10-KPeriod: FY2019

DARDEN RESTAURANTS INC Annual Report, Year Ended May 26, 2019

Filed July 19, 2019For Securities:DRI

Summary

Darden Restaurants, Inc. (DRI) reported strong performance in its fiscal year ending May 26, 2019, with total sales reaching $8.51 billion, a 5.3% increase year-over-year. This growth was driven by the addition of 39 net new company-owned restaurants and a 2.5% increase in same-restaurant sales across its portfolio. Net earnings from continuing operations saw a significant 19.0% increase to $718.6 million, translating to $5.73 per diluted share, up from $4.79 in the prior year. This improvement was bolstered by the positive impact of the Tax Cuts and Jobs Act. The company continues to invest in its core brands, particularly Olive Garden and LongHorn Steakhouse, which are driving same-restaurant sales growth. Darden also demonstrated its commitment to shareholder returns through dividends and share repurchases, with plans to continue expanding its restaurant base in fiscal year 2020. The company's strategy remains focused on operational excellence, culinary innovation, and delivering an outstanding guest experience across its diverse brand portfolio, which includes Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, and Eddie V's. Darden's robust financial position, indicated by its investment-grade credit ratings, and its consistent cash flow generation provide a solid foundation for future growth and shareholder returns.

Financial Highlights

55 data points
Beta

Revenue

$8.51B

18.7% Gross Margin

Net Income

$713.40M

8.4% Net Margin

EPS (Diluted)

$5.69

Total Assets

$5.89B

Cash & Equivalents

$457.30M

Free Cash Flow

$815.60M

Financial Statements
Beta
Revenue$8.51B
Gross Profit$1.59B
Operating Expenses$7.68B
Operating Income$832.50M
Interest Expense$44.30M
Net Income$713.40M
EPS (Basic)$5.78
EPS (Diluted)$5.69
Shares Outstanding (Basic)123.50M
Shares Outstanding (Diluted)125.40M

Key Highlights

  • 1Total sales increased by 5.3% to $8.51 billion in fiscal year 2019.
  • 2Net earnings from continuing operations grew by 19.0% to $718.6 million, with diluted EPS rising to $5.73.
  • 3Darden added 39 net new company-owned restaurants, expanding its total restaurant count to 1,785.
  • 4Same-restaurant sales increased by 2.5% overall, with Olive Garden and LongHorn Steakhouse showing particularly strong performance.
  • 5The company returned capital to shareholders through dividends ($370.8 million) and share repurchases ($207.5 million).
  • 6Operating income increased by 8.6% to $832.5 million.
  • 7Segment profit margins improved for Olive Garden, LongHorn Steakhouse, and Fine Dining segments.

Frequently Asked Questions

In fiscal year 2019, Darden Restaurants Inc. reported total sales of $8.51 billion, a 5.3% increase from the previous year. Net earnings from continuing operations rose by 19.0% to $718.6 million, resulting in diluted earnings per share of $5.73. The company also saw a 2.5% increase in same-restaurant sales and added 39 net new restaurants to its portfolio.

Olive Garden and LongHorn Steakhouse were strong performers, both achieving same-restaurant sales growth and contributing significantly to overall sales. Olive Garden's sales grew by 5.0% with a 3.9% same-restaurant sales increase, while LongHorn Steakhouse saw a 6.3% sales increase with a 3.3% same-restaurant sales increase. Other brands like The Capital Grille and Eddie V's also reported positive same-restaurant sales growth, though Cheddar's Scratch Kitchen, Yard House, Seasons 52, and Bahama Breeze experienced slight declines.

Darden projects fiscal year 2020 sales to increase between 5.3% and 6.3%, driven by the benefit of a 53rd week, same-restaurant sales growth of 1.0% to 2.0%, and the opening of approximately 50 new restaurants. The company also anticipates capital expenditures between $450 million and $500 million and expects its annual effective tax rate to be between 10.0% and 11.0%.

Darden aims to maintain an investment-grade credit rating to ensure flexible access to financing. As of May 26, 2019, its long-term debt was approximately $939.1 million, and its adjusted debt to adjusted total capital ratio was 58%. The company has a $750 million revolving credit agreement and manages its capital structure to support its growth and shareholder returns, utilizing cash flow from operations, debt, and equity.