Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Merger or Acquisition (December 2013)
19 slides from Darden Restaurants's merger presentation, Dec 19, 2013
Slide 1: Comprehensive Plan to Enhance Shareholder Value
December 19, 2013 Comprehensive Plan to Enhance Shareholder Value Exhibit 99.1
Slide 2: Forward-Looking Statements
® Forward-Looking Statements 2 During the course of this presentation, Darden Restaurants’ officers and employees may make forward-looking statements concerning the Company’s expectations, goals or objectives. Forward-looking statements are made under the Safe Harbor provisions of the Private Securi
Slide 3: Summary Overview
® Summary Overview 3 Comprehensive plan to enhance shareholder value addresses important changes in consumer demand and dynamics and leverages Darden’s position as the premier full service restaurant company Key elements of the plan: – Separate Red Lobster from Darden – Reduce unit growth, lower
Slide 4: Spin-Off Transaction Details
® Spin-Off Transaction Details 4 Transaction Structure Proposed tax free spin-off of Red Lobster, which will result in 100% pro rata distribution of Red Lobster stock “New Red Lobster” to become a publicly-traded company Expected Timing Expect to close in early FY2015¹ Subject to regulatory
Slide 5: Strategic Rationale for Separation
® Strategic Rationale for Separation 5 Current portfolio hampered by divergent operating priorities, capital requirements, sales and earnings growth prospects and volatility profiles of Red Lobster and the rest of Darden Transaction transforms the portfolio into two independent companies that ca
Slide 6: Details of New Unit Growth Strategy, Cost Management Focus and Capital Return
® Details of New Unit Growth Strategy, Cost Management Focus and Capital Return for Darden ex. Red Lobster 6 Same-Restaurant Sales 1– 2% growth 2 – 3% growth New Unit Growth Olive Garden ~1% new unit growth ~10 new units annually Minimal new units LongHorn 5 – 6% new unit growth 30 – 35 new units an
Slide 7: New Darden and New Red Lobster Strategic Focus and Financial Metrics
® “New Darden” “New Red Lobster” Strategic Focus • Retaining core customers and expanding customer base to grow same-restaurant sales and market share • Selective investment in expanding customer base and new unit growth to drive cash flow growth and growth in return of capital to shareholders • Ret
Slide 8: Overview of Historical Financial Performance
® Darden ex. Red Lobster Red Lobster Re v e nue & % G ro w th ($ in b il lion s ) E BIT D A ( U naudit e d ) & % M a rgi n ($ in m il lion s ) Overview of Historical Financial Performance ¹ Darden completed the acquisition of Yard House in Aug-2012. ² Reflects unaudited LTM figures as of Q2 FY14 (24
Slide 9: Overview of the New Darden
® Overview of the “New Darden” 9 Premier Brands Stronger and more stable growth, reduced debt and better long-term shareholder value creation prospects Winning Culture Key Characteristics Balance of proven brands with leading positions and proven but earlier stage brands with significant runway
Slide 10: Portfolio of Premier Brands
® Portfolio of Premier Brands 10 Sales Profile ($ in billions) Unit Information¹ Key Highlights Olive Garden • Units: 834 • AUV: $4.6mm • Return on Sales²: 17% • FY13 SRS: (1.5)% • #1 Italian full service dining concept in the U.S. • Among the largest full service dining restaurant chains in the U.S
Slide 11: Continued Focus on Return of Capital
® Continued Focus on Return of Capital Follows Nearly $4 Billion Returned to Shareholders Over the Past Decade 11 Source: Capital IQ Note: Fiscal year ends in May. $ in millions, except for per share data or unless otherwise noted. ¹ Over the FY04-FY13 period. Cumulative Share Repurchase¹: $ 2.6bn C
Slide 12: What's Different for Darden Post Separation
® What’s Different for Darden Post Separation 12 Same Different Leading multi-brand operator Higher and more consistent sales and earnings growth Commitment to quality and menu innovation More balanced commodity purchasing profile Commitment to return of capital Stronger free cash flow from reduced
Slide 13: Overview of the New Red Lobster
® Overview of the “New Red Lobster” 13 Key Characteristics Key Strengths/Opportunities Ability to streamline operations and support higher leverage while still providing attractive capital return profile Expect low single digit revenue growth to be driven by modestly increasing same-restaurant sal
Slide 14: New Red Lobster Management Team
® “New Red Lobster” Management Team 14 Brings extensive leadership experience in the foodservice industry Currently serves as President of the Specialty Restaurant Group and New Business for Darden Served as President of Red Lobster from FY05 – 11, during which time he spearheaded the revitali
Slide 15: New Red Lobster Management Team (Cont'd)
® “New Red Lobster” Management Team (Cont’d) 15 Salli Setta President Brad Richmond Chief Financial and Administrative Officer¹ Currently serves as President of Red Lobster and will continue in this role Previously served as Red Lobster’s Executive Vice President of Marketing for 8 years Curre
Slide 16: What's Different for Red Lobster Post Separation
® What’s Different for Red Lobster Post Separation 16 Same Different Iconic American casual dining brand More tailored operating initiatives focused on maintaining stable sales by retaining core guests Dominates the casual dining “seafood specialist” segment Ability to further differentiate Red Lobs
Slide 17: Updated FY 2014 Guidance
® Updated FY 2014 Guidance 17 Previous Updated Unit Growth ~80 net new restaurants ~75 net new restaurants Same-Restaurant-Sales Flat on a blended basis for Red Lobster, Olive Garden and LongHorn Red Lobster: 4 – 5% Decrease Olive Garden: 1 – 2% Decrease LongHorn: 2 – 3% Increase Revenue Growth¹ 6 –
Slide 18: Next Steps
® Next Steps 18 Build separate organizational structures, including corporate functions Prepare and audit separate accounts Explore sale opportunities Complete review process with SEC Confirm tax-free status of spin-off Create separate capital structures Obtain third party approvals
Slide 19: Nourish & Delight
— NOURISH & DELIGHT Everyone We Serve.
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