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Darden Restaurants, Inc.$91.05($1.46)(1.58%)

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 Darden Restaurants Reports Fiscal 2020 Fourth Quarter and Full Year Results; And Provides Fiscal 2021 First Quarter Outlook
   Thursday, June 25, 2020 7:00:00 AM ET

ORLANDO, Fla., June 25, 2020 /PRNewswire/ -- Darden Restaurants, Inc., (NYSE: DRI) today reported its financial results for the fourth quarter and fiscal year ended May 31, 2020, which included a 53rd week of operations compared to 52 weeks last year.

Statement from Gene Lee, CEO.

The strategy we put in place five years ago helped us successfully navigate one of the most challenging periods in our Company's history. When our dining rooms closed, our operators did an amazing job of reimagining the guest experience by staying true to our back-to-basics operating philosophy.

We benefited greatly from our competitive advantages that form the foundation of our strategy, especially our scale and our culture. Our scale allowed us to quickly react to constant change, while our team members displayed tremendous innovation, flexibility and passion as they continued to serve our guests. I'm incredibly proud of our teams and that our culture grew stronger during this time.

The full-service restaurant industry plays a vital role in our communities. As our industry continues to rebuild, there is significant opportunity to increase market share. Those executing at the highest level are going to win, and Darden is well positioned to take advantage of the opportunity.

Fourth Quarter 2020 Financial Highlights From Continuing Operations, Compared to Fourth Quarter Last Year

  • Total sales decreased 43.0% to $1.27 billion driven by negative blended same-restaurant sales of 47.7%, which was partially offset by an extra week of operations and the addition of 19 net new restaurants
  • Same-restaurant sales by segment and brand:

  • Reported diluted net loss per share was $3.85 as compared to reported diluted net earnings per share of $1.67 last year
  • Adjusted diluted net loss per share was $1.24, after excluding approximately $2.61 primarily related to non-cash impairments on goodwill and trademark balances, restaurant-level and other assets, as compared to adjusted diluted net earnings per share of $1.76 last year*

Fiscal 2020 Financial Highlights From Continuing Operations, Compared to Fiscal 2019

  • Total sales decreased 8.3% to $7.81 billion driven by negative blended same-restaurant sales of 11.0%, which was partially offset by the addition of 19 net new restaurants
  • Same-restaurant sales by segment and brand:

  • Reported diluted net loss per share was $0.40 as compared to reported diluted net earnings per share of $5.73 last year
  • Adjusted diluted net earnings per share was $3.13, after excluding approximately $3.53 primarily related to non-cash impairments on goodwill and trademark balances, restaurant-level and other assets as well as non-cash pension settlement charges, as compared to adjusted diluted net earnings per share of $5.82 last year*

Segment Performance
Segment profit represents sales, less costs for food and beverage, restaurant labor, restaurant expenses and marketing expenses.  Beginning in fiscal 2020, our calculation of segment profit now excludes non-cash real estate related expenses.  Fiscal 2019 segment profit has been restated to conform to the current year presentation.

Business Update
For fiscal 2021 first quarter to date through Sunday, June 21, Darden blended same-restaurant sales declined 33.2%.  As of June 22, 91% of our dining rooms were open with at least limited capacity.

Same-restaurant sales performance for Darden and its reportable segments per week and for the quarter to date are as follows:

Sales for Olive Garden and LongHorn Steakhouse restaurants open with at least limited dining room capacity for the entire week, including To Go sales, are as follows:

Liquidity and Cash Balance
Based on week ending June 21 results, the Company is generating positive operating cash flow.  With over $750 million of cash on hand as of June 22 and access to its $750 million credit facility, the Company has access to over $1.5 billion of liquidity.

"As we shifted to an off premise only model, we took a disciplined approach to pursue sales opportunities that drove incremental profitability and cash flow," said CFO Rick Cardenas.  "This approach, which focused on cash management while investing in our team members, resulted in a better liquidity position than we anticipated earlier in the fourth quarter and is the foundation of our first quarter financial outlook."

Fiscal 2021 First Quarter Financial Outlook
Due to uncertainty surrounding future business performance stemming from COVID-19, the Company is providing a financial outlook for the current quarter instead of its usual practice of providing an annual outlook.

The financial outlook for the first quarter of fiscal 2021 is as follows:

  • Total sales of approximately 70% of prior year sales
  • EBITDA of at least $75 million*
  • Diluted net earnings per share from continuing operations greater than or equal to $0.00
  • Approximately 131 million weighted average diluted shares outstanding

Additionally, for the full year, the Company expects to open 35-40 net new restaurants and have total capital spending of $250 to $300 million.

Annual Meeting of Shareholders
Darden will hold its Annual Meeting of Shareholders on September 23, 2020.  The meeting will be held in a virtual format only.  The record date for shareholders to vote in the Annual Meeting is July 29, 2020.

Investor Conference Call
The Company will host a conference call and slide presentation on Thursday, June 25 at 8:30 am ET to review its recent financial performance.  To listen to the call live, please go to  at least fifteen minutes early to register, download, and install any necessary audio software.  Prior to the call, a slide presentation will be posted on the Investor Relations section of our website at: .  For those who cannot access the Internet, please dial 1-833-470-0145 and enter passcode 9995451.  For those who cannot listen to the live broadcast, a replay will be available shortly after the call.

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. For more information, please visit .

Information About Forward-Looking Statements
Forward-looking statements in this communication regarding our expected earnings performance and all other statements that are not historical facts, including without limitation statements concerning our future economic performance, are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are first made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q and Form 8-K reports. These risks and uncertainties include the impacts of the novel coronavirus (COVID-19) pandemic on our business and the response of governments and of our Company to the outbreak, technology failures including failure to maintain a secure cyber network, food safety and food-borne illness concerns, the inability to hire, train, reward and retain restaurant team members or monitor and proactively respond to employee dissatisfaction, a failure to develop and recruit effective leaders,  litigation, unfavorable publicity, an inability or failure to manage the accelerated impact of social media, risks relating to public policy changes and federal, state and local regulation of our business, long-term and non-cancelable property leases, labor and insurance costs, failure to execute a business continuity plan following a disaster, health concerns including food-related pandemics or virus outbreaks, intense competition, failure to drive profitable sales growth, a lack of availability of suitable locations for new restaurants, higher-than-anticipated costs to open, close, relocate or remodel restaurants, a failure to execute innovative marketing tactics, a failure to address cost pressures, shortages or interruptions in the delivery of food and other products and services, adverse weather conditions and natural disasters, volatility in the market value of derivatives, economic factors specific to the restaurant industry and general macroeconomic factors including interest rates, disruptions in the financial markets, risks of doing business with franchisees, licensees and vendors in foreign markets, failure to protect our intellectual property, impairment in the carrying value of our goodwill or other intangible assets, failure of our internal controls over financial reporting and other factors and uncertainties discussed from time to time in reports filed by Darden with the Securities and Exchange Commission.

Non-GAAP Information
The information in this press release includes financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"), such as adjusted diluted net earnings per share from continuing operations and EBITDA - earnings before interest, taxes, depreciation and amortization. The Company's management uses these non-GAAP measures in its analysis of the Company's performance. The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information that is essential to a proper understanding of the operating results of the Company's businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP measures are included in this release.






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