Q2 2020 Domino's Pizza Inc Earnings Call
No need to press star one on your telephone please be advised that today's conference is being recorded if you acquire any further assistance. Please press star zero.
I'd now like how the converts over to your Speaker day Mr., Jeff Lawrence CFO. Please go ahead Sir.
Thanks, Catherine and whoever wants to jump Florent CFO dominoes.
Sure joining the call today about the results of our second quarter 2020.
As you know this call it primarily for our investor audience. So I kindly ask that all members of the medium and others being a listen only mode throughout the call.
If forward looking statements are made today I refer you to the Safe Harbor statement you can find in this mornings release and the 10-Q.
[music], we'll start with my prepared comments, which will be followed by prepared comments from CEO Rich Allison followed by analyst questions. We asked at our analyst limit themselves to one question. Please during this call.
With that I'd like to walk you all through the results for the second quarter, while reminding everyone that we have communicated flocked to preliminary estimated information.
The first eight weeks of the second quarter in a business update that we released on May the 26.
As we stated in the last business update we intend to return to our normally quarterly earnings cadence going forward effective with today's release.
[music] before I dive into Q2 results I'm sure. Most of you have now seen the announcement this morning, but after more than 20 years that the company and five as a domino CFO I've decided to retire from dominoes.
Domino, there's about opportunity and in the past 20 years I've had the chance to learn pro and lead and one of the best brands and companies in the entire world.
From a lead role early in my career in our IPO traveling the U.S. into more than 50 countries around the world, helping our global franchisees grow to number one to helping the team shaped our digital transformation over the past decade, I could not have asking for more and I'm proud of the result, we've achieved together.
Like anything you cannot do it alone I want to thank our board of directors rich and his leadership team and my global Finance team.
And I'd like to personally thank all the franchisees and frontline team members worldwide. You are the heart of this great brand.
And most of all my wife, and my family, who have gone along with me on this unbelievable and awesome ride.
I have achieved ever goal I set out for myself here at Dominos and I'm going to take a while learn break with my family and see what the next adventure is for US we are very very excited.
I have agreed to stay on until year end to end to assist rich in the board and identifying my successor and know that dominoes will be in great hands and that our best days are yet to come I will remain dominoes number one and biggest fan.
As to everybody again.
With that let's get into the second quarter.
In the second quarter, we continue to lead the brought a restaurant industry with 37 straight quarters, a positive U.S. comparable sales and 106 consecutive quarters of positive international comps.
Truly outstanding accomplishment and testament to the strength and resiliency of the Domino's brand globally.
We also continue to increase our global store count as we opened a harder than 25 gross new stores and 84 net new stores in Q2.
Our diluted EPS in Q2 was $2, a 99 cents an increase of 36.5% over the prior year quarter, primarily resulting from strong operationally were operational result, and a significantly lower effective tax rate.
With that let's take a closer look at the financial results for Q2.
Global retail sales grew 5.7% as compared to the prior year quarter pressured by a stronger dollar when excluding the negative impact of foreign currency global retail sales grew by 8.1%.
Retail sales were positively impacted by strong U.S. same store sales, but were negatively impacted by temporary store closures in our international markets.
Same store sales for the U.S. grew 16.1% lapping a prior year increase of 3%.
And same store sales for our international business grew 1.3% rolling over a prior year increase of 2.4%.
Breaking down the U.S. Kannan, our franchise business was up 16%, while our company owned stores were up 16.91st on.
The U.S. comp this quarter was driven by both the ticket and order growth and was significantly impacted by customer ordering behavior during the cold weather 19 pandemic.
During the pandemic, we have continued to attract new customers to our brand, while focusing on safety convenience and value.
We also note that existing customers many of whom are part of our best in class loyalty program continued to order in a larger order sizes.
Our delivery comp was also positively impacted by higher order counts in addition to larger order sizes.
The accelerated levels of demand we saw during the middle of the second quarter remained elevated through the end of the quarter with no discernible drop off.
The international comp was driven by ticket growth during the quarter.
We were particularly proud of our international comp for the quarter as it was positive despite the negative impact on the comp in many markets from partial week openings and closings, abbreviated store hours and limited service methods.
Other markets in our global portfolio saw dramatic increases in sales much like the U.S. business.
We continue to believe we are well positioned to grow our global market share, but with the during and after this pandemic.
On the unit Count front, we opened 39 net U.S. stores in the second quarter, consisting of 40 store openings and only one closure.
Our International Division added 45, net new stores during Q2 comprised of 85 store openings and 40 closures.
We believe the pandemic has had a net negative impact.
Store openings globally in part due to delays and approvals and government restrictions. In addition to general construction delays.
Importantly unit economics remain strong in most markets, particularly in the U.S. business and we will continue to work with our franchisees to responsibly grow their businesses.
Turning to revenues total revenues for the second quarter were up 13.4% from the prior year, driven primarily by high higher retail sales, which drove higher supply chain and U.S. store revenues.
These increases were partially offset by lower international franchise revenues, resulting from temporary store closures as well as pressure from the negative impact of changes in FX.
Moving on to operating margin as a percentage of revenues consolidated operating margin for the quarter decreased slightly to 38.8% from 39% in the prior year quarter due primarily to investments made related to the covert 19 pandemic.
Partially offset by higher revenues from our U.S. franchise business and the positive impact of the sale of our New York stores to franchisees last year.
Company owned store margin was down year over year and was negatively impacted by higher labor costs, partially offset by lower food and occupancy costs.
Supply chain operating margin was up year over year and was positively impacted by lower delivery costs.
DNA expenses decreased approximately a million dollars as compared to the prior year quarter, primarily due to lower travel expenses, resulting from the cobot 19 pandemic any 2.4 million dollar pre tax loss recorded in the prior year related to the New York store sale.
These decreases were partially offset by higher professional fees.
We continue to see the benefit of improved discipline and focus in this important area, while continuing to invest in strategic initiatives throughout our business.
Interest expense increased approximately $6 million in the quarter, driven primarily by a higher weighted average debt balance, resulting from our 2019, a recapitalization and borrowings under our variable funding notes during the quarter.
Our reported effective tax rate was 4.7% for the quarter down 8.2 percentage points from the prior year quarter.
The reported effective tax rate in the quarter included an 18.5 percentage point positive impact from tax benefits on equity based compensation.
We expect to see continued volatility in our effective tax rate related to these tax benefits.
When you add it all up our second quarter net income was up $26.3 million or 28.5% over the prior year quarter.
Our second quarter diluted EPS was $2, a 99 cents versus $2, a 19 cents in the prior year, which was a 36.5% increase.
Here's how that 80 cents increase breaks down.
Our lower effective tax rate, resulting primarily from higher tax benefit on equity based compensation positively impacted us by 32 cents.
Lower diluted share count, resulting primarily from share repurchases in 2019 Bennett benefited us by 14 cents.
Higher net interest expense, resulting from higher average debt balances negatively impacted us by 11 cents.
And most importantly, our improved operating results benefited us by 45 cents.
Let's turn to cash.
We continued to generate positive cash from operations through Q2 and as of the end of the second quarter, we had more than $306 million in available cash and an additional $102 million of available borrowing capacity under our variable funding notes.
Our financial standing is and remains strong.
During the second quarter, we generated net cash provided by operating activities of approximately $116 million.
After deducting for Capex, we generated free cash flow of approximately a $100 million.
We also invested $40 million in Dash brands limited, our master franchisee in China.
For accounting purposes. This is an equity investment reported at cost and will be adjusted in the future for.
For impairments.
We have agreed to invest another $40 million in Q1 of 2021.
Subject to certain performance conditions being Matt and May Alternatively invest this amount in Q2, I'm, sorry, Q1, 2021 at our option if such conditions are not Matt.
During Q2, we returned $30 million to our shareholders in the form of a 78 cents per share quarterly dividend and finally, we have not repurchased any shares under our authorized share repurchase program since the first week of January.
A reminder, we have $327 million remaining under our board authorization for future share repurchases.
Before wrapping up the financial update I want to get you current on some estimates we shared with you on the last earnings call.
We remain steadfast in our commitment to lead with our values and invest in our team members our customers and our communities.
We had previously estimated that the total Q2 impact from frontline bonuses safety and cleaning equipment community, giving and enhanced sick pay would be approximately $15 million.
The actual Q2 impact for these items came in at $11 million.
Separately, we had previously estimated that the total Q2 impact on international royalty revenues from partial store closures would be approximately $5 million.
The estimated Q2 impact came in at 7 million.
Finally, we continue to estimate that FX for the full twentytwenty fiscal year could have a 10 million dollar negative impact on royalty revenues.
Going forward, we do not anticipate providing additional forward looking estimates on the aforementioned items.
In closing we remain in very good shape financially and we will continue to closely monitor all aspects of our business as we operate in these uncertain times.
We will continue to focus on doing the right thing for our team members and communities today, while ensuring we not only survive, but our best position to thrive coming out of this crisis tomorrow.
Thanks again for joining the call today, and now I'll turn it over to rich.
Thanks, Jeff.
Been interested team made for more than two decades, a true Domino's pizza sauce in your bank.
Over the course of your career you have been a key contributor to the success of our global brands working across all aspects of the business.
As our CFO you have an outstanding track record of creating strategic value for our great system.
Your accomplishments speak for themselves.
And I want to thank you on behalf of the entire Domino's Global community. We wish you all the best.
I also want to personally thank you for staying on through the end of the year.
As we identify a worthy successor and also for agreeing to serve as an advisor to me personally through the end of the here.
All right, let's now talk a bit about the business.
The cope with 90 pandemic set the background for the second quarter.
Creating challenges that we are certainly unlike anything we've ever seen as a brand that.
Mike anything I've ever seen as a leader or frankly would hope to see again.
We operate in over 90 markets and across six continents, none of which were spared by this virus and our hearts go out to those around the world that were directly impacted.
Throughout the quarter, our focus as a global brands and the focus of our local operators remain steadfast on serving our customers and our community.
And doing that with a convenient affordable and safe food and service experience.
Given the unprecedented nature of the conditions surrounding the quarter I do want to take a few moments to say thank you.
First to our customers for given us and our franchisees the privilege to serve you around the world.
To our franchisees and our operators fear incredible resiliency you passion your innovative spirit.
Willingness to support each other and share best practices and for your commitment to your teams in your communities.
Into our corporate teams.
Truly across every aspect of our business from our supply chain corporate operations to our functional support teams for leading with our values and for your unyielding commitment to supporting the brand around the world.
I have never been more proud and I am today to where the dominoes logo and to serve as your CEO.
I also want to share some of the work that we've been doing as a brand aligned with our purpose in values.
Our purpose as a brand.
As to feed the power of possible one pizza at a time.
Our values or do the right thing.
Put people first.
Inspired solutions.
Champion, our customers and grow and when together.
During the quarter. This purpose and these values drove us.
Drove us to partner with our franchisees to feed the need and giving away 10 million slices of pizza and our local communities.
Drove us to pay our nearly $8 million and thank you bonuses to frontline hourly team members in our corporate stores and supply chain centers.
And drove us to speak out against racism and to commit $3 million over the next three years to make a difference in black communities, including $1 billion, which will be invested to establish the dominoes black franchise opportunity fund.
We sold a lot of pizza in Q2, but I can tell you I'm, even more proud of the good that our company our team members and our franchisees did along the way.
Now I'm going to turn my attention to our second quarter results.
I'll discuss our U.S. and our international businesses, while we began a few additional topics and some perspectives.
On the dynamics around food delivery and the pizza category in these times, which certainly been a tailwind for many of us within the industry.
Well share some of the latest updates related to operations and execution as we continue to navigate our way through the pandemic.
And also all talk about the areas where I believe.
We can continue to differentiate ourselves from the competition and drive shareholder value over the long term.
And following that as always we'll be happy to take some too and I.
So let me get started with the discussion about our us business.
The second quarter marked a rather unprecedented acceleration for food delivery in the U.S. and we were certainly no exception.
Our 37th consecutive quarter and strongest in that nine plus year run for same store sales.
Was evidence of this tailwind in delivery.
Beyond the numbers I'm, most proud of our energy and execution at the store level, we absorbed unprecedented volume, while maintaining high service levels and continuing to provide tremendous value for our customers.
I can't say enough about our supply chain division, which did a terrific job handling heavy volumes and ensuring continued supply of product to our stores.
So while there remains much to sort out and still much left to unfold regarding the future of customer behavior.
We realize there's an opportunity to capitalize on the engagement with both new and returning customers.
We believe value and convenience or bringing customers to us.
And we hope it will continue to bring them back.
Nearly 75% of our sales in the U.S. are coming through digital channels through the second quarter.
This combined with loyalty adoption.
Give us a good proven chance at driving additional customer frequency.
And I am glad more than ever that we have this direct digital and loyalty relationship with our customers and that we're not dependent upon a third party to bring us orders.
Beyond anything else executing a terrific delivery and carry out experience will be the ultimate way to convinced these customers to come back and to remain domino's customers for the long term.
I'll now turn my attention to operations, we spent much of the quarter.
Retooling almost 60 years of standard operating procedures and doing that over a matter of weeks.
Our teams and franchisees have done an outstanding job of implementing many things rather quickly.
Including protocols around contact was delivery.
Including the innovation of the pizza pedestal to deliver pizzas to our customers front doors.
The rollout of Dominoes car side delivery, which provides.
Credibly convenient and contact free.
Carry out experience for our customers.
And many digital enhancements that our teams have developed to make ordering selecting service methods paying and tipping even easier.
During all of this our innovation and supply chain teams continue to work on our menu.
Just last Monday, we began rolling out a new product.
Our new chicken wings with a greatly improved wing and terrific new sauces.
We've added these two our $7.99.
Not for offering a Tempe swing option in addition to our pizza offerings.
We're promoting the product any offer today through our digital channels.
Wings are a rapidly growing category as many of you know in delivery and carry out and as were honest with ourselves our wings needed to improve.
And this is a sign that continued momentum continued menu innovation doesn't always have to be something brand, new but can be a major renovation of existing products that customers have simply told us need to be better.
Our customers are mixing and matching within our value platforms more than ever before and our new wings are a nice addition tour 799 carry out offer.
We're very excited about this launch and we look forward to bringing additional new product news to our customers over the next few months.
Let me remind you once again, how we think about new products.
Now while product innovation is very important for any restaurant brand dominoes, we don't launch new products just to create news.
Our strategy and launching new products focuses on.
First driving incremental sales and orders and incremental profitability for our franchisees at the store level.
We focus on permanent menu items and simple operations.
And very importantly, whenever possible bidding new menu items into our existing value platforms.
Now turning to store growth.
The pandemic certainly created obstacles for new store openings during the second quarter.
But I'm very pleased that we and our franchisees still managed to open 39 net new stores in the U.S. during Q2.
Our development team and our franchisees did a great job remaining focused on smart growth across our markets.
And while near term challenges remain in many cities and towns.
Domestic about the medium and long term opportunity to accelerate unit growth and to take advantage of the certain opportunities that we're seeing in the marketplace.
Looking forward I can tell you that we don't know exactly what the new normal is going to look like in the us.
Covert 19 has accelerated some of the trends that we were already seeing in motion around delivery carry out and digital adoption.
And we expect that customer expectations around safety and contact plus experiences will remain heightened for the foreseeable future.
Now we don't while we don't have all of the answers on the future. We will continue to focus on the fundamental areas, where we know we have to compete aggressively.
Value, we talk about value often it's always important but even more so when we're facing a recession.
And the high unemployment that we see today.
For interesting in unit growth will continue to be a focus.
And the higher sales levels that we're experiencing and the service expectations that we have for our business make this even more important.
We will continue to expand our supply chain capacity.
We opened our Columbia, South Carolina supply chain centre in Q2, and we are on track to open another supply chain Center in Katy, Texas and US then crust manufacturing facility in New Jersey during the back half of this year.
Innovation across all areas of our business.
Digital and delivery and carry out and in food will continue to be important.
And a focus on service a constant focus on service with plenty of opportunities still for us to improve is always a focus for us at dominance.
So in closing for the us business I'd like to highlight a special recognition. We received this summer for the first time since 2009, we've been recognized as the leader and customer satisfaction for the pizza category as part of the size. Most recent restaurant report that just makes me incredibly.
Out of our us business leaders, our franchisees and our operators.
Turning our attention to international.
We've now achieved 106 consecutive quarters of positive same store sales growth and and to be honest with you.
Back in April I thought this incredible Ron was in doubt.
I'm in my 10th year here at Dominos, and I have never observed.
Such wide variations in performance across our international business.
During the quarter, we had several markets, which saw a significant increases in sales driven in part by pandemic driven changes in consumer behavior.
China, Japan, and South Korea are leading examples.
And these markets are also responsible for pioneering many of the contact close delivery and carry out innovations.
The U.S. and dozens of international markets have benefited from the incredible ingenuity and creativity in these markets.
However, we that other markets, which have had to deal with complete shutdowns for significant closures across their businesses.
Rants, Spain, New Zealand, Panama, and several others were completely closed for a period of time.
India in Saudi Arabia, and others had significant portions of their markets temporarily shuttered.
And dozens of markets had to deal with service method restrictions.
And business our restrictions during the quarter.
In an environment with so many challenges I'm very pleased with the resiliency and performance of our international business.
Our global group of terrific Master franchisees once again demonstrated that they are the absolute best in the restaurant industry.
You at our peak, we had about 2400 stores closed in the international business as markets in stores have gradually reopened over the over the quarter and his service methods have resumed we've seen consistent improvement in the business.
Now there is still much work left to return the business to where it was pre pandemic.
We are at fewer than 600 stores fully closed as of July the eight.
At the same time, however, many markets are partially closed or still restoring service methods.
These factors have continued to pressure retail sales and we expect continued volatility in the international business in the months ahead.
In addition to the pressure on retail sales and same store sales. The pandemic has also slowed our international store growth momentum.
We opened 45 net new stores in the quarter and that's far below our typical performance. We expect that it will take some time for store growth to ramp back up in the markets that have been most impacted by cobot 19.
But with all that said as I look forward I remain very optimistic about our international business and about the growth opportunity ahead.
The pandemic has accelerated delivery adoption around the world and that is good for our business good for our business over the long term.
We are the clear number one in QSR pizza on a global basis, and we're number one and roughly half of the into international markets, where we compete.
And while we're number one and all of those places we still believe that we have significant room for market share growth within the pizza category around the world.
We feel that unit economics cash on cash returns and franchisee profitability fundamentals are still very strong in the majority of our international markets.
You know over read over the recent weeks I've spoken with many of our international Master franchisees and they remain very optimistic and very committed to investing in the long term growth of their businesses.
We've also taken advantage of an opportunity to invest in an international market as Jeff shared with you earlier, we now hold a minority ownership interest in dash brands, our master franchisee in China, We're very happy with where the business stands today, we recently opened our three.
Hundredth store in China, and we're excited about the long term growth potential there.
We believe that we can play a role in helping Domino's, China reach that potential and view this as a good long term investment for DPC.
As I wrap up the discussion on our international business I just want to say, thank you to our incredible master franchisees and to the operators of our more than 11000 store network outside the U.S.
So in closing, we will likely never forget the second quarter of 2020 as a chapter in our path toward dominant number one.
We are rising to the challenge of today and we are looking forward to capture the opportunities of tomorrow.
And then opportunity is driven by the fact that we continue to bring more customers into this incredible brand. Each day, we have more opportunities to delight, our customers and to convert them into loyal Domino's fans.
We're still very much a work in progress brand with plenty of areas to address and improve.
And while we cannot predict future nor will we try to do so.
We will do all that weekend to come out of this challenging time period, even stronger than we've ever been.
The resiliency of our brand and our business model the strength afforded to the bigger of our global franchisees and operators has never been more evident.
In the 60 year history of our company.
And most importantly, we're going to continue to lead with our values and the health and safety of our store team members franchisees and customers will remain our top priority.
And with that Jeff and I will be happy to take your questions.
Thank you.
Due to ask a question you'll need to press star one on your telephone.
Your question press the pound.
Please limit your questions to one only.
And our first question comes from Brian Bittner with Oppenheimer and company. Your line is open.
Thanks, Good morning, guys.
Certainly and I, Miss your positive energy and and definitely going to Miss your Weightiness. So congratulations on a terrific career at dominoes.
Thanks, Brian Rich.
Rich I understand the tailwinds from the pandemic on your business in the us.
They make sense, but what can you specifically due.
To take advantage of these tailwinds in retaining convert these new customers and really enable this current strength to pay dividends in the future in the form of future sales gains.
Sure Brian. Thanks for the question, we are getting you know a an incredible opportunity today.
To bring more customers into the Brandon.
You look at the delivery business in particular, we've seen a significant increase.
In new customer acquisition over the course of.
The of the second quarter and you know our task. There is to can is to take those new customer opportunities and convert them into the second purchase in the third and ultimately loyal customers going forward, we've been working hard on that and the second quarter was our best.
Quarter, four for driving new active loyalty members.
Best quarter, we've had since.
Q1 of 2019, we we ran our points for pies promotion, so working hard to convert these customers into loyal customers such that we can continue to earn their business overtime.
Thank you.
Thank you. Our next question comes from Matthew Difrisco with Guggenheim. Your line is open.
Thank you.
Congratulations Jeff on a great run as well and your next chapter and trying to get some of your family very MBS.
I was hoping to learn more about the dash investment can you share with us the percentage of your ownership, but that gives you know with dash and then also just to clarify your development comments. It sounds like Twoq was obviously, a very tough environment for development, both domestically and internationally.
Correct to assume you environments gotten better about three Q.
It would be logical to have an environment that could support more growth both domestically and internationally on a net basis. Thank you.
Hey, Matt, It's Jeff I'll I'll take the China, a part of that and I'll kick it over to rich for that development outlook.
We're not disclosing that percentage ownership it is a minority investment.
We put in $40 million, we may be required oil and or we have the option to put in another 40.
At the beginning of 2021 and and listen as Rich said in his prepared remarks. This is just a very exciting growth market for us on Retuned I have a lot of personal experience spend a lot of time, there and we know that if we want to hit our long term aspirate.
Patients as a brand we have to have China I'd be a thriving market for us. So we're viewing this very strategically in addition to being what we think will be a good financial investment, but more importantly, really a strategic investment.
Where we can bring to bear all of our capabilities, our centers of excellence and really partner with that master.
And just a more intimate and close way to help accelerate the growth long term. So very excited about the investment we think that it will be grateful for all of our stakeholders.
And and with that I'll kick it over to rich to talk a little bit about development outlook sure. So Matt I'll I'll I'll talk about that in kind of two parts first on the U.S. side of the business is certainly during the quarter, we had challenges around the country with construction delays with permitting delays.
Cetera, driven driven by the pandemic.
But still really pleased with the store growth that we were able to achieved during the quarter and as I look out into the future.
I I expect us to see more and more opportunities to accelerate unit growth in the U.S. When you look at the increase in the business that we're seeing today and I think also as you look at some of the real estate opportunities that may present themselves.
That weren't available in the past I think we've got a strong opportunity to continue to accelerate that you as store growth.
On the international side. The situation is very different you know from market to market.
In in markets around the World, where we did not have significant store closures are trading restrictions. The business has been very very strong and those markets continue to press ahead.
Yeah with their development goals in the near term and then we've got other markets, where we've had significant numbers of of of temporary store closures will we're really you know the near term focus of those master franchisees is to get those stores opened again and reestablish those operations. So I.
Stacked on the international side for things to remain choppy.
Here in the in the near term, but what I think about the medium to long term I still have a very high level of confidence around our group the growth opportunities that we've got outside the U.S.
Excellent. Thank you.
Thank you. Our next question comes from Nick with Wedbush Securities. Your line is open.
Pardon me, Nick Sachin check your mute button.
Hi, Thanks very much.
Any way to give us a little bit more incremental clarification around the new customers you've acquired.
Just looking at that the digital mix, it's not quite clear where those.
You customers have.
Being coming so maybe if you could maybe disclosed some of the loyalty numbers that would be helpful.
Then Nick you know the new customer acquisition during the quarter was really concentrated around our delivery business, which is probably not surprising you know to many of you as a as customers sought a contact plus experience and an experience where they didn't have to leave their homes.
So more so than in the Curie outside of our business, where there was a lot of caution out there among customers about going going out into public and to places a business during the quarters. That's that's really where the bulk of the customer acquisition came in.
And then also we saw improvements.
You know in.
Our customer retention across the delivery side of the business as well so strong strong quarter really on both fronts as it relates to our delivery business you know the digital our digital percentage.
<unk> ran about 75% during the quarter popping up as much as 80% you know in in any given week, which has given us yet another opportunity to grow that engagement with our customers and an opportunity to continue to bring them on and into into our loyalty program.
And as I mentioned earlier in my prepared remarks, Q2 was that the best quarter, we've seen in over a year in terms of adding an active new members to our.
Piece of the pie rewards loyalty program.
Thank you.
Our next question comes from Jeff Farmer with Gordon Haskett. Your line is open great. Thank you and best of luck, Jeff Good luck with everything moving forward.
You guys did briefly touch on it but can you compare consumer behavior and some of your largest international markets.
I can tell places like India, India and Mexico.
Just as two examples to what you're seeing in the U.S. just trying to figure out how consumers are behaving there.
Those important international market versus what we've seen in the U.S.
Yes, there are.
Jeff There are lot of could there a lot of consistent patterns. When you look around the world.
The desire on the part of customers to have a contact was experience.
Is certainly high and when when our international Master franchisees do their customer research and they see a lot of the same things that we see in the us which is.
Safety has really risen very high in terms of customer needs.
The other things that have always been there like value consistent service great products still there, but safety has risen pretty high on the list. So.
Generally what you do see then is more growth on the delivery side of the business and then in some of our international markets, where we had more of a dinah and component and again, we don't really do table service anywhere around the world, but we do have at a number of our emerging markets larger dining rooms, and a higher percentage of.
Customers, who choose to sit down and need their food in our stores that that part of the business certainly saw a lot of pressure you in a number of cases, where those dining rooms were closed or where customers. We're just very cautious about going in and eating in a public place.
And you take all those things into into account and you end up with some as I mentioned earlier in the prepared remarks, some fairly disparate impacts with some markets really seeing a tailwind as we have had in the U.S. and then some other markets, which has seen a a lot more pressure on their business and there and their comps.
Thank you.
Thank you and we have a question from Chris Ocull, Steven with Stifel. Your line is open.
Thanks, Good morning, Jeff I would also like to offer my congratulations on a very successful career at dominoes, we're going to Miss the interaction.
Rich you mentioned additional new products planned for later this year is this a change from your original plan for this year and could you explain maybe why product innovation is just become seems like a become a higher priority for the company.
Yes.
Chris So.
No it isn't up to the first part of your question you know not have changed from our plan. This year. We had we had planned to have several.
New products coming out during 2020 and as I mentioned earlier very excited that we began the rollout last week of our new wings, and we'll have more product news coming over the course of of the next couple of months.
You know we taken.
Talked a lot about I've talked in my prepared remarks about the the approach that we take to new product development. We don't do it just for news, but we're looking for products that can remain on the menu and deliver great incremental sales and profit to our franchisees one of the things that we've observed as we've seen this huge boom.
In delivery over the course of the last couple of years is we're trying to keep an eye on product categories that customers are really adopting at higher rates were delivery and certainly wings is one of those one of the one of the fastest growing categories.
Out there and so we saw an opportunity number one to improve our wings.
Based on the feedback that we got from consumers, but also a great opportunity to bring terrific value by putting a 10 piece wing offer in two hours 799 platform. It you'll recall that we started some years ago with our large three topping pizza at seven non.
The nine and then over time, we've expanded that across the remaining crush types and now we're looking at wings that yet another great opportunity to add to that to that mix and match.
Platform.
So I think you're going to see us we're going to we're going to continue to stay focused on a on a new product development, but with the parameters that I always talk about which is we don't do it just for news we're going to do it if we think it brain sustain sales and profit to the franchisees.
Thanks.
Our next question comes from Lorne suburban with credit Suisse. Your line is open.
Thanks, and congratulations on next that's great.
You mentioned comp.
Dan Shuqiu are you seeing any different than regionally and how customers are engaging with.
And what changes in customer behavior as markets reopen for dynamic any shift in carry out or delivery performance.
And so.
Lauren we we've.
No.
Not seen honestly a lot of discernible difference when we look you know across regionally across the us in the second quarter.
I will say that our our rural and suburban locations have generally performed better than some of the denser more urban centers around the country and as I as all of you know our brand relative to some of the other restaurant brands is more tilted in terms of our sales.
Coming from more of those.
Rural and suburban locations.
And then as it relates to how our business performed in the quarter relative to what was going on with you know.
Sit down restaurant, Reopenings and things like that I would tell you that it's still pretty early to draw any discernible conclusions. There you know as Jeff said, we didn't see any slowdown in momentum all the way through the end of the of the second quarter and that was as a number of states in cities around the country were Rio.
Opening dine in but even with that said those that were reopening were only reopening at 50, and most 75% capacity and as we're all aware some of those things are actually.
Being reversed as we speak and as we as we see.
Another spike Unfortunately, and in covert 19 cases, so still still a very dynamic and evolving.
Marketplace out there for us.
Thank you.
Thank you and our next question comes from Peter Slate.
James Your line is open.
Huh.
Thanks, Congratulations Jeff.
I will definitely be passed.
I want to ask about.
Let's say outspend couple of days ago.
Partnership with Vantagesouth sounds like it might be.
Ordering and Dom capability can you guys elaborate on.
What you're seeing there on your expectations on rolling out.
Capabilities.
Hey, Pete I appreciate the kind words and I'll take a CHMP at this one.
You know that we continue and have for you know for as long as rich and I didn't hear and before that to be very serious about investing in our technological capabilities going forward I think everybody who follows dominoes knows that were a believer a big believer in voice technology generally you can order obviously on.
Digital.
Your digital or your mobile phone right now.
You know using a a voice assistant and we've been working on a phone down.
Trying to use artificial intelligence to take a full order we've made great strides in that.
Partnership that you referenced again, it just part of our overall.
Strategy to continue to invest and get smarter in this area that.
But more than that starts to get into into kind of future strategic stuff that we're quite frankly, not going to disclose we got the competitive reasons.
But do you know that one of the great thing that we've been able to do and even during this pandemic is continue to invest with the long term.
The long term brand in mind, we have not slowed down in our technological investments and in some ways, we've actually accelerated as you've seen us roll GPS you've seen us roll car side delivery. So I think that this crisis has really shown us that.
We can move faster, we can with our great franchisees execute a little bit faster and we're meeting the customers where they want to meet aside on technology invoices, just part of that so that'd be the color I give you on that but just know that we are we are and remain committed.
To all the technological investments that we've talked to you all about really encouraged by what we've been able to roll out over the last three or four months and quite frankly gives us a lot of competence that we'll be able to do some more that in the future.
Great. Thank you congrats.
Thank you Pete.
We have a question from David Tarantino with Baird. Your line is open.
Hi, good morning, and like congrats Jeff as well.
My question comes back to the strength, you're seeing in the us business.
Wondering richer, Jeff if you can.
Help us understand how much of the increase or that you saw during Q2 was related to the customers you're acquiring.
Versus potentially existing customers, increasing their frequency or order sizes. So.
Could you help bucket those two things.
Thanks.
Hey, David It's rich, we're not going to break down you know those specific numbers for for competitive reasons, but back to some of what.
I was I was describing earlier.
If you take a look at the delivery business, we saw a significant uptick and.
New customer acquisition on the delivery side of the business and also very strong retention or reap.
You know from existing customers. If you look on the on the curio outside of the business great repeat purchase from existing customers.
Not as strong on the acquisition side on the carry out business and that's not surprising honestly when you think about the fact that.
During the during the quarter.
We're very reluctant to go to.
To go outside of of the home and two places a business.
Now as we watch those patterns evolve over the course of the quarter.
We moved very aggressively to implement our domino's car side delivery and we're actually on TV advertising that today, you've probably seen our ads, but that is that is really a.
An effort to.
Number one create a terrific carry out experience for the customer where they never even have to get out of their car. It is contact was in that you know our store team members will bring the pizza out of the store and we'll put it in the customers truck or backseat wherever they want to put it so in the near term.
It really is all about driving customer acquisition in frequency for the carry out business, but over the long term, it's a great way for us to compete against the drive through.
So many other QSR SAB, but that we had been a very limited number of our U.S stores. So just one example of of an innovation there that we are focused on not only to address.
The.
Demand dynamics of the near term, but also as we think about how we position the brand for success in the future.
Great very helpful. If I could ask just one follow up a rich when you acquire new delivery customer what's been your historical retention rate on that.
Do you have any muttered signature on that occur.
David We've got a lot of man.
But we don't share them publicly.
Yes.
Alright fair enough, where those Josh thank you. Thanks.
Thanks, David It's again, it's a great your I love it.
Okay.
We have a question from John Glass with Morgan Stanley. Your line is open.
You very much Jeff Wow and hats off.
And my question really two things one is how does this how does this pandemic change your view or modify if you may be on.
On the four distinct strategy right. This is a moment we're deliveries expand in accelerating is it still right to do for interesting I understand what are the primary reasons purchasing originally was that carry out business are you is enthusiastic about that business as you were prior.
I'd also be Williams in your comments and thoughts on what's happening in the third party aggregator business. There's been a couple of acquisitions and transformations in those businesses. What do you think that means for Domino's has that industry gets consolidated but you also get some new competitors in the U.S.
Thanks, John first on the on the forward, you're saying you know I am I am if anything more enthusiastic about forcing you know given what we've seen.
During the pandemic and the and the increased sales and momentum that we've had there around our delivery business.
And carry out has been growing in a in a very strong way for quite some time also so when I take a look at it I just see more opportunity to get more stores on the map from a demand standpoint.
Also when we think about the real estate environment out there I also think that we're going to have no in the near and medium term.
Up fairly unprecedented opportunity in terms of the availability and affordability of real estate out there.
As you know unfortunate.
Reality of the pandemic is that there will be a number of.
Retail stores and restaurants.
That will close quite a few of which will be in a similar footprint.
Kind of environment to what we look for and then I think also we may see a more favorable market in terms of rents that we can go out there and and get with landlords. So I'm I'm as optimistic and even more so than ever around around fortress, saying.
You know on your your second question around the third party.
Aggregator market certainly is been a it's been a very interesting quarter as it relates to news out there about possible consolidation you I I've been talking for a long time about the fact that that the only way that that business gets to profitability is.
His through some form of consolidation overtime, given what has happened recently you know with with the couple of deals that had been announced.
Frankly, I don't see that change in the competitive dynamic a whole lot certainly for the near term I expect.
Those aggregators to still remain very promotional in terms of how they're going out to acquire customers and I expect them to remain pretty aggressive in particular with how they go out and cut deals with the largest QSR ours. So when we take a look at it from Domino's.
Perspective, we expect it to continue to be highly competitive environment that will participate in and we expected to continue to be a pretty tough.
You know in environment.
For the third party Aggregators in terms of their ability to to to drive profitable transactions.
Thank you.
Thank you. Our next question comes from Dennis Geiger.
Your line is open.
Thanks for the question, Jeff Congratulations on a great run and great. Good luck.
Just wondering if you guys could share any thoughts on on sort of how important the enhanced unemployment checks have been on the business.
More importantly, how you're thinking about any kind of strategy tweaks as an if they roll off does this change your strategy with respect to marketing or promotional activity anything you can comment there and on a high level. Thank you.
Sure this.
I think certainly you know the the initial stimulus checks and the unemployment the additional unemployment I think I think no doubt have enabled a lot of consumers to continue to.
To to two to eat to eat out to order food delivery cetera, how much of the business is driven by that we honestly, we honestly don't know I can tell you that as we look forward, yes, theres a lot of uncertainty obviously around what that stimulus might look like post.
Post July but we were remaining very focused on value frankly, as we always have been because.
We're going to be in a recession for some period of time here, where consumers pocketbooks are going to be under pressure and so we've got to have great value with our national offers great value on our menus and we got to have great value with respect to what we charge customers to deliver that food and then and I feel very good about why.
Domino's is position on those fronts.
Thank you.
Our next question comes from Chris Carroll with RBC capital markets. Your line is open.
Thanks, Good morning, and Jeff Congratulations on a great career, Dominos and all the best and next steps so.
As a follow up to John's question on forger, saying, given your commentary around real estate opportunities and together with presumably another strong franchisee cash flow year does the current environment change your thinking at all about the long term store development opportunity in the U.S.
Chris I think if anything it increases potentially the opportunity overtime. Obviously, we don't know we don't know exactly how long were going to be in this cobot 19 Panda. We don't know we don't know when we're going to have a vaccine or effective therapeutics, but.
A significant disruptions like this do tend to accelerate changes in market share and create opportunity and as we take a look at this.
We are we're looking for opportunities to move even more aggressively to get stores open.
And so if anything I see an opportunity that could only grow overtime.
Great. Thank you.
We have a question from Katz from <unk> with Goldman Sachs. Your line is open.
Great. Thanks.
Congratulations on.
And track record.
That.
A question so the first.
Yes.
Given us the split historically kind of wondering if you're saying how attractive.
The commentary.
Got it.
That makes a lot of.
At the economy.
Open in the back half a quarter or are you seeing improvement carry out.
And the delivery side did that.
And your and accelerate.
He said.
A question.
So Katie I I think we heard yet a little bit on then I'll I'll take a shot at it you know what I would tell you is.
As you know this customer behavior that we're seeing during the pandemic.
Is really meeting dominoes, where we already work with great carry out great delivery, a frictionless technological experience great value and so in many ways I think thats pandemic has just.
Accelerated a lot of what we thought we probably would have earned over time, but that it came to us quickly and as it relates to delivery versus carry out those two different service methods.
When we see places that have restrictions lifted around carry out we sell more carry out [laughter].
While still having a great delivery business so to us it it's less about into certain daypart shut down to the certain regulation happen, we know that when customers have.
Unfettered access to dominoes that we will build we have every chance to build sustainable relationships and sales with these customers over time, we clearly saw that during Q2 again with no discernible drop off in demand through the ended the quarter and that gives us a lot of confidence.
That for the foreseeable future customers are going to continue to really value both delivery and the carry out experiences.
As allowed by local and state ordinances, depending on where you're at so.
So for US again, we feel like this is just than.
Asked meeting the customer where they were already going the pandemic I think has accelerated that.
And then again on our side, we've tried to meet the customer where they want to be by rolling out the innovations faster and more efficiently and by the way.
Kudos to our our 800 franchise partners in the United States the job that they have done as rich mentioned in his prepared remarks with rewriting operational procedures executing at a high level keeping service up during that pandemic had been nothing short of just outstanding So so that would.
The the commentary that that I think we could give you around that but we're in the right business as you want to being carry out you want to be in delivery, whether theres, a pandemic or not.
And with that I'll I'll pause and I think you had on I think will allow you quick a quick follow up if you talk louder. Okay. Thank you so.
I mentioned that cleared by the way. It's very helpful. You talked about higher ticket being helpful contributor to the comp can you help us understand.
That's helpful.
Even if you would dive into.
Carry out.
<unk> ability to 15 ticket growth in the U.S. and the coming quarters.
Menu innovation, maybe its bundling or should we factored that in dying down.
[music].
So katy its rich on that on it on the ticket dynamic a little different across the two businesses growth in delivery really driven.
Both by order count growth and also ticket, but with a pretty heavy.
Yes.
Growth in order count.
Carry out business growth for the quarter really driven more by ticket.
In both cases it is it's.
More items customers are ordering larger basket sizes, and it's really interesting one of the things that we have heard over the quarter is that customers are actively putting more food in the basket to have leftovers. The next day, so they're thinking about not just that evenings meal, but how they're planning for the following day, how much of that dynamic.
It continues following covert 19, we honestly don't don't know today.
We're continuing to obviously track it in follow it but at this point. It is is really hard to say given where we given where we are.
In the in the cycle is pandemic.
Great. Thank you.
Thank you. Our next question comes from John I haven't come with JP Morgan. Please.
Please limit yourself to one question.
That's one question congratulations Jeff.
Can't wait to hear what's next.
Just a comment on on Dash. Obviously, you guys are investing from a position of strength are accelerating into development. Yeah from a position of strength. You do you think that that could have the potential would you want you had to have majority ownership stake at some point and obviously asked the question. This is the first time you have made the direct.
Investment in an international franchisee and this is it related question.
Are there any opportunities for you to.
Provide.
Capital or cash flow assistance to any large franchisees elsewhere outside of China that could also be converted into a significant equity stake as clearly some operators must exist.
You know that could benefit from some cash cash flow from a working capital perspective.
Hey, John it's rich.
First on dash that we're quite happy to be a minority partner in that business. It's got Theres, a great group of partners that own the rest of the equity in that business at a terrific management team on the ground to lead that so we see this is a great opportunity Craig.
Value for DPC, but also to be a great thought partner and strategic partner with the with the board there and the management team as we grow the business.
Looking elsewhere around the globe. We've we've never said never you know on investing in these international businesses dash happened to be a terrific opportunity to do that.
You know.
If others were to come around at some point in the future. You know we would we we might consider that with the bar is very high you've only seen US do this one time in any recent memory. So it's it's not something that you should expect us to do in and wide scale.
Thank you.
Thank you. Our next question comes from Greg Francfort with Bank of America. Your line is open.
Yes, thanks for the question and Jeff Congrats on retirement definitely get admits are interactions.
Rich.
You just.
There seems to be a lot to changing.
And I'm curious what you think are the biggest changes to domino's strategy postcode versus pre Cove I don't know that greater focus on unit growth our focus on the supply chain or focus on value.
If you could just kind of comment on what you think is the biggest change.
And it was approaching acquisition strategy to grow helpful. Thanks.
Sure Greg.
When I when I think about what what's going on at least so far with Covance.
I think the reality is it has accelerated a lot of trends that were already in place in our industry. When you think about digital adoption. When you think about the migration from on premise to off premise through delivery and carry all those things have just accelerated and less.
Forward by a year or two or three years, so what I look at.
To do going forward.
A lot of that is doubling down on the things that we've been doing.
Fortress thing.
For example to make sure that we continue to get closer and more convenient to our customers. We have slowed down a bit in terms of our investment in the digital side of our business and making the ordering experience easier for customers ordering all the way through paying and receive in your food.
Both for delivery in the carry out.
Experience there I will tell you that one thing that is very different in Cove. It is just the heightened sensitivity around oh around food safety and contact was methods. So we've invested heavily there and my expectation is that that is going.
We continue to be important to customers.
Quite some time to comp. So I think that is one thing that is likely to be a bit.
A bit different.
You know as customers have many customers have order delivery that had never order delivery before I think our ability to offer variety is going to be even more important in the future than it is today, so thats why you've seen us.
Renovate a product and wings that needed to be renovated it. It is a category that is growing rapidly.
Here is we look through coated.
And we're looking to other.
Opportunities around menu innovation as well to take advantage of the fact that customers are just choosing to order delivery more often and across a much wider variety of food. So.
Greg.
Doubling down on some of the same strategies, but then also leaning in maybe a little bit more on the on some of the other things that that we believe we need to do to be very competitive going forward.
Thanks Rich.
Thank you our next question comes from.
Jeffrey Bernstein with Barclays. Your line is open.
Great. Thanks, very much Jeff congratulations.
Hard to imagine any future endeavors as much front are successful as your years of dominoes.
Hi, My question is just on the U.S. delivery business.
Rich just wondering you commented on the third party aggregators and perhaps a little bit consolidation going on here just wondering whether your thoughts have changed at all in terms of perhaps using an aggregator to generate some incremental sales on different platforms. As we've seen their popularity increase even if you continue to be the one due in the delivery.
And then just to clarify that you make any mention of I know you did last quarter, you talked about weekday weekend lunch dinner.
Any third quarter quarter to date.
Momentum.
Any color would be great. Thank you.
Sure, Jeff Hey, first on the third parties is only strengthened by point of view that we don't need to be on those platforms.
I cannot imagine that we would have been able to move as quickly as we have in meeting our customer as Jeff described where they wanted to be if we didnt have full control over that digital experience and the actual caught the actual contact close experience at the point of.
Of deliver in the food and we've had pretty pretty strong growth in a in demand without having to pay significant without having to ask our franchisees to pay high fees to a third party. So my point of view as strength that.
Your second part of your question around around Dayparts, you know since since the last time, you know, Jeff and I spoke to you about the business at that time, I think we talked about lunch growing pretty rapidly dinner being softer.
We see more balance you know there in terms of growth at lunch growth at dinner I will tell you that the evening day part is still relatively weak.
Versus what it.
In terms of growth compared with the growth that we're seeing across some of the other day parts.
In the business, but by and large continuing to see strong strong at launch and strong at dinner.
Thank you. Our next question comes from Brett Levy with MKM Partners. Your line is open.
Thanks for taking the call and Jeff This is to you.
When you think about the franchisees right now obviously, they're all as you said the profitability is relatively is quite strong.
What are they asking for right now.
What are what are the what do they think you need to do from an investment standpoint, the aside from just a new products and.
As you implement more of the technology is there Andy to reassess the digital fee.
Thank you.
Yes, so Brett French franchisee profitability is I think we shared last time 20 night team was our strongest year. So we were pleased to come into this pandemic in.
Position of strength.
And that has really continued through the course of the Pandemics certainly.
Sub franchisees see stronger profits and others, depending upon where you are located around around the country, but continues to be.
Very strong with the sales growth that we have seen when you ask you know what what franchisees are asking for will.
Tell you Dear during the second quarter. It really was about helping them adapt to this new environment. So we we were we've been on a cadence of more frequent franchisee communication that we probably ever had in the history of our brand a really working together literally day by day.
Hour by hour to implement new operating procedures across the business.
Working together to implement new technology solutions to better enable these contact with experience and those were things that franchisees were craving and where we worked very hard.
You know to meet their needs and work together to get those to get those things rolled out and as we look forward, we're going to continue to invest in tech across our business from.
The from the technology that you hold in your hand with your smartphone when you order from US all the way through the store and how we run and operate our business inside the four walls of the box that's going to continue to be a big focus for us in an area, where our franchisees wood.
With would love to habits continue to help them. When we think about how they continue to run efficient businesses and continue to drive their bottom line profitability.
If I could sneak in one other quick one where.
You are on capacity within the supply chain given that these are as you say unprecedented sales level and.
Yes, just where do you think you are in terms of existing you've already mentioned, where you're building out. Thanks.
Yes, I can tell you where awfully glad that we had already opened our centers in New Jersey and that we got to center in South Carolina opened this year to help us keep up with all of this unprecedented demand.
As I mentioned earlier, we're going to open in Katy, Texas later, this year and we're going to add some then crust capacity to our system.
We are continuing to look at a at our supply chain network and.
As we've talked about in the past you should expect to see us continue to add centers overtime.
Which is a a great a great problem or opportunity depending on however, you want to describe it we're going to have to continue to add more capacity to support our franchisees around the country.
Thank you. Our next question comes from John Tower with Wells Fargo.
Line is open.
Great and Jeff everybody else. Congratulations I hope you have fun in critical retirement or whatever it is you decide to do next.
I am curious I know you guys aren't necessarily tied directly to any specific sports, but we are coming upon a season, where.
Pizza consumption seems to be a bit higher fall and winter than than rest of year and the sport schedule seems to be a bit up in the air. So can you discuss how you plan on attacking this.
During a period, where viewing particularly on the weekends might be gone or or significantly lower than it's been in years past.
Yeah, John I mean, it is it is so hard to tell as you know what's going to happen with with respect to support for us. It doesn't matter. If people are sitting in the stands at all if it's if it's on TV people will gather and.
In order pizza, so from where we are today here in the summer I guess theres only upside as we look through the back half of the year as sports sports come on to TV. It is remarkable what we find ourselves watching on TV now as we kind of as we crave.
Live action live action sports, but I wish I knew John I really I really wish I knew and hopefully we'll get back to more of a state of normal around around some of those sports as we work through the fall and winter.
And then just following up to your earlier comments rich on on kind of the landscape or at least real estate landscape potentially using up a little bit in future windows. It does seem like the whole pizza category itself has thrived during the pandemic both chain and independent.
But I'm curious to see or hear from you if you're actually seeing.
Something else in the marketplace, perhaps how independent there are faring versus the chains right now.
And the pizza guys.
Yes, John you know what I would say is that the stronger you were in digital and the stronger you were in off Prem the better off you're doing you know if you go down the scale on both of those two dimensions I think you know whether its chains or a or independence. There's more of a struggle. If you were weak in digital and weaken off Prem.
Thank you and our next question comes from Andrew Charles with Cowen. Your line is open.
Great. Thank you and just echo everyone else, Jeff in pleasure working with the and wish you best of luck you next endeavor, hopefully some I kind of enjoy terminal.
I wanted to ask question are you able to disclose how many active use fluids numbers you hedge in the quarter and you look globally other penetration levels that you've seen some international markets.
Per capita basis would be loyalty program. It's just there's more room for growth in this and this program, especially obviously, it's obviously as well from a conversion to make these users more active.
Andrew yet, we're not going to disclose today the number of of active members. We do that you know about once a year or so has been our past practice and we'll stick with that.
You're talking about penetration you know in other markets, yes, we look across the globe we have.
We're the number one pizza player in about half of the 90 odd international markets that we operate in it we have a number of markets, where our share is significantly higher than the share that we hold in the U.S. business today and that is one of the things that continues to give us some confidence.
There's a there's a big opportunity to continue to earn more business up from the customers in the U.S.. We still only serve you know about one out of every five QSR pieces that are going to get eat Tonight, and our share is significantly better than that at a number of the international markets around the globe, which gives us a lot.
Confidence.
Thank you.
Thank you.
Showing no further questions at this time I'd like to turn the call back to rich Alstom for any closing remarks.
Well listen thanks, everybody. It is certainly has been an eventful Q2, it and we really appreciate all of you for joining us this morning.
I'll offer one more time my thanks to Jeff Lawrence, Jeff. Thank you for everything you've done for the business.
And I look forward to speaking with all of you in October when we get together once again to discuss our third quarter 2020 results.
Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
[music].