News Release Details

Darden Restaurants Reports Fiscal 2019 Third Quarter Results; Increases Financial Outlook For The Full Fiscal Year; And Declares Regular Quarterly Dividend

March 21, 2019

ORLANDO, Fla., March 21, 2019 /PRNewswire/ -- Darden Restaurants, Inc., (NYSE: DRI) today reported its financial results for the third quarter ended February 24, 2019.

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

  • Total sales increased 5.5% to $2.25 billion driven by the addition of 39 net new restaurants and a blended same-restaurant sales increase of 2.8%
  • Same-restaurant sales by brand:

+4.3% for Olive Garden


-2.7% for Cheddar's Scratch Kitchen


+3.8% for LongHorn Steakhouse


-2.1% for Yard House


+4.3% for The Capital Grille


-1.3% for Seasons 52


+3.7% for Eddie V's


-3.7% for Bahama Breeze

  • Reported diluted net earnings per share from continuing operations increased 3.4% to $1.80 and increased 5.3% from last year's adjusted diluted net earnings per share*
  • The Company repurchased approximately $74 million of its outstanding common stock

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

"Our strong top-line results exceeded the industry this quarter resulting in significant market share gains," said CEO Gene Lee. "This sales performance, coupled with strong operating profit growth, is a testament to our strategy and the outstanding focus and execution by our restaurant teams who create exceptional dining experiences for our guests every day."

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



Q3 Sales




Q3 Segment Profit



($ in millions)


2019


2018


% Change


2019


2018


% Change

Consolidated Darden


$2,246.5


$2,128.4


5.5

%







Olive Garden


$1,130.2


$1,073.2


5.3

%


$247.0


$226.7


9.0

%

LongHorn Steakhouse


$483.2


$452.8


6.7

%


$96.4


$89.9


7.2

%

Fine Dining


$174.5


$164.4


6.1

%


$44.3


$40.3


9.9

%

Other Business


$458.6


$438.0


4.7

%


$67.5


$65.5


3.1

%
















YTD Sales




YTD Segment Profit



($ in millions)


2019


2018


% Change


2019


2018


% Change

Consolidated Darden


$6,281.3


$5,946.0


5.6

%







Olive Garden


$3,180.3


$3,014.6


5.5

%


$649.7


$593.4


9.5

%

LongHorn Steakhouse


$1,326.2


$1,245.0


6.5

%


$232.5


$214.0


8.6

%

Fine Dining


$451.2


$427.1


5.6

%


$94.5


$86.6


9.1

%

Other Business


$1,323.6


$1,259.3


5.1

%


$181.6


$182.8


(0.7)

%

U.S. Same-Restaurant Sales Results


Q3

YTD


Olive
Garden

LongHorn
Steakhouse

Olive
Garden

LongHorn
Steakhouse

Same-Restaurant Sales

4.3%

3.8%

4.4%

3.3%

Same-Restaurant Traffic

0.1%

0.5%

0.3%

0.0%

Pricing

1.8%

1.8%

1.9%

1.7%

Menu-mix

2.4%

1.5%

2.2%

1.6%

Dividend Declared
Darden's Board of Directors declared a regular quarterly cash dividend of $0.75 per share on the Company's outstanding common stock. The dividend is payable on May 1, 2019 to shareholders of record at the close of business on April 10, 2019.

Share Repurchase Program
During the quarter, the Company repurchased approximately 0.7 million shares of its common stock for a total cost of approximately $74 million. Fiscal year-to-date, the Company repurchased approximately 1.6 million shares of its common stock for a total cost of approximately $166 million. As of the end of the fiscal third quarter, the Company had approximately $346 million remaining under the current $500 million repurchase authorization.

Updated Fiscal 2019 Financial Outlook
The Company increased its financial outlook for fiscal 2019 based on year-to-date results and its expected performance for the fourth quarter.


Current (03/21/19)

Prior (12/18/18)

Total sales growth

Approx. 5.5%

5.0% to 5.5%

Same-restaurant sales growth

2.5% to 2.7%

 Approx. 2.5%

Effective tax rate

Approx. 10%

10% to 11%

Diluted net earnings per share from continuing operations

$5.76 - $5.80

$5.60 - $5.70

Diluted average common shares outstanding for the year

125M to 126M

Approx. 126M

Investor Conference Call
The Company will host a conference call and slide presentation on Thursday, March 21 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/1007/29533 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 Q3 Reported to Adjusted Earnings Reconciliation


Q3 2019


Q3 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 (Benefit)

Net Earnings

Diluted
Net Earnings Per
Share

Reported Earnings from Continuing Operations

$253.1

$28.0

$225.1

$1.80


$116.0

$(102.5)

$218.5

$1.74

% Change vs Prior Year




3.4

%






Adjustments:










Debt retirement costs






102.2


33.6


68.6


0.54


Net benefit of deferred tax revaluation







77.3


(77.3)


(0.61)


Cheddar's integration expenses






6.7


1.4


5.3


0.04


Adjusted Earnings from Continuing Operations

$253.1

$28.0

$225.1

$1.80


$224.9

$9.8

$215.1

$1.71

% Change vs Prior Year




5.3

%







 

DARDEN RESTAURANTS, INC.

NUMBER OF COMPANY-OWNED RESTAURANTS



2/24/19

2/25/18

Olive Garden1

860


853


LongHorn Steakhouse

512


499


Cheddar's Scratch Kitchen

159


154


Yard House

78


71


The Capital Grille2

58


57


Bahama Breeze

42


39


Seasons 52

43


41


Eddie V's

20


19


Darden Continuing Operations

1,772


1,733


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


Nine Months Ended


2/24/2019


2/25/2018


2/24/2019


2/25/2018

Sales

$

2,246.5



$

2,128.4



$

6,281.3



$

5,946.0


Costs and expenses:








Food and beverage

638.0



603.3



1,784.6



1,701.4


Restaurant labor

711.4



683.0



2,053.1



1,929.6


Restaurant expenses

379.5



360.8



1,098.4



1,055.2


Marketing expenses

62.4



58.9



186.9



183.0


General and administrative expenses

102.8



110.1



302.4



307.0


Depreciation and amortization

85.3



79.2



248.8



234.1


Impairments and disposal of assets, net

1.6



(0.3)



4.4



(1.1)


Total operating costs and expenses

$

1,981.0



$

1,895.0



$

5,678.6



$

5,409.2


Operating income

265.5



233.4



602.7



536.8


Interest, net

12.4



117.4



38.3



147.9


Earnings before income taxes

253.1



116.0



564.4



388.9


Income tax expense

28.0



(102.5)



54.5



(39.5)


Earnings from continuing operations

$

225.1



$

218.5



$

509.9



$

428.4


Losses from discontinued operations, net of tax benefit of $0.8, 
     $0.5, $1.3 and $4.0, respectively

(1.5)



(0.7)



(4.5)



(6.9)


Net earnings

$

223.6



$

217.8



$

505.4



$

421.5










Basic net earnings per share:








Earnings from continuing operations

$

1.83



$

1.77



$

4.12



$

3.45


Losses from discontinued operations

(0.02)



(0.01)



(0.03)



(0.06)


Net earnings

$

1.81



$

1.76



$

4.09



$

3.39


Diluted net earnings per share:








Earnings from continuing operations

$

1.80



$

1.74



$

4.06



$

3.40


Losses from discontinued operations

(0.01)



(0.01)



(0.04)



(0.06)


Net earnings

$

1.79



$

1.73



$

4.02



$

3.34


Average number of common shares outstanding:








Basic

123.3



123.6



123.7



124.2


Diluted

125.0



125.7



125.6



126.1


 

DARDEN RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions)



2/24/2019


5/27/2018


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

302.9



$

146.9


Receivables, net

73.9



83.7


Inventories

209.5



205.3


Prepaid income taxes

5.2



15.9


Prepaid expenses and other current assets

95.7



89.9


Assets held for sale



11.9


Total current assets

$

687.2



$

553.6


Land, buildings and equipment, net

2,539.9



2,429.8


Goodwill

1,183.7



1,183.7


Trademarks

950.8



950.8


Other assets

336.2



351.7


Total assets

$

5,697.8



$

5,469.6


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

303.2



$

277.0


Accrued payroll

163.3



177.5


Accrued income taxes

7.3




Other accrued taxes

50.5



56.6


Unearned revenues

471.7



415.8


Other current liabilities

446.9



457.6


Total current liabilities

$

1,442.9



$

1,384.5


Long-term debt

927.4



926.5


Deferred income taxes

130.7



114.0


Deferred rent

346.5



318.0


Other liabilities

534.6



531.8


Total liabilities

$

3,382.1



$

3,274.8


Stockholders' equity:




Common stock and surplus

$

1,676.8



$

1,631.9


Retained earnings

728.4



657.6


Treasury stock

(7.8)



(7.8)


Accumulated other comprehensive income (loss)

(81.0)



(85.2)


Unearned compensation

(0.7)



(1.7)


Total stockholders' equity

$

2,315.7



$

2,194.8


Total liabilities and stockholders' equity

$

5,697.8



$

5,469.6


 

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



Nine Months Ended


2/24/2019


2/25/2018

Cash flows—operating activities




Net earnings

$

505.4



$

421.5


Losses from discontinued operations, net of tax

4.5



6.9


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




Depreciation and amortization

248.8



234.1


Stock-based compensation expense

45.3



32.2


Loss on extinguishment of debt



102.2


Change in current assets and liabilities and other, net

116.0



(45.9)


Net cash provided by operating activities of continuing operations

$

920.0



$

751.0


Cash flows—investing activities




Purchases of land, buildings and equipment

(346.9)



(294.9)


Proceeds from disposal of land, buildings and equipment

12.7



3.3


Cash used in business acquisitions, net of cash acquired



(40.4)


Purchases of capitalized software and changes in other assets, net

(15.5)



(10.3)


Net cash used in investing activities of continuing operations

$

(349.7)



$

(342.3)


Cash flows—financing activities




Proceeds from issuance of common stock

45.4



35.5


Dividends paid

(278.4)



(234.9)


Repurchases of common stock

(166.0)



(207.6)


Proceeds from issuance of short-term debt, net



50.6


Repayment of long-term debt



(408.2)


Proceeds from issuance of long-term debt



300.0


Principal payments on capital and financing leases

(4.9)



(3.9)


Other, net

0.1



(11.5)


Net cash used in financing activities of continuing operations

$

(403.8)



$

(480.0)


Cash flows—discontinued operations




Net cash used in operating activities of discontinued operations

(10.5)



(15.2)


Net cash provided by investing activities of discontinued operations



0.2


Net cash used in discontinued operations

$

(10.5)



$

(15.0)






Increase (decrease) in cash and cash equivalents

156.0



(86.3)


Cash and cash equivalents - beginning of period

146.9



233.1


Cash and cash equivalents - end of period

$

302.9



$

146.8


 

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SOURCE Darden Restaurants, Inc.: Financial