Darden Restaurants, Inc.

Welcome to the Darden Fiscal Year 2022 Third Quarter Earnings Call. Your lines have been placed on listen only until the question and answer session. To ask a question, you may press star 1 on your touchtone phone. The conference is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Mr. Kevin Kalacak. Thank you. You may begin.

Thank you, Jess, and good morning, everyone, and thank you for participating on today's call. Joining me on the call today are Gene Lee, Darden's Chairman and CEO, Rick Cardenas, President and COO, and Raj Vinam, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning, and in its filings with the Securities and Exchange Commission. They're simultaneously broadcasting a presentation during this call, which is posted in the Investor Relations section of our website at Darden.com. Today's discussion and presentation include certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation. Any reference to pre-COVID when discussing third quarter performance is a comparison to the third quarter of fiscal 2020. This is because last year's results are not meaningful due to the pandemic's impact on the business and the limited capacity environment that we operated in during the third quarter of fiscal 2021. We plan to release fiscal 2022 fourth quarter earnings on Thursday, June 23rd, before the market opens, followed by a conference call. This morning, Gene will share some brief remarks. Rick will give an update on our operating performance. Raj will provide more detail on our financial results and an update to our fiscal 22 financial outlook. And then Gene will have some closing comments. Now, I'll turn the call over to Gene.

Thank you, Kevin, and good morning, everyone. Our third quarter was one of stark contrast, and I'm pleased with our performance in this highly volatile environment. Our team did a great job controlling what they could control. In fiscal December, we achieved record sales while meeting our internal profit expectations that were contemplated in the guidance we provided in December. However, in fiscal January, which is a high volume period for us, the Omicron variant significantly impacted consumer demand, restaurant staffing, and operating expenses. We also experienced substantial weather impacts, all of which resulted in significantly lower sales and earnings than our internal expectations. Finally, as COVID cases declined and the operating environment normalized, sales improved throughout fiscal February, and we had strong results that exceeded our internal expectations. Sales strength has continued into March. Quarter to date, our average weekly sales are slightly ahead of our February actuals, and these trends are incorporated in our guidance. When we talked last in December, we could not have predicted the impacts Omicron would have on our business. In fact, the dramatic spike in cases created the most difficult operating environment since the initial onset of COVID two years ago. Rick will provide more details on the impact it had on our staffing levels in a moment. Omicron also created additional pressure on expenses at the restaurant level as we saw higher levels of sick pay and we incurred significant overtime costs due to staffing shortages caused by exclusions. The January spike also caused further supply chain disruptions and we now expect inflation to be higher in Q4 than when we talked in December. We have implemented pricing actions to mitigate the impacts of rising costs, and Raj will provide more detail in his remarks. We recognize that all of us in the industry face additional risks due to the current geopolitical environment, such as higher inflation and further supply chain disruptions. However, I'm confident that Darden can compete effectively in any operating environment. We have a strong balance sheet and the right strategy in place, driven by our four competitive advantages of significant scale, extensive data and insights, rigorous strategic planning, and our results-oriented culture. And our brands are relentlessly focused on executing our back-to-basics operating philosophy anchored in food, service, and atmosphere. Now I'll turn it over to Rick.