Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q1 FY2016 Earnings Presentation
23 slides from Darden Restaurants's earnings presentation, Sep 22, 2015
Slide 1: FY2016 1st Quarter Earnings Call
FY2016 1st Quarter Earnings Call September 22, 2015 0
Slide 2: Disclaimer
Disclaimer 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 statements in this com
Slide 3: Disclaimer (continued)
Disclaimer IMPORTANT NOTICE (continued) There is no assurance that the REIT transaction described herein will be completed, and there are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein relating to the REIT tran
Slide 4: Non GAAP Information
Non GAAP Information The information in this communication includes financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”), such as adjusted net earnings per diluted share from continuing operations.
Slide 5: Today's topics
Today’s topics First Quarter Highlights Brand Performance Financial Update Updated Fiscal 2016 Outlook 4
Slide 6: Continued progress and improving fundamentals…
Continued progress and improving fundamentals… Darden Sales1 ($bn) Same-Restaurant Sales Growth 3.8% 3.6% 3.4% $1.88 $1.73 $1.65 $1.69 $1.62 $1.60 $1.49 $1.56 1.5% FY14 FY15 FY14 FY15 FY14 FY15 FY15 FY16 Q2 Q3 Q4 Q1 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Darden Adjusted EPS1,2 $1.08 $0.99 $0.71 $0.68 $0.54
Slide 7: Italy… Family… Value
Italy… Family… Value Olive Garden is where people of all ages gather to Value Proposition enjoy the abundance of great Italian food and wine, and be treated like family 3.4% 2.7% 2.2% Four Quarters of Positive Same-Restaurant Sales 0.5% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 Leveraging Core Brand Equities
Slide 8: Italy… Family… Value
Italy… Family… Value Over 30% Two Year Growth 18% OG TO GO Program Growth 22% 23% 14% 15% Q1 Q2 Q3 Q4 FY15 FY16 Tabletop Tablets Restaurant Refresh Rolled out to over half of Olive Garden 19 Restaurants refreshed with varying Restaurants investment levels Planned completion by the end of fisca
Slide 9: Legendary Steaks Done Right
Legendary Steaks Done Right Same-Restaurant Sales Growth Ten consecutive quarters of industry outperformance 5.4% 5.2% 5.0% 4.4% 3.5% 3.2% 2.8% 2.6% 2.4% 0.3% Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Leveraging Our Steak Credentials Performance Drivers • Culina
Slide 10: Specialty Restaurants
Specialty Restaurants Same-Restaurant Sales Brand Elements 5.4% Modern American Gathering Place 3.7% 3.2% 3.4% 100+ Beers on Tap and a Globally Inspired Menu Customized Classic Rock Playlist Creates Vibrant Energy FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 7.2% 6.1% 5.0% 4.4% Nationally Renowned Fine D
Slide 11: Summary of restaurant real estate transactions
Summary of restaurant real estate transactions 64 properties in process (47 closed through end of Q1) Expected cap rates averaging 5.4%1 Individual restaurant sale EBITDAR / rent coverage greater than 3.0x leasebacks Base lease term averages of ~15.4 years Average rent per restaurant of ~$
Slide 12: Restaurant real estate value optimization plan
Restaurant real estate value optimization plan Darden will separate 488 of its restaurant real estate properties across two executions Sale leaseback of 64 restaurant real estate assets (in process) Executing sale leaseback transactions that demonstrate the quality of Darden’s assets Spin of
Slide 13: Financial Update
J. DARDEN FINANCIAL UPDATE
Slide 14: Fiscal 2016 first quarter margins
Fiscal 2016 first quarter margins As Reported As Adjusted Continuing Operations Q1 2016 Q1 2016 vs. Q1 2015 (Bps) Favorable/(Unfavorable) Food & Beverage 29.8% 29.8% 170 Restaurant Labor 31.8% 31.8% 10 Restaurant Expenses 16.1% 16.0% 100 Marketing 3.9% 3.9% 10 Restaurant-Level EBITDA 18.4% 18.5% 290
Slide 15: Sales and profit increases in all segments…
Sales and profit increases in all segments… All of our segments had positive sales growth… Fine Dining Other Same-restaurant Sales Growth +2.7% +4.4% $945 $913 $357 $384 $245 $221 $104 $113 FY15 Q1 FY16 Q1 FY15 Q1 FY16 Q1 FY15 Q1 FY16 Q1 FY15 Q1 FY16 Q1 …coupled with significant Segment Profit1 grow
Slide 16: Operating margin expansion to moderate in the second half of fiscal 2016
Operating margin expansion to moderate in the second half of fiscal 2016 A Margin expansion started in the back half of last year B We expect expansion to moderate the back half of this year C However, we expect it will be more accretive than the front half over two years 1H 2H 1H 2H 1H 2H Fiscal 20
Slide 17: Updated FY2016 Annual Earnings Growth Outlook
Updated FY2016 Annual Earnings Growth Outlook Per Share % Growth FY2015 Adjusted Diluted Net EPS from Continuing Operations1 $2.63 Remove 53rd Week Impact in Fiscal 2015 (In Q4) (0.07) FY2015 52 Week Adjusted Diluted Net EPS from Continuing Operations1 $2.56 Growth from FY15 (52 Week Year) to FY162
Slide 18: Thank you to our 150,000 Team Members!
Thank you to our 150,000 Team Members! 17
Slide 19: Additional Information
J. DARDEN ADDITIONAL INFORMATION
Slide 20: FY2016 1st Quarter Earnings Call
FY2016 1st Quarter Earnings Call September 22, 2015 19
Slide 21: Fiscal 2016 Q1 Reported to Adjusted Earnings Reconciliation
Fiscal 2016 Q1 Reported to Adjusted Earnings Reconciliation Fiscal Q1 Reported to Adjusted Earnings Reconciliation Q1 2016 Q1 2015 % Change Reported Diluted Net EPS from Continuing Operations $0.63 ($0.14) NM Real Estate Plan Implementation $0.05 Other Strategic Action Plan Costs $0.04 Asset Impairm
Slide 22: Fiscal 2015 and 2014 Quarterly Reported to Adjusted Earnings Reconciliation
Fiscal 2015 and 2014 Quarterly Reported to Adjusted Earnings Reconciliation Fiscal 2015 Q1 Q2 Q3 Q4* Annual* Reported Diluted Net EPS from Continuing Operations ($0.14) ($0.24) $1.01 $0.92 $1.51 Red Lobster-Related Shared Support Costs 0.02 0.00 0.00 0.00 0.02 Other Strategic Action Plan Costs 0.04
Slide 23: FY2016 Commodities Outlook
FY2016 Commodities Outlook Product Breakdown and Contract Coverage For Fiscal 2016 Sep-Nov Dec-May FY2016 FY2016 Spend by Category Coverage Outlook Coverage Outlook Low single-digit Low single-digit Beef 19% 80% 30% Inflation Inflation Low single-digit Low single-digit Produce 13% 80% 80% Inflatio