Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Investor Presentation (July 2018)
31 slides from Darden Restaurants's investor presentation, July 2018
Slide 1: Investor Presentation
Investor Presentation July 2018
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: Darden Restaurants: An Attractive Investment
Darden Restaurants: An Attractive Investment • Premier full-service restaurant company with unifying mission and compelling strategy for generating attractive shareholder returns • Darden’s competitive advantages drive sales and expand margins • Differentiated and iconic brands positioned to increas
Slide 4: A Full-Service Restaurant Company With...
A FULL-SERVICE RESTAURANT COMPANY WITH … 1 Be financially successful through great people consistently delivering outstanding food, drinks and service in an inviting atmosphere making every guest loyal. MISSION 4 Significant Scale Extensive Data & Insights Rigorous Strategic Planning Results-
Slide 5: Darden's Competitive Advantages
Darden’s Competitive Advantages • Support best-in-class restaurant brands by helping them reach their full potential: Significant Scale Extensive Data & Insights Rigorous Strategic Planning Results-Oriented Culture 5
Slide 6: Scale: Enables Supply Chain, G&A and People Advantages
Scale: Enables Supply Chain, G&A and People Advantages Scale enables deep relationships with vendor partners Supply Use supplier negotiation expertise and leverage Chain Consolidate vendors to achieve meaningful supplier relationships Extend favorable Darden product pricing across all brands
Slide 7: Extensive Data and Insights: Enhance Value
Extensive Data and Insights: Enhance Value Validated, insight-driven decisions Breadth and depth of data leads to richer Insight Example insights Build guest relationships Deep industry and consumer Develop relevant, Action understanding enables turning insights into targeted content actions Tailor
Slide 8: Rigorous Strategic Planning: Maximize Value
Rigorous Strategic Planning: Maximize Value Elevate enterprise value through Corporate Strategy Ensure we have the right portfolio of brands with a compelling logical fit Align strategies and coordinate operations to maximize the portfolio value Capture the available synergies across the busin
Slide 9: Results-Oriented Culture: Grow our Business and our People
Results-Oriented Culture: Grow our Business and our People Focused talent and development strategy Performance Accountability Transparency 1 Superior Set challenging goals Coach employees and provide feedback Let every employee know where they stand Behavior Differentiation Employment Proposition Up
Slide 10: Portfolio of Differentiated and Iconic Brands
Portfolio of Differentiated and Iconic Brands Total Average Annual Annual Same- Restaurants Sales Restaurant Sales Restaurant Sales $4.1 B $4.8 M 856 2.4% $1.7 B $3.4 M 504 2.7% $653 M $4.3 M 156 (2.0%) $572 M $8.3 M 72 1.1% $441 M $7.7 M 58 2.8% $250 M $6.1 M 42 (0.6%) $237 M $6.2 M 39 1.1% $134 M
Slide 11: Vision: To Be The Choice For Casual Dining
VISION: TO BE THE CHOICE FOR CASUAL DINING; FAMOUS FOR SERVING UP ITALIAN GENEROSITY AND WELCOMING EVERYONE LIKE FAMILY! COMPETITIVE ADVANTAGES STRONG ABUNDANT, CRAVEABLE TRUSTED, VALUE ITALIAN FOOD ICONIC BRAND THE NUMBERS 856 RESTAURANTS $4.1B ANNUAL SALES $4.8M AVERAGE ANNUAL RESTAURANT SALES As
Slide 12: Vision: To Become America's Favorite Steakhouse
VISION: TO BECOME AMERICA’S FAVORITE STEAKHOUSE … ONE GUEST, ONE COMMUNITY AT A TIME COMPETITIVE ADVANTAGES FRESH INGREDIENTS, ENGAGED SIMPLE BOLDLY SEASONED CULTURE OPERATING MODEL THE NUMBERS 504 RESTAURANTS $1.7B ANNUAL SALES $3.4M AVERAGE ANNUAL RESTAURANT SALES As of May 27, 2018 12
Slide 13: Vision: To Be America's Everyday Kitchen
VISION: TO BE AMERICA’S EVERYDAY KITCHEN COMPETITIVE ADVANTAGES WOW! SPEED OF VALUE EXPERIENCE THE NUMBERS 156 RESTAURANTS $653M ANNUAL SALES $4.3M AVERAGE ANNUAL RESTAURANT SALES As of May 27, 2018 13
Slide 14: Vision: To Be The Modern American Gathering Place
VISION: TO BE THE MODERN AMERICAN GATHERING PLACE REVERED FOR ITS DRAFT BEER AND CULINARY OFFERINGS COMPETITIVE ADVANTAGES BROAD DISTINCTIVE SUPERIOR APPEAL OFFERING ECONOMICS THE NUMBERS 72 RESTAURANTS $572M ANNUAL SALES $8.3M AVERAGE ANNUAL RESTAURANT SALES As of May 27, 2018 14
Slide 15: Vision: To Be The Ultimate Relationship Brand
VISION: TO BE THE ULTIMATE RELATIONSHIP BRAND IN LUXURY HOSPITALITY BY SERVING AS A PRIVATE CLUB OPEN TO THE PUBLIC COMPETITIVE ADVANTAGES EXCEPTIONALLY, PROPRIETARY BEST-IN-CLASS DISTINCTIVE BEEF PLATFORM PEOPLE CULTURE GUEST EXPERIENCES THE NUMBERS 58 RESTAURANTS $441M ANNUAL SALES $7.7M AVERAGE A
Slide 16: Vision: To Be A Favorite Restaurant
VISION: TO BE A FAVORITE RESTAURANT THAT INSPIRES PEOPLE TO DISCOVER A BETTER WAY TO EAT COMPETITIVE ADVANTAGES A BETTER SHARING FRESHNESS WAY TO EAT CULTURE THE NUMBERS 42 RESTAURANTS $250M ANNUAL SALES $6.1M AVERAGE ANNUAL RESTAURANT SALES As of May 27, 2018 16
Slide 17: Vision: To Be The Choice For Experiential Dining
VISION: TO BE THE CHOICE FOR EXPERIENTIAL DRINKING AND DINING, DELIVERING CARIBBEAN FLAVORS, ISLAND VIBES AND GOOD TIMES COMPETITIVE ADVANTAGES UNIQUE, CARIBBEAN FUN, ISLAND EXPERIENCE FOOD & BEVERAGE AMPLIFIED BY HAPPY HOUR & EVENTS THE NUMBERS 39 RESTAURANTS $237M ANNUAL SALES $6.2M AVERAGE ANNUAL
Slide 18: Vision: To Be The Ultimate Relationship Brand
VISION: TO BE THE ULTIMATE RELATIONSHIP BRAND IN LUXURY HOSPITALITY BY SERVING AS A PRIVATE CLUB OPEN TO THE PUBLIC COMPETITIVE ADVANTAGES V-LOUNGE PRIME SEAFOOD INDULGENCE PLATFORM CULTURE THE NUMBERS 19 RESTAURANTS $134M ANNUAL SALES $7.1M AVERAGE ANNUAL RESTAURANT SALES As of May 27, 2018 18
Slide 19: Franchise Operations
Franchise Operations The Brands Olive Garden LongHorn The Capital Grille Cheddar’s Scratch Kitchen Bahama Breeze Olive Garden, Puerto Rico The Purpose Leverage Darden’s iconic brands with select world class partners The Advantage Vibrant brand portfolio with global appeal The Capital Grille,
Slide 20: Value Creating Business Model
Value Creating Business Model • History of Stable and Growing Cash Flows • Strong Balance Sheet with Investment Grade Profile • Significant Return of Capital • Commitment to Superior Long-Term Total Shareholder Return • Fiscal 2019 Annual Outlook 20
Slide 21: History of Stable and Growing Cash Flows
History of Stable and Growing Cash Flows Adjusted EBITDA1 from Continuing Operations ($M) $1,083 $918 $942 $749 $698 $679 $655 $630 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018 CapEx $398 $458 $510 $415 $297 $228 $293 $396 Adjusted EBITDA / 1.6x 1.5
Slide 22: Strong Balance Sheet – Investment Grade Profile
Strong Balance Sheet – Investment Grade Profile Total Debt to Adjusted EBITDA Adjusted Debt to Adjusted EBITDAR1 Investment grade credit profile provides meaningful competitive advantages Flexible access to cost-effective debt financing 3.6x Better pricing on leases supporting efficient new re
Slide 23: History of Returning Significant Capital
History of Returning Significant Capital Fiscal 2008-2018 Cumulative Capital Returns Red Lobster Sale Cumulative Share Repurchase $ 2.4 B 49% $781 Cumulative Dividends Paid $ 2.4 B 51% Cheddar’s $599 Acquisition $560 FCPT $549 Spin-Off $509 $502 $453 Yard House RARE Acquisition 2007 Acquisition $235
Slide 24: Long-Term Value Creation Framework
Long-Term Value Creation Framework Annual Target, Over Time Same-Restaurant Sales 1% - 3% Business Performance New Restaurant Sales Growth 2% - 3% 7% - 10% (EAT Growth) EBIT Margin Expansion 10 - 30bps Return of Dividend Payout Ratio 50% - 60% 3% - 5% Cash Share Repurchase ($millions) $150 - $250 To
Slide 25: Darden Ten-Year Annualized Total Shareholder Return
Darden Ten-Year Annualized Total Shareholder Return 24% 17% 17% 16% 14% 14% 13% 12% 11% 12% 11% 10% 11% 10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ten Fiscal Years Ended May Note: Rounded to the nearest percentage point 25
Slide 26: Fiscal 2019 Annual Outlook
Fiscal 2019 Annual Outlook SALES MARGIN Total Sales Growth Total Inflation: ~2% 4% to 5% Commodities: 0% to 1% Labor: 3.5% to 4.5% Same-Restaurant Sales Growth Run Rate Investments 1% to 2% ~$35 million Restaurant Openings Incremental Synergies 45 to 50 ~$13 million Capital Spending Effective Tax Ra
Slide 27: Value Creating Business Model
Value Creating Business Model • History of stable and growing cash flows Significant free cash flow after healthy investment in underlying business • Strong balance sheet with investment grade profile Flexible access to cost-effective debt financing Opportunities to add more leverage as needed
Slide 28: Additional Information
SE DARDEN RESTAURANTS Additional Information
Slide 29: Large and Stable $86B Casual Dining Industry
Large and Stable $86B Casual Dining Industry - 19% of the Total Restaurant Industry 2018 Quick Service 2018 Full Service % of total 51% 7% 6% 12% 19% 5% $230 $86 $33 $29 $56 $20 Traditional QSR QSR retail Fast casual Midscale Casual dining Fine dining Though casual dining industry growth has …major
Slide 30: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Non‐GAAP Reporting - Slide 21 Reconciliations In addition to U.S. generally accepted accounting principles (GAAP) reporting, Darden has presented certain measures on a non -GAAP basis in the slides for its Investor Presentation dated January 2016, such Adjusted Earnings Before Inter
Slide 31: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Fiscal Year Ended $ in Millions 5/27/2018 5/28/2017 5/29/2016 5/31/2015 5/25/2014 Net earnings $ 596.0 $ 479.1 $ 375.0 $ 709.5 $ 286.2 Interest, net 161.1 40.2 172.5 192.3 134.4 (1) Income taxes (2.9) 150.6 93.4 323.7 23.7 Depreciation and amortization (1) 313.1 272.
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