ORLANDO, Fla., Sept. 26, 2017 /PRNewswire/ -- Darden
Restaurants, Inc., (NYSE: DRI) today reported its financial results
for the first quarter ended August 27, 2017.
First Quarter 2018 Financial Highlights, Comparisons Versus
Same Fiscal Quarter Last Year
- Total sales increased 12.9% to $1.94
billion, including 11.2% growth from the addition of 141
Cheddar's Scratch Kitchen restaurants and 21 other net new
restaurants
- Blended same-restaurant sales from Darden's legacy brands
increased 1.7%
|
+1.9% for Olive
Garden
|
|
+2.0% for The Capital
Grille
|
|
-0.4% for Yard
House
|
|
+2.6% for LongHorn
Steakhouse
|
|
+2.5% for Eddie
V's
|
|
-2.2% for Seasons
52
|
|
|
|
|
|
+1.2% for Bahama
Breeze
|
- Same-restaurant sales for Cheddar's Scratch Kitchen were
-1.4%
- Reported diluted net earnings per share from continuing
operations increased 8.0% to $0.95
and were negatively impacted by approximately $0.04 related to Cheddar's Scratch Kitchen
integration expenses
- Adjusted diluted net earnings per share from continuing
operations increased 12.5% to $0.99*
- The Company repurchased approximately $100 million of its outstanding common stock
* See "Non-GAAP Information" below for more details
"Our focus on simplifying operations and providing an excellent
value for our core consumer continues to yield strong sales
growth," said CEO Gene Lee. "The
teams continue to make appropriate investments in their brands and
manage costs effectively. These actions have enabled Darden to
outperform the industry."
Segment Performance
Segment profit represents sales,
less costs for food and beverage, restaurant labor, restaurant
expenses and marketing expenses.
|
|
Q1
Sales
|
|
|
|
Q1 Segment
Profit
|
|
|
($ in
millions)
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
Consolidated
Darden
|
|
$1,936.1
|
|
$1,714.4
|
|
12.9
|
%
|
|
|
|
|
|
|
Olive
Garden
|
|
$989.9
|
|
$961.2
|
|
3.0
|
%
|
|
$199.1
|
|
$186.3
|
|
6.9
|
%
|
LongHorn
Steakhouse
|
|
$404.5
|
|
$386.3
|
|
4.7
|
%
|
|
$63.6
|
|
$60.1
|
|
5.8
|
%
|
Fine
Dining
|
|
$122.2
|
|
$114.2
|
|
7.0
|
%
|
|
$19.2
|
|
$16.9
|
|
13.6
|
%
|
Other
Business
|
|
$419.5
|
|
$252.7
|
|
66.0
|
%
|
|
$65.9
|
|
$44.7
|
|
47.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Same-Restaurant Sales Results
|
Q1
|
|
Olive Garden
|
LongHorn
Steakhouse
|
Same-Restaurant
Sales
|
1.9%
|
2.6%
|
Same-Restaurant
Traffic
|
(0.3)%
|
0.1%
|
Pricing
|
1.5%
|
1.5%
|
Menu-mix
|
0.7%
|
1.0%
|
|
|
|
|
Share Repurchase Program
During the quarter, the
Company repurchased approximately 1.2 million shares of its common
stock for a total cost of approximately $100
million. As of the end of the fiscal first quarter, the
Company had approximately $370
million remaining under the current $500 million repurchase authorization.
Fiscal 2018 Financial Outlook
The Company reaffirmed
its outlook for total sales growth of 11.5% to 13% driven by the
addition of Cheddar's Scratch Kitchen and other new restaurant
openings and same-restaurant sales growth from legacy Darden
brands of approximately 1.0% to 2.0%. The Company also
reaffirmed adjusted diluted net earnings per share from continuing
operations is expected to be in the range of $4.38 to $4.50.* This financial outlook includes
the expected full financial impact of Hurricanes Harvey and
Irma.
* See "Non-GAAP Information" below for more details
Investor Conference Call
The Company will host a
conference call and slide presentation on Tuesday,
September 26 at 8:30 am ET to
review its recent financial performance and reaffirm its financial
outlook for the full fiscal year. To listen to the call live,
please go to https://www.webcaster4.com/Webcast/Page/1007/22469 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 1-888-603-9230 and enter passcode 9992959. 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 more than 175,000 team members in over 1,700
restaurants. Together, we create memorable experiences for 380
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 the ability to successfully integrate
Cheddar's Scratch Kitchen operations into our business, technology
failures including failure to maintain a secure cyber network, food
safety and food-borne illness concerns, litigation, unfavorable
publicity, 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, an inability or failure to manage the accelerated
impact of social media, a failure to execute innovative marketing
tactics, a failure to develop and recruit effective leaders, 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 Q1 Reported
to Adjusted Earnings Reconciliation
|
|
Q1
2018
|
|
Q1
2017
|
$ 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
|
$159.5
|
$38.2
|
$121.3
|
$0.95
|
|
$151.4
|
$40.3
|
$111.1
|
$0.88
|
% Change vs Prior
Year
|
|
|
|
8.0%
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Cheddar's integration
expenses
|
6.4
|
2.2
|
4.2
|
0.04
|
|
—
|
—
|
—
|
—
|
Adjusted Earnings
from Continuing Operations
|
$165.9
|
$40.4
|
$125.5
|
$0.99
|
|
$151.4
|
$40.3
|
$111.1
|
$0.88
|
% Change vs Prior
Year
|
|
|
|
12.5%
|
|
|
|
|
|
|
|
Reconciliation of
Fiscal 2018 Reported to Adjusted Earnings Outlook
|
|
2018
|
Reported diluted
net earnings per share from continuing operations
|
$4.30
|
to
|
$4.44
|
Cheddar's integration
expenses
|
0.13
|
|
0.10
|
Income tax
expense
|
(0.05)
|
|
(0.04)
|
Adjusted diluted
net earnings per share from continuing operations
|
$4.38
|
to
|
$4.50
|
DARDEN
RESTAURANTS, INC.
|
NUMBER OF
COMPANY-OWNED RESTAURANTS
|
|
|
8/27/17
|
|
8/28/16
|
|
Olive
Garden1
|
847
|
|
843
|
|
LongHorn
Steakhouse
|
491
|
|
483
|
|
Cheddar's Scratch
Kitchen
|
141
|
|
—
|
|
Yard House
|
68
|
|
65
|
|
The Capital
Grille
|
56
|
|
56
|
|
Bahama
Breeze
|
38
|
|
36
|
|
Seasons 52
|
41
|
|
40
|
|
Eddie V's
|
19
|
|
16
|
|
Darden Continuing
Operations
|
1,701
|
|
1,539
|
|
1Includes
six locations in Canada for all periods presented.
|
DARDEN
RESTAURANTS, INC.
|
CONSOLIDATED
STATEMENTS OF EARNINGS
|
(In millions,
except per share data)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
8/27/2017
|
|
8/28/2016
|
Sales
|
$
|
1,936.1
|
|
|
$
|
1,714.4
|
|
Costs and
expenses:
|
|
|
|
Food and
beverage
|
555.2
|
|
|
493.2
|
|
Restaurant
labor
|
624.2
|
|
|
545.8
|
|
Restaurant
expenses
|
342.9
|
|
|
303.7
|
|
Marketing
expenses
|
66.0
|
|
|
63.7
|
|
General and
administrative expenses
|
98.0
|
|
|
87.7
|
|
Depreciation and
amortization
|
76.1
|
|
|
66.8
|
|
Impairments and
disposal of assets, net
|
(0.8)
|
|
|
(7.8)
|
|
Total operating costs
and expenses
|
$
|
1,761.6
|
|
|
$
|
1,553.1
|
|
Operating
income
|
174.5
|
|
|
161.3
|
|
Interest,
net
|
15.0
|
|
|
9.9
|
|
Earnings before
income taxes
|
159.5
|
|
|
151.4
|
|
Income tax
expense
|
38.2
|
|
|
40.3
|
|
Earnings from
continuing operations
|
$
|
121.3
|
|
|
$
|
111.1
|
|
Losses from
discontinued operations, net of tax benefit of $(1.0) and $(0.7),
respectively
|
(2.3)
|
|
|
(0.9)
|
|
Net
earnings
|
$
|
119.0
|
|
|
$
|
110.2
|
|
|
|
|
|
Basic net earnings
per share:
|
|
|
|
Earnings from
continuing operations
|
$
|
0.97
|
|
|
$
|
0.89
|
|
Losses from
discontinued operations
|
(0.02)
|
|
|
(0.01)
|
|
Net
earnings
|
$
|
0.95
|
|
|
$
|
0.88
|
|
Diluted net earnings
per share:
|
|
|
|
Earnings from
continuing operations
|
$
|
0.95
|
|
|
$
|
0.88
|
|
Losses from
discontinued operations
|
(0.02)
|
|
|
(0.01)
|
|
Net
earnings
|
$
|
0.93
|
|
|
$
|
0.87
|
|
Average number of
common shares outstanding:
|
|
|
|
Basic
|
125.2
|
|
|
124.9
|
|
Diluted
|
127.3
|
|
|
126.7
|
|
DARDEN
RESTAURANTS, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(In
millions)
|
|
|
8/27/2017
|
|
5/28/2017
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
146.8
|
|
|
$
|
233.1
|
|
Receivables,
net
|
57.6
|
|
|
75.9
|
|
Inventories
|
176.3
|
|
|
178.9
|
|
Prepaid income
taxes
|
2.9
|
|
|
6.2
|
|
Prepaid expenses and
other current assets
|
88.3
|
|
|
80.6
|
|
Assets held for
sale
|
11.1
|
|
|
13.2
|
|
Total current
assets
|
$
|
483.0
|
|
|
$
|
587.9
|
|
Land, buildings and
equipment, net
|
2,318.8
|
|
|
2,272.3
|
|
Goodwill
|
1,172.2
|
|
|
1,201.7
|
|
Trademarks
|
950.2
|
|
|
950.2
|
|
Other
assets
|
299.3
|
|
|
280.2
|
|
Total
assets
|
$
|
5,223.5
|
|
|
$
|
5,292.3
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
256.8
|
|
|
$
|
249.5
|
|
Accrued
payroll
|
123.9
|
|
|
149.1
|
|
Accrued income
taxes
|
11.5
|
|
|
1.9
|
|
Other accrued
taxes
|
61.9
|
|
|
54.2
|
|
Unearned
revenues
|
353.1
|
|
|
388.6
|
|
Other current
liabilities
|
451.1
|
|
|
445.9
|
|
Total current
liabilities
|
$
|
1,258.3
|
|
|
$
|
1,289.2
|
|
Long-term
debt
|
936.6
|
|
|
936.6
|
|
Deferred income
taxes
|
151.9
|
|
|
145.6
|
|
Deferred
rent
|
292.1
|
|
|
282.8
|
|
Other
liabilities
|
525.9
|
|
|
536.4
|
|
Total
liabilities
|
$
|
3,164.8
|
|
|
$
|
3,190.6
|
|
Stockholders'
equity:
|
|
|
|
Common stock and
surplus
|
$
|
1,619.8
|
|
|
$
|
1,614.6
|
|
Retained
earnings
|
515.0
|
|
|
560.1
|
|
Treasury
stock
|
(7.8)
|
|
|
(7.8)
|
|
Accumulated other
comprehensive income (loss)
|
(66.1)
|
|
|
(62.9)
|
|
Unearned
compensation
|
(2.2)
|
|
|
(2.3)
|
|
Total stockholders'
equity
|
$
|
2,058.7
|
|
|
$
|
2,101.7
|
|
Total liabilities and
stockholders' equity
|
$
|
5,223.5
|
|
|
$
|
5,292.3
|
|
DARDEN
RESTAURANTS, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
8/27/2017
|
|
8/28/2016
|
Cash flows—operating
activities
|
|
|
|
Net
earnings
|
$
|
119.0
|
|
|
$
|
110.2
|
|
Losses from
discontinued operations, net of tax
|
2.3
|
|
|
0.9
|
|
Adjustments to
reconcile net earnings from continuing operations to cash
flows:
|
|
|
|
Depreciation and
amortization
|
76.1
|
|
|
66.8
|
|
Stock-based
compensation expense
|
8.4
|
|
|
6.2
|
|
Change in current
assets and liabilities and other, net
|
(26.4)
|
|
|
(11.0)
|
|
Net cash provided by
operating activities of continuing operations
|
$
|
179.4
|
|
|
$
|
173.1
|
|
Cash flows—investing
activities
|
|
|
|
Purchases of land,
buildings and equipment
|
(95.7)
|
|
|
(60.1)
|
|
Proceeds from
disposal of land, buildings and equipment
|
2.9
|
|
|
3.8
|
|
Purchases of
capitalized software and changes in other assets, net
|
(3.9)
|
|
|
(6.8)
|
|
Net cash used in
investing activities of continuing operations
|
$
|
(96.7)
|
|
|
$
|
(63.1)
|
|
Cash flows—financing
activities
|
|
|
|
Proceeds from
issuance of common stock
|
15.8
|
|
|
3.3
|
|
Income tax benefits
credited to equity
|
—
|
|
|
0.6
|
|
Dividends
paid
|
(79.1)
|
|
|
(70.5)
|
|
Repurchases of common
stock
|
(100.2)
|
|
|
(195.6)
|
|
ESOP note receivable
repayment
|
0.1
|
|
|
0.1
|
|
Principal payments on
capital and financing leases
|
(1.0)
|
|
|
(1.0)
|
|
Net cash used in
financing activities of continuing operations
|
$
|
(164.4)
|
|
|
$
|
(263.1)
|
|
Cash
flows—discontinued operations
|
|
|
|
Net cash used in
operating activities of discontinued operations
|
(4.6)
|
|
|
(7.0)
|
|
Net cash used in
discontinued operations
|
$
|
(4.6)
|
|
|
$
|
(7.0)
|
|
|
|
|
|
Decrease in cash and
cash equivalents
|
(86.3)
|
|
|
(160.1)
|
|
Cash and cash
equivalents - beginning of period
|
233.1
|
|
|
274.8
|
|
Cash and cash
equivalents - end of period
|
$
|
146.8
|
|
|
$
|
114.7
|
|
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SOURCE Darden Restaurants, Inc.: Financial