8-K
DARDEN RESTAURANTS INC (DRI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 16, 2022
(Date of earliest event reported)
DARDEN RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 1-13666
| Florida | 59-3305930 |
|---|---|
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
1000 Darden Center Drive, Orlando, Florida 32837
(Address of principal executive offices, including zip code)
(407) 245-4000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | 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)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, without par value | DRI | New York Stock Exchange |
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. |
|---|
On December 16, 2022, Darden Restaurants, Inc. (the Company) issued a news release entitled “Darden Restaurants Reports Fiscal 2023 Second Quarter Results; Declares Quarterly Dividend; And Updates Fiscal 2023 Financial Outlook,” a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K. In addition, the slide presentation accompanying the Company’s conference call will be posted on the Company’s website.
As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section. The information in this Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the Securities Act), except as expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d)Exhibits.
| Exhibit<br>Number | Description of Exhibit |
|---|---|
| 99.1 | News release datedDecember16, 2022 entitled “Darden Restaurants Reports Fiscal 2023SecondQuarter Results; Declares Quarterly Dividend; AndUpdatesFiscal 2023 Financial Outlook” |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DARDEN RESTAURANTS, INC. | |
|---|---|
| By: | /s/ Rajesh Vennam |
| Rajesh Vennam | |
| Senior Vice President, Chief Financial Officer |
Date: December 16, 2022
3
Document
Exhibit 99.1
Darden Restaurants Reports Fiscal 2023 Second Quarter Results;
Declares Quarterly Dividend;
And Updates Fiscal 2023 Financial Outlook
ORLANDO, Fla., December 16, 2022 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE:DRI) today reported its financial results for the second quarter ended November 27, 2022.
Second Quarter 2023 Financial Highlights
•Total sales increased 9.4% to $2.49 billion driven by a blended same-restaurant sales increase of 7.3% and sales from 35 net new restaurants
•Same-restaurant sales:
| Consolidated Darden | 7.3% |
|---|---|
| Olive Garden | 7.6% |
| LongHorn Steakhouse | 7.3% |
| Fine Dining | 5.9% |
| Other Business | 7.1% |
•Reported diluted net earnings per share increased 2.7% to $1.52 as compared to last year's reported diluted net earnings per share
•The Company repurchased $100 million of its outstanding common stock
“I am pleased with our results this quarter,” said Darden President & CEO Rick Cardenas. “All of our brands performed at a high level by remaining focused on our Back-to-Basics Operating Philosophy anchored in food, service and atmosphere. I am proud of the focus and commitment our teams continue to display. Their disciplined approach in executing our strategy is what enables us to succeed, evidenced by the fact that, just last week, we surpassed $10 billion in sales on a trailing 52-week basis for the first time in Darden's history.”
Segment Performance
Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses. Segment profit excludes non-cash real estate related expenses.
| Q2 Sales | |||
|---|---|---|---|
| ($ in millions) | 2023 | 2022 | 2022 |
| Consolidated Darden | $2,486.5 | 2,272.2 | |
| Olive Garden | $1,176.7 | 1,077.2 | $235.1 |
| LongHorn Steakhouse | $600.5 | 547.2 | $83.6 |
| Fine Dining | $202.0 | 188.7 | $39.7 |
| Other Business | $507.3 | 459.1 | $62.3 |
All values are in US Dollars.
| YTD Sales | |||
|---|---|---|---|
| ($ in millions) | 2023 | 2022 | 2022 |
| Consolidated Darden | $4,932.6 | 4,578.2 | |
| Olive Garden | $2,307.4 | 2,167.6 | $488.4 |
| LongHorn Steakhouse | $1,205.1 | 1,114.3 | $191.1 |
| Fine Dining | $385.4 | 357.5 | $73.2 |
| Other Business | $1,034.7 | 938.8 | $147.1 |
All values are in US Dollars.
Average weekly sales by segment compared to fiscal 2020 due to impact of pandemic on fiscal 2022 and 2021:
| Q2 Average Weekly Sales | ||
|---|---|---|
| 2023 | 2020 | |
| Consolidated Darden | $101,092 | $88,055 |
| Olive Garden | $101,570 | $90,871 |
| LongHorn Steakhouse | $83,859 | $66,867 |
| Fine Dining | $172,401 | $147,668 |
| Other Business | $108,656 | $99,653 |
Dividend Declared
Darden's Board of Directors declared a quarterly cash dividend of $1.21 per share on the Company's outstanding common stock. The dividend is payable on February 1, 2023 to shareholders of record at the close of business on January 10, 2023.
Share Repurchase Program
During the quarter, the Company repurchased approximately 0.76 million shares of its common stock for a total cost of approximately $100 million. As of the end of the fiscal second quarter, the Company had approximately $811 million remaining under the current $1 billion repurchase authorization.
Fiscal 2023 Financial Outlook
The Company updated its financial outlook:
•Total sales of $10.3 to $10.45 billion
•Same-restaurant sales growth of 5% to 6.5%
•New restaurant openings of 55 to 60
•Total capital spending of $525 to $575 million
•Total inflation of approximately 7%
•An effective tax rate of approximately 13%
•Diluted net earnings per share from continuing operations of $7.60 to $8.00
•Approximately 123 million weighted average diluted shares outstanding
Investor Conference Call
The Company will host a conference call and slide presentation on Friday, December 16, 2022 at 8:30 am ET to review its recent financial performance. To listen to the call live, please go to https://app.webinar.net/rZKo5gvwPA3 at least fifteen minutes early to register, download, and install any necessary audio software. Prior to the call, a slide presentation will be posted on the Investor Relations section of our website at: www.darden.com. For those who cannot access the Internet, please dial 1-800-225-9448 and provide the conference passcode DARDEN. For those who cannot listen to the live broadcast, a replay will be available shortly after the call.
About Darden
Darden is a restaurant company featuring a portfolio of differentiated brands that include Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's. For more information, please visit www.darden.com.
Information About Forward-Looking Statements
Forward-looking statements in this communication regarding our expected earnings performance and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are first made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports. These risks and uncertainties include: the impacts of the novel coronavirus
(COVID-19) pandemic on our business and the global economy, a failure to address cost pressures and a failure to effectively deliver cost management activities, economic factors and their impacts on the restaurant industry and general macroeconomic factors including unemployment, energy prices and interest rates, the inability to hire, train, reward and retain restaurant team members, a failure to develop and recruit effective leaders, labor and insurance costs, health concerns including food-related pandemics or outbreaks of flu or other viruses, food safety and food-borne illness concerns, technology failures including failure to maintain a secure cyber network, compliance with privacy and data protection laws and risks of failures or breaches of our data protection systems, risks relating to public policy changes and federal, state and local regulation of our business, intense competition, changing consumer preferences, an inability or failure to manage the accelerated impact of social media, a failure to execute innovative marketing and guest relationship tactics, climate change, adverse weather conditions and natural disasters, long-term and non-cancelable property leases, failure to execute a business continuity plan following a disaster, shortages or interruptions in the delivery of food and other products and services, failure to drive profitable sales growth, a lack of availability of suitable locations for new restaurants, higher-than-anticipated costs to open, close, relocate or remodel restaurants, risks of doing business with franchisees, licensees and vendors in foreign markets, volatility in the market value of derivatives, volatility leading to the inability to hedge equity compensation market exposure, failure to protect our intellectual property, litigation, unfavorable publicity, disruptions in the financial markets, impairment in the carrying value of our goodwill or other intangible assets, changes in tax laws or unanticipated tax liabilities, failure of our internal controls over financial reporting and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.
(Analysts) Kevin Kalicak, (407) 245-5870; (Media) Rich Jeffers, (407) 245-4189
DARDEN RESTAURANTS, INC.
NUMBER OF COMPANY-OWNED RESTAURANTS
| 11/27/22 | 11/28/21 | |
|---|---|---|
| Olive Garden | 890 | 879 |
| LongHorn Steakhouse | 553 | 539 |
| Cheddar's Scratch Kitchen | 179 | 172 |
| Yard House | 85 | 85 |
| The Capital Grille | 61 | 61 |
| Seasons 52 | 45 | 44 |
| Bahama Breeze | 42 | 42 |
| Eddie V's | 29 | 27 |
| The Capital Burger | 3 | 3 |
| Darden Continuing Operations | 1,887 | 1,852 |
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| 11/27/2022 | 11/28/2021 | 11/27/2022 | 11/28/2021 | |||||
| Sales | $ | 2,486.5 | $ | 2,272.2 | $ | 4,932.6 | $ | 4,578.2 |
| Costs and expenses: | ||||||||
| Food and beverage | 818.3 | 694.1 | 1,613.6 | 1,379.5 | ||||
| Restaurant labor | 808.5 | 744.8 | 1,602.3 | 1,480.8 | ||||
| Restaurant expenses | 417.0 | 385.0 | 820.5 | 763.1 | ||||
| Marketing expenses | 31.1 | 21.9 | 61.4 | 45.8 | ||||
| General and administrative expenses | 90.4 | 91.7 | 178.7 | 204.7 | ||||
| Depreciation and amortization | 96.8 | 92.1 | 192.4 | 181.1 | ||||
| Impairments and disposal of assets, net | (8.8) | — | (13.7) | — | ||||
| Total operating costs and expenses | $ | 2,253.3 | $ | 2,029.6 | $ | 4,455.2 | $ | 4,055.0 |
| Operating income | 233.2 | 242.6 | 477.4 | 523.2 | ||||
| Interest, net | 19.8 | 16.7 | 39.6 | 32.3 | ||||
| Earnings before income taxes | 213.4 | 225.9 | 437.8 | 490.9 | ||||
| Income tax expense | 25.9 | 32.5 | 56.7 | 65.8 | ||||
| Earnings from continuing operations | $ | 187.5 | $ | 193.4 | $ | 381.1 | $ | 425.1 |
| Losses from discontinued operations, net of tax benefit of $0.3, $0.0, $0.3 and $0.5, respectively | (0.3) | (0.2) | (0.9) | (1.0) | ||||
| Net earnings | $ | 187.2 | $ | 193.2 | $ | 380.2 | $ | 424.1 |
| Basic net earnings per share: | ||||||||
| Earnings from continuing operations | $ | 1.54 | $ | 1.50 | $ | 3.11 | $ | 3.28 |
| Losses from discontinued operations | (0.01) | — | (0.01) | (0.01) | ||||
| Net earnings | $ | 1.53 | $ | 1.50 | $ | 3.10 | $ | 3.27 |
| Diluted net earnings per share: | ||||||||
| Earnings from continuing operations | $ | 1.52 | $ | 1.48 | $ | 3.09 | $ | 3.24 |
| Losses from discontinued operations | — | — | (0.01) | (0.01) | ||||
| Net earnings | $ | 1.52 | $ | 1.48 | $ | 3.08 | $ | 3.23 |
| Average number of common shares outstanding: | ||||||||
| Basic | 122.1 | 129.2 | 122.5 | 129.8 | ||||
| Diluted | 123.1 | 130.5 | 123.5 | 131.1 |
DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
| 11/27/2022 | 5/29/2022 | |||
|---|---|---|---|---|
| (Unaudited) | ||||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 240.7 | $ | 420.6 |
| Receivables, net | 71.6 | 72.0 | ||
| Inventories | 296.1 | 270.6 | ||
| Prepaid income taxes | 115.6 | 274.8 | ||
| Prepaid expenses and other current assets | 168.1 | 141.4 | ||
| Total current assets | $ | 892.1 | $ | 1,179.4 |
| Land, buildings and equipment, net | 3,558.7 | 3,356.0 | ||
| Operating lease right-of-use assets | 3,434.8 | 3,465.1 | ||
| Goodwill | 1,037.4 | 1,037.4 | ||
| Trademarks | 806.3 | 806.3 | ||
| Other assets | 296.0 | 291.6 | ||
| Total assets | $ | 10,025.3 | $ | 10,135.8 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 435.3 | $ | 366.9 |
| Short-term debt | 58.0 | — | ||
| Accrued payroll | 137.1 | 181.5 | ||
| Accrued income taxes | 18.9 | 32.1 | ||
| Other accrued taxes | 68.3 | 64.5 | ||
| Unearned revenues | 463.8 | 498.0 | ||
| Other current liabilities | 725.0 | 704.5 | ||
| Total current liabilities | $ | 1,906.4 | $ | 1,847.5 |
| Long-term debt | 885.8 | 901.0 | ||
| Deferred income taxes | 177.5 | 201.1 | ||
| Operating lease liabilities - non-current | 3,730.5 | 3,755.8 | ||
| Other liabilities | 1,304.2 | 1,232.2 | ||
| Total liabilities | $ | 8,004.4 | $ | 7,937.6 |
| Stockholders’ equity: | ||||
| Common stock and surplus | $ | 2,214.6 | $ | 2,226.0 |
| Retained earnings (deficit) | (199.7) | (25.9) | ||
| Accumulated other comprehensive income (loss) | 6.0 | (1.9) | ||
| Total stockholders’ equity | $ | 2,020.9 | $ | 2,198.2 |
| Total liabilities and stockholders’ equity | $ | 10,025.3 | $ | 10,135.8 |
DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| Six Months Ended | ||||
|---|---|---|---|---|
| 11/27/2022 | 11/28/2021 | |||
| Cash flows—operating activities | ||||
| Net earnings | $ | 380.2 | $ | 424.1 |
| Losses from discontinued operations, net of tax | 0.9 | 1.0 | ||
| Adjustments to reconcile net earnings from continuing operations to cash flows: | ||||
| Depreciation and amortization | 192.4 | 181.1 | ||
| Impairments and disposal of assets, net | (13.7) | — | ||
| Stock-based compensation expense | 38.4 | 38.1 | ||
| Change in current assets and liabilities and other, net | 37.4 | (162.8) | ||
| Net cash provided by operating activities of continuing operations | $ | 635.6 | $ | 481.5 |
| Cash flows—investing activities | ||||
| Purchases of land, buildings and equipment | (280.3) | (173.3) | ||
| Proceeds from disposal of land, buildings and equipment | 21.1 | 6.0 | ||
| Purchases of capitalized software and changes in other assets, net | (14.2) | (10.5) | ||
| Net cash used in investing activities of continuing operations | $ | (273.4) | $ | (177.8) |
| Cash flows—financing activities | ||||
| Net proceeds from issuance of common stock | 11.7 | 25.7 | ||
| Dividends paid | (296.5) | (286.1) | ||
| Repurchases of common stock | (299.2) | (452.3) | ||
| Proceeds from short-term debt, net | 58.0 | — | ||
| Principal payments on finance leases | (8.8) | (5.6) | ||
| Payments of debt issuance costs | — | (2.7) | ||
| Other, net | (0.1) | — | ||
| Net cash used in financing activities of continuing operations | $ | (534.9) | $ | (721.0) |
| Cash flows—discontinued operations | ||||
| Net cash provided by operating activities of discontinued operations | 0.9 | 0.4 | ||
| Net cash provided by discontinued operations | $ | 0.9 | $ | 0.4 |
| Decrease in cash, cash equivalents, and restricted cash | (171.8) | (416.9) | ||
| Cash, cash equivalents, and restricted cash - beginning of period | 472.1 | 1,214.7 | ||
| Cash, cash equivalents, and restricted cash - end of period | $ | 300.3 | $ | 797.8 |
| Reconciliation of cash, cash equivalents, and restricted cash: | 11/27/2022 | 11/28/2021 | ||
| --- | --- | --- | --- | --- |
| Cash and cash equivalents | $ | 240.7 | $ | 746.3 |
| Restricted cash included in prepaid expenses and other current assets | 59.6 | 51.5 | ||
| Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | 300.3 | $ | 797.8 |
6