Carbon Black, Inc. (NASDAQ:CBLK) Q2 2018 Earnings Conference Call - Final Transcript

Aug 07, 2018 • 05:00 pm ET

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Carbon Black, Inc. (NASDAQ:CBLK) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Steve Ritchie

Pizza category give us confidence that together, we can successfully move through this period.

Now let me turn to Q2 and our five strategic priorities. Our North America comp sales were down 6.1% to consumer and brand sentiment challenges that have carried over since the November 2017 earnings call. While we are disappointed with these results, we believe we understand what needs to be done and that our culture commitments, new brand positioning and five operating priorities will support better results in the future.

On the marketing front, the research and analysis we conducted after the NFL comments by our founder in November of 2017 have made it clear that we needed to move away from a founder-centric marketing plan. Obviously, the recent events have further evidenced that we need to move on. To assist us in the revitalization of our brand, we've retained the service of new creative and PR agencies, and I will discuss in greater detail shortly.

As I mentioned earlier, the foundation of our success is quality people and quality pizza, and this foundation remains intact. During the quarter, the 2018 American Customer Satisfaction Index ACSI was released. Papa John's ranked number one among QSR pizza brands and product quality, service quality, received overall quality and accuracy of order. I want to personally thank and congratulate all our dedicated operators and team members for supporting this significant achievement.

For International, our total sales grew 12% during the quarter, yet comp sales were down 0.8%. These results continued to be negatively impacted by the UK and the Middle East. To adapt in the UK, we are refining our marketing message and have made additional management changes. Over the past three months, we have hired Liz Williams as the new Marketing Director of the entire business unit, as well as a new Marketing Director. Liz is a seasoned marketing manager with experience across a variety of QSR and casual dining brands and brings with her a clear understanding of the marketplace and customer expectations. We are confident that she will help us to refine and adapt our offerings to enhance our relevance in the UK. We are excited about the future of this important growth market, which is now approaching 400 restaurants and continues to expand.

In the Middle East, we continue to work with one of our larger franchisees as they evaluate their ownership options. Ultimately, we expect these restaurants to remain part of our franchise footprint within the Middle East. In Beijing and Tianjin, China, we completed the sale of our 34 company-owned restaurants on June 15. While this took longer-than-anticipated, we believe it was worth to wait to find an experienced operator to drive the brand forward in the region. Our international restaurants are now 100% franchised and we do not expect to own any international restaurants going forward.

Throughout much of the rest of the world, we continue to see strong sales and unit growth, including in Europe and Latin America. Our new markets