Good day, ladies and gentlemen, and welcome to the Papa John's Second Quarter 2015 Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session, and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to Lance Tucker, Chief Financial Officer. Sir, you may begin. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Thank you, Shannon. Good morning. Joining me on the call today are our Founder, Chairman and CEO, John Schnatter; President and COO, Steve Ritchie; CMO, Bob Kraut, and other members of our senior management team. After the financial update, John and Steve will have comments about our business, and the management team will then be available for Q&A. Our discussion today will contain forward-looking statements that involve risks related to future events. Actual events may differ materially from the projections discussed today. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings press release and the risk factors included in our SEC filings. And all statements made on this call are as of today. Please refer to our earnings press release in the Investor Relations section of our website for a reconciliation and other disclosures related to our discussion of non-GAAP financial measures on this call. Unless otherwise noted, all comparisons are versus the comparable periods from a year ago. This call is being taped, and the replay will be available for a limited time on our website and in downloadable podcast format. Now, onto a discussion of our second quarter operating results. In these remarks, we will be discussing our results on a non-GAAP basis, excluding the impact of the preliminary settlement of the…

Thank you. Our first question comes from Alex Slagle with Jefferies. You may begin.

Thanks. Congrats, guys. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Thanks.

Lance, I had a question on G&A. In your prepared remarks, you mentioned the magnitude at the operators' conference, but I still get the sense that G&A is trending higher than many of us might have expected. And I just wonder if you could talk to what else drove that higher in the quarter and how we should think about for the full year? Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Of course. So, given the size of the increase of Q2 G&A, I think we'll go into a little more detail here than we typically would. So, first of all, let me hit the big picture. In terms of both the magnitude in increase over the prior year and the percent of revenues, we do expect Q2 G&A to be an anomaly barring something unexpected. For the rest of 2015, we expect G&A to come down in absolute dollars versus the first half. We also expect it to come down as a percentage of revenues and in terms of year-over-year growth. We will still be up versus 2014 on an annual basis in the range of 80 basis points to 100 basis points. But where SG&A was 10.5% of revenues in the second quarter, we expect that percentage to be down a little bit in Q3 and then down more significantly in Q4, averaging 9.5% of revenues or lower in the second half of the year. These projections are baked into our guidance, which we've raised from $2.04 to $2.10, meaning we expect to be close to a 20% annual EPS growth in 2015. So, some of the details around the Q2 increase, Alex, nearly one-third of the increase was due to timing and rollover issues. So, as you mentioned, we called out that our…

Okay. Big picture, kind of looking at the EPS guidance, I mean should we – thinking about the gives and takes, should we kind of think of the lower tax rate essentially offsetting with the higher G&A outlook overall for the year? Is that magnitude-wise how to think about it? Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Alex, this is Lance. I'd say that'd be pretty close. I mean, you can see our overall guidance is up from $2.04 to $2.10. So, despite the increased G&A headwinds on a full year basis, we have raised our guidance; that would equate to roughly 20% EPS growth. And in addition, we had guided at the beginning of the year that we thought our pre-tax income margin would be up 30 basis points to 50 basis points. We do expect to be at the top end or exceed that. So, I'd say the tax rate is contributing, but I think the rest of the business is contributing as well to that increased guidance of getting close to 20% EPS growth.

Great. And just one follow-up on the International business, really great momentum you're seeing there. I just wonder if you could talk to some of the trends you're seeing in some of the specific regions. You mentioned the UK and Beijing, but maybe some of the other key regions there. Steve M. Ritchie - President & Chief Operating Officer: Sure, Alex. It's Steve. I'll comment on that. And really more of the same in terms of the successful markets are really driving the overall International portfolio. As you did reference UK, we've been extremely pleased with the growth there. And as we always talked about, the scale being the overall driver to our success in the UK, now over 300 stores and kicking off national media campaigns with exciting promotion is driving success there. We continue to have a tremendous success over the Latin America region. And it's not one or two markets, it's really all of our markets throughout Latin America that have been big components of the overall comp growth. Another region that we have spoken to in the past is kind of the GCC in the Middle East. We continue to do very favorable in those markets despite some geopolitical issues. The performance of the Papa John's brand has done quite well. So those regions in addition to some of the other markets within Europe are really the drivers of the continued growth in the 6.8% Q2 comp, but more impressively, a two-year roll of 15.4%, and now a three-year roll on the International business of 22.2% for the quarter.

Great. Thank you. Steve M. Ritchie - President & Chief Operating Officer: Thank you, Alex.

Thank you. Our next question comes from Chris O'Cull with KeyBanc. You may begin.

Yeah. Thanks. This is a clarification on the last G&A question. And Lance, thanks for that guidance, that's very helpful. But you mentioned G&A in the back half of the year I think averaging a certain percentage of revenue. Is there any way you can provide that if you exclude the commissary or if you can maybe give us some – because the commissary business obviously fluctuates with cheese prices? Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Yeah. Chris, I'm not prepared to give that on the call here I think. Hopefully, the overall guidance of 9.5% or below for the second half – again, it will be higher in Q3 than it will be in Q4. The one piece of information I can share for you that may help some, the lower revenues, or the lower commissary revenues, is probably adding 25 basis points to 35 basis points as a percent of sales of that G&A, so I can give it to you that way.

I'm assuming commissary – the year-over-year change in commissary revenue is probably going to be similar in the back half as we saw in the first half. Is that reasonable? Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: That is in fact reasonable.

Okay. And then, John, one of your competitors discussed plans to add a loyalty program. Do you think – I mean, the Papa Rewards program is very unique in the industry. Do you think that the program may need to evolve in response to that or how should we think about the potential of other loyalty programs coming into the category? John H. Schnatter - Chairman & Chief Executive Officer: Well, Chris, frankly, if you don't evolve every aspect of your business, it's not long before you're in trouble. So, absolutely, we're definitely moving forward, innovating, improving, getting better. We have a pretty in-depth study going on right now with not only what we're doing but with the competitor that you referred to. Steve or Bob, you want to jump in on this one? Steve M. Ritchie - President & Chief Operating Officer: Sure, John, I'll jump in. John H. Schnatter - Chairman & Chief Executive Officer: Yeah. Steve M. Ritchie - President & Chief Operating Officer: It's Steve. I think the key part of this, Chris, is obviously we were the first to launch a loyalty program in the category back in 2010. Scale being a big factor, so we've got a tremendous head start in that area. We've been doing a lot of innovation within the program, but not losing sight of simplicity being the key component of a successful loyalty program. But as we always look at the customer experience and that being key components of having a successful program, are aware they're taking a look at that. So I'm not surprised; in fact, surprised maybe there wasn't a launch of a loyalty program sooner given some of the success that we've had. John H. Schnatter - Chairman & Chief Executive Officer: Yeah. Chris, they've given us a nice head start on the loyalty program because we know so much more about that aspect of our business this year than we did a year ago. And we even had matrices where we can compare how we do to how our competitors do because they're testing it in their market up in Detroit. So, we know exactly what they're doing, and we're watching it very closely. And it's like anything else. You got to figure out how you're going to compete against them, and we'll figure it out.

Is there opportunities to increase the awareness of the Papa Rewards program, or how do you drive, I guess, conversion from just an online order to the rewards program? I'm trying to figure out if there's a way that that conversion can be accelerated at all? John H. Schnatter - Chairman & Chief Executive Officer: Steve or Bob, I'll let you handle that. Robert C. Kraut - Chief Marketing Officer & Senior Vice President: Yeah. John H. Schnatter - Chairman & Chief Executive Officer: But be careful. Bob, go ahead. Robert C. Kraut - Chief Marketing Officer & Senior Vice President: Yeah, this is Bob Kraut. A couple things, we're looking at conversions from all points of the business and Papa Rewards is one point that contributes to that. And we're seeing some success in that area. Regarding rewards, John had referenced that we're studying different ways to enhance value of the program, and we'll only come out with improvements that are good for customers. And at some point in time, when we look to create news to the program, you'll probably see a stronger effort in the marketplace to promote Papa Rewards, increased acquisition and membership, and along with conversions.

Okay. Great. Thanks, guys.

The next question comes from Peter Saleh with BTIG. You may begin.

Hi. Great. Thank you. So, just wanted to ask about the labor lines. So, great top line performance, great same-store sales, yet, we're getting some deleverage on the labor line and also we had the investment on the point of sale system over the past year. So, maybe you could just talk a little bit about what kind of benefits do you think the point of sale is going to have and when we should start to see that flow through and how we should think about the labor line for the rest of the year and into 2016? John H. Schnatter - Chairman & Chief Executive Officer: Yeah, Peter. I'll talk at a high level, and then Lance, you or Steve can jump in here. We're not successful because one or two things we do, Peter, we're successful because of the thousand things we do, and I think we would end this year with a 13% to 18% EPS growth that's up closer to 19% or 20% already. And so, if you just keep doing the little things, the thousand little things, then sooner or later they add up and you're able to raise – I think, this is two quarters in a row, Lance, we raised our estimates for the year. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Correct. John H. Schnatter - Chairman & Chief Executive Officer: And that's what happens when you do the little things right. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Peter, this is Lance. I'll jump in, and then I'll toss the efficiency side over to Steve here in a moment, but just relative to the actual numbers, so we were in fact delevered a little bit on the salary and benefits line there…

Got it. Thank you. And then just real quick on the commodities side. I know cheese has been a nice tailwind this year. And as I understand it, you guys may have some of your cheese exposure locked at least on the company side. Can you talk about where you stand with the franchisees in terms of what franchisees look to lock more of their cheese going forward? And is it too early to talk about 2016 and could you lock any of the exposure given where commodities are right now for 2016? John H. Schnatter - Chairman & Chief Executive Officer: Philosophically, Lance, I'll talk – this is John, I'll talk about how we approach the cheese hedging and how our franchisees do it. The thing about cheese is that it's 35% to 40% of our cost. So, if that were to jump to $2.60 or $2.80 a pound, that would put our year in jeopardy with Wall Street, and we can't do that, so we like to hedge cheese. This year we're hedging it, we're a little negative and we're fine. We're fine hedging at $1.80 and the cheese goes to $1.60. I think that's a win. Our franchisees they don't like to hedge. They like to take the risk, and as we say, we think if you cover the downside, the upside takes care of itself. Lance? Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Thanks, John. So, John, really from a – really explained it very well, Peter, from a theoretical standpoint. We do have a pretty decent amount of our cheese fixed this year. And relative to 2016, it's actually not too early to be out thinking, at least, into the first half of 2016, what we may do. So, I won't share any of the figures with you, but we have relatively low amounts of cheese locked in at this point for both Q1 and Q2 as well. We try to stay anywhere from 9 months to 12 months out in front and by decreasing amounts as we go out further.

Great. Thank you. And then just the last question, congrats to Steve on the promotion. I just wanted to ask how the responsibilities will change with the promotion and with the increased title. Steve M. Ritchie - President & Chief Operating Officer: Sure, Peter. This is Steve. John H. Schnatter - Chairman & Chief Executive Officer: Well, go ahead. Steve M. Ritchie - President & Chief Operating Officer: Go ahead, John. John H. Schnatter - Chairman & Chief Executive Officer: No, you go ahead, Steve. Steve M. Ritchie - President & Chief Operating Officer: Okay, well, you jump in as well as, John. So, thank you, Peter, first of all for that. So the responsibility is really – for the most part remain the same. I have now picked up the Information Systems part of the responsibilities in that department as the alignment with our IS team in technology, just the synergies with the operation side of the business are really key, obviously, to our overall success. But the other departments in terms of global operations, research and development, the supply chain, quality assurance in addition to our PJ Food Service business globally, will continue to report to me. John H. Schnatter - Chairman & Chief Executive Officer: Yeah, we've been through this exercise before. And Peter, good judgment comes from bad judgment. And bad judgment comes from our experience. We – this is really the first President we've had that understands the operational side of the company. And that's a huge advantage because when you understand what happens at restaurant level, it just takes a lot of wear and tear off me on having to give daily instructions on why we make certain decisions. So – and I can tell you that the building and the field are extremely excited about Steve getting the job because he's one of them. But Steve probably takes 10% of my time as much as the couple of the other Presidents we've had.

Great. Thank you very much.

Thank you. Our next question comes from Alton Stump with Longbow Research. You may begin.

Hey, guys, it's actually Brittany Whitman on for Alton today. I was just wondering if you had any prediction or guidance for corporate and other costs for the back half of the year. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: We typically – Brittany, this is Lance.

Hi, Lance. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: We typically wouldn't go into that kind of line-item detail. We did give a little more around G&A...

Yeah. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: ...given the increase in Q2, but we're not going to get into those particular line-items again. The overall pre-tax income margin will be up at least 30 basis points to 50 basis points, and we've spoken a couple times that our EPS should be $2.04 to $2.10. And you have our comp guidance, so hopefully, you can kind of...

Okay. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: ...make it through from there.

Okay. Great. And then just quickly, how has the competitive environment changed in 2Q versus 1Q, if at all? John H. Schnatter - Chairman & Chief Executive Officer: Steve. Why don't you take that one, Steve? Steve M. Ritchie - President & Chief Operating Officer: Sure. Brittany, it's Steve. And I think really relatively the same; if you think about the two national players really the promotional activity is pretty similar to what we have seen in the past. Our promotional pricing and our overall strategy is really the same as well. There is a cyclical nature of the overall nature of the business. But you look at two-year and three-year rolls, the range between our two-year and three-year rolls are really relatively consistent. So, not seeing anything significantly different in the competitive environment than what we saw in Q1.

Okay. Great. Thank you. John H. Schnatter - Chairman & Chief Executive Officer: And Brittany...

Oh, sorry, go ahead. John H. Schnatter - Chairman & Chief Executive Officer: This is John. We, of course, respect our competitors, but our biggest competitor is ourselves. When we wake up every day and we innovate and we tinker and we get better and we provide more value, more quality for our customers, we do extremely well. And that's – we wake up every day doing that. It's just part of our culture; it's how we're organized.

Right. That's great. That's all I had. Thanks, guys. John H. Schnatter - Chairman & Chief Executive Officer: Thank you, Brittany.

Thank you. Our next question comes from Mark Smith with Feltl and Co. You may begin.

Morning, guys. First off, can you guys talk about your appetite for company-operated restaurant growth domestically? And also, are there opportunities for you guys to buy some franchise restaurants? John H. Schnatter - Chairman & Chief Executive Officer: Steve? Steve M. Ritchie - President & Chief Operating Officer: Sure, Mark. It's Steve. I'll take that. So, I mean, I think the way – you know, the way we look at the business, we've talked about this in the past. We are very opportunistic as we look at corporate acquisitions. Just in the last couple of years, we have acquired a couple of markets, Denver and Minneapolis of note. Those were markets that were underperforming. And now, they're doing quite well. So, I think, if you look at a quarter-to-quarter basis on how we look at the opportunities corporately to acquire, the optimism that we have on our abilities to turn markets is obviously pretty high given the success that we've had over the – really, the last three years in our corporate business. However, on the flipside, we've got very good franchisees. The vast majority of our franchise markets are performing very well, and the tailwinds that are occurring in 2015 from a commodity standpoint, our franchisees have been making the right investments to drive the sales growth and improve their overall unit economics. So, it's something that we just continue to look at day-to-day when the opportunities do arrive. John H. Schnatter - Chairman & Chief Executive Officer: And Lance, specifically, do we give out pre-tax profit on corporate stores? Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: No. We don't. What they can see and you can look at the face of the P&L and see we had over a 20% operating margin in the second quarter, it's actually almost 21%. John H. Schnatter - Chairman & Chief Executive Officer: Yeah. Mark, if you just looked at it from a financial perspective, as we – maybe you can make more or less on capital, if we did – we were 100% franchised, but there's more to it than that. I just couldn't imagine leading the franchisees if we didn't have corporate stores. And with 650 stores that perform, just on every matrices is better than the franchisees, we have tremendous clout on guiding the system and influence the system and leading the system. We have a competitor that has a franchisee with like 1,000 stores, 1,200 stores and in that situation, the tail is wagging the dog, and it's just not healthy.

Okay. And next question, looking at your exposure to international markets and primarily currency, how big of an impact does the Canadian dollar make versus the rest of the basket of currencies especially given where that's kind of reported, did we miss some of that in North American or domestic operations. John H. Schnatter - Chairman & Chief Executive Officer: Lance? Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: Yeah. Mark, this is Lance. So in the big scheme of things, it's really a – still a pretty small number. We do report Canada as you're probably aware in our North America segment. But just order of magnitude, our overall international revenues are less than 10% of our total revenues and our overall international profit is closer to 5%. So any given currency unless it were happening China, the UK, Russia can move us a little more than some of the others because it's a significant store base there, but Canada by itself wouldn't be meaningful for discussion.

Okay. Did you guys give or have you given in the past ex-currency shifts, what the – what impact that had on earnings this quarter? Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: We actually said in the first quarter that it was a little bit over $0.01. And this quarter, overall, it was about $0.01. And what we have said is for the full year, we think it'll be anywhere from probably $0.02 to $0.04.

Okay. Great. Thank you.

Thank you. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: All right. Shannon, so it sounds like we're wrapped?

Okay. I'm showing no further questions at this time. I'd like to turn the call back over for closing remarks. Lance F. Tucker - CFO, Treasurer, Chief Administrative Officer & SVP: All righty. Thank you so much. Thanks for everybody for being on the call. John H. Schnatter - Chairman & Chief Executive Officer: Thank you. Good day.

Ladies and gentlemen, this concludes today's conference. Thanks for your participation and have a wonderful day.