Day, and thank you for standing by. Welcome to the first quarter 2026 Domino's Pizza earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Greg Lemenchick, Vice President of Investor Relations and Sustainability. Please go ahead. Good morning, everyone. Thank you for joining us today for our first quarter conference call. Today's call will begin with our Chief Executive Officer, Russell Weiner, followed by our Chief Financial Officer, Sandeep Reddy. The call will conclude with a Q&A session. The forward-looking statements in this morning's earnings release and Form 10-Q, both of which are available on our IR website, also apply to our comments on the call today. Actual results or trends could differ materially from our forecasts. For more information, please refer to the risk factors discussed in our filings with the SEC. In addition, please refer to the Form 8-K earnings release to find disclosures and reconciliations of non-GAAP financial measures that may be referenced on today's call. This morning's conference call is being webcast and is also being recorded for replay via our website. We want to do our best this morning to accommodate as many of your questions as time permits. As such, we encourage you to ask one question only. With that, I'd like to turn the call over to Russell. Thanks, Greg, and good morning, everybody. Q1 represented another quarter of positive order count and market share growth for Domino's in the U.S. While I was pleased with our start to the year, performance for the rest of the quarter did not meet our expectations, resulting in same-store sales of 0.9%. We are very clear on the drivers of our results, and we'll do everything within our control to address them by adjusting our plans in the second half of the year. Looking back at Q1, pressure intensified throughout the quarter, in particular in March because of growing consumer uncertainty. Consumer sentiment hit COVID level lows and ongoing inflation continued to impact purchase decisions. Weather also affected our business in the quarter, including the beginning of our carryout special boost week. Competition within the QSR pizza space also increased in Q1 as the national pizza players offered deals comparable, if not identical, to the renowned value Domino's has made famous. While this created some short-term pressure, we believe Domino's wins in a sustained value environment. Our advantage is profit power, the ability to offer compelling ongoing value while driving profit growth for Domino's franchisees. Our industry-leading advertising budget drives the order counts needed to make this value model work profitably over time. Our pizza competitors simply don't have that same capability. As a result, we believe that when competitors match our value, it places significant pressure on their franchisee economics. Over time, we expect this pressure to contribute to more store closures on top of the roughly 450 closures our two public pizza competitors have already announced for 2026. I believe these dynamics will translate into more sales, more stores, and more profits for Domino's franchisees. In Q1, we continued to make strong progress on our Hungry for MORE strategy. I want to call out a couple of areas, particularly within the operational excellence pillar, that we believe will play a major role in driving our future success. We fully launched our new app, including improvements to our world-famous Pizza Tracker, which has tracked more than 2.5 billion orders since 2008. This new modernized app is much easier for our customers to use and will allow for more personalization over time. The updated tracker provides more precise ready time based on new AI technology, live activities for iOS users, and a more detailed view of each order's progress. The closer we can deliver our products to the time we promise our customers, the more they come back in the future. The updated tracker helps us do just that. In addition to the consumer-facing app, we made progress in our back-of-house DomOS orchestration agent that makes production more efficient and effective. This orchestration agent allows an order to be prepared hot and fresh for our customers in the most efficient way possible. For example, if there's not gonna be a driver back in time to pick up a pizza when it exits the oven, this technology can alert a store to hold that order, so it isn't made until a driver is there. Our goal at the end of the day is just-in-time pizza making, which will result in a more consistent, higher quality product for our customers. As I finish up, I want to highlight why I remain so bullish on our business now and in the long term. On our February earnings call, I shared my view on QSR pizza category growth and my confidence that we can outperform the competition and capture meaningful market share in 2026 and beyond. That view remains unchanged. I'll start with 2026. We are committed to doing everything we can to deliver 3% same-store sales in the U.S. for the year. While I already addressed why we believe we missed our plan in Q1, those were reasons, not excuses. Our team is hard at work making the adjustments we believe are necessary to drive an even bigger impact in the current macro environment. I'm especially energized by the product innovation we're bringing in the second half of the year, particularly around pizza, which goes beyond what we originally planned. It's bold, exciting, and has real potential to elevate our brand. Now to my belief in the long term, which is as strong as it has ever been. You've heard me talk about how we've taken 11 points of market share over the past 11 years in the U.S. Let's go a little bit deeper. Let me tell you how we gained that market share. We did it by driving more sales, more stores, and more profits. First, sales. Our same store sales have grown on average more than 5% annually over that time period. Next, stores. We've opened more than 2,000 net new stores over the last 11 years amidst a backdrop of significant competitive closures. Finally, profits. Our average franchisee has increased profits almost $80,000 per store. This means the Domino's franchise system is earning $740 million more in profits than it did just 11 years ago. This has been and will remain our formula for success. More sales, more stores, and more profits drive more market share. More market share drives scale, which strengthens our competitive advantage. That is the Domino's effect, working for over a decade, delivered again in Q1, and one we expect to continue well into the future. I'll now hand the call over to Sandeep. Thank you, Russell, and good morning, everyone. Income from operations increased 4.2% in Q1, excluding the impact of foreign currency and a gain on the sale of the company's corporate aircraft. This increase, which came in below our expectations, was primarily driven by higher U.S. and international franchise royalties and fees, as well as gross margin dollar growth within supply chain. Excluding the impact of foreign currency, global retail sales grew 3.4% in the quarter due to positive U.S. comps and global net store growth of more than 900 stores over the past 12 months. In Q1, retail sales grew by 2.8% in the U.S., driven by same-store sales and net store growth. The U.S. QSR pizza category grew again in the quarter and we continued to take share. Same-store sales grew 0.9% for the quarter, driven by our marketing promotions and continued growth in our aggregator business. Our business was impacted by a challenging macro environment, which continues to pressure consumers, as well as increased competitive activity. Our comp was driven by a balance of positive order counts and a positive average ticket. Ticket benefited from 0.9% of pricing, partially offset by a negative mix impact. Our carryout comps were up 2.4% and delivery was down 0.3%. Shifting to U.S. unit count. We added 19 net new stores, bringing our U.S. system store count to more than 7,200. International retail sales grew 4%, excluding the impact of foreign currency in the quarter. This was driven by net store growth over the last year, inclusive of 161 stores in Q1 that were slightly offset by same-store sales decline of 0.4%. Excluding the headwind on our comp sales from Domino's Pizza Enterprises in the quarter, we would have met our expectations. Moving to capital allocation. Through April 21st, we repurchased approximately 446,000 shares for a total of $170 million year -to -date in fiscal 2026. As of April 21st, we had approximately $1.29 billion remaining on our share repurchase authorization. This is inclusive of the additional $1 billion share repurchase authorization that the board approved in April. I wanted to take some time to remind everyone of the incredible profit and cash flow generation of our earnings model. If you go back to 2015, Domino's generated approximately $400 million in operating income and approximately $230 million in free cash flow. In 2025, that grew to approximately $950 million and $670 million, respectively. Over the same time period, we have returned approximately $7.7 billion to shareholders through share repurchases and a dividend that has grown annually by more than 20% on average. We have done all of this while maintaining a leverage ratio in our expected range of 4x-6 x. We expect to deliver meaningful cash to shareholders in 2026 and beyond, in line with our capital allocation priorities, and we'll look to drive the best possible returns for our shareholders as we evaluate our options. Now turning to our updated outlook for 2026, which excludes the impact of the 53rd week. First, U.S. same-store sales. As a result of the challenging start to the year and increased macro pressure, we now expect our U.S. comp to be up low single digits in 2026. As Russell noted, we're actively optimizing our marketing calendar to meet the moment and ensure we're well-positioned despite the current macro environment. Second, we now expect our international same-store sales growth to be low single digits, primarily as a result of the macro and geopolitical uncertainty across the world. Third, we continue to expect 175+ net stores in the U.S. and approximately 800 net stores in our international business. As a result of our revised same-store sales outlook, we now believe our global retail sales growth will be up mid-single digits for the year. Due to our lowered sales expectations, we now expect operating income growth of mid- to high-single digits, excluding the impact of foreign currency, refranchising gains, and the gain on the sale of our corporate aircraft. As I close, I want to be clear that our team is fully aligned and working with urgency to deliver our 2026 outlook and that our belief in the long-term algorithm of the Domino's business through 2028 has not changed. Thank you. We will now open the line for questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from David Tarantino with Baird. Your line is open. Hi. Good morning. Russell, I just wanted to ask your thoughts on the comps outlook for the remainder of the year. It looks like you're guiding to continued positive comps, even though the comparisons look like they get quite a bit more difficult. So I was just wondering if maybe you can unpack why you think the business might be able to accelerate on an underlying basis. I know you mentioned some innovation that's coming and adjustments to your plans and maybe as part of the adjustments, does that mean, you know, perhaps a bit more focus on value? Or I guess what, you know, if you could elaborate on that'd be great. Thanks. Thanks, David. You know, I'd like to say, even though Sandeep talked about a revised guidance, my objective, his objective, everyone at our company, our objective continues to be for the year in the U.S., 3% same-store sales. We had a pretty light first quarter last year, and folks asked, you know, whether or not we thought we could hit 3% for the year and we did, and that remains our focus. That remains our objective. You're right, though, we have absolutely looked at our calendar and asked ourselves, within what we can control, how do we change things? How do we see what's out there in the environment? It's not just value. I think we can do a little bit more on pizza innovation as well. Starting as soon as May, you're gonna see things on the calendar or in media from Domino's that weren't on our calendar to start the year. Our plans moving forward will look very different than they were starting the year, and that's because we adapt to what's going on in the broader environment. David, I'm just gonna add on the guidance, specifically on positive low single digits. I wanna emphasize the positive. I think we're really confident that even with the macro environment and the volatility that we see in the macro environment, with all the leaning in that Russell just talked about, we're still confident of driving positive low single digits. That's point number one. Point number two is we're still growing stores. We're expecting 175 stores. We grew 172 stores last year as well. We are expecting to drive retail sales growth definitely well above the same-store sales growth that we're talking about, continuing to drive market share growth in a category that we believe will continue to grow. Thank you. Our next question comes from Greg Francfort with Guggenheim. Your line is open. Hey, hey. Thanks for the question. I just wanted to follow up on that. Russell, is there anything you're seeing competitively in the environment right now that maybe is your competitors acting a little more rationally or anything you can see from that front? Then do you expect with your competitors maybe closing stores later this year? Is that something you could see from an accelerated basis? Thanks. Thanks, Greg. You know, on the competitive side, I think what they're doing is they're seeing what has made Domino's successful. If you look at Q1, one of the things I talked about in my opening remarks is a lot of the promotions they had there were really out of our playbook. You know, kind of their version of Best Deal Ever. There were Mix and Matches and, you know, to that we say bring it on, because we're built to do that stuff over time now. You add that to some of the macros and, was that a little bit of a headwind for us in Q1? Yeah. I think it delves really well into your second point, which is the closures that they've already announced for the year. Greg, I know the kind of volumes that need to be done in order to make deals like the ones we have out there profitable. I do not believe that our competition can drive those kinds of volumes because their advertising budget, you know, ours is as big as the biggest two competitors combined, just can't do that. Believe me, I was not pleased with our results for the quarter. I do think that there was potentially a little bit more structural damage behind the scenes. You'll see that I think in future quarters and future years coming up, in store closures and kinda lighter franchise profits for our competitors. Greg, what I'll add is, Russell talked about the 450 stores that our national competitors that are publicly traded are have [corded]. Really speaking, if I go back into 2025, they closed about the same number of stores last year too. Our playbook has been to continue to squeeze their profits. They close stores, we take sales, we take share. What is happening in 2026 is no different. It's a continuation of the same play, and that continuation of the same play should continue well beyond 2026. That's why I think what Russell said on the profit part is super critical. We are able to actually continue to drive this playbook forward. Thank you. Our next question comes from David Palmer with Evercore ISI. Your line is open. Thanks. I just wanna, you know, present maybe a common investor view and push back, and that is that, you know, it's not a pushback that Domino's will gain share in the pizza category, and especially from the near-end big three players. It's really that Domino's operates in the pizza category, and that you've talked about 1%-2% growth for that category in the past, and that with your share gains, which I think people can believe in, will get you to that 3% comp growth while growing units. The concerns about the pizza category in light of the fact that other categories are more available online in delivery channels now, and I guess the concern is that maybe 3% is not appropriate in light of that, even though your long-term delivery has been strong and in fact better than 3%, the concern is that the reality is different today. Could you just speak to any of that and how it informs your strategy? Thank you. Thanks a lot, David, for the question. You know, I've been here, this is my 18th year at Domino's, and I feel like every year when I get in front of our team and I talk about category growth, it's 1%-2%. You know, we've talked, if you remember first quarter last year, I had a lot of questions about the pizza category, which got off to a slow start last year, but guess what, ended up at 1%-2% for the year. So this is a trend that has been pretty consistent, and we just don't see falling off. You know, maybe just getting to your delivery question, I'd answer it in a little bit a different way. Look, you know, delivery, certainly other folks are getting into this game, have gotten into this game. You gotta remember, we've changed our strategy and we're on the aggregators. You know, essentially this last quarter, on delivery, we held serve on total delivery. That is something in the past Domino's would not have done, because of the structure of our consumers. What we talk about a lot is lower income consumers, which, you know, we have a QSR and QSR Pizza and Domino's have a good amount of those customers. When it comes to delivery, when times are tight, what happens is we don't lose those customers. We may lose an occasion. Those people come back. This quarter, with all the headwinds out there with consumer confidence being low, this normally would've been a quarter where we took our total delivery business at, I think, even a bigger hit. The fact is, us being on aggregators with a higher income customer, the incrementality of that, our full delivery strategy results are probably a little different than they would've been in the past. I'd point to as well is, you know, this carryout business that just continues to grow for us. It's a bigger portion of the pizza category, bigger portion of the QSR category, and we can continue to grow that in addition to opening up all those new stores, which helps us with carryout as well. David, net-net, history hasn't changed. We're a few months into a year, and I'm really bullish about our ability to grow in a category that can continue to grow. I'm just gonna dimensionalize some of the numbers that Russell talked about. I think the delivery category in QSR Pizza is a $17 billion category, of which the aggregator businesses call it $5 billion, roughly. Now, to Russell's point, we're playing in both the 1P as well as the aggregator Ps, which is why we were able to actually drive the kind of results that we were able to drive in Q1 despite a very tough environment. The really important thing over here is we have a 33% share in the delivery business today. If I actually look at the carryout business, the carryout category size is $21 billion. That's about half of all of QSR Pizza. Our share there is just 20%. We have significant runway of growth on the carryout business that we can actually tap into. I think that's the exciting part about the strategy, and it goes back to what we talked about at our Investor Day in 2023. Aggregators were certainly a very important piece of it, but it's significantly under-penetrated in carryout, and that's a big part of how we actually look at the 3% same-store sales growth objective we have. Thank you. Our next question comes from Brian Bittner with Oppenheimer. Your line is open. Thank you. Good morning. You talked a lot in your prepared remarks about some of the sources of pressure you experienced in the first quarter, and the first quarter was, you know, something in that 300 basis points trend change from where you were in the fourth quarter. You also said in the first quarter that you did take market share and that the industry remained in solid shape, the QSR pizza category. When you look at that trend change that occurred for Domino's comps in 1Q, was it more driven by taking less share than you've been taking? Or did the QSR pizza category see some type of trend change for the entire industry? Can you just kind of maybe unpack the current trends we're seeing in the business right now versus where we were? Brian, I think when we look at Q1, there was a lot of noise in Q1. I think, the way we talked about some of the weather issues that we had early in the quarter. Then starting in March, we saw significant macro and competitive pressures weigh on the business as well. Through all that noise, we still saw the QSR pizza category grow. Through that noise, we actually grew faster than the pizza category. We did take share to the point that we made in the prepared remarks. What I think is important to note is Russell talked about the fact that competitive activity stepping up did have a short-term impact in the quarter. In the long term, we believe that the competition's not gonna be able to drive the profitability they need to sustain that. We look at share really on a much longer term basis, and on a longer term basis, we've continued to gain significant share. Even in a quarter that was a bit tough for us in Q1, we gained share. We feel really good about what the long term holds for us, and we'll keep on running the play we are. Thank you. Our next question comes from John Ivankoe with JP Morgan. Your line is open. Hi. Thank you. I'm interested, you know, to hear that some of your previously unplanned innovation is around pizza. Certainly I'll be very curious to see what type of pizza innovation that you can do at this time. That's the first point. Secondly, you know, there are significantly growing categories around premium chicken and also sandwiches. You know, your operating platform does permit both of those. To what extent is there an opportunity for you to extend both in terms of your capability of your stores and your supply chain into some non-pizza categories, which are actually quite large, like premium chicken and sandwiches? Thank you. Yeah. Thanks, John. You know, we've got a multi-year product innovation strategy and funnel. What we're able to do in times like this is to say, "Okay, what's going on in macro? And what can we do to inflect any kind of negative externalities that we're seeing right now?" I think we're gonna do that with some of this pizza innovation, and this is stuff that's either moved up in the calendar this year or didn't even, you know, exist on our calendar before that got started. As I said, I'm really excited about those, and I guess you'll have to just wait and see. I promise you will be as well. You're right about, you know, the overall product portfolio we've got. The 40%+ of what we sell is not pizza. One of the first things I did actually when I was at the company in 2008, we launched sandwiches. We've had sandwiches roll back for a very long time. We've got a wide variety of chicken products. As you know, we're also globally testing something called CHICK 'N' DIP in the U.K. and so far, that DPG is very excited about the performance of that. Product innovation pipeline is something that is very robust here. We do think what we've got right now with our pizza oven, all of our products can go through that, and we can make the most delicious food there. Obviously, things are on the table if needed, but that's where our focus is. Thank you. Our next question comes from Peter Saleh with BTIG. Your line is open. Great. Thanks. Let me just wanted to come back to the health of the consumer in 1Q. Can you maybe just talk a little bit about that performance by income cohort as you've talked about it in the past? Just curious if you think the shortfall this quarter was really due to the competitive pressure in pizza, which might be a little bit more transitory, or do you feel like this was an overall QSR kind of pressure in the quarter? Thanks. When we look at the consumer, you know, this quarter, the kind of uncertainty there when you look at the surveys are kind of at COVID level lows. That is particularly magnified when you look at the lower income customer. I'm pretty confident both in pizza and QSR, you're gonna see pressures there. That's why not only in pizza, but in the rest of QSR, you saw a lot of value out there. You know, companies are going to give consumers what they're looking for. Clearly they're looking for that, and that's why the competition is, you know, is leaning in on value. You know, the thing I'd say about the quarter, it certainly wasn't the quarter that we had initially expected. If you look at the composition of our 0.9%, a couple of things. One is from a retail sales point, and maybe this gets to, you know, Brian's question a little bit beforehand, we're up 2.8%. When we grow, it's not just in same-store sales, it's, you know, it's total retail sales. When you look even beyond the composition of the same store within the composition of same-store sales, and you look at every income cohort for us, and I don't think this is going to be the same for the rest of QSR, we grew, including in the lower income cohort. There are definitely some bright spots when you think about what the rest of the year has in store for a pressured customer. Thank you. Our next question comes from Chris O'Cull with Stifel Financial Group. Your line is open. Thanks. Good morning, guys. Russell, you mentioned that you expect competitors to close additional stores. Just wondering if the company has a sense of the sales lift franchisees are getting in markets where competitors' stores have already closed. Are there certain geographies where you're seeing more closures by the competitive set? Thanks, Chris. Yeah. No, certainly, you know, we're seeing a lift when there are closures. A couple of things. One is I think in general, we expect to see our fair share. You take our share of pizza sales in that area, that's kind of what we, you know, expect to see when they close. You know, now the thing is, you know, to remember is these closures happen because of, you know, business pressures over time. When the stores close, they're not million-dollar stores, you know, in AUV, they're probably close to half of that. While the flow-through continues to come at those levels, it happened and the attrition happens over time. What I was trying to say before is I think the attrition will continue. Whether it's in-store closures or just in less sales that lead to less profits that lead to eventual closures, this is something we've been doing for a long time, and I think it's just proof that this strategy is working. 11 years, 11 points of market share. 11 points of market share in a category that's growing. This was not an increase in a declining category. This was sales averaging more than 5% annually over those 11 years, 2,000 new stores over those 11 years, and franchisee profits increasing over those 11 years. That's why we're so bullish on the future. I mean, last year, Q2, Q3, Q4 were all really strong quarters. Q1 wasn't where we thought it would be, but that doesn't mean it's a predictor of the future. The predictor of the future is what we've done in the past, what we have and will have on the calendar, and our ability economically with our franchisees to continue to push within a category that we expect to still grow, gain that market share, and continue to gain sales. It's not at all something that should not continue. Thank you. Our next question comes from Dennis Geiger with UBS. Your line is open. Great. Thanks, guys. I wanted to ask another on value and value positioning and sort of a little more on what you've seen maybe from some of the recent promos. But more importantly, as you think about competition from the large pizza brands, maybe even from C-store and the non-pizza QSR players that you kind of touched on, do you feel over the near term that you've got to do even more on the discounting front or more generous offers? Or do you wait out the competitive intensity, as you touched on the fact that it's not sustainable longer term? Just curious on that front, how you approach it over the coming quarters or so. Thank you. Yeah. Thanks, Dennis. You know, when I think of competitive intensity, I think of us as the driver of competitive intensity. You know, renowned value is one of the core pillars of our Hungry for MORE strategy, as well as the E, which is our everything we do is enhanced by our franchisees. We drive renowned value and still drive profits. You know, profits were up last year with our franchisees. I think on this one, we're actually the ones in the lead. We're the ones that can drive profitable volume growth through this. Other folks that are kind of trying to follow that lead, certainly in the short term, they may keep more of their customers. In the long term, I think this makes it more difficult for them to compete, more difficult for them to have those franchisee conversations about promoting the next offer. We can continue this well on into the future in a way that gives consumers what they're looking for and gives our franchisees what they deserve, which is profit growth. Thank you. Our next question comes from Lauren Silberman with Deutsche Bank. Your line is open. Thanks a lot. Just to level set everyone, I guess, what are you defining as low single digit? Is it 0%-3%? My actual question is, it's on the gas prices, obviously, we've seen a big increase. How does that impact Domino's across a few different fronts? If you can comment on U.S. and international, that'd be, one, on consumer demand. Two, on just the impact on the supply of delivery drivers. Any thoughts on the commodity costs outlook. Thank you. You know what, maybe I'll take the gas prices one. Sure. Maybe you can talk a little bit about guidance. Thanks for the question, Lauren. You know, the gas prices right now, what we're seeing there is really more of the impact on consumer disposable income. You know, as long as that continues, I think that will continue to be a driver of both consumer confidence and, you know, what our customer is able to afford if gas prices are higher. Which is why the companies that are gonna succeed during this timeframe are the ones who can continue to derive profitable value because that is not going to change. On the availability of drivers, we are staffed to levels that I'm very, very happy with, and that's been consistent for a long time, and we're not seeing anything there. Sandeep, on the guidance? Yeah. I think what I said, positive low single digits, that's exactly what it is. Anything positive in the low single digits would be what the guidance implies, and this applies to the U.S. as well as the international business. That's why we just clarified that language in the guidance update. Thank you. Our next question comes from Andrew Charles with TD Cowen. Your line is open. Great. Thank you. Carryout had been a bright spot of U.S. business in recent years, appealing more to value-conscious consumers. While the carryout same-store sales at 2.4% were still positive, I'm curious if you could speak to the narrowing performance between delivery and carryout. You know, you called out some weather impacting, you know, carryout boost week, but what further kind of led that narrowing performance? Yeah, no. Andrew, I think we're actually, when we talk about the total comp and the total impact of the business, the impact was both to the delivery as well as the carryout side. The macro impact that we talked about coming in in March, the competitive pressures that we talked about coming in as well, and the weather impact earlier in the quarter. All of that actually had an impact. I think just keeping in perspective that the carryout business still grew 2.4%, and we did grow sales stores pretty materially as well. The retail sales growth continued to be compelling. Our share growth on carryout continued to be very good. We're happy with the fact that we're growing. We just would like to grow more. I think that's why all the initiatives that Russell talked about that the team is working very hard on are gonna be impactful to the carryout business as well as we move forward. I think I would just add to that too, you know, we're talking a lot about our belief in continued category growth, but also continued Domino's growth. You know, I pointed to past success before, but I'd also point to the people who have the most insight into the ability of Domino's to grow in the future, and the folks who are spending their money betting on that growth are franchisees. The pipeline is really, really, really strong. If you're looking for what are the people who are investing their own money and expertise and time, what do they think about the future perspective? It's not just hearing the CEO and the CFO talking about what their future looks like, it's our franchisees are talking with their investments as well. Andrew, I'll come back. Sorry, I should have mentioned this the first time. I mean, the fact that we have a 20% share on carryout is super exciting. I just look at it as a huge opportunity. We have a right to win and actually gain share pretty significantly over there and get to, at the very least, the 33% share that we have on delivery and more as we get past it. We're super excited about the carryout business. I think all the things that Russell talked about in terms of technology innovations are gonna impact the carryout business as well, which I think is gonna be a very significant driver of continued share growth as we move forward. Thank you. Our next question comes from Christine Cho with Goldman Sachs. Your line is open. Thank you for taking my question. I'd like to discuss the international business. You mentioned that you're still expecting low single-digit same-store sales growth for the year, but have you seen any impacts from the war, and how does that compare to what you experienced in 2023 and 2024? Additionally, Sandeep, I think you mentioned that excluding DPE, your international business would have met expectations. Can you elaborate on that a little bit? With the new DPE CEO now in place, are you seeing any leading indicators that the turnaround is progressing in the right direction? Thank you. Yeah, I think, you know, and, you know, we can tag team on this one. Yeah. Go ahead. Sandeep. Yeah, on the international business being in over 90 countries, you know, things, you know, impact things in a different way. When you look at our business specifically in the Middle East, we're in constant contact with our franchisees over there, and so far, you know, they've not seen an impact from the war. You know, even if it did, I'm not saying this is something we still don't hold dear, but it's just for perspective, that part of the world, it's probably about 2% of our operating income. Andrew Gregory, the new CEO of Domino's Pizza Enterprises, actually starts in August, Christine, but we are still working very closely with their team. Actually, on Wednesday, I've got a conference call with Jack Cowin, who's the, you know, Executive Chairman of DPE, and we're leaning in, w e continue to lean in with him big time to turn around that business. It's all about getting the value equation right to start order count driving again, which then leads to sales growth. We're continuing to lean in with them there. As Sandeep said, look, our job is to give reasons, but they're not excuses. If you took out DPE, the rest of our international business performed exactly as we had hoped it would for the quarter. Our job is it's a pretty big focus right now on one part of the business, and that's what we're all doing. Then just to add a little texture to the performance and then a little bit about the guidance itself. I think when we look at the bright spots, and Russell talked about excluding DPE, we were on track. I think the European business, and that was driven a lot by the U.K., who just had an update that they announced recently, what was pretty good. We were pleased with the Americas business as well and the performance over there. I'm moving to the guidance itself. When we talk about low single digits, we're just taking into account pretty much the answers are driven by your questions. I mean, there's macro and geopolitical uncertainty, which has developed since the time we provided our February guidance, and we're taking that into consideration as we've updated to low single digits. We're just monitoring this very carefully. We feel the underlying business, excluding the impact with DPE, is where we expected it to be. Thank you. Our next question comes from Jeff Farmer with Gordon Haskett. Your line is open. Thank you. Just following up on an earlier question. Relative to that initial 3% U.S. same-store sales guidance that you guys had as of late February, which income cohorts or channels would you say saw trends fall furthest below your expectations? Yeah. Jeff, I think when we go back to what Russell talked about, when we look at the broad industry, of course, with the macro environment and the pressure on the low-income consumer, there will be broadly industry-wide impact that we would expect. Specifically to our own performance, the great news was we were actually pretty consistent across all income cohorts and grew across all income cohorts, which means a pretty narrow band in terms of performance. The part that I would actually bring back, and I don't remember who asked the question or who made the comment, but the competitive activity did make a difference in the quarter, but that's a very short term and transitory impact that we think over the long term will sort itself out. We feel that that's all taken into account in the guidance that we provided because we have ideas and plans that are gonna be implemented as we move through the balance of the year. Yeah. I'd just say that maybe another way to think about it is that short-term headwind competitively, I think is a long-term tailwind. Thank you. Our next question comes from Danilo Gargiulo with Bernstein. Your line is open. Thank you. I want to ask a question on leverage, and specifically, Sandeep, during Investor Day, you laid out a decision tree that was informing how you were thinking about leveraging or de-leveraging the business. Now, with increased uncertainty on macro and geopolitical environment, why is it the best option to continue to do share repurchases versus driving down the leverage to say, you know, 3x-4x in anticipation of maybe volatility in the rate? Thank you. Yeah. Danilo, I think, when I go back to where we were at the time of the Investor Day, December 2023, we actually were running at a leverage of 5.4x, if I remember right. Since that time, we've continuously delevered, and we've gotten down to 4.3x as of this most recent quarter. But I think the more important thing I would say on the decision tree was we were very clear based on where interest rates were, and interest rates were pretty volatile at that time too, that if interest rates remained at the level at which they were, we would just refinance existing debt load while growing earnings and naturally deleverage. If interest rates did go up, we would actually reduce our leverage, but partial debt pay down. Since that time, I think what we've seen is interest rates have been volatile. The 10-year was about 4.2% at that time. Now it's probably close to somewhere in the same range, 4.2%-4.3%. I think that decision tree does not change. I think the part that I wanted to really address in the prepared remarks is we stay very consistent in returning capital to shareholders and returning value to shareholders. We've been very committed to the dividend. We've actually raised it by 15% this year. But on average, over the last decade, has been going up about 20% annually. Share repurchases is another vehicle that we actually believe delivers great value to shareholders over a period of time. We're committed. We talked about the share repurchase authorization that we had approved by the board, and we will lean in, but with discipline. We will make sure that from a decision tree perspective, we're paying very close attention to where interest rates are. We will be paying attention to where market volatility is. We believe that by staying close to that low end of the 4x that we've talked about, we've demonstrated that we will stay disciplined. I think the repurchase, in addition to what Sandeep talked about, is driven by a belief. It's driven by belief in the Domino's brand, a belief in what we can do over the long term, and a belief that's a right spend on behalf of our shareholders. Thank you. Our next question comes from Sara Senatore with Bank of America. Your line is open. Thank you. Maybe two clarifications. The first is, you know, you mentioned excluding the headwind from the DPE comp, you would have met expectations. I guess DPE has been a drag now for, I think, probably three years. You know, is there a point at which you think about perhaps lowering the long term algo or the growth for the international market, just because it seems like it's been a drag either from a unit or comps perspective for a while. The other follow-up is you mentioned promotional impact is kind of transitory, which makes sense. Is this related to the closures? Is it possible that sort of the remaining stores are healthier or conversely that maybe it's kind of the last gasp of you know, struggling competitors? Just, you know, Russell, especially given how much perspective you have, you know, I guess, how long does this type of thing last in the context of, you know, pressured margins? Thanks. Thanks, Sara. The potential for the markets that DPE is in long term and short term is far too big for us to ever think about taking down long-term guidance. What we need to be focused on is helping them untap that potential, one that they had been doing for a long time, but they're clearly not doing now. I talked before about value. We're in constant conversations with them. You know, one of the things that Jack Cowin talked about on a couple of calls ago is that they're open to looking at changing the structure of their portfolio, maybe what markets they own versus don't own. You should know that we've got contractual powers that you know we can leverage as well to drive change, and we're gonna be doing all of those things. The long term for the market that DPE has is way too high for us not to continue to tap that. I think just on the promotional impact being potentially transitory. Yeah, I mean, I think what we expect is the promotional intensity is high as potentially store closures are looming and maybe there's some leaning in that's going on. Regardless of whether it's short term or not, I think the sustainability of that promotion is not gonna work for the franchisee profitability of the competition. Either the stores will end up closing or they'll have to stop doing the promotions because they can't afford the profits. You're talking about the U.S. business. U.S. business. Yeah, I just want to be clear, that's about the U.S. business. Really back to what I was talking about before, which is potentially in addition to some of the kind of the external headwinds, competition was a headwind for us in the quarter. I actually really do truly think this will be a long-term tailwind because this is doing damage to the P&L of, I believe, of their franchisees. Thank you. Our next question comes from Jon Tower with Citi. Your line is open. Great. Thanks for taking the question. Maybe just first, starting on the expectation for the macro in your guidance. Are you effectively just carrying forward what you saw in the month of March for the balance of the year? Secondarily, obviously, the channel shift between delivery and carryout will impact mix, but what else is going on with check in your business in the U.S.? Jon, I think you’re right. I think your question actually framed exactly how we’re thinking about guidance. I think we’ve taken into account the incremental pressure that we saw in the macro into the guidance that we’ve updated this time, and that’s the base assumption. I think in terms of channel shifts, delivery and carryout, we’re expecting to grow both businesses. I think when we look at this year and all the things that we’re planning on, we’re looking to have a balance between ticket and order count growth. I think that’s embedded in our assumptions. That really didn’t change. I think the timing of when all those sales would come have obviously shifted a little bit based on how we started the first quarter. That's pretty much how we're thinking about the year. Yeah. I just maybe saying it in a little bit of a different way. The guidance, you know, has been updated. The goals have not been updated at all. That's our job this year, and that's what we're doing in moving around things on the calendar. Everything that we are focused on is delivering on the goal, which is the high end of that guidance. Thank you. Our next question comes from Brian Harbour with Morgan Stanley. Your line is open. Yeah, good morning, guys. I'm curious if you think, you know, advertising effectiveness has changed to some extent. I mean, was it less in the quarter? How people respond to that and how people respond to some of the deal-driven advertising, is that something that you plan to change as you go through the year, or is this more just about kind of new products? Yeah, Brian, we can get better in everything that we do in all aspects of our business. Absolutely are we gonna continue to drive the renowned value and come up with, you know, new products. Our job is to develop great stories that supersede, or build upon what is great value or, great innovation. You know, our CMO, Kate Trumbull, is working very closely with the advertising agency. I mean, the light's on every evening, here. I know not only some of the products on the calendar, but I know some of the stories on the calendar. You may know my first job here at the company was Chief Marketing Officer, and I am really excited about the stories we're gonna tell. It's not just spending the most amount of money, although that certainly helps. It's on top of the money, it's having the most compelling stories, and we're gonna do both of those things in the second half of the year. Thank you. Our next question comes from Chris Carril with KeyBanc Capital Markets. Your line is open. Hi, good morning. Thanks for the question. Can you expand a bit more on the margin outlook for both the supply chain business and your company-owned stores, for the balance of the year? You know, maybe puts and takes around the food cost basket, potential impact from higher energy costs, and maybe for the supply chain, how you're thinking about productivity gains at this point. And then specifically just on the company-owned store margins. I think they seem to come in a little bit lower than anticipated in the 1Q. So just curious how you're thinking about the various dynamics impacting the company store margins in the 1Q as, you know, we're thinking about the balance of the year here. Thanks. Thanks for the question, Chris. Let me start with the supply chain margins, and I think this is a story that's been really very strong for the last few years, and I think we're really proud of the work the team is actually doing on the supply chain side to actually navigate some of the cost pressures that we're seeing in the current environment as well. We've actually been driving a lot of procurement productivity and the team keeps on pushing hard to actually get more value out of that business, and that's showing up in the profit growth that you're seeing on the margins over there. Also I think we're driving gross profit dollar growth on the back of the volume that we actually are continuing to drive and expect to drive. I'd say that's the supply chain business and our expectation for the year is to see positive margin outlooks on the supply chain business as we talked about in February. I'm gonna now go to the company stores. The company stores, there's a subtle tweak that we made in the earnings release. We actually did not talk about that as one of the KPIs from a profit perspective and a profit margin perspective. We have the disclosure in the Form 10-Q. The reason this was the case was, this was really. It's becoming less and less material. Last year, we still had Maryland in the portfolio, but we did refranchise it. As we actually get to a place where the size of the portfolio of company stores is less, it's less material to the profitability of the company. That's why we keep the disclosure on the Form 10-Q, but I think the read-through to what's happening in our franchisees really isn't there when we only have five markets in which we're operating. Again, we had some discrete issues that we dealt with in the first quarter. We had some pressure from labor, we had some pressure from the food basket, which actually was impacting on the business. We had some pressures on insurance as well, as we outlined. Really speaking, when we look at the big picture on the total company, we feel like this is not that material to what's gonna happen to the company. We believe that operating margins will continue to expand this year at the company level and where we feel pretty good about where that's going as we manage the puts and takes between the revenues and investments we need to make in the P&L to drive profit growth for the company. Maybe just to add to that, Sandeep, the company store profit is not reflective of the profit for our franchisees, which continues to be strong. Thank you. Our final question comes from Jeffrey Bernstein with Barclays. Your line is open. Great. Thank you very much. Just wanted to talk again about the U.S. competition. I know Russell, you noted the intensification, but yet good to see your increase in confidence taking share. I was hoping to maybe look a little bit more at the broader QSR segment. I mean, I know your largest pizza peers are increasingly aggressive on value, but it seems like the QSR peers with their values and deals, and they have lots more outlets. And I know I'm guessing they're better positioned in terms of their franchisee health to be able to offer extended value without having to see closures. So maybe that's a potential risk to the historical 1%-2% pizza category growth if we see again all the big burger and chicken players more sustainably pushing value, which seems to be on their agenda. Any color there would be great. Thank you. Yeah, Jeff, you know, certainly what you're seeing throughout the industry is competitors, both pizza and non-pizza, giving customers what they want. You know, we actually talked about this last year. If you remember, there was a lot of value pressure last year, and one of the things I said was, you know, you need to give customers not just value for value's sake, but they need to value the things that you're putting value on. That's why we were so excited about, and continue to be so excited about promotions like Best Deal Ever, because there it's not, hey, I want a large pizza, you're gonna give me a small pizza at a discount. It's we're gonna give you the large pizza at a discount. What I think you're starting to see this year is competition, pizza and non-pizza, realizing they need to do the same thing. You know, at the end of the day, I think what that allows us to do is not only continue, like, continue to put pressure on our competition and continue to grow there, but also, you know, just this value environment is not gonna change, I don't believe for the rest of this year. When I look at our Q1 results and we look at some of the macros, we didn't see non-pizza be a significant impact. If we did, we would've called it out. Yeah, I think we're gonna just have a year where we're gonna continue to compete, and I'm really glad we have the resources and our franchisees have the resources to do that. Thank you, Jeff. That was our last question of the call. I wanna thank you all for joining our call today, and we look forward to speaking to you all again soon. You may now disconnect.