News Release Details

Darden Restaurants Reports Fiscal 2019 Second Quarter Results and Increases Financial Outlook For The Full Fiscal Year

December 18, 2018

ORLANDO, Fla., Dec. 18, 2018 /PRNewswire/ -- Darden Restaurants, Inc., (NYSE: DRI) today reported its financial results for the second quarter ended November 25, 2018.

Second Quarter 2019 Financial Highlights, Comparisons Versus Same Fiscal Quarter Last Year

  • Total sales increased 4.9% to $1.97 billion driven by the addition of 40 net new restaurants and a blended same-restaurant sales increase of 2.1%
  • Same-restaurant sales by brand:

+3.5% for Olive Garden


-4.0% for Cheddar's Scratch Kitchen


+2.9% for LongHorn Steakhouse


-1.1% for Yard House


+3.7% for The Capital Grille


-0.8% for Seasons 52


+0.9% for Eddie V's


-1.1% for Bahama Breeze

  • Reported diluted net earnings per share from continuing operations increased 29.6% to $0.92 and increased 26.0% from last year's adjusted diluted net earnings per share*
  • The Company repurchased approximately $61 million of its outstanding common stock

* See "Non-GAAP Information" below for more details

"We had another quarter of strong and steady performance by continuing to focus on being brilliant with the basics in our restaurants," said CEO Gene Lee. "We continued to grow market share profitably by strengthening and leveraging our competitive advantages, and our brands are making the appropriate investments while managing costs effectively."

Segment Performance
Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses.



Q2 Sales




Q2 Segment Profit



($ in millions)


2019


2018


% Change


2019


2018


% Change

Consolidated Darden


$1,973.4


$1,881.5


4.9

%







Olive Garden


$998.1


$951.6


4.9

%


$184.5


$167.6


10.1

%

LongHorn Steakhouse


$412.6


$387.7


6.4

%


$65.9


$60.5


8.9

%

Fine Dining


$146.7


$140.6


4.3

%


$29.6


$27.1


9.2

%

Other Business


$416.0


$401.6


3.6

%


$48.7


$51.4


(5.3)

%
















YTD Sales




YTD Segment Profit



($ in millions)


2019


2018


% Change


2019


2018


% Change

Consolidated Darden


$4,034.8


$3,817.6


5.7

%







Olive Garden


$2,050.1


$1,941.4


5.6

%


$402.7


$366.7


9.8

%

LongHorn Steakhouse


$842.9


$792.1


6.4

%


$136.1


$124.0


9.8

%

Fine Dining


$276.7


$262.8


5.3

%


$50.3


$46.4


8.4

%

Other Business


$865.1


$821.3


5.3

%


$114.0


$117.3


(2.8)

%

U.S. Same-Restaurant Sales Results


Q2

YTD


Olive
Garden

LongHorn
Steakhouse

Olive
Garden

LongHorn
Steakhouse

Same-Restaurant Sales

3.5%

2.9%

4.4%

3.0%

Same-Restaurant Traffic

(0.8)%

(0.1)%

0.4%

(0.2)%

Pricing

1.9%

1.7%

1.9%

1.6%

Menu-mix

2.4%

1.3%

2.1%

1.6%

Share Repurchase Program
During the quarter, the Company repurchased approximately 0.6 million shares of its common stock for a total cost of approximately $61 million. As of the end of the fiscal second quarter, the Company had approximately $419 million remaining under the current $500 million repurchase authorization.

Updated Fiscal 2019 Financial Outlook
The Company updated its fiscal 2019 forecast for same-restaurant sales growth to approximately 2.5% and its outlook for diluted net earnings per share from continuing operations to range between $5.60 and $5.70.  All other aspects of its financial outlook were reaffirmed.

Investor Conference Call
The Company will host a conference call and slide presentation on Tuesday, December 18 at 8:30 am ET to review its recent financial performance. To listen to the call live, please go to https://www.webcaster4.com/Webcast/Page/1007/28506 at least fifteen minutes early to register, download, and install any necessary audio software. Prior to the call, a slide presentation will be posted on the Investor Relations section of our website at: www.darden.com. For those who cannot access the Internet, please dial 1-888-396-9924 and enter passcode 3047110. For those who cannot listen to the live broadcast, a replay will be available shortly after the call.

About Darden
Darden is a restaurant company featuring a portfolio of differentiated brands that include Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's.  Our people equal our success, and we are proud to employ 180,000 team members in more than 1,700 restaurants.  Together, we create memorable experiences for nearly 390 million guests each year in communities across North America.  For more information, please visit www.darden.com.

Information About Forward-Looking Statements
Forward-looking statements in this communication regarding our expected earnings performance and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are first made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports. These risks and uncertainties include technology failures including failure to maintain a secure cyber network, food safety and food-borne illness concerns, the inability to hire, train, reward and retain restaurant team members or monitor and proactively respond to employee dissatisfaction, a failure to develop and recruit effective leaders,  litigation, unfavorable publicity, an inability or failure to manage the accelerated impact of social media, risks relating to public policy changes and federal, state and local regulation of our business, long-term and non-cancelable property leases, labor and insurance costs, failure to execute a business continuity plan following a disaster, health concerns including food-related pandemics or virus outbreaks, intense competition, failure to drive profitable sales growth, a lack of availability of suitable locations for new restaurants, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products and services, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including interest rates, disruptions in the financial markets, risks of doing business with franchisees, licensees and vendors in foreign markets, failure to protect our intellectual property, impairment in the carrying value of our goodwill or other intangible assets, failure of our internal controls over financial reporting and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

Non-GAAP Information
The information in this press release includes financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"), such as adjusted diluted net earnings per share from continuing operations. The Company's management uses these non-GAAP measures in its analysis of the Company's performance. The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information that is essential to a proper understanding of the operating results of the Company's businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP measures are included in this release.

Fiscal Q2 Reported to Adjusted Earnings Reconciliation


Q2 2019


Q2 2018

$ in millions, except EPS

Earnings Before Income Tax

Income Tax Expense

Net Earnings

Diluted Net Earnings Per
Share


Earnings Before Income Tax

Income Tax Expense

Net Earnings

Diluted Net Earnings Per Share

Reported Earnings from Continuing Operations

$135.3

$19.4

$115.9

$0.92


$113.4

$24.8

$88.6

$0.71

% Change vs Prior Year




29.6%






Adjustments:










Cheddar's integration expenses


4.2

1.4

2.8

0.02

Adjusted Earnings from Continuing Operations

$135.3

$19.4

$115.9

$0.92


$117.6

$26.2

$91.4

$0.73

% Change vs Prior Year




26.0%
























 

DARDEN RESTAURANTS, INC.

NUMBER OF COMPANY-OWNED RESTAURANTS



11/25/18

11/26/17

Olive Garden1

858

849

LongHorn Steakhouse

510

496

Cheddar's Scratch Kitchen

158

153

Yard House

75

68

The Capital Grille2

58

57

Bahama Breeze

41

39

Seasons 52

42

41

Eddie V's

20

19

Darden Continuing Operations

1,762

1,722

1Includes six locations in Canada for all periods presented.

2Includes one The Capital Burger restaurant in fiscal 2019.

                                                               

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share data)

(Unaudited)



Three Months Ended


Six Months Ended


11/25/2018


11/26/2017


11/25/2018


11/26/2017

Sales

$

1,973.4



$

1,881.5



$

4,034.8



$

3,817.6


Costs and expenses:








Food and beverage

563.3



542.9



1,146.6



1,098.1


Restaurant labor

662.4



622.4



1,341.7



1,246.6


Restaurant expenses

361.0



351.5



718.9



694.4


Marketing expenses

58.0



58.1



124.5



124.1


General and administrative expenses

95.1



98.9



199.6



196.9


Depreciation and amortization

82.8



78.8



163.5



154.9


Impairments and disposal of assets, net

2.7





2.8



(0.8)


Total operating costs and expenses

$

1,825.3



$

1,752.6



$

3,697.6



$

3,514.2


Operating income

148.1



128.9



337.2



303.4


Interest, net

12.8



15.5



25.9



30.5


Earnings before income taxes

135.3



113.4



311.3



272.9


Income tax expense

19.4



24.8



26.5



63.0


Earnings from continuing operations

$

115.9



$

88.6



$

284.8



$

209.9


Losses from discontinued operations, net of tax expense 
     (benefit) of $0.7, $(2.5), $(0.4) and $(3.5), respectively

(0.3)



(3.9)



(3.0)



(6.2)


Net earnings

$

115.6



$

84.7



$

281.8



$

203.7










Basic net earnings per share:








Earnings from continuing operations

$

0.94



$

0.72



$

2.30



$

1.69


Losses from discontinued operations

(0.01)



(0.03)



(0.03)



(0.05)


Net earnings

$

0.93



$

0.69



$

2.27



$

1.64


Diluted net earnings per share:








Earnings from continuing operations

$

0.92



$

0.71



$

2.26



$

1.66


Losses from discontinued operations



(0.04)



(0.02)



(0.05)


Net earnings

$

0.92



$

0.67



$

2.24



$

1.61


Average number of common shares outstanding:








Basic

123.9



123.6



123.9



124.4


Diluted

125.8



125.5



125.8



126.4


 

DARDEN RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions)



11/25/2018


5/27/2018


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

139.7



$

146.9


Receivables, net

80.5



83.7


Inventories

209.4



205.3


Prepaid income taxes

20.7



15.9


Prepaid expenses and other current assets

99.8



89.9


Assets held for sale

11.1



11.9


Total current assets

$

561.2



$

553.6


Land, buildings and equipment, net

2,521.1



2,429.8


Goodwill

1,183.7



1,183.7


Trademarks

950.8



950.8


Other assets

332.4



351.7


Total assets

$

5,549.2



$

5,469.6


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

301.3



$

277.0


Short-term debt

45.0




Accrued payroll

139.8



177.5


Accrued income taxes

4.5




Other accrued taxes

56.8



56.6


Unearned revenues

388.6



415.8


Other current liabilities

449.3



457.6


Total current liabilities

$

1,385.3



$

1,384.5


Long-term debt

927.1



926.5


Deferred income taxes

125.1



114.0


Deferred rent

339.2



318.0


Other liabilities

522.2



531.8


Total liabilities

$

3,298.9



$

3,274.8


Stockholders' equity:




Common stock and surplus

$

1,675.5



$

1,631.9


Retained earnings

662.5



657.6


Treasury stock

(7.8)



(7.8)


Accumulated other comprehensive income (loss)

(78.7)



(85.2)


Unearned compensation

(1.2)



(1.7)


Total stockholders' equity

$

2,250.3



$

2,194.8


Total liabilities and stockholders' equity

$

5,549.2



$

5,469.6


 

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



Six Months Ended


11/25/2018


11/26/2017

Cash flows—operating activities




Net earnings

$

281.8



$

203.7


Losses from discontinued operations, net of tax

3.0



6.2


Adjustments to reconcile net earnings from continuing operations to cash flows:




Depreciation and amortization

163.5



154.9


Stock-based compensation expense

31.6



18.1


Change in current assets and liabilities and other, net

(46.0)



(68.8)


Net cash provided by operating activities of continuing operations

$

433.9



$

314.1


Cash flows—investing activities




Purchases of land, buildings and equipment

(233.0)



(197.7)


Proceeds from disposal of land, buildings and equipment

0.8



3.1


Cash used in business acquisitions, net of cash acquired



(40.4)


Purchases of capitalized software and changes in other assets, net

(9.6)



(5.8)


Net cash used in investing activities of continuing operations

$

(241.8)



$

(240.8)


Cash flows—financing activities




Proceeds from issuance of common stock

41.7



17.4


Dividends paid

(186.0)



(157.0)


Repurchases of common stock

(92.3)



(188.9)


Proceeds from issuance of short-term debt, net

45.0



153.5


Principal payments on capital and financing leases

(3.2)



(2.3)


Other, net

0.1



(8.2)


Net cash used in financing activities of continuing operations

$

(194.7)



$

(185.5)


Cash flows—discontinued operations




Net cash used in operating activities of discontinued operations

(4.6)



(6.2)


Net cash used in discontinued operations

$

(4.6)



$

(6.2)






Decrease in cash and cash equivalents

(7.2)



(118.4)


Cash and cash equivalents - beginning of period

146.9



233.1


Cash and cash equivalents - end of period

$

139.7



$

114.7


 

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SOURCE Darden Restaurants, Inc.: Financial