Slides
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Earnings Call Fiscal 2025: Second Quarter Results December 19, 2024
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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 a complete description of the Company's performance, financial condition or outlook. 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 completeour integration of Chuy's Holdings 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, environmental, social and governancerisk, including disclosure expectations and the impacts of third party ratings, 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 anduncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission. The information in this communication includes financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”), such as adjusted diluted net earnings per share from continuing operations and adjusted EBITDA. The Company’s management uses these non-GAAP measures in its analysis of the Company’s performance. The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information that is essential to a proper understanding of the operating results of the Company’s businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included under “Additional Information” in this presentation. 2 2
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A full-service restaurant company with … 10 Iconic Brands Back-To-Basics 1 Driving Philosophy Culinary Innovation & Execution Attentive Service Engaging Atmosphere Integrated Marketing 4 Competitive Advantages Significant Scale Extensive Data & Insights Rigorous Strategic Planning Results- Oriented Culture 1 Mission Be financially successful through great people consistently delivering outstanding food, drinks and service in an inviting atmosphere making every guest loyal. 3
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Never Ending Pasta Bowl Elevates Brand Equity | Simple to Execute | Not at a Deep Discount 4
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5 Uber Direct Delivery Pilot
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Stuffed Chicken MarsalaSteak Gorgonzola Alfredo 6
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7 Steak Hero Shots 7
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// Preserve the employee experience and Chuy’s unique culture // Maintain the guest experience // Successfully migrate Chuy’s onto the Darden platform 10 10
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Next Generation Point of Sale 11 11 // Improved and more modern interface // Updated technology architecture // Ability to operate on different types of hardware // Near real-time analytics
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12 Responding in Times of Need 12
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Thank You To Our Team Members 13
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2.4% SAME-RESTAURANT SALES GROWTH1 $2.9 Billion TOTAL SALES 6.0% TOTAL SALES GROWTH $2.03 ADJUSTED DILUTED NET EPS FROM CONTINUING OPERATIONS2 Fiscal 2025 Second Quarter Financial Highlights 14 $445 Million ADJUSTED EBITDA2 $308 Million CASH RETURN3 1 Will not include Chuy's until they have been owned and operated by Darden for a 16-month period (Q4 Fiscal 2026); Includes Ruth's Chris for the month of November only. 2 A reconciliation of Non-GAAP measures can be found in the Additional Information section of this presentation. 3 Includes dividends paid and repurchases of common stock. 14
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As Reported As Adjusted1 Q2 2025 Q2 2025 Q2 2025 vs Q2 2024 (bps) ($ millions) ($ millions) % of Sales Favorable/(Unfavorable) Sales $2,890.0 $2,890.0 Food and Beverage $872.8 $872.8 30.2 % 80 Restaurant Labor $926.8 $926.8 32.1 % 20 Restaurant Expenses $477.7 $477.7 16.5 % — Marketing Expenses $48.8 $48.8 1.7 % (30) Restaurant-Level EBITDA $563.9 $563.9 19.5 % 70 General and Administrative Expenses $144.1 $119.1 4.1 % (10) Depreciation and Amortization $127.7 $127.7 4.4 % (30) Impairment and Disposal of Assets, Net $0.0 $0.0 — % 10 Operating Income $292.1 $317.1 11.0 % 30 Interest Expense $46.2 $43.5 1.5 % (20) Earnings Before Income Tax $245.9 $273.6 9.5 % 10 Income Tax Expense $30.2 $33.6 1.2 % — Note: Effective Tax Rate 12.3% 12.3% Earnings From Continuing Operations $215.7 $240.0 8.3 % 20 Margin Analysis vs. Prior Year 15 Note: Continuing operations, values may not foot due to rounding. 1 A reconciliation of Non-GAAP measures can be found in the Additional Information section of this presentation. 15
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Second Quarter Segment Performance1 Segment Sales ($ millions) Segment Profit Margin2 Other Fine Dining Other Fine Dining 1 From the date of acquisition, October 11, 2024, forward, sales and profits from Chuy's restaurants are included within the Ot her Business segment. 2 Segment profit margin calculated as (sales less costs of food & beverage, restaurant labor, restaurant expenses and marketing expenses) / sales. 16 16
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Updating Fiscal 2025 Annual Outlook SALES Total Sales ~$12.1 Billion Same-Restaurant Sales Growth1 ~1.5% DEVELOPMENT Restaurant Openings 50 to 55 Capital Spending ~$650 Million MARGIN Total Inflation: ~2.5% Commodities: ~1.0% Effective Tax Rate ~12.5% Adjusted Diluted Earnings per Share $9.40 to $9.602 (~118 Million Weighted Average Diluted Shares Outstanding) 17 1 Does not include Ruth's Chris and Chuy's as they were not owned and operated by Darden for a 16 -month period at the beginning of the fiscal year. 2 A reconciliation of Non-GAAP measures can be found in the Additional Information section of this presentation. 17
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Chuy's Expected Financial Impacts 18 // Expected net run-rate pre-tax synergies of approximately $17 million • Approximately $2 million in fiscal 2025 // Expected to be neutral impact to adjusted net earnings per share in fiscal 2025 excluding acquisition and integration related expenses // Anticipate total acquisition and integration related expenses of approximately $50 - $55 million, pre-tax • Approximately $47 million, pre-tax, in fiscal 2025 18
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Question & Answer Session
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Additional Information
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December - May FY2025 Spend by category Coverage Outlook Beef 25% 40% Low single digit inflation Dairy / Oil1 13% 40% Flat Produce 12% 95% Low single digit deflation Seafood 9% 75% Low single digit inflation Chicken 8% 90% Low single digit inflation Wheat2 7% 95% Flat Non-Perishable / Other 26% 45% Low single digit inflation Weighted average coverage 100% 60% Back Half Commodities Outlook 1 Includes cheese, cream, butter, and shortening. 2 Includes breadsticks and pasta. 21 21
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Reported to Adjusted Earnings Reconciliations Q2 2025 Q2 2024 $ 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 Net Earnings Diluted Net Earnings Per Share Reported Earnings from Continuing Operations $ 245.9 $ 30.2 $ 215.7 $ 1.82 $ 241.4 $ 29.1 $ 212.3 $ 1.76 Adjustments: Acquisition Transaction and Integration Related Costs $ 27.7 $ 3.4 $ 24.3 $ 0.21 $ 12.8 $ 3.2 $ 9.6 $ 0.08 General and Administrative Expenses 25.0 2.8 22.2 0.19 5.6 1.4 4.2 0.03 Impairment1 — — — — 5.9 1.5 4.4 0.04 Interest2 2.7 0.6 2.1 0.02 1.3 0.3 1.0 0.01 Adjusted Earnings from Continuing Operations $ 273.6 $ 33.6 $ 240.0 $ 2.03 $ 254.2 $ 32.3 $ 221.9 $ 1.84 Adjusted Interest 43.5 35.8 Adjusted Income Tax 33.6 32.3 Adjusted Operating Income $ 317.1 $ 290.0 Depreciation and Amortization 127.7 112.5 Adjusted EBITDA $ 444.8 $ 402.5 22 1 Write-off of acquired Ruth's Chris assets not able to be utilized. 2 In Q2 FY25, Chuy's associated costs relate to write-off of term loan issuance and interest rate hedge settlement. In Q2 FY24, Ruth's associated costs relate to write-off of term loan issuance used to fund Ruth's Chris acquisition, which was paid off with proceeds from bond offering. 22
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Reported to Adjusted Earnings Outlook Reconciliation 2025 Reported diluted net earnings per share from continuing operations $ 9.07 to $ 9.27 Chuy's transaction and integration related costs $ 0.40 $ 0.40 Income tax expense $ (0.07) $ (0.07) Adjusted diluted net earnings per share from continuing operations $ 9.40 $ 9.60 23