Earnings Call Fiscal 2025: Second Quarter Results December 19, 2024 Disclaimer/Non-GAAP Information 2 2 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 p ...

A sign hangs on the front of an Olive Garden restaurant on June 22, 2023 in Chicago, Illinois.Darden Restaurants on Thursday reported quarterly earnings and revenue that met analysts' expectations and better-than-expected same-store sales growth at Olive Garden and LongHorn Steakhouse.Shares of the company rose 8% in premarket trading.Here's what the company reported, which may not compare with what Wall Street was expecting, based on a survey of analysts by LSEG:Earnings per share: $2.03 adjusted. That may ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) Darden Restaurants reported strong Q2 FY25 financial results, with total sales up 6.0% and adjusted diluted EPS rising 10.3%, driven by same-restaurant sales growth across key brands [Fiscal 2025 Second Quarter Financial Highlights](index=1&type=section&id=Fiscal%202025%20Second%20Quarter%20Financial%20Highlights) Darden Restaurants reported strong Q2 FY25 financial results, with total sales up 6.0% to $2.9 billion and adjusted diluted EPS rising 10.3% to $2.03, driven by same-restaurant sales growth and new restaurant additions Q2 FY25 Key Financial Metrics | Metric | Q2 FY25 | Q2 FY24 | Change (%) | | :------------------------------------ | :------ | :------ | :--------- | | Total Sales | $2.9 billion | $2.727 billion | 6.0% | | Blended Same-Restaurant Sales Growth | 2.4% | N/A | N/A | | Reported Diluted Net EPS | $1.82 | $1.76 | 3.4% | | Adjusted Diluted Net EPS | $2.03 | $1.84 | 10.3% | | Shares Repurchased | $142 million | N/A | N/A | Q2 FY25 Same-Restaurant Sales Growth by Brand | Brand | Same-Restaurant Sales Growth | | :-------------------- | :--------------------------- | | Consolidated Darden | 2.4% | | Olive Garden | 2.0% | | LongHorn Steakhouse | 7.5% | | Fine Dining | (5.8)% | | Other Business | 0.7% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Rick Cardenas highlighted strong quarterly performance with positive same-restaurant sales across key brands and expressed confidence in the company's long-term strategy - CEO Rick Cardenas noted a strong quarter with positive same-restaurant sales from **Olive Garden**, **LongHorn Steakhouse**, **Yard House**, and **Cheddar's Scratch Kitchen**, as well as three of four business segments[3](index=3&type=chunk) - The company's strategy and brands are believed to be effective in competing regardless of the economic environment, with leadership teams focused on long-term execution[3](index=3&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) The company's segments, particularly Olive Garden and LongHorn Steakhouse, showed strong sales and profit growth in Q2 and year-to-date Fiscal 2025 [Q2 2025 Segment Sales and Profit](index=1&type=section&id=Q2%202025%20Segment%20Sales%20and%20Profit) In Q2 Fiscal 2025, Olive Garden and LongHorn Steakhouse demonstrated strong sales and profit growth, while Fine Dining experienced a slight decrease Q2 FY25 Segment Sales and Profit Performance | Segment | Q2 2025 Sales ($ millions) | Q2 2024 Sales ($ millions) | Q2 2025 Segment Profit ($ millions) | Q2 2024 Segment Profit ($ millions) | | :-------------------- | :------------------------- | :------------------------- | :---------------------------------- | :---------------------------------- | | Consolidated Darden | $2,890.0 | $2,727.3 | N/A | N/A | | Olive Garden | $1,292.5 | $1,251.4 | $277.1 | $262.5 | | LongHorn Steakhouse | $710.1 | $643.0 | $134.2 | $111.8 | | Fine Dining | $306.0 | $318.0 | $52.7 | $56.6 | | Other Business | $581.4 | $514.9 | $79.2 | $66.5 | - Segment profit is calculated as sales less costs for food and beverage, restaurant labor, restaurant expenses, and marketing expenses, excluding non-cash real estate related expenses[4](index=4&type=chunk) - Sales and profits from Chuy's restaurants are included within the Other Business segment from the date of acquisition[4](index=4&type=chunk) [Year-to-Date Segment Sales and Profit](index=2&type=section&id=Year-to-Date%20Segment%20Sales%20and%20Profit) For the year-to-date Fiscal 2025, Consolidated Darden sales reached $5,647.0 million, with Olive Garden and LongHorn Steakhouse continuing as strong contributors with increased segment profits YTD FY25 Segment Sales and Profit Performance | Segment | YTD 2025 Sales ($ millions) | YTD 2024 Sales ($ millions) | YTD 2025 Segment Profit ($ millions) | YTD 2024 Segment Profit ($ millions) | | :-------------------- | :-------------------------- | :-------------------------- | :----------------------------------- | :----------------------------------- | | Consolidated Darden | $5,647.0 | $5,457.9 | N/A | N/A | | Olive Garden | $2,501.6 | $2,479.3 | $526.1 | $524.8 | | LongHorn Steakhouse | $1,423.6 | $1,312.8 | $261.8 | $229.2 | | Fine Dining | $584.9 | $591.5 | $90.3 | $96.3 | | Other Business | $1,136.9 | $1,074.3 | $162.9 | $150.8 | [Capital Allocation](index=2&type=section&id=Capital%20Allocation) Darden declared a quarterly cash dividend of $1.40 per share and repurchased $142 million of common stock during the quarter [Dividend Declaration](index=2&type=section&id=Dividend%20Declaration) Darden's Board of Directors declared a quarterly cash dividend of $1.40 per share, payable on February 3, 2025, to shareholders of record as of January 10, 2025 - A quarterly cash dividend of **$1.40 per share** was declared[7](index=7&type=chunk) - The dividend is payable on **February 3, 2025**, to shareholders of record on **January 10, 2025**[7](index=7&type=chunk) [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) During the second quarter, the company repurchased approximately 0.9 million shares of its common stock for $142 million, with $601 million remaining under the current authorization - The company repurchased approximately **0.9 million shares** of common stock for **$142 million** during the quarter[8](index=8&type=chunk) - **$601 million** remained under the **$1 billion** share repurchase authorization at the end of the fiscal second quarter[8](index=8&type=chunk) [Fiscal 2025 Financial Outlook](index=2&type=section&id=Fiscal%202025%20Financial%20Outlook) Darden updated its Fiscal 2025 outlook, projecting total sales of $12.1 billion and adjusted diluted EPS between $9.40 and $9.60, including Chuy's operating results [Updated Full Year Outlook](index=2&type=section&id=Updated%20Full%20Year%20Outlook) Darden updated its Fiscal 2025 financial outlook to include Chuy's operating results, projecting total sales of $12.1 billion and adjusted diluted net earnings per share between $9.40 and $9.60 - The Fiscal 2025 financial outlook now includes Chuy's operating results, excluding approximately **$47 million** (pre-tax) of transaction and integration related costs[9](index=9&type=chunk) Fiscal 2025 Full Year Outlook | Metric | Fiscal 2025 Outlook | | :---------------------------------------------------- | :------------------ | | Total Sales | Approximately $12.1 billion | | Same-Restaurant Sales Growth | Approximately 1.5% | | New Restaurant Openings | 50 to 55 | | Total Capital Spending | Approximately $650 million | | Total Inflation | Approximately 2.5% | | Effective Tax Rate | Approximately 12.5% | | Diluted Net EPS (excluding Chuy's costs) | $9.40 to $9.60 | | Weighted Average Diluted Shares Outstanding | Approximately 118 million | [Diluted Net Earnings Per Share Outlook Reconciliation](index=5&type=section&id=Diluted%20Net%20Earnings%20Per%20Share%20Outlook%20Reconciliation) The company provided a reconciliation for its Fiscal 2025 diluted net earnings per share outlook, adjusting reported EPS to an adjusted range of $9.40 to $9.60 Fiscal 2025 Diluted Net EPS Outlook Reconciliation | Metric | Outlook 2025 (Range) | | :---------------------------------------------------------------------------------- | :------------------- | | Reported diluted net earnings per share from continuing operations | $9.07 to $9.27 | | Chuy's transaction and integration related costs | $0.40 | | Income tax expense | ($0.07) | | Adjusted diluted net earnings per share from continuing operations | $9.40 to $9.60 | [Company Information](index=4&type=section&id=Company%20Information) Darden Restaurants operates a diverse portfolio of 2,152 company-owned restaurants across multiple brands, including Olive Garden and LongHorn Steakhouse [About Darden Restaurants](index=4&type=section&id=About%20Darden%20Restaurants) Darden is a restaurant company with a diverse portfolio of differentiated brands, including Olive Garden, LongHorn Steakhouse, and Ruth's Chris Steak House - Darden Restaurants operates a portfolio of differentiated brands including **Olive Garden**, **LongHorn Steakhouse**, **Yard House**, **Ruth's Chris Steak House**, **Cheddar's Scratch Kitchen**, **The Capital Grille**, **Chuy's**, **Seasons 52**, **Eddie V's**, and **Bahama Breeze**[14](index=14&type=chunk) [Number of Company-Owned Restaurants](index=5&type=section&id=Number%20of%20Company-Owned%20Restaurants) As of November 24, 2024, Darden operated a total of 2,152 company-owned restaurants, with Olive Garden and LongHorn Steakhouse being the largest brands Company-Owned Restaurants by Brand | Brand | 11/24/24 | 11/26/23 | | :-------------------------- | :------- | :------- | | Olive Garden | 925 | 912 | | LongHorn Steakhouse | 580 | 566 | | Cheddar's Scratch Kitchen | 181 | 182 | | Chuy's | 104 | — | | Yard House | 88 | 87 | | Ruth's Chris Steak House | 82 | 78 | | The Capital Grille | 70 | 64 | | Seasons 52 | 45 | 44 | | Bahama Breeze | 43 | 42 | | Eddie V's | 30 | 31 | | The Capital Burger | 4 | 4 | | Darden Continuing Operations | 2,152 | 2,010 | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) Darden's Q2 FY25 consolidated statements show increased sales and earnings, with total assets growing to $12.5 billion and operating cash flow at $661.8 million year-to-date [Consolidated Statements of Earnings](index=6&type=section&id=Consolidated%20Statements%20of%20Earnings) For Q2 Fiscal 2025, Darden reported sales of $2,890.0 million, leading to earnings from continuing operations of $215.7 million, or $1.82 diluted net earnings per share Consolidated Statements of Earnings (Q2 & YTD FY25) | Metric | Three Months Ended 11/24/2024 ($ millions) | Three Months Ended 11/26/2023 ($ millions) | Six Months Ended 11/24/2024 ($ millions) | Six Months Ended 11/26/2023 ($ millions) | | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Sales | $2,890.0 | $2,727.3 | $5,647.0 | $5,457.9 | | Total operating costs and expenses | $2,597.9 | $2,448.8 | $5,085.7 | $4,926.5 | | Operating income | $292.1 | $278.5 | $561.3 | $531.4 | | Earnings before income taxes | $245.9 | $241.4 | $478.0 | $464.6 | | Income tax expense | $30.2 | $29.1 | $54.7 | $57.5 | | Earnings from continuing operations | $215.7 | $212.3 | $423.3 | $407.1 | | Diluted net earnings per share (continuing operations) | $1.82 | $1.76 | $3.57 | $3.35 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of November 24, 2024, Darden's total assets increased to $12,519.2 million, driven by growth in land, buildings, equipment, goodwill, and trademarks, with total liabilities also rising Consolidated Balance Sheets (As of November 24, 2024) | Asset/Liability | 11/24/2024 ($ millions) | 11/26/2023 ($ millions) | | :------------------------------------ | :------------------------ | :------------------------ | | Total current assets | $879.6 | $822.8 | | Land, buildings and equipment, net | $4,591.0 | $4,184.3 | | Goodwill | $1,653.9 | $1,391.0 | | Trademarks | $1,346.4 | $1,148.0 | | Total assets | $12,519.2 | $11,323.0 | | Total current liabilities | $2,401.0 | $2,192.5 | | Long-term debt | $2,121.7 | $1,370.4 | | Total liabilities | $10,448.3 | $9,080.5 | | Total stockholders' equity | $2,070.9 | $2,242.5 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended November 24, 2024, net cash provided by operating activities was $661.8 million, while investing activities resulted in a net outflow of $939.3 million Consolidated Statements of Cash Flows (YTD FY25) | Cash Flow Activity | Six Months Ended 11/24/2024 ($ millions) | Six Months Ended 11/26/2023 ($ millions) | | :---------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $661.8 | $609.9 | | Net cash used in investing activities | ($939.3) | ($1,022.9) | | Net cash provided by financing activities | $298.9 | $216.7 | | Increase (decrease) in cash, cash equivalents, and restricted cash | $21.4 | ($196.3) | | Cash, cash equivalents, and restricted cash - end of period | $241.5 | $219.9 | - Cash used in business acquisitions, net of cash acquired, was **$613.7 million** for the six months ended November 24, 2024[27](index=27&type=chunk) - Dividends paid amounted to **$330.5 million**, and repurchases of common stock totaled **$314.2 million** during the six-month period[27](index=27&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The company reconciled reported to adjusted diluted net earnings per share, highlighting adjustments for transaction and integration costs [Reconciliation of Adjusted Diluted Net Earnings Per Share](index=5&type=section&id=Reconciliation%20of%20Adjusted%20Diluted%20Net%20Earnings%20Per%20Share) Darden provided a reconciliation of reported to adjusted diluted net earnings per share for Q2 Fiscal 2025, showing an adjusted EPS of $2.03, a 10.3% increase year-over-year Reconciliation of Adjusted Diluted Net EPS (Q2 FY25 & FY24) | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | | :------------------------------------------ | :------------------- | :------------------- | | Reported Earnings from Continuing Operations | $215.7 | $212.3 | | Transaction and integration related costs | $24.3 | $9.6 | | General and administrative expenses | $22.2 | $4.2 | | Adjusted Earnings from Continuing Operations | $240.0 | $221.9 | | Reported Diluted Net EPS | $1.82 | $1.76 | | Adjusted Diluted Net EPS | $2.03 | $1.84 | | % Change vs Prior Year (Adjusted EPS) | 10.3% | N/A | - Adjustments for Q2 FY25 included **$27.7 million** in transaction and integration related costs and **$25.0 million** in general and administrative expenses, impacting earnings before income tax[18](index=18&type=chunk) [Legal and Investor Information](index=2&type=section&id=Legal%20and%20Investor%20Information) The report includes forward-looking statements subject to risks, clarifies the use of non-GAAP measures, and provides details for investor communications [Information About Forward-Looking Statements](index=4&type=section&id=Information%20About%20Forward-Looking%20Statements) The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, as detailed in Darden's SEC filings - Forward-looking statements are subject to risks and uncertainties, including economic factors, labor and insurance costs, technology failures, and challenges in integrating Chuy's Holdings operations[15](index=15&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of their initial date and are not updated[15](index=15&type=chunk) - Significant uncertainties are described in Darden's Form 10-K, Form 10-Q, and Form 8-K reports[15](index=15&type=chunk) [Non-GAAP Information Disclosure](index=4&type=section&id=Non-GAAP%20Information%20Disclosure) The press release includes non-GAAP financial measures, such as adjusted diluted net earnings per share, which management uses for performance analysis but are not a substitute for GAAP results - Non-GAAP measures, like **adjusted diluted net earnings per share**, are used by management for performance analysis and provide useful supplemental information[16](index=16&type=chunk) - These non-GAAP disclosures are not a substitute for GAAP operating results and may not be comparable to measures presented by other companies[16](index=16&type=chunk) [Investor Conference Call & Contacts](index=2&type=section&id=Investor%20Conference%20Call%20%26%20Contacts) Darden hosted an investor conference call and slide presentation on December 19, 2024, to discuss financial performance, with webcast access and contact information provided - An investor conference call and slide presentation were held on **December 19, 2024**, at **8:30 am ET** to review financial performance[10](index=10&type=chunk) - The call was webcast live, and a replay was made available shortly after[10](index=10&type=chunk)[13](index=13&type=chunk) - Contact information for analysts (**Phil McClain**) and media (**Rich Jeffers**) was provided[17](index=17&type=chunk)

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