Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q3 2016 Earnings Presentation
22 slides from Darden Restaurants's earnings presentation, Apr 5, 2016
Slide 1: Earnings Call Fiscal 2016 Q3
Earnings Call Fiscal 2016 Q3 April 5, 2016
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: 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: Earnings Call Fiscal 2016 Q3
Earnings Call Fiscal 2016 Q3 April 5, 2016
Slide 5: Fiscal Third Quarter Highlights
Fiscal Third Quarter Highlights Darden Sales ($bn) Same-Restaurant Sales Growth - Comparable Calendar Basis 4.2% 3.8% $1.88 $1.85 $1.73 3.4% $1.65 $1.69 $1.60 $1.56 $1.61 2.9% FY14 FY15 FY15 FY16 FY15 FY16 FY15 FY16 Q41 Q1 Q22 Q32 Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Darden Adjusted EPS3 $1.21 $1.08 $0.9
Slide 6: Positive Sales and Earnings Momentum
Positive Sales and Earnings Momentum Q3 Highlights Same-Restaurant Sales1 4.9% 3.4% 4.9% Calendar +600bps Same-Restaurant Sales 2.2% 2.5% 2.8% Same-Restaurant Sales Industry Outperformance1 0.5% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 3.0% Calendar Same- 6th Consecutive Qtr. of Same- OG To G
Slide 7: Strong Segment Profit Growth
Strong Segment Profit Growth Q3 Highlights 2.7% Calendar +400bps Same-Restaurant Sales Same-Restaurant Sales1 Same-Restaurant Sales Industry Outperformance1 5.4% 5.2% 4.8% 3.6% 2.6% 2.7% -0.7% Calendar Same- 12th Consecutive Qtr. of Same- Restaurant Guest Count Restaurant Sales Growth FY15 Q2 FY15 Q
Slide 8: Same-Restaurant Sales Growth at all Brands
Same-Restaurant Sales Growth at all Brands Same-Restaurant Sales1 5.4% 3.1% 3.7% 3.2% 3.6% 2.4% 3.1% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 5.2% 5.3% 3.8% 3.8% 5.3% 1.2% 3.1% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 5.8% 6.3% 3.2% 2.5% 6.3% -0.6% 1.7% FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1
Slide 9: Financial Update
758 ONPCENG owiias eo : JE DARDEN Financial Update RESTAURANTS a Po chame Pee eo = =— ISLAND GRILLE | 3 Pre ter — | iH Td A» ' 5 ae - = Ts q , is = = F _ Va oo aL ; Ei bi : | =
Slide 10: Fiscal Third Quarter Highlights
Fiscal Third Quarter Highlights $1.21* 6.2% Fiscal Calendar Adjusted Diluted EPS from Continuing Operations Same-Restaurant Sales 22% Adjusted Diluted EPS Growth vs $64 million Dividends Paid Last Year 6 Straight Quarters of Double Digit 2.3 million Shares Repurchased Adjusted EPS growth * EPS value
Slide 11: Fiscal Third Quarter Adjusted Earnings
Fiscal Third Quarter Adjusted Earnings Fiscal 2016 Q3 Adjusted Earnings Growth Drivers1 Fiscal 2016 Q3 Diluted Net EPS from Continuing Operations $0.84 Debt Retirement Costs 0.34 Real Estate Plan Implementation 0.03 Fiscal 2016 Q3 Adjusted Diluted Net EPS from Continuing Operations $1.21 Fiscal 2016
Slide 12: Adjusted EBIT Margins increased 200 basis points
Adjusted EBIT Margins increased 200 basis points As As Adjusted Reported Q3 2016 Q3 2016 Q3 2016 vs. Q3 2015 (bps) ($ millions) Favorable/(Unfavorable) Food & Beverage 29.1% $537.8 29.1% 160 Restaurant Labor 31.0% $572.5 31.0% (10) Restaurant Expenses 16.5% $305.2 16.5% (60) Marketing 2.7% $50.7 2.7
Slide 13: Sales and profit increased in all segments
Sales and profit increased in all segments All of our segments had positive sales growth… ($ millions) Fine Dining Other $1,020 $957 $404 $425 $256 $232 $139 $146 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 FY15 Q3 FY16 Q3 …coupled with significant Segment Profit1 growth ($ millions) Fine Dining
Slide 14: Fiscal 2016 Annual Outlook
Fiscal 2016 Annual Outlook Same-Restaurant Total +3.0 to +3.5% Sales Restaurant Openings New Restaurant Openings 18 to 22 Tax Rate Annual Effective Rate 23% to 25% Adjusted Earnings Total $3.48 to $3.52 per Diluted Share1 Growth2 36% to 38% Total $230 - $255 Capital Expenditures New Restaurants $85
Slide 15: Fiscal 2017 Capital Expenditures Outlook
Fiscal 2017 Capital Expenditures Outlook Restaurant Openings New Restaurant Openings 24 to 28 Olive Garden Remodel/Refresh Remodel ~250k-$450k ea. At Least 60 Bar Refresh ~$20k ea. Up to 150 Total $310 - $350 Capital Expenditures New Restaurants $110 - $130 ($ millions) Remodel/Maintenance/Other $20
Slide 16: Long-Term Value Creation Framework
Long-Term Value Creation Framework Annual Target, Over Time Same-Restaurant Sales 1% - 3% Business Performance New Restaurant Growth 2% - 3% 7% - 10% (EAT Growth) EBIT Margin Expansion 10 - 40bps Return of Dividend Payout Ratio 50% - 60% 3% - 5% Cash Share Repurchase ($ millions) $100 - $200 Total S
Slide 17: Additional Information
758 ONPCENG owiias eo : JE DARDEN Additional Information RESTAURANTS a Po chame Pee eo = =— ISLAND GRILLE | 3 Pre ter — | iH Td A» ' 5 ae - = Ts q , is = = F _ Va oo aL ; Ei bi : | =
Slide 18: Reported to Adjusted Earnings Reconciliations
Reported to Adjusted Earnings Reconciliations Fiscal 2016 Q1 Q2 Q3 Reported Diluted Net EPS from Continuing Operations $0.63 $0.23 $0.84 Real Estate Plan Implementation 0.05 0.16 0.03 Debt Retirement Costs - 0.17 0.34 Strategic Action Plan and Other Costs - (0.02) - Adjusted Diluted Net EPS from Con
Slide 19: Reported to Adjusted EBIT Margin and Earnings Reconciliations
Reported to Adjusted EBIT Margin and Earnings Reconciliations Quarter Ended Change (in millions) 2/28/2016 2/22/2015 (bps) Sales - as reported $ 1,847.5 $ 1,730.9 Earnings from continuing operations - as reported $ 108.2 $ 128.4 Interest, net - as reported 83.1 23.3 Income taxes - as reported 29.9 1
Slide 20: Commodities Outlook
Commodities Outlook Product Breakdown and Contract Coverage For Fiscal 2016 Fourth Quarter Mar-May FY2016 Spend by Category Coverage Outlook Beef 19% 80% Low Single Digit Deflation Produce 13% 80% Low Single Digit Inflation Dairy / Oil1 12% 65% Mid Single Digit Inflation Seafood 11% 90% Mid Single
Slide 21: Updated FY2016 Annual Earnings Growth Outlook
Updated FY2016 Annual Earnings Growth Outlook Per Share % Growth Fiscal 2015 Adjusted Diluted Net EPS from Continuing Operations1 $2.63 Remove 53rd Week Impact in Fiscal 2015 (In Q4) (0.07) Fiscal 2015 52 Week Adjusted Diluted Net EPS from Continuing Operations1 $2.56 Growth from Fiscal 2015 (52 Wee
Slide 22: Fiscal and Comparable Calendar Dates
Fiscal and Comparable Calendar Dates Fiscal Calendar Comparable Calendar Q1 June 1, 2015 – August 30, 2015 June 1, 2015 – August 30, 2015 vs. vs. May 26, 2014 – August 24, 2014 June 2, 2014 – August 31, 2014 Q2 August 31, 2015 - November 29, 2015 August 31, 2015 - November 29, 2015 vs. vs. August 25