Darden Restaurants Reports Fiscal 2022 Fourth Quarter and Full Year Results
Increases Quarterly Dividend; Authorizes New $1 Billion Share Repurchase Program; And Provides Fiscal 2023 Outlook
Darden Restaurants, Inc. (NYSE:DRI) today reported its financial results for the fourth quarter and fiscal year ended May 29, 2022.
Fourth Quarter 2022 Financial Highlights
- Total sales increased 14.2% to $2.60 billion driven by a blended same-restaurant sales increase of 11.7% and sales from 33 net new restaurants
- Same-restaurant sales:
| Consolidated Darden | 11.7 % | |||
| Olive Garden | 6.5 % | |||
| LongHorn Steakhouse | 10.6 % | |||
| Fine Dining | 34.5 % | |||
| Other Business | 18.5 % |
- Reported diluted net earnings per share was $2.24 as compared to last year's reported diluted net earnings per share of $2.79 and last year's adjusted diluted net earnings per share of $2.03*
- Net earnings from continuing operations were $282 million
- EBITDA of $431 million*
- The Company repurchased $237 million of its outstanding common stock
* See the "Non-GAAP Information" below for more details.
Fiscal 2022 Financial Highlights
- Total sales increased 33.8% to $9.63 billion driven by a blended same-restaurant sales increase of 30.9% and sales from 33 net new restaurants
- Same-restaurant sales:
| Consolidated Darden | 30.9 % | |||
| Olive Garden | 24.1 % | |||
| LongHorn Steakhouse | 28.1 % | |||
| Fine Dining | 62.7 % | |||
| Other Business | 42.4 % |
- Reported diluted net earnings per share was $7.40, as compared to last year's reported diluted net earnings per share of $4.80 and last year's adjusted diluted net earnings per share of $4.31*
- Net earnings from continuing operations were $955 million
- EBITDA of $1,531 billion*
* See the "Non-GAAP Information" below for more details.
"We had a strong quarter despite experiencing high inflation, and fiscal 2022 was a solid year," said Darden President & CEO Rick Cardenas. "Darden's competitive advantages enabled our brands to strengthen their business models while our restaurant teams continued to deliver exceptional guest experiences in a challenging operating environment. As we begin our new fiscal year, our focus remains on driving profitable sales, investing in the guest experience and simplifying operations. Darden's strategy, and our strong balance sheet, positions us well regardless of the operating environment."
Segment Performance
Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses. Segment profit excludes non-cash real estate related expenses.
| Q4 Sales | Q4 Segment Profit | |||||||||||
| ($ in millions) | 2022 | 2021 | Pre-COVID1 | 2022 | 2021 | Pre-COVID1 | ||||||
| Consolidated Darden | $2,602.9 | $2,279.2 | $2,229.1 | |||||||||
| Olive Garden | $1,193.7 | $1,103.7 | $1,107.0 | $265.3 | $281.6 | $232.9 | ||||||
| LongHorn Steakhouse | $647.3 | $572.0 | $484.4 | $115.8 | $118.0 | $92.9 | ||||||
| Fine Dining | $210.5 | $149.6 | $154.6 | $44.0 | $33.1 | $32.1 | ||||||
| Other Business | $551.4 | $453.9 | $483.1 | $85.9 | $86.8 | $77.7 | ||||||
| Annual Sales | Annual Segment Profit | |||||||||||
| ($ in millions) | 2022 | 2021 | Pre-COVID2 | 2022 | 2021 | Pre-COVID2 | ||||||
| Consolidated Darden | $9,630.0 | $7,196.1 | $8,765.9 | |||||||||
| Olive Garden | $4,503.9 | $3,593.4 | $4,390.0 | $993.7 | $832.9 | $898.8 | ||||||
| LongHorn Steakhouse | $2,374.3 | $1,810.4 | $1,892.6 | $418.4 | $323.5 | $343.9 | ||||||
| Fine Dining | $776.2 | $443.2 | $634.0 | $165.0 | $80.2 | $129.6 | ||||||
| Other Business | $1,975.6 | $1,349.1 | $1,849.3 | $300.2 | $193.0 | $259.3 | ||||||
Average weekly sales by segment:
| Q4 Average Weekly Sales | Annual Average Weekly Sales | ||||||
| 2022 | 2021 | Pre-COVID1 | 2022 | 2021 | Pre-COVID2 | ||
| Consolidated Darden | $107,199 | $95,859 | $96,542 | $99,815 | $76,134 | $94,148 | |
| Olive Garden | $103,885 | $97,425 | $99,105 | $98,443 | $79,296 | $97,759 | |
| LongHorn Steakhouse | $91,731 | $83,004 | $73,088 | $84,896 | $66,261 | $70,929 | |
| Fine Dining | $182,454 | $136,426 | $152,848 | $169,480 | $103,813 | $152,687 | |
| Other Business | $120,481 | $101,910 | $113,838 | $108,790 | $76,734 | $107,285 | |
| 1 Pre-COVID represents FY2019 Q4. | |||||||
| 2 Pre-COVID represents trailing four quarters ended FY2020 Q3 | |||||||
Dividend Declared
Darden's Board of Directors declared a quarterly cash dividend of $1.21 per share, a 10% increase from third quarter fiscal 2022, on the Company's outstanding common stock. The dividend is payable on August 1, 2022 to shareholders of record at the close of business on July 8, 2022.
Share Repurchase Program
During the quarter, the Company repurchased approximately 1.8 million shares of its common stock for a total cost of approximately $237 million. In addition, yesterday, Darden's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $1 billion of its outstanding common stock. This repurchase program does not have an expiration and replaces the previously existing share repurchase authorization.
"By adhering to our strategy, and pricing below inflation, we ended the year with significantly better margins than pre-COVID," said CFO Raj Vennam. "As a result, we generated $1.3 billion of cash from operations in fiscal 2022. The strength of our operating model and its ability to generate durable cash flow allows us to be disciplined as we enter fiscal 2023."
Fiscal 2023 Financial Outlook
Below is the full year financial outlook for fiscal 2023. We will provide additional detail on the quarterly flow during our investor conference call scheduled for this morning at 8:30 am ET.
- Total sales of $10.2 to $10.4 billion
- Same-restaurant sales growth of 4% to 6%
- 55 to 60 new restaurant openings
- Total capital spending of $500 to $550 million
- Total inflation of approximately 6%
- An effective tax rate of approximately 13.5%
- Diluted net earnings per share from continuing operations of $7.40 to $8.00
- Approximately 124 million weighted average diluted shares outstanding
Annual Meeting of Shareholders
Darden will hold its Annual Meeting of Shareholders on September 21, 2022. The meeting will be held in a virtual format only. The record date for shareholders to vote in the Annual Meeting is July 27, 2022.
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.
| Fiscal 2022 EBITDA Reconciliations | ||
| $ in millions | ||
| Q4 | Fiscal 2022 | |
| Net Earnings from Continuing Operations | $281.7 | $954.7 |
| Interest, Net | 18.9 | 68.7 |
| Income tax expense | 37.6 | 138.8 |
| Depreciation and amortization | 93.0 | 368.4 |
| EBITDA | $431.2 | $1,530.6 |
| Reported to Adjusted Earnings Reconciliation | |||||||||
| Q4 2021 | 2021 | ||||||||
| $ in millions, except per share amounts | Earnings Before Income Tax | Income Tax Expense (Benefit) | 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 | $306.0 | $(63.0) | $369.0 | $2.79 | $576.5 | $(55.9) | $632.4 | $4.80 | |
| Adjustments: | |||||||||
| Corporate restructuring1 | 47.8 | 12.0 | 35.8 | 0.27 | |||||
| Income tax benefit2 | 99.7 | (99.7) | (0.76) | 99.7 | (99.7) | (0.76) | |||
| Adjusted Diluted Earnings from Continuing Operations | $306.0 | $36.7 | $269.3 | $2.03 | $624.3 | $55.8 | $568.5 | $4.31 | |
| 1 Includes cash expenses of approximately $38 million, primarily related to severance and benefits, paid over an eighteen month period, and non-cash expenses of approximately $10 million related to acceleration of equity-settled awards and expense associated with the postretirement benefit plan. | |||||||||
| 2 Primarily relates to our estimated federal net operating loss (NOL) for fiscal year 2021, which was carried back to the preceding five years. A non-recurring income tax benefit is generated due to the difference in the federal tax rates between fiscal year 2021 and the years to which the NOL was carried back. | |||||||||
| DARDEN RESTAURANTS, INC. NUMBER OF COMPANY-OWNED RESTAURANTS | ||
| 5/29/22 | 5/30/21 | |
| Olive Garden | 884 | 875 |
| LongHorn Steakhouse | 546 | 533 |
| Cheddar's Scratch Kitchen | 172 | 170 |
| Yard House | 85 | 81 |
| The Capital Grille | 62 | 60 |
| Seasons 52 | 45 | 44 |
| Bahama Breeze | 42 | 42 |
| Eddie V's | 28 | 26 |
| The Capital Burger | 3 | 3 |
| Darden Continuing Operations | 1,867 | 1,834 |
| DARDEN RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In millions, except per share data) (Unaudited) | |||||||
| Three Months Ended | Twelve Months Ended | ||||||
| 5/29/2022 | 5/30/2021 | 5/29/2022 | 5/30/2021 | ||||
| Sales | $ 2,602.9 | $ 2,279.2 | $ 9,630.0 | $ 7,196.1 | |||
| Costs and expenses: | |||||||
| Food and beverage | 811.4 | 663.1 | 2,943.6 | 2,072.1 | |||
| Restaurant labor | 829.3 | 690.7 | 3,108.8 | 2,286.3 | |||
| Restaurant expenses | 423.8 | 386.0 | 1,582.6 | 1,344.2 | |||
| Marketing expenses | 20.2 | 24.3 | 93.2 | 91.1 | |||
| General and administrative expenses | 83.5 | 97.7 | 373.2 | 396.2 | |||
| Depreciation and amortization | 93.0 | 89.1 | 368.4 | 350.9 | |||
| Impairments and disposal of assets, net | 3.5 | 5.2 | (2.0) | 6.6 | |||
| Total operating costs and expenses | $ 2,264.7 | $ 1,956.1 | $ 8,467.8 | $ 6,547.4 | |||
| Operating income | 338.2 | 323.1 | 1,162.2 | 648.7 | |||
| Interest, net | 18.9 | 17.1 | 68.7 | 63.5 | |||
| Other (income) expense, net | — | — | — | 8.7 | |||
| Earnings before income taxes | 319.3 | 306.0 | 1,093.5 | 576.5 | |||
| Income tax expense (benefit) | 37.6 | (63.0) | 138.8 | (55.9) | |||
| Earnings from continuing operations | $ 281.7 | $ 369.0 | $ 954.7 | $ 632.4 | |||
| Losses from discontinued operations, net of tax expense (benefit) of $0.3, $(0.8), $(0.2) and $(3.2), respectively | — | (0.5) | (1.9) | (3.1) | |||
| Net earnings | $ 281.7 | $ 368.5 | $ 952.8 | $ 629.3 | |||
| Basic net earnings per share: | |||||||
| Earnings from continuing operations | $ 2.26 | $ 2.82 | $ 7.47 | $ 4.85 | |||
| Losses from discontinued operations | — | — | (0.01) | (0.02) | |||
| Net earnings | $ 2.26 | $ 2.82 | $ 7.46 | $ 4.83 | |||
| Diluted net earnings per share: | |||||||
| Earnings from continuing operations | $ 2.24 | $ 2.79 | $ 7.40 | $ 4.80 | |||
| Losses from discontinued operations | — | (0.01) | (0.01) | (0.03) | |||
| Net earnings | $ 2.24 | $ 2.78 | $ 7.39 | $ 4.77 | |||
| Average number of common shares outstanding: | |||||||
| Basic | 124.4 | 130.9 | 127.8 | 130.4 | |||
| Diluted | 125.5 | 132.4 | 129.0 | 131.8 | |||
| DARDEN RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS (In millions) | |||
| 5/29/2022 | 5/30/2021 | ||
| (Unaudited) | |||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $ 420.6 | $ 1,214.7 | |
| Receivables, net | 72.0 | 68.2 | |
| Inventories | 270.6 | 190.8 | |
| Prepaid income taxes | 274.8 | 337.2 | |
| Prepaid expenses and other current assets | 141.4 | 60.2 | |
| Total current assets | $ 1,179.4 | $ 1,871.1 | |
| Land, buildings and equipment, net | 3,356.0 | 2,869.2 | |
| Operating lease right-of-use assets | 3,465.1 | 3,776.4 | |
| Goodwill | 1,037.4 | 1,037.4 | |
| Trademarks | 806.3 | 806.3 | |
| Other assets | 291.6 | 295.7 | |
| Total assets | $ 10,135.8 | $ 10,656.1 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Accounts payable | $ 366.9 | $ 304.5 | |
| Accrued payroll | 181.5 | 177.4 | |
| Accrued income taxes | 32.1 | 35.9 | |
| Other accrued taxes | 64.5 | 60.5 | |
| Unearned revenues | 498.0 | 474.2 | |
| Other current liabilities | 704.5 | 795.8 | |
| Total current liabilities | $ 1,847.5 | $ 1,848.3 | |
| Long-term debt | 901.0 | 929.8 | |
| Deferred income taxes | 201.1 | 221.6 | |
| Operating lease liabilities - non-current | 3,755.8 | 4,088.5 | |
| Other liabilities | 1,232.2 | 754.8 | |
| Total liabilities | $ 7,937.6 | $ 7,843.0 | |
| Stockholders' equity: | |||
| Common stock and surplus | $ 2,226.0 | $ 2,286.6 | |
| Retained earnings (deficit) | (25.9) | 522.3 | |
| Accumulated other comprehensive income (loss) | (1.9) | 4.2 | |
| Total stockholders' equity | $ 2,198.2 | $ 2,813.1 | |
| Total liabilities and stockholders' equity | $ 10,135.8 | $ 10,656.1 | |
| DARDEN RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) | |||
| Twelve Months Ended | |||
| 5/29/2022 | 5/30/2021 | ||
| Cash flows—operating activities | |||
| Net earnings | $ 952.8 | $ 629.3 | |
| Losses from discontinued operations, net of tax | 1.9 | 3.1 | |
| Adjustments to reconcile net earnings from continuing operations to cash flows: | |||
| Depreciation and amortization | 368.4 | 350.9 | |
| Impairments and disposal of assets, net | (2.0) | 6.6 | |
| Stock-based compensation expense | 60.5 | 72.4 | |
| Change in current assets and liabilities and other, net | (117.0) | 131.2 | |
| Net cash provided by operating activities of continuing operations | $ 1,264.6 | $ 1,193.5 | |
| Cash flows—investing activities | |||
| Purchases of land, buildings and equipment | (376.9) | (254.9) | |
| Proceeds from disposal of land, buildings and equipment | 10.1 | 5.4 | |
| Purchases of capitalized software and changes in other assets, net | (22.2) | (14.2) | |
| Net cash used in investing activities of continuing operations | $ (389.0) | $ (263.7) | |
| Cash flows—financing activities | |||
| Net proceeds from issuance of common stock | 40.2 | 46.2 | |
| Dividends paid | (563.0) | (202.6) | |
| Repurchases of common stock | (1,071.3) | (45.4) | |
| Proceeds from (repayments of) short-term debt, net | — | (270.0) | |
| Other, net | (15.6) | (7.1) | |
| Net cash used in financing activities of continuing operations | $ (1,609.7) | $ (478.9) | |
| Cash flows—discontinued operations | |||
| Net cash provided by (used in) operating activities of discontinued operations | (8.5) | 0.5 | |
| Net cash provided by (used in) discontinued operations | $ (8.5) | $ 0.5 | |
| (Decrease) increase in cash and cash equivalents | (742.6) | 451.4 | |
| Cash and cash equivalents - beginning of period | 1,214.7 | 763.3 | |
| Cash and cash equivalents - end of period | $ 472.1 | $ 1,214.7 | |
| Reconciliation of cash, cash equivalents, and restricted cash: | 5/29/2022 | 5/30/2021 | |
| Cash and cash equivalents | $ 420.6 | $ 1,214.7 | |
| Restricted cash included in prepaid expenses and other current assets | 51.5 | — | |
| Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 472.1 | $ 1,214.7 | |
SOURCE Darden Restaurants, Inc.