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Press release from PR Newswire

Darden Restaurants Reports Third Quarter Diluted Net Earnings Per Share of $1.02; Declares a Quarterly Dividend of 50 Cents Per Share

Friday, March 22, 2013

Darden Restaurants Reports Third Quarter Diluted Net Earnings Per Share of $1.02; Declares a Quarterly Dividend of 50 Cents Per Share07:00 EDT Friday, March 22, 2013ORLANDO, Fla., March 22, 2013 /PRNewswire/ -- Darden Restaurants, Inc. (NYSE: DRI) today reported diluted net earnings per share and sales for the third quarter ended February 24, 2013. (Logo:  http://photos.prnewswire.com/prnh/20050203/FLTH026LOGO)Headlines for the quarter include the following: Third quarter diluted net earnings per share from continuing operations were $1.02, an 18% decrease from the $1.25 per diluted share in the third quarter of last year. Earnings from continuing operations in this year's third quarter were $134.5 million and sales were $2.26 billion, which compare to earnings from continuing operations of $164.1 million and sales of $2.16 billion in the third quarter last year.  Third quarter total sales from continuing operations of $2.26 billion represent an increase of 4.6% compared to the third quarter of last year.  The increase reflects a same-restaurant sales increase of 2.3% for the Company's Specialty Restaurant Group, incremental sales from the acquisition of 40 Yard House restaurants on August 29, 2012 and the addition and operation of another 108 net new restaurants compared to the third quarter last year, offset by a combined same-restaurant sales decline of -4.6% for Olive Garden, Red Lobster and LongHorn Steakhouse.  In the third quarter, U.S. same-restaurant sales decreased -1.6%, -4.1% and -6.6% for LongHorn Steakhouse, Olive Garden and Red Lobster, respectively.  In the third quarter, the Company estimates that winter weather adversely affected same-restaurant sales results by approximately 90 basis points.  The Company estimated that costs associated with the acquisition of Yard House USA, Inc., which was completed on August 29, 2012, the beginning of this year's second quarter, adversely affected diluted net earnings per share for this year's third quarter by approximately two cents.   Darden's Board of Directors declared a quarterly dividend of 50 cents per share.Operating HeadlinesOLIVE GARDEN'S third quarter sales of $962 million were 0.6% higher than the prior year, driven by revenue from 42 net new restaurants offset by a -4.1% decrease in U.S. same-restaurant sales.  For the quarter, on a percentage of sales basis, higher food and beverage expenses, restaurant labor expenses, restaurant expenses, selling, general and administrative expenses and depreciation expense resulted in a decrease for the quarter in both operating profit and operating profit as a percentage of sales.  RED LOBSTER'S third quarter sales of $669 million were -6.0% lower than the prior year as a result of a U.S. same-restaurant sales decrease of -6.6% that was partially offset by revenue from three net new restaurants.  For the quarter, on a percentage of sales basis, lower food and beverage expenses were more than offset by higher restaurant labor expenses, restaurant expenses, selling, general and administrative expenses and depreciation expense, which resulted in a decrease for the quarter in both operating profit and operating profit as a percentage of sales.  LONGHORN STEAKHOUSE'S third quarter sales of $332 million were 6.9% higher than the prior year, driven by revenue from 42 net new restaurants offset by a U.S. same-restaurant sales decrease of -1.6%. For the quarter, on a percentage of sales basis, higher food and beverage expenses, restaurant labor expenses, restaurant expenses, selling, general and administrative expenses and depreciation expense resulted in a decline for the quarter in both operating profit and operating profit as a percentage of sales. THE SPECIALTY RESTAURANT GROUP'S third quarter sales of $287 million were 61.1% higher than the prior year, driven by the addition of the 40 Yard House restaurants purchased on August 29, 2012 plus three new Yard House restaurants, three net new restaurants at The Capital Grille, five net new restaurants at Bahama Breeze and seven net new restaurants at Seasons 52; same-restaurant sales increases of 4.1% at The Capital Grille, 2.3% at Eddie V's, 0.4% at Seasons 52 and slightly offset by a same-restaurant sales decline of -0.3% at Bahama Breeze. Fiscal 2013 December, January and February U.S. Same-Restaurant Sales ResultsDarden reported U.S. same-restaurant sales for the fiscal months of December, January and February as follows:Olive GardenDecember JanuaryFebruarySame-Restaurant Sales-2.5%-0.6%-9.1%Same-Restaurant Traffic      -3.7%-0.9%-7.0%Pricing2.3%2.1%1.2%Menu-mix-1.2%-1.7%-3.4%Red LobsterDecemberJanuaryFebruarySame-Restaurant Sales-7.1%-5.2%-7.5%Same-Restaurant Traffic           -5.5%-1.7%-6.0%Pricing1.2%1.3%1.2%Menu-mix-2.8%-4.8%-2.7%LongHorn SteakhouseDecember JanuaryFebruarySame-Restaurant Sales-3.6%2.5%-3.0%Same-Restaurant Traffic       -4.4%0.1%-2.9%Pricing2.0%2.0%2.0%Menu-mix-1.3%0.4%-2.2%Note: The Company estimates that winter weather adversely affected results by approximately 110 basis points in December and 150 basis points in February.  There was no adverse weather impact in January. Other Actions Darden's Board of Directors declared a quarterly cash dividend of 50 cents per share on the Company's outstanding common stock. The dividend is payable on May 1, 2013 to shareholders of record at the close of business on April 10, 2013. Fiscal 2013 Financial Outlook Darden affirmed its financial outlook for fiscal 2013.  The Company anticipates total sales growth for the year of between +6% and +7%, which reflects combined U.S. same-restaurant sales for the year for Red Lobster, Olive Garden and LongHorn Steakhouse that is expected to be between -1.5% to -2.5%, incremental sales starting in fiscal September from the acquisition of Yard House and the addition of approximately 105 net new restaurants this year, not including the initial 40 Yard House restaurants in operation when the acquisition was completed.  The Company expects diluted net earnings per share from continuing operations for fiscal 2013 to be between $3.06 to $3.22, which includes approximately 9 cents of transaction and closing costs associated with the purchase of Yard House.  Darden Restaurants, Inc., (NYSE: DRI), the world's largest full-service restaurant company, owns and operates more than 2,000 restaurants that generate over $8.0 billion in annual sales. Headquartered in Orlando, Fla., and employing more than 190,000 people, Darden is recognized for a culture that rewards caring for and responding to people. In 2013, Darden was named to the FORTUNE "100 Best Companies to Work For" list for the third year in a row and is the only full-service restaurant company to ever appear on the list. Our restaurant brands ? Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House ? reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want. For more information, please visit www.darden.com. Forward-looking statements in this news release regarding our expected earnings per share and U.S. same-restaurant sales for the fiscal year, new restaurant growth and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, plans or objectives, 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 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 (including all amendments to those reports). These risks and uncertainties include food safety and food-borne illness concerns, litigation, unfavorable publicity, risks relating to public policy changes and federal, state and local regulation of our business including health care reform, labor and insurance costs, technology failures, failure to execute a business continuity plan following a disaster, health concerns including virus outbreaks, intense competition, failure to drive sales growth, failure to successfully integrate the Yard House business and the additional indebtedness incurred to finance the Yard House acquisition, our plans to expand our newer brands like Bahama Breeze, Seasons 52 and Eddie V's, a lack of suitable new restaurant locations, higher-than-anticipated costs to open, close or remodel restaurants, a failure to execute innovative marketing tactics and increased advertising and marketing costs, a failure to develop and recruit effective leaders, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets, failure to protect our service marks or other intellectual property,  a possible impairment in the carrying value of our goodwill or other intangible assets, a failure of our internal controls over financial reporting, or changes in accounting standards, and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.DARDEN RESTAURANTS, INC.NUMBER OF COMPANY-OWNED RESTAURANTS02/24/1302/26/12678Red Lobster USA67527Red Lobster Canada27705Total Red Lobster702812Olive Garden USA7706Olive Garden Canada6818Total Olive Garden776416LongHorn Steakhouse37448The Capital Grille4533Bahama Breeze2828Seasons 522111Eddie V's1143Yard House-5Other22,107Total Restaurants1,959 DARDEN RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF EARNINGS(In millions, except per share data)(Unaudited)Three Months EndedNine Months Ended2/24/20132/26/20122/24/20132/26/2012Sales$2,258.2$2,159.7$6,253.0$5,933.2Costs and expenses:Cost of sales:Food and beverage695.1661.71,921.51,828.5Restaurant labor709.0657.21,971.51,864.6Restaurant expenses348.2308.4977.8901.2Total cost of sales (1)$1,752.3$1,627.3$4,870.8$4,594.3Selling, general and administrative199.8198.0634.1568.3Depreciation and amortization101.088.9292.8258.8Interest, net31.927.792.774.5Total costs and expenses$2,085.0$1,941.9$5,890.4$5,495.9Earnings before income taxes173.2217.8362.6437.3Income taxes(38.7)(53.7)(83.3)(112.3)Earnings from continuing operations$134.5$164.1$279.3$325.0Losses from discontinued operations, net of tax benefit           of $0.2, $0.0, $0.4 and $0.4, respectively(0.1)?(0.5)(0.7)Net earnings$134.4$164.1$278.8$324.3Basic net earnings per share:Earnings from continuing operations$1.04$1.28$2.17$2.49Losses from discontinued operations???(0.01)Net earnings$1.04$1.28$2.17$2.48Diluted net earnings per share:Earnings from continuing operations$1.02$1.25$2.13$2.43Losses from discontinued operations??(0.01)(0.01)Net earnings$1.02$1.25$2.12$2.42Average number of common shares outstanding:Basic129.3128.0128.7130.7Diluted131.5130.9131.4133.8(1) Excludes restaurant depreciation and amortization as follows:$95.8$83.2$277.2$242.2 DARDEN RESTAURANTS, INC.CONSOLIDATED BALANCE SHEETS(In millions)2/24/20135/27/2012(Unaudited)ASSETSCurrent assets:Cash and cash equivalents$103.9$70.5Receivables, net68.171.4Inventories432.6404.1Prepaid income taxes12.712.2Prepaid expenses and other current assets82.574.9Deferred income taxes153.6124.5Total current assets$853.4$757.6Land, buildings and equipment, net4,335.03,951.3Goodwill904.5538.6Trademarks574.2464.9Other assets290.7231.8Total assets$6,957.8$5,944.2LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$324.8$260.7Short-term debt216.9262.7Accrued payroll135.5154.3Accrued income taxes12.9?Other accrued taxes69.760.4Unearned revenues315.4231.7Current portion of long-term debt?349.9Other current liabilities460.2454.4Total current liabilities$1,535.4$1,774.1Long-term debt, less current portion2,502.41,453.7Deferred income taxes369.9312.9Deferred rent223.4204.4Obligations under capital leases, net of current installments    53.054.4Other liabilities323.4302.7Total liabilities$5,007.5$4,102.2Stockholders' equity:Common stock and surplus$1,184.5$2,518.8Retained earnings930.93,172.8Treasury stock(8.5)(3,695.8)Accumulated other comprehensive income (loss)(150.3)(146.6)Unearned compensation(6.3)(7.2)Total stockholders' equity$1,950.3$1,842.0Total liabilities and stockholders' equity$6,957.8$5,944.2 DARDEN RESTAURANTS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)Nine Months Ended2/24/20132/26/2012Cash flows?operating activitiesNet earnings$278.8$324.3Losses from discontinued operations, net of tax benefit0.50.7Adjustments to reconcile net earnings from continuing operations to cash flows:   Depreciation and amortization292.8258.8Stock-based compensation expense36.041.3Change in current assets and liabilities and other, net81.9(74.6)Net cash provided by operating activities of continuing operations$690.0$550.5Cash flows?investing activitiesPurchases of land, buildings and equipment(518.5)(483.4)Proceeds from disposal of land, buildings and equipment?3.3Cash used in business acquisitions, net of cash acquired(577.4)(58.6)Increase in other assets(23.0)(21.1)Net cash used in investing activities of continuing operations$(1,118.9)$(559.8)Cash flows?financing activitiesProceeds from issuance of common stock49.445.1Income tax benefits credited to equity10.412.0Dividends paid(193.2)(168.6)Repurchases of common stock(52.4)(357.0)ESOP note receivable repayment0.91.5Proceeds from issuance of short-term debt, net(45.7)102.2Repayment of long-term debt(350.9)(1.5)Principal payments on capital leases(1.2)(1.2)Proceeds from issuance of long-term debt1,050.0400.0Payment of debt issuance costs(7.4)(5.1)Net cash provided by financing activities of continuing operations$459.9$27.4Cash flows?discontinued operationsNet cash used in operating activities of discontinued operations(0.3)(0.4)Net cash provided by investing activities of discontinued operations2.70.3Net cash provided by (used in) discontinued operations$2.4$(0.1)Increase in cash and cash equivalents33.418.0Cash and cash equivalents - beginning of period70.570.5Cash and cash equivalents - end of period$103.9$88.5 SOURCE Darden Restaurants, Inc.: FinancialFor further information: (Analysts) Matthew Stroud (407) 245-6458; (Media) Rich Jeffers (407) 245-4189