Darden Restaurants, Inc. · NYSE:DRI
Darden Restaurants — FY2019 Earnings Presentation
24 slides from Darden Restaurants's earnings presentation, Jun 20, 2019
Slide 1: Earnings Call: Fiscal 2019 Q4 & Annual Results
EARNINGS CALL FISCAL 2019: Q4 & ANNUAL RESULTS June 20, 2019
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 2019 Highlights
Fiscal 2019 Highlights $8.5 BILLION 5.3% 2.5% SAME-RESTAURANT SALES TOTAL SALES TOTAL SALES GROWTH GROWTH $5.82 21% ADJUSTED DILUTED NET EPS ADJUSTED DILUTED NET EPS1 GROWTH VS LAST YEAR1 1 Values adjusted for special items. A reconciliation of reported to adjusted numbers can be found in the Additi
Slide 4: Fourth Quarter Results
Fourth Quarter Results 3.7% 2.4% SAME-RESTAURANT SALES TOTAL SALES GROWTH GROWTH 10 ~270 BPS SAME-RESTAURANT SALES NET NEW RESTAURANTS INDUSTRY VS. LY OUTPERFORMANCE1 1 Industry excluding Darden brands. 4
Slide 5: Fourth Quarter Results
Fourth Quarter Results 5.7% 3.3% TOTAL SALES GROWTH SAME-RESTAURANT SALES GROWTH 10 ~360 BPS SAME-RESTAURANT SALES NET NEW RESTAURANTS INDUSTRY VS. LY OUTPERFORMANCE1 1 Industry excluding Darden brands. 5
Slide 6: Fourth Quarter Results
Fourth Quarter Results 0.6% -3.2% TOTAL SALES GROWTH SAME-RESTAURANT SALES 1 Industry excluding Darden brands. 6
Slide 7: Thank you to our 185,000 Team Members!
Thank you to our 185,000 Team Members! 7
Slide 8: Financial Discussion
JE DARDEN RESTAURANTS Financial Discussion
Slide 9: Fourth Quarter Highlights
Fourth Quarter Highlights 4.5% 1.6% SAME-RESTAURANT SALES $1.76 ADJUSTED DILUTED NET EPS FROM TOTAL SALES GROWTH GROWTH CONTINUING OPERATIONS1 26.6% ADJUSTED DILUTED NET EPS $92 MILLION $42 MILLION GROWTH VS LAST YEAR1 DIVIDENDS PAID SHARE REPURCHASES 1 EPS value adjusted for special items. A reconc
Slide 10: Margin Analysis
Margin Analysis As Reported As Adjusted Q4 2019 Q4 2019 Q4 2019 vs. Q4 2018 (bps) ($ millions) ($ millions) % of Sales Favorable/(Unfavorable) Sales $2,229.1 $2,229.1 Food and Beverage $627.9 $627.9 28.2% 0 Restaurant Labor $718.0 $718.0 32.2% (10) Restaurant Expenses $379.4 $379.4 17.0% 0 Marketing
Slide 11: Fourth Quarter Restaurant Labor % of Sales
Fourth Quarter Restaurant Labor % of Sales 1.2% 32.1% 32.2% 0.6% 0.4% 0.2% 0.1% Fiscal 2018 Inflation Pricing Leverage Check Mix / New Restaurants Mark to Market Fiscal 2019 Productivity / Brand Mix Green is a favorable variance to prior year, red is unfavorable Values may not foot due to rounding 1
Slide 12: Margin Analysis
Margin Analysis As Reported As Adjusted Q4 2019 Q4 2019 Q4 2019 vs. Q4 2018 (bps) ($ millions) ($ millions) % of Sales Favorable/(Unfavorable) Sales $2,229.1 $2,229.1 Food and Beverage $627.9 $627.9 28.2% 0 Restaurant Labor $718.0 $718.0 32.2% (10) Restaurant Expenses $379.4 $379.4 17.0% 0 Marketing
Slide 13: Fourth Quarter Segment Performance
Fourth Quarter Segment Performance Segment Sales ($ millions) Fine Dining Other $1,068 $1,107 $458 $484 $483 $461 $147 $155 FY18 Q4 FY19 Q4 FY18 Q4 FY19 Q4 FY18 Q4 FY19 Q4 FY18 Q4 FY19 Q4 Segment Profit Margin1 Fine Dining Other 21.2% 21.2% 21.4% 19.0% 19.0% 20.6% 15.7% 15.8% FY18 Q4 FY19 Q4 FY18 Q4
Slide 14: Strong Model Generates Substantial Cash Flows
Strong Model Generates Substantial Cash Flows Adjusted EBITDA1 from Continuing Operations $1,188 $1,083 $918 $942 Fiscal 2016 Fiscal 2017 Fiscal 2018 Fiscal 2019 CapEx $228 $293 $396 $452 Adjusted EBITDA / CapEx 4.0x 3.2x 2.7x 2.6x Dividends Paid $268 $279 $314 $371 Repurchases of Common Stock $185
Slide 15: Long-Term Value Creation Framework
Long-Term Value Creation Framework Annual Target, Over Time Same-Restaurant Sales 1% - 3% Business Performance New Restaurant Sales Growth 2% - 3% 7% - 10% (EAT Growth) EBIT Margin Expansion 10 - 30bps Return of Dividend Payout Ratio 50% - 60% 3% - 5% Cash Share Repurchase ($millions) $150 - $250 To
Slide 16: Fiscal 2020 Annual Outlook
Fiscal 2020 Annual Outlook SALES MARGIN Total Sales Growth1 Total Inflation: ~2.5% 5.3% to 6.3% Commodities: 1% to 2% Labor: 3.5% to 4.5% Same-Restaurant Sales Growth Effective Tax Rate 1% to 2% 10% to 11% Restaurant Openings Lease Accounting EPS ~50 Gross, ~44 Net Impact -$0.05 Capital Spending $45
Slide 17: Increasing quarterly dividend 17%
Increasing quarterly dividend 17% DARDEN QUARTERLY DIVIDEND 13% 19% 17% Increase Increase Increase $0.88 $0.75 $0.75 $0.63 $0.63 $0.56 Mar 2017 Jun 2017 Mar 2018 Jun 2018 Mar 2019 Jun 2019 Note: Month dividend declared. 17
Slide 18: Additional Information
JE DARDEN RESTAURANTS Additional Information
Slide 19: Annual Segment Performance
Annual Segment Performance Segment Sales ($ millions) Fine Dining Other $4,287 $1,807 $4,083 $1,811 $1,720 $1,703 $606 $574 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 Segment Profit Margin1 Fine Dining Other 20.1% 20.6% 20.4% 21.1% 17.7% 17.9% 14.8% 14.3% FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 19 1 Se
Slide 20: Commodities Outlook – First Half Fiscal 2020
Commodities Outlook – First Half Fiscal 2020 June - November FY2020 Annual Spend by Category Coverage Outlook Beef 19% 80% Low Single Digit Inflation Produce 13% 70% Low Single Digit Inflation Dairy / Oil1 10% 25% Flat Seafood 10% 85% Low Single Digit Inflation Chicken 7% 95% Flat Wheat2 6% 95% Low
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 Reconciliation
Reported to Adjusted Earnings Reconciliation Fiscal 2019 Fiscal 2018 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 Repor
Slide 23: Reported to Adjusted EBIT Margin and Earnings Reconciliations
Reported to Adjusted EBIT Margin and Earnings Reconciliations Quarter Ended Change (in millions) 5/26/2019 5/27/2018 (bps) Sales - as reported $ 2,229.1 $ 2,134.1 Earnings from continuing operations - as reported $ 208.7 $ 175.4 I nterest, net - as reported 11.9 13.2 I ncome tax expense - as reporte
Slide 24: Reported to Adjusted Earnings Reconciliations
Reported to Adjusted Earnings Reconciliations Fiscal Year Ended Adjusted EBITDA ($ in Millions) 5/26/2019 5/27/2018 5/28/2017 5/29/2016 Earnings from continuing operations $ 718.6 $ 603.8 $ 482.5 $ 359.7 Interest, net 50.2 161.1 40.2 172.5 Income tax (benefit) expense 63.7 1.9 154.8 90.0 Depreciatio