Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q4 2016 Earnings Presentation
29 slides from Darden Restaurants's earnings presentation, Jun 30, 2016
Slide 1: Earnings Call Fiscal 2016 Q4
Earnings Call Fiscal 2016 Q4 June 30, 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 Q4
Earnings Call Fiscal 2016 Q4 June 30, 2016
Slide 5: Fiscal Fourth Quarter Highlights
Fiscal Fourth Quarter Highlights Darden Sales ($bn) Same-Restaurant Sales Growth - Comparable Calendar Basis 4.2% $1.85 $1.69 $1.73 $1.75 $1.79 3.4% $1.60 $1.56 $1.61 2.9% 2.6% FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16 Q1 Q21 Q31 Q42 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Darden Adjusted EPS3 $1.21 $1.10 $0.
Slide 6: Positive Sales and Earnings Momentum
Positive Sales and Earnings Momentum Q4 Highlights Same-Restaurant Sales1 4.9% 2.8% 2.5% 2.4% 2.4% Calendar +460 bps Same-Restaurant Sales Same-Restaurant Sales Industry Outperformance1 FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 OG To Go Sales Growth vs. Year Ago 0.4% Calendar Same- +40% OG To Go 18% 17% 20% 1
Slide 7: Continued Segment Profit Margin Growth
Continued Segment Profit Margin Growth Q4 Highlights Same-Restaurant Sales1 4.8% 3.6% 2.7% 2.2% 2.2% Calendar +440 bps Same-Restaurant Sales FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 Same-Restaurant Sales Industry Outperformance1 Segment Profit Margin Percent2 21.3%3 20.3%3 1.3% 1.3% +250 bps 17.8% -2.0% 15.4
Slide 8: Same-Restaurant Sales Growth at all Brands
Same-Restaurant Sales Growth at all Brands Same-Restaurant Sales1 3.6% 3.1% 2.4% 1.4% 1.4% FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 5.3% 5.0% 3.8% 3.8% 5.0% FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 5.8% 6.3% 4.7% 4.7% 2.5% FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 6.4% 4.3% 3.7% 0.9% 3.7% FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 3.9% 2
Slide 9: Financial Update
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Slide 10: Fiscal Fourth Quarter Highlights
Fiscal Fourth Quarter Highlights $1.10 1.7% Fiscal Calendar Diluted EPS from Continuing Operations Same-Restaurant Sales 8.9% 13% Operating Performance Adjusted Diluted EPS Growth vs Last Year1 Growth vs. Last Year1 $63 million ~700 thousand Dividends Paid Shares Repurchased 1 EPS values adjusted fo
Slide 11: Adjusted EBIT Margins increased 60 basis points
Adjusted EBIT Margins increased 60 basis points As As Adjusted Reported Q4 2016 Q4 2016 Q4 2016 vs. Q4 2015 (bps) ($ millions) Favorable/(Unfavorable) Food & Beverage 28.9% $517.0 28.9% 130 Restaurant Labor 31.1% $556.9 31.1% Flat Restaurant Expenses 17.2% $308.4 17.2% (150) Marketing 3.5% $63.4 3.5
Slide 12: Segment Performance
Segment Performance All of our segments had positive sales growth on a 13 week basis… ($ millions)1 Fine Dining Other $968 $982 $410 $413 $247 $264 $129 $132 FY15 Q4 FY16 Q4 FY15 Q4 FY16 Q4 FY15 Q4 FY16 Q4 FY15 Q4 FY16 Q4 …with Segment Profit Margin growth in all segments, excluding incremental rent
Slide 13: Increasing Quarterly Dividend by 12%
Increasing Quarterly Dividend by 12% Dividends per Share (DPS) DRI Annualized DPS 03/31/2016 ($0.50 per quarter) $2.00 12% DRI Annualized Dividend Increase 06/30/2016 $0.24 Increase New DRI Annualized DPS 06/30/2016 ($0.56 per quarter) $2.24 $2.24 vs. $2.00 Higher Increase When Including Four Corner
Slide 14: Fiscal 2016 Annual Highlights
Fiscal 2016 Annual Highlights 4.4% Total Sales Growth 3.3% Same-Restaurant Sales on a 52-Week Basis1 38% Adjusted Diluted EPS Growth $3.53 Adjusted Diluted EPS from vs Last Year2 Continuing Operations2 1 FY15 Total sales adjusted to exclude $125 million in sales due to the 53rd week. 2 EPS values ad
Slide 15: Fiscal 2016 Annual Highlights (continued)
Fiscal 2016 Annual Highlights (continued) +400 bps Same-Restaurant Sales $95 million Realized cost savings in Fiscal 2016 vs Industry Benchmark $453 million Returned to shareholders FCPT Dividends Paid and Share Spin-off of Real Estate Repurchase $1 billion 3 Upgrades from all 3 credit rating Debt R
Slide 16: Fiscal 2017 Annual Outlook
Fiscal 2017 Annual Outlook Sales Margin Total Sales Growth Cost Savings 1.7% to 2.7% $30 Same Restaurant Sales Total Inflation 1.0% to 2.0% 1.5% to 2.0% New Restaurants Effective Tax Rate 24 to 28 26% to 27% Capital Spending $310 to $350 Earnings per Diluted Share $3.80 to $3.90 (~128.5 million Weig
Slide 17: Outlook at or Above Long Term Framework on Most Measures
Outlook at or Above Long Term Framework on Most Measures Annual Target, Fiscal 2017 (Over Time) Outlook Same-Restaurant Sales 1% - 3% P New Restaurant Growth 2% - 3% - EBIT Margin Expansion 10 - 40bps P Business Performance (Adj. EAT Growth) 7% - 10% P Dividend Payout Ratio 50% - 60% P Share Repurch
Slide 18: Premier Full-Service Restaurant Company
Premier Full-Service Restaurant Company 1 Mission Be financially successful through great people consistently delivering outstanding food, drinks and service in an inviting atmosphere making every guest loyal. 4 Competitive Significant Scale Extensive Data & Insights Rigorous Strategic Planning
Slide 19: Thank you to our 150,000 Team Members!
Thank you to our 150,000 Team Members! 18
Slide 20: Additional Information
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Slide 21: Annual Margins
Annual Margins As As Adjusted Reported 2016 2016 vs. 2015 (bps) Favorable/(Unfavorable) Food & Beverage 29.4% 29.4% 140 Restaurant Labor 31.6% 31.6% Flat Restaurant Expenses 16.8% 16.8% (20) Marketing 3.4% 3.4% 20 Restaurant-Level EBITDA 18.8% 18.8% 140 G&A 5.5% 4.8% 40 Depreciation & Amortization 4
Slide 22: Annual Segment Performance
Annual Segment Performance All of our segments had positive sales growth for the year on a 52 week basis… ($ millions)1 Fine Dining Other $3,7 $1,58 $3,839 $1,51 8 $993 20 6 $911 $492 $514 FY15 (52 wk) FY16 FY15 (52 wk) FY16 FY15 (52 Wk) FY16 Q4 FY15 (52 Wk) FY16 …and Segment Profit Margin growth in
Slide 23: Fiscal and Comparable Calendar Dates
Fiscal and Comparable Calendar Dates Same-Restaurant Sales Calculation Dates Fiscal Calendar Basis Comparable Calendar Basis 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 A
Slide 24: Fiscal 2017 Annual Outlook
Fiscal 2017 Annual Outlook Sales Margin Total Sales Growth Cost Savings 1.7% to 2.7% $30 Same Restaurant Sales Total Inflation 1.0% to 2.0% 1.5% to 2.0% Olive Garden 6 to 8 LongHorn 8 to 10 The Capital Grille 1 to 2 New Restaurants Effective Tax Rate Yard House Seasons 52 2 to 4 0 to 1 24 to 28 26%
Slide 25: Commodities Outlook – 1st Half Fiscal 2017
Commodities Outlook – 1st Half Fiscal 2017 Product Breakdown and Contract Coverage For the 1st Half of Fiscal 2017 Jun-Nov FY2017 Spend by Category Coverage Outlook Beef 20% 45% Mid Single Digit Deflation Produce 12% 60% Low Single Digit Inflation Dairy / Oil1 12% 60% Low Single Digit Inflation Se
Slide 26: Reported to Adjusted Earnings Reconciliations
Reported to Adjusted Earnings Reconciliations Fiscal 2016 Q1 Q2 Q3 Q4 Annual Reported Diluted Net EPS from Continuing Operations $0.63 $0.23 $0.84 $1.10 $2.78 Real Estate Plan Implementation 0.05 0.16 0.03 - 0.26 Debt Retirement Costs - 0.17 0.34 - 0.51 Strategic Action Plan and Other Costs - (0.02)
Slide 27: Reported to Adjusted EBIT Margin and Earnings Reconciliations
Reported to Adjusted EBIT Margin and Earnings Reconciliations Quarter Ended Change (in millions) 5/29/2016 5/31/2015 (bps) Sales - as reported $ 1,790.2 $ 1,878.3 Earnings from continuing operations - as reported $ 140.4 $ 118.1 Interest, net - as reported 9.7 24.0 Income taxes - as reported 35.0 8.
Slide 28: Reported to Adjusted EBIT Margin and Earnings Reconciliations
Reported to Adjusted EBIT Margin and Earnings Reconciliations Year Ended Change (in millions) 5/29/2016 5/31/2015 (bps) Sales - as reported $ 6,933.5 $ 6,764.0 Earnings from continuing operations - as reported $ 359.7 $ 196.4 Interest, net - as reported 172.5 192.3 Income taxes - as reported 90.0 (2
Slide 29: Fiscal 2016 Fourth Quarter Growth Drivers
Fiscal 2016 Fourth Quarter Growth Drivers Per Share % Growth FY15 Q4 Adjusted Diluted Net EPS from Continuing Operations (13-Week Basis)1 $1.01 Fourth Quarter Growth from Fiscal 2015 to Fiscal 2016 Operating Performance $0.13 13% Net Incremental Ongoing Real Estate Expenses (0.02) (2%) Tax TimingUpd