Darden Restaurants, Inc.

Welcome to the Darden Fiscal Year 2024 Fourth 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. This conference is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Ms. Courtney Aquila. Thank you. You may begin.

Thank you, Darrell. Good morning, everyone, and thank you for participating on today's call. Joining me today are Rick Cardenas, Darden's President and CEO, and Raj Bhanan, 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. We are 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 non-GAAP measurements, and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2025 first quarter earnings on Thursday, September 19th, before the market opens, followed by a conference call. During today's call, any reference to pre-COVID when discussing fourth quarter performance is a comparison to the fourth quarter of fiscal 2019, and any reference to annual pre-COVID performance is the trailing 12 months ending February of fiscal year 2020. Additionally, all references to industry results during today's call refer to Black Box Intelligence's casual dining benchmark, excluding Darden's casual dining brands. During our fiscal fourth quarter, industry same restaurant sales decreased 0.8%, and industry same restaurant guest counts decreased 3.5%. And during our full fiscal year 2024, industry same restaurant sales decreased 1.4%, and industry same restaurant guest counts decreased 4.7%. This morning, Rick will share some brief remarks recapping the fiscal year. Raj will provide details on the fourth quarter and full year financial results. and share our fiscal 2025 financial outlook. And then Rick will close with some final comments. Now I will turn it over to Rick.

Thank you, Courtney. Before I begin, I would like to thank Kevin Kalachak for his leadership of investor relations for close to 10 years. As many of you know, Kevin has moved to lead finance for Olive Garden. We are excited for his new opportunity and equally excited to have Courtney transition into leading investor relations. I'm confident you will find Courtney a worthy successor. Thank you, Kevin, and good morning, everyone. I'm proud of our ability to stay disciplined and control what we can control. This continued focus enabled us to have a strong year in what became an increasingly weaker consumer environment, especially for consumers below the median household income. For the full year, we grew total sales by 8.6% to $11.4 billion, delivered adjusted diluted net earnings per share of $8.88, an increase of 11%, exceeding the high end of the EPS range we provided at the beginning of the fiscal year, despite the challenging sales environment that emerged in the back half of the year. We opened 53 new restaurants in 24 states, eight of which were reopenings, and acquired and completed the integration of Ruth's Chris Steakhouse. Throughout the year, we strengthened and defended our four competitive advantages, and our restaurants remained focused on being brilliant with the basics, This has enabled us to successfully navigate whatever comes our way, including the increased discounting and marketing pressure we've seen recently. And when evaluating our performance within the context of our long-term framework of 10 to 15% total shareholder return as measured by EPS growth plus dividend yield, we delivered a TSR of 14.2% for fiscal 2024, which is near the high end of our target. And as I said, our teams are focused on controlling what they can control. One of the ways we do that is by having well-trained, tenured team members. Our manager and team member retention is at or above pre-COVID levels, and our teams are benefiting from this staffing consistency, which helps create great guest experiences. We also provide our teams with training programs that not only enhance their skill sets, but build on the unique culture of our brands, further strengthening engagement. For example, Longhorn recently completed their seventh StakeMaster Series. Over the course of two months, thousands of culinary team members competed in this highly engaging grilling competition and training program for the right to be crowned champion and received the $15,000 grand prize. Congratulations to this year's champion, Jacob Montgomery from the Longhorn Steakhouse in Cape Coral, Florida. Beyond providing strong labor and cost management, our operators are ensuring their teams remain focused on being brilliant with the basics, which is driving record guest satisfaction. Several of our brands reached all new time highs for overall guest satisfaction for the full fiscal year, including Olive Garden, Cheddar Scratch Kitchen, Yardhouse, Seasons 52, and Bahama Breeze. Additionally, within the casual dining segment of Technomics Industry Tracking Tool, Longhorn ended the fiscal year ranked number one for food, service, atmosphere, and overall perceptions, as well as brand fit and loyalty. Now let me provide a final update on the integration of Ruth's Chris Steakhouse. During the quarter, we completed the transition of all company-owned restaurants onto both our proprietary point of sale and labor management systems, which were the final major changes for the restaurants. We also acquired a single franchise location in Destin, Florida during the quarter. Thanks to the hard work and collaboration between the Ruth's Chris team and our integration team, We closed on the acquisition and completed the integration during the same fiscal year. This included onboarding 5,000 new team members with no turnover among our nine directors of operations. We also achieved the expected synergies resulting in EPS accretion of 10 cents. Integration is not easy and I'm particularly proud of the focus the restaurant teams maintained on the guest and team member experience throughout the process. Overall, I'm pleased with our performance for the fiscal year. We successfully navigated a challenging environment, and our proven strategy, combined with the strength of our business, ensures we are well positioned regardless of the operating environment. As we begin fiscal 2025, we remain focused on managing our business for the long term by executing our strategy that drives growth and long-term shareholder value. We have also taken steps to further position Darden and our brands for future growth and success through several leadership changes. We are fortunate to have a deep bench of talent, and these changes are designed to allow two of our most seasoned presidents to devote more time to developing our newest brand presidents. After nine years of leading Longhorn Steakhouse to record performance, Todd Burroughs has transitioned to a new role as president of business development. Todd now has responsibility for our new restaurant development and facilities team, our international and franchising business, and Ruth's Chris, our newest brand. Reporting to Todd are Mark Braun, Senior Vice President of Development, Brad Smith, President of International and Franchising, and Rick Jenkins, President of Ruth's Chris, who previously led operations for the brand. Todd is well suited to lead this work. He brings an operator's perspective to new restaurant development and our growing franchise business. Further, Todd was with Longhorn when we acquired Rare Hospitality 17 years ago. and who will be a valuable leader and resource for Rick as the Ruth's Chris team continues to acclimate to Darden. Todd's replacement at Longhorn is Laura Williamson. Laura is well respected across Longhorn, having served as their finance leader for nine years. She will report to me. We also named three new brand presidents within our specialty restaurant group who will report directly to John Martin, who continues to serve as president of the specialty restaurant group. Brian Clements, the former head of operations at Olive Garden, is now president of Yardhouse. Fallon Farrell, who led operations for Eddie V's, has been named president of the Capital Grill and Eddie V's. And Mark Cooper, who led finance for the Specialty Restaurant Group, is now president of Seasons 52 and Bahama Breeze. I'm excited about these changes and confident we have the right leaders in place to drive future growth. I'm also proud that three of our seven brand presidents began their careers as hourly team members at our restaurants, and the average tenure of all of our brand presidents is 27 years. Now I'll turn it over to Raj.