Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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.

			Three Months Ended																		Nine Months Ended
(in millions)			February 25, 2024						February 26, 2023						% Chg						February 25, 2024						February 26, 2023						% Chg
Sales			$	2,974.8					$	2,786.2					6.8%						$	8,432.7					$	7,718.8					9.2%
Costs and expenses:
Food and beverage			920.2						887.0						3.7						2,617.0						2,500.6						4.7
Restaurant labor			937.1						874.2						7.2						2,693.3						2,476.5						8.8
Restaurant expenses			471.9						440.3						7.2						1,368.9						1,260.8						8.6
Marketing expenses			31.7						28.2						12.4						107.2						89.6						19.6
General and administrative expenses			108.2						107.0						1.1						376.3						285.7						31.7
Depreciation and amortization			117.9						98.3						19.9						340.2						290.7						17.0
Impairments and disposal of assets, net			0.4						1.3						(69.2)						11.0						(12.4)						NM
Total costs and expenses			$	2,587.4					$	2,436.3					6.2						$	7,513.9					$	6,891.5					9.0
Operating income			387.4						349.9						10.7						918.8						827.3						11.1
Interest, net			36.5						19.6						86.2						103.3						59.2						74.5
Earnings before income taxes			350.9						330.3						6.2						$	815.5					$	768.1					6.2
Income tax expense (1)			37.5						43.5						(13.8)						95.0						100.2						(5.2)
Earnings from continuing operations			$	313.4					$	286.8					9.3						$	720.5					$	667.9					7.9
Losses from discontinued operations, net of tax			(0.5)						(0.2)						NM						(1.0)						(1.1)						(9.1)
Net earnings			$	312.9					$	286.6					9.2%						$	719.5					$	666.8					7.9%
Diluted net earnings per share:
Earnings from continuing operations			$	2.60					$	2.34					11.1%						$	5.95					$	5.42					9.8%
Losses from discontinued operations			—						—						—						—						(0.01)						(100.0)
Net earnings			$	2.60					$	2.34					11.1%						$	5.95					$	5.41					10.0%
(1) Effective tax rate			10.7		%				13.2		%										11.6		%				13.0		%
NM- Percentage not considered meaningful.

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.

						February 25, 2024						May 28, 2023						February 26, 2023
Olive Garden						917						905						893
LongHorn Steakhouse						572						562						554
Cheddar’s Scratch Kitchen						181						180						179
Yard House						88						86						86
Ruth’s Chris Steak House						79						—						—
The Capital Grille						64						62						61
Seasons 52						44						44						43
Bahama Breeze						43						42						42
Eddie V’s						30						29						29
The Capital Burger						4						4						3
Total						2,022						1,914						1,890

OVERVIEW OF OPERATIONS

Financial Highlights - Consolidated

• 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.

• 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.

• 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.

Outlook

We expect sales for fiscal 2024 to be approximately $11.4 billion, driven by same-restaurant sales growth of 1.5 to 2.0 percent1 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.

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.

SALES

The following table presents our sales by segment for the periods indicated.

			Three Months Ended															Nine Months Ended
(in millions)			February 25, 2024			February 26, 2023			% Chg			SRS (1)						February 25, 2024			February 26, 2023			% Chg			SRS (1)
Olive Garden			$	1,310.2		$	1,301.2		0.7		%	(1.8)		%				$	3,789.5		$	3,608.6		5.0		%	2.6		%
LongHorn Steakhouse			$	730.7		$	695.5		5.1		%	2.3		%				$	2,043.5		$	1,900.6		7.5		%	5.0		%
Fine Dining			$	372.9		$	235.6		58.3		%	(2.3)		%				$	964.4		$	621.0		55.3		%	(2.3)		%
Other Business			$	561.0		$	553.9		1.3		%	(2.6)		%				$	1,635.3		$	1,588.6		2.9		%	(0.7)		%

(1)Same-restaurant sales is a year-over-year comparison of each period’s sales volumes for a 52-week year and is limited to restaurants that have been open, and operated by Darden, for at least 16 months. Accordingly, Ruth’s Chris results will not be included in this calculation until the second quarter of fiscal 2025.

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.

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.

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.

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.

COSTS AND EXPENSES

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.

			Three Months Ended												Nine Months Ended
			February 25, 2024						February 26, 2023						February 25, 2024						February 26, 2023
Sales			100.0		%				100.0		%				100.0		%				100.0		%
Costs and expenses:
Food and beverage			30.9						31.8						31.0						32.4
Restaurant labor			31.5						31.4						31.9						32.1
Restaurant expenses			15.9						15.8						16.2						16.3
Marketing expenses			1.1						1.0						1.3						1.2
General and administrative expenses			3.6						3.8						4.5						3.7
Depreciation and amortization			4.0						3.5						4.0						3.8
Impairments and disposal of assets, net			—						—						0.1						(0.2)
Total operating costs and expenses			87.0		%				87.4		%				89.1		%				89.3		%
Operating income			13.0						12.6						10.9						10.7
Interest, net			1.2						0.7						1.2						0.8
Earnings before income taxes			11.8						11.9						9.7						10.0
Income tax expense			1.3						1.6						1.1						1.3
Earnings from continuing operations			10.5		%				10.3		%				8.5		%				8.7		%

Quarter Ended February 25, 2024 Compared to Quarter Ended February 26, 2023

• 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.

• 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.

• 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.

• Marketing expenses increased as a percent of sales primarily due to increased marketing and media spend.

• 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.

• Depreciation and amortization expenses increased as a percent of sales primarily due to capital expenditures and the acquisition of Ruth’s Chris.

Nine months ended February 25, 2024 Compared to Nine Months Ended February 26, 2023

• 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.

• 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.

• 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.

• Marketing expenses increased as a percent of sales primarily due to increased marketing and media spend.

• 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.

• Depreciation and amortization expenses increased as a percent of sales primarily due to capital expenditures and the acquisition of Ruth’s Chris.

• 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.

INTEREST EXPENSE

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.

INCOME TAXES

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.

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.

LOSSES FROM DISCONTINUED OPERATIONS

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).

SEGMENT RESULTS

We manage our restaurant brands, Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, Ruth’s Chris, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s and The Capital Burger in North America as operating segments. We aggregate our operating segments into reportable segments based on a combination of the size, economic characteristics and sub-segment of full-service dining within which each brand operates. Our four reportable segments are: (1) Olive Garden, (2) LongHorn Steakhouse, (3) Fine Dining and (4) Other Business (see Note 7 to our unaudited consolidated financial statements in Part I, Item 1 of Form 10-Q).

Our management uses segment profit as the measure for assessing performance of our segments. The following table presents segment profit margin1 for the periods indicated.

						Three Months Ended																		Nine Months Ended
Segment						February 25, 2024						February 26, 2023						Change						February 25, 2024						February 26, 2023						Change
Olive Garden						22.5%						22.5%						— BPS						21.6%						20.2%						140 BPS
LongHorn Steakhouse						18.7%						17.4%						130 BPS						17.9%						15.7%						220 BPS
Fine Dining						21.8%						21.8%						— BPS						18.4%						19.4%						(100) BPS
Other Business						14.9%						14.0%						90 BPS						14.3%						13.2%						110 BPS
1 Segment profit margin calculated as (sales less costs of food & beverage, restaurant labor, restaurant expenses and marketing expenses) / sales.

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.

SEASONALITY

Our sales volumes fluctuate seasonally. Typically, our average sales per restaurant are highest in the winter and spring, followed by the summer, and lowest in the fall. Holidays, changes in the economy, severe weather, effects of other conditions may impact sales volumes seasonally in some operating regions. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

Typically, cash flows generated from operating activities are our principal source of liquidity, which we use to finance capital expenditures for new restaurants and to remodel and maintain existing restaurants, to pay dividends to our shareholders and to repurchase shares of our common stock. Since substantially all of our sales are for cash and cash equivalents, and accounts payable are generally paid in 5 to 90 days, we are typically able to carry current liabilities in excess of current assets.

We currently manage our business and financial ratios to target an investment-grade bond rating, which has historically allowed flexible access to financing at reasonable costs. Our publicly issued long-term debt currently carries the following ratings:

• Moody’s Investors Service “Baa2”;

• Standard & Poor’s “BBB”; and

• Fitch “BBB”.

Our commercial paper has ratings of:

• Moody’s Investors Service “P-2”;

• Standard & Poor’s “A-2”; and

• Fitch “F-2”.

These ratings are as of the date of the filing of this Form 10-Q and have been obtained with the understanding that Moody’s Investors Service, Standard & Poor’s and Fitch will continue to monitor our credit and make future adjustments to these ratings to the extent warranted. The ratings are not a recommendation to buy, sell or hold our securities, may be changed, superseded or withdrawn at any time and should be evaluated independently of any other rating.

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.

Loans under the Revolving Credit Agreement bear interest at a rate of (a) Term SOFR (which is defined, for the applicable interest period, as the Term SOFR Screen Rate two U.S. Government Securities Business Days prior to the commencement of such interest period with a term equivalent to such interest period) plus a Term SOFR adjustment of 0.10 percent plus the relevant margin determined by reference to a ratings-based pricing grid (Applicable Margin), or (b) the base rate (which is defined as the highest of the BOA prime rate, the Federal Funds rate plus 0.500 percent, and the Term SOFR plus 1.00 percent) plus the relevant Applicable Margin. Assuming a “BBB” equivalent credit rating level, the Applicable Margin under the Revolving Credit Agreement is 1.000 percent for Term SOFR loans and 0.000 percent for base rate loans.

The Revolving Credit Agreement matures on October 23, 2028, and the proceeds may be used for working capital and capital expenditures, the refinancing of certain indebtedness, certain acquisitions and general corporate purposes.

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.

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.

As of February 25, 2024, our outstanding long-term debt consisted principally of:

• $500.0 million of unsecured 3.850 percent senior notes due in May 2027;

• $500.0 million of unsecured 6.300 percent senior notes due in October 2033;

• $96.3 million of unsecured 6.000 percent senior notes due in August 2035;

• $42.8 million of unsecured 6.800 percent senior notes due in October 2037; and

• $300.0 million of unsecured 4.550 percent senior notes due in February 2048.

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.

Through our shelf registration statement on file with the SEC, depending on conditions prevailing in the public capital markets, we may from time to time issue equity securities or unsecured debt securities in one or more series, which may consist of notes, debentures or other evidences of indebtedness in one or more offerings.

From time to time, we or our affiliates, may repurchase our outstanding debt in privately negotiated transactions, open-market transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

From time to time we enter into interest rate derivative instruments. See Note 11 to our unaudited consolidated financial statements in Part I, Item 1 of this report, which is incorporated by reference.

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.

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.

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.

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.

We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, sales, costs or expenses, results of operations, liquidity, capital expenditures or capital resources.

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.

FINANCIAL CONDITION

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.

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.

CRITICAL ACCOUNTING ESTIMATES

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales, costs and expenses during the reporting period. Actual results could differ from those estimates. We have discussed the development, selection and disclosure of those estimates with the Audit Committee. Our critical accounting estimates have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023.

APPLICATION OF NEW ACCOUNTING STANDARDS

Information regarding application of new accounting standards is incorporated by reference from Note 1 to our unaudited consolidated financial statements in Part I, Item 1 of this report.

FORWARD-LOOKING STATEMENTS

Statements set forth in or incorporated into this report regarding the expected increase in the number of our restaurants and capital expenditures in fiscal 2024, projections for sales and all other statements 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 and are included, along with this statement, 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. In addition to the risks and uncertainties of ordinary business obligations, and those described in information incorporated into this report, the forward-looking statements contained in this report are subject to the risks and uncertainties described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended May 28, 2023 and in our Forms 10-Q (including this report), which are summarized as follows:

• A failure to address cost pressures, including rising costs for commodities, labor, health care and utilities used by our restaurants, and a failure to effectively deliver cost management activities and achieve economies of scale in purchasing;

• Economic and business factors and their impacts on the restaurant industry and general macroeconomic factors including unemployment, energy prices and interest rates;

• The inability to hire, train, reward and retain restaurant team members and determine and maintain adequate staffing;

• A failure to recruit, develop and retain effective leaders or the loss or shortage of personnel with key capacities and skills;

• Increases in labor and insurance costs;

• Health concerns arising from food-related pandemics, outbreaks of flu, viruses or other diseases;

• Failures to maintain food safety throughout the supply chain and food-borne illness concerns;

• Insufficient guest or employee facing technology or a failure to maintain a continuous or secure cyber network

• Increased costs related to compliance with privacy and data protection laws and government enforcement, litigation or adverse publicity relating to potential failures thereof;

• A failure to successfully integrate Ruth’s Chris Steak House operations into our business.

• Insufficient or ineffective response to legislation or government regulation may impact our cost structure, operational efficiencies and talent availability;

• Intense competition, or an insufficient focus on competition and the consumer landscape;

• Changes in consumer preferences that may adversely affect demand for food at our restaurants;

• An inability or failure to recognize, respond to and effectively manage the accelerated impact of social media;

• A failure to identify and execute innovative marketing and guest relationship tactics and ineffective or improper use of other marketing initiatives and increased advertising and marketing costs;

• Impacts of climate change, adverse weather conditions and natural disasters;

• The inability to cancel long-term, non-cancelable leases that we may want to cancel or the inability to renew the leases that we may want to extend at the end of their terms;

• Our inability or failure to execute a comprehensive business continuity plan following a major natural disaster such as a hurricane or manmade disaster, including terrorism;

• The impact of shortages, delay or interruptions in the delivery of food and other products from third-party vendors and suppliers;

• Our failure to drive both short-term and long-term profitable sales growth through brand relevance, operating excellence, opening new restaurants of existing brands and developing or acquiring new dining brands;

• A lack of suitable new restaurant locations or a decline in the quality of the locations of our current restaurants;

• Higher-than-anticipated costs or delays to open, close, relocate or remodel restaurants;

• Risks associated with doing business with franchisees and licensees;

• Risks associated with doing business with business partners and vendors in foreign markets;

• Volatility in the market value of derivatives we may use to hedge commodity and broader market prices;

• Volatility in the United States equity markets that may affect our ability to efficiently hedge exposures to our market risk related to equity-based compensation awards;

• Failure to protect our service marks or other intellectual property;

• Litigation, including allegations of illegal, unfair or inconsistent employment practices;

• Unfavorable publicity, or a failure to respond effectively to adverse publicity;

• Disruptions in the financial markets that may impact consumer spending patterns, affect the availability and cost of credit;

• Impairment of the carrying value of our goodwill or other intangible assets;

• Changes in tax laws or treaties and unanticipated tax liabilities; and

• A failure of our internal controls over financial reporting and future changes in accounting standards.

Any of the risks described above or elsewhere in this report or our other filings with the SEC could have a material impact on our business, financial condition or results of operations. It is not possible to predict or identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. Therefore, the above is not intended to be a complete discussion of all potential risks or uncertainties.