Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q3 FY2015 Earnings Presentation
24 slides from Darden Restaurants's earnings presentation, Mar 20, 2015
Slide 1: FY2015 Third Quarter Earnings Call
FY2015 Third Quarter Earnings Call MARCH 20, 2015
Slide 2: Forward-Looking Statement
Forward-Looking Statement 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
Slide 3: 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 4: Today's Topics
Today’s Topics Outline Operating Philosophy Real Estate Evaluation Process Update Third Quarter Olive Garden Performance Third Quarter Margin Analysis Darden Fourth Quarter and Annual Expectations 4
Slide 5: Our Operating Philosophy – "Back to Basics"
Our Operating Philosophy – “Back to Basics” Increasing the Core Operational Fundamentals of the business, providing an outstanding guest experience rooted in: • GreatCulinary food Attentive Service Engaging Integrated Innovation Atmosphere Marketing Darden enables brands to reach their full pote
Slide 6: Real Estate Evaluation Process Update
Real Estate Evaluation Process Update Continuing to evaluate real estate portfolio • Various options still being evaluated • May be multiple, staged transactions 31 owned properties listed for sale leaseback to help inform our thinking on value creation opportunities • Initially marketed 16 prop
Slide 7: Darden Delivered Strong Third Quarter Results
Darden Delivered Strong Third Quarter Results Total sales growth of 6.9% versus last year, driven by Same- Restaurant Sales growth in all brands, and new unit growth Adjusted EBIT margin* as a percent of sales increase of 200 basis points through improved cost management and sales leverage Led
Slide 8: 8
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Slide 9: Seven Consecutive Months of Same-Restaurant Sales Growth…
Seven Consecutive Months of Same-Restaurant Sales Growth… Olive Garden Same-Restaurant Sales Performance First back-to- 2.4% 2.5% back quarter 2.2% increase since 2010 1.6% 0.9% 0.6% 0.7% 0.5% 0.2% -1.3% Q1 Q2 Q3 August September October November December January February 9
Slide 10: …With Significant Margin Expansion
…With Significant Margin Expansion Olive Garden Restaurant-Level Margin (% of Sales) 23.0% 20.6% 240 Basis Margin Expansion Driven by: Point Increase 1. Direct Labor Productivity Improvements 2. Reduced Marketing Spending with Fewer Weeks of Price-Pointed Promotions FY14 Q3 FY15 Q3 Note: Restaurant-
Slide 11: Olive Garden Critical Initiatives
Olive Garden Critical Initiatives Operations Core Menu New Approach Execution Restaurant & Beverage to Advertising Food, Service Reimaging Innovation and Promotions & Atmosphere Reinforce value leadership, Deliver an Improve quality expand choice integrated Create superior and intensify & variety an
Slide 12: Cucina Mia Menu Reduces Need for Constant Price Pointed Promotions
Cucina Mia Menu Reduces Need for Constant Price Pointed Promotions 12
Slide 13: ToGo Capitalizing on Guests' Need for Convenience with Strong Results
ToGo Capitalizing on Guests’ Need for Convenience with Strong Results ToGo Sales per Restaurant Week ($Thousands) $9.0 $7.4 22% Increase Q3 FY14 Q3 FY15 13
Slide 14: Olive Garden Remodel Test Showing Promising Results
Olive Garden Remodel Test Showing Promising Results High single digit sales lift vs. control group in current 13 restaurant test Continue to test different investment levels to Optimize Returns • Adding 6 restaurants to the test with refined investment levels Tailor future remodels to individu
Slide 15: Encouraging Olive Garden's Results
Encouraging Olive Garden’s Results Seven consecutive months of Same-Restaurant Sales Growth 240 basis point increase in Restaurant-Level Margin $23 million Increase in Olive Garden EBIT* in the 3rd quarter from last year * Non-GAAP number. Excludes interest and taxes. 15
Slide 16: Today's Topics
Today’s Topics Outline Operating Philosophy Real Estate Evaluation Process Update Third Quarter Olive Garden Performance Third Quarter Margin Analysis Darden Fourth Quarter and Annual Expectations 16
Slide 17: Fiscal 2015 Third Quarter Margins
Fiscal 2015 Third Quarter Margins As Reported As Adjusted Q3 2015 Q3 2015 vs. Q3 2014 (Bps) Favorable/(Unfavorable) Food & Beverage 30.7% 30.7% (70) Restaurant Labor 30.9% 30.9% 50 Restaurant Expenses 15.9% 15.9% 80 Gross Margin 22.5% 22.5% 70 SG&A 7.8% 7.6% 120 Impairments 0.3% 0.0% 0 Depreciation
Slide 18: FY2015 Fourth Quarter and Annual Outlook
FY2015 Fourth Quarter and Annual Outlook Same-Restaurant Sales Q4E* AnnualE* Darden Blended 2.0% - 3.0% 2.0% to 2.5% Olive Garden 1.5% - 2.5% 0.5% to 1.0% LongHorn Steakhouse 4.0% - 5.0% 3.5% to 4.0% Specialty Restaurants 2.5% - 3.5% 3.0% to 3.5% Fiscal 2015 Reported to Adjusted Earnings Reconciliat
Slide 19: Since October 2014, We Have Identified $90 - $100 million in Annualized Cost Efficiencies
Since October 2014, We Have Identified $90 - $100 million in Annualized Cost Efficiencies Once Fully Implemented Estimated Annual Cost Savings ($Millions) $15 - $20 $90 - $100 Supply $40 - $50 Chain and Other Margin ~$30 SG&A Fiscal 2015 Fiscal 2016 Fiscal 2017 Cumulative 19
Slide 20: Thank You to Our 150,000 Team Members!
Thank You to Our 150,000 Team Members! 20
Slide 21: Questions
Questions 21
Slide 22: Additional Information
Additional Information 22
Slide 23: 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 Q4E* AnnualE* Diluted Net EPS from Continuing Operations ($0.14) ($0.24) $1.01 $0.91 - $0.94 $1.50 - $1.53 Red Lobster-Related Shared Support Costs 0.02 0.00 0.00 0.02 Other Strategic Action Plan Costs 0
Slide 24: Darden
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