News Release Details

Darden Restaurants Reports Fiscal 2021 Second Quarter Results; Announces Quarterly Dividend; And Provides Fiscal 2021 Third Quarter Outlook

December 18, 2020

ORLANDO, Fla., Dec. 18, 2020 /PRNewswire/ -- Darden Restaurants, Inc., (NYSE:DRI) today reported its financial results for the second quarter ended November 29, 2020.

Second Quarter 2021 Financial Highlights, Comparisons to Second Quarter Last Year

  • Total sales of $1.66 billion, a decrease of 19.4% driven by negative blended same-restaurant sales of 20.6% and partially offset by the addition of 19 net new restaurants
  • Same-restaurant sales by segment (Thanksgiving Day shifted to the last week of our second fiscal quarter this year from the first week of our third fiscal quarter last year):

(19.9)% for Olive Garden


(31.0)% for Fine Dining


(11.1)% for LongHorn Steakhouse


(28.6)% for Other Business

  • Reported diluted net earnings per share from continuing operations were $0.74 as compared to last year's reported diluted net earnings per share of $0.21 and last year's adjusted diluted net earnings per share of $1.12*
  • Reported net earnings from continuing operations of $97 million
  • EBITDA of $206 million*

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

"I was pleased with our ability to once again deliver strong profitability in an unpredictable sales environment," said CEO Gene Lee. "Our restaurant teams continue to demonstrate remarkable flexibility and resilience, while executing at a high level and serving our guests safely. We continue to view this environment as a rare opportunity to meaningfully transform our business for long-term growth. Our brands made additional strides to invest in and strengthen their businesses to ensure they emerge even stronger and better positioned to grow share."

Segment Performance
Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses.  Segment profit excludes non-cash real estate related expenses.



Q2 Sales




Q2 Segment Profit



($ in millions)


2021


2020


% Change


2021


2020


% Change

Consolidated Darden


$1,656.5


$2,056.4


(19.4)

%







Olive Garden


$829.5


$1,023.6


(19.0)

%


$175.1


$190.3


(8.0)

%

LongHorn Steakhouse


$407.4


$447.3


(8.9)

%


$66.3


$71.9


(7.8)

%

Fine Dining


$108.1


$154.8


(30.2)

%


$20.3


$30.4


(33.2)

%

Other Business


$311.5


$430.7


(27.7)

%


$39.3


$47.7


(17.6)

%



YTD Sales




YTD Segment Profit



($ in millions)


2021


2020


% Change


2021


2020


% Change

Consolidated Darden


$3,183.9


$4,190.3


(24.0)

%







Olive Garden


$1,617.7


$2,113.8


(23.5)

%


$348.9


$419.2


(16.8)

%

LongHorn Steakhouse


$784.1


$897.5


(12.6)

%


$123.3


$146.4


(15.8)

%

Fine Dining


$191.2


$291.1


(34.3)

%


$30.2


$50.7


(40.4)

%

Other Business


$590.9


$887.9


(33.4)

%


$75.0


$112.1


(33.1)

%

Business Update
Comparable calendar* same-restaurant sales performance for Darden, Olive Garden and LongHorn Steakhouse for the weeks listed below are as follows:

Weeks Ended

11/8/20

11/15/20

11/22/20

11/29/20

12/6/20

12/13/20

Darden

(23.4)

%

(23.3)

%

(29.1)

%

(34.0)

%

(33.4)

%

(36.9)

%

Olive Garden

(21.9)

%

(22.5)

%

(27.3)

%

(34.9)

%

(31.1)

%

(32.6)

%

LongHorn Steakhouse

(12.0)

%

(12.1)

%

(18.5)

%

(22.9)

%

(19.5)

%

(23.3)

%

* Comparable calendar reflects same-restaurant growth for the weeks ended November 8, 2020 through December 13, 2020 compared to weeks ended November 10, 2019 through December 15, 2019

Percentage of restaurants open with at least limited dining room capacity for the entire week:

Weeks Ended

11/8/20

11/15/20

11/22/20

11/29/20

12/6/20

12/13/20

Darden

92.0

%

91.7

%

80.9

%

79.7

%

79.7

%

75.4

%














Sales for Olive Garden and LongHorn Steakhouse restaurants open with at least limited dining room capacity for the entire week, including To Go sales, for the weeks ended November 8, 2020 through December 13, 2020, are as follows:

Weeks Ended

11/8/20

11/15/20

11/22/20

11/29/20

12/6/20

12/13/20

Olive Garden







Total Sales per Restaurant

$75,492

$77,098

$71,495

$59,282

$75,851

$80,740

To Go Sales as % of Total

34.4

%

34.8

%

36.4

%

34.0

%

36.6

%

36.8

%

Comparable Calendar* Same-Restaurant Sales %

(19.1)

%

(19.7)

%

(19.8)

%

(25.6)

%

(21.8)

%

(23.3)

%

# of Restaurants

792

789

668

652

648

612








LongHorn Steakhouse







Total Sales per Restaurant

$62,447

$63,179

$58,541

$46,544

$60,195

$63,448

To Go Sales as % of Total

21.8

%

22.1

%

23.6

%

21.5

%

23.6

%

23.5

%

Comparable Calendar* Same-Restaurant Sales %

(10.5)

%

(10.6)

%

(15.3)

%

(18.2)

%

(14.7)

%

(17.4)

%

# of Restaurants

498

498

470

468

467

436

* Comparable calendar reflects same-restaurant growth for the weeks ended November 8, 2020 through December 13, 2020 compared to weeks ended November 10, 2019 through December 15, 2019

Dividend Declared
Darden's Board of Directors declared a quarterly cash dividend of $0.37 per share on the Company's outstanding common stock. The dividend is payable on February 1, 2021 to shareholders of record at the close of business on January 8, 2021.

Fiscal 2021 Third Quarter Financial Outlook
Based on recent performance trends, uncertainty surrounding further capacity limits and dining room closures, and the duration of these impacts we are providing a broad range of expectations for third quarter performance.

  • Total sales between 65% to 70% of prior year
  • EBITDA of $170 to $210 million*
  • Diluted net earnings per share from continuing operations of $0.50 to $0.75
  • Approximately 132 million weighted average diluted shares outstanding

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

The Company is reiterating its full year outlook for 35-40 net new restaurants and total capital spending of $250 to $300 million.

Investor Conference Call
The Company will host a conference call and slide presentation on Friday, December 18 at 8:30 am ET to review its recent financial performance. To listen to the call live, please go tohttps://www.webcaster4.com/Webcast/Page/1007/38874 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 1-833-470-0145 and enter passcode 6365427. 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. 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 the impacts of the novel coronavirus (COVID-19) pandemic on our business and the response of governments and of our Company to the outbreak, health concerns including food-related pandemics or outbreaks of flu or other viruses, 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, a failure to develop and recruit effective leaders,  risks relating to public policy changes and federal, state and local regulation of our business, litigation, unfavorable publicity, an inability or failure to manage the accelerated impact of social media, long-term and non-cancelable property leases, labor and insurance costs, failure to execute a business continuity plan following a disaster, intense competition, changing consumer preferences, 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, volatility leading to the inability to hedge equity compensation market exposure, 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 and EBITDA. 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 2020

$ in millions, except EPS

Earnings
Before
Income
Tax

Income
Tax
Expense
(Benefit)

Net
Earnings

Diluted
Net
Earnings
Per Share

Reported Earnings from Continuing Operations

$(6.2)

$(31.6)

$25.4

$0.21

Adjustments:





Pension settlement charge1

147.1

36.2

110.9

0.90

International structure simplification

6.2

4.1

2.1

0.01

Adjusted Earnings from Continuing Operations

$147.1

$8.7

$138.4

$1.12

1 In November of fiscal 2020, we settled our benefit obligation to participants in our primary
noncontributory defined benefit pension plan as part of our termination of that plan,
resulting in a settlement charge.

 

Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) Reconciliation

$ in millions

Q2 2021

Reported Earnings from Continuing Operations

$96.9

Interest

14.6

Income Tax Expense

8.8

Depreciation and Amortization

86.0

EBITDA

$206.3

 

Fiscal 2021 Third Quarter EBITDA Outlook Reconciliation

$ in millions

Net Earnings

$66

to

$99

Interest, net

15


15

Income tax expense

1


8

Depreciation and amortization

88


88

EBITDA

$170

to

$210

 

DARDEN RESTAURANTS, INC.

NUMBER OF COMPANY-OWNED RESTAURANTS



11/29/20

11/24/19

Olive Garden

874


867


LongHorn Steakhouse

527


518


Cheddar's Scratch Kitchen

168


166


Yard House

81


79


The Capital Grille1

60


59


Seasons 52

43


45


Bahama Breeze

41


42


Eddie V's

24


23


Darden Continuing Operations

1,818


1,799


1Includes two The Capital Burger restaurants in fiscal 2021 and one in fiscal 2020.

                                                               

 

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share data)

(Unaudited)



Three Months Ended


Six Months Ended


11/29/2020


11/24/2019


11/29/2020


11/24/2019

Sales

$

1,656.5



$

2,056.4



$

3,183.9



$

4,190.3


Costs and expenses:








Food and beverage

475.1



583.0



909.6



1,186.3


Restaurant labor

535.5



692.3



1,036.2



1,396.1


Restaurant expenses

330.5



375.6



621.4



748.0


Marketing expenses

18.8



66.3



47.6



135.0


General and administrative expenses

89.9



91.4



218.2



189.4


Depreciation and amortization

86.0



87.6



173.6



173.8


Total operating costs and expenses

$

1,535.8



$

1,896.2



$

3,006.6



$

3,828.6


Operating income

120.7



160.2



177.3



361.7


Interest, net

14.6



13.1



31.2



24.2


Other (income) expense, net

0.4



153.3



7.9



153.3


Earnings before income taxes

105.7



(6.2)



138.2



184.2


Income tax expense (benefit)

8.8



(31.6)



4.0



(13.0)


Earnings from continuing operations

$

96.9



$

25.4



$

134.2



$

197.2


Losses from discontinued operations, net of tax benefit of $0.7,
$0.7, $1.6 and $0.9 respectively

(0.9)



(0.7)



(2.1)



(1.9)


Net earnings

$

96.0



$

24.7



$

132.1



$

195.3










Basic net earnings per share:








Earnings from continuing operations

$

0.74



$

0.21



$

1.03



$

1.61


Losses from discontinued operations



(0.01)



(0.01)



(0.02)


Net earnings

$

0.74



$

0.20



$

1.02



$

1.59


Diluted net earnings per share:








Earnings from continuing operations

$

0.74



$

0.21



$

1.02



$

1.59


Losses from discontinued operations

(0.01)



(0.01)



(0.01)



(0.02)


Net earnings

$

0.73



$

0.20



$

1.01



$

1.57


Average number of common shares outstanding:








Basic

130.3



122.2



130.1



122.5


Diluted

131.5



123.7



131.2



124.1


 

 

DARDEN RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions)



11/29/2020


5/31/2020


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

777.3



$

763.3


Receivables, net

46.2



49.8


Inventories

203.0



206.9


Prepaid income taxes

21.8



18.4


Prepaid expenses and other current assets

61.4



63.0


Total current assets

$

1,109.7



$

1,101.4


Land, buildings and equipment, net

2,776.0



2,756.9


Operating lease right-of-use assets

3,909.8



3,969.2


Goodwill

1,037.4



1,037.4


Trademarks

806.3



805.9


Other assets

288.4



275.3


Total assets

$

9,927.6



$

9,946.1


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

235.6



$

249.4


Short-term debt



270.0


Accrued payroll

130.0



150.0


Accrued income taxes

6.1



6.2


Other accrued taxes

47.6



43.4


Unearned revenues

439.9



467.9


Other current liabilities

686.9



605.9


Total current liabilities

$

1,546.1



$

1,792.8


Long-term debt

929.4



928.8


Deferred income taxes

45.1



56.1


Operating lease liability - non-current

4,222.8



4,276.3


Other liabilities

729.1



560.9


Total liabilities

$

7,472.5



$

7,614.9


Stockholders' equity:




Common stock and surplus

$

2,239.0



$

2,205.3


Retained earnings

223.2



143.5


Accumulated other comprehensive income (loss)

(7.1)



(17.6)


Total stockholders' equity

$

2,455.1



$

2,331.2


Total liabilities and stockholders' equity

$

9,927.6



$

9,946.1


 

 

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



Six Months Ended


11/29/2020


11/24/2019

Cash flows—operating activities




Net earnings

$

132.1



$

195.3


Losses from discontinued operations, net of tax

2.1



1.9


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




Depreciation and amortization

173.6



173.8


Stock-based compensation expense

41.4



28.0


Pension settlement charge



147.1


Change in current assets and liabilities and other, net

79.4



(103.0)


Net cash provided by operating activities of continuing operations

$

428.6



$

443.1


Cash flows—investing activities




Purchases of land, buildings and equipment

(108.2)



(256.5)


Proceeds from disposal of land, buildings and equipment

5.4



4.3


Cash used in business acquisitions, net of cash acquired



(37.0)


Purchases of capitalized software and changes in other assets, net

(6.9)



(20.5)


Net cash used in investing activities of continuing operations

$

(109.7)



$

(309.7)


Cash flows—financing activities




Proceeds from issuance of common stock

10.4



14.8


Dividends paid

(39.1)



(215.7)


Repurchases of common stock

(6.8)



(230.9)


Repayments of short-term debt

(270.0)




Principal payments on finance leases

(2.9)



(2.5)


Other, net



0.5


Net cash used in financing activities of continuing operations

$

(308.4)



$

(433.8)


Cash flows—discontinued operations




Net cash provided by operating activities of discontinued operations

3.5



0.4


Net cash provided by discontinued operations

$

3.5



$

0.4






Increase (decrease) in cash and cash equivalents

14.0



(300.0)


Cash and cash equivalents - beginning of period

763.3



457.3


Cash and cash equivalents - end of period

$

777.3



$

157.3


 

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SOURCE Darden Restaurants, Inc.: Financial