Florida | 59-3305930 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2). |
Emerging growth company ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
DARDEN RESTAURANTS, INC. | |
By: | /s/ Ricardo Cardenas |
Ricardo Cardenas | |
Senior Vice President and Chief Financial Officer |
• | Total sales increased 5.5% to $2.25 billion driven by the addition of 39 net new restaurants and a blended same-restaurant sales increase of 2.8% |
• | Same-restaurant sales by brand: |
+4.3% for Olive Garden | -2.7% for Cheddar's Scratch Kitchen | ||
+3.8% for LongHorn Steakhouse | -2.1% for Yard House | ||
+4.3% for The Capital Grille | -1.3% for Seasons 52 | ||
+3.7% for Eddie V’s | -3.7% for Bahama Breeze |
• | Reported diluted net earnings per share from continuing operations increased 3.4% to $1.80 and increased 5.3% from last year's adjusted diluted net earnings per share* |
• | The Company repurchased approximately $74 million of its outstanding common stock |
Q3 Sales | Q3 Segment Profit | |||||||||||||
($ in millions) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||
Consolidated Darden | $2,246.5 | $2,128.4 | 5.5 | % | ||||||||||
Olive Garden | $1,130.2 | $1,073.2 | 5.3 | % | $247.0 | $226.7 | 9.0 | % | ||||||
LongHorn Steakhouse | $483.2 | $452.8 | 6.7 | % | $96.4 | $89.9 | 7.2 | % | ||||||
Fine Dining | $174.5 | $164.4 | 6.1 | % | $44.3 | $40.3 | 9.9 | % | ||||||
Other Business | $458.6 | $438.0 | 4.7 | % | $67.5 | $65.5 | 3.1 | % | ||||||
YTD Sales | YTD Segment Profit | |||||||||||||
($ in millions) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||
Consolidated Darden | $6,281.3 | $5,946.0 | 5.6 | % | ||||||||||
Olive Garden | $3,180.3 | $3,014.6 | 5.5 | % | $649.7 | $593.4 | 9.5 | % | ||||||
LongHorn Steakhouse | $1,326.2 | $1,245.0 | 6.5 | % | $232.5 | $214.0 | 8.6 | % | ||||||
Fine Dining | $451.2 | $427.1 | 5.6 | % | $94.5 | $86.6 | 9.1 | % | ||||||
Other Business | $1,323.6 | $1,259.3 | 5.1 | % | $181.6 | $182.8 | (0.7 | )% |
Q3 | YTD | |||
Olive Garden | LongHorn Steakhouse | Olive Garden | LongHorn Steakhouse | |
Same-Restaurant Sales | 4.3% | 3.8% | 4.4% | 3.3% |
Same-Restaurant Traffic | 0.1% | 0.5% | 0.3% | 0.0% |
Pricing | 1.8% | 1.8% | 1.9% | 1.7% |
Menu-mix | 2.4% | 1.5% | 2.2% | 1.6% |
Current (03/21/19) | Prior (12/18/18) | |
Total sales growth | Approx. 5.5% | 5.0% to 5.5% |
Same-restaurant sales growth | 2.5% to 2.7% | Approx. 2.5% |
Effective tax rate | Approx. 10% | 10% to 11% |
Diluted net earnings per share from continuing operations | $5.76 - $5.80 | $5.60 - $5.70 |
Diluted average common shares outstanding for the year | 125M to 126M | Approx. 126M |
Fiscal Q3 Reported to Adjusted Earnings Reconciliation | |||||||||||||||||
Q3 2019 | Q3 2018 | ||||||||||||||||
$ in millions, except EPS | Earnings Before Income Tax | Income Tax Expense | Net Earnings | Diluted Net Earnings Per Share | Earnings Before Income Tax | Income Tax Expense (Benefit) | Net Earnings | Diluted Net Earnings Per Share | |||||||||
Reported Earnings from Continuing Operations | $253.1 | $28.0 | $225.1 | $1.80 | $116.0 | $(102.5) | $218.5 | $1.74 | |||||||||
% Change vs Prior Year | 3.4 | % | |||||||||||||||
Adjustments: | |||||||||||||||||
Debt retirement costs | — | — | — | — | 102.2 | 33.6 | 68.6 | 0.54 | |||||||||
Net benefit of deferred tax revaluation | — | — | — | — | — | 77.3 | (77.3 | ) | (0.61 | ) | |||||||
Cheddar's integration expenses | — | — | — | — | 6.7 | 1.4 | 5.3 | 0.04 | |||||||||
Adjusted Earnings from Continuing Operations | $253.1 | $28.0 | $225.1 | $1.80 | $224.9 | $9.8 | $215.1 | $1.71 | |||||||||
% Change vs Prior Year | 5.3 | % |
2/24/19 | 2/25/18 | |||
Olive Garden1 | 860 | 853 | ||
LongHorn Steakhouse | 512 | 499 | ||
Cheddar's Scratch Kitchen | 159 | 154 | ||
Yard House | 78 | 71 | ||
The Capital Grille2 | 58 | 57 | ||
Bahama Breeze | 42 | 39 | ||
Seasons 52 | 43 | 41 | ||
Eddie V's | 20 | 19 | ||
Darden Continuing Operations | 1,772 | 1,733 | ||
1Includes six locations in Canada for all periods presented. | ||||
2Includes one The Capital Burger restaurant in fiscal 2019. |
Three Months Ended | Nine Months Ended | ||||||||||||||
2/24/2019 | 2/25/2018 | 2/24/2019 | 2/25/2018 | ||||||||||||
Sales | $ | 2,246.5 | $ | 2,128.4 | $ | 6,281.3 | $ | 5,946.0 | |||||||
Costs and expenses: | |||||||||||||||
Food and beverage | 638.0 | 603.3 | 1,784.6 | 1,701.4 | |||||||||||
Restaurant labor | 711.4 | 683.0 | 2,053.1 | 1,929.6 | |||||||||||
Restaurant expenses | 379.5 | 360.8 | 1,098.4 | 1,055.2 | |||||||||||
Marketing expenses | 62.4 | 58.9 | 186.9 | 183.0 | |||||||||||
General and administrative expenses | 102.8 | 110.1 | 302.4 | 307.0 | |||||||||||
Depreciation and amortization | 85.3 | 79.2 | 248.8 | 234.1 | |||||||||||
Impairments and disposal of assets, net | 1.6 | (0.3 | ) | 4.4 | (1.1 | ) | |||||||||
Total operating costs and expenses | $ | 1,981.0 | $ | 1,895.0 | $ | 5,678.6 | $ | 5,409.2 | |||||||
Operating income | 265.5 | 233.4 | 602.7 | 536.8 | |||||||||||
Interest, net | 12.4 | 117.4 | 38.3 | 147.9 | |||||||||||
Earnings before income taxes | 253.1 | 116.0 | 564.4 | 388.9 | |||||||||||
Income tax expense | 28.0 | (102.5 | ) | 54.5 | (39.5 | ) | |||||||||
Earnings from continuing operations | $ | 225.1 | $ | 218.5 | $ | 509.9 | $ | 428.4 | |||||||
Losses from discontinued operations, net of tax benefit of $0.8, $0.5, $1.3 and $4.0, respectively | (1.5 | ) | (0.7 | ) | (4.5 | ) | (6.9 | ) | |||||||
Net earnings | $ | 223.6 | $ | 217.8 | $ | 505.4 | $ | 421.5 | |||||||
Basic net earnings per share: | |||||||||||||||
Earnings from continuing operations | $ | 1.83 | $ | 1.77 | $ | 4.12 | $ | 3.45 | |||||||
Losses from discontinued operations | (0.02 | ) | (0.01 | ) | (0.03 | ) | (0.06 | ) | |||||||
Net earnings | $ | 1.81 | $ | 1.76 | $ | 4.09 | $ | 3.39 | |||||||
Diluted net earnings per share: | |||||||||||||||
Earnings from continuing operations | $ | 1.80 | $ | 1.74 | $ | 4.06 | $ | 3.40 | |||||||
Losses from discontinued operations | (0.01 | ) | (0.01 | ) | (0.04 | ) | (0.06 | ) | |||||||
Net earnings | $ | 1.79 | $ | 1.73 | $ | 4.02 | $ | 3.34 | |||||||
Average number of common shares outstanding: | |||||||||||||||
Basic | 123.3 | 123.6 | 123.7 | 124.2 | |||||||||||
Diluted | 125.0 | 125.7 | 125.6 | 126.1 |
2/24/2019 | 5/27/2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 302.9 | $ | 146.9 | |||
Receivables, net | 73.9 | 83.7 | |||||
Inventories | 209.5 | 205.3 | |||||
Prepaid income taxes | 5.2 | 15.9 | |||||
Prepaid expenses and other current assets | 95.7 | 89.9 | |||||
Assets held for sale | — | 11.9 | |||||
Total current assets | $ | 687.2 | $ | 553.6 | |||
Land, buildings and equipment, net | 2,539.9 | 2,429.8 | |||||
Goodwill | 1,183.7 | 1,183.7 | |||||
Trademarks | 950.8 | 950.8 | |||||
Other assets | 336.2 | 351.7 | |||||
Total assets | $ | 5,697.8 | $ | 5,469.6 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 303.2 | $ | 277.0 | |||
Accrued payroll | 163.3 | 177.5 | |||||
Accrued income taxes | 7.3 | — | |||||
Other accrued taxes | 50.5 | 56.6 | |||||
Unearned revenues | 471.7 | 415.8 | |||||
Other current liabilities | 446.9 | 457.6 | |||||
Total current liabilities | $ | 1,442.9 | $ | 1,384.5 | |||
Long-term debt | 927.4 | 926.5 | |||||
Deferred income taxes | 130.7 | 114.0 | |||||
Deferred rent | 346.5 | 318.0 | |||||
Other liabilities | 534.6 | 531.8 | |||||
Total liabilities | $ | 3,382.1 | $ | 3,274.8 | |||
Stockholders’ equity: | |||||||
Common stock and surplus | $ | 1,676.8 | $ | 1,631.9 | |||
Retained earnings | 728.4 | 657.6 | |||||
Treasury stock | (7.8 | ) | (7.8 | ) | |||
Accumulated other comprehensive income (loss) | (81.0 | ) | (85.2 | ) | |||
Unearned compensation | (0.7 | ) | (1.7 | ) | |||
Total stockholders’ equity | $ | 2,315.7 | $ | 2,194.8 | |||
Total liabilities and stockholders’ equity | $ | 5,697.8 | $ | 5,469.6 |
Nine Months Ended | |||||||
2/24/2019 | 2/25/2018 | ||||||
Cash flows—operating activities | |||||||
Net earnings | $ | 505.4 | $ | 421.5 | |||
Losses from discontinued operations, net of tax | 4.5 | 6.9 | |||||
Adjustments to reconcile net earnings from continuing operations to cash flows: | |||||||
Depreciation and amortization | 248.8 | 234.1 | |||||
Stock-based compensation expense | 45.3 | 32.2 | |||||
Loss on extinguishment of debt | — | 102.2 | |||||
Change in current assets and liabilities and other, net | 116.0 | (45.9 | ) | ||||
Net cash provided by operating activities of continuing operations | $ | 920.0 | $ | 751.0 | |||
Cash flows—investing activities | |||||||
Purchases of land, buildings and equipment | (346.9 | ) | (294.9 | ) | |||
Proceeds from disposal of land, buildings and equipment | 12.7 | 3.3 | |||||
Cash used in business acquisitions, net of cash acquired | — | (40.4 | ) | ||||
Purchases of capitalized software and changes in other assets, net | (15.5 | ) | (10.3 | ) | |||
Net cash used in investing activities of continuing operations | $ | (349.7 | ) | $ | (342.3 | ) | |
Cash flows—financing activities | |||||||
Proceeds from issuance of common stock | 45.4 | 35.5 | |||||
Dividends paid | (278.4 | ) | (234.9 | ) | |||
Repurchases of common stock | (166.0 | ) | (207.6 | ) | |||
Proceeds from issuance of short-term debt, net | — | 50.6 | |||||
Repayment of long-term debt | — | (408.2 | ) | ||||
Proceeds from issuance of long-term debt | — | 300.0 | |||||
Principal payments on capital and financing leases | (4.9 | ) | (3.9 | ) | |||
Other, net | 0.1 | (11.5 | ) | ||||
Net cash used in financing activities of continuing operations | $ | (403.8 | ) | $ | (480.0 | ) | |
Cash flows—discontinued operations | |||||||
Net cash used in operating activities of discontinued operations | (10.5 | ) | (15.2 | ) | |||
Net cash provided by investing activities of discontinued operations | — | 0.2 | |||||
Net cash used in discontinued operations | $ | (10.5 | ) | $ | (15.0 | ) | |
Increase (decrease) in cash and cash equivalents | 156.0 | (86.3 | ) | ||||
Cash and cash equivalents - beginning of period | 146.9 | 233.1 | |||||
Cash and cash equivalents - end of period | $ | 302.9 | $ | 146.8 |
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