Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q4 FY2017 Earnings Presentation
24 slides from Darden Restaurants's earnings presentation, Jun 27, 2017
Slide 1: Earnings Call Fiscal 2017: Q4 Results
EARNINGS CALL FISCAL 2017: Q4 RESULTS JUNE 27, 2017
Slide 2: Disclaimer/Non-GAAP Information
DISCLAIMER/NON-GAAP INFORMATION IMPORTANT NOTICE The following slides are part of a presentation by Darden Restaurants, Inc. (the "Company") and are intended to be viewed as part of that presentation (the "Presentation"). No representation is made that the Presentation is complete. Forward-looking s
Slide 3: Fiscal Fourth Quarter Highlights
FISCAL FOURTH QUARTER HIGHLIGHTS DARDEN SALES ($BN) SAME-RESTAURANT SALES GROWTH1 3.3% 1.7% $1.69 $1.71 $1.61 $1.64 $1.85 $1.88 $1.79 $1.93 1.3% 0.9% FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 Q1 Q2 Q3 Q4 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 DARDEN ADJUSTED EPS2 $1.21 $1.32 $1.10 $1.18 $0.88 $0.68 $0.64 $0.
Slide 4: Fiscal Fourth Quarter Highlights
FISCAL FOURTH QUARTER HIGHLIGHTS 4.4% SAME-RESTAURANT SALES 3.5% SAME-RESTAURANT SALES ACQUISITION COMPLETED GROWTH GROWTH APRIL 24, 2017 +590 BPS +500 BPS 1.3% SAME-RESTAURANT SALES SAME-RESTAURANT SALES SAME-RESTAURANT SALES INDUSTRY OUTPERFORMANCE1 INDUSTRY OUTPERFORMANCE1 GROWTH2 1 Industry excl
Slide 5: Financial Discussion
SE DARDEN RESTAURANTS FINANCIAL DISCUSSION
Slide 6: Fiscal Fourth Quarter Highlights
FISCAL FOURTH QUARTER HIGHLIGHTS 8.1% 3.3% SAME-RESTAURANT SALES $1.18 ADJUSTED DILUTED EPS FROM TOTAL SALES GROWTH GROWTH1 CONTINUING OPERATIONS2 7.3% ADJUSTED DILUTED EPS GROWTH ~$70 MILLION ~$15 MILLION VS LAST YEAR1 DIVIDENDS PAID SHARE REPURCHASES 1 Excludes Cheddar’s Scratch Kitchen 2 EPS valu
Slide 7: Margin Analysis
MARGIN ANALYSIS As Reported As Adjusted Q4 2017 Q4 2017 Q4 2017 vs. Q4 2016 (bps) ($ millions) ($ millions) % of Sales Favorable/(Unfavorable) Sales $1,934.6 $1,934.6 Food & Beverage $557.5 $557.5 28.8% 10 Restaurant Labor $603.1 $603.1 31.2% (10) Restaurant Expenses $335.8 $335.8 17.4% (20) Marketi
Slide 8: FY17 Q4 Segment Performance
FY17 Q4 SEGMENT PERFORMANCE Segment Sales ($ millions) Fine Dining Other $982 $1,027 $332 $413 $437 $264 $132 $139 FY16 Q4 FY17 Q4 FY16 Q4 FY17 Q4 FY16 Q4 FY17 Q4 FY16 Q4 FY17 Q4 Segment Profit Margin1 Fine Dining Other 19.9% 20.1% 20.4% 19.3% 19.0% 19.1% 18.9% 17.4% FY16 Q4 FY17 Q4 FY16 Q4 FY17 Q4
Slide 9: Fiscal 2017 Annual Highlights
FISCAL 2017 ANNUAL HIGHLIGHTS 3.4% 1.8% SAME-RESTAURANT SALES $4.02 ADJUSTED DILUTED EPS FROM TOTAL SALES GROWTH GROWTH1 CONTINUING OPERATIONS2 13.9% ADJUSTED DILUTED EPS GROWTH ~$280 MILLION ~$230 MILLION SHARE REPURCHASES VS LAST YEAR2 DIVIDENDS PAID 1 Excludes Cheddar’s Scratch Kitchen 2 EPS valu
Slide 10: Outperforms Casual Dining on Most Measures
OUTPERFORMS CASUAL DINING ON MOST MEASURES Food & Beverage Rank: 1st Gap: +7 Intent to Return Rank: 1st Gap: +9 Service Value Rank: 5th Rank: 1st Gap: +2 Gap: +9 Intent to Recommend Rank: 1st Atmosphere Gap: +11 Rank: 1st Gap: +6 Source: Technomic; Gap is Cheddar’s Scratch Kitchen – Casual Dining Av
Slide 11: Cheddar's Scratch Kitchen Trailing Twelve Months
TRAILING TWELVE MONTHS $624 MILLION 0.3% SAME-RESTAURANT ~300 BPS SAME-RESTAURANT SALES TOTAL REVENUE SALES GROWTH INDUSTRY OUTPERFORMANCE2 $4.5 MILLION AVERAGE RESTAURANT VOLUME ~17% RESTAURANT-LEVEL EBITDA¹ $72 MILLION ADJUSTED EBITDA¹ 1 Trailing twelve months ended May 2017. 2 Industry excluding
Slide 12: Significant Room for Growth
SIGNIFICANT ROOM FOR GROWTH Restaurant Footprint1 Investment Profile2 Capital Investment Range $3.0 - $4.0MM Square Feet 8,000 Dining Seats 280 1Cheddar’s Scratch Kitchen as of March 2017 2 Represents the range of calendar 2016 openings. Capital Investment includes cash investments for building, equ
Slide 13: Fiscal 2018 Annual Outlook
FISCAL 2018 ANNUAL OUTLOOK SALES MARGIN Total Sales Growth Total Inflation: ~2.0% 11.5% to 13.0% Commodities: 0% to 1% Labor: 3% to 4% Same-Restaurant Sales Growth Effective Tax Rate 1.0% to 2.0% Approximately 26% Restaurant Openings 35 to 40 (Includes 4 to 5 Cheddar’s) Capital Spending $400 to $450
Slide 14: Increasing Quarterly Dividend by 12.5%
INCREASING QUARTERLY DIVIDEND BY 12.5% DARDEN QUARTERLY DIVIDEND 12.5% $0.63 Increase 12.0% $0.56 $0.56 $0.56 $0.56 Increase $0.50 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 Jun 2017 Note: Month dividend declared. 13
Slide 15: Thank You to Our 175,000 Team Members!
THANK YOU TO OUR 175,000 TEAM MEMBERS! 14
Slide 16: Additional Information
SE DARDEN RESTAURANTS ADDITIONAL INFORMATION
Slide 17: Annual Margin Analysis
ANNUAL MARGIN ANALYSIS As Reported As Adjusted 2017 2017 2017 vs. 2016 (bps) ($ millions) ($ millions) % of Sales Favorable/(Unfavorable) Sales $7,170.2 $7,170.2 Food & Beverage $2,070.3 $2,070.3 28.9% 50 Restaurant Labor $2,265.3 $2,265.3 31.6% Flat Restaurant Expenses $1,265.2 $1,265.2 17.6% (80)
Slide 18: Annual Segment Performance
ANNUAL SEGMENT SEGMENT PERFORMANCE PERFORMANCE Segment Sales ($ millions) Fine Dining Other $3,839 $3,939 $1,588 $1,622 $99 $1,0 3 74 $51 $53 4 6 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 Segment Profit Margin1 Fine Dining Other 21.2%2 21.7%2 1.4% 2.3% 19.5%2 19.7%2 18.2%2 18.8%2 17.5%2 1.5 0.1% 0.9%
Slide 19: Historical Restaurants and Same-Restaurant Sales
HISTORICAL RESTAURANTS AND SAME-RESTAURANT SALES Restaurants Fiscal 2017 Same-Restaurant Sales Growth1 Q1 Q2 Q3 Q4 162 163 165 150 157 129 Cheddar’s Scratch Kitchen 0.0% 0.8% (1.9%) 1.9% 106 90 Knapp Track (2.1%) (2.8%) (4.2%) (1.5%) 80 62 67 57 Knapp Track – Regional (2.2%) (3.2%) (4.9%) (1.7%) 1 C
Slide 20: Cheddar's Scratch Kitchen Superior Price Proposition
CHEDDAR’S SCRATCH KITCHEN SUPERIOR PRICE PROPOSITION VS. MAJOR CD CHAINS Competitor A Competitor B Competitor C Competitor D Competitor E Onion Rings $5.29 N/A $8.99 $5.99 N/A N/A Spinach Dip $5.79 $7.32 N/A N/A $8.09 $10.02 $9.44 Cheeseburger w/fries $8.86 $9.05 $9.99 $8.99 $8.99 (w/Bacon) $19.99 $
Slide 21: Commodities Outlook – 1st Half Fiscal 2018
COMMODITIES OUTLOOK – 1ST HALF FISCAL 2018 Jun-Nov FY2018 Spend by Category Coverage Outlook Mid Single Digit Beef 19% 50% Deflation Low Single Digit Produce 13% 80% Inflation Low Single Digit Dairy / Oil1 10% 20% Inflation Mid Single Digit Seafood 10% 60% Inflation Wheat2 7% 90% Flat Chicken 6% 95%
Slide 22: Reported to Adjusted Earnings Reconciliations
REPORTED TO ADJUSTED EARNINGS RECONCILIATIONS Note: The sum of the quarterly Diluted EPS amounts do not total the annual EPS amounts due to the impact of the timing of share repurchases on the weighted average share count. 21
Slide 23: Reported to Adjusted Earnings Reconciliations
REPORTED TO ADJUSTED EARNINGS RECONCILIATIONS 22
Slide 24: Reported to Adjusted EBIT Margin and Earnings Reconciliations
REPORTED TO ADJUSTED EBIT MARGIN AND EARNINGS RECONCILIATIONS 23