ORLANDO, Fla., March 22, 2018 /PRNewswire/ -- Darden
Restaurants, Inc., (NYSE: DRI) today reported its financial results
for the third quarter ended February 25, 2018.
Third Quarter 2018 Financial Highlights, Comparisons Versus
Same Fiscal Quarter Last Year
- Total sales increased 13.3% to $2.13
billion, including 11.3% growth from the addition of 154
Cheddar's Scratch Kitchen restaurants and 34 other net new
restaurants
- Blended same-restaurant sales from Darden's legacy brands
increased 2.0%
|
+2.2% for Olive
Garden
|
|
+2.8% for The Capital
Grille
|
|
+1.9% for Yard
House
|
|
+2.0% for LongHorn
Steakhouse
|
|
+2.7% for Eddie
V's
|
|
-0.2% for Seasons
52
|
|
|
|
|
|
+0.2% for Bahama
Breeze
|
- Same-restaurant sales for Cheddar's Scratch Kitchen were
-2.2%
- Reported diluted net earnings per share from continuing
operations increased 31.8% to $1.74
- Adjusted diluted net earnings per share from continuing
operations increased 29.5% to $1.71*
- Issued $300 million of 30-year
debt at 4.55%, which replaced $311
million of higher-interest (6.8% and 6.0%) long-dated bonds
tendered in the quarter
- The Company repurchased approximately $19 million of its outstanding common stock
* See "Non-GAAP Information" below for more details
"Our solid performance this quarter is a result of our focus on
executing our back-to-basics operating philosophy to deliver
memorable guest experiences," said CEO Gene
Lee. "Our strategy continues to work, creating an
environment that allowed us to invest in our people and our
business, strengthen our balance sheet and return nearly
$100 million to shareholders during
the quarter."
Adjustments to Earnings Per Share*
Reported diluted net earnings per share from continuing operations
for the third quarter were $0.03
higher than adjusted diluted net earnings per share from continuing
operations due to the following performance adjustments:
- ($0.54) for debt retirement
costs;
- +$0.61 related to the net benefit of deferred tax
revaluation; and
- ($0.04) for Cheddar's
integration costs
* See "Non-GAAP Information" below for more details
Segment Performance
Segment profit represents sales, less costs for food and beverage,
restaurant labor, restaurant expenses and marketing expenses.
|
|
Q3
Sales
|
|
|
|
Q3 Segment
Profit
|
|
|
($ in
millions)
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
Consolidated
Darden
|
|
$2,128.4
|
|
$1,878.7
|
|
13.3
|
%
|
|
|
|
|
|
|
Olive
Garden
|
|
$1,073.2
|
|
$1,035.1
|
|
3.7
|
%
|
|
$226.7
|
|
$217.7
|
|
4.1
|
%
|
LongHorn
Steakhouse
|
|
$452.8
|
|
$434.3
|
|
4.3
|
%
|
|
$89.9
|
|
$85.0
|
|
5.8
|
%
|
Fine
Dining
|
|
$164.4
|
|
$153.7
|
|
7.0
|
%
|
|
$40.3
|
|
$36.4
|
|
10.7
|
%
|
Other
Business
|
|
$438.0
|
|
$255.6
|
|
71.4
|
%
|
|
$65.5
|
|
$44.8
|
|
46.2
|
%
|
|
|
YTD
Sales
|
|
|
|
YTD Segment
Profit
|
|
|
($ in
millions)
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
Consolidated
Darden
|
|
$5,946.0
|
|
$5,235.6
|
|
13.6
|
%
|
|
|
|
|
|
|
Olive
Garden
|
|
$3,014.6
|
|
$2,911.3
|
|
3.5
|
%
|
|
$593.4
|
|
$557.5
|
|
6.4
|
%
|
LongHorn
Steakhouse
|
|
$1,245.0
|
|
$1,185.6
|
|
5.0
|
%
|
|
$214.0
|
|
$197.5
|
|
8.4
|
%
|
Fine
Dining
|
|
$427.1
|
|
$396.6
|
|
7.7
|
%
|
|
$86.6
|
|
$76.7
|
|
12.9
|
%
|
Other
Business
|
|
$1,259.3
|
|
$742.1
|
|
69.7
|
%
|
|
$182.8
|
|
$124.1
|
|
47.3
|
%
|
U.S. Same-Restaurant Sales Results
|
Q3
|
YTD
|
|
Olive
Garden
|
LongHorn
Steakhouse
|
Olive
Garden
|
LongHorn
Steakhouse
|
Same-Restaurant
Sales
|
2.2%
|
2.0%
|
2.4%
|
2.8%
|
Same-Restaurant
Traffic
|
0.1%
|
(0.1)%
|
0.3%
|
0.3%
|
Pricing
|
1.7%
|
0.7%
|
1.6%
|
1.0%
|
Menu-mix
|
0.4%
|
1.4%
|
0.5%
|
1.5%
|
Note: The Company estimates that more severe winter weather
negatively impacted same-restaurant sales by -70 basis points in
the third quarter of fiscal 2018 compared to the same fiscal
quarter last year.
Dividend Declared
Darden's Board of Directors declared a regular quarterly cash
dividend of $0.63 per share on the Company's outstanding
common stock. The dividend is payable on May 1, 2018 to
shareholders of record at the close of business on April 10,
2018.
Share Repurchase Program
During the quarter, the Company repurchased approximately 0.2
million shares of its common stock for a total cost of
approximately $19 million. As of the
end of the fiscal third quarter, the Company had approximately
$262 million remaining under the
current $500 million repurchase
authorization.
Updated Fiscal 2018 Financial Outlook
The Company increased its financial outlook for Fiscal 2018 based
on year-to-date results and its expected performance in the fourth
quarter.
|
Current
(03/22/18)
|
Prior
(01/08/18)
|
Same-restaurant sales
growth
|
Approx. 2%
|
Approx. 2%
|
New restaurant
openings
|
Approx. 40
|
Approx. 40
|
Total sales
growth
|
Approx.
13%
|
Approx.
13%
|
Effective tax
rate
|
16.0% to
16.5%
|
Approx.
18%
|
Adjusted diluted net
earnings per share from continuing operations*
|
$4.75 to
$4.80
|
$4.70 to
$4.78
|
Diluted average
common shares outstanding for the year
|
Approx.
126M
|
Approx.
126M
|
* See "Non-GAAP Information" below for more details
Investor Conference Call
The Company will host a conference call and slide presentation on
Thursday, March 22 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/1007/24792 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 1-800-857-9760 and enter passcode 1227145. 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 Q3 Reported
to Adjusted Earnings Reconciliation
|
|
Q3
2018
|
|
Q3
2017
|
$ in millions, except
EPS
|
Earnings
Before
Income
Tax
|
|
Income
Tax
Expense
(Benefit)
|
|
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
|
$116.0
|
|
$(102.5)
|
|
$218.5
|
|
$1.74
|
|
|
$220.2
|
|
$53.9
|
|
$166.3
|
|
$1.32
|
|
% Change vs Prior
Year
|
|
|
|
|
|
|
31.8
|
%
|
|
|
|
|
|
|
|
|
|
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
|
$224.9
|
|
$9.8
|
|
$215.1
|
|
$1.71
|
|
|
$220.2
|
|
$53.9
|
|
$166.3
|
|
$1.32
|
|
% Change vs Prior
Year
|
|
|
|
|
|
|
29.5
|
%
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Fiscal 2018 Reported to Adjusted Earnings Outlook
|
|
Current
(03/22/18)
|
Prior
(01/08/18)
|
Reported diluted
net earnings per share from continuing operations
|
$4.73
|
|
to
|
$4.78
|
|
$5.17
|
|
to
|
$5.27
|
|
Cheddar's integration
expense
|
0.14
|
|
|
0.14
|
|
0.13
|
|
|
0.10
|
|
Debt retirement
costs
|
0.81
|
|
|
0.81
|
|
|
|
|
Income tax expense
from Cheddar's integration and Interest expense
|
(0.32)
|
|
|
(0.32)
|
|
(0.04)
|
|
|
(0.03)
|
|
Net benefit of
deferred tax revaluation
|
(0.61)
|
|
|
(0.61)
|
|
(0.56)
|
|
|
(0.56)
|
|
Adjusted diluted
net earnings per share from continuing operations
|
$4.75
|
|
to
|
$4.80
|
|
$4.70
|
|
to
|
$4.78
|
|
DARDEN
RESTAURANTS, INC.
NUMBER OF
COMPANY-OWNED RESTAURANTS
|
|
|
2/25/18
|
2/26/17
|
Olive
Garden1
|
853
|
|
843
|
|
LongHorn
Steakhouse
|
499
|
|
488
|
|
Cheddar's Scratch
Kitchen
|
154
|
|
—
|
|
Yard House
|
71
|
|
65
|
|
The Capital
Grille
|
57
|
|
56
|
|
Bahama
Breeze
|
39
|
|
36
|
|
Seasons 52
|
41
|
|
40
|
|
Eddie V's
|
19
|
|
17
|
|
Darden Continuing
Operations
|
1,733
|
|
1,545
|
|
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
|
|
Nine Months
Ended
|
|
2/25/2018
|
|
2/26/2017
|
|
2/25/2018
|
|
2/26/2017
|
Sales
|
$
|
2,128.4
|
|
|
$
|
1,878.7
|
|
|
$
|
5,946.0
|
|
|
$
|
5,235.6
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Food and
beverage
|
603.3
|
|
|
541.5
|
|
|
1,701.4
|
|
|
1,512.8
|
|
Restaurant
labor
|
683.0
|
|
|
578.3
|
|
|
1,929.6
|
|
|
1,662.2
|
|
Restaurant
expenses
|
360.8
|
|
|
320.4
|
|
|
1,055.2
|
|
|
929.4
|
|
Marketing
expenses
|
58.9
|
|
|
54.6
|
|
|
183.0
|
|
|
175.4
|
|
General and
administrative expenses
|
110.1
|
|
|
87.2
|
|
|
307.0
|
|
|
254.4
|
|
Depreciation and
amortization
|
79.2
|
|
|
67.9
|
|
|
234.1
|
|
|
202.5
|
|
Impairments and
disposal of assets, net
|
(0.3)
|
|
|
(0.7)
|
|
|
(1.1)
|
|
|
(8.4)
|
|
Total operating costs
and expenses
|
$
|
1,895.0
|
|
|
$
|
1,649.2
|
|
|
$
|
5,409.2
|
|
|
$
|
4,728.3
|
|
Operating
income
|
233.4
|
|
|
229.5
|
|
|
536.8
|
|
|
507.3
|
|
Interest,
net
|
117.4
|
|
|
9.3
|
|
|
147.9
|
|
|
28.7
|
|
Earnings before
income taxes
|
116.0
|
|
|
220.2
|
|
|
388.9
|
|
|
478.6
|
|
Income tax (benefit)
expense
|
(102.5)
|
|
|
53.9
|
|
|
(39.5)
|
|
|
121.5
|
|
Earnings from
continuing operations
|
$
|
218.5
|
|
|
$
|
166.3
|
|
|
$
|
428.4
|
|
|
$
|
357.1
|
|
Losses from
discontinued operations, net of tax benefit of
$(0.5), $(0.9), $(4.0) and $(2.2),
respectively
|
(0.7)
|
|
|
(0.7)
|
|
|
(6.9)
|
|
|
(1.8)
|
|
Net
earnings
|
$
|
217.8
|
|
|
$
|
165.6
|
|
|
$
|
421.5
|
|
|
$
|
355.3
|
|
|
|
|
|
|
|
|
|
Basic net earnings
per share:
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
1.77
|
|
|
$
|
1.34
|
|
|
$
|
3.45
|
|
|
$
|
2.88
|
|
Losses from
discontinued operations
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.06)
|
|
|
(0.02)
|
|
Net
earnings
|
$
|
1.76
|
|
|
$
|
1.33
|
|
|
$
|
3.39
|
|
|
$
|
2.86
|
|
Diluted net earnings
per share:
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
1.74
|
|
|
$
|
1.32
|
|
|
$
|
3.40
|
|
|
$
|
2.84
|
|
Losses from
discontinued operations
|
(0.01)
|
|
|
—
|
|
|
(0.06)
|
|
|
(0.02)
|
|
Net
earnings
|
$
|
1.73
|
|
|
$
|
1.32
|
|
|
$
|
3.34
|
|
|
$
|
2.82
|
|
Average number of
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
123.6
|
|
|
124.1
|
|
|
124.2
|
|
|
124.1
|
|
Diluted
|
125.7
|
|
|
125.9
|
|
|
126.1
|
|
|
125.8
|
|
DARDEN
RESTAURANTS, INC.
CONSOLIDATED
BALANCE SHEETS
(In
millions)
|
|
|
2/25/2018
|
|
5/28/2017
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
146.8
|
|
|
$
|
233.1
|
|
Receivables,
net
|
50.6
|
|
|
75.9
|
|
Inventories
|
208.0
|
|
|
178.9
|
|
Prepaid income
taxes
|
62.7
|
|
|
6.2
|
|
Prepaid expenses and
other current assets
|
90.4
|
|
|
80.6
|
|
Assets held for
sale
|
11.1
|
|
|
13.2
|
|
Total current
assets
|
$
|
569.6
|
|
|
$
|
587.9
|
|
Land, buildings and
equipment, net
|
2,404.8
|
|
|
2,272.3
|
|
Goodwill
|
1,182.0
|
|
|
1,201.7
|
|
Trademarks
|
950.2
|
|
|
950.2
|
|
Other
assets
|
348.1
|
|
|
280.2
|
|
Total
assets
|
$
|
5,454.7
|
|
|
$
|
5,292.3
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
291.5
|
|
|
$
|
249.5
|
|
Short-term
debt
|
50.6
|
|
|
—
|
|
Accrued
payroll
|
157.3
|
|
|
149.1
|
|
Accrued income
taxes
|
—
|
|
|
1.9
|
|
Other accrued
taxes
|
53.1
|
|
|
54.2
|
|
Unearned
revenues
|
456.6
|
|
|
388.6
|
|
Other current
liabilities
|
458.4
|
|
|
445.9
|
|
Total current
liabilities
|
$
|
1,467.5
|
|
|
$
|
1,289.2
|
|
Long-term
debt
|
926.4
|
|
|
936.6
|
|
Deferred income
taxes
|
106.4
|
|
|
145.6
|
|
Deferred
rent
|
310.6
|
|
|
282.8
|
|
Other
liabilities
|
518.9
|
|
|
536.4
|
|
Total
liabilities
|
$
|
3,329.8
|
|
|
$
|
3,190.6
|
|
Stockholders'
equity:
|
|
|
|
Common stock and
surplus
|
$
|
1,628.4
|
|
|
$
|
1,614.6
|
|
Retained
earnings
|
586.4
|
|
|
560.1
|
|
Treasury
stock
|
(7.8)
|
|
|
(7.8)
|
|
Accumulated other
comprehensive income (loss)
|
(80.4)
|
|
|
(62.9)
|
|
Unearned
compensation
|
(1.7)
|
|
|
(2.3)
|
|
Total stockholders'
equity
|
$
|
2,124.9
|
|
|
$
|
2,101.7
|
|
Total liabilities and
stockholders' equity
|
$
|
5,454.7
|
|
|
$
|
5,292.3
|
|
DARDEN
RESTAURANTS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
millions)
(Unaudited)
|
|
|
Nine Months
Ended
|
|
2/25/2018
|
|
2/26/2017
|
Cash flows—operating
activities
|
|
|
|
Net
earnings
|
$
|
421.5
|
|
|
$
|
355.3
|
|
Losses from
discontinued operations, net of tax
|
6.9
|
|
|
1.8
|
|
Adjustments to
reconcile net earnings from continuing operations to cash
flows:
|
|
|
|
Depreciation and
amortization
|
234.1
|
|
|
202.5
|
|
Stock-based
compensation expense
|
32.2
|
|
|
27.3
|
|
Loss on
extinguishment of debt
|
102.2
|
|
|
—
|
|
Change in current
assets and liabilities and other, net
|
(45.9)
|
|
|
114.4
|
|
Net cash provided by
operating activities of continuing operations
|
$
|
751.0
|
|
|
$
|
701.3
|
|
Cash flows—investing
activities
|
|
|
|
Purchases of land,
buildings and equipment
|
(294.9)
|
|
|
(214.0)
|
|
Proceeds from
disposal of land, buildings and equipment
|
3.3
|
|
|
8.2
|
|
Cash used in business
acquisitions, net of cash acquired
|
(40.4)
|
|
|
—
|
|
Purchases of
capitalized software and changes in other assets, net
|
(10.3)
|
|
|
(14.5)
|
|
Net cash used in
investing activities of continuing operations
|
$
|
(342.3)
|
|
|
$
|
(220.3)
|
|
Cash flows—financing
activities
|
|
|
|
Proceeds from
issuance of common stock
|
35.5
|
|
|
62.5
|
|
Income tax benefits
credited to equity
|
—
|
|
|
12.1
|
|
Dividends
paid
|
(234.9)
|
|
|
(208.9)
|
|
Repurchases of common
stock
|
(207.6)
|
|
|
(214.9)
|
|
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
|
(3.9)
|
|
|
(3.0)
|
|
Other, net
|
(11.5)
|
|
|
0.8
|
|
Net cash used in
financing activities of continuing operations
|
$
|
(480.0)
|
|
|
$
|
(351.4)
|
|
Cash
flows—discontinued operations
|
|
|
|
Net cash used in
operating activities of discontinued operations
|
(15.2)
|
|
|
(13.8)
|
|
Net cash provided by
investing activities of discontinued operations
|
0.2
|
|
|
0.8
|
|
Net cash used in
discontinued operations
|
$
|
(15.0)
|
|
|
$
|
(13.0)
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
(86.3)
|
|
|
116.6
|
|
Cash and cash
equivalents - beginning of period
|
233.1
|
|
|
274.8
|
|
Cash and cash
equivalents - end of period
|
$
|
146.8
|
|
|
$
|
391.4
|
|
View original
content:http://www.prnewswire.com/news-releases/darden-restaurants-reports-fiscal-2018-third-quarter-results-and-increases-financial-outlook-for-the-full-fiscal-year-300617961.html
SOURCE Darden Restaurants, Inc.: Financial