Q2 2024 The Wendy's Co Earnings Call - Estimated

And during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star followed by the number two. Thank you you may begin your conference. Thank you and good morning, everyone.

Speaker Change: Today's conference call and webcast includes a powerpoint presentation, which is available on our Investor Relations website, IR Wendy's Dot com.

Speaker Change: Before we begin please take note of the Safe Harbor statement that appears at the end of our earnings release.

Speaker Change: This disclosure reminds investors that certain information we may discuss today is forward looking.

Speaker Change: Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward looking statements.

Speaker Change: Also some of today's comments will reference non-GAAP financial measures.

Speaker Change: Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure at the end of this presentation or in our earnings release.

Speaker Change: On our conference call today are president and Chief Executive Officer, Kirk Tanner will give a business update and our Chief Financial Officer, Gunther Plush will review, our second quarter results and share our financial outlook.

Speaker Change: From there we will open up the line for questions.

Speaker Change: With that I will hand things over to Kirk.

Kirk Tanner: Thanks, Nick Good morning, everyone. During the second quarter, our restaurants across the globe continue to deliver system wide and same restaurant sales growth, reaching two 6% and 8% respectively. Our performance was competitive in the U S with our dollar and traffic share holding steady with the <unk> Burger category.

Kirk Tanner: During the quarter. This performance was driven by sales growth at the breakfast and late night day parts and our focus on surrounding our customers with their wendy's favorites exciting innovation and compelling value done the wendy's way with fresh high quality ingredients. The international segment delivered another quarter of strong system wide sales growth reaching.

Kirk Tanner: Over 8% driven by continued same restaurant sales growth and net unit growth across each region.

Speaker Change: Turning to our digital business everything we're doing in this space is with the goal of creating and building loyalty and personalized experiences for our customers. Our digital business continues to perform well and we've made really good progress we grew global digital sales by over 40% year over year in the second quarter delivering 17%.

Speaker Change: Global digital sales mix.

Speaker Change: Global digital sales growth was driven by the U S segment, which grew sales dollars over 40% year over year, and international which grew over 30% year over year, our focus on driving sales through our Wendy's App and loyalty platform continues to be successful in our loyalty business is now almost as <unk>.

Speaker Change: As our third party delivery business.

Speaker Change: You'll see us continue to focus on improving the experience for customers. We are confident that this will drive loyalty, even further and create more growth for the brand in the years to come.

Speaker Change: Finally, our Q2 development progress achieved our expectations. We have now opened 99 brand new Wendy's restaurants through Q2 more than 20% increase versus the first half of 2023.

Speaker Change: Looking ahead the team has made meaningful progress towards solidifying our sales growth planned for the second half of 2024 and setting us up for unit growth acceleration in 2025 and beyond driving our confidence in delivering strong results over the near and long term.

Speaker Change: Before diving into our year to go plan I'd like to briefly touch on the leadership and structural changes that we recently announced with the elevation of Abigail Pringle and EJ lunch to the roles of President U S and President International we now have a structure that drives focus and clear accountability for accelerated unit growth in <unk>.

Speaker Change: Operational performance in both segments. This evolution also provides one voice for the franchisees and each segment streamlining our communication and enhancing our engagement I am confident this change will accelerate progress across our strategic focus areas, including franchise profitability unit growth customer satisfaction.

Speaker Change: Action and execution excellence.

Speaker Change: Now, let's turn to our plans to drive growth during the rest of the year and beyond.

Speaker Change: We are leaning in even further across the growth pillars to drive sales, while expanding restaurant margin. Our balanced approach focuses on elevating our craveable core menu delivering impactful innovation and offering relevant value. We believe we are in a position of strength offering menu items that deliver across this spectrum.

Speaker Change: When it comes to our craveable menu, our fresh never frozen beef fresh produce and full customization of every sandwich on the menu are key differentiators for us.

Speaker Change: We will continue to capitalize on opportunities to drive impactful innovation in the second quarter, we launched Triple Berry Frosty and saucy Nugs, both resonating with consumers and you can expect to see a continuous stream of innovation from us in the second half of the year.

Speaker Change: As it relates to value consumers continue to seek relevant value Wendy's as the original when it comes to bundle value meal deals in <unk> and you'll see us continue to lean into this competitive advantage breakfast remains an incredibly important day part it is highly profitable and we have not yet reached our potential we continue to outperform competitors.

I am confident this change will accelerate progress across our strategic focus areas, including franchise profitability, unit growth, customer satisfaction, and executional excellence. Now, let's turn to our plans to drive growth during the rest of the year and beyond.

Speaker Change: <unk> by driving breakfast dollar growth ahead of the category in the second quarter.

Speaker Change: We have now optimized level of our investment in 2024 to allow us to extend our existing breakfast advertising investment horizon beyond 2025, we continue to expect that breakfast sales growth will outpace rest of day at Wendy's and those sales continue to be accretive to overall restaurant margin for the company and franchisees.

Speaker Change: Turning to our overall sales outlook as we assess the current consumer and category. We now expect to deliver global same restaurant sales growth of 123% for the full year.

We will continue to capitalize on opportunities to drive impactful innovation. In the second quarter, we launched Triple Berry Frosty and Saucy Nugs, both resonating with consumers, and you can expect to see a continuous stream of innovation from us in the second half of the year.

Speaker Change: Now, let's turn to the great momentum, we built towards achieving our development goals.

Speaker Change: The team has made great progress solidifying our new restaurant pipeline as we continue our mission to bring more wendy's to more fans across the globe.

Speaker Change: We remain on track to deliver global new restaurant openings of 250 to 300 units, providing a strong foundation to accelerate front in 2025 and beyond. Additionally.

Breakfast remains an incredibly important day part.

It is highly profitable and we have not yet reached our potential. We continue to outperform competitors by driving breakfast dollar growth ahead of the category in the second quarter.

Speaker Change: Additionally, I am pleased to share that we have added more than 250 global new restaurant commitments year to date our.

Speaker Change: Our European expansion is accelerating we recently announced that the brand will enter the Republic of Ireland in Romania with strong franchisees, who will begin opening restaurants in 2025, Ireland is a natural expansion of our current footprint and we intend for Romania to act as an anchor for further expansion across other areas of.

We have now optimized the level of our investment in 2024 to allow us to extend our existing breakfast advertising investment horizon beyond 2025.

Speaker Change: Europe. These new development agreements layer on top of an additional increase in our U K franchise commitments, all supporting our plans to build hundreds of restaurants.

Turning to our overall sales outlook, as we assess the current consumer and category, we now expect to deliver global same restaurant sales growth of 1 to 3% for the full year. Now let's turn to the great momentum we've built towards achieving our development goals.

Speaker Change: On the European continent in the coming years.

Speaker Change: Now turning to New Zealand, we recently shared that the Flynn group has acquired the current New Zealand restaurants with plans to further expand the market. In addition to their existing development agreement for 200 restaurants in Australia through 2034. The Flynn group continues to be an outstanding operator, and we are confident in their ability to grow.

The team has made great progress solidifying our new restaurant pipeline as we continue our mission to bring more Wendy's to more fans across the globe.

We remain on track to deliver global new restaurant openings of 250 to 300 units, providing a strong foundation to accelerate front in 2025 and beyond.

Speaker Change: These high potential markets, beginning with new restaurants in Australia in 2025.

Speaker Change: In Asia, our franchisee in India has increased our development commitment with a mix of both traditional locations and delivery kitchens. This will build upon our current footprint of 150 open restaurants.

Our European expansion is accelerating. We recently announced that the brand will enter the Republic of Ireland and Romania with strong franchisees who will begin opening restaurants in 2025.

Speaker Change: Finally in Canada, we have finalized a new agreement in Quebec with plans to double our footprint in the province this year.

Speaker Change: We have also recently announced an enhanced incentive program to appeal to franchisees of all sizes and increase the reach of our new restaurant development program.

These new development agreements layer on top of an additional increase in our UK franchise commitments, all supporting our plans to build hundreds of restaurants on the European continent in the coming years.

Speaker Change: We expect that these incentives along with our continued focus on expanding restaurant margin and improving profitability will boost new build returns and further build out our long term restaurant pipeline.

GP: As a result of the team's work 100% of our Newbuild goals through 2025 are tied to development commitments, which is up from 90%. We previously disclosed we are well on our way towards rapid expansion over the long term I'll now turn it over to GP to share our second quarter financial results.

Now turning to New Zealand, we recently shared that the Flynn Group has acquired the current New Zealand restaurants with plans to further expand the market in addition to their existing development agreement for

The Flynn Group continues to be an outstanding operator, and we are confident in their ability to grow these high potential markets, beginning with new restaurants in Australia in 2025.

GP: Thanks Cook in the second quarter, our global system wide sales grew two 6% nine under half a percent on a two year basis supported by global same restaurant sales growth across both our U S and international segments and continued global net unit growth.

GP: Our U S company restaurant margin reached 16, 5% decreasing 80 basis points year over year. This was primarily due to an increase in labor costs, driven by wage inflation and customer count declines, partially offset by the benefit of a higher average check.

We have also recently announced an enhanced incentive program to appeal to franchisees of all sizes and increase the reach of our new restaurant development program.

GP: The decrease in G&A was primarily driven by a decrease in incentive compensation and lower outside professional services as we lapped implementation costs for the company's human capital management system in the prior year.

GP: These were partially offset by an increase in employee compensation and benefits.

As a result of the team's work, 100% of our new build goals through 2025 are tied to development commitments, which is up from 90% we previously disclosed.

GP: Adjusted EBITDA decreased 1% to approximately $143 million, resulting primarily from an increase in the company's incremental investment in breakfast advertising spending and a decrease in U S company operated restaurant margin, partially offset by higher franchise royalty revenue and lower general and administrative expense.

Thanks Kirk. In the second quarter, our global system-wide sales grew 2.6%, 9.5% on a two-year basis, supported by global same-western sales growth across both our U.S. and international segments, and continued global net unit growth.

GP: The decrease in adjusted earnings per share was driven by lower adjusted EBITDA and increase in depreciation and higher cloud computing amortization cost is.

GP: Partially offset by fewer shares outstanding as a result of the company's share repurchase program and lapping a decrease in investment income in the prior year. Finally, the decrease in free cash flow resulted from the increase in the company's incremental investment in breakfast advertising and an increase in capital expenditures.

Speaker Change: Our U.S. company restaurant margin reached 16.5 percent, decreasing 80 basis points year-over-year. This was primarily due to an increase in labor costs driven by rate inflation and customer accounts declines, partially offset by the benefit of a higher average check.

GP: These were partially offset by a decrease in cash paid for cloud computing cost.

GP: Now, let's turn to our expectations for 2024.

Speaker Change: After flowing through our year to date results and refining our category a forecast for the remainder of the year in the United States. We now expect full year global system wide sales growth of 3% to 5% made up of 1% to 3% same restaurant sales growth and 2% global net unit growth.

Attracted EBITDA decreased 1% to approximately $143 million.

Speaker Change: Resulting primarily from an increase in the company's incremental investment in breakfast advertising spending and a decrease in U.S. company-operated restaurant margin, partially offset by higher franchise royalty revenue and lower general and administrative expense.

GP: Our adjusted EBITDA outlook of $535 million to $545 million remains unchanged the impact of our updated system wide sales outlook is offset by lower expected G&A of $255 million to $265 million.

GP: Primarily driven by lower expected incentive compensation.

GP: And optimization of our investment in breakfast advertising as we now plan to spend approximately $22 million this year.

Speaker Change: As a result of the updated system wide sales outlook, we have now widened our U S company operated restaurant margin expectations to 15% to 17%.

GP: We are reaffirming our outlook for adjusted EPS of <unk>, 98 to $1.02 and capital expenditures of $90 million to $100 million.

GP: Finally, we now expect free cash flow of $275 million to $285 million driven by the impact of our updated system wide sales outlook.

GP: To close I'd like to highlight our capital allocation policy, which remains unchanged. Our first priority remains investing in profitable growth and our continued investments across our growth pillars showcase exactly that.

Speaker Change: Our trusted EBITDA outlook of $535 to $545 million remains unchanged.

Speaker Change: Lee we are committed to sustaining an attractive dividend, we announced today the declaration of a third quarter dividend of <unk> 25 per share and continue to expect a full year dividend of $1 per share in 2024.

Speaker Change: is offset by lower expected GNA of 255 to 265 million dollars.

Speaker Change: Lastly, our capital allocation policy gives us the flexibility to utilize excess cash to repurchase shares and reduce debt yield.

Speaker Change: As a result of the updated system-wide sales outlook, we have now widened our U.S. company operated restaurant margin expectations to 15 to 17 percent.

Speaker Change: Year to date through July 25th we have repurchased approximately two 9 million shares and have approximately $260 million remaining on our $500 million share repurchase authorization expiring in February of 2027.

Speaker Change: We are reaffirming our outlook for a Trusted EPS of $0.98 to $1.02 and capital expenditures of $90 to $100 million.

Speaker Change: Due to current share price levels, we now expect share repurchases in 2024 of approximately $75 million.

Speaker Change: Finally, we now expect free cash flow of $275 to $285 million, driven by the impact of our updated system-wide sales outlook.

Speaker Change: We are fully committed to delivering a simple yet powerful formula via an efficient growth company that is driving strong system wide sales growth on the backdrop of positive same restaurant sales and expanding our global footprint.

Speaker Change: To close, I'd like to highlight our capital allocation policy, which remains unchanged. Our first priority remains investing in profitable growth, and our continued investments across our growth pillars showcase exactly that.

Speaker Change: Is translating into significant free cash flows, which supports meaningful return of cash to shareholders through an attractive dividend and share repurchases with that I will hand things over to Mick to share our upcoming IR calendar.

Speaker Change: Secondly, we are committed to sustaining an attractive dividend. We announced today the declaration of our third quarter dividend of $0.25 per share and continue to expect a full year dividend of $1 per share in 2024.

Speaker Change: Thanks GP.

Mick: To start things off we will hold an investor call hosted by Bernstein on August 27th.

Speaker Change: Lastly, our capital allocation policy gives us the flexibility to utilize excess cash to repurchase shares and reduce debt.

Speaker Change: On September 12, we will attend the Jpmorgan conference in Miami.

Mick: We'll then head to Canada for an MTR with Stifel in Toronto on September 24th.

Speaker Change: Year-to-date through July 25th, we have repurchased approximately 2.9 million shares and have approximately $260 million remaining on our $500 million share repurchase authorization expiring in February of 2027.

Speaker Change: If you're interested in joining us at any of these events. Please contact the respective sell side analyst or equity sales contact at the host firm.

Mick: Lastly, we plan to report our third quarter earnings and host a conference call that same day on October 31.

Mick: As we transition into our Q&A section I wanted to remind everyone that due to the high number of covering analysts we will be limiting everyone to one question only.

Mick: That we're ready to take your questions.

Speaker Change: We are fully committed to delivering our simple yet powerful formula. We are an efficient growth company that is driving strong system-wide sales growth on the backdrop of positive same-western sales and expanding our global footprint.

Mick: Thank you.

Speaker Change: Our first question with Deutsche Bank comes from Jeffrey Bernstein of Barclays.

Speaker Change: Your line is now open. Please go ahead.

Jeffrey Bernstein: Great. Thank you very much I just had a question on the U S comp trends.

Speaker Change: Two parts I guess the first part is just you mentioned the <unk> the <unk>.

Speaker Change: With that, I will hand things over to Nick to share our upcoming IR calendar. Thanks, GP. To start things off, we will hold an investor call hosted by Bernstein on August 27. On September 12, we will attend the J.P. Morgan Conference in Miami.

Speaker Change: Service category discounting and I know you talked about your five dollar Biggie bag I'm just wondering if you could talk about any change in consumer behavior you've seen.

Speaker Change: I'm, assuming the mix of that has gone up.

Speaker Change: How do you differentiate when it seems like everyone has a very similar $5 offer.

Speaker Change: We'll then head to Canada for an NDR with Steeple in Toronto on September 24th.

Speaker Change: On the follow up was just on the franchisee feedback from those conversations.

Speaker Change: The conversations have been active with I know some pushback in terms of making sure everything is profitable, but just wondering how the conversations are going with franchisees as you talk about being more aggressive on the value side of things. Thank you.

Speaker Change: As we transition into our Q&A section, I wanted to remind everyone that due to the high number of covering analysts, we will be limiting everyone to one question only.

Speaker Change: Yes.

Speaker Change: Yes, good morning, Jeffrey this is Kirk.

Speaker Change: <unk> the question very relevant right now of course, yes look the first thing I would point to is we've got this nationally recognized famous platform called Biggie bag.

Speaker Change: Thank you. Our first question for today comes from Jeffrey Bernstein of Barclays. Your line is now open, please go ahead.

Speaker Change: We've had on the menu prior to others coming in and doing something similar on the menu. So we have traction with that value proposition that's relevant.

Speaker Change: Our franchisees are certainly on board with that and of course that is.

Speaker Change: That is a concern for everyone, but our franchisees are on board. They help build this platform over the years. This has been a very effective tool and it is in line with the rest of the things that we offer on our menu were very focused on three things delivering our core having exciting innovation that drew.

Jeffrey Bernstein: and how you differentiate when it seems like everyone has a very similar five dollar offer.

Speaker Change: <unk> traffic and relevant value the balance of our portfolio and our menu allows us to work really hard in times like we're in and we're really excited about the traction that we have and the balance that we have across our menu.

Speaker Change: Yeah, good morning, Jeffrey. This is Kirk. I appreciate the question. Very relevant right now, of course. Yeah, look, the first thing I would point to is we've got this

Speaker Change: Thank you our next.

Speaker Change: The next question comes from Brian Bittner of Oppenheimer Your.

Speaker Change: nationally-recognized, famous platform called Biggie Bag.

Brian Bittner: Your line is now open. Please go ahead.

Speaker Change: Okay.

Speaker Change: Thanks, Good morning, guys.

Speaker Change: I just wanted to ask a question about your updated same store sales guidance for 2024, it's now 1% to 3% and I think the math.

Brian Bittner: This assumes a kind of 2% to 5% comp range in the second half of the year, which is obviously a meaningful acceleration from where your trends have been the last couple of quarters I know youre expecting to stimulate some breakfast growth, but is the easy comparison, but big enough factor to drive.

Speaker Change: Our franchisees are certainly on board with that, of course that is a concern for everyone, but our franchisees are on board, they help build this

Speaker Change: And it is in line with the rest of the things that we offer on our menu. You know, we're very focused on three things, delivering our core.

Speaker Change: This acceleration that you bank.

Speaker Change: Going into the outlook or or what does drive your confidence that the second half.

Brian Bittner: Showcases acceleration.

Brian Bittner: Good morning, Brian.

Speaker Change: And with our 1% to 3% guidance range.

Brian Bittner: Clearly easier comparisons as one part of the story second part of the story.

Speaker Change: We definitely expect that the category is going to be slightly slightly improve in the back half and thirdly is confidence in the programming we have out there.

Jeffrey Bernstein: Thank you. Our next question comes from Brian Bittner of Oppenheimer. Your line is now open, please go ahead.

Speaker Change: <unk> just said our programming is focused on.

Speaker Change: Showcasing our core and all the good news, we have India, plus you will see a meaningful stream of innovation in the second us plus a nationally recognized speaking platforms.

Our digital offerings and acquisition strategies. The combination of all three will as you point out drive a slight acceleration on a one year basis. If you look on a two year basis, it's actually very very comparable.

Brian Bitzner: Which is obviously a meaningful acceleration from where your trends have been the last couple quarters.

Brian Bitzner: I know you're expecting to stimulate some breakfast growth, but is the easing comparisons a big enough factor to drive this acceleration that you're baking into the outlook, or what does drive your confidence that the second half

Brian Bittner: Okay.

Brian Bittner: Thank you our next.

Speaker Change: Next question comes from John <unk>.

Speaker Change: From JP Morgan your.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: can showcase this acceleration.

Speaker Change: John Your line is now open. Please go ahead.

Speaker Change: Sorry about that I don't know what happens.

Speaker Change: But we definitely expect that the category is going to slightly, slightly improve in the back half.

Speaker Change: Hopefully this number is correct that's what I have in front of me. So please correct me if it's wrong.

Speaker Change: Youre applying cost food and paper plus labor.

63% generally in basketball in the industry companies kind of want to be around 60, even lower.

Speaker Change: showcasing our core and all the goodness we have in there.

Speaker Change: Plus, you will see a meaningful stream of innovation in the second half.

Speaker Change: Obviously negative traffic.

Speaker Change: The question that I ask is not just in terms of unit development and as we kind of think about the system over the next couple of years in terms of rent renewals. If you will of properties that are coming up to their 20 year term.

Speaker Change: Plus, our nationally recognized Biggie platform, and our digital offerings and acquisition strategies.

Speaker Change: The combination of all three will, as you point out, drive a slight acceleration on a one-year basis. If you look on a two-year basis, it's actually very, very comparable.

Speaker Change: How are we feeling about just overall capacity in the U S. I mean.

Speaker Change: The economics would certainly suggest that you keep stores open but in some cases, it's actually not the choice.

Speaker Change: Thank you. Our next question comes from John Ivankoe from JP Morgan. Your line is now open, please go ahead.

Speaker Change: The kennon its situated the landlord. So I just really wanted to get a sense as we think about the U S. Not just in 'twenty five and a couple of years after 25.

Speaker Change: Kind of how we're thinking about net overall unit count in this important market. Thank you.

Speaker Change: Good morning, John.

Speaker Change: And then and bullish about the U S market via highly Underpenetrated.

Speaker Change: We have a lot of interest from U S franchisees to continue to expand <unk> announced it in the first half. We ended about 250 development agreement. It was a good amount in <unk>.

Speaker Change: Running 63%, you know, generally investable in the industry, you know, companies kind of want to be around 60, even lower.

Speaker Change: No.

Speaker Change: <unk> additions in the United States as you might have also picked up two weeks ago, we issued a new HDD.

Speaker Change: <unk> launched an optimized incentive programs.

Speaker Change: <unk> to keep working on the restaurant economic model plus the incentives that are out there, making the decisions for franchisees to build.

Speaker Change: you know properties that are coming up to their 20-year term. You know how are we feeling about just overall capacity you know in the U.S.? I mean you know that the economics would certainly suggest that you keep stores open but in some cases it's actually not the choice.

Speaker Change: Much much easier. So we think we have not reached out potentially in the United States Youre, helping with incentives that would be just loans to continue the incentive program around build to sue them through closer than that.

Speaker Change: Contribution of the U S markets to the overall unit growth, which is about 30%.

Speaker Change: He is very feasible for us.

Speaker Change: Well, good morning, John . Yeah, we are very confident and bullish about the U.S. market. We are highly underpenetrated.

Speaker Change: Thank you. Our next question comes from Alex Slagle with Jefferies. Your.

Speaker Change: Your line is now open. Please go ahead.

Alex Slagle: Alright, Thanks, I guess to follow up on that Bob.

Speaker Change: We added about 250 development agreements. It was a good amount in international, but it was also additions in the United States.

Speaker Change: Canada Your biggest international market and you talk to the new commitments and plans for accelerated growth in Quebec, and I know the profitability.

Speaker Change: As you might have also picked up two weeks ago, we issued a new FDD and in the new FDD we launched an optimized incentive program, so our commitment to keep working on the restaurant economic model plus.

Speaker Change: The ability and economics are there has improved significantly versus 2019.

Speaker Change: So if you think that could be even greater opportunity to expand that development beyond just go back maybe look at Ontario, Alberta.

Speaker Change: Perhaps you feel pretty well penetrated at this point, but curious if you think there's greater opportunity there.

Speaker Change: Yeah.

Speaker Change: Yes, Alex Good morning, we're very excited about the Canadian market, we have a very engaged franchise base as you pointed out.

Speaker Change: They are making great progress on sales and profits with back in 2023. They grew sales by 9% in the system. It was up in profits by about 25%. So it was a great economic environment, we definitely expect that Canada on its own is going to double that growth rate very attractive.

Speaker Change: Thank you. Our next question comes from Alex Slagle of Jeffreys. Your line is now open, please go ahead.

Speaker Change: Yes.

Speaker Change: Definitely economics also very good. So we're excited about that combined almost maybe all the other international markets to be continue highlights, but yeah. It's definitely a lot of growth to be had.

Speaker Change: Yes.

Speaker Change: Thank you our.

Speaker Change: Our next question comes from Eric Gonzalez of Keybanc your.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Curious if you think there could be even greater opportunity to expand that development beyond just Quebec, maybe look at Ontario, Alberta, just perhaps you feel pretty well penetrated at this point, but curious if you think there's greater opportunity there.

Eric Gonzalez: Hi, Thank you maybe if you could talk about how ctrip sales trended throughout the quarter I know, it's not something you typically do but there are a lot of competitive cross currents during the quarter on a month to month trends were a little bit lumpy. So.

Speaker Change: It can be helpful. If you could explain how the quarter unfolded and some of the things that were done to lift sales when trend softened in wahler add if there's anything you could talk about the exit rate in June or how you fared in July would be very helpful. Thank you.

Speaker Change: Yeah, Alex, good morning. We're very excited about the Canadian market. We have a very engaged franchise base.

Speaker Change: As you pointed out, they're making great progress on sales and profits. Right back in 2023, they grew sales by 9 percent and the system was up in profits by about 25 percent. So, obviously, great economic environment. We definitely expect that Canada on its own is going to double their growth rates.

Speaker Change: Thanks, Good morning, yes, the sales over the quarter, there was some ebb and flow and overall, but pretty consistent I would just say if you look at our business. We continue to compete extremely well in this environment.

Speaker Change: We talked about holding share and the proposition that we have for consumers.

Speaker Change: Very attractive AUVs, therefore economics also very good, so very excited about that combined obviously with all the other international markets that we continue to highlight. But yeah, there is definitely a lot of growth to be had.

Speaker Change: On our balance across value our core business innovation.

Speaker Change: <unk> kept our business fairly steady through.

Speaker Change: That cycle that we just went through that's crude thats critically important the other thing that I think is helping us is that our digital performance, we're continuing to lean into our digital we added.

Speaker Change: Thank you. Our next question comes from Eric Gonzalez of KeyBank. Your line is now open. Please go ahead.

Speaker Change: About 6% more loyal users too.

Speaker Change: Our platform, our loyalty platform, taking us to $42 million, which I think also is really important as we build a personal relationship with our customers.

Speaker Change: Thank you.

Speaker Change: The next question comes from Andrew <unk> of BMO capital markets. Your line is now open. Please go ahead.

Eric Gonzalez: Good morning.

Speaker Change: You know, the sales over the quarter, there was some ebb and flow, you know, overall, but pretty consistent. I would just say, if you look at our business, we continue to compete extremely well in this environment.

Gerald Lozinski: Hi, This is Gerald Lozinski answer Andrew Charles Thank you for taking the question I was hoping you could walk us through the drivers behind the updated 2024 U S company margins guidance.

Speaker Change: We talked about holding share and, you know, the proposition that we have for consumers.

And if you could also provide us with an update on <unk> and your visibility there as we look out to the balance of the year. Thank you.

Speaker Change: Hi, good morning on the restaurant margin.

Speaker Change: It seems to be obviously.

Speaker Change: Widened the guidance range for sales to be consequently, obviously also of items to range for company restaurant margin to 15% to 17%. So the midpoint is about 16 as you might have seen year to date margin is also 16%.

Speaker Change: We are expecting flat commodities for the year labor inflation that unchanged labor inflation in the 3% to 5% range is also unchanged and.

Speaker Change: which I think also is really important as we build a personal relationship with our customers.

Speaker Change: We definitely expect growth.

Speaker Change: Thank you. Our next question comes from Andrew Strelzik of BMO Capital Markets. Your line is now open. Please go ahead.

Speaker Change: The acceleration of sales lift in the in the second half plus a smaller price actions. We took at the end of the second quarter all of that gets us very comfortably into the guidance range. We have issued the picture on commodities Hasnt really changed.

Jared Lisinski: Hi, this is Jared Lisinski on for Andrew Strelzik. Thank you for taking the question. I was hoping you could walk us through the drivers behind the updated 2024 U.S. company margins guidance, and if you could also provide us with an update on food costs and your visibility there as we look at to the balance of the year. Thank you.

Speaker Change: And fries are inflationary for us chicken deflationary you, obviously made no progress in the last quarter to lock down price visibility on the commodity basket, we are slightly north of 90% nine zero lodestone is comparable of the visibility we had lost.

Speaker Change: Good morning. Yeah, on the restaurant margin, since we obviously widened the guidance range for sales, we consequently obviously also widened the range for company restaurant margin to 15 to 17 percent. So the midpoint is about 16. As you might have seen, our year-to-date margin is also 16 percent.

Speaker Change: Year to date.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from Dennis Geiger of UBS.

Speaker Change: Your line is now open. Please go ahead.

Dennis Geiger: Great. Thanks, guys wondering if you could talk about breakfast performance in the quarter a bit more it seems like the advertising the offers and innovation has been resonating, but just curious if you could speak to any more observations around breakfast around your breakfast customer and sort of how thats shaping your breakfast growth goal.

Speaker Change: We expect to see labor inflation in the 3-5% range, that's also unchanged. And we definitely expect with the slight acceleration of sales lift in the second half.

Speaker Change: All is going forward. Thank you.

Speaker Change: Yes, Dennis Good morning, Yes breakfast is really an important opportunity for us we've talked about this in the past is reaching our full potential and we're about halfway there which is the exciting part. It is certainly a tailwind in our business right now it's growing faster than the rest of our business and it's growing faster than the category, we're gaining share.

Speaker Change: Beef and fries are inflationary for us.

Speaker Change: In this day part we continue to invest we will.

Speaker Change: We will continue to invest through the horizon of 2025 and beyond in breakfast.

Speaker Change: What I really like about breakfast is it.

Speaker Change: It's more profitable it's incremental to our business. It leverages the restaurants labor model and we've got a great menu. So it is something that we'll continue to stay focused on.

Speaker Change: Thank you. Our next question comes from Dennis Geiger of UBS. Your line is now open, please go ahead.

Dennis Geiger: Great. Thanks, guys. Wondering if you could talk about breakfast performance in the quarter a bit more.

Speaker Change: Continue to build momentum on and it'll be a tailwind for our overall Srs performance.

Speaker Change: Thank you.

Speaker Change: Next question comes from Dennis Garguilo of benzene.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Yeah.

Dennis Garguilo: Thank you.

Dennis Geiger: Yeah, Dennis, good morning. Yeah, breakfast is really an important opportunity for us. We've talked about this in the past as

Dennis Garguilo: If you can give us a little bit more context on the developing centers that you have.

Speaker Change: And then.

Speaker Change: Specifically your expectations on the cash on cash return on a maybe unlevered basis that you would expect incentive fees to be getting out of it and you can also put that into context versus the other programs that you're running in theater utilization rate. Thank you.

Speaker Change: Good morning, Daniel Yes.

Speaker Change: We are happy with the incentive programs. We have just launched so remember you've heard us talk about.

Dennis Garguilo: To shoot and about the pacesetter the pace set actually has expired.

Speaker Change: All of the driving forces for the additional development commitments that <unk> signed so we worked in the last couple of months with the franchise community on terms of renewing the incentive program.

Speaker Change: It's incremental to our business, it leverages the restaurant's labor model, and we've got a great menu. So, it is something that, you know, we'll continue to stay focused on, we'll continue to build momentum on, and it'll be a tailwind for our overall SRS performance.

Speaker Change: Little bit different now.

Speaker Change: T assist them the basic idea is there.

Speaker Change: The more you commit from a building point of view.

Speaker Change: Thank you. Our next question comes from Danilo Gargiulo of Bernstein. Your line is now open. Please go ahead.

Speaker Change: The higher of an incentive you're going to get.

Speaker Change: In vain.

Speaker Change: Have to deal with less builders that are building more pure franchise unit and the franchisees that want to build more obviously get rewarded for it began incentives.

Danilo Gargiulo: Specifically, your expectations on the cash-on-cash returns on a leader basis that you're expecting Sanchez's to be getting out of it, and if you can also put that into context versus the other programs that you're running and their utilization rates. Thank you.

Speaker Change: I'm not looking that much on cash on cash returns I look at levels of payback periods.

Speaker Change: The build to suit program, which is unchanged from a design point of view is still our best program delivered with the Levered payback on that one is about two years.

Speaker Change: Good morning Danilo. Yes, we are happy with the incentive programs we have just launched. So remember

Speaker Change: The top builder, which is our richest incentive nine exchange you need to sign up for about 15 units.

Speaker Change: You get a levered return of about three in the half year. So.

Speaker Change: Very very attractive the franchise community that we booked the program with was very excited and confident that as we are rolling these out state will get.

Speaker Change: The franchise base excited and sign up for development agreements I am sure. We are going to give an update on the sign ups on these programs in the next couple of quarters.

Speaker Change: Yes.

Speaker Change: Thank you. Our next question comes from Jon Tower of Citi. Your line is now open. Please go ahead.

Speaker Change: Yeah.

Jon Tower: Thanks for taking the question just maybe circling back to the breakfast conversation Kirk I think you had mentioned in your prepared remarks. The idea. This year again, we're going to be spending about $22 million in breakfast spend our incremental spend.

Speaker Change: From the company contribution side I think it was closer to 27 previously maybe im mistaken, but you also made some comments about extending it potentially beyond 25. So are you contemplating incremental investment above that $55 million you had originally outlined.

Speaker Change: Earlier this year.

Speaker Change: John Good morning, Thanks for the question, Yeah, Yeah to clarify yes.

Speaker Change: Yes, so.

Speaker Change: Very, very attractive. The franchise community that we worked the program with was very excited and confident that

Speaker Change: Breakfast is something that again, we're very bullish on we do think that it's important to be to look at the horizon, the investment horizon, a little longer a little longer than we originally communicated.

Speaker Change: Think about it as pushing that same investments some of that into.

Speaker Change: Beyond 25, that's how we're thinking about I think this is one where we're going to build it over time again, our potential is at about $3000 a week per restaurant over that over a horizon, we're going to be you're going to be very diligent about doing that but it's prudent.

Speaker Change: That investment past 'twenty five we'll continue to build it past them.

Speaker Change: In breakfast spend, our incremental spend.

Speaker Change: Okay.

Speaker Change: I think it was closer to 27 previously, maybe I'm mistaken, but you also made some comments about extending it potentially beyond 25. So are you contemplating incremental investment above that $55 million you had originally outlined earlier this year?

Speaker Change: Thank you. Our next question comes from Gregory Defense full of Guggenheim Partners. Your line is now open. Please go ahead.

Speaker Change: Hey, Thanks for the question Kirk I think in the prepared remarks, you made a comment about increasing the pace of innovation.

Speaker Change: John , good morning. Thanks for the question. Yeah, yeah, to clarify, yeah, breakfast is something that, again, we're, we're very bullish on. We do think that it's

Speaker Change: Can you maybe help frame up all the obviously without tipping your hand too much.

Speaker Change: That's going to look like because I, just think the shorter calendar windows greater number of new products, just just any thoughts there. Thanks.

Speaker Change: to look at the horizon, the investment horizon a little longer, a little longer than we originally communicated. So I think about it as pushing that

Speaker Change: Innovation is such an important part of what consumers are looking for and our customers expect from us.

Speaker Change: <unk> seen us do things like <unk>.

Speaker Change: We've also been very successful leveraging our frosty brand, it's a brand that consumers love and we've continued to innovate off those platforms Youll see us innovate in the second half of the year, we will innovate off of our core will continue to innovate.

Speaker Change: beyond 25. That's how we're thinking about it. I think this is one where we're going to build it over time.

Speaker Change: On platforms like frothy.

Speaker Change: I think innovation is an important part thats kind of celebrates both our core business.

Speaker Change: And our.

Speaker Change: Thank you, our next question comes from Gregory Fransvold of Guggenheim Partners, the line is now open, please go ahead.

Speaker Change: New new to this world consumer propositions that have some breakthrough I think thats really important right now we've talked a lot about value and value is critically important innovation is also important customers are looking and loving innovation. So we're going to stay focused on that.

Speaker Change: Thank you. Our next question comes from Brian Mullan of Piper Sandler your.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Innovation is such an important part of what consumers are looking for and our customers expect from us.

Brian Mullan: Okay. Thank you just a question on the efforts to expand the digital menu boards at the drive through where are you in that in the rollout at the company stores and just maybe remind us how much of the franchise system has that capability. Today is there anything you could do to potentially accelerate that process across the franchises.

Speaker Change: Yes.

Speaker Change: Good morning, Brian Yes. This is all digital ecosystems are super important and it's what the consumer expects.

Speaker Change: on platforms like Frosty.

Speaker Change: We have set aside.

Speaker Change: $20 million in capital to complete digital menu board rollout in the company restaurants in 2004 and 2005, we are currently 30% to 35 units installed.

Speaker Change: You know, I think it innovations an important part that's, you know, kind of celebrates both our core business.

Speaker Change: and our new to this world consumer propositions that have some breakthrough. I think that's really important right now. We talk a lot about value and value is critically important.

Speaker Change: Obviously accelerating in the second half.

Speaker Change: We like what we see.

Speaker Change: It's a good experience for our consumer it's a good experience for our crew member since you obviously don't have to go out anymore and to change our menu boards between the rest of the day the breakfast menu. So committed to the investment it is contemplated in the cash flow and capital.

Speaker Change: Thank you. Our next question comes from Brian Mullen of Piper Sandler. The line is now open. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Next question comes from Lauren Silberman of Deutsche Bank.

Speaker Change: Please go ahead.

Lauren Silberman: Hey, just on the guide wanted to confirm.

Lauren Silberman: EBITDA and EPS being reaffirmed its primarily due to less breakfast advertising contribution this year and then specific to the advertising how did you come to the decision to reduce the level of investment this year or youre not seeing the return as high as you would have expected.

Speaker Change: Good morning Brian . Yes, digital ecosystems are super important and that's what the consumer expects. As you know, we have set aside

Speaker Change: Good morning, Laura just to clarify our EBITDA and EPS guidance. So it's unchanged versus previously so obviously, we had headwinds on the sales side. It seems obviously the midpoint of the guidance range shifted down a little bit it's not because we are not competitive either maintaining share.

Speaker Change: in 24 and 25.

Speaker Change: We are currently 30 to 35 units installed. We are almost accelerating in the second half.

Speaker Change: It's because the categories a little bit softer than we expected how did you overcome.

Speaker Change: The profit headwinds coming out of the sales shortfall you still optimization on the breakfast advertising investment of $5 million.

Speaker Change: And we also shifted their G&A outlook range down to $2 $55 million to $265 million.

Speaker Change: Thank you. Our next question comes from Lauren Silberman of Deutsche Bank. Your line is now open, please go ahead.

Speaker Change: A good portion of that was incentive comp accruals.

Speaker Change: A little bit of timing of new hires.

Speaker Change: Specific question around the breakfast investment levels.

Speaker Change: You, obviously, winning in the in the category, we have outgrown the category in the first half. So we are happy about that but in the context of the whole environment to be absolutely believes and we broke this a little bit with the media agencies, we believe that in that environment, we are better off stretching to investment.

Lauren Silberman: this year. And then specific to the advertising, how did you come to the decision to reduce the level of investment this year? Are you not seeing the returns as high as you would have expected?

Speaker Change: Good morning Lauren, just to clarify our EBITDA and EPS guidance so it's unchanged versus previously so obviously we had headwinds on the sales side since obviously the midpoint of the guidance range

Speaker Change: <unk>.

Speaker Change: Our planning assumption is now three years into 2026, and obviously the reduction this year allowed us to stretch to investment.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from Brian <unk> of Morgan Stanley in.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: How did we overcome the profit headwinds coming out of the sales shortfall is the optimization on the breakfast advertising investment of $5 million and we also shifted the G&A outlook range down to $255 to $265 million.

Brian: Yes, thanks, good morning, guys.

Brian: Just a quick one on the development side I think you said <unk> was in line with your expectations was that also true.

Speaker Change: Just the closures that you had in the U S or could you kind of comment on that.

Speaker Change: Yeah.

Speaker Change: A good portion of that was incentive comp accruals and a little bit of timing of new hires.

Speaker Change: Good morning, Brian Yes, absolutely it's in line with our expectations right as I said.

Speaker Change: In the prepared remarks, our sales guidance for the year is 1% to 3% Srs and 2% net unit growth is unchanged versus what we have told you previously.

Speaker Change: We are obviously winning in the category, we have outgrown the category in the first half, so we are happy about that, but in the context of the whole environment, we absolutely believe, and we worked this a little bit with the media agencies, we believe that in that environment we are better off.

Speaker Change: Reaffirmed again, our gross openings of 250 to 300 units. So it's all kind of where we thought it would be.

Speaker Change: Stretching their investment over our planning assumption is now three years into 2026 and obviously the reduction this year allowed us to stretch the investment out.

Speaker Change: Thank you. Our next question comes from David Palmer of Evercore ISI.

Speaker Change: Your line is now open. Please go ahead.

David Palmer: Thank you good morning, guys I'm wondering if we could maybe take a step back and think about the biggest opportunities and challenges Kirk that you see.

David Palmer: For the brand in the U S. What are you hearing from franchisees about what you want to improve upon and they want to improve upon and what are you seeing about.

Speaker Change: Yeah, thanks. Good morning, guys.

Speaker Change: Just a quick one on the development side. I think you said 2Q was in line with your expectations. Was that also true of

Kirk Tanner: These changes that can be made this year versus perhaps some longer term changes.

Speaker Change: Just the closures that you had in the U.S. or could you kind of comment on that?

Kirk Tanner: You see the brand, making thank you.

Speaker Change: Good morning, Brian . Yes, absolutely. It's in line with our expectations. As I said in the prepared remarks, our sales guidance for the year is 1-3% SRS and 2% net unit growth. That's unchanged.

Speaker Change: Yes, David Thanks for the question look.

Speaker Change: The team is focused on this positive flywheel right and I think that makes a lot of sense for both the brand and our franchisees that positive fly.

Kirk Tanner: Flywheel starts with being.

Kirk Tanner: Very relevant in the in the <unk>.

Kirk Tanner: Present, which is right now we're competing well in the marketplace, we have to stay focused on.

Kirk Tanner: Delivering and gaining share.

Kirk Tanner: Working.

Speaker Change: Thank you. Our next question comes from David Palmer of Evercore ISI. Your line is now open, please go ahead.

Speaker Change: Wendy's is famous for so.

Speaker Change: Certainly a big part of it but youll see us we're working very diligently on driving the economic model at the restaurant level, improving our margin performance because we know that is critical we're very focused on our long term unit performance and building new restaurants, I think that we talk about the 99 new.

Kirk Tanner: Restaurants, we built this year and the 250 to 300 restaurants will build.

Kirk Tanner: In 2024, those are all very brand building.

Kirk Tanner: Perform and outperform current restaurants. So those are the big things you think about this business its top line growing share improving our margin and building new restaurants. Those are the critical things that we are focused on and working side by side with our franchisees to make that.

David Palmer: Perhaps some longer term changes that you see the brand making. Thank you.

Speaker Change: Yeah, David, thanks for the question. Look, the team is focused on this positive flywheel, right? And I think that makes a lot of sense for both the brand and our franchisees, that positive

Kirk Tanner: <unk>.

Kirk Tanner: Yeah.

Speaker Change: Thank you. Our next question comes from Sara Senatore of Bank of America.

Speaker Change: Right now we're competing well in the marketplace. We have to stay focused on delivering and gaining share working

Speaker Change: Your line is now open. Please go ahead.

Sara Senatore: Great. Thank you.

Sara Senatore: One clarification and then a question. Please the first is on <unk>.

Kirk Tanner: Yes.

Speaker Change: You mentioned that the.

Kirk Tanner: Jim is perhaps a little softer than you had expected holding share.

Speaker Change: You talk about any of the sort of underlying dynamics.

Speaker Change: So the traffic.

Speaker Change: Sure.

Speaker Change: Specific risks.

Speaker Change: Or is it some of the promotional activity, perhaps dragging on.

Speaker Change: That was just a clarification and then with respect to the restaurant level margins I know you talked about a wider.

Speaker Change: in 2024. Those are all very brand-building. They perform and outperform current restaurants, so those are the big things. You think about this business, it's top-line, growing share, improving our margin.

Speaker Change: Range of sales is there any change or any impact.

Speaker Change: That is from like the UK restaurants, I know that they had previously.

Speaker Change: A diminishing drag, but anything there that maybe changed thanks.

Speaker Change: and building new restaurants. Those are the critical things that we are focused on and working side-by-side with our franchisees to make that happen.

Speaker Change: Okay.

Speaker Change: Good morning, Sarah so a little bit of the composition of our sales growth in the United States. So we have realized the system has realized about 4% pricing.

Speaker Change: Thank you. Our next question comes from Sara Senatore of Bank of America. Your line is now open. Please go ahead.

Speaker Change: We have seen traffic down about 2%, a little bit less than 2% and slightly negative mix of a little bit more than 1%. So a little bit of context too again traffic down is a function of that.

Sara Senatore: Great. Thank you. One clarification and then a question, please. The first is on

Sara Senatore: J.P., you mentioned that the industry was perhaps a little softer than you had expected with the holding share. Could you talk about any of the sort of underlying dynamics there that you saw, which is to say, is it traffic that's a bit slower, and if so, if there are specific groups?

Speaker Change: Candidly, we being down as well as we said in the prepared remarks.

Shea: Traffic installers Shea.

Speaker Change: In line with the category I want to point out also within the income cohorts right. Our research company split them into below and above $75000. You see the same trend that <unk> seen the last couple of quarters.

Shea: The lower income consumer is reducing the frequency the higher income consumers increasing their frequency via competing with both income cohorts and maintaining share there.

Speaker Change: range of sales. Is there any change or any impact that is from the like the UK restaurants? I know that they had previously been a diminishing drag, but anything there that may be changed? Thanks.

Speaker Change: In terms of mix actually the biggest the biggest headwinds a little bit more than 1% is driven by the fact that we drove last year relatively how to meet to create premium sandwich, which we.

Shea: We didn't do this year.

Shea: And secondly.

Speaker Change: We continued our digital acquisition strategy. This year that resulted in a 6% increase in our loyalty base and that created a little bit of mix headwinds for us our value offerings biggie bag year over year had no material impact on our mix and profitability.

Speaker Change: So a little bit of context, so again, traffic down is a function of...

Speaker Change: The category being down as well, right, as we said in the prepared remarks.

Speaker Change: Our classic end-dollar share, we are in line with the category. I want to point out also within the income cohorts, right, our research company

Shea: Year over year. Since obviously is nationally recognized we have it for several years and was obviously sitting in the base already.

Speaker Change: Thank you.

Jim <unk>: The next question comes from Jim <unk> of Stephens.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Alright. This is Tyler <unk> on for Jim Thanks for taking the question.

Speaker Change: Several peers in the industry you had mentioned headwinds with same store sales in California due to the recent price increases.

Sara Senatore: Actually, the biggest headwinds, a little bit more than 1%, is driven by the fact that we drove last year relatively hard and made to create a premium sandwich, which we didn't do this year. And secondly, we continued our digital acquisition strategy this year, but it resulted in a 6% increase in our loyalty base.

Speaker Change: If you could give us an update on the market and if you had any particular call outs and then I had one follow up.

Jim <unk>: Yeah.

Speaker Change: Yes, I think that.

Jim <unk>: Clearly the consumer across the country has been well documented there certainly.

Speaker Change: Certain cohorts in <unk>.

Shea: Consumer bases that are under pressure and more discerning in their decisions as far as California goes.

Speaker Change: This is something that is an unfortunate from a wage and labor standpoint, but the team is working against it.

Speaker Change: Focused on driving more productivity and delivering the wendy's promise in this light.

Jim <unk>: These are opportunities, where we feel like we still have to win and we have a plan in place to do that we have a proposition on our menu to do just that but I think if you look at where consumers are.

Speaker Change: Thank you. Our next question comes from Jim Salera of Stevens. Your line is now open. Please go ahead.

Speaker Change: Our focus is on winning in this environment winning and.

Tyler Prowse: Hi, this is Tyler Prowse on for Jim. Thanks for taking the question. Several peers in the industry have mentioned headwinds, the same sort of sales in California due to the recent price increases. I was going to see if you could give us an update on the market and if you had any particular call outs. And then I had one follow up.

Speaker Change: And competing well in this environment and we do we're doing that just with that that strategy, including places like California. It goes to delivering our core <unk>.

Speaker Change: Having compelling innovation and having relevant value and this relevant value has allowed us.

Speaker Change: To stay very competitive and win in this marketplace.

Speaker Change: Yeah, I think that clearly the consumer across the country has been well documented.

Speaker Change: Thank you.

Speaker Change: This time, we currently have no further questions for today. So that concludes today's conference call. Thank you all for joining you may now disconnect your lines.

Speaker Change: You know, our focus is on winning in this environment, winning and competing well in this environment. And we do we're doing that just with that that strategy, including places like California. It goes to delivering our core.

Speaker Change: Having compelling innovation and having relevant value. And this relevant value has allowed us to stay very competitive and win in this marketplace.

Speaker Change: Thank you. At this time we currently have no further questions for today so that concludes today's conference call. Thank you all for joining, you may now disconnect your lines.