ORLANDO,
Fla., Sept. 21, 2023 /PRNewswire/ -- Darden
Restaurants, Inc. (NYSE:DRI) today reported its financial results
for the first quarter ended August 27, 2023.
First Quarter 2024 Financial Highlights, Comparisons Versus
Same Fiscal Quarter Last Year
- Total sales increased 11.6% to $2.7
billion, driven by a blended same-restaurant sales* increase
of 5.0% and sales from the addition of 77 company-owned Ruth's
Chris Steak House (Ruth's Chris) restaurants and 46 other net new
restaurants
- Same-restaurant sales:
|
|
|
Consolidated
Darden*
|
5.0 %
|
|
|
|
Olive Garden
|
6.1 %
|
|
|
|
LongHorn
Steakhouse
|
8.1 %
|
|
|
|
Fine Dining*
|
(2.8) %
|
|
|
|
Other
Business
|
1.7 %
|
- Reported diluted net earnings per share from continuing
operations were $1.60
- Excluding $0.18 of Ruth's Chris
transaction and integration related costs, adjusted diluted net
earnings per share from continuing operations were $1.78, an increase of 14.1%**
- The Company repurchased $143
million of its outstanding common stock
* Will not include Ruth's Chris Steak House until
they have been owned and operated by Darden for a 16-month
period
** See the "Non-GAAP Information"
below for more details
"Looking across our entire portfolio, I am pleased with our
first quarter results," said Darden
President & CEO Rick
Cardenas. "Our strategy is working. We continue
to grow share, strengthen margins, and make meaningful investments
in our business while returning capital to shareholders."
Segment Performance
Segment profit represents sales,
less costs for food and beverage, restaurant labor, restaurant
expenses and marketing expenses. Segment profit excludes non-cash
real estate related expenses. From the date of acquisition forward,
sales and profits from Ruth's Chris company-owned restaurants are
included within the Fine Dining segment. Royalties from Ruth's
Chris franchise and managed locations reside in the Other Business
segment.
|
|
Q1
Sales
|
|
Q1 Segment
Profit
|
($ in
millions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Consolidated
Darden
|
|
$2,730.6
|
|
$2,446.1
|
|
|
|
|
Olive Garden
|
|
$1,227.9
|
|
$1,130.7
|
|
$262.3
|
|
$216.1
|
LongHorn
Steakhouse
|
|
$669.8
|
|
$604.6
|
|
$117.4
|
|
$92.0
|
Fine Dining
|
|
$273.5
|
|
$183.4
|
|
$39.7
|
|
$30.0
|
Other
Business
|
|
$559.4
|
|
$527.4
|
|
$84.3
|
|
$72.3
|
Dividend Declared
Darden's Board of Directors declared
a quarterly cash dividend of $1.31 per share on the
Company's outstanding common stock. The dividend is payable
on November 1, 2023 to shareholders of record at the
close of business on October 10, 2023.
Share Repurchase Program
During the quarter, the
Company repurchased approximately 0.9 million shares of its
common stock for a total of approximately $143 million. As of the end of the fiscal
first quarter, the Company had approximately $509 million remaining under the current
$1 billion repurchase
authorization.
Fiscal 2024 Financial Outlook
The company reiterated
all aspects of its full year financial outlook for fiscal 2024,
culminating in adjusted diluted net earnings per share from
continuing operations of $8.55 to $8.85, including Ruth's Chris operating results,
but excluding approximately $55
million, pre-tax, of expected transaction and integration
related costs.*
* See the "Non-GAAP Information" below for more
details
Announces Election of New Board Chair
On September 20, 2023, Darden's Board of Directors
unanimously elected Cynthia (Cindie) T.
Jamison as Chair of the Board, succeeding Eugene (Gene) I. Lee, Jr. who, as previously
announced, retired from service as a director of the Company on
that date.
"I look forward to the opportunity to continue working
with Cindie in her new role as Chair," said Cardenas. "She has been
a tremendous steward of our company since joining the Board nine
years ago.
"I also want to thank Chuck
Sonsteby for his leadership and tireless dedication to the
Board, serving as Chair for more than four years, and for the last
three years as Lead Independent Director. Finally, I want to thank
Gene for his service as Chair and his invaluable leadership at
Darden over the last 16 years."
Investor Conference Call
The Company will host a
conference call and slide presentation
on Thursday, September 21,
2023 at 8:30 am ET
to review its recent financial performance. To listen to the call
live, please go to
https://event.choruscall.com/mediaframe/webcast.html?webcastid=HcYNeR3Q 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 1-877-407-9219. 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, Yard House, Ruth's Chris Steak House,
Cheddar's Scratch Kitchen, The Capital Grille, Seasons 52, Eddie
V's and Bahama Breeze. 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: a failure to address cost pressures and a
failure to effectively deliver cost management activities, economic
factors and their impacts on the restaurant industry and general
macroeconomic factors including unemployment, energy prices and
interest rates, the inability to hire, train, reward and retain
restaurant team members, a failure to develop and recruit effective
leaders, labor and insurance costs, health concerns including
food-related pandemics or outbreaks of flu or other viruses, food
safety and food-borne illness concerns, technology failures
including failure to maintain a secure cyber network, compliance
with privacy and data protection laws and risks of failures or
breaches of our data protection systems, the inability to
successfully integrate Ruth's Chris Steak House operations into our
business, risks relating to public policy changes and federal,
state and local regulation of our business, intense competition,
changing consumer preferences, an inability or failure to manage
the accelerated impact of social media, a failure to execute
innovative marketing and guest relationship tactics, climate
change, adverse weather conditions and natural disasters, long-term
and non-cancelable property leases, failure to execute a business
continuity plan following a disaster, shortages or interruptions in
the delivery of food and other products and services, 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, risks of doing
business with franchisees, licensees and vendors in foreign
markets, volatility in the market value of derivatives, volatility
leading to the inability to hedge equity compensation market
exposure, failure to protect our intellectual property, litigation,
unfavorable publicity, disruptions in the financial markets,
impairment in the carrying value of our goodwill or other
intangible assets, changes in tax laws or unanticipated tax
liabilities, 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
2024
|
|
Q1
2023
|
$ in millions, except
per share amounts
|
Earnings
Before
Income
Tax
|
Income
Tax
Expense
(Benefit)
|
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
|
$
223.2
|
$
28.4
|
$
194.8
|
$
1.60
|
|
$
224.4
|
$
30.8
|
$
193.6
|
$
1.56
|
% Change vs Prior
Year
|
|
|
|
2.6 %
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Ruth's Chris
transaction and integration related costs
|
24.8
|
2.6
|
22.2
|
0.18
|
|
—
|
—
|
—
|
$
—
|
Adjusted Earnings
from Continuing Operations
|
$
248.0
|
$
31.0
|
$
217.0
|
$
1.78
|
|
$
224.4
|
$
30.8
|
$
193.6
|
$
1.56
|
% Change vs Prior
Year
|
|
|
|
14.1 %
|
|
|
|
|
|
Reconciliation of
Fiscal 2024 Reported to Adjusted Earnings Outlook
|
|
2024
|
Reported diluted net
earnings per share from continuing operations
|
$8.18
|
to
|
$8.48
|
Ruth's Chris
transaction and integration related expenses
|
0.45
|
|
0.45
|
Income tax
expense
|
(0.08)
|
|
(0.08)
|
Adjusted diluted net
earnings per share from continuing operations
|
$8.55
|
to
|
$8.85
|
DARDEN RESTAURANTS,
INC.
NUMBER OF
COMPANY-OWNED RESTAURANTS
|
|
|
8/27/23
|
8/28/22
|
Olive Garden
|
906
|
887
|
LongHorn
Steakhouse
|
562
|
549
|
Cheddar's Scratch
Kitchen
|
183
|
174
|
Yard House
|
86
|
85
|
Ruth's Chris Steak
House
|
77
|
—
|
The Capital
Grille
|
64
|
61
|
Seasons 52
|
44
|
45
|
Bahama
Breeze
|
42
|
42
|
Eddie V's
|
30
|
29
|
The Capital
Burger
|
4
|
3
|
Darden Continuing
Operations
|
1,998
|
1,875
|
DARDEN RESTAURANTS,
INC.
CONSOLIDATED
STATEMENTS OF EARNINGS
(In millions, except
per share data)
(Unaudited)
|
|
|
Three Months
Ended
|
|
8/27/2023
|
|
8/28/2022
|
Sales
|
$ 2,730.6
|
|
$ 2,446.1
|
Costs and
expenses:
|
|
|
|
Food and
beverage
|
851.0
|
|
795.3
|
Restaurant
labor
|
875.3
|
|
793.8
|
Restaurant
expenses
|
446.6
|
|
403.5
|
Marketing
expenses
|
38.6
|
|
30.3
|
General and
administrative expenses
|
153.3
|
|
88.3
|
Depreciation and
amortization
|
109.8
|
|
95.6
|
Impairments and
disposal of assets, net
|
3.1
|
|
(4.9)
|
Total operating costs
and expenses
|
$ 2,477.7
|
|
$ 2,201.9
|
Operating
income
|
252.9
|
|
244.2
|
Interest,
net
|
29.7
|
|
19.8
|
Earnings before income
taxes
|
223.2
|
|
224.4
|
Income tax
expense
|
28.4
|
|
30.8
|
Earnings from
continuing operations
|
$
194.8
|
|
$
193.6
|
Losses from
discontinued operations, net of tax benefit of $0.1 and $0.0,
respectively
|
(0.3)
|
|
(0.6)
|
Net earnings
|
$
194.5
|
|
$
193.0
|
Basic net earnings per
share:
|
|
|
|
Earnings from
continuing operations
|
$
1.61
|
|
$
1.58
|
Losses from
discontinued operations
|
—
|
|
(0.01)
|
Net
earnings
|
$
1.61
|
|
$
1.57
|
Diluted net earnings
per share:
|
|
|
|
Earnings from
continuing operations
|
$
1.60
|
|
$
1.56
|
Losses from
discontinued operations
|
(0.01)
|
|
—
|
Net
earnings
|
$
1.59
|
|
$
1.56
|
Average number of
common shares outstanding:
|
|
|
|
Basic
|
120.9
|
|
122.9
|
Diluted
|
122.0
|
|
123.9
|
DARDEN RESTAURANTS,
INC.
CONSOLIDATED BALANCE
SHEETS
(In
millions)
|
|
|
8/27/2023
|
|
5/28/2023
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
192.1
|
|
$
367.8
|
Receivables,
net
|
59.2
|
|
80.2
|
Inventories
|
287.0
|
|
287.9
|
Prepaid income
taxes
|
98.8
|
|
107.3
|
Prepaid expenses and
other current assets
|
198.6
|
|
154.5
|
Total current
assets
|
$
835.7
|
|
$
997.7
|
Land, buildings and
equipment, net
|
3,991.7
|
|
3,725.1
|
Operating lease
right-of-use assets
|
3,600.3
|
|
3,373.9
|
Goodwill
|
1,376.9
|
|
1,037.4
|
Trademarks
|
1,148.0
|
|
806.3
|
Other assets
|
316.6
|
|
301.1
|
Total
assets
|
$
11,269.2
|
|
$
10,241.5
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
419.6
|
|
$
426.2
|
Short-term
debt
|
95.4
|
|
—
|
Accrued
payroll
|
168.6
|
|
173.0
|
Accrued income
taxes
|
8.5
|
|
7.8
|
Other accrued
taxes
|
74.3
|
|
65.9
|
Unearned
revenues
|
541.7
|
|
512.0
|
Other current
liabilities
|
786.1
|
|
752.5
|
Total current
liabilities
|
$
2,094.2
|
|
$
1,937.4
|
Long-term
debt
|
1,477.1
|
|
884.9
|
Deferred income
taxes
|
231.4
|
|
142.2
|
Operating lease
liabilities - non-current
|
3,877.5
|
|
3,667.6
|
Other
liabilities
|
1,441.0
|
|
1,407.9
|
Total
liabilities
|
$
9,121.2
|
|
$
8,040.0
|
Stockholders'
equity:
|
|
|
|
Common stock and
surplus
|
$
2,256.8
|
|
$
2,230.8
|
Retained earnings
(deficit)
|
(124.8)
|
|
(32.5)
|
Accumulated other
comprehensive income (loss)
|
16.0
|
|
3.2
|
Total stockholders'
equity
|
$
2,148.0
|
|
$
2,201.5
|
Total liabilities and
stockholders' equity
|
$
11,269.2
|
|
$
10,241.5
|
DARDEN RESTAURANTS,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
millions)
(Unaudited)
|
|
|
Three Months
Ended
|
|
8/27/2023
|
|
8/28/2022
|
Cash flows—operating
activities
|
|
|
|
Net
earnings
|
$
194.5
|
|
$
193.0
|
Losses from
discontinued operations, net of tax
|
0.3
|
|
0.6
|
Adjustments to
reconcile net earnings from continuing operations to cash
flows:
|
|
|
|
Depreciation and
amortization
|
109.8
|
|
95.6
|
Impairments and
disposal of assets, net
|
3.1
|
|
(4.9)
|
Stock-based
compensation expense
|
30.3
|
|
20.3
|
Change in current
assets and liabilities and other, net
|
(68.9)
|
|
123.2
|
Net cash provided by
operating activities of continuing operations
|
$
269.1
|
|
$
427.8
|
Cash flows—investing
activities
|
|
|
|
Purchases of land,
buildings and equipment
|
(150.9)
|
|
(122.8)
|
Proceeds from disposal
of land, buildings and equipment
|
1.6
|
|
10.4
|
Cash used in business
acquisitions, net of cash acquired
|
(699.9)
|
|
—
|
Purchases of
capitalized software and changes in other assets, net
|
(5.0)
|
|
(5.7)
|
Net cash used in
investing activities of continuing operations
|
$
(854.2)
|
|
$
(118.1)
|
Cash flows—financing
activities
|
|
|
|
Net proceeds from
issuance of common stock
|
22.3
|
|
6.4
|
Dividends
paid
|
(158.5)
|
|
(148.5)
|
Repurchases of common
stock
|
(142.9)
|
|
(199.0)
|
Proceeds from
short-term debt, net
|
95.4
|
|
—
|
Proceeds from issuance
of long-term debt, net
|
600.0
|
|
—
|
Payments of debt
issuance costs
|
(1.4)
|
|
—
|
Principal payments on
finance leases
|
(5.5)
|
|
(4.3)
|
Net cash provided by
(used in) financing activities of continuing operations
|
$
409.4
|
|
$
(345.4)
|
Cash flows—discontinued
operations
|
|
|
|
Net cash used in
operating activities of discontinued operations
|
—
|
|
(0.5)
|
Net cash used in
discontinued operations
|
$
—
|
|
$
(0.5)
|
|
|
|
|
Decrease in cash, cash
equivalents, and restricted cash
|
(175.7)
|
|
(36.2)
|
Cash, cash equivalents,
and restricted cash - beginning of period
|
416.2
|
|
472.1
|
Cash, cash equivalents,
and restricted cash - end of period
|
$
240.5
|
|
$
435.9
|
|
|
|
|
Reconciliation of cash,
cash equivalents, and restricted cash:
|
8/27/2023
|
|
8/28/2022
|
Cash and cash
equivalents
|
$
192.1
|
|
$
377.5
|
Restricted cash
included in prepaid expenses and other current assets
|
48.4
|
|
58.4
|
Total cash, cash
equivalents, and restricted cash shown in the statement of cash
flows
|
$
240.5
|
|
$
435.9
|
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SOURCE Darden Restaurants, Inc.: Financial