Darden Restaurants, Inc. (NYSE:DRI) Q2 2018 Earnings Conference Call Transcript

Dec 19, 2017 • 08:30 am ET


Darden Restaurants, Inc. (NYSE:DRI) Q2 2018 Earnings Conference Call Transcript


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Welcome to the Darden Fiscal Year 2018 Second Quarter Earnings Call. (Operator Instructions) This conference is being recorded. If you have any objections, please disconnect at this time.

I will now turn the call over to Mr. Kevin Kalicak. Thank you. You may begin.

Kevin Kalicak

Thank you, Jean. Good morning, everyone, and thank you for participating on today's call. Joining me on the call today are Gene Lee, Darden's CEO; and Rick Cardenas, CFO.

(Forward-Looking Cautionary Statements)

Today's discussion and presentation includes certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation. We plan to release fiscal 2018 third quarter earnings on March 22 before the market opens, followed by a conference call.

This morning, Gene will share some brief remarks about our quarterly performance and business highlights, and Rick will provide an update on our financial results and outlook for the year.

During today's call and for the remainder of this fiscal year, all references to Darden's same-restaurant sales only include Darden's legacy brands since Cheddar's Scratch Kitchen restaurants are new to Darden.

Now I'll turn the call over to Gene.

Gene Lee

Thanks, Kevin, and good morning, everyone. Let me start by saying, I'm very pleased with our performance during the quarter. Our teams did a great job managing through some difficult circumstances recovering from the hurricanes. Total sales from continuing operations were $1.88 billion, an increase of 14.6%. Same-restaurant sales grew 3.1%, and adjusted net earnings per share were $0.73, an increase of 14.1% from last year's diluted net earnings per share.

Given our consistent positive results, I am more convinced than ever that our success has been driven by the strategy we implemented three years ago. Our intense focus on improving the food, service and atmosphere in our restaurants, combined with relevant integrated marketing, remains the winning strategy for our brands. The long-term investments we have made and will continue to make in these areas are paying off. And we will work hard every day to better execute in these critical areas.

This back-to-basics operating philosophy is coupled with Darden's four competitive advantages. One, leveraging our significant scale to create a cost advantage; two, using extensive data and insights to improve operating fundamentals and to better understand our guest and communicate with them more effectively; ensuring our brands systematically go through our rigorous strategic planning process; and four, cultivating our results-oriented people culture to enable growth.

Together, our operating philosophy and competitive advantages give me confidence in our ability to continue to deliver a long-term framework over time. Turning to Olive Garden. Same-restaurant sales grew 3%, outperforming the industry benchmarks, excluding Darden, by 400 basis points. This was Olive Garden's 13th consecutive quarter of same-restaurant sales growth, driven by our focus on simplification and flawless execution, which continues to result in high guest satisfaction scores. Our promotional strategies and core menu working together to create everyday value and drive increased frequency for our most loyal guests and our strong To Go performance, which grew 12%.

During the