. While we continue to see strong development from Yum! China, our brands are also seeing broad-based development across other markets. The widespread strength in our store level economics and cash-on-cash returns improving relative to pre - Covid levels are key drivers contributing to the acceleration and development we're seeing around the world. Our KFC International markets have seen impressive development as China, Russia, India, Latin America, and the Middle East continued to deliver strong unit development during the third quarter. Additionally, over the past year, Pizza Hut international has driven a significant inflection in their unit growth, going from negative net new units in 2020 to opening nearly 200 net new units during the third quarter. We expect this momentum to continue, a further testament to the confidence our franchisees have in the future of the brand. at Taco International, we continue to see strong development as key markets are approaching scale. Not only are we seeing strong development across our brands, but given the continued strength of digital and off-premise growth, our teams continue to evolve the asset types being developed into more digitally-enabled formats. As an example, we now have 23 Go-mobile locations at Taco Bell U.S. the technology forward restaurants, which include dual drive - throughs with a dedicated mobile pickup lane, mobile pickup shelves, and a faster bell-honk experience, among other things, have been a big hit, and we have more in our development pipeline. Next, I'll provide an update on our strong balance sheet and liquidity position. In August, we completed our third whole business securitization issuance at Taco Bell in the past five-years, issuing $2.25 billion of new securitization notes. The weighted average yield of the new notes was approximately 2.24% and the proceeds were used to opportunistically repay $1.3 billion of existing higher-coupon Taco Bell securitization notes, and to support our share buyback program. We still expect our 2021 interest expense to be approximately $500 million in line with 2020. We ended the quarter with cash and cash equivalents of $1 billion excluding restricted cash. Due to our continued recovery in EBITDA, our consolidated net leverage continues to be temporarily below our target of approximately 5 times. With respect to our share buy-back programs, during the quarter we repurchased 2.6 million shares at an average share price of $127 per share, totaling approximately $330 million. Year-to-date, we've repurchased $860 million of shares at an average price of $117. Capital expenditures, net of re-franchising proceeds during the quarter were $49 million. We now expect net capital expenditures of approximately $175 million for the full year, reflecting roughly $75 million in re-franchising proceeds and $250 million of gross capex. Lastly, our capital priorities remain unchanged, invest in the business, maintain a healthy balance sheet, pay a competitive dividend, and return the remaining excess cash to shareholders via share repurchases. Before wrapping up, I'd like to take a moment to address both labor and cost inflation pressures and how a Yum! is well-positioned to navigate these challenges. U.S. labor availability remains tight across most industries, driving wage inflation and staffing challenges that have resulted in a small number of our stores limiting operating hours, particularly during the early morning and late-night day parks. While our franchisees are not immune to these market pressures, we believe the power of our scale and the larger average size of our franchisees, relative to those of our QSR peers, enables our system to manage the inflationary environment better than most. For example, while many small chains and independent restaurants experienced difficulties adapting to these market dynamics, our franchisees continue to invest through this environment, accelerating investments that helped widen their strategic advantage. Additionally, our people first culture is a true competitive advantage in both attracting and retaining team members. We're confident in the ability of our brands to respond to the dynamic market conditions and are working closely with our franchisees to assess strategic opportunities to take price as and when needed while ensuring we continue to offer compelling value to our customers. While store level margins have moderated franchisee unit economics generally remained incredibly healthy. Overall, I'm pleased with our performance this quarter, driven by impressive unit growth and sustained digital sales. We continue to invest in our digital ecosystem to scale technologies and provide a unique competitive advantage for our franchise operators while enhancing the customer and team member experience. Our franchise system is healthy and well-positioned to invest through the near-term pressures fueling our development engine and future unit growth. Our unit growth and sustained sales momentum, despite lingering COVID impacts, only make us more confident in our ability to deliver on our long-term growth algorithm. With that, Operator, we are ready to take any questions. Operator: We will now begin the question and answer session. To ask a question [Operator Instructions] Again please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. The first question comes from John Glass with Morgan Stanley. Please go ahead. John Glass: Thanks. And good morning. I'm wondering if you could comment a little bit more about Taco Bell 's performance this quarter, while it was strong in a 2 year basis to raise some deceleration, stimulus may have played a role last quarter. So maybe that was a false read. That would also have seemed to be the brand just given your comments on staffing in early morning at late night that may have been impacted. Is there any notable impact of sales just from staffing shortages there? Typically just talk about the overall trends in staffing in particular. And why maybe you saw some deceleration on a 2-year basis. David Gibbs: Yeah. On a -- In terms of staffing, obviously, we're pressured in our restaurants just as everybody else is. But I think we're doing an amazing job in the field of being focused on retention. We won't have a staffing problem if we don't have any open jobs if we retain the employees that we have. And given the culture that we have in our restaurants across all of our brands, and the kind of environment that our franchisees create for their employees with pay checks and pathways to advancement, I think we're getting through this better than most. We're really proud of the results we put up across all of the brands this quarter. You guys probably saw it's on a 2-year basis. We're positive on all 4 brands. On a 1-year basis, we're positive on all 4 brands. And then obviously, the big news is the 760 net new units that we open for the quarter, so very strong quarter. We've got pluses and minuses. John, if you're talking about in the U.S., KFC was up 13 on a 2-year basis, Pizza Hut, HMR, business -- Home Meal Replacement business was up 17, Taco Bell was a little bit softer. For them, late-night and breakfast become a little bit more of a challenge, and they skew a little bit more towards individual meals. And I think that's what you're seeing. Every brand has a different set of attributes as we go through this. Some will play better in this environment than other, but all of our brands are doing quite well, which is contributing to this great quarter. Operator: The next question comes from David Palmer with Evercore ISI. Please go ahead. David Palmer: Thanks. Just a quick follow-up on John's, and then I have one on unit growth. The Taco Bell results, 8% two-year. That's below the industry's comp. Taco Bell has been a long term share gainer. If you have a big picture comment about maybe sources of weakness, whether supply chain, the Midwest, something like that, also just bigger picture. Why you think Taco Bell on a two-year basis might not be as doing as well as the industry average of drive-through chains out there? And then on unit growth do you -- the results are very strong and it's hard to see weakness or hold backs from a development standpoint from a macro sense. But we would expect there to be that, that there would be some friction out there given all the macro challenges around COVID. Do you believe that there is something hold you back even in the strong numbers? Thanks. David Gibbs: Yeah, it's a great point. Obviously, the numbers that we put up in this quarter are truly record setting, right? 760 net new units in third quarter is a record for Yum! We're at 1,800 net new units year-to-date, basically, which is closing in on the record we set for Yum! in 2019 for full-year development. And I think you're right. There's probably some friction that we're experiencing that we haven't been able to open all the units that we could because of some challenges. But this is where the big advantages of Yum! come in. Our scale, our purchasing capability, the size of our franchisees, their access to capital. We've been anticipating some of the supply chain challenges ordering ahead of time, securing the inventory we need on equipment, for example, to get through this without having equipment delays to open restaurants. I do think there is further upside to the numbers we're putting up, and I do think if we continue these trends, we'll obviously set a record for Yum! in the fourth quarter, and we probably have a shot at setting a record for the restaurant industry all time for a number of units open in 1 year. I look forward to reporting back on that in our fourth quarter call. As for Taco Bell, the Taco Bell sales are up 15%. System sales are up 15% on a two-year basis. We make no apologies for that. The business is doing quite well, very strong. It does have its own unique challenges since it skews a little bit more towards individual meals versus family occasions, you are seeing the brands like pizza, I think KFC, that's skewed towards family occasions performing even better. But Taco Bell performance is strong. In Q3, we made some investments in -- on the marketing side, they weren't designed to pay off on the top line, such as re-launching breakfast. We know those will have benefits for us down the road. We're proud of what's going on at Taco Bell with system sales growth like that, unit growth like we're seeing all across Yum! and the Taco Bell. I'm excited about the future for all our brands. Operator: The next question comes from David Tarantino of Baird. Please go ahead. David Tarantino: Hi. Good morning. I have another question on development. And first, I just wanted to see if you thought this year's development strength was due in part to some hands up activity from delays that you saw last year and or just underlying strength. And then Chris, I think you mentioned in your comments that you're seeing improved cash-on-cash returns and a lot of markets, and I was hoping that you could elaborate what you meant there specifically. Thanks. David Gibbs: Yeah, thanks, David. As David mentioned, we are very excited about the momentum in development. And if you think about the drivers, the number one driver is unit economics. So that gets that both parts of your question. Around the globe -- in general, our franchisees are seeing strong EBITDA, and they are seeing that translate to improved returns whenever they build restaurants. Remember, these are our franchisees putting their capital to work, and that's where I think the strength of the brand and the larger average size of our franchisees Chris Turner: really matters. They're able to see through near-term fluctuations related to COVID around the globe and invest for the long term. The 2nd driver on development is the strong development teams that we have who are focused and incentivized to go create great results on the development front. And they have an improved set of capabilities. We're now bringing analytics to bear and how we set our development plans in a number of markets around the globe. We're bringing new prototypes to bear. We talked about the Go mobile concept, which is primed for digital growth with Taco Bell. We have similar examples and other brands. So it's a broad set of drivers that are supporting this growth. And you've seen this trajectory change, in particular in the Pizza Hut business. That's been an important driver of where the numbers are. Pizza Hut international putting up plus 200 in the quarter. That's more than 300 better than where they were a year ago and you've seen Pizza Hut, U.S. stabilized. Those are also important drivers. Broad-based strength in development right now. David Gibbs: As far as the issue of pent-up demand, I'm sure there's some units that spilled over from 2020 into 2021, but we do believe that these trends in development will continue We think we've gotten to a new level on development that's why we raised our development guidance on the last earnings call. Look, we're talking about net new units. Let's talk about growth new units for the quarter. In the quarter, we opened over a thousand gross new units. That's a store every other hour, basically, all quarter long. Pretty amazing. And when you think about just the side effect of that, how we're modernizing the estate with that kind of development, it's really encouraging. Operator: The next question comes from John Ivankoe with JPMorgan. Please go ahead. John Ivankoe: Hi. Thank you very much. I think a lot of us on the call know what the U.S. issues are in terms of construction labor, and permitting, and even equipment. But I wanted you to give us a rest of the world view in terms of how supply chains are around equipment and your ability to, I guess again, keep us get current rate of development over the next couple of quarters. And of course, asset in the context of your supply chain seems to have gotten worse in the past 6 months, and perhaps some of the stores that opened in that third quarter benefited from what was ordered, 6 months ago or even longer. Do you expect this momentum to continue with their -- that pipeline, just in terms of overall supply chain constraints, however, you want to define it that you feel good on a market-by-market basis? David Gibbs: Yes, thanks a bunch, John. It's a good question. And I think this is where the strength of our operating model and our capability set around sourcing really shines. We saw some of those supply chain challenges related to equipment that are a global challenge. We saw those on the horizon earlier this year and our supply chain teams were building resiliency plans at that point and they worked with our franchisees around the globe to get ahead on purchasing for those equipment and reserving capacity with suppliers. There is certainly are going to be some local challenges here and there related to permitting. But again this is where that capability set helped us get ahead plus our larger, more sophisticated franchisees who invest ahead. They have a sophisticated teams who are driving their development, and that's a big asset here as well. So yes, we probably left a few units on the table this year as a result of that. But in general, we don't see that as a constraint on our long-term development pattern. Operator: The next question comes from Jon Tower with Wells Fargo. Please go ahead. Jon Tower: Awesome. Thank you for taking the question. Just real quick in terms of thinking about the value proposition to the consumer and obviously the inflation that's running through the market today. Curious to know how your franchisees are handling the pricing situation now and that heading into '22 Jon Tower: with obviously wage rate inflation as well as commodity cost inflation. How are you messaging to the franchisees? The best way to handle it to the extent obviously can have influence on it. In terms of new product news, are you constructing items, say at Taco Bell or KFC, for next year that will allow them to at least maintain some of the penny profits so they're not getting squeezed too much in this inflationary environment? Thank you. David Gibbs: Yes, thanks, John. Obviously, inflation is a story not just in our industry, but across sectors. And again, I think this is a situation where Yums! operating model sets us and our franchisees up to deal with those challenges really well. And I think of three things. One, keep in mind our footprints. 60% of our sales are outside the U.S. and this inflation challenges are most acute in the U.S. We see it in a few pockets around the globe, most acute in the U.S. Second in the U.S. think about our scale, we purchased across all four brands together with RSCS, we have a professional team of highly talented strategic sourcing experts. They're working right now. I can tell you throughout this inflationary trends, they saw it coming. They've got plans on finding ways to offset that. So we're leveraging our scale to help manage costs in those -- against those pressures. And then third to your point, we pull a number of leavers to manage margin with our franchisees. Our brands are working proactively with the franchisees. You've mentioned product design. I'm sure we're going a little bit of that. We've done some menu management. We'll think about how to optimize promotions. And of course pricing is a lever that's available, but our franchisees and our brands, they manage and they balance the short-term and the long-term. In the short-term, they want to make sure we're providing strong value to the customer that we don't get too far ahead of the consumer. But in the long run, whenever I talk to our franchisees, they're confident that long term margins in the restaurants will be sustained And we can continue the momentum we've seen on a restaurant profit coming through the last couple of years. Operator: The next question comes from Brian Mullan with Deutsche Bank. Please go ahead. Brian Mullan: Hey, thank you. Just a two-part question on Habit. Just number 1. Have you look to eventually refranchise some Company-owned stores there. Can you talk about what you'd be looking for in any franchise partner for that brand. Maybe -- and making sure about how far along you may or may not be or operational goalposts that you would like to achieve first. And then just number 2, David, I'm curious are you spending any time yet looking for international partners or is it just too early for that for Habit? David Gibbs: We appreciate the question on Habit. We're really excited about Habit 's performance. If you think about it, they started pre -pandemic 60% dine-in sales. So they had the biggest hill to climb in this environment and just put up a plus 7 on a 2-year basis. So the way they've pivoted has been truly impressive. I think it hasn't gone unnoticed, we've had lots of demand from franchise -- from potential franchisees, both in the Yum! system and outside the Yum! system to enter. We've now started closing on a few deals. We closed on two already with Yum! franchisees entering the Habit system, and we have more in the hopper. So we're seeing strong demand and interest in becoming Habit franchisees because the unit economics are great to all the reasons why we bought them. As far as international goes, same-story there. As you know, they're already in a couple of countries. I just was on a call yesterday where we were evaluating a new potential partner to enter in another country. So we've built up a little bit of capability and the team internationally to focus on Habit International and see every indication that that can become a growth driver for Yum! down the road. Jodi Dyer: Operator, we have time for one more question. Operator: Thank you. And that will come from Dennis Geiger with UBS. Please go ahead. Dennis Geiger: Great. Thanks for the question. Just wondering if you could talk a little bit more about Pizza U.S. both near-term momentum and then your thoughts on longer-term positioning. Just first on the near-term, anymore details, current impacts, maybe driver staffing challenges if there was a bit more of an outsize impact there versus stepping challenges at the other brands across the portfolio. And then more importantly bigger picture, just any more color on the broader strategic shifts. The benefits you're seeing and specifically how the work that you've done across asset base digital, new product development, etc. impacts how you're thinking about improved brand health and positioning longer-term for Pizza Hut in the U.S. Thank you. David Gibbs: Yeah. Look, Pizza Hut U.S. is obviously a bright spot for us right now and will be for the long term as all the work that we've been doing over the last few years, investing in digital and capabilities and working with our franchise partners has really starting to pay off. This quarter Pizza U.S. sales were up 17% off-premise basis, which is the heart of the business and the future of the business. But it's not immune to the same staffing challenges that everybody's facing. So I'm sure those sales were held back to some degree by the challenges of getting drivers. We actually saw our carryout business is now starting to grow faster. When we don't have the ability to get drivers were still able to pivot to carry out. But so we know that there's a lot of demand for what we're offering at Pizza Hut and with a bright future in the U.S. The other thing I'll point out is our investment in digital at Pizza Hut has been really one of our leading investments in the world of digital. That's one of the advantages at Yum! has are knowledge of digital through the Pizza Hut business. You guys all picked up on the fact that we had over $5 billion of digital sales yet again, this quarter. But interesting context on that across Yum is our dine-in business started to climb this quarter. So from Q2 to Q3, we did see a return to dine-in, yet we saw digital sales go up and we saw digital mix go up, which is proving that not only is it sticky that it's still something that's going to continue to grow for us, which is a great sign for all of our brands as we move forward. With that, I want to thank everybody for the time on the call. We're obviously excited about what's going on with digital and what's going on with net new unit development, widespread same-store sales growth on a 1 and 2-year basis across all of our brands. A lot of momentum in the business right now, a lot of enthusiasm from our franchise partners with record profits at the unit level. And very excited about the path forward for Yum! and our four brands. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good morning, and welcome to the Second Quarter 2021 Yum! Brands, Incorporated Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Jodi Dyer, Vice President of Investor Relations and CFO, Digital & Technology. Please go ahead. Jodi Dyer: Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our Chief Financial Officer; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, I would like to remind you that this conference call includes forward-looking statements. Forward-looking statements are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. All forward-looking statements are made only as of the date of this announcement and 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 our earnings releases and relevant sections of our filings with the SEC 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. All system sales results exclude the impact of foreign currency. Core operating profit growth figures exclude the impact of our currency and special items. All 2-year same-store sales growth figures are calculated using the geometric method. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are 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 upcoming Yum! Investor events and the following: Disclosures pertaining to outstanding debt in our restricted group capital structure will be provided at the time of the Form 10-Q filing. Third quarter earnings will be released on October 28, 2021, with the conference call on the same day. Now, I'd like to turn the call over to Mr. David Gibbs. David Gibbs: Thank you, Jodi, and good morning, everyone. I'm excited to share our strong second quarter results as we delivered record second quarter unit development and 23% same-store sales growth. Importantly, each division reported positive same-store sales growth on a 2-year basis, a step-up from first quarter trends. This sustained momentum was underpinned by our investments in digital and off premise and the adaptability of our brands to meet the needs of consumers in an ever changing environment. Though COVID obviously creates a more challenged operating environment, our confidence is stronger than ever in our ability to navigate the resulting uncertainties and in the long-term growth potential of Yum!. As a result, we're reinstating our long-term growth algorithm with one important change, we are raising our previous guidance of 4% unit growth to between 4% and 5% unit growth. As a reminder, our long-term growth algorithm includes 2% to 3% same-store sales growth, and mid-to-high single-digit system sales growth, leading to high-single-digit core operating profit growth. The diversification of our global portfolio, the resilience of our business model, and the agility of our teams are allowing us to compete and win in a full range of market conditions, including both those markets with accelerated recovery and markets still heavily impacted by COVID. Looking forward, our iconic brands and unmatched scale, in combination with the world-class talent in our restaurant teams, franchisees, and above store leaders have uniquely positioned us for sustained growth. Now, we'll discuss our recipe for growth and our Q2 performance and the growth drivers that underpin it. To start, I'll cover two growth drivers, namely relevant, easy, and distinctive brands or RED for short; RED, for short; and Unrivaled Culture & Talent. Then Chris will share more details of our Q2 results, our Unmatched Operating Capability and Bold Restaurant Development growth drivers and our strong liquidity and balance sheet position. First, a few highlights from the quarter. In Q2, Yum! system sales grew 26%, driven by 23% same-store sales growth. Importantly, same-store sales grew 4% on a 2-year basis, which includes the impact of approximately 700 or about 1% of our stores being temporarily closed due to COVID as of the end of Q2 2021. This was driven by continued strong sales momentum in North America, the UK, and Australia with improved performance in Europe as it began to reopen and showed signs of recovery. As I mentioned earlier, each of our brands delivered positive 2-year same-store sales growth on a global basis, including the impact of temporary closures, and each brand also reported an improvement in the 2-year trend from Q1. This is a great indicator for the sustained strength and breadth of our recovery, even more exciting as the extremely strong net new unit growth of 603 units that we delivered during the quarter, which was both broad based and record setting. Looking across the more than 150 countries in which we operate, we've seen that while the overall global trend is positive, the recovery will neither be consistent from country to country nor linear within a country. This insight reinforces the competitive advantages of our diversified portfolio and our ability to serve customers through multiple armed and off premise channels. We've seen that increased customer mobility driven by reopening trends and vaccinations contributed to strong performance in many of our markets. A key growth driver for our business and priority for our teams is the continued acceleration of our digital and technology initiatives across the globe geared toward providing customers with new and seamless ways to access our brands. Even as economies continue to reopen, the importance of the off-premise occasion remains a top priority. We delivered a second quarter record with over 5 billion in digital sales, a 35% increase over the prior year. Even more exciting for the first time on a trailing 12-month basis, we delivered more than $20 billion in digital sales. We believe these sales are highly incremental and result from our investments in our digital and technology ecosystem, which enable our teams to deliver an even more RED customer experience. To bring the impact of our digital efforts to life, I want to share a few proof points. At Taco Bell U.S., the launch of our Taco Bell Rewards Program in 2020 has continued to grow digital sales for the brand with features such as loyalty member exclusives, and early access to crave worthy promotions. We're incredibly excited by the early results from the program and the future growth opportunity that remains. We're seeing significant uptick in frequency and higher spend per visits leading to an increase in overall spend of 35% for active customers in the Taco Bell Rewards Program compared to their pre-loyalty behavior. As another example, at KFC U.S., we launched our internally built KFC e-commerce website and app in early 2021 replacing our previous third-party solution. As a result, our 2021 digital sales are on pace to soon surpass last year's full-year digital sales amount. Now, let's talk about our RED brands. Starting with the KFC division, which accounts for approximately 51% of our divisional operating profit, Q2 system sales grew 35% driven by 30% same-store sales growth and 5% unit growth. For the Division, Q2 same-store sales grew 2% on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of Q2 2021. At KFC International, same-store sales grew 36% during the quarter. Same-store sales declined 1% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021. We had truly outstanding results in market leading to recovery with double-digit 2-year same-store sales growth in the UK, Australia, Canada, and the Middle East. Our strong off-premise capabilities, digital strength, and value offerings have continued to meet shifting consumer demand around the globe, and there is opportunity for continued recovery as reopening and mobility increases globally. Next, at KFC U.S., we continue to see strong momentum with 11% same-store sales growth in Q2. Importantly, same-store sales grew 19% on a 2-year basis, owing to the continued strength of our group occasion business, the digital capabilities mentioned earlier, and our new chicken sandwich. Our chicken sandwich performed exceptionally well and provides us with a solid platform to drive additional sales layers in the future. Moving on to Pizza Hut, which accounts for approximately 17% of our divisional operating profit, the division reported Q2 system sales growth of 10% driven by 10% same-store sales growth. While the division had a 3% unit decline versus last year, driven by the elevated COVID-related dislocations and closures of 2020 it has sustained its positive 2021 development momentum delivering 1% unit growth relative to Q1. Global Q2 same-store sales grew 1% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021. Overall, Pizza Hut International same-store sales grew 16%. Same-store sales declined 6% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021. Importantly, the off-premise channel achieved 21% same-store sales growth on a 2-year basis for the quarter and delivery continued to be the primary driver of growth as the shift towards an off-premise model continues in most of our Pizza Hut markets. The top line results from our Australia, Canada, Malaysia, and our U.K. delivery business are shining examples of what it means to nail the RED Brand strategy. These markets continue to unlock off-premise growth opportunities through a focus on value and innovation, a digital-first customer experience, and distinctive communications with the help of our magnetic ambassadors, spokespeople who bring our brand to life across the world. At Pizza Hut U.S., we continue to see positive same-store sales with 4% overall same-store sales growth. On a 2-year basis, the off-premise channel grew 18% and overall same-store sales grew 9%, which includes the impact of about 1% of our stores being temporarily closed as of the end of Q2 2021. Pizza Hut also delivered strong product news with the continued success of our iconic stuffed crust pizza and the successful return of a consumer favorite, the Edge Pizza during the quarter. As for Taco Bell, which accounts for approximately 31% of our divisional operating profit, Q2 system sales grew 24%, driven by a 21% same-store sales growth and 2% unit growth. For the division, Q2 same-store sales grew 12% on a two-year basis. The quarter kicked off with the return of the Quesalupa as part of the fan-favorite $5 Chalupa Cravings Box, followed by the re-launch of the iconic Naked Chicken Chalupa. In May, we launched our first-ever global brand campaign, #ISeeATaco, in which fans could score a free taco when the moon looked like a taco. We generated over 2 billion impressions and step-change brand awareness, especially in our international markets where we have a tremendous run rate for growth. And finally, the Habit Burger Grill delivered 31% same-store sales growth and 6% unit growth. Q2 same-store sales grew 7% on a 2-year basis. Importantly, digital sales continued to mix over 35%, only a modest pullback from Q1, even as dining rooms continued re-opening and dine-in sales saw a steady improvement throughout the quarter. On the innovation front, we introduced the Brunch Charburger during the quarter, a unique all-day breakfast offering that included crisp golden tots, house-made secret sauce and a freshly cracked egg. In addition to providing customers with a seamless experience to access our brands, we continue to invest in restaurant technology initiatives that make it easier for our team members to operate and run a restaurant. As previously announced in the quarter, we’ve agreed to acquire Dragontail Technologies, a cutting-edge restaurant technology company, whose platform is focused on optimizing and managing the entire food preparation process from order through delivery, including automating the kitchen flow, driver dispatch, and customer order tracking. The acquisition is subject to various approvals and we expect to close by the end of the third quarter. We will not be able to comment further on Dragontail today, but you can find additional information in the May 26 press release. An important factor of RED Brands is having a positive impact and the desire to make good easy for customers. Our Recipe for Good framework focuses on our commitment to investing in the right recipe today. We were proud to publish our 2020 Recipe for Good report this week, which highlights our strategic investments in socially responsible growth and sustainable stewardship of our people, food, and impact on the planet. The report includes updates on our key commitments on critical issues like climate change and equity and inclusion. I’m confident that our plans in these areas have the right ingredients for us to succeed and make a positive impact for our people, franchisees, customers, and communities. Now, to unrivaled culture and talent. Two of our key assets are our iconic brands and the people that bring our brands to life around the world every day. As I’ve mentioned in previous quarters, COVID has further strengthened the collaboration partnership across our entire system. A great example of this is our relationship with our independent supply chain purchasing co-op in the U.S., RSCS. Many of you probably saw the recent announcement that the CEO of RSCS, Steve McCormick has made the decision to retire in early 2022 and that RSCS Chief Operating Officer, Todd Imhoff, was unanimously selected to succeed Steve in the role of CEO. Steve has had a tremendous and positive impact on our business for nearly a decade and our entire system is grateful for his leadership. At the same time, Todd is the right leader to step into this role and lead the RSCS moving forward as it continues to provide a true competitive advantage for our entire U.S. business. Our unrivaled culture and talent has always been a towering strength of Yum! and I’m incredibly proud of our ability to bring our brands and people together in ways we haven’t in the past. During the quarter, we hosted several virtual meetings where we fostered collaborations on a global scale for our franchisees and teams, including marketing, planning meetings, ops, development programs, a global finance summit, leaning with leaders sessions, and company-wide chats just to name a few. It’s during these meetings that we realize we are all more alike than we are different and the power that our brands and our culture have to bring people together. To wrap up, I’m pleased with the sustained momentum in our business and the agility we’ve shown in the last year and I’m optimistic that we are set up to win. Our results demonstrate the resilience of our diversified global business and confidence in our strategies, which are fueled by the underlying health of our franchise system. We are poised to accelerate growth and maximize value creation for all our stakeholders for years to come. With that, Chris, over to you. Chris Turner: Thank you, David, and good morning, everyone. Today, I’ll discuss our second quarter results, our unmatched operating capability, and Bold Restaurant Development growth drivers, and our solid liquidity and balance sheet position. To begin, let’s discuss Q2. Overall, Yum! system sales grew 26%, driven by 23% same-store sales growth. On a 2-year basis, same-store sales grew 4%, which includes the negative impact of about 1% of our stores being temporarily closed due to COVID as of the end of Q2 2021. We delivered 2% unit growth year-over-year, which included a Q2 record of 603 net new units. EPS, excluding special items, was $1.16, representing a 41% increase, compared to ex-special EPS of $0.82 in Q2 2020. Core operating profit grew 53% in the second quarter, driven by accelerated same-store sales growth in several developed markets at KFC, the combination of strong sales and restaurant margin growth at Taco Bell, and a year-over-year benefit associated with reserves for franchisee accounts receivable. At Taco Bell, company restaurant margins were 25.9%, 1.4 points higher than prior year. Favorable sales flow-through was partially offset by labor and commodity inflation, as well as increasing semi-variable costs as we return to normal operations. As mentioned on our previous call, we expect these margins to return closer to historical pre-COVID levels later this year given inflationary pressures, along with increased staffing at our restaurants as a result of increases in dining room patronage and a return toward our historical day part mix. During Q2, we continued to see recoveries of amounts past due, primarily led by KFC International. These recoveries resulted in a $4 million net benefit to operating profit related to bad debt during the quarter, representing a $17 million year-over-year tailwind to operating profit growth as we lapped $13 million of expense in Q2 2020. As a reminder, we ended 2020 with $12 million of full-year bad debt expense with large quarterly swings due to COVID. As such, we expect year-over-year operating profit growth to be negatively impacted in the second half as we lap bad debt recoveries of $21 million and $8 million in Q3 and Q4, respectively. While difficult to forecast, at this point, we still don’t expect bad debt to significantly impact our year-over-year operating profit growth on a full-year basis. General and administrative expenses were $230 million. Full-year 2021 G&A is expected to be back-end weighted, as it has been historically. We now estimate that our consolidated G&A expenses will be approximately $1 billion for the full-year 2021, a slight increase from our Q1 estimate attributable to increased incentive-based compensation. Our commitment to be an efficient growth company that leverages fixed costs with our unique scale benefits is unchanged and we expect our G&A to system sales ratio to move back toward our historic ratio as sustained growth continues. Reported interest expense was $159 million, an increase of 21% compared to Q2 2020, driven by a special item charge of $34 million related to early redemption of restricted group bonds during the quarter. Interest expense, ex-special, was approximately $125 million, a decrease of 5%, driven by recent refinancing actions and the elimination of revolver balances held in the prior year. We still expect our 2021 interest expense to be approximately $500 million, excluding the previously mentioned $34 million special item charge similar to 2020. We plan to continue to take advantage of favorable market conditions to refinance debt at attractive rates. As a reminder, this will result in higher one-time expenses that will be favorable to interest expense going forward. Capital expenditures, net of refranchising proceeds, were $16 million for the quarter. As we’ve discussed on prior earnings calls, we believe roughly $250 million in annual gross CapEx appropriately balances the inherent needs of the business, with opportunities to invest in technology initiatives and strategic development of equity stores. We still anticipate at least $50 million in annual proceeds from refranchising, which will fund the strategic equity store investments. As a reminder, for 2021, we may be slightly higher than the $250 million gross CapEx amount to catch up on repair, maintenance, and remodels, as well as selective strategic development in the U.S. Now, on to our unmatched operating capability growth driver. Our restaurants are operated by world-class franchisees who are experienced and competing and winning in any environment. It’s well known that the U.S. is facing a competitive labor market, which is more pronounced relative to other markets across our diverse global footprint. We and our franchisees are leaning into our unrivaled culture, which differentiates our brands to compete in a tight labor market with a focus on retention and recruiting. I’ll add some color by sharing examples from our Taco Bell company restaurants. I’ll start first with recruitment. We posted hiring parties, which have led to a significant uptick in employee hires. We also launched a fast apply option to make the application process easier and more efficient by reducing the application time from 8 minutes to 2 minutes. On the retention front, we’ve supported and rewarded our team members by offering a variety of incentives, including paid time off, free family meals, and increased employee development activities to name a few. We’ve always prioritized investing in our people and we recognize the importance now more than ever to ensure we maintain focus on our unmatched operating capability to deliver a RED customer experience. At the same time, our system is well-positioned to sustain strong unit economics while managing the inflationary environment related to labor market dynamics and commodity cost trends. On the commodity front, there is no one better equipped to navigate this environment, given our massive cross-brand purchasing scale through our domestic supply chain co-op RSCS that gives our franchisees many benefits, including advantaged end-to-end sourcing and supply chain costs. We are also confident in the pricing power of our brands and partner closely with our franchisees as they make strategic pricing decisions in their respective markets to deal with cost pressures, while still providing customers with relevant value and distinctive products. As David mentioned earlier, we are also prioritizing investments in restaurant technology initiatives that make it easier for our team members to operate a restaurant, while also providing an enhanced customer experience. As an example, Pizza Hut International continues to demonstrate significant momentum on this front, as evidenced by increased customer satisfaction metrics. Their improvements are fueled by continued adoption of frictionless restaurant technology, including our in-house intelligent coaching app called HutBot that launched at the end of 2020 and is now live in 40 markets, covering 4,000 restaurants. HutBot eases the daily management of our stores with the [RTM], leading to a better customer experience. At Taco Bell, we’ve continued excelling at serving more customers through our drive-thru’s. We had our sixth consecutive quarter of under 4-minute drive-thru order to delivery time. Speed for Q2 was 6-seconds faster than Q2 2020 and our teams served 4 million more cars compared to the same quarter last year. A huge shout-out to our operators and team members for continuing to break records in speed with the increased demand in off-premise. The drive-thru experience is an increasingly critical competitive advantage for our brands. So these improvements position us well to win going forward. That’s a perfect segue to our Bold Restaurant Development growth driver, which I’m particularly thrilled to speak about today. Our net new unit growth of 603 during the quarter was broad-based across brands and geographies, making this not only a record quarter, but also capping a record first half. These results speak to the strength of our iconic brands in growing food categories supported by a healthy, well-capitalized franchise system primed for sustained growth. Most notably, KFC opened 428 net new units during the quarter with significant builds in China, Russia, India, Latin America, and Thailand, contributing to 5% unit growth year-over-year. As many of you know, KFC has the first-mover advantage in several emerging markets with a strong domestic footprint upon which to grow. This impressive development quarter from KFC speaks to the power of this global brand and the unit economics that underpin it. Pizza Hut has sustained its positive 2021 development momentum, delivering 1% unit growth relative to Q1, underpinned by the strength in gross openings and moderating store closures. Pizza Hut opened 99 net new units during the quarter, led by strong development in China, India, and Asia. Taco Bell opened 74 net new units and we’re excited to share that Taco Bell International had its best development quarter ever, opening 30 net new units led by Spain and the U.K. In the U.S., we opened our flagship Taco Bell Cantina in Times Square, with a digital forward footprint and personalized experience. Overall, we are pleased with the momentum in the first half of the year and we’re extremely proud to announce 4% to 5% unit growth guidance, led by development from all four brands across our footprint. Next, I’ll provide an update on our balance sheet and liquidity position and priorities for capital allocation. We ended Q2 with cash and cash equivalents of approximately $552 million, excluding restricted cash. The strong recovery in EBITDA during Q2 drove our consolidated net leverage down to approximately 4.5 times, temporarily below our target of approximately 5 times. During the quarter, we repurchased 2.1 million shares, totaling $255 million at an average price per share of $119. Year-to-date, we’ve repurchased $530 million of shares at an average price of $112. Finally, our capital priorities remain unchanged, invest in the business, maintain a healthy balance sheet, pay a competitive dividend, and return the remaining excess cash flows to shareholders via repurchases. Overall, I’m extremely proud of our Q2 results, the resilience of our business model, and the agility of our teams. With that, operator, we are ready to take any questions. Operator: Thank you. [Operator Instructions] Our first question comes from John Glass from Morgan Stanley. Please go ahead. John Glass: Thanks and good morning. Chris and David, I just wanted to, you know on your new unit development target, I’m wondering what signals you’re getting that prompted you to not only reinstate the guidance, but increase it from a pipeline perspective? What time frame is reasonable to expect? Could this become visible in 2022, for example? And just specifically on the KFC brand domestically, it’s doing very well on a same-store sales basis. I don’t think there’s been a lot of development, though, over the last several years. How do you think about domestic development specifically or generally playing into that? And the KFC brand, specifically, do you see opportunity here in the U.S. just given the repositioning of that brand? Thanks. David Gibbs: Thanks, John. Yes, obviously, we’re excited about net new development. And as you know, we do have a lot of visibility into the pipeline of our development because it takes about 12 months to plant the seed of development before you get the opening. So, we’re working with our franchise partners around the world to get that visibility, understand what’s coming down the pike, and that’s what gives us the increasing confidence, but really that all starts with the unit economics. When our unit economics are good, it’s an attractive proposition for our franchisees to build. You saw Yum! China last night talk about that. We’re seeing that in the vast majority of the world right now, which is what gives us the confidence to make that commitment to 4% to 5% net new unit growth. And just to clarify, that would apply to 2021, as well as 2022 and beyond. As far as domestically, we do think we’ve talked about this past on calls. We do think that there’s upside for KFC and Pizza Hut, particularly in the U.S. Taco Bell is starting to accelerate the development. So that went all – that trend is moving, but KFC and Pizza Hut haven’t historically been growing in the U.S., and we think there’s every reason in the world they should be net growers and they’re shifting into that in 2021 and we think that will continue. Operator: Our next question comes from Dennis Geiger from UBS. Please go ahead. Dennis Geiger: Great. Thanks for the question. Maybe just a follow-up on that impressive unit growth target acceleration, David and Chris. As it relates to kind of where that might be coming from, as you contemplated that acceleration, Chris, I think you spoke to all brands would be seeing the increase. Is it any in particular over the next few years or longer-term where you feel like you’re really seeing something interesting where one brand more so than others might be driving that acceleration, and how to think about the timing of that over the next few years perhaps, just curious if any additional insights to share there? Thank you. Chris Turner: Yes. Thanks, Dennis. Just to elaborate, our development engine is working and we expect it to work across all four of the brands, as David said. KFC has historically been our development leader. And if you look at what they did in Q2, it was very broad-based growth across a number of countries in the KFC system, I think north of 60 countries in the KFC system. And we expect them to continue to be the leader. But we have high expectations for the other brands. You’re seeing Taco Bell with strong domestic growth, but you also saw a strong international growth in Taco Bell development. And they are now back on track running ahead of where they were in 2019. We expect to get to 100 units, for example, in Spain this year and have other markets that are getting to scale. And then you’ve seen a market trajectory change in Pizza Hut. We took last year to drive our asset transformation strategy. We made some closures that helped accelerate that. And now you’ve seen the trajectory change and plus 99 in Pizza Hut this year. So, we have high expectations for growth across all the brands. Operator: Our next question comes from John Ivankoe from JPMorgan. Please go ahead. John Ivankoe: Hi. Thank you. I think these are all related questions. Just for clarification, I may have missed this or just didn’t catch it. Is there a quarter coming up maybe over the next eight or so, where you do expect to be in that 4% to 5% net unit growth? Your kind of parameter or goal that you’ve set out, I mean, if you can maybe point to a specific quarter that will get us all on the same page? And secondly, how many of the units that you are opening in 2021, whether you want to talk about the first half or you want to talk about the full-year, are units that are still catch-up units from 2020? In other words, you now is 2021 a year where it’s 2021 development and 2020 combined and 2022 doesn’t necessarily increase much from 2021, or am I thinking about that the wrong way that the actual development pipeline is so robust that 2022 development will exceed that of 2021? Thank you. David Gibbs: Thanks, John. And just to clarify, obviously when we report quarterly results that has the trailing 12 months in it, which we had some closures last year. So, when we’re talking about our 4% to 5% net new unit growth algorithm now, we’re talking on an annual basis starting in 2021. So that’s what we’re expecting for 2021, 2022, and beyond. As far as the second question on catch-up units, certainly, there were some units that were put on hold in 2020 that have opened in 2021, no doubt. And that’s helping us get to the number for 2021, because we had to restart the development engine. But by issuing the guidance on – as part of our long-term algorithm, we’re obviously clearly trying to signal that we think that will continue into 2022 with organic growth, again, based on the factors I mentioned earlier: strong unit economics, healthy franchisees. We’ve got strong brands all around the world, in general. Operator: The next question comes from Brian Bittner from Oppenheimer. Please go ahead. Brian Bittner: Thanks. Good morning. I’m going to ask my question on the KFC International business. When you adjust for the store closures, the two-year same-store sales for KFC International were positive. They turned positive in the quarter. This was despite what we heard from China last night, your largest international market, where sales do still remain below pre-COVID levels. So, can you again highlight where you are seeing this offsetting strength KFC International? And maybe, if possible, could you give us a glimpse of how those better markets are performing on a 2-year basis relative to the whole international business? David Gibbs: Yes. Great question. The KFC International business obviously showed quarter-over-quarter improvement in the 2-year trends which we are excited about and we think reflects the strength of the brand across its markets. You do see differences depending on the COVID situation in the state of each of those markets in that business. More developed markets where we’re seeing recovery advance are running further ahead where you’ve got more customer mobility and fewer restrictions on operating hours, those sorts of things for our restaurants, and where the footprint is more off-premise-ready. And so, if you look at markets like the U.K., for example, running incredibly strong, north of 40% growth in the quarter. The emerging markets have a bit of a longer tail on recovery. And so that’s what you’re seeing, but in general, great trend and improvement over the entire KFC International business. Operator: The next question comes from David Palmer from Evercore ISI. Please go ahead. David Palmer: Thanks. A question on digital sales. I think you mentioned that digital sales was up 35% in the quarter and that you believe it’s incremental. I’m wondering if that’s an interesting reason why multi-year growth might be higher coming out of COVID as the headwinds from COVID directly ease. For example, I think the digital order mix was 20 points higher at global KFC versus pre-COVID levels at least earlier in this year. So, I’m wondering what brands and maybe broken out by U.S. versus International, do you see the digital step-up proving to be the biggest help to multi-year sales growth in 2022 and beyond or whenever we finally have COVID headwinds ease? Thanks. David Gibbs: Yes. Thanks, David. I’m glad you asked about digital. Obviously, it’s something we’re really excited about as we are now on track for trailing 12-month $20 billion of digital sales. We’ve been making investments and developed a long-term strategy for how to win in digital for many years now. So this is starting to pay off, not something that happened overnight. You’ve seen us make investments in things like Quick Order, Quantum, Tictuk, Dragontrail now more recently, and then investments in people. So, this is something where we’ve been building up the capability in all aspects. We developed a road map to win in digital and now we’re implementing that, and it’s actually been accelerated by COVID. But it’s all the things that we were expecting to happen to the business are happening. It’s really hard to single out which part of the business is going to benefit most from digital, because all of our brands are very rapidly becoming digital brands. You’re seeing that in the numbers. Obviously, the brands like Pizza Hut that tend to – that started with a bigger digital base of customers, launched loyalty first. They’re getting a benefit because it’s central to what they do. But really on a growth basis, it’s the brands like our other brands that started up from a smaller base that are really getting a big benefit, and it is both the U.S. and an international play. It’s widespread and we do think it can fuel the business for a long time to come, part of the reason why we confidently reinstated our long-term growth algorithm. Operator: The next question comes from Jeffrey Bernstein from Barclays. Please go ahead. Jeffrey Bernstein: Great. Thank you very much. Just a question on the broader inflationary topic, which you mentioned in your prepared remarks. Clearly, the franchise model insulates corporate, which is a good thing. But I am just wondering how you think about the outlook maybe for the system in terms of both commodities and labor over the next 12 months or so? I’m assuming the pressure is outside and I was wondering how you respond in conversations with franchisees. I guess, qualitatively, whether you prefer to take the hit to margin or suggest they would take a hit to margin or are there maybe incremental cost savings or incremental menu pricing, maybe you can share the current pricing by brand to help us understand how the franchisees are managing? Thank you. David Gibbs: Yes. This is clearly a topic that is top of mind right now. We are seeing inflationary pressures primarily in the U.S., much more mark there than in our global footprint outside the U.S. represent 60% of our business. In the U.S., it is a topic that we and our franchisees are collaborating closely on. We are well-positioned to deal with this. First, when we had commodity inflation, as we mentioned in the remarks, we have greater purchasing scale than most players in the industry. RSCS, which leverages purchasing across the brands, gives our franchisees advantaged cost and negotiating capability from a sourcing standpoint. We are also seeing some wage inflation, as you mentioned. But when we think about dealing with both of those, the next lever that our franchisees and our brands pull is pricing. And so, we are confident that our brands have strong pricing power and our franchisees, who are the ones who actually make those decisions in their restaurants, are being very thoughtful about how to do that. They use analytics, they tend to layer these in over time, so that they don’t get too far ahead of the consumer. And our brands, obviously, are very smart about how they create mix in the menu. I would say, we’ve been very thoughtful and have increased pricing moderately across the brands in the U.S. to deal with this. But we’re confident in the ability to continue to pull those levers to deal with this tactfully. Operator: The next question comes from Jon Tower from Wells Fargo. Please go ahead. Jon Tower: Great. Thanks. I was just kind of following up on the question about digital and specifically how it ties into development. Is this higher digital mix that you’re seeing across your brands across the globe allowing you to, kind of penetrate in the markets and specifically urban versus suburban at a different rate than you had once thought? And specifically, how is the digital mix impacting the type of future development that you’re thinking for these brands, meaning, our footprint is a little bit smaller than you had previously thought, say, two to three years ago, because digital mix is higher. Just curious to get a little color there. David Gibbs: Yes. Look, digital is one of those things that had no downside. Obviously, the customers are – you have a better experience when it’s a digital experience. The average check is higher. There’s labor savings from processing orders on digital. So, the link to development is probably pretty – is pretty clear, right? It’s going to give you better unit economics when you have higher check and less labor associated with the check and stickier customers by the way. So, we do think digital as part of our upside for development as we go forward and you’re also seeing our brands develop new assets that take advantage of that, Taco Bell is best example of that, is the Taco Bell Go Mobile asset, which is, as you mentioned a smaller footprint, more on digital and should give our franchisees better unit economics. Obviously, this all starts and ends with franchisee unit economics, and to the extent that digital improves that, it’s going to drive development. Jodi Dyer: Operator, we have time for one more question. Operator: Okay. Our next question is from David Tarantino from Baird. Please go ahead. David Tarantino: Hi. Good morning. My question is on Pizza Hut, and I wanted to specifically ask about the transformation or asset transformation that you’ve been going through there. And whether your unit growth guidance now assumes that you’re largely completed with that transformation, the closings that would be tied to that? And then I guess secondarily, can you just kind of frame-up how you’re thinking about growth for that brand globally? Do you think Pizza Hut can get closer to your overall average on growth as you think about the next several years? David Gibbs: Yes. Thanks, David. The Pizza Hut strategy, as we’ve talked about over the last few years, has been to revitalize the brand and driving asset transformation. But it’s focused on a modern off-premise business. And through COVID, both Pizza Hut U.S. and Pizza Hut International has continued to drive progress on that front. If we take Pizza Hut U.S. specifically, if you saw last year that we drove a number of closures in the system that did move our mix of [Delco assets] by a few percentage points. So, we’re continuing to make progress on that transformation. There is still further to go. So, we’re going to continue to drive that. But in terms of net unit count, you’ve seen a change in that trajectory. We were actually slightly positive this quarter in Pizza Hut U.S., which we think reflects the improved unit economics in the U.S. that stem from the strength of the brand. And then across both Pizza Hut U.S. and across Pizza Hut International, you’re continuing to see strong growth in off-premise, roughly 20% [indiscernible] I think we were 18% in Pizza Hut U.S. on a 2-year basis and 21% in Pizza Hut International. So, we think the strategy is working. We think the brand is strengthening. Still more work to go on continuing to transition the asset base, but we’ve seen a change in trajectory on unit counts. I think with that, we’ll wrap up. I just want to thank everybody for the time on the call. And obviously, you sense that results are strong. But underlying those results, what’s really encouraging for us is that all four brands are performing well. You saw that on a global 2-year basis they were all positive. They were all positive on a global basis in the U.S. Those all four brands had improved trends from Q1, which really bodes well for the future. And a lot of it is being fueled by digital obviously with $5 billion of digital sales in the quarter and on-track for over $20 billion on an annual basis. But it’s not just the top line story, it’s also on the net new units side with 603 net units in the quarter, a record no matter how you slice it. And all of that obviously adds up to great confidence in the business and the way forward and which is why we reinstated our guidance and raised our net new unit target. We know we have a lot of work and a lot of exciting work ahead of us to continue to grow and accelerate the brands. The team is fired up for it and it’s a great quarter, but there’s a lot more to come. Thanks for your time, everybody. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Good morning, and welcome to the First Quarter 2021 Yum! Brands, Incorporated Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Gavin Felder, Chief Strategy Officer and Interim Head of Investor Relations. Please go ahead. Gavin Felder: Thanks, operator. Good morning, everyone, and thank you for joining us. On our call today are David Gibbs, our CEO; Chris Turner, our Chief Financial Officer; and Dave Russell, our Senior Vice President and Corporate Controller. Following remarks from David and Chris, we'll open the call to questions. Before we get started, I would like to remind you that this conference call includes forward-looking statements. Forward-looking statements are subject to future events and uncertainties that cause our actual results to differ materially from these statements. We're going to do our best to provide our current thinking about the impact of the COVID-19 pandemic on our business. But obviously, this situation is completely unprecedented and evolving, so any forward-looking remarks should be considered in light of the uncertainty regarding the severity and duration of the pandemic and the variables that will be impacted as a result. All forward-looking statements are made only as of the date of this announcement and 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 our earnings releases and relevant sections of our filings with the SEC 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. All system sales results exclude the impact of foreign currency. Core operating profit growth figures exclude the impact of our currency and special items. All 2-year same-store sales growth figures are calculated using the geometric method. For more information on our reporting calendar for each market, please visit the Financial Reports section of our website. We are 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 upcoming Yum! investor events and the following: Disclosures pertaining to outstanding debt in our restricted group capital structure will be provided at the time of the Form 10-Q filing. Second quarter results will be released on July 29, 2021, with the conference call on the same day. Finally, we'll be hosting a virtual KFC Global Investor Day on Tuesday, May 25, 2021, available via webcast on our website. Stay tuned for more details. Now I'd like to turn the call over to Mr. David Gibbs. David Gibbs: Thank you, Gavin, and good morning, everyone. We've had a strong start to 2021 with solid same-store sales results on a 2-year basis and a meaningful uplift in unit development. This performance is a testament to the incredible focus and dedication of our restaurant teams, franchisees and above-store leaders around the world who are rising above the challenges presented by the pandemic to unlock new areas of growth such as digital and off-premise, while putting the needs of our customers and local communities first. I've always believed that our success will come from leaning into our core strengths and building new capabilities that enhance our ability to grow. And the way our business has navigated through COVID-19 has only reinforced this belief. This mindset is reflected in our Recipe for Growth and Good framework, which has successfully guided our strategy and will continue to serve as our north star. Our recipe highlights our unique strength as a company, notably, our iconic brands, our unmatched global scale, our diversified network of highly capable and well-capitalized franchisees and our unparalleled culture and talent. Today, we'll discuss our Q1 performance through the lens of this framework and the growth drivers that underpin it, and we'll highlight the specific areas where we've introduced new capabilities as we look toward the future. I'll cover two growth drivers, namely, relevant, easy and distinctive brands, or RED, for short; and Unrivaled Culture & Talent. Then Chris will share more details of our Q1 results, our Unmatched Operating Capability and Bold Restaurant Development growth drivers and our strong liquidity and balance sheet position. I'll start with a few first quarter highlights. In Q1, Yum! system sales grew 11%, driven by 9% same-store sales growth and the addition of 435 net new units during the quarter. Importantly, same-store sales grew 2% on a 2-year basis, which includes the impact of nearly 900 or about 2% of our stores being temporarily closed due to COVID as of the end of Q1 2021. This was driven by strong sales performance in North America, the UK, Australia and Japan, with some offset from COVID-related trading restrictions in parts of Asia and Europe. Notably, all four of our brands had a weekly per restaurant sales record in the U.S. at least once during the quarter. And I'm very encouraged that on a 2-year basis our overall same-store sales in the U.S. increased 10%. Importantly, each of our brands experienced positive 2-year same-store sales growth on a global basis in open and operating stores during Q1. This is a great indicator for the strength and breadth of our recovery. The key focus point for our teams was the continued acceleration of our digital and technology initiatives across the globe, all geared towards providing customers with new and seamless ways to access our brands. Delivery has been a significant part of this strategy, and we now have over 39,000 restaurants offering delivery, representing a 16% increase year-over-year, driven by expanded aggregator partnerships and continued investment in our own branded channels. We had another record digital system sales quarter with over $5 billion, about a 45% increase over the prior year. Now let's talk about our four brands, starting with the KFC Division, which accounts for approximately 48% of our divisional operating profit. Q1 system sales grew 11%, driven by 8% same-store sales growth and 4% unit growth. For the division, Q1 same-store sales were flat on a 2-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of Q1 2021. Globally, KFC's digital sales mix reached a record of 43% during the quarter, driven by the rapid expansion of delivery, click and collect and the introduction of new channel ordering options. At KFC International, same-store sales grew 7% during the quarter. Same-store sales declined 2% on a 2-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q1 '21. We continue to see strength in the UK, Australia, Canada and Japan during the quarter and saw encouraging results in the Middle East, Mexico and Africa. Each of these markets performed well above their 2019 sales levels, owing to their off-premise capabilities, digital strength and impressive product launches like the Share Box in Japan and the Chicken Nights promotion in Mexico. Next, at KFC U.S., we continue to see positive same-store sales, with 14% growth in Q1. Importantly, same-store sales grew 11% on a 2-year basis, thanks to all the team's hard work in building additional sales channels and growing the core business while adding hyper-relevant product innovation such as the new Chicken Sandwich. Our sandwich is performing at more than twice the volumes of our prior U.S. sandwich launches. And all initial indications are that it's highly incremental. Customers are loving the product and coming back more frequently for it. In fact, as we've entered Q2, demand for the new sandwich has been so strong that, coupled with general tightening in domestic chicken supply, our main challenge has been keeping up with that demand. Moving on to Pizza Hut, which accounts for approximately 17% of our divisional operating profit. The division reported Q1 system sales growth of 7%, driven by 12% same-store sales growth and a 4% unit decline. Global Q1 same-store sales declined 1% on a 2-year basis, which includes the impact of about 3% of our stores being temporarily closed as of the end of Q1 2021. Overall, Pizza Hut International same-store sales grew 8%. Same-store sales declined 7% on a 2-year basis, which includes the impact of 3% of our stores being temporarily closed as of the end of Q1 2021. Importantly, the off-premise channel achieved 10% same-store sales growth for the quarter. Similar to KFC, our developed markets with high off-premise capabilities, digital strength and newsworthy products continue to perform well. Pizza Hut U.S. had another stellar quarter, delivering 23% same-store sales growth in the off-premise channel, with 16% overall same-store sales growth. Overall same-store sales grew 8% on a 2-year basis, which includes the impact of 3% of our stores being temporarily closed as of the end of Q1 2021 and was driven by a combination of compelling value with the $10 Tastemaker offer and category-leading innovation with the launch of the unique Detroit Style Pizza and the reboot of our iconic Stuffed Crust Pizza. As for Taco Bell, which accounts for approximately 36% of our divisional operating profit, Q1 system sales grew 11%, driven by a 9% same-store sales growth and 1% unit growth. For the division, Q1 same-store sales grew 10% on a 2-year basis. The quarter kicked off with the return of Nacho Fries, this time offered in the $5 Nacho Fries Box. We also introduced our first digital-led product launch with the $5 Build Your Own Cravings Box available exclusively on the Taco Bell app or web, which drove a meaningful increase in loyalty memberships during the quarter. And finally, our newest brand, The Habit Burger Grill, delivered 13% same-store sales growth and 6% unit growth during the quarter. Q1 same-store sales grew 3% on a 2-year basis, which includes the impact of about 2% of our stores that were temporarily closed as of the end of Q1 2021. We introduced our new Patty Melt, and our sales growth was aided by reduced government restrictions and government stimulus. Encouragingly, digital sales continued to mix above 40%, even as dining rooms reopened, and we saw a steady improvement in the dine-in channel throughout the quarter. On to the Recipe for Growth, starting with RED brands. Having four brands across more than 50,000 restaurants provides us with an enviable platform to understand how consumers are behaving in every corner of the world and to use that understanding to capture future growth in our sales overnight and our brands over time. In some cases, this means strengthening our ability to grow sales at a faster pace and bringing in strong diverse tech talent. It's with this in mind that we were excited to close on two strategic acquisitions during the quarter, being Kvantum, Inc. and Tictuk Technologies. Kvantum is a true innovator in marketing optimization with a proven track record of adding significant value with enabling data-driven decisions to drive return on advertising dollars and sales increases. We have seen material improvements in both marketing spend efficiencies and same-store sales growth in our Pizza UK off-premise and Pizza Hut Taiwan businesses as a result of leveraging their toolkit. And at the end of last year, both Taco Bell U.S. and KFC U.S. engaged Kvantum services on marketing calendar and mix optimization. Tictuk presents an exciting opportunity to expand access by providing frictionless ordering through text, social media and other conversational channels in literally just a few clicks. We've deployed their platform in approximately 900 KFC, Pizza Hut and Taco Bell restaurants across 35 countries outside of the U.S. and have been thrilled with the agility and customer obsession of the Tictuk team. In fact, we have several examples of customers completing orders on the Tictuk platform in under 10 seconds, a truly seamless experience. Beyond their proven capabilities, what excites me most about these acquisitions is the high-quality, culturally aligned teams we've brought into our global organization. This is a perfect segue to our Unrivaled Culture & Talent growth driver. Given the environment we have been operating in, we have to find new ways to connect with the people across our vast global business. One way we've done this is through virtual market visits where we virtually walk through a restaurant and connect with team members. The leadership team and I attended four virtual market visits during the quarter in Pizza Hut Japan, KFC Asia, Taco Bell U.S. in Times Square and KFC Africa. We each left those meetings energized and proud of how our brands are represented around the world and the incredible people that make it all happen. Here, I also want to highlight two key actions we are taking to bring our Recipe for Growth and Good to life. On the equity and inclusion front in the U.S., we are taking tangible actions to represent the diverse communities where we operate by increasing Black and Latin employees and leaders in our corporate and restaurant management roles. As part of this effort, we're proud to partner with OneTen, a coalition of leading companies coming together to upskill, hire and advance 1 million Black individuals in America over the next 10 years. These actions advance our global Unlocking Opportunity Initiative in the U.S., and we are looking forward to working alongside the community of companies in OneTen as well as our franchisees to advance equity and opportunity. Finally, as part of our broader strategy to address climate change, earlier this week, we announced our pledge to achieve net zero greenhouse gas emissions by 2050 with a science-based target to reduce emissions by nearly 50% across our supply chain and restaurants by 2030, in partnership with our franchisees, suppliers and producers. This is an incredibly important issue to us, our customers and other stakeholders. And I'm proud of our continued progress in this space. To wrap up, I'm encouraged by the momentum in our business as we execute our Recipe for Growth and Good to set ourselves up for the next chapter of growth. Although COVID continues to impact many geographies and make our overall path to recovery uneven, I believe that, with our iconic brands, world-class talent, inclusive culture and healthy franchise system, we are poised to enter a post-COVID world even stronger. With that, Chris, over to you. Chris Turner: Thank you, David, and good morning, everyone. Today, I'll discuss our first quarter results, our Unmatched Operating Capability and Bold Restaurant Development growth drivers and our strong liquidity and balance sheet position. To begin, let's discuss Q1. As David mentioned, overall Yum! system sales grew 11%, driven by 9% same-store sales growth and 1% unit growth. On a 2-year basis, same-store sales grew 2%, which includes the negative impact of about 2% of our stores being temporarily closed due to COVID as of the end of Q1 2021. EPS, excluding special items, was $1.07, representing a 67% increase compared to ex special EPS of $0.64 in Q1 2020. Core operating profit grew 33% in the first quarter. This performance is attributable to a stellar same-store sales growth in several developed markets at KFC, the combination of strong sales and restaurant margin growth at Taco Bell and a year-over-year benefit associated with reserves for franchisee accounts receivable. I'll now provide some additional color on several items. Starting with Taco Bell, we had another impressive quarter of profitability, where company restaurant margins were 24.1%, representing a 1.7% increase over prior year. As we've mentioned on previous earnings calls, we expect these margins to return closer to historical levels later this year as check averages normalize, dining room patronage increases and we adjust staffing levels at our restaurants as a result. During Q1, we continued to see recoveries of amounts past due at KFC International and Pizza Hut U.S. These recoveries resulted in a $6 million net benefit to operating profit related to bad debt during the quarter, representing a $34 million year-over-year tailwind to operating profit growth as we lapped $28 million of expense in Q1 2020, while we ended 2020 with $12 million of full year bad debt expense, we had large quarterly swings last year due to COVID. As such, we expect year-over-year operating profit growth to continue to be impacted as we lap bad debt expense of $13 million in Q2 and bad debt recovery of $21 million and $8 million in Q3 and Q4, respectively. While difficult to forecast, at this point, we don't expect bad debt to significantly impact our year-over-year operating profit growth on a full year basis. Most importantly, our franchisees are generally on solid financial ground despite the uncertainties caused by COVID. We recently completed the restructuring of our largest Pizza Hut U.S. franchisee NPC. that resulted in Flynn Restaurant Group joining the Pizza Hut family. We believe our franchisees are well positioned to partner with us as we look to accelerate out of COVID. General and administrative expenses were $206 million. We still anticipate the timing of full year 2021 G&A to be back-end-weighted as it has been historically. And we estimate that our consolidated G&A expenses will be slightly less than $1 billion for the full year 2021. Our commitment to be an efficient growth company that leverages fixed costs and utilizes our unique scale remains unchanged, and we expect our G&A ratio to move back toward our historical target as sustained growth resumes. Interest expense was approximately $131 million, an increase of 11% compared to Q1 2020, driven by write-offs of historical debt issuance costs and other one-time financing costs associated with the Q1 refinancing. Capital expenditures, net of refranchising proceeds, were $25 million for the quarter. As we mentioned on our last earnings call, we believe roughly $250 million in annual gross CapEx appropriately balances the inherent needs of the business, with opportunities to invest in technology initiatives and strategic development of equity stores. We still anticipate at least $50 million in annual proceeds from refranchising, which will fund the strategic equity store investments. As a reminder, for 2021, we may be slightly higher than the $250 million gross CapEx amount to catch up spend on repair, maintenance and remodels delayed owing to COVID as well as selective strategic development in the U.S., primarily for The Habit Burger Grill, for which refranchising proceeds may not be fully realized this year. Now on to our unmatched operating capability growth driver, with so much of our sales now going through off-premise channels, our operations teams have been laser-focused on delivering a fast, enjoyable experience for customers. As a result, KFC U.S. improved their drive-thru speed by nearly 15 seconds in the quarter over last year. And Taco Bell U.S. delivered their fastest average drive-thru speed in 8 years, while serving a staggering 17 million more cars compared to the same quarter last year. Importantly, one-third of these additional cars served were digital orders, which typically carry a higher check value, not to mention an optimized customer experience. Additionally, we continue to make tangible progress on scaling our in-house built technology platform. During the quarter, we deployed the pickup and delivery ordering solution across all KFC U.S. restaurants, including the launch of our first ever custom-built KFC app. Early signs are highly encouraging, and this gives us confidence as we look to further optimize and scale the platform. Now moving on to Bold Restaurant Development, during the first quarter, we opened 660 restaurants and closed 225, resulting in 435 net new units. Most notably, KFC delivered 4% unit growth, with strength in China, India, Russia and Thailand. At Pizza Hut, we were pleased to add 71 net new units, reflecting a positive trajectory following the COVID-related dislocations and closures of last year. We still have more work to do, and there will be choppiness related to the uncertainty of COVID and our continuing transition to a more modern estate, but we are encouraged by strong unit economics in many markets and our resilient global franchise base. We are also proud to announce that, shortly after the quarter ended, we opened our first ever Taco Bell in Malaysia. Not only was this the 31st international market Taco Bell has entered, but it was the first market entry where all training and launch programs were conducted virtually, a real breakthrough by the amazing Taco Bell Asia team. Overall, we are pleased with the momentum at the end of 2020 and into the early part of 2021, and this increases our confidence that we can return to 4% annual unit growth sooner rather than later. In 2021, we are optimistic that we will accomplish at least 3% unit growth. Now for an update on our balance sheet and liquidity position as well as our latest thoughts on capital structure and priorities for capital allocation. First, we ended Q1 with cash and cash equivalents of approximately $560 million, excluding restricted cash. Consolidated net leverage was 4.9 times which returns us to our target of approximately 5 times. Second, we repurchased 2.6 million shares totaling $275 million at an average price per share of $106. Third, we executed a series of transactions that added resiliency to our business while balancing liquidity, flexibility and cost. During the quarter, we amended and extended our credit facility and refinanced our term loans. We also priced a new Yum! Brands, Inc. holding company bond, which closed on April 1, subsequent to quarter end. Proceeds from this new bond, which carries a coupon of 4.625% and matures in 2032 will be used to repay $1.05 billion of 5.25% restricted group notes due in 2026, which we intend to retire later in the second quarter. All combined, the transactions were leverage-neutral and importantly, allowed us to boost liquidity, lower interest going forward and extend maturities. As always, we will continue to look for opportunities to further optimize our capital structure, depending on market and business conditions. Lastly, our capital priorities remain unchanged; invest in the business, maintain a healthy balance sheet, pay a competitive dividend and return the remaining excess cash flows to shareholders via repurchases. With that, operator, we are ready to take any questions. Operator: [Operator Instructions] Our first question comes from David Palmer from Evercore ISI. Please go ahead. David Palmer: Thanks. I will try to squeeze in a two-part question. Just really about the U.S. brands for KFC and Pizza Hut, I am particularly curious about Pizza Hut. But both of those brands have had a pretty good run during COVID, but they have also been doing some pretty good stuff on the marketing front lately, so new management and the like. So, I am wondering how you feel those brands are set up for post-COVID. Do you think they can lap me or flat coming out of this as they lap some of these COVID comparisons? And I think, particularly with regard to Pizza Hut, I think people are curious about the health of that system. And obviously, it’s a long way away now the concerns of 2019, the franchisee profitability if the unit closure is over, any sort of feelings about the long-term health of that business? Thanks. David Gibbs: Yes. Thanks Dave. I think you are right. KFC and Pizza Hut have done a tremendous job navigating this tricky environment over the last year. But very importantly, they have done a great job setting themselves up for future success. A lot of that, as you mentioned, good marketing, the rollout of the KFC sandwich, I mentioned it in my prepared remarks, but it bears repeating. That has been a very successful launch with a great product. It really is a winning product in the category, and we are excited about the impact that will have, along with Secret Recipe Fries that rolled out in the quarter. But on Pizza Hut specifically, the comment about health is also well put. The Pizza Hut franchisees over the last year, given the success they have had, the ability to close some of the underperforming dine-in stores that we have been trying to get out of, those – all of those moves together have strengthened their financial condition in a very big way and that sets them up for a much growth going forward. A big part of that is just the ownership of NPC, which we also mentioned, Greg Flynn and his organization taking over a good chunk of the Pizza Hut U.S. stores is a huge positive for the brand. They are great restaurant operators, great businessmen that has a great team underneath him, knows how to run restaurants as well as anybody in this country. And very excited about the impact he will have taking over those stores and improving their operations, fixing up the assets and growing the business. Operator: Our next question comes from John Glass from Morgan Stanley. Please go ahead. John Glass: Thanks and good morning. It was good to hear that unit growth is now sort of within the historical range, 3% this year, perhaps on the path back to 4%. Can you just drill down a little bit? One, just by brand, how you think that plays out? Obviously, you have led with KFC, but maybe there are some other opportunities within the other 2 brands this year. And also just thinking out over the next 2 years to 3 years, historically, you have led with KFC, but is there – has COVID changed the way you think – thought about the growth opportunity for the other 2 brands and maybe the balance of growth is going to be different going forward than it has been historically? David Gibbs: Yes. Thanks so much. Good question on development. And as we said, we were encouraged by the momentum at the end of last year and the momentum in Q1. Our expectation for all of our brands is to be growing units, and that’s been our history and will continue to be our expectation going forward. KFC, we think, has historically been strong, and we want it to continue to be strong. But we have high expectations for Taco Bell, Pizza Hut and The Habit. Common across all of them is we think strong franchisees, very strong unit economics that improve as the business rebounds from COVID, continued brand love from consumers and ability to serve them on an off-premise basis. Plus, you are seeing us now integrate digital into the formats. And so post-COVID, optimized formats in each of those brands. And so with that, coupled with our very strong development teams, we think supports us on that trajectory back. And so we have expectations that we see strength across all of the brands going forward from a development standpoint. Operator: The next question comes from Dennis Geiger from UBS. Please go ahead. Dennis Geiger: Great, thanks for the question. And wondering if you could talk a little bit more about Taco Bell and some of the brand strength and the franchisee strength that you have seen in recent quarters. David, I think you talked about some of the key drivers of strength in this most recent quarter. Just curious, on the go forward, some of the drivers you are most excited about, whether it’s digital, the loyalty program that you touched on, how that new products pipeline looks. And just as we think about the reopening developments and dynamics going forward, some of the headwinds may be from competition reopening, but also talk about kind of late night coming back, maybe breakfast coming back. Curious if you guys could speak to some of those tailwinds as well. Thank you. David Gibbs: Yes. And for Taco Bell, I think there is excitement across the board for everything they have done over the last year under Mark King’s leadership and the great talent that we have at the brand and with our franchise partners, one of the strongest franchise systems you will ever find. The international development story is one that bears mentioning in terms of the opportunities we have there. We are starting to see ourselves get to scale in some markets. We always know that when we get to about 100 units in a market that’s when you really can start to unlock development, leverage marketing dollars to really create a virtuous cycle and a better unit economic play. We are starting to see that happen in a few markets around the world, and I think we are excited about the upside there. But even in the U.S., we also are leaning more into development as the unit economics look great right now. The opportunities in the U.S. real estate landscape are there. And our franchise partners are financially healthy and eager to go after them in concert with our team and picking the right opportunities that make money for them. The progress that we have made over the last year on digital is also an important part of the Taco Bell story. We are coming out of 2020 with a great loyalty program and a lot of loyalty members. That progress was made last year as we increased our digital sales. That lays the foundation for more success going forward. We did this – the first digital-only promotion of the $5 Create Your Own Box. It’s a great example of how having that digital business increasing gives us new tools to grow sales. So, I think the brand is really hitting on all cylinders. The product innovation is there. Once again, they have got something out of fries for the quarter, and they have got a great pipeline of stuff coming down the road. And the future for Taco Bell is incredibly bright with accelerating development growth, a strengthening brand, a great leadership team, great franchise partners. Operator: The next question comes from David Tarantino from Baird. Please go ahead. David Tarantino: Hi, good morning. I wanted to come back to your outlook for unit growth. And I guess, if I look at the first quarter, I think 435 net openings is the highest you have achieved in perhaps at least 10 years, according to my model. But I am wondering if there was anything unique to the quarter that would have driven that strength. And if you can comment on how that strong start to the quarter kind of translates to your guidance of at least 3%, but not perhaps getting to that 4% run rate, that would be helpful? Thanks. David Gibbs: Yes. David, good question, if you look at Q1, I think a couple of things stand out. We had strong gross openings which were, in particular, driven by a few key markets in Asia, but general strength in openings across the board. You saw in the U.S., fewer closures. And in general, in the Pizza Hut global system, fewer closures than we had last year, which as we said in the prepared remarks, we think reflects a bit of a turn there, although there is still a lot of work to be done on the asset transformation, and there is still going to be choppiness from a unit standpoint in the Pizza Hut system. And so those are kind of what drove the shape of development in the quarter. As we said, there is still a lot of uncertainty going forward. If you get outside of the U.S., the COVID situation in certain countries is still very dire, and that leads to some unpredictability. That’s why we are not yet ready to commit to exactly when we can get back to the 4% number. But we do have enough confidence as we look at the current pipeline to say that we think we will be at the 3% number at least this year. But again, we have still got a fair bit of uncertainty out there given the global situation. Operator: The next question comes from John Ivankoe from JPMorgan. Please go ahead. John Ivankoe: Hi. Thank you. Chris, I think you touched on it briefly in your prepared remarks, but ticket drove the majority of quick service comps in 2020, just speaking for the category with ticket being hugely positive and transactions generally being negative. Can you comment – and this is, I guess, for the whole team – on your thoughts of maintaining that ticket as traffic returns or should we, by definition, be looking for a positive transaction environment, perhaps at least partially offset by negative ticket environment? And if you could talk about maybe some experience that you have seen in markets that have been reopened the longest in terms of that ticket traffic dynamic, if there is any differences in those markets that have been opened the longest relative to national average? Thanks. Chris Turner: Yes. Good question, John. And obviously with 290 brand country combinations it varies, a lot of this varies by each one of those. But in general, we are seeing as markets reopen, ticket come down a little bit. But the thing that determined a lot of our success going into this was our ability to serve family meals and serve larger tickets. So, the brands that had those options, like KFC buckets, and Pizza Hut meals for sharing, tended to do better. And we are not seeing that all go away. I think, as you think about the things that happened during COVID, accelerating trends, which ones of those are going to be sticky. I think we expect that ticket will come down from where it’s at, but I don’t know that it’s going return to its old levels. And we think that’s good. The same thing could be said for some of the digital business, the increases that we have had in digital, that’s going to be stickier and stay in our business. So even in the U.S., as we see dining rooms reopen, we are not seeing, for example, a decline in Taco Bell’s digital business. And so we are holding on to those gains. So yes, it’s probably fair to expect ticket to start to moderate. But not – I don’t know that it’s going to return to pre-COVID levels. Operator: The next question comes from Jon Tower from Wells Fargo. Please go ahead. Jon Tower: Awesome. Thank you. I appreciate it. I was just hoping you guys can tell us a little bit on the recent tech investments. I know David, you had mentioned that Kvantum has been in a couple markets so far. And Tictuk, if I am saying the name correctly, has been in about 900 stores outside of the U.S. So, I am curious to hear what you expect these platforms to deliver, and how you expect them to spread across the globe. What sort of unlock you are expecting for sales, and maybe perhaps dig into what you are seeing in those stores where the technologies been deployed versus stores where that hasn’t been the case? And if there is any incremental investment, perhaps on headcount, in order to see this opportunity scale-up across the globe? David Gibbs: Great, great question. So, we are excited about both of these acquisitions. If you think about the key areas of our technology strategy, they tied to two of those key areas, one being our e-commerce and technology platform. So, Tictuk enhances that by giving us one more way, one more channel for customers to easily access our brands, through channels like WhatsApp, social media, text messaging, we have had a really good success with it. And nearly 1,000 stores where we have already used Tictuk, and we have high expectations for that team, to continue to bring on new markets, and expand within each of the brands around the globe, we think it’s a great customer experience, really easy to reorder just a few seconds for those customers. So, we are excited about what it does on the platform. If you then think about another key area of our technology strategy, which is data and analytics and our ability to drive insights, Kvantum did squarely against that, brings a new capability in-house that many of our markets around the globe have used to optimize their marketing investments. And so we are excited that they are now continuing to serve more and more of our businesses internally. Both of these we think are high return, they are on the smaller side, but high return acquisitions. And importantly, they create a competitive advantage. And the reason we decided to acquire them is there is also the scaled economies that come from being able to apply their capabilities across the breadth of our global business. Chris Turner: Yes. And just one thing to expand on the return piece, we are buying these companies in order to improve our capability and provide services to our franchisees at the lowest possible cost that are really unique proprietary capabilities that we would have. They are not designed to drive a profit for Yum! We want to provide them at the lowest cost to our franchisees. The return for Yum! comes through top line growth in our franchise units, which leads to more royalty income. We think we have really got a great model here where we do these smaller acquisitions, but we can scale them across the world. They have almost no impact on our P&L initially, and then the return comes from growing sales and units improving franchise economics, which we all know is a virtuous cycle, which leads to more development and healthier franchisees is really our number one goal. Operator: Our next question comes from Brian Bittner from Oppenheimer. Please go ahead. Brian Bittner: Thank you. Good morning. As you analyze your different regions in country combinations for specifically for the KFC portfolio outside of the U.S., where are you in faxing store level volumes, having the biggest outperformance versus ‘19 levels? And on the flip side, where are you seeing the biggest underperformance versus 2019, just so we can maybe better understand what market recoveries are needed to drive a further acceleration in this positive to your trend that you are starting to see? David Gibbs: Sure, good question, Brian. I think all of this is actually fairly intuitive. Where we are seeing ourselves successful is for the most part in developed markets, like the U.S., Canada, Australia, the UK, for KFC, where they are ahead of the curve a little bit on vaccination, keeping the virus under control, people are back trading, and where our business is going into the pandemic had skewed more off-premise to begin with, and had well developed digital and tech capabilities. So, that trend is continuing for all the markets. Well, I think that’s something that we are pleased with is that where we were going, which usually we are a little bit ahead in developed market versus emerging markets is on point environment. So conversely, the other markets that are struggling, are the ones, perhaps where we had skewed more dine-in going into the pandemic, and where we have maybe government action that is limiting our ability to trade, for example, in some markets, I think, in India, we have got to close our stores now, at 3 o’clock in the afternoon, that’s obviously going to have an impact on our business. So, less mobility leads to less sales, but we know that those situations will work themselves hopefully out sooner rather than later, which is why I think long-term, we are still very confident in the international business and returning to even stronger growth. Operator: Our last question comes from Sara Senatore from Bernstein. Please go ahead. Sara Senatore: Thank you. Just a quick follow-up to an earlier question. And then another one there Quick Order technology. And the follow-up was, I think, to John’s question about tech acquisitions that specifically could us maybe talk about give some context in terms of maybe the success or what you have seen from previous acquisitions, I think like Quick Order, a couple of years ago, and just maybe how your technology strategy has or hasn’t changed as you think about build versus buy. And then any color, you can give on loyalty for Taco Bell, I know Pizza Hut has a loyalty program, anything you can tell me about your frequency, what that looks like when people join or average spend, just as loyalty programs become more pervasive, I am trying to figure out they are still having the same kind of impact on the business. Thank you. Dave Russell: Thanks, Sara. I will take the first part of your question on technology. If you think about it, we do ask ourselves the question of should we build the capability in-house, should we acquire it and bring it in-house or should we contract with an external provider. And we run that test, and we think about, gosh, we should have it in-house, if it is a strategic competitive advantage, with high switching costs, and we need to have that in-house. We then assess our ability to develop it versus, the speed of integrating and the opportunity to attract or find a great candidate to acquire. Obviously, our ability to develop in-house is terrific right now with Clay Johnson coming onboard over a year ago, plus the strong technology teams that we have at each brands. And that’s where you saw the success with the launch of our KFC U.S. e-commerce platform which will continue to expand to other parts of the business. The Tictuk and Kvantum acquisitions for the reasons we talked about earlier, we think it was the right thing given that we had already seen the success and the impact they have had on our system to bring those in-house. And we have got plenty of examples where we contract with service providers where it’s either a less strategic capability or the switching costs are low. So that’s how we think about that. And again, as David said, we drive return from these primarily by driving system sales growth and creating better unit economics for our franchisees, which furthers development in the long run. David Gibbs: Yes, in past acquisitions that we have done like Quick Order have really paid off not only being done as a Pizza Hut acquisition, but leveraging the talent and some of the IP across other brands. So this thing is really, got all sorts of synergies and benefits as if as we make the right acquisitions. We have also done acquisitions outside of tech, like we bought Collider, a consumer insights company, that has been enormously helpful in us navigating the marketing environment all around the world and making sure we stay connected with consumers. And Collider in particular is really excited about the acquisition we did with Kvantum which will help them come up with insights on the marketing side, and then implement those insights most efficiently using Kvantum’s algorithms. So, a lot of this stuff is going to start to create even more synergies as we put the – what we believe is going to be the greatest tech team in the restaurant industry together. On the loyalty side, clearly, the move to digital that we are seeing with the consumer – with our consumer base, really enables us to leverage loyalty in an even bigger way. So Pizza Hut, which has had a loyalty program for quite some time now, continues to see more and more of their business going through that loyalty program, driven by frequent users that love the program. That’s why I have mentioned earlier, I was so excited about seeing Taco Bell launch their loyalty program would be hard to do when their digital mix was pretty low. Now, that they have a much bigger digital mix. That’s a great backdrop for us to engage with loyalty on our Taco Bell customers. And just as we would expect, we are seeing those customers coming back more frequently. Excited about the program and seeing giving us a new channel to communicate with them, market to them and grow the business. David Gibbs: I guess, as the last question, I will just wrap up by saying we are all quite excited about Q1. But we know there is a lot more work to do. I think what you saw in Q1 just demonstrates the resilience of the business, how we are coming out of the pandemic in a lot of markets that are now getting to the other side of this stronger with a better foundation to grow. Evidenced by the development progress we are made in the quarter. But we all know this is a journey. We haven’t reached the finish line. We are not doing a victory dance. But we are very excited about the future. Appreciate everybody’s time today and look forward to talking to you on the next call. Operator: This concludes today’s conference. You may now disconnect.