Darden Restaurants Reports Fiscal 2024 Fourth Quarter and Full Year Results; Increases Quarterly Dividend; And Provides Fiscal 2025 Outlook
Darden Restaurants (NYSE: DRI) reported its Q4 and fiscal 2024 results, highlighting a 6.8% increase in Q4 sales to $3.0 billion, attributed to new restaurant openings including 80 Ruth's Chris Steak House locations. Same-restaurant sales were flat overall, with Olive Garden down 1.5% and LongHorn Steakhouse up 4.0%. Adjusted diluted EPS for Q4 rose to $2.65. Fiscal 2024 saw an 8.6% rise in total sales to $11.4 billion and an adjusted diluted EPS of $8.88, up 11.0%. Darden also declared a 6.9% increase in its quarterly dividend to $1.40 per share and announced a fiscal 2025 sales outlook between $11.8 to $11.9 billion with an EPS range of $9.40 to $9.60.
- Q4 sales increased by 6.8% to $3.0 billion.
- Fiscal 2024 total sales rose 8.6% to $11.4 billion.
- Adjusted Q4 diluted EPS increased to $2.65.
- Fiscal 2024 adjusted diluted EPS increased by 11.0% to $8.88.
- Quarterly dividend increased by 6.9% to $1.40 per share.
- Fiscal 2025 sales forecasted between $11.8 to $11.9 billion.
- Same-restaurant sales flat overall in Q4.
- Olive Garden's same-restaurant sales decreased by 1.5% in Q4.
- Fine Dining segment experienced a 2.6% decrease in same-restaurant sales in Q4.
Insights
Darden Restaurants' fiscal 2024 results reveal a notable performance. The total sales increased to
Analyzing the earnings, adjusted diluted EPS from continuing operations rose 11.0% to
The fiscal 2025 outlook is cautiously optimistic, projecting total sales between
Overall, Darden's financial health remains solid, but the slight decline in some segments and inflationary pressures warrant careful monitoring.
Darden's acquisition of Ruth's Chris has already started to show benefits with increased segment profits in fine dining. This segment, however, showed a 2.4% decline in same-restaurant sales. This reflects on the competitive nature of the fine dining industry and potential challenges in integrating new acquisitions smoothly.
The same-restaurant sales growth of 1.6% across Darden's portfolio is in line with industry norms, suggesting stable consumer demand. Yet, the mixed results across brands like Olive Garden (-1.5%) and LongHorn Steakhouse (4.0%) highlight the varied performance within the company's portfolio.
The forecast for new restaurant openings (45 to 50) suggests growth potential, but investors should keep an eye on the macroeconomic factors affecting consumer spending in dining out. Additionally, the forecasted inflation rate of around 3% could affect profitability.
Fourth Quarter 2024 Financial Highlights
- Total sales increased
6.8% to$3.0 billion - Same-restaurant sales:
Consolidated Darden* | 0.0 % | ||||||
Olive Garden | (1.5) % | ||||||
LongHorn Steakhouse | 4.0 % | ||||||
Fine Dining* | (2.6) % | ||||||
Other Business | (1.1) % |
- Reported diluted net earnings per share from continuing operations were
$2.58 - Excluding
$0.07 $2.65 2.7% ** - The Company repurchased
$97.3 million
Fiscal 2024 Financial Highlights
- Total sales increased
8.6% to$11.4 billion 1.6% and sales from the addition of 80 company-owned Ruth's Chris restaurants and 37 other net new restaurants - Same-restaurant sales:
Consolidated Darden* | 1.6 % | ||||||
Olive Garden | 1.6 % | ||||||
LongHorn Steakhouse | 4.7 % | ||||||
Fine Dining* | (2.4) % | ||||||
Other Business | (0.7) % |
- Reported diluted net earnings per share from continuing operations were
$8.53 - Excluding
$0.35 $8.88 11.0% **
* Will not include Ruth's Chris Steak House until they have been owned and operated by Darden for a 16-month period (Q2 Fiscal 2025)
** See the "Non-GAAP Information" below for more details
"We had a strong year by staying disciplined, being brilliant with the basics, and controlling what we could control," said Darden President & CEO Rick Cardenas. "This enabled us to exceed the high end of the EPS range we provided at the beginning of the fiscal year despite weakening conditions that emerged in the back half of the year."
Segment Performance
Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses. Segment profit excludes non-cash real estate related expenses. From the date of acquisition forward, sales and profits from Ruth's Chris company-owned restaurants are included within the Fine Dining segment. Royalties from Ruth's Chris franchise and managed locations are in the Other Business segment.
Q4 Sales | Q4 Segment Profit | |||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||
Consolidated Darden | ||||||||
Olive Garden | ||||||||
LongHorn Steakhouse | ||||||||
Fine Dining | ||||||||
Other Business | ||||||||
Annual Sales | Annual Segment Profit | |||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||
Consolidated Darden | ||||||||
Olive Garden | ||||||||
LongHorn Steakhouse | ||||||||
Fine Dining | ||||||||
Other Business | ||||||||
Dividend Declared
Darden's Board of Directors declared a quarterly cash dividend of
Share Repurchase Program
During the quarter, the Company repurchased approximately 0.6 million shares of its common stock for a total of approximately
Fiscal 2025 Financial Outlook
Below is the full year financial outlook for fiscal 2025. We will provide additional details during our investor conference call scheduled for this morning at 8:30 am ET.
- Total sales of
$11.8 $11.9 billion - Same-restaurant sales* growth of
1.0% to2.0% - New restaurant openings of 45 to 50
- Total capital spending of
$550 $600 million - Total inflation of approximately
3.0% - An effective tax rate of approximately
13% - Diluted net earnings per share from continuing operations of
$9.40 $9.60 - Approximately 119 million weighted average diluted shares outstanding
* Excludes Ruth's Chris Steak House as they will not be owned and operated by Darden for a 16-month period at the beginning of Fiscal 2025
Annual Meeting of Shareholders
Darden will hold its Annual Meeting of Shareholders on September 18, 2024. The meeting will be held in a virtual format only. The record date for shareholders to vote in the Annual Meeting is July 24, 2024.
Investor Conference Call
The Company will host a conference call and slide presentation on Thursday, June 20, 2024 at 8:30 am ET to review its recent financial performance. To listen to the call live, please go to https://event.choruscall.com/mediaframe/webcast.html?webcastid=haKaMeza 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 1-877-407-9219. 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, Yard House, Ruth's Chris Steak House, Cheddar's Scratch Kitchen, The Capital Grille, Seasons 52, Eddie V's and Bahama Breeze. 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: 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, the inability to successfully integrate Ruth's Chris Steak House operations into our business, 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.
Non-GAAP Information
The information in this press release includes financial information determined by methods other than in accordance with
(Analysts) Courtney Aquilla, (407) 245-5054; (Media) Rich Jeffers, (407) 245-4189
Fiscal Q4 Reported to Adjusted Earnings Reconciliation | |||||||||
Q4 2024 | Q4 2023 | ||||||||
$ in millions, except per share amounts | Earnings | Income | Net | Diluted | Earnings | Income | Net | Diluted | |
Reported Earnings from Continuing Operations | $ 360.0 | $ 50.0 | $ 310.0 | $ 2.58 | $ 352.4 | $ 36.8 | $ 315.6 | $ 2.58 | |
% Change vs Prior Year | — % | ||||||||
Adjustments: | |||||||||
Ruth's Chris transaction and integration related costs | 7.4 | (0.8) | 8.2 | 0.07 | — | — | — | — | |
Adjusted Earnings from Continuing Operations | $ 367.4 | $ 49.2 | $ 318.2 | $ 2.65 | $ 352.4 | $ 36.8 | $ 315.6 | $ 2.58 | |
% Change vs Prior Year | 2.7 % | ||||||||
Fiscal YTD FY24 Reported to Adjusted Earnings Reconciliation | |||||||||
2024 | 2023 | ||||||||
$ in millions, except per share amounts | Earnings | Income | Net | Diluted | Earnings | Income | Net | Diluted | |
Reported Earnings from Continuing Operations | $ 1,175.5 | $ 145.0 | $ 1,030.5 | $ 8.53 | $ 1,120.5 | $ 137.0 | $ 983.5 | $ 8.00 | |
% Change vs Prior Year | 6.6 % | ||||||||
Adjustments: | |||||||||
Ruth's Chris transaction and integration related costs | 51.8 | 9.7 | 42.1 | 0.35 | — | — | — | — | |
Adjusted Earnings from Continuing Operations | $ 1,227.3 | $ 154.7 | $ 1,072.6 | $ 8.88 | $ 1,120.5 | $ 137.0 | $ 983.5 | $ 8.00 | |
% Change vs Prior Year | 11.0 % | ||||||||
DARDEN RESTAURANTS, INC. | ||
NUMBER OF COMPANY-OWNED RESTAURANTS | ||
5/26/24 | 5/28/23 | |
Olive Garden | 920 | 905 |
LongHorn Steakhouse | 575 | 562 |
Cheddar's Scratch Kitchen | 181 | 180 |
Yard House | 88 | 86 |
Ruth's Chris | 80 | — |
The Capital Grille | 66 | 62 |
Seasons 52 | 44 | 44 |
Bahama Breeze | 43 | 42 |
Eddie V's | 30 | 29 |
The Capital Burger | 4 | 4 |
Darden Continuing Operations | 2,031 | 1,914 |
DARDEN RESTAURANTS, INC. | |||||||
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||
(In millions, except per share data) | |||||||
(Unaudited) | |||||||
Three Months Ended | Twelve Months Ended | ||||||
5/26/2024 | 5/28/2023 | 5/26/2024 | 5/28/2023 | ||||
Sales | $ 2,957.3 | $ 2,769.0 | $ 11,390.0 | $ 10,487.8 | |||
Costs and expenses: | |||||||
Food and beverage | 906.9 | 855.3 | 3,523.9 | 3,355.9 | |||
Restaurant labor | 926.0 | 869.8 | 3,619.3 | 3,346.3 | |||
Restaurant expenses | 467.7 | 441.4 | 1,836.6 | 1,702.2 | |||
Marketing expenses | 37.3 | 28.7 | 144.5 | 118.3 | |||
General and administrative expenses | 102.9 | 100.4 | 479.2 | 386.1 | |||
Depreciation and amortization | 119.7 | 97.1 | 459.9 | 387.8 | |||
Impairments and disposal of assets, net | 1.4 | 1.8 | 12.4 | (10.6) | |||
Total operating costs and expenses | $ 2,561.9 | $ 2,394.5 | $ 10,075.8 | $ 9,286.0 | |||
Operating income | 395.4 | 374.5 | 1,314.2 | 1,201.8 | |||
Interest, net | 35.4 | 22.1 | 138.7 | 81.3 | |||
Earnings before income taxes | 360.0 | 352.4 | 1,175.5 | 1,120.5 | |||
Income tax expense | 50.0 | 36.8 | 145.0 | 137.0 | |||
Earnings from continuing operations | $ 310.0 | $ 315.6 | $ 1,030.5 | $ 983.5 | |||
Losses from discontinued operations, net of tax benefit of | (1.9) | (0.5) | (2.9) | (1.6) | |||
Net earnings | $ 308.1 | $ 315.1 | $ 1,027.6 | $ 981.9 | |||
Basic net earnings per share: | |||||||
Earnings from continuing operations | $ 2.60 | $ 2.61 | $ 8.59 | $ 8.07 | |||
Losses from discontinued operations | (0.02) | — | (0.02) | (0.01) | |||
Net earnings | $ 2.58 | $ 2.61 | $ 8.57 | $ 8.06 | |||
Diluted net earnings per share: | |||||||
Earnings from continuing operations | $ 2.58 | $ 2.58 | $ 8.53 | $ 8.00 | |||
Losses from discontinued operations | (0.01) | — | (0.02) | (0.01) | |||
Net earnings | $ 2.57 | $ 2.58 | $ 8.51 | $ 7.99 | |||
Average number of common shares outstanding: | |||||||
Basic | 119.2 | 121.0 | 119.9 | 121.9 | |||
Diluted | 120.1 | 122.1 | 120.8 | 122.9 | |||
DARDEN RESTAURANTS, INC. | |||
CONSOLIDATED BALANCE SHEETS | |||
(In millions) | |||
5/26/2024 | 5/28/2023 | ||
(Unaudited) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 194.8 | $ 367.8 | |
Receivables, net | 79.1 | 80.2 | |
Inventories | 290.5 | 287.9 | |
Prepaid income taxes | 121.7 | 107.3 | |
Prepaid expenses and other current assets | 136.7 | 154.5 | |
Total current assets | $ 822.8 | $ 997.7 | |
Land, buildings and equipment, net | 4,184.3 | 3,725.1 | |
Operating lease right-of-use assets | 3,429.3 | 3,373.9 | |
Goodwill | 1,391.0 | 1,037.4 | |
Trademarks | 1,148.0 | 806.3 | |
Other assets | 347.6 | 301.1 | |
Total assets | $ 11,323.0 | $ 10,241.5 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 399.5 | $ 426.2 | |
Short-term debt | 86.8 | — | |
Accrued payroll | 190.1 | 173.0 | |
Accrued income taxes | 6.1 | 7.8 | |
Other accrued taxes | 71.0 | 65.9 | |
Unearned revenues | 591.8 | 512.0 | |
Other current liabilities | 847.2 | 752.5 | |
Total current liabilities | $ 2,192.5 | $ 1,937.4 | |
Long-term debt | 1,370.4 | 884.9 | |
Deferred income taxes | 232.0 | 142.2 | |
Operating lease liabilities - non-current | 3,704.7 | 3,667.6 | |
Other liabilities | 1,580.9 | 1,407.9 | |
Total liabilities | $ 9,080.5 | $ 8,040.0 | |
Stockholders' equity: | |||
Common stock and surplus | $ 2,252.4 | $ 2,230.8 | |
Retained earnings (deficit) | (35.5) | (32.5) | |
Accumulated other comprehensive income | 25.6 | 3.2 | |
Total stockholders' equity | $ 2,242.5 | $ 2,201.5 | |
Total liabilities and stockholders' equity | $ 11,323.0 | $ 10,241.5 | |
DARDEN RESTAURANTS, INC. | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(In millions) | |||
(Unaudited) | |||
Twelve Months Ended | |||
5/26/2024 | 5/28/2023 | ||
Cash flows—operating activities | |||
Net earnings | $ 1,027.6 | $ 981.9 | |
Losses from discontinued operations, net of tax | 2.9 | 1.6 | |
Adjustments to reconcile net earnings from continuing operations to cash flows: | |||
Depreciation and amortization | 459.9 | 387.8 | |
Impairments and disposal of assets, net | 12.4 | (10.6) | |
Stock-based compensation expense | 68.5 | 67.5 | |
Change in current assets and liabilities and other, net | 50.4 | 124.6 | |
Net cash provided by operating activities of continuing operations | $ 1,621.7 | $ 1,552.8 | |
Cash flows—investing activities | |||
Purchases of land, buildings and equipment | (601.2) | (564.9) | |
Proceeds from disposal of land, buildings and equipment | 3.3 | 25.4 | |
Cash used in business acquisitions, net of cash acquired | (701.1) | — | |
Purchases of capitalized software and changes in other assets, net | (25.6) | (28.9) | |
Net cash used in investing activities of continuing operations | $ (1,324.6) | $ (568.4) | |
Cash flows—financing activities | |||
Net proceeds from issuance of common stock | 43.6 | 35.4 | |
Dividends paid | (628.4) | (589.8) | |
Repurchases of common stock | (453.9) | (458.7) | |
Proceeds from short-term debt, net | 86.8 | — | |
Proceeds from issuance of long-term debt, net | 500.0 | — | |
Principal payments on finance leases, net | (19.8) | (19.8) | |
Payments of debt issuance costs | (11.7) | (0.2) | |
Net cash used in financing activities of continuing operations | $ (483.4) | $ (1,033.1) | |
Cash flows—discontinued operations | |||
Net cash used in operating activities of discontinued operations | (9.8) | (7.2) | |
Net cash used in discontinued operations | $ (9.8) | $ (7.2) | |
Decrease in cash, cash equivalents, and restricted cash | (196.1) | (55.9) | |
Cash, cash equivalents, and restricted cash - beginning of period | 416.2 | 472.1 | |
Cash, cash equivalents, and restricted cash - end of period | $ 220.1 | $ 416.2 | |
Reconciliation of cash, cash equivalents, and restricted cash: | 5/26/2024 | 5/28/2023 | |
Cash and cash equivalents | $ 194.8 | $ 367.8 | |
Restricted cash included in prepaid expenses and other current assets | 25.3 | 48.4 | |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 220.1 | $ 416.2 | |
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SOURCE Darden Restaurants, Inc.: Financial
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