Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q3 FY2017 Earnings Presentation
22 slides from Darden Restaurants's earnings presentation, Mar 28, 2017
Slide 1: Q3 Results and Cheddar's Scratch Kitchen Acquisition
Q3 Results and Cheddar’s Scratch Kitchen Acquisition
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
Slide 3: Fiscal Third Quarter Highlights
Fiscal Third Quarter Highlights Darden Sales ($bn) Same-Restaurant Sales Growth 2.6% 1.7% $1.75 $1.79 $1.69 $1.71 $1.85 $1.88 1.3% $1.61 $1.64 0.9% FY15 FY16 FY16 FY17 FY16 FY17 FY16 FY17 Q41 Q1 Q2 Q3 Q4 FY16 2 Q1 FY17 Q2 FY17 Q3 FY17 Darden Adjusted EPS3 $1.21 $1.32 $1.01 $1.10 $0.88 $0.68 $0.64 $0
Slide 4: Fiscal Third Quarter Highlights
Fiscal Third Quarter Highlights 1.4% 0.2% Same-Restaurant Sales Same-Restaurant Sales 560 bps 440 bps Same-Restaurant Sales Same-Restaurant Sales Industry Outperformance1 Industry Outperformance1 1 Industry excluding Darden brands.
Slide 5: A full-service restaurant company with …
A full-service restaurant company with … 1 Mission Be financially successful through great people consistently delivering outstanding food, drinks and service in an inviting atmosphere making every guest loyal. 4 Competitive Significant Scale Extensive Data & Insights Rigorous Strategic Planning
Slide 6: Shared Operating Philosophy
Shared Operating Philosophy Culinary Innovation & Execution Attentive Service Scratch prepared modern Team Members as real and genuine classics & American favorites as our scratch cooking Engaging Atmosphere Integrated Marketing Timeless restaurant design Targeted local marketing brings & décor with
Slide 7: Strategic Portfolio Fit
Strategic Portfolio Fit Differentiated “scratch” kitchen concept complements portfolio Allows Darden to compete as an undisputed value leader in the full-service, varied menu category Experienced management team with shared values
Slide 8: Attractive Restaurant-Level Economics
Attractive Restaurant-Level Economics $617M $4.4M Total Revenue Avg. Restaurant Volume ~6,300 ~$13.50 Avg. Wkly. Guest Count Average Check ~17% $72M Average REBITDA1 Adjusted EBITDA1 1 Trailing twelve months ended December 2016
Slide 9: Significant Room for Growth
Significant Room for Growth Currently: 165 Locations Across 28 States* Company-Owned Restaurants Franchisee Restaurants Pipeline: 3 under construction, 6 signed leases, 3 additional LOIs * Represents company-owned and franchised restaurants.
Slide 10: Powerful Brand Perception
Powerful Brand Perception Major CD Chains – Value vs. Intent to Recommend 53% Intent to Recommend Top Box % 48% 43% 38% 33% n= 700 for each brand 28% 38% 40% 42% 44% 46% 48% 50% 52% 54% 56% Value Top Box % Source: Technomic Time Period 12 months ending Sep. '16
Slide 11: Financial Discussion
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Slide 12: Margin Analysis
Margin Analysis Fiscal Q3 2017 vs. PY* (bps) ($ millions) % of Sales Favorable/(Unfavorable) Sales $1,878.7 Food & Beverage $541.5 28.8% 30 Restaurant Labor $578.3 30.8% 20 Restaurant Expenses $320.4 17.1% (60) Marketing $54.6 2.9% (20) Restaurant-Level EBITDA $383.9 20.4% (20) G&A $87.2 4.6% 20 Dep
Slide 13: Segment Performance
Segment Performance Segment Sales ($ millions) Fine Dining Other $1,020 $1,035 $426 $434 $256 $256 $146 $154 FY16 Q3 FY17 Q3 FY16 Q3 FY17 Q3 FY16 Q3 FY17 Q3 FY16 Q3 FY17 Q3 Segment Profit Margin1 Fine Dining Other 23.2% 23.7% 21.6% 21.0% 20.0% 19.6% 17.5% 16.5% FY16 Q3 FY17 Q3 FY16 Q3 FY17 Q3 FY16 Q
Slide 14: Fiscal 2017 Annual Outlook and Fiscal 2018 Capital Spending
Fiscal 2017 Annual Outlook and Fiscal 2018 Capital Spending Total Sales ~2.3% Same-Restaurant Sales ~1.5% Fiscal 2017 Total Inflation ~1.5% Outlook Effective Tax Rate 25% to 26% Earnings per Diluted Share $3.95 to $4.00 New Restaurant Openings 30 to 35 Fiscal 2018 Capital Spending Capital Expenditur
Slide 15: Darden to acquire Cheddar's for $780 million
Darden to acquire Cheddar's for $780 million 10.4x LTM EBITDA1 purchase multiple, net of certain tax benefits estimated at approximately $30 million Additional $10 million for certain Cheddar’s transaction-related tax attributes Reimburse equityholders for pre-closing capital expenditures on new res
Slide 16: Darden to acquire Cheddar's for $780 million
Darden to acquire Cheddar's for $780 million Expected run-rate synergies of $20 to $25 million representing approximately 4% of sales Savings of >5% of sales in prior acquisitions Accretive to Darden’s diluted net earnings per share, excluding acquisition and integration-related expenses Approximate
Slide 17: A full-service restaurant company with …
A full-service restaurant company with … 1 Mission Be financially successful through great people consistently delivering outstanding food, drinks and service in an inviting atmosphere making every guest loyal. 4 Competitive Significant Scale Extensive Data & Insights Rigorous Strategic Planning
Slide 18: Additional Information
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Slide 19: Commodities Outlook – Q4 of Fiscal 2017
Commodities Outlook – Q4 of Fiscal 2017 Product Breakdown and Contract Coverage For Q4 of Fiscal 2017 Q4 FY2017 Spend by Category Coverage Outlook Beef 20% 80% Mid Single Digit Deflation Produce 13% 80% Low Single Digit Inflation Dairy / Oil1 10% 50% Low Single Digit Inflation Seafood 10% 95% Mid
Slide 20: Reported to Adjusted Earnings Reconciliations
Reported to Adjusted Earnings Reconciliations Fiscal 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Earnings Diluted Earnings Diluted Earnings Diluted Earnings Diluted Before Income Tax Net Before Income Tax Net Before Income Tax Net Before Income Tax Net Income Expense Net Earnings Income Expense Net Earning
Slide 21: Reported to Adjusted EBIT Margin and Earnings Reconciliations
Reported to Adjusted EBIT Margin and Earnings Reconciliations Quarter Ended Change (in millions) 2/26/2017 2/28/2016 (bps) Sales - as reported $ 1,878.7 $ 1,847.5 Earnings from continuing operations - as reported $ 166.3 $ 108.2 Interest, net - as reported 9.3 83.1 Income taxes - as reported 53.9 29
Slide 22: Fiscal and Comparable Calendar Dates
Fiscal and Comparable Calendar Dates Same-Restaurant Sales Calculation Dates Fiscal Calendar Basis Comparable Calendar Basis Q4 February 29, 2016 - May 29, 2016 February 29, 2016 - May 29, 2016 vs. vs. February 23, 2015 - May 24, 2015 March 2, 2015 - May 31, 2015