For the quarter ended November 2024, Darden Restaurants (DRI) reported revenue of $2.89 billion, up 6% over the same period last year. EPS came in at $2.03, compared to $1.84 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $2.88 billion, representing a surprise of +0.48%. The company delivered an EPS surprise of -0.98%, with the consensus EPS estimate being $2.05.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Str ...

Core Insights - Darden Restaurants reported quarterly earnings of $2.03 per share, missing the Zacks Consensus Estimate of $2.05 per share, but showing an increase from $1.84 per share a year ago [1][2] - The company posted revenues of $2.89 billion for the quarter, surpassing the Zacks Consensus Estimate by 0.48% and up from $2.73 billion year-over-year [3] - Darden's stock has underperformed the market, losing about 2.7% since the beginning of the year compared to the S&P 500's gain of 23.1% [4] Earnings Performance - The earnings surprise for the latest quarter was -0.98%, and the company has surpassed consensus EPS estimates only once in the last four quarters [2][3] - The current consensus EPS estimate for the upcoming quarter is $2.80, with expected revenues of $3.16 billion, and for the current fiscal year, the estimate is $9.47 on $11.96 billion in revenues [8] Industry Outlook - The Retail - Restaurants industry, to which Darden belongs, is currently ranked in the bottom 45% of over 250 Zacks industries, indicating potential challenges ahead [9] - The performance of Darden's stock may be influenced by the overall industry outlook, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9]

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 ...

Core Insights - Darden Restaurants reported quarterly earnings and revenue that met analysts' expectations, with better-than-expected same-store sales growth at Olive Garden and LongHorn Steakhouse [1] Financial Performance - Earnings per share were reported at $2.03 adjusted, slightly above the expected $2.02 [2] - Revenue for the quarter was $2.89 billion, slightly below the expected $2.9 billion [2] - Fiscal second-quarter net income was $215.1 million, or $1.82 per share, an increase from $212.1 million, or $1.76 per share, a year earlier [2] Same-Store Sales Growth - Darden's same-store sales rose 2.4%, surpassing StreetAccount estimates of 1.5% [5] - LongHorn Steakhouse reported same-store sales growth of 7.5%, exceeding the expected 4.1% [5] - Olive Garden, which accounts for over 40% of Darden's quarterly revenue, saw same-store sales growth of 2%, above the anticipated 1.4% [6] - The fine-dining segment, including The Capital Grille and Ruth's Chris Steak House, experienced a same-store sales decline of 5.8%, worse than the expected 2.8% decrease [7] - The remaining segment, including Cheddar's Scratch Kitchen and Yard House, reported same-store sales growth of 0.7%, in line with estimates [7] Expansion and Acquisitions - Darden added 39 net new locations during the quarter, along with 103 Chuy's restaurants [8] - The company completed its $605 million acquisition of the Tex-Mex chain Chuy's in October [8]

[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)

Core Viewpoint - Darden Restaurants, Inc. is set to report its second-quarter fiscal 2025 results on December 19, with expectations of earnings growth and increased revenues compared to the previous year [1][3]. Group 1: Earnings Expectations - The Zacks Consensus Estimate for fiscal Q2 earnings per share (EPS) is $2.05, reflecting an 11.4% increase from $1.84 in the same quarter last year [3]. - Revenue expectations are pegged at $2.9 billion, indicating a 5.3% rise from the previous year's figure [3]. Group 2: Factors Influencing Performance - Darden's performance is anticipated to benefit from culinary innovation, improved guest satisfaction, and strategic marketing initiatives [5]. - The company has refined core menu items and introduced new culinary options, enhancing its appeal to a broader customer base [5][6]. - Investments in restaurant maintenance and remodels are expected to improve dining environments and guest experiences [7]. Group 3: Marketing and Sales Strategies - Darden's marketing efforts, including the "Never Ending Pasta Bowl" promotion, are likely to have contributed to sales growth without heavy discounting [8]. - The use of digital and connected TV marketing strategies is expected to have driven incremental sales during the quarter [8]. Group 4: Revenue and Cost Projections - Revenue from Olive Garden and LongHorn Steakhouse is projected to rise by 3.7% to $1.3 billion and 6.9% to $0.7 billion, respectively [9]. - Food, beverage, and labor costs are expected to increase by 4.1% and 4.9% year over year, reaching $880 million and $924 million, respectively [9]. Group 5: Earnings Prediction Model - The current model does not predict an earnings beat for Darden, with an Earnings ESP of -2.58% [10]. - Darden holds a Zacks Rank of 3, indicating a neutral outlook [11].

Wall Street analysts forecast that Darden Restaurants (DRI) will report quarterly earnings of $2.05 per share in its upcoming release, pointing to a year-over-year increase of 11.4%. It is anticipated that revenues will amount to $2.87 billion, exhibiting an increase of 5.3% compared to the year-ago quarter.Over the last 30 days, there has been a downward revision of 0.1% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsidera ...

Core Viewpoint - The market anticipates Darden Restaurants (DRI) will report a year-over-year increase in earnings driven by higher revenues when it releases its results for the quarter ending November 2024 [1] Earnings Expectations - The earnings report is expected on December 19, 2024, with a consensus EPS estimate of $2.06, reflecting a 12% increase year-over-year [3] - Revenues are projected to reach $2.87 billion, marking a 5.3% increase from the same quarter last year [4] Estimate Revisions - The consensus EPS estimate has been revised 0.05% higher in the last 30 days, indicating a slight positive reassessment by analysts [5] - The Most Accurate Estimate for Darden is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.07%, suggesting a bearish outlook from analysts [11][12] Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the likelihood of actual earnings deviating from consensus estimates, with positive readings being more reliable [8][9] - Darden's current Zacks Rank is 3 (Hold), complicating predictions of an earnings beat [13] Historical Performance - In the last reported quarter, Darden was expected to earn $1.81 per share but reported $1.75, resulting in a surprise of -3.31% [14] - Over the past four quarters, Darden has beaten consensus EPS estimates twice [15] Conclusion - While Darden Restaurants may not be a strong candidate for an earnings beat, investors should consider other factors before making investment decisions [18]

Core Insights - Investors in the Retail - Restaurants sector may consider Darden Restaurants (DRI) and Dutch Bros (BROS) as potential undervalued stocks [1] Valuation Metrics - Both DRI and BROS currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3] - DRI has a forward P/E ratio of 18.16, while BROS has a significantly higher forward P/E of 121.11 [5] - DRI's PEG ratio is 1.98, suggesting a more favorable valuation in relation to its expected earnings growth compared to BROS's PEG ratio of 3.45 [5] - DRI's P/B ratio stands at 9.43, whereas BROS has a P/B ratio of 11.16, indicating that DRI is comparatively undervalued [6] Value Grades - DRI has a Value grade of B, while BROS has a Value grade of F, highlighting DRI as the superior value option based on current valuation figures [7]

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