dri-20240825

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 25, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

1-13666

Commission File Number

DARDEN RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)


Florida		59-3305930
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1000 Darden Center Drive
Orlando,	Florida	32837
(Address of principal executive offices)		(Zip Code)

407-245-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, without par value	DRI	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Number of shares of common stock outstanding as of September 16, 2024: 117,500,476.

Table of Contents

TABLE OF CONTENTS


			Page
Part I -	Financial Information
	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	10
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4.	Controls and Procedures	30

Part II -	Other Information
	Item 1.	Legal Proceedings	31
	Item 1A.	Risk Factors	31
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 5.	Other Information	31
	Item 6.	Exhibits	32

Signature			33

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.

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share data)

(Unaudited)


	Three Months Ended
		August 25, 2024		August 27, 2023
Sales		$	2,757.0	$	2,730.6
Costs and expenses:
Food and beverage		846.7		851.0
Restaurant labor		889.3		875.3
Restaurant expenses		458.2		446.6
Marketing expenses		44.7		38.6
General and administrative expenses		126.4		153.3
Depreciation and amortization		121.5		109.8
Impairments and disposal of assets, net		1.0		3.1
Total operating costs and expenses		$	2,487.8	$	2,477.7
Operating income		269.2		252.9
Interest, net		37.1		29.7

Earnings before income taxes		232.1		223.2
Income tax expense		24.5		28.4
Earnings from continuing operations		$	207.6	$	194.8
Losses from discontinued operations, net of tax benefit of $0.4 and $0.1, respectively		(0.4)		(0.3)
Net earnings		$	207.2	$	194.5
Basic net earnings per share:
Earnings from continuing operations		$	1.75	$	1.61
Losses from discontinued operations		—		—
Net earnings		$	1.75	$	1.61
Diluted net earnings per share:
Earnings from continuing operations		$	1.74	$	1.60
Losses from discontinued operations		—		(0.01)
Net earnings		$	1.74	$	1.59
Average number of common shares outstanding:
Basic		118.5		120.9
Diluted		119.2		122.0

See accompanying notes to our unaudited consolidated financial statements.

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DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended
		August 25, 2024		August 27, 2023
Net earnings		$	207.2	$	194.5


Change in fair value of derivatives and amortization of unrecognized gains and losses on derivatives, net of taxes of $0.5 and $5.4, respectively		0.2		12.6
Net unamortized gain (loss) arising during the period, including amortization of unrecognized net actuarial gain (loss), net of taxes of $0.1 and $0.0, respectively, related to pension and other post-employment benefits		0.1		0.2
Other comprehensive income		$	0.3	$	12.8
Total comprehensive income		$	207.5	$	207.3

See accompanying notes to our unaudited consolidated financial statements.

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DARDEN RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions)


	August 25, 2024		May 26, 2024
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	192.5	$	194.8
Receivables, net	63.8		79.1
Inventories	297.7		290.5
Prepaid income taxes	103.6		121.7
Prepaid expenses and other current assets	162.0		136.7

Total current assets	$	819.6	$	822.8
Land, buildings and equipment, net of accumulated depreciation and amortization of $3,844.9 and $3,759.9, respectively	4,272.8		4,184.3
Operating lease right-of-use assets	3,365.5		3,429.3
Goodwill	1,391.0		1,391.0
Trademarks	1,148.0		1,148.0
Other assets	358.6		347.6
Total assets	$	11,355.5	$	11,323.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	401.0	$	399.5
Short-term debt	293.9		86.8
Accrued payroll	161.0		190.1
Accrued income taxes	1.7		6.1
Other accrued taxes	81.6		71.0
Unearned revenues	554.7		591.8

Other current liabilities	830.8		847.2
Total current liabilities	$	2,324.7	$	2,192.5
Long-term debt	1,385.6		1,370.4
Deferred income taxes	236.4		232.0
Operating lease liabilities - non-current	3,636.8		3,704.7
Other liabilities	1,628.3		1,580.9
Total liabilities	$	9,211.8	$	9,080.5
Stockholders’ equity:
Common stock and surplus	$	2,262.3	$	2,252.4
Retained earnings (deficit)	(144.5)		(35.5)
Accumulated other comprehensive income	25.9		25.6

Total stockholders’ equity	$	2,143.7	$	2,242.5
Total liabilities and stockholders’ equity	$	11,355.5	$	11,323.0

See accompanying notes to our unaudited consolidated financial statements.

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DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three Months Ended August 25, 2024 and August 27, 2023

(In millions)

(Unaudited)


	Common Stock And Surplus
	Shares	Amount		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income		Total Stockholders’ Equity











Balance at May 26, 2024	118.9	$	2,252.4	$	(35.5)	$	25.6	$	2,242.5
Net earnings	—	—		207.2		—		207.2
Other comprehensive income (loss)	—	—		—		0.3		0.3
Dividends declared ($1.40 per share)	—	—		(166.4)		—		(166.4)
Stock option exercises	0.1	6.6		—		—		6.6
Stock-based compensation	—	24.1		—		—		24.1
Repurchases of common stock	(1.2)	(22.6)		(149.8)		—		(172.4)
Issuance of stock under Employee Stock Purchase Plan and other plans	0.2	3.1		—		—		3.1
Other	—	(1.3)		—		—		(1.3)
Balance at August 25, 2024	118.0	$	2,262.3	$	(144.5)	$	25.9	$	2,143.7













Balance at May 28, 2023	121.1	$	2,230.8	$	(32.5)	$	3.2	$	2,201.5
Net earnings	—	—		194.5		—		194.5
Other comprehensive income (loss)	—	—		—		12.8		12.8
Dividends declared ($1.31 per share)	—	—		(160.1)		—		(160.1)
Stock option exercises	0.2	19.4		—		—		19.4
Stock-based compensation	—	20.6		—		—		20.6
Repurchases of common stock	(0.9)	(16.2)		(126.7)		—		(142.9)
Issuance of stock under Employee Stock Purchase Plan and other plans	0.3	2.9		—		—		2.9
Other	—	(0.7)		—		—		(0.7)
Balance at August 27 2023	120.7	$	2,256.8	$	(124.8)	$	16.0	$	2,148.0

See accompanying notes to our unaudited consolidated financial statements.

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DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Three Months Ended
	August 25, 2024		August 27, 2023
Cash flows—operating activities
Net earnings	$	207.2	$	194.5
Losses from discontinued operations, net of tax	0.4		0.3
Adjustments to reconcile net earnings from continuing operations to cash flows:
Depreciation and amortization	121.5		109.8
Impairments and disposal of assets, net	1.0		3.1
Stock-based compensation expense	34.7		30.3
Change in current assets and liabilities	(77.8)		(59.5)

SEC Form 10-Q filed by Darden Restaurants Inc.