OREANDA-NEWS. Darden Restaurants, Inc., (NYSE:DRI) today reported its financial results for the first quarter ended August 28, 2016.First Quarter 2017 Financial Highlights Versus Same Fiscal Quarter Last Year

  • Total sales from continuing operations increased 1.6% to $1.71 billion
  • Reported diluted net earnings per share from continuing operations increased 39.7% to $0.88 and increased 29.4% from last year's adjusted diluted net earnings per share*
  • The Company repurchased approximately $196 million of its outstanding common stock during the quarter
  • Same-restaurant sales increased 1.3% for the quarter
 

+2.0% for Olive Garden

  

-1.2% for The Capital Grille

  

+0.0% for Yard House
 

+0.6% for LongHorn Steakhouse

  

-1.7% for Eddie V's

  

+0.7% for Seasons 52
         

+3.9% for Bahama Breeze
*   See the "Non-GAAP Information" below for more details"I'm pleased with our performance during the quarter and the progress we made against our strategic initiatives," said CEO Gene Lee.  "We continued to gain market share and our same-restaurant sales growth outperformed the industry by a considerable margin.  We also returned significant capital to shareholders in the form of our regular dividend and $196 million in share repurchases."Segment Performance Versus Same Fiscal Period Last YearSegment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses.  Segment profit for fiscal 2017 includes the impact of additional rent and other tax expense related to the completion of our real estate strategy, primarily impacting Olive Garden and LongHorn Steakhouse.
   

Sales

      

Segment Profit

      

Real Estate

Impact* $

($ in millions)

  

Q1 2017

  

Q1 2016

  

% Change

  

Q1 2017

  

Q1 2016

  

% Change

  

Consolidated Darden

  

$1,714.4

  

$1,687.0

  

1.6

%

                

Olive Garden

  

$961.2

  

$944.6

  

1.8

%

  

$186.3

  

$192.0

  

-3.0

%

  

($22.0)

LongHorn Steakhouse

  

$386.3

  

$383.9

  

0.6

%

  

$60.1

  

$57.1

  

5.3

%

  

($5.8)

Fine Dining

  

$114.2

  

$113.3

  

0.8

%

  

$16.9

  

$17.8

  

-5.1

%

  

($0.1)

Other Business

  

$252.7

  

$245.2

  

3.1

%

  

$44.7

  

$43.8

  

2.1

%

  

($1.5)
*Represents the incremental impact to segment profit of the fiscal 2016 real estate transactions, primarily rent expense.U.S. Same-Restaurant Sales Results - Fiscal Calendar Basis

Olive Garden

June

July

August

Q1

Same-Restaurant Sales

2.0%

1.6%

2.4%

2.0%

Same-Restaurant Traffic

(1.9)%

(0.8)%

(0.2)%

(1.0)%

Pricing

1.8%

1.8%

1.8%

1.8%

Menu-mix

2.1%

0.6%

0.8%

1.2%
         
         

LongHorn Steakhouse

June

July

August

Q1

Same-Restaurant Sales

(0.4)%

(0.5)%

3.1%

0.6%

Same-Restaurant Traffic

(2.7)%

(3.0)%

2.1%

(1.3)%

Pricing

1.7%

1.4%

2.2%

1.8%

Menu-mix

0.6%

1.1%

(1.2)%

0.1%

Share Repurchase Program

During the quarter, the Company repurchased approximately 3.2 million shares of its common stock for a total cost of approximately $196 million.  An additional $4 million in shares were repurchased subsequent to the close of the first quarter, for a total of $200 million in shares repurchased year-to-date.  In addition, Darden's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $500 million of its outstanding common stock.  This repurchase program does not have an expiration and replaces the previously existing share repurchase authorization.

Fiscal Q1 Reported to Adjusted Earnings Reconciliation
 

Q1 2017

Q1 2016

% Change

Reported Diluted Net EPS from Continuing Operations

$0.88

$0.63

39.7%

Real Estate Plan Implementation

—

0.05

  

Adjusted Diluted Net EPS from Continuing Operations

$0.88

$0.68

29.4%

DARDEN RESTAURANTS, INC.
NUMBER OF COMPANY-OWNED RESTAURANTS

  
   
 

8/28/16

  

8/30/15

  

Olive Garden1

843

  

843

  

LongHorn Steakhouse

483

  

482

  

Yard House

65

  

59

  

The Capital Grille

56

  

54

  

Bahama Breeze

36

  

37

  

Seasons 52

40

  

43

  

Eddie V's

16

  

16

  

Darden Continuing Operations

1,539

  

1,534

  

1Includes six locations in Canada for all periods presented.

DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share data)
(Unaudited)

  
   
 

Three Months Ended

  
 

8/28/2016

    

8/30/2015

  

Sales

$

1,714.4

    

$

1,687.0

  

Costs and expenses:

          

Food and beverage

493.2

    

502.8

  

Restaurant labor

545.8

    

536.0

  

Restaurant expenses

303.7

    

271.9

  

Marketing expenses

63.7

    

65.6

  

General and administrative expenses

87.7

    

97.1

  

Depreciation and amortization

66.8

    

81.1

  

Impairments and disposal of assets, net

(7.8)

    

(1.7)

  

Total operating costs and expenses

$

1,553.1

    

$

1,552.8

  

Operating income

161.3

    

134.2

  

Interest, net

9.9

    

22.4

  

Earnings before income taxes

151.4

    

111.8

  

Income tax expense

40.3

    

30.8

  

Earnings from continuing operations

$

111.1

    

$

81.0

  

Earnings (loss) from discontinued operations, net of tax expense (benefit) of $(0.7) and $3.1, respectively

(0.9)

    

5.4

  

Net earnings

$

110.2

    

$

86.4

  
       

Basic net earnings per share:

      

Earnings from continuing operations

$

0.89

    

$

0.64

  

Earnings (loss) from discontinued operations

(0.01)

    

0.04

  

Net earnings

$

0.88

    

$

0.68

  

Diluted net earnings per share:

      

Earnings from continuing operations

$

0.88

    

$

0.63

  

Earnings (loss) from discontinued operations

(0.01)

    

0.04

  

Net earnings

$

0.87

    

$

0.67

  

Average number of common shares outstanding:

      

Basic

124.9

    

127.4

  

Diluted

126.7

    

129.3

  

DARDEN RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)

  
   
 

8/28/2016

    

5/29/2016

  
 

(Unaudited)

        

ASSETS

          

Current assets:

          

Cash and cash equivalents

$

114.7

    

$

274.8

  

Receivables, net

56.3

    

64.0

  

Inventories

161.8

    

175.4

  

Prepaid income taxes

10.2

    

46.1

  

Prepaid expenses and other current assets

82.3

    

76.4

  

Deferred income taxes

168.6

    

163.3

  

Assets held for sale

16.9

    

20.3

  

Total current assets

$

610.8

    

$

820.3

  

Land, buildings and equipment, net

2,035.9

    

2,041.6

  

Goodwill

872.3

    

872.3

  

Trademarks

574.6

    

574.6

  

Other assets

276.7

    

273.8

  

Total assets

$

4,370.3

    

$

4,582.6

  

LIABILITIES AND STOCKHOLDERS' EQUITY

      

Current liabilities:

      

Accounts payable

$

214.1

    

$

241.9

  

Accrued payroll

111.0

    

135.1

  

Accrued income taxes

7.1

    

—

  

Other accrued taxes

53.7

    

49.1

  

Unearned revenues

327.6

    

360.4

  

Other current liabilities

418.6

    

400.6

  

Total current liabilities

$

1,132.1

    

$

1,187.1

  

Long-term debt, less current portion

440.2

    

440.0

  

Deferred income taxes

257.6

    

255.2

  

Deferred rent

257.1

    

249.7

  

Other liabilities

482.0

    

498.6

  

Total liabilities

$

2,569.0

    

$

2,630.6

  

Stockholders' equity:

      

Common stock and surplus

$

1,472.4

    

$

1,502.6

  

Retained earnings

429.3

    

547.5

  

Treasury stock

(7.8)

    

(7.8)

  

Accumulated other comprehensive income (loss)

(89.4)

    

(87.0)

  

Unearned compensation

(3.2)

    

(3.3)

  

Total stockholders' equity

$

1,801.3

    

$

1,952.0

  

Total liabilities and stockholders' equity

$

4,370.3

    

$

4,582.6

  

DARDEN RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

  
   
 

Three Months Ended

  
 

8/28/2016

    

8/30/2015

  

Cash flows—operating activities

          

Net earnings

$

110.2

    

$

86.4

  

(Earnings) losses from discontinued operations, net of tax

0.9

    

(5.4)

  

Adjustments to reconcile net earnings from continuing operations to cash flows:

      

Depreciation and amortization

66.8

    

81.1

  

Stock-based compensation expense

6.2

    

10.2

  

Change in current assets and liabilities and other, net

(11.0)

    

(34.3)

  

Net cash provided by operating activities of continuing operations

$

173.1

    

$

138.0

  

Cash flows—investing activities

      

Purchases of land, buildings and equipment

(60.1)

    

(64.9)

  

Proceeds from disposal of land, buildings and equipment

3.8

    

130.2

  

Purchases of capitalized software and other assets

(6.8)

    

(3.7)

  

Net cash provided by (used in) investing activities of continuing operations

$

(63.1)

    

$

61.6

  

Cash flows—financing activities

      

Proceeds from issuance of common stock

3.3

    

56.9

  

Income tax benefits credited to equity

0.6

    

11.6

  

Dividends paid

(70.5)

    

(70.0)

  

Repurchases of common stock

(195.6)

    

—

  

ESOP note receivable repayment

0.1

    

0.3

  

Repayment of long-term debt

—

    

(15.0)

  

Principal payments on capital and financing leases

(1.0)

    

(0.8)

  

Net cash used in financing activities of continuing operations

$

(263.1)

    

$

(17.0)

  

Cash flows—discontinued operations

      

Net cash used in operating activities of discontinued operations

(7.0)

    

(28.4)

  

Net cash used in discontinued operations

$

(7.0)

    

$

(28.4)

  
       

Increase (decrease) in cash and cash equivalents

(160.1)

    

154.2

  

Cash and cash equivalents - beginning of period

274.8

    

535.9

  

Cash and cash equivalents - end of period

$

114.7

    

$

690.1