Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q3 FY2018 Earnings Presentation
21 slides from Darden Restaurants's earnings presentation, Mar 22, 2018
Slide 1: Earnings Call Fiscal 2018: Q3 Results
EARNINGS CALL FISCAL 2018: Q3 RESULTS March 22, 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: Fiscal Third Quarter Highlights
Fiscal Third Quarter Highlights DARDEN SALES ($B) SAME-RESTAURANT SALES GROWTH1 3.3% 3.1% 2.0% $1.94 $2.13 1.7% $1.79 $1.93 $1.71 $1.64 $1.88 $1.88 FY16 FY17 FY17 FY18 FY17 FY18 FY17 FY18 Q4 Q1 Q2 Q3 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 DARDEN ADJUSTED EPS2 $1.71 $1.18 $1.32 $1.10 $0.99 $0.88 $0.73 $0.64
Slide 4: Fiscal Third Quarter Highlights
Fiscal Third Quarter Highlights 2.2% ~310 BPS ~440 BPS SAME-RESTAURANT SALES GROWTH SAME-RESTAURANT SALES INDUSTRY SAME-RESTAURANT GUEST COUNTS OUTPERFORMANCE1 INDUSTRY OUTPERFORMANCE1 2.0% ~290 BPS ~420 BPS SAME-RESTAURANT SALES INDUSTRY SAME-RESTAURANT GUEST COUNTS SAME-RESTAURANT SALES GROWTH OUT
Slide 5: Cheddar's Former Franchises Driving Same-Restaurant Sales Declines
Cheddar’s Former Franchises Driving Same-Restaurant Sales Declines Fiscal 2018 Q3 Same-Restaurant Sales Legacy Restaurants Former Franchises Total -0.1% -2.2% -5.8%
Slide 6: XE DARDEN
XE DARDEN longugny Cheddars <p RESTAURANTS edie VS
Slide 7: J DARDEN
J DARDEN Cheddars aD RESTAURANTS a
Slide 8: Financial Discussion
SE DARDEN RESTAURANTS Financial Discussion
Slide 9: Fiscal Third Quarter Highlights
Fiscal Third Quarter Highlights 13.3% 2.0 % SAME-RESTAURANT SALES $1.71 ADJUSTED DILUTED EPS FROM TOTAL SALES GROWTH GROWTH1 CONTINUING OPERATIONS2 29.5% ADJUSTED DILUTED EPS GROWTH $78 MILLION $19 MILLION VS LAST YEAR2 DIVIDENDS PAID SHARE REPURCHASES 1 Excludes Cheddar’s Scratch Kitchen. 2 EPS val
Slide 10: Margin Analysis
Margin Analysis As Reported As Adjusted Q3 2018 Q3 2018 Q3 2018 vs. Q3 2017 (bps) ($ millions) ($ millions) % of Sales Favorable/(Unfavorable) Sales $2,128.4 $2,128.4 Food & Beverage $603.3 $603.3 28.3% 50 Restaurant Labor $683.0 $683.0 32.1% (130) Restaurant Expenses $360.8 $360.8 17.0% 10 Marketin
Slide 11: Q3 Restaurant Labor % of Sales
Q3 Restaurant Labor % of Sales 0.4% 32.1% 0.4% 1.3% 30.8% 0.5% 0.3% Fiscal 2017 Pricing Leverage Productivity Net Inflation Cheddar's Mix Workforce Fiscal 2018 of New Investments Restaurants & Mark to Market Green is a favorable variance to prior year, red is unfavorable
Slide 12: Mark to Market Negatively Impacting EBIT, Offset in Tax
Mark to Market Negatively Impacting EBIT, Offset in Tax Mark-to-Market As Adjusted Impact Q3 2018 Q3 2018 Q3 2018 Q3 2018 ($ millions) % of Sales ($ millions) (bps) Favorable / Sales $2,128.4 (Unfavorable) Restaurant Labor $683.0 32.1% ($1.5) (10) Restaurant-Level EBITDA $422.4 19.8% ($1.5) (10) G&A
Slide 13: Normalized Q3 Effective Tax Rate of ~19%
Normalized Q3 Effective Tax Rate of ~19% Performance Adjusted Effective Tax Rate 4.4% Q1-Q2 Tax Reform True Up ~7% Included in January 8, Resolution of Other Tax Matters ~4% 2018 Guidance Equity (incl. DRI) Market Impact ~4% Normalized Performance Adjusted Effective Tax Rate ~19%
Slide 14: Fiscal Third Quarter Segment Performance
Fiscal Third Quarter Segment Performance Segment Sales ($ millions) Fine Dining Other $1,035 $1,073 $438 $434 $453 $154 $164 $256 FY17 Q3 FY18 Q3 FY17 Q3 FY18 Q3 FY17 Q3 FY18 Q3 FY17 Q3 FY18 Q3 Segment Profit Margin1 Fine Dining Other 23.7% 24.5% 21.0% 21.1% 19.9% 19.6% 17.5% 15.0% FY17 Q3 FY18 Q3 F
Slide 15: Increased Fiscal 2018 EPS Outlook
Increased Fiscal 2018 EPS Outlook Current Prior (03/22/18) (01/08/18) Same-restaurant sales growth1 ~ 2% ~ 2% New restaurant openings ~ 40 ~ 40 Total sales growth ~ 13% ~ 13% Effective tax rate 16.0% to 16.5% ~ 18% Adjusted earnings per diluted share2 $4.75 to $4.80 $4.70 to $4.78 Capital expenditur
Slide 16: Preliminary Fiscal 2019 Outlook
Preliminary Fiscal 2019 Outlook New restaurants 45 to 50 Capital expenditures $425M to $475M New restaurants $225M to $260M Remodels/Maintenance/Tech/Other $200M to $215M Effective tax rate 12% to 13% Incremental investments $15MM Diluted avg. common shares outstanding ~125M
Slide 17: Additional Information
SE DARDEN RESTAURANTS Additional Information
Slide 18: Commodities Outlook – Q4 Fiscal 2018
Commodities Outlook – Q4 Fiscal 2018 March-May FY2018 Annual Spend by Category Coverage Outlook Beef 19% 80% Flat Produce 13% 75% Low Single Digit Inflation Dairy / Oil1 10% 55% Low Single Digit Inflation Seafood 10% 90% Flat Wheat2 7% 95% Flat Chicken 6% 95% Flat Non-Perishable / Other 35% 60% Low
Slide 19: Reported to Adjusted Earnings Reconciliations
Reported to Adjusted Earnings Reconciliations Fiscal 2018 Q1 2018 Q2 2018 Q3 2018 Earnings Income Diluted Earnings Income Diluted Earnings Income Diluted Before Tax Net Before Tax Net Before Tax Net Income Expense Net Earnings Income Expense Net Earnings Income Expense Net Earnings $ in millions, ex
Slide 20: Reconciliation of Fiscal 2018 Annual Reported to Adjusted Earnings Outlook
Reconciliation of Fiscal 2018 Annual Reported to Adjusted Earnings Outlook Fiscal 2018 Outlook Current (03/22/18) Prior (01/08/18) Reported diluted net earnings per share from continuing operations $4.73 to $4.78 $5.17 to $5.27 Cheddar's integration expense $0.14 $0.14 $0.13 $0.10 Debt retirement co
Slide 21: Reported to Adjusted EBIT Margin and Earnings Reconciliations
Reported to Adjusted EBIT Margin and Earnings Reconciliations Quarter Ended Change (in millions) 2/25/2018 2/26/2017 (bps) Sales - as reported $ 2,128.4 $ 1,878.7 Earnings from continuing operations - as reported $ 218.5 $ 166.3 Interest, net - as reported 117.4 9.3 Income tax expense (benefit) - as