Darden Restaurants Q2 Sales Reach $2.49B

TL;DR

Darden Restaurants (DRI) Q2 sales hit $2.49B. Looks solid.

AI Summary

Darden Restaurants Inc. reported its second quarter results for fiscal year 2025, ending November 24, 2024. The company's total sales for the quarter were $2.49 billion. This filing covers the period from August 26, 2024, to November 24, 2024, and includes comparative data from the same period in the previous fiscal year.

Why It Matters

This report provides insight into Darden's recent financial performance, crucial for investors assessing the company's health and future prospects in the competitive restaurant industry.

Risk Assessment

Risk Level: low — This is a routine quarterly filing from a large, established company with no immediate red flags.

Key Numbers

• $2.49B — Total Sales (Second quarter fiscal year 2025 sales ending November 24, 2024.)

Key Players & Entities

• DARDEN RESTAURANTS INC (company) — Filer
• 20241124 (date) — Conformed Period of Report
• 20250102 (date) — Filed as of Date
• $2.49 billion (dollar_amount) — Total sales for the quarter

FAQ

Filing Documents

• dri-20241124.htm (10-Q) — 1430KB
• ex31aq2fy25.htm (EX-31.A) — 10KB
• ex31bq2fy25.htm (EX-31.B) — 10KB
• ex32aq2fy25.htm (EX-32.A) — 5KB
• ex32bq2fy25.htm (EX-32.B) — 5KB
• 0000940944-25-000003.txt ( ) — 7858KB
• dri-20241124.xsd (EX-101.SCH) — 45KB
• dri-20241124_cal.xml (EX-101.CAL) — 85KB
• dri-20241124_def.xml (EX-101.DEF) — 226KB
• dri-20241124_lab.xml (EX-101.LAB) — 608KB
• dri-20241124_pre.xml (EX-101.PRE) — 427KB
• dri-20241124_htm.xml (XML) — 1433KB

- Financial Information

Part I - Financial Information

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 4 Consolidated Statements of Earnings 4 Consolidated Statements of Comprehensive Income 5 Consolidated Balance Sheets 6 Consolidated Statements of Changes in Stockholders' Equity 7 Consolidated Statements of Cash Flows 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 33

Controls and Procedures

Item 4. Controls and Procedures 33

- Other Information

Part II - Other Information

Legal Proceedings

Item 1. Legal Proceedings 34

Risk Factors

Item 1A. Risk Factors 34

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 34

Other Information

Item 5. Other Information 34

Exhibits

Item 6. Exhibits 35 Signature 36 2 Table of Contents Cautionary Statement Regarding Forward-Looking Statements Statements set forth in or incorporated into this report that are not historical facts, including without limitation statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Darden Restaurants, Inc. and its subsidiaries that are preceded by, followed by or that include words such as "may," "will," "expect," "intend," "anticipate," "continue," "estimate," "project," "believe," "plan", "outlook" or similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This statement is included for purposes of complying with the safe harbor provisions of that Act. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements for any reason to reflect events or circumstances arising after such date. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. The most significant of these uncertainties are described in Darden's Form 10-K, Form 10-Q (including this report) and Form 8-K reports. 3 Table of Contents PART I FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) DARDEN RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In millions, except per share data) (Unaudited) Three Months Ended Six Months Ended November 24, 2024 November 26, 2023 November 24, 2024 November 26, 2023 Sales $ 2,890.0 $ 2,727.3 $ 5,647.0 $ 5,457.9 Costs and expenses: Food and beverage 872.8 845.8 1,719.5 1,696.8 Restaurant labor 926.8 880.9 1,816.1 1,756.2 Restaurant expenses 477.7 450.4 935.9 897.0 Marketing expenses 48.8 36.9 93.5 75.5 General and administrative expenses 144.1 114.8 270.5 268.1 Depreciation and amortization 127.7 112.5 249.2 222.3 Impairments and disposal of assets, net — 7.5 1.0 10.6 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 Interest, net 46.2 37.1 83.3 66.8 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 Losses from discontinued operations, net of tax benefit of $ 0.2 , $ 0.3 , $ 0.6 and $ 0.4 , respectively ( 0.6 ) ( 0.2 ) ( 1.0 ) ( 0.5 ) Net earnings $ 215.1 $ 212.1 $ 422.3 $ 406.6 Basic net earnings per share: Earnings from continuing operations $ 1.84 $ 1.77 $ 3.59 $ 3.38 Losses from discontinued operations ( 0.01 ) — ( 0.01 ) — Net earnings $ 1.83 $ 1.77 $ 3.58 $ 3.38 Diluted net earnings per share: Earnings from continuing operations $ 1.82 $ 1.76 $ 3.57 $ 3.35 Losses from discontinued operations — — ( 0.01 ) — Net earnings $ 1.82 $ 1.76 $ 3.56 $ 3.35 Average number of common shares outstanding: Basic 117.5 119.9 118.0 120.4 Diluted 118.3 120.8 118.7 121.4 See accompanying notes to our unaudited consolidated financial statements. 4 Table of Contents DARDEN RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) (Unaudited) Three Months Ended Six Months Ended November 24, 2024 November 26, 2023 November 24, 2024 November

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Basis of Presentation Darden Restaurants, Inc. (we, our, Darden or the Company) owns and operates full-service dining restaurants in the United States and Canada under the trade names Olive Garden , LongHorn Steakhouse , Cheddar's Scratch Kitchen , Yard House , Ruth's Chris Steak House (Ruth's Chris), The Capital Grille , Chuy's , Seasons 52 , Bahama Breeze , Eddie V's Prime Seafood (Eddie V's) and The Capital Burger . As of November 24, 2024, through subsidiaries, we own and operate all of our restaurants in the United States and Canada, except for 2 joint venture restaurants managed by us, 4 managed locations operating under contractual agreements and 91 franchised restaurants. We also have 60 franchised restaurants in operation located in Latin America, the Caribbean, Asia, and the Middle East. We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. We operate on a 52/53-week fiscal year which ends on the last Sunday in May. Our fiscal year ending May 25, 2025 will contain 52 weeks of operation. Operating results for interim periods presented are not necessarily indicative of results that may be expected for the full fiscal year. These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 26, 2024. We prepare our consolidated financial statements in conformity with G

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) income statement. The ASU requires companies to include amounts already required by GAAP in the same disclosure, provide a qualitative description of remaining amounts not separately disaggregated, and disclose the total selling expenses along with the definition of selling expenses in annual reports. The amendment is effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. The amendment should be applied prospectively; however retrospective application is permitted. Management is currently evaluating this ASU to determine its impact on the Company's disclosures. We plan to adopt in in fiscal 2028. Note 2. Acquisition of Chuy's On October 11, 2024, we acquired 100 percent of the equity interest of Chuy's Holdings, Inc (Chuy's Holdings) in an all-cash transaction of $ 649.1 million in total consideration, net of $ 35.3 million of cash on Chuy's Holdings balance sheet at closing. We financed the acquisition with a portion of the proceeds from the issuance of a $ 400.0 million aggregate principal amount of 4.350 percent senior notes due 2027 (2027 Notes) and a $ 350.0 million aggregate principal amount of 4.550 percent senior notes due 2029 (2029 Notes), which were issued on October 3, 2024. The 2027 Notes will mature on October 15, 2027 and the 2029 Notes will mature on October 15, 2029. Interest on the Notes will be paid semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2025, to holders of record on the preceding March 31 or September 30, as the case may be. The acquired operations of Chuy's Holdings included 103 restaurants. The results of Chuy's operations are included in our consolidated financial statements from the date of acquisition. The assets and liabilities of Chuy's Holdings were recorded at their respective fair values as of the date of acquisition. We are in the process of confirming, through internal studies and third-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) As a result of the acquisition and related integration efforts, we incurred expenses of approximately $ 27.7 million and $ 29.2 million during the quarter and six months ended November 24, 2024, which are included in general and administrative expenses and interest expense in our consolidated statements of earnings. Pro-forma financial information of the combined entities for periods prior to the acquisition is not presented due to the immaterial impact of the financial results of Chuy's on our consolidated financial statements . Note 3. Revenue Recognition Deferred revenue liabilities from contracts with customers included on our accompanying consolidated balance sheets was comprised of the following: (in millions) November 24, 2024 May 26, 2024 Unearned revenues Deferred gift card revenue $ 576.9 $ 620.6 Deferred gift card discounts ( 25.5 ) ( 29.5 ) Other 0.6 0.7 Total $ 552.0 $ 591.8 Other liabilities Deferred franchise fees - non-current $ 4.9 $ 4.9 The following table presents a rollforward of deferred gift card revenue. Three Months Ended Six Months Ended (in millions) November 24, 2024 November 26, 2023 November 24, 2024 November 26, 2023 Beginning balance $ 579.5 $ 563.4 $ 620.6 $ 537.0 Acquired deferred gift card revenue 2.6 — 2.6 61.8 Activations 131.0 145.7 253.4 275.8 Redemptions and breakage ( 136.2 ) ( 128.4 ) ( 299.7 ) ( 293.9 ) Ending balance $ 576.9 $ 580.7 $ 576.9 $ 580.7 12 Table of Contents DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 4. Additional Financial Information Supplemental Balance Sheet Information The components of lease assets and liabilities on the consolidated balance sheet were as follows: (in millions) Balance Sheet Classification November 24, 2024 May 26, 2024 Operating lease right-of-use assets Operating lease right-of-use assets $ 3,678.2 $ 3,429.3 Finance lease right-of-use assets Land, buildings and equipment, net 1,209.0 1,106.3 Total lease assets, net $ 4,887.2 $ 4,535.6 Operating lease liabilities - current Other current liabilities $ 212.6 $ 198.8 Finance lease liabilities - current Other current liabilities 15.7 15.3 Operating lease liabilities - non-current Operating lease liabilities - non-current 3,939.1 3,704.7 Finance lease liabilities - non-current Other liabilities 1,484.1 1,357.1 Total lease liabilities $ 5,651.5 $ 5,275.9 Supplemental Cash Flow Information Cash paid for interest and income taxes were as follows: Six Months Ended (in millions) November 24, 2024 November 26, 2023 Interest, net of amounts capitalized $ 79.7 $ 63.4 Income taxes, net of refunds 28.8 63.4 Non-cash investing and financing activities were as follows: Six Months Ended (in millions) November 24, 2024 November 26, 2023 Increase in land, buildings and equipment through accrued purchases $ 39.6 $ 60.5 Right-of-use assets obtained in exchange for new operating lease liabilities 1 349.6 315.5 Right-of-use assets obtained in exchange for new finance lease liabilities 85.4 55.7 Net change in right-of-use assets mainly due to reclassification between categories upon modification 50.4 5.8 1 Fiscal 2025 includes $ 337.7 million from the acquisition of Chuy's and fiscal 2024 includes $ 299.5 million from the acquisition of Ruth's Chris. We had restricted cash of $ 24.2 million as of November 24, 2024 and $ 25.3 million as of May 26, 2024, which represents cash held as security for a standby letter of credi

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 6. Net Earnings per Share Outstanding stock options, restricted stock and equity-settled performance stock units granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding, none of which impact the numerator of the diluted net earnings per share computation. Stock options, restricted stock and equity-settled performance stock units excluded from the calculation of diluted net earnings per share because the effect would have been anti-dilutive, were as follows: Three Months Ended Six Months Ended (in millions) November 24, 2024 November 26, 2023 November 24, 2024 November 26, 2023 Anti-dilutive stock-ba