DARDEN RESTAURANTS INC
For the period ended Aug 25, 2024. Filed Sep 27, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 25, 2024 · Filed Sep 27, 2024
DRI$226.35-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-02-25; filed 2024-04-02.
0000940944-24-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-08-25; filed 2024-09-27.
0000940944-24-000055
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 124 previous paragraphs and 119 current paragraphs.
79 unchanged; 27 reworded; 13 added; 16 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
•Our net earnings from continuing operations were $207.6 million for the first quarter of fiscal 2025 compared to $194.8 million for the first quarter of fiscal 2024.
Current report
On July 17, 2024, we entered into an agreement to acquire all of the outstanding shares of Chuy’s Holdings, Inc. (Chuy’s Holdings), a Delaware corporation, for $37.50 per share in an all-cash transaction with an enterprise value of approximately $605 million. The transaction has been approved by our Board of Directors and is subject to the satisfaction of customary conditions, including, among others, the approval of Chuy’s Holdings shareholders. The acquisition is expected to be completed in the second quarter of fiscal 2025 and expected to be funded through the issuance of debt. The impacts of the planned acquisition of Chuy’s Holdings have not been included in our fiscal 2025 outlook below.
Current report
During the second quarter of fiscal 2025, we entered into an exclusive multi-year delivery arrangement with Uber Technologies, Inc. (Uber). The agreement will enable our guests to order on-demand delivery via Darden restaurant channels, with delivery handled by Uber Direct, through Uber’s national delivery network. An initial pilot of first-party delivery from a limited number of Olive Garden locations will begin in the second quarter of fiscal 2025.
Current report
Olive Garden’s sales decrease for the first quarter of fiscal 2025 was primarily driven by same-restaurant sales decreases, offset by revenue from new restaurants. The decrease in U.S. same-restaurant sales for the first quarter of fiscal 2025 resulted from a 5.6 percent decrease in same-restaurant guest count, partially offset by a 2.9 percent increase in average check.
Current report
Other Business’ sales decrease for the first quarter of fiscal 2025 was primarily driven by same-restaurant sales decreases, offset by revenue from new restaurants. The decrease in same-restaurant sales for the first quarter of fiscal 2025 resulted from a 3.9 percent decrease in same-restaurant guest counts, offset by a 2.2 percent increase in average check.
Current report
•Impairment and disposal of assets, net decreased as a percent of sales primarily due to a decrease in unplanned closures or early lease terminations as compared to prior year.
Current report
Net interest expense increased as a percent of sales for the first quarter of fiscal 2025 primarily due to financing related to the Ruth’s Chris acquisition.
Current report
On September 16, 2024, we entered into Amendment No. 1 (Amendment) to the Revolving Credit Agreement, which replaced the prior financial covenant (which provided for a maximum consolidated total debt to total capitalization ratio) with a new financial covenant requiring us to maintain, measured as of the end of each fiscal quarter, a maximum consolidated leverage ratio of 3.50 to 1.00 (which may be temporarily increased to 4.00 to 1.00 upon our the election as a result of a covered acquisition, subject to customary limitations set forth in the Revolving Credit Agreement). All other material terms and conditions of the Revolving Credit Agreement were unchanged.
Current report
On September 16, 2024, the Company entered into a senior unsecured $600 million 2-year Term Loan Credit Agreement (the Term Loan Agreement) with BOA, as administrative agent, the lenders and other agents party thereto, the material terms of which are consistent with the Revolving Credit Agreement, as amended by the Amendment. The Term Loan Agreement provides for a single borrowing on any business day until February 17, 2025 (the Funding Date) and matures on the second anniversary of the Funding Date. The Company has not drawn on the Term Loan as of the date of this filing. The proceeds may be used to finance our anticipated acquisition of Chuy’s Holdings.
Current report
•$500.0 million of unsecured 6.300 senior notes due in October 2033;
Current report
Other than the planned acquisition of Chuy’s Holdings, which we intend to fund through one or more long-term debt issuances, we are not aware of any trends or events that would materially affect our capital requirements or liquidity. We believe that our internal cash-generating capabilities, the potential issuance of equity or unsecured debt securities under our shelf registration statement and short-term commercial paper or drawings under our Revolving Credit Agreement should be sufficient to finance our capital expenditures, debt maturities and other operating activities through fiscal 2025.
Current report
•A failure to successfully complete our acquisition and integration of Chuy’s Holdings operations into our business.
Current report
•Environmental, social and governance risk, including disclosure expectations and the impact of third party ratings,
Removed paragraphs (16)
Previous report
•Our net earnings from continuing operations were $313.4 million and $720.5 million for the third quarter and nine months of fiscal 2024 compared to $286.8 million and $667.9 million for the third quarter and nine months of fiscal 2023. As a result of the acquisition and related integration efforts, we incurred expenses of approximately $6.8 million ($2.0 million, net of tax) and $44.4 million ($33.8 million, net of tax) during the quarter and nine months ended February 25, 2024, respectively, which are included in general and administrative expenses, impairment, net and interest expense in our consolidated statements of earnings.
Previous report
Olive Garden’s sales increase for the third quarter of fiscal 2024 was primarily driven by revenue from new restaurants offset by same-restaurant sales decreases. The decrease in U.S. same-restaurant sales for the third quarter of fiscal 2024 resulted from a 3.8 percent decrease in same-restaurant guest counts offset by a 2.1 percent increase in average check. Olive Garden’s sales increase for the nine months of fiscal 2024 was primarily driven by U.S. same-restaurant sales increases combined with revenue from new restaurants. The increase in U.S. same-restaurant sales for the nine months of fiscal 2024 resulted from a 3.9 percent increase in average check offset by a 1.2 percent decrease in same-restaurant guest counts.
Previous report
Other Business’ sales increase for the third quarter and nine months of fiscal 2024 was primarily driven by revenue from new restaurants partially offset by U.S. same-restaurant sales decreases. The decrease in same-restaurant sales for the third quarter of fiscal 2024 resulted from a 5.0 percent decrease in same-restaurant guest counts offset by a 2.5 percent increase in average check. The decrease in U.S. same-restaurant sales for the nine months of fiscal 2024 resulted from a 3.3 percent decrease in same-restaurant guest counts offset by a 2.7 percent increase in average check.
Previous report
•Restaurant labor costs increased as a percent of sales primarily due to a 1.4% impact from inflation, partially offset by a 0.7% impact from sales leverage, a 0.3% impact related brand mix, including Ruth’s Chris, a 0.2% impact from incentive compensation, and a 0.1% impact from productivity improvement.
Previous report
Nine months ended February 25, 2024 Compared to Nine Months Ended February 26, 2023
Previous report
•Restaurant expenses decreased as a percent of sales due to a 0.5% impact from sales leverage, which was almost completely offset by the impact from inflation.
Previous report
•General and administrative expenses increased as a percent of sales primarily due to a 0.5% impact from the Ruth’s Chris transaction and integration costs, a 0.2% impact from incentive pay accrual, a 0.2% impact from inflation and other, partially offset by a 0.2% impact from sales leverage.
Previous report
•Depreciation and amortization expenses increased as a percent of sales primarily due to capital expenditures and the acquisition of Ruth’s Chris.
Previous report
•Impairment and disposal of assets, net increased as a percent of sales primarily due to five properties that either closed or will close during fiscal 2024, write-offs of acquired Ruth’s Chris assets and a liquor license impairment, compared to gains on the sale of properties last year.
Previous report
Net interest expense increased as a percent of sales for the quarter and nine months ended February 25, 2024 primarily due to interest related to financing the acquisition of Ruth’s Chris. See Liquidity and Capital Resources for a description of the financing. At the closing date of acquisition, we entered into a $600 million 3-year Term Loan which was paid off upon issuance of $500.0 million of senior notes issued during the second quarter of fiscal year 2024. See Liquidity and Capital Resources below and Note 2 for a description of the Term Loan and senior notes issuance.
Previous report
The Inflation Reduction Act (IRA) was enacted on August 16, 2022. The IRA includes provisions imposing a 1.0 percent excise tax on share repurchases that occur after December 31, 2022 and introduces a 15.0 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income. The impact of the IRA excise tax and CAMT are immaterial to our consolidated financial statements for the quarter and nine months ended February 25, 2024.
Previous report
On May 31, 2023, the Company also entered into a senior unsecured $600 million 3-year Term Loan Credit Agreement (Term Loan) with Bank of America, N.A., as administrative agent, the lenders and other agents party thereto, the material terms of which are consistent with the Revolving Credit Agreement, as amended. We borrowed $600 million under the Term Loan to fund a portion of the consideration paid in connection with the acquisition of Ruth’s Chris. The $600 million outstanding under the Term Loan was subsequently paid in full on October 10, 2023 with the $500 million proceeds from our 2033 Notes (as defined and discussed below) along with $100 million from cash on hand. The Term Loan was terminated on October 10, 2023 in connection with its payment in full and no amounts remain outstanding.
Previous report
On October 10, 2023, the Company issued $500 million aggregate principal amount of our 6.300% Senior Notes due 2033 (the 2033 Notes) pursuant to the provisions of the Underwriting Agreement, dated October 4, 2023 (Underwriting Agreement), among the Company and BofA Securities, Inc., Truist Securities, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein. The 2033 Notes were issued under the Company’s Indenture, dated as of January 1, 1996 (Base Indenture), between the Company and Computershare Trust Company, National Association (as successor to Wells Fargo Bank, National Association, successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association), as trustee (Base Trustee), as amended and supplemented by the Second Supplemental Indenture, dated as of October 4, 2023 (Second Supplemental Indenture), among the Company, the Base Trustee and U.S. Bank Trust Company, National Association, as successor trustee with respect to the 2033 Notes. The 2033 Notes will mature on October 10, 2033. Interest on the 2033 Notes will be paid semi-annually in arrears on April 10 and October 10 of each year, commencing on April 10, 2024, to holders of record on the preceding March 26 or September 25, as the case may be.
Previous report
•$500.0 million of unsecured 6.300 percent senior notes due in October 2033;
Previous report
Impairment of our assets, including goodwill or trademarks, adversely affects our financial position and results of operations, and our leverage ratio for purposes of our Revolving Credit Agreement. A leverage ratio exceeding the maximum permitted under our Revolving Credit Agreement would be a default under our Revolving Credit Agreement. At February 25, 2024, write-downs of goodwill, other indefinite-lived intangible assets, or any other assets in excess of approximately $716.4 million would have been required to cause our leverage ratio to exceed the permitted maximum. As our leverage ratio is determined on a quarterly basis, and due to the seasonal nature of our business, a lesser amount of impairment in future quarters could cause our leverage ratio to exceed the permitted maximum.
Previous report
•A failure to successfully integrate Ruth’s Chris Steak House operations into our business.
Reworded paragraphs (27)
Previous wording
The discussion and analysis below for the Company, which contains forward-looking statements, should be read in conjunction with the unaudited consolidated financial statements and the notes to such financial statements included elsewhere in this quarterly report on Form 10-Q (Form 10-Q) and the audited consolidated financial statements and the notes thereto included in our Form 10-K for the fiscal year ended May 28, 2023 (Form 10-K). In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Item 1A. Risk Factors” section of the Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Forward-Looking Statements” included elsewhere in this Form 10-Q.
Current wording
The discussion and analysis below for the Company, which contains forward-looking statements, should be read in conjunction with the unaudited consolidated financial statements and the notes to such financial statements included elsewhere in this quarterly report on Form 10-Q (Form 10-Q) and the audited consolidated financial statements and the notes thereto included in our Form 10-K for the fiscal year ended May 26, 2024 (Form 10-K). In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Item 1A. Risk Factors” section of the Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Forward-Looking Statements” included below in this Form 10-Q.
Previous wording
To facilitate review of our discussion and analysis, the following table sets forth our financial results for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the quarters and nine months ended February 25, 2024 and February 26, 2023.
Current wording
To facilitate review of our discussion and analysis, the following table sets forth our financial results for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the three months ended August 25, 2024 and August 27, 2023.
Previous wording
The following table details the number of company-owned restaurants currently reported in continuing operations that were open at the end of the third quarter of fiscal 2024, compared with the number open at the end of fiscal 2023 and the end of the third quarter of fiscal 2023.
Current wording
The following table details the number of company-owned restaurants currently reported in continuing operations that were open at the end of the first quarter of fiscal 2025, compared with the number open at the end of fiscal 2024 and the end of the first quarter of fiscal 2024.
Previous wording
•Total sales increased 6.8% and 9.2% to $2.97 billion and $8.43 billion for the third quarter and nine months of fiscal 2024 compared to $2.79 billion and $7.72 billion for the third quarter and nine months of fiscal 2023 driven by sales from the addition of 79 company-owned Ruth's Chris Steak House (Ruth’s Chris) restaurants and 53 other net new restaurants, partially offset by a blended same-restaurant sales decrease of (1.0)%1 in third quarter. Same-restaurant sales increased by 2.2% for the nine months ended fiscal 2024.
Current wording
•Total sales increased 1.0 percent to $2.76 billion for the first quarter of fiscal 2025 compared to $2.73 billion for the first quarter of fiscal 2024 driven by sales from 42 net new restaurants, partially offset by a blended same-restaurant sales decrease of (1.1) percent 1.
Previous wording
•Reported diluted net earnings per share from continuing operations were $2.60 and $5.95 for the third quarter and nine months of fiscal 2024 compared to $2.34 and $5.42 for the third quarter and nine months of fiscal 2023.
Current wording
•Reported diluted net earnings per share from continuing operations were $1.74 for the first quarter of fiscal 2025 compared to $1.60 for the first quarter of fiscal 2024.
Previous wording
We expect sales for fiscal 2024 to be approximately $11.4 billion, driven by same-restaurant sales growth of 1.5 to 2.0 percent 1 and approximately 50 to 55 new restaurant openings inclusive of Ruth’s Chris new restaurant openings. Additionally, we expect capital expenditures incurred to build new restaurants, remodel and maintain existing restaurants and for technology initiatives to be approximately $600 million.
Current wording
We expect sales for fiscal 2025 to be between $11.8 and $11.9 billion, driven by same-restaurant sales growth of 1.0 to 2.0 percent 1 and approximately 45 to 50 new restaurant openings. Additionally, we expect capital expenditures incurred to build new restaurants, remodel and maintain existing restaurants and for technology initiatives to be $550 to $600 million.
Previous wording
1 Same-restaurant sales results exclude Ruth's Chris as they have not yet been owned and operated by Darden for a 16-month period.
Current wording
1 Same-restaurant sales results excludes Ruth's Chris as they have not yet been owned and operated by Darden for a 16-month period.
Previous wording
LongHorn Steakhouse’s sales increase for the third quarter and nine months of fiscal 2024 was primarily driven by same-restaurant sales increases combined with revenue from new restaurants. The increase in same-restaurant sales for the third quarter of fiscal 2024 resulted from a 5.2 percent increase in average check offset by a 2.7 percent decrease in same-restaurant guest counts. The increase in U.S. same-restaurant sales for the nine months of fiscal 2024 resulted from a 5.9 percent increase in average check offset by a 0.9 percent decrease in same-restaurant guest counts.
Current wording
LongHorn Steakhouse’s sales increase for the first quarter of fiscal 2025 was primarily driven by same-restaurant sales increases combined with revenue from new restaurants. The increase in same-restaurant sales for the first quarter of fiscal 2025 resulted from a 3.0 percent increase in average check combined with a 0.7 percent increase in same-restaurant guest counts.
Previous wording
Fine Dining’s sales increase for the third quarter and nine months of fiscal 2024 was primarily driven by the acquisition of Ruth’s Chris, offset by same-restaurant sales decreases. The decrease in same-restaurant sales for the third quarter of fiscal 2024 resulted from a 7.0 percent decrease in same-restaurant guest counts offset by a 5.1 percent increase in average check. The decrease in U.S. same-restaurant sales for the nine months of fiscal 2024 resulted from a 6.7 percent decrease in same-restaurant guest counts offset by a 4.8 percent increase in average check.
Current wording
Fine Dining’s sales increase for the first quarter of fiscal 2025 was primarily driven by the acquisition of Ruth’s Chris and revenue from new restaurants, offset by same restaurant sales decreases. The decrease in same-restaurant sales for the first quarter of fiscal 2025 resulted from a 9.3 percent decrease in same-restaurant guest counts offset by a 3.7 percent increase in average check.
Previous wording
The following table sets forth selected operating data as a percent of sales for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the quarters and nine months ended February 25, 2024 and February 26, 2023.
Current wording
The following table sets forth selected operating data as a percent of sales for the periods indicated. All information is derived from the unaudited consolidated statements of earnings for the quarters ended August 25, 2024 and August 27, 2023.
Previous wording
•Food and beverage costs decreased as a percent of sales primarily due to a 1.3% impact from pricing leverage, and a 0.4% impact from mix and other, partially offset by a 0.3% impact from inflation.
Current wording
•Food and beverage costs decreased as a percent of sales primarily due to a 0.8% impact from pricing leverage and a 0.2% impact from cost savings, partially offset by a 0.6% impact from mix and other.
Previous wording
•Restaurant labor costs decreased as a percent of sales primarily due to a 1.2% impact from sales leverage, a 0.3% impact from productivity improvement and a 0.2% impact related to brand mix, including Ruth’s Chris, partially offset by a 1.6% impact from inflation.
Current wording
•Restaurant labor costs increased as a percent of sales primarily due to a 1.2% impact from inflation, partially offset by a 0.3% impact from sales leverage, a 0.6% impact from salary and benefits, and a 0.2% productivity improvement.
Previous wording
•Restaurant expenses increased as a percent of sales primarily due to a 0.4% impact from inflation and a 0.2% impact related to brand mix, including Ruth’s Chris, partially offset by a 0.4% impact from sales leverage and other.
Current wording
•Restaurant expenses increased as a percent of sales primarily due a 0.3% impact from inflation, partially offset by a 0.1% impact related to other.
Previous wording
•Marketing expenses increased as a percent of sales primarily due to increased marketing and media spend.
Current wording
•Marketing expenses increased as a percent of sales primarily due to increased marketing and media.
Previous wording
•General and administrative expenses decreased as a percent of sales primarily due to a 0.3% impact from incentive pay accrual and a 0.2% impact from sales leverage and other, partially offset by a 0.2% impact from Ruth’s Chris transaction and integration costs and a 0.1% impact from inflation.
Current wording
•General and administrative expenses decreased as a percent of sales primarily due to a 0.9% impact from Ruth’s Chris transaction and integration costs incurred in fiscal 2024 but not in fiscal 2025, a 0.4% impact from incentive pay and a 0.1% impact from sales leverage, partially offset by a 0.2% impact from inflation and a 0.1% impact related to mark to market adjustments.
Previous wording
•Depreciation and amortization expenses increased as a percent of sales primarily due to capital expenditures and the acquisition of Ruth’s Chris.
Current wording
•Depreciation and amortization expenses increased as a percent of sales primarily due to the acquisition of Ruth’s Chris as well as depreciation on brand assets.
Previous wording
The effective income tax rate for continuing operations for the quarter ended February 25, 2024 was 10.7 percent compared to an effective income tax rate for the quarter ended February 26, 2023 of 13.2 percent. This decrease in tax rate was primarily driven by mark-to-market activity and deductions related to Ruth’s Chris transaction costs. The effective income tax rate for continuing operations for the nine months ended February 25, 2024 was 11.6 percent compared to an effective income tax rate for the nine months ended February 26, 2023 of 13.0 percent. This change was primarily driven by the impact of federal tax credits and higher benefits related to option exercises.
Current wording
The effective income tax rate for continuing operations for the quarter ended August 25, 2024 was 10.6 percent compared to an effective income tax rate for the quarter ended August 27, 2023 of 12.7 percent. The decrease in the tax rate is primarily driven by the release of federal tax reserves and the favorable impact of mark to market hedges.
Previous wording
On an after-tax basis, losses from discontinued operations for the quarter and nine months ended February 25, 2024 were $0.5 million ($0.00 per diluted share) and $1.0 million ($0.00 per diluted share) compared with losses from discontinued operations for the quarter and nine months ended February 26, 2023 of $0.2 million ($0.00 per diluted share) and $1.1 million ($0.01 per diluted share).
Current wording
On an after-tax basis, losses from discontinued operations for the first quarter of fiscal 2025 were $0.4 million ($0.00 per diluted share) compared with losses from discontinued operations for the first quarter of fiscal 2024 of $0.3 million ($0.01 per diluted share).
Previous wording
The increase in Olive Garden’s segment profit margin for the nine months of fiscal 2024 was driven primarily by positive same-restaurant sales, lower food and beverages costs, restaurant labor costs and restaurant expense, partially offset by increased marketing costs. The increase in Longhorn Steakhouse’s segment profit margin for the third quarter and nine months of fiscal 2024 was driven primarily by positive same-restaurant sales as well as lower food and beverages costs, restaurant labor and restaurant expenses. The decrease in Fine Dining’s segment profit margin for the nine months of fiscal 2024 was driven primarily by negative same-restaurant sales and higher restaurant labor, restaurant expenses and marketing costs partially offset by lower food and beverage costs. The increase in Other Business’ segment profit margin for the third quarter and nine months of fiscal 2024 was driven primarily by increased franchise revenue with the addition of Ruth’s Chris and lower food and beverage costs, partially offset by negative same-restaurant sales, increased restaurant labor costs and marketing costs.
Current wording
The decrease in Olive Garden’s segment profit margin for the first quarter of fiscal 2025 was driven primarily by negative same-restaurant sales as well as increased restaurant labor costs and restaurant expenses, partially offset by lower food and beverage costs. The increase in Longhorn Steakhouse’s segment profit margin for the first quarter of fiscal 2025 was driven primarily by positive same-restaurant sales as well as decreased food and beverage costs, partially offset by higher restaurant labor and restaurant expenses. The decrease in Fine Dining’s segment profit margin for the first quarter of fiscal 2025 was driven primarily by negative same-restaurant sales, higher restaurant labor costs and restaurant expenses, partially offset by lower food and beverages costs. Other Business’ segment profit margin for the first quarter of fiscal 2025 remained flat compared to fiscal 2024, primarily due to lower food and beverage costs, offset by negative same-restaurant sales.
Previous wording
On October 23, 2023, we entered into a $1.25 billion Revolving Credit Agreement (Revolving Credit Agreement) with Bank of America, N.A. (BOA), as administrative agent, and the lenders and other agents party thereto. The Revolving Credit Agreement replaced our prior $1.0 billion Revolving Credit Agreement (Prior Revolving Credit Agreement), dated as of September 10, 2021, and the Prior Revolving Credit Agreement was terminated concurrently with our entry into the Revolving Credit Agreement. The Revolving Credit Agreement is a senior unsecured credit commitment to the Company and contains customary representations and affirmative and negative covenants (including limitations on liens and subsidiary debt and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type, and consistent with our Prior Revolving Credit Agreement. As of February 25, 2024, we had no outstanding balances and were in compliance with all covenants under the Revolving Credit Agreement. As of February 25, 2024, $158.7 million of commercial paper was outstanding in addition to $0.5 million of letters of credit outstanding, which were both backed by this facility. After consideration of commercial paper and letters of credit backed by the Revolving Credit Agreement, as of February 25, 2024, we had $1.09 billion of credit available under the Revolving Credit Agreement.
Current wording
On October 23, 2023, we entered into a $1.25 billion Revolving Credit Agreement (as amended, Revolving Credit Agreement) with Bank of America, N.A. (BOA), as administrative agent, and the lenders and other agents party thereto. The Revolving Credit Agreement replaced our prior $1.0 billion Revolving Credit Agreement (Prior Revolving Credit Agreement), dated as of September 10, 2021, and the Prior Revolving Credit Agreement was terminated concurrently with our entry into the Revolving Credit Agreement. The Revolving Credit Agreement is a senior unsecured credit commitment to the Company and contains customary representations and affirmative and negative covenants (including limitations on liens and subsidiary debt and, prior to the Amendment (as defined below) a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type. As of August 25, 2024, we had no outstanding balances and were in compliance with all covenants under the Revolving Credit Agreement. As of August 25, 2024, $293.9 million of commercial paper was outstanding in addition to $0.5 million of letters of credit outstanding, which were both backed by this facility. After consideration of commercial paper and letters of credit backed by the Revolving Credit Agreement, as of August 25, 2024, we had $955.6 million of credit available under the Revolving Credit Agreement.
Previous wording
The interest rate on our $42.8 million senior notes due in October 2037 is subject to adjustment from time to time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of February 25, 2024, no such adjustments have been made to this rate.
Current wording
The interest rate on our $42.8 million senior notes due in October 2037 is subject to adjustment from time to time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of August 25, 2024, no such adjustments are made to this rate.
Previous wording
Net cash flows provided by operating activities of continuing operations increased to $1.20 billion for the first nine months of fiscal 2024, from $1.14 billion for the nine months of fiscal 2023. Net cash flows provided by operating activities include net earnings from continuing operations of $720.5 million and $667.9 million in the first nine months of fiscal 2024 and 2023, respectively. Net cash flows provided by operating activities increased in fiscal 2024 primarily due to the increase in net earnings compared to fiscal 2023.
Current wording
Net cash flows provided by operating activities from continuing operations increased to $273.2 million for the first three months of fiscal 2025, from $269.1 million for the three months of fiscal 2024. Net cash flows provided by operating activities include net earnings from continuing operations of $207.6 million and $194.8 million in the first three months of fiscal 2025 and 2024, respectively. Net cash flows provided by operating activities increased in fiscal 2025 primarily due to higher net earnings in fiscal 2025.
Previous wording
Net cash flows used in investing activities of continuing operations were $1.18 billion for the first nine months of fiscal 2024, compared to $409.5 million for the first nine months of fiscal 2023. Capital expenditures increased to $460.8 million for the first nine months of fiscal 2024 from $410.5 million for the first nine months of fiscal 2023 reflecting an increase in new restaurant construction and remodel activity during fiscal 2024. Net cash used in the acquisition of Ruth’s Chris was $699.9 million during fiscal 2024.
Current wording
Net cash flows used in investing activities from continuing operations were $149.7 million for the first three months of fiscal 2025, compared to $854.2 million for the first three months of fiscal 2024. Net cash used in the acquisition of Ruth’s Chris was $701.1 million during fiscal 2024. Capital expenditures decreased to $145.2 million for the first three months of fiscal 2025 from $150.9 million for the first three months of fiscal 2024 reflecting a decrease in new restaurant construction and remodel spend during fiscal 2025.
Previous wording
Net cash flows used in financing activities of continuing operations were $158.5 million for the first nine months of fiscal 2024, compared to net cash used in financing activities of $862.7 million for the first nine months of fiscal 2023. Net cash flows used in financing activities for the first nine months of fiscal 2024 included net proceeds from issuance of short term debt of $158.7 million, net proceeds from the 2033 Notes of $500.0 million, dividends paid of $472.1 million and share repurchases of $356.6 million. Net cash flows used in financing activities for the first nine months of fiscal 2023 included dividends paid of $443.3 million and share repurchases of $423.5 million. Dividends declared by our Board of Directors totaled $3.93 and $3.63 per share for the first nine months of fiscal 2024 and 2023, respectively.
Current wording
Net cash flows used in financing activities from continuing operations were $126.7 million for the first three months of fiscal 2025, compared to net cash provided by financing activities of $409.4 million for the first three months of fiscal 2024. Net cash flows used in financing activities for the first three months of fiscal 2025 included net proceeds from issuance of short term debt of $207.1 million, dividends paid of $166.0 million and share repurchases of $172.4 million. Net cash flows provided by financing activities for the first three months of fiscal 2024 included net proceeds from issuance of short term debt of $95.4 million and proceeds from the Term Loan Agreement of $600.0 million, dividends paid of $158.5 million and share repurchases of $142.9 million. Dividends declared by our Board of Directors totaled $1.40 and $1.31 per share for the first three months of fiscal 2025 and 2024, respectively.
Previous wording
On March 20, 2024, our Board of Directors authorized a new share repurchase program under which we may repurchase up to $1 billion of our outstanding common stock. This repurchase program does not have an expiration and replaced the previously existing share repurchase authorization. Repurchases are subject to prevailing market prices, may be made in open market or private transactions, may occur or be discontinued at any time and remain subject to the discretion of our Board of Directors. There can be no assurance that we will repurchase any shares. During the quarter and nine months ended February 25, 2024, we repurchased 0.2 million and 2.3 million shares of our common stock, respectively, compared to 0.87 million and 3.3 million shares of our common stock, respectively, during the quarter and nine months ended February 26, 2023.
Current wording
On March 20, 2024 our Board of Directors authorized a new share repurchase program under which we may repurchase up to $1 billion of our outstanding common stock. This repurchase program does not have an expiration and replaced the prior share repurchase authorization. During the quarter ended August 25, 2024, we repurchased 1.2 million shares of our common stock compared to 0.9 million shares of our common stock during the quarter ended August 27, 2023.
Previous wording
Our current assets totaled $876.4 million as of February 25, 2024, compared to $997.7 million as of May 28, 2023. The decrease was primarily due to a decrease in cash and cash equivalents.
Current wording
Our current assets totaled $819.6 million as of August 25, 2024, compared to $822.8 million as of May 26, 2024. The decrease was primarily due to a decrease in receivables and prepaid income tax, partially offset by increase in prepaid expenses and other current assets.
Previous wording
Our current liabilities totaled $2.27 billion as of February 25, 2024, compared to $1.94 billion as of May 28, 2023. The increase was primarily driven by an increase in short-term debt as well as an increase in other current liabilities and unearned revenues associated with the acquisition of Ruth’s Chris.
Current wording
Our current liabilities totaled $2.32 billion as of August 25, 2024, compared to $2.19 billion as of May 26, 2024. The increase was primarily driven by an increase in short-term debt .
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
•Food and beverage costs decreased as a percent of sales primarily due to a 1.1% impact from pricing leverage and a 0.4% impact from mix and other, offset by a 0.5% impact from inflation.
Previous report — wording carried elsewhere
•Marketing expenses increased as a percent of sales primarily due to increased marketing and media spend.