ORLANDO, Fla. , Dec. 19, 2017 /PRNewswire/ -- Darden
Restaurants, Inc., (NYSE:DRI) today reported its financial results for the second quarter ended November 26,
2017.
Second Quarter 2018 Financial Highlights, Comparisons Versus Same Fiscal Quarter Last Year
- Total sales increased 14.6% to $1.88 billion, including 11.5% growth from the addition
of 153 Cheddar's Scratch Kitchen restaurants and 28 other net new restaurants
- Blended same-restaurant sales from Darden's legacy brands increased 3.1%
|
+3.0% for Olive Garden
|
|
+3.8% for The Capital Grille
|
|
+2.0% for Yard House
|
|
+3.8% for LongHorn Steakhouse
|
|
+6.8% for Eddie V's
|
|
-0.5% for Seasons 52
|
|
|
|
|
|
+2.5% for Bahama Breeze
|
- Same-restaurant sales for Cheddar's Scratch Kitchen were -2.0%
- Reported diluted net earnings per share from continuing operations increased 10.9% to $0.71 and were negatively impacted by approximately $0.02 related to Cheddar's
Scratch Kitchen integration expenses
- Adjusted diluted net earnings per share from continuing operations increased 14.1% to $0.73*
- The Company repurchased approximately $89 million of its outstanding common
stock
* See "Non-GAAP Information" below for more details
"Our strong same-restaurant sales and new restaurant growth drove continued market share gains during the quarter," said
CEO Gene Lee. "That performance, in addition to our solid earnings growth, is a result of
executing on our strategy. Our teams are building guest loyalty at all of our brands through their constant focus on our
back-to-basics operating philosophy, which is grounded in food, service and atmosphere."
Segment Performance
Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses
and marketing expenses.
|
|
Q2 Sales
|
|
|
|
Q2 Segment Profit
|
|
|
($ in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
Consolidated Darden
|
|
$1,881.5
|
|
$1,642.5
|
|
14.6
|
%
|
|
|
|
|
|
|
Olive Garden
|
|
$951.6
|
|
$915.0
|
|
4.0
|
%
|
|
$167.6
|
|
$153.5
|
|
9.2
|
%
|
LongHorn Steakhouse
|
|
$387.7
|
|
$365.0
|
|
6.2
|
%
|
|
$60.5
|
|
$52.4
|
|
15.5
|
%
|
Fine Dining
|
|
$140.6
|
|
$128.6
|
|
9.3
|
%
|
|
$27.1
|
|
$23.4
|
|
15.8
|
%
|
Other Business
|
|
$401.6
|
|
$233.9
|
|
71.7
|
%
|
|
$51.4
|
|
$34.6
|
|
48.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD Sales
|
|
|
|
YTD Segment Profit
|
|
|
($ in millions)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
Consolidated Darden
|
|
$3,817.6
|
|
$3,356.9
|
|
13.7
|
%
|
|
|
|
|
|
|
Olive Garden
|
|
$1,941.4
|
|
$1,876.2
|
|
3.5
|
%
|
|
$366.7
|
|
$339.8
|
|
7.9
|
%
|
LongHorn Steakhouse
|
|
$792.1
|
|
$751.3
|
|
5.4
|
%
|
|
$124.0
|
|
$112.5
|
|
10.2
|
%
|
Fine Dining
|
|
$262.8
|
|
$242.8
|
|
8.2
|
%
|
|
$46.4
|
|
$40.2
|
|
15.4
|
%
|
Other Business
|
|
$821.3
|
|
$486.6
|
|
68.8
|
%
|
|
$117.3
|
|
$79.4
|
|
47.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Same-Restaurant Sales Results
|
Q2
|
YTD
|
|
Olive
Garden
|
LongHorn
Steakhouse
|
Olive
Garden
|
LongHorn
Steakhouse
|
Same-Restaurant Sales
|
3.0%
|
3.8%
|
2.5%
|
3.2%
|
Same-Restaurant Traffic
|
1.1%
|
0.9%
|
0.4%
|
0.5%
|
Pricing
|
1.7%
|
0.8%
|
1.6%
|
1.2%
|
Menu-mix
|
0.2%
|
2.1%
|
0.5%
|
1.5%
|
|
|
|
|
|
|
|
Share Repurchase Program
During the quarter, the Company repurchased approximately 1.1 million shares of its common stock for a
total cost of approximately $89 million. As of the end of the fiscal second quarter, the Company
had approximately $281 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 for the remainder of the fiscal year.
|
Current (12/19/17)
|
Prior (9/26/17)
|
Same-restaurant sales growth
|
Approx. 2%
|
1.0% to 2.0%
|
New restaurant openings
|
Approx. 40
|
35 to 40
|
Total sales growth
|
Approx. 13%
|
11.5% to 13.0%
|
Effective Tax Rate
|
Approx. 25%
|
Approx. 26%
|
Adjusted diluted net earnings per share from continuing
operations*
|
$4.45 to $4.53
|
$4.38 to $4.50
|
Diluted average common shares outstanding for the year
|
Approx. 126M
|
Approx. 127M
|
|
* See "Non-GAAP Information" below for more details
|
Investor Conference Call
The Company will host a conference call and slide presentation on Tuesday, December 19 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/1007/23596 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 1-877-918-6709 and enter passcode
4488892. 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 Q2 Reported to Adjusted Earnings Reconciliation
|
|
Q2 2018
|
|
Q2 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
|
$113.4
|
$24.8
|
$88.6
|
$0.71
|
|
$107.0
|
$27.3
|
$79.7
|
$0.64
|
% Change vs Prior Year
|
|
|
|
10.9%
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Cheddar's integration expenses
|
4.2
|
1.4
|
2.8
|
0.02
|
|
—
|
—
|
—
|
—
|
Adjusted Earnings from Continuing Operations
|
$117.6
|
$26.2
|
$91.4
|
$0.73
|
|
$107.0
|
$27.3
|
$79.7
|
$0.64
|
% Change vs Prior Year
|
|
|
|
14.1%
|
|
|
|
|
|
Reconciliation of Fiscal 2018 Reported to Adjusted Earnings
Outlook
|
|
Current (12/19/17)
|
Prior (9/26/17)
|
Reported diluted net earnings per share from continuing
operations
|
$4.37
|
to
|
$4.47
|
$4.30
|
to
|
$4.44
|
Cheddar's integration expenses
|
0.13
|
|
0.10
|
0.13
|
|
0.10
|
Income tax expense from integration expenses
|
(0.05)
|
|
(0.04)
|
(0.05)
|
|
(0.04)
|
Adjusted diluted net earnings per share from continuing
operations
|
$4.45
|
to
|
$4.53
|
$4.38
|
to
|
$4.50
|
|
|
|
|
|
|
DARDEN RESTAURANTS, INC.
|
NUMBER OF COMPANY-OWNED RESTAURANTS
|
|
|
11/26/17
|
11/27/16
|
Olive Garden1
|
849
|
842
|
LongHorn Steakhouse
|
496
|
485
|
Cheddar's Scratch Kitchen
|
153
|
—
|
Yard House
|
68
|
65
|
The Capital Grille
|
57
|
56
|
Bahama Breeze
|
39
|
36
|
Seasons 52
|
41
|
40
|
Eddie V's
|
19
|
17
|
Darden Continuing Operations
|
1,722
|
1,541
|
1 Includes 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
|
|
Six Months Ended
|
|
11/26/2017
|
|
11/27/2016
|
|
11/26/2017
|
|
11/27/2016
|
Sales
|
$
|
1,881.5
|
|
|
$
|
1,642.5
|
|
|
$
|
3,817.6
|
|
|
$
|
3,356.9
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
Food and beverage
|
542.9
|
|
|
478.1
|
|
|
1,098.1
|
|
|
971.3
|
|
Restaurant labor
|
622.4
|
|
|
538.1
|
|
|
1,246.6
|
|
|
1,083.9
|
|
Restaurant expenses
|
351.5
|
|
|
305.3
|
|
|
694.4
|
|
|
609.0
|
|
Marketing expenses
|
58.1
|
|
|
57.1
|
|
|
124.1
|
|
|
120.8
|
|
General and administrative expenses
|
98.9
|
|
|
79.5
|
|
|
196.9
|
|
|
167.2
|
|
Depreciation and amortization
|
78.8
|
|
|
67.8
|
|
|
154.9
|
|
|
134.6
|
|
Impairments and disposal of assets, net
|
—
|
|
|
0.1
|
|
|
(0.8)
|
|
|
(7.7)
|
|
Total operating costs and expenses
|
$
|
1,752.6
|
|
|
$
|
1,526.0
|
|
|
$
|
3,514.2
|
|
|
$
|
3,079.1
|
|
Operating income
|
128.9
|
|
|
116.5
|
|
|
303.4
|
|
|
277.8
|
|
Interest, net
|
15.5
|
|
|
9.5
|
|
|
30.5
|
|
|
19.4
|
|
Earnings before income taxes
|
113.4
|
|
|
107.0
|
|
|
272.9
|
|
|
258.4
|
|
Income tax expense
|
24.8
|
|
|
27.3
|
|
|
63.0
|
|
|
67.6
|
|
Earnings from continuing operations
|
$
|
88.6
|
|
|
$
|
79.7
|
|
|
$
|
209.9
|
|
|
$
|
190.8
|
|
Losses from discontinued operations, net of tax benefit of
$(2.5), $(0.6), $(3.5) and $(1.3), respectively
|
(3.9)
|
|
|
(0.2)
|
|
|
(6.2)
|
|
|
(1.1)
|
|
Net earnings
|
$
|
84.7
|
|
|
$
|
79.5
|
|
|
$
|
203.7
|
|
|
$
|
189.7
|
|
|
|
|
|
|
|
|
|
Basic net earnings per share:
|
|
|
|
|
|
|
|
Earnings from continuing operations
|
$
|
0.72
|
|
|
$
|
0.65
|
|
|
$
|
1.69
|
|
|
$
|
1.54
|
|
Losses from discontinued operations
|
(0.03)
|
|
|
—
|
|
|
(0.05)
|
|
|
(0.01)
|
|
Net earnings
|
$
|
0.69
|
|
|
$
|
0.65
|
|
|
$
|
1.64
|
|
|
$
|
1.53
|
|
Diluted net earnings per share:
|
|
|
|
|
|
|
|
Earnings from continuing operations
|
$
|
0.71
|
|
|
$
|
0.64
|
|
|
$
|
1.66
|
|
|
$
|
1.52
|
|
Losses from discontinued operations
|
(0.04)
|
|
|
—
|
|
|
(0.05)
|
|
|
(0.01)
|
|
Net earnings
|
$
|
0.67
|
|
|
$
|
0.64
|
|
|
$
|
1.61
|
|
|
$
|
1.51
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
123.6
|
|
|
123.1
|
|
|
124.4
|
|
|
124.0
|
|
Diluted
|
125.5
|
|
|
124.9
|
|
|
126.4
|
|
|
125.8
|
|
DARDEN RESTAURANTS, INC.
|
CONSOLIDATED BALANCE SHEETS
|
(In millions)
|
|
|
11/26/2017
|
|
5/28/2017
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$
|
114.7
|
|
|
$
|
233.1
|
|
Receivables, net
|
66.7
|
|
|
75.9
|
|
Inventories
|
199.1
|
|
|
178.9
|
|
Prepaid income taxes
|
3.2
|
|
|
6.2
|
|
Prepaid expenses and other current assets
|
90.4
|
|
|
80.6
|
|
Assets held for sale
|
11.1
|
|
|
13.2
|
|
Total current assets
|
$
|
485.2
|
|
|
$
|
587.9
|
|
Land, buildings and equipment, net
|
2,386.2
|
|
|
2,272.3
|
|
Goodwill
|
1,173.1
|
|
|
1,201.7
|
|
Trademarks
|
950.2
|
|
|
950.2
|
|
Other assets
|
322.9
|
|
|
280.2
|
|
Total assets
|
$
|
5,317.6
|
|
|
$
|
5,292.3
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
$
|
262.0
|
|
|
$
|
249.5
|
|
Short-term debt
|
153.5
|
|
|
—
|
|
Accrued payroll
|
129.0
|
|
|
149.1
|
|
Accrued income taxes
|
—
|
|
|
1.9
|
|
Other accrued taxes
|
57.3
|
|
|
54.2
|
|
Unearned revenues
|
366.9
|
|
|
388.6
|
|
Other current liabilities
|
449.3
|
|
|
445.9
|
|
Total current liabilities
|
$
|
1,418.0
|
|
|
$
|
1,289.2
|
|
Long-term debt
|
935.6
|
|
|
936.6
|
|
Deferred income taxes
|
143.6
|
|
|
145.6
|
|
Deferred rent
|
301.4
|
|
|
282.8
|
|
Other liabilities
|
542.9
|
|
|
536.4
|
|
Total liabilities
|
$
|
3,341.5
|
|
|
$
|
3,190.6
|
|
Stockholders' equity:
|
|
|
|
Common stock and surplus
|
$
|
1,606.8
|
|
|
$
|
1,614.6
|
|
Retained earnings
|
447.3
|
|
|
560.1
|
|
Treasury stock
|
(7.8)
|
|
|
(7.8)
|
|
Accumulated other comprehensive income (loss)
|
(68.2)
|
|
|
(62.9)
|
|
Unearned compensation
|
(2.0)
|
|
|
(2.3)
|
|
Total stockholders' equity
|
$
|
1,976.1
|
|
|
$
|
2,101.7
|
|
Total liabilities and stockholders' equity
|
$
|
5,317.6
|
|
|
$
|
5,292.3
|
|
DARDEN RESTAURANTS, INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
|
|
Six Months Ended
|
|
11/26/2017
|
|
11/27/2016
|
Cash flows—operating activities
|
|
|
|
Net earnings
|
$
|
203.7
|
|
|
$
|
189.7
|
|
Losses from discontinued operations, net of tax
|
6.2
|
|
|
1.1
|
|
Adjustments to reconcile net earnings from continuing operations to cash
flows:
|
|
|
|
Depreciation and amortization
|
154.9
|
|
|
134.6
|
|
Stock-based compensation expense
|
14.3
|
|
|
18.0
|
|
Change in current assets and liabilities and other, net
|
(65.0)
|
|
|
(49.1)
|
|
Net cash provided by operating activities of continuing
operations
|
$
|
314.1
|
|
|
$
|
294.3
|
|
Cash flows—investing activities
|
|
|
|
Purchases of land, buildings and equipment
|
(197.7)
|
|
|
(135.3)
|
|
Proceeds from disposal of land, buildings and equipment
|
3.1
|
|
|
6.9
|
|
Cash used in business acquisitions, net of cash acquired
|
(40.4)
|
|
|
—
|
|
Purchases of capitalized software and changes in other assets,
net
|
(5.8)
|
|
|
(12.3)
|
|
Net cash used in investing activities of continuing operations
|
$
|
(240.8)
|
|
|
$
|
(140.7)
|
|
Cash flows—financing activities
|
|
|
|
Proceeds from issuance of common stock
|
17.4
|
|
|
46.0
|
|
Income tax benefits credited to equity
|
—
|
|
|
8.3
|
|
Dividends paid
|
(157.0)
|
|
|
(139.5)
|
|
Repurchases of common stock
|
(188.9)
|
|
|
(214.7)
|
|
Proceeds from issuance of short-term debt, net
|
153.5
|
|
|
—
|
|
Principal payments on capital and financing leases
|
(2.3)
|
|
|
(1.8)
|
|
Other, net
|
(8.2)
|
|
|
0.5
|
|
Net cash used in financing activities of continuing operations
|
$
|
(185.5)
|
|
|
$
|
(301.2)
|
|
Cash flows—discontinued operations
|
|
|
|
Net cash used in operating activities of discontinued operations
|
(6.2)
|
|
|
(10.4)
|
|
Net cash used in discontinued operations
|
$
|
(6.2)
|
|
|
$
|
(10.4)
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
(118.4)
|
|
|
(158.0)
|
|
Cash and cash equivalents - beginning of period
|
233.1
|
|
|
274.8
|
|
Cash and cash equivalents - end of period
|
$
|
114.7
|
|
|
$
|
116.8
|
|
View original content:http://www.prnewswire.com/news-releases/darden-restaurants-reports-fiscal-2018-second-quarter-results-second-quarter-same-restaurant-sales-growth-of-31-and-increases-financial-outlook-for-the-full-fiscal-year-300572905.html
SOURCE Darden Restaurants, Inc.: Financial