Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — Q4 FY2018 Earnings Presentation
23 slides from Darden Restaurants's earnings presentation, Jun 21, 2018
Slide 1: Earnings Call Fiscal 2018: Q4 & Annual Results
EARNINGS CALL FISCAL 2018: Q4 & ANNUAL RESULTS June 21, 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: Darden Fiscal Fourth Quarter Highlights
Darden Fiscal Fourth Quarter Highlights SALES ($B) SAME-RESTAURANT SALES GROWTH1 3.1% 2.2% 2.0% $2.13 1.7% $1.71 $1.94 $1.88 $1.88 $1.93 $2.13 $1.64 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 Q1 Q2 Q3 Q4 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 ADJUSTED EPS2 $1.71 $1.32 $1.39 $0.99 $1.18 $0.88 $0.73 $0.64 FY17
Slide 4: Fourth Quarter and Fiscal 2018 Annual Results
Fourth Quarter Fiscal 2018 Annual 4.0% 2.4% $4.1 BILLION SAME-RESTAURANT SALES TOTAL SALES GROWTH TOTAL SALES GROWTH ~270 BPS ~190 BPS 3.7% SAME-RESTAURANT GUEST SAME-RESTAURANT SALES COUNT INDUSTRY INDUSTRY TOTAL SALES GROWTH OUTPERFORMANCE1 OUTPERFORMANCE1 1 Industry excluding Darden brands. 4
Slide 5: Fourth Quarter and Fiscal 2018 Annual Results
Fourth Quarter Fiscal 2018 Annual 4.9% 2.4% $1.7 BILLION SAME-RESTAURANT SALES TOTAL SALES GROWTH TOTAL SALES GROWTH ~280 BPS ~190 BPS 5.0% SAME-RESTAURANT GUEST SAME-RESTAURANT SALES COUNT INDUSTRY INDUSTRY TOTAL SALES GROWTH OUTPERFORMANCE1 OUTPERFORMANCE1 1 Industry excluding Darden brands. 5
Slide 6: Fourth Quarter Same-Restaurant Sales
Fourth Quarter Same-Restaurant Sales 2.6% 3.6% 1.4% 0.6% 0.4% -4.7% 6
Slide 7: Thank you to our 180,000 Team Members!
Thank you to our 180,000 Team Members! 7
Slide 8: Financial Discussion
SE DARDEN RESTAURANTS Financial Discussion
Slide 9: Fiscal Fourth Quarter Highlights
Fiscal Fourth Quarter Highlights 10.3% 2.2% SAME-RESTAURANT SALES $1.39 ADJUSTED DILUTED EPS FROM TOTAL SALES GROWTH GROWTH1 CONTINUING OPERATIONS2 17.8% ADJUSTED DILUTED EPS GROWTH $79 MILLION $27 MILLION VS LAST YEAR2 DIVIDENDS PAID SHARE REPURCHASES 1 Excludes Cheddar’s Scratch Kitchen. 2 EPS val
Slide 10: Margin Analysis
Margin Analysis As Reported As Adjusted Q4 2018 Q4 2018 Q4 2018 vs. Q4 2017 (bps) ($ millions) ($ millions) % of Sales Favorable/(Unfavorable) Sales $2,134.1 $2,134.1 Food & Beverage $601.7 $601.7 28.2% 60 Restaurant Labor $684.9 $684.9 32.1% (90) Restaurant Expenses $361.9 $361.9 17.0% 40 Marketing
Slide 11: Fiscal Fourth Quarter Segment Performance
Fiscal Fourth Quarter Segment Performance Segment Sales ($ millions) Fine Dining Other $1,027 $1,068 $461 $437 $458 $332 $139 $147 FY17 Q4 FY18 Q4 FY17 Q4 FY18 Q4 FY17 Q4 FY18 Q4 FY17 Q4 FY18 Q4 Segment Profit Margin1 Fine Dining Other 21.2% 20.4% 20.6% 19.9% 19.1% 19.0% 17.4% 15.7% FY17 Q4 FY18 Q4
Slide 12: Darden Fiscal 2018 Highlights
Darden Fiscal 2018 Highlights $8.1 BILLION 12.7% 19.7% ADJUSTED DILUTED EPS GROWTH TOTAL SALES TOTAL SALES GROWTH VS LAST YEAR1 $20 MILLION $314 MILLION $235 MILLION WORKFORCE INVESTMENTS DIVIDENDS PAID SHARE REPURCHASES 1 Values adjusted for special items. A reconciliation of reported to adjusted n
Slide 13: Dividend Increase and Share Repurchase Authorization
Dividend Increase and Share Repurchase Authorization • Increased quarterly dividend 19% to $0.75 DARDEN QUARTERLY DIVIDEND 12% 13% 19% Increase Increase Increase $0.75 $0.63 $0.63 $0.56 $0.56 $0.50 Mar 2016 Jun 2016 Mar 2017 Jun 2017 Mar 2018 Jun 2018 Note: Month dividend declared. • New share repur
Slide 14: Our Commitment to Shareholders
Our Commitment to Shareholders Long-term framework introduced during Fiscal 2016 Annual Target, Over Time Same-Restaurant Sales 1% - 3% Business Performance New Restaurant Sales Growth 2% - 3% 7% - 10% (EAT Growth) EBIT Margin Expansion 10 - 40bps Return of Dividend Payout Ratio 50% - 60% 3% - 5% Ca
Slide 15: Ten-Year Rolling Annualized Total Shareholder Return
Ten-Year Rolling Annualized Total Shareholder Return 24% 17% 17% 16% 14% 14% 13% 12% 11% 12% 11% 10% 11% 10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ten Fiscal Years Ended May Note: Rounded to the nearest percentage point. 15
Slide 16: Updated Framework Maintains 10% to 15% Return
Updated Framework Maintains 10% to 15% Return Annual Target, Over Time Same-Restaurant Sales 1% - 3% Business Performance New Restaurant Sales Growth 2% - 3% 7% - 10% (EAT Growth) EBIT Margin Expansion 10 - 30bps Return of Dividend Payout Ratio 50% - 60% 3% - 5% Cash Share Repurchase ($millions) $15
Slide 17: Fiscal 2019 Annual Outlook
Fiscal 2019 Annual Outlook SALES MARGIN Total Sales Growth Total Inflation: ~2% 4% to 5% Commodities: 0% to 1% Labor: 3.5% to 4.5% Same-Restaurant Sales Growth Run Rate Investments 1% to 2% ~$35 million Restaurant Openings Incremental Synergies 45 to 50 ~$13 million Capital Spending Effective Tax Ra
Slide 18: Additional Information
SE DARDEN RESTAURANTS Additional Information
Slide 19: Annual Segment Performance
Annual Segment Performance Segment Sales ($ millions) Fine Dining Other $3,939 $4,083 $1,720 $1,622 $1,703 $536 $574 $1,074 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 Segment Profit Margin1 Fine Dining Other 20.1% 19.6% 20.4% 19.3% 17.3% 17.7% 16.9% 14.8% FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 19 1 Se
Slide 20: Commodities Outlook – First Half Fiscal 2019
Commodities Outlook – First Half Fiscal 2019 June - November FY2019 Annual Spend by Category Coverage Outlook Beef 18% 75% Low Single Digit Inflation Produce 13% 70% Low Single Digit Inflation Dairy / Oil1 10% 55% Low Single Digit Deflation Seafood 10% 70% Low Single Digit Deflation Wheat2 6% 75% Lo
Slide 21: Reported to Adjusted Earnings Reconciliations
Reported to Adjusted Earnings Reconciliations Fiscal 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Earnings Income Diluted Earnings Income Diluted Earnings Income Diluted Earnings Income Diluted Before Tax Net Before Tax Net Before Tax Net Before Tax Net Income Expense Net Earnings Income Expense Net Earning
Slide 22: Reported to Adjusted Earnings Reconciliations
Reported to Adjusted Earnings Reconciliations 2018 2017 Earnings Income Diluted Earnings Income Diluted Before Tax Net Before Tax Net Income Expense Net Earnings Income Expense Net Earnings $ in millions, except EPS Tax (Benefit) Earnings Per Share Tax (Benefit) Earnings Per Share Reported Earnings
Slide 23: Reported to Adjusted EBIT Margin and Earnings Reconciliations
Reported to Adjusted EBIT Margin and Earnings Reconciliations Quarter Ended Change Year Ended Change (in millions) 5/27/2018 5/28/2017 (bps) 5/27/2018 5/28/2017 (bps) Sales - as reported $ 2,134.1 $ 1,934.6 $ 8,080.1 $ 7,170.2 Earnings from continuing operations - as reported $ 175.4 $ 125.4 $ 603.8