Bob Evans Reports Fiscal 2016 First-Quarter Results, Raises Fiscal Year 2016 Guidance and Will Pursue $200 Million Sale-Leaseback of Restaurant Properties

  • Q1 2016 net sales total $321.7 million.  GAAP net income of $0.19 per diluted share.  Non-GAAP net Income(1) of $0.51 per diluted share  

  • Company increases fiscal year 2016 non-GAAP diluted EPS guidance range to $1.85 to $2.00
     
  • Bob Evans Restaurants reports 21 percent increase in Q1 2016 non-GAAP operating income, compared to the corresponding period last year
     
  • BEF Foods reports 327 percent increase in Q1 2016 non-GAAP operating income, compared to the corresponding period last year
     
  • Board authorizes pursuit of a $200 million sale-leaseback transaction for a select portion of its restaurant properties
     
  • Company repurchased $60.6 million (1.3 million shares) during Q1 2016, expects to complete the remainder of the current $150 million repurchase authorization during the balance of fiscal 2016
     
  • Quarterly dividend of $0.31 per share payable on September 21, 2015, to stockholders of record at the close of business on September 7, 2015

 

NEW ALBANY, Ohio, Sept. 01, 2015 (GLOBE NEWSWIRE) — Bob Evans Farms, Inc. (NASDAQ:BOBE) today announced its financial results for the fiscal 2016 first quarter ended Friday, July 24, 2015.  On a GAAP basis, the Company reported net income of $4.3 million, or $0.19 per diluted share, compared with a net loss of $1.0 million, or $0.04 per diluted share, in the corresponding period last year.  On an adjusted basis(1), non-GAAP net income was $11.7 million, or $0.51 per diluted share, compared with net income of $2.3 million, or $0.10 per diluted share, in the corresponding period last year.  

Please note, the Company has added a “Corporate and Other” category to its financial reporting to separate corporate and other costs from direct business segment costs.  The Company believes this reporting view to be more in-line with how management measures results of operations and allocates resources.

First quarter fiscal 2016 commentary 

Executive Chairman Doug Benham said, “Our teams remain laser-focused on continuous improvement in both of our businesses and execution of our strategic initiatives.  BEF Foods is achieving promising results.  At Bob Evan’s Restaurants, we are implementing our strategy of improving the quality of our food offerings; significantly lowering discounting that was historically utilized to drive transactions; and optimizing our investments in labor to deliver a better guest experience.  We are continuing our CEO search as the CEO Search Committee of the Board of Directors remains engaged in a thoughtful and thorough process to identify and appoint the right chief executive to lead the Company forward.”

Chief Financial Officer Mark Hood said, “We continued to make progress in the improvement of Bob Evans Farms’ operating performance during the first quarter of fiscal 2016.  The improvement continues to be led by BEF Foods which posted strong operating results for the third consecutive quarter.  We also saw improvement in Bob Evans Restaurants’ operating performance during the quarter.  Although same-store sales declined by 0.3 percent, sales were more profitable.

 “We remain focused on executing our turnaround plan, and our priorities continue to be:

  1. improve the brand experience for our restaurant guests and grocery customers;
  2. profitably increase sales in our restaurants, and increase points of distribution of our consumer food products;
  3. reduce costs, particularly at the corporate level; and
  4. allocate capital efficiently.

“At Bob Evans Restaurants, non-GAAP operating income increased 21 percent, to $20.3 million, as our strategic initiatives resulted in significantly lower discounting and improved food costs.  Additionally, spending discipline resulted in lower costs in most expense categories.  We are excited to have launched our “Best in Class Breakfast” initiative in the second quarter and to continue the efforts begun in the first quarter to target our marketing more effectively to drive transactions and to serve our guests more efficiently.”

Hood continued, “We have completed our review of alternatives concerning a transaction for our owned restaurant properties and determined, along with our external advisors, that given our current business and market conditions, a sale-leaseback transaction of up to $200 million is the most appropriate path to further enhance shareholder value.  We would anticipate net proceeds of $165 to $170 million from such a transaction.  The sale-leaseback of the restaurant properties would be in addition to the previously announced pursuit of a sale-leaseback of our headquarters building and select industrial properties for which we expect net proceeds of $85 to $90 million.  We expect to use net proceeds from these transactions to pay down debt and repurchase shares while maintaining a prudent adjusted leverage level.  Approval of such sale-leaseback transaction(s) remains subject to final Board approval, amendment of our credit agreement, and other normal conditions of closing.  The Company cannot guarantee if and when the transaction(s) will be completed, but expects to complete such transaction(s) in the second half of fiscal 2016.”

President, BEF Foods, Mike Townsley said, “At BEF Foods non-GAAP operating income more than quadrupled to $15.9 million as we benefitted from lower sow costs combined with a 14.6 percent increase in branded retail volume, which more than offset the 42.6 percent decline in foodservice volume.  Foodservice volume declined as planned this quarter as we continue to replace lower-margin volume in that business with higher-margin branded retail volume.  Lower average net selling prices due to increased trade spending of $5.6 million resulted in a 3.7 percent decline in net sales.  We are on track with our key initiatives in fiscal 2016 and are excited about the second quarter launch of our new natural line of refrigerated side dish products in select markets.”

First-quarter fiscal 2016 Bob Evans Restaurants segment summary
Bob Evans Restaurants’ net sales were $238.7 million, a decline of $1.5 million, or 0.6 percent, compared to net sales of $240.2 million in the corresponding period last year.  Same-store sales declined 0.3 percent in the quarter, below the national Knapp-Track™ family dining index increase of 2.5 percent.  Bob Evans closed 18 restaurants during the first quarter. 

 

Same-Store Sales (SSS) Restaurants

 

May

 

June

 

July

 

1Q  FY ’16

542   -0.2 %   -0.9 %   0.3 %   -0.3 %

Bob Evans Restaurants’ GAAP operating income was $9.8 million, compared to GAAP operating income of $14.9 million in the corresponding period last year.  First-quarter fiscal 2016 GAAP operating income includes $10.5 million of costs for expected settlement of legal matters; see attached schedules for a reconciliation of GAAP to non-GAAP operating income.  Bob Evans Restaurants’ non-GAAP operating income was $20.3 million; an increase of $3.5 million compared to $16.8 million in the year ago period.  Approximately $0.5 million of sales deleverage was offset by a combination of a $1.4 million decline in food cost rate resulting from lower discounting, favorable commodity costs, and sales mix increase of breakfast items; a $1.2 million increase in labor and benefit cost rates driven primarily by an increase in average wage rates and incentive compensation, partially offset by a reduction of direct labor hours; a $2.4 million decline in other operating expenses driven by reduced occupancy costs, marketing costs (timing), and utility costs; a $0.7 million decline in S,G&A costs due to cost savings initiatives partially offset by higher performance-based compensation expense; and a $0.8 million decline in depreciation expense due in part to the closure of 18 restaurants.  

First-quarter fiscal 2016 BEF Foods segment summary
BEF Foods’ net sales were $83.0 million, a decrease of $3.1 million, or 3.7 percent, compared to net sales of $86.2 million in the corresponding period last year. Overall, total pounds sold increased 0.4 percent compared to the prior year period.  From a net sales perspective, a 17.2 percent increase in side-dish volume and a 14.8 percent increase in sausage volume were offset by a $5.6 million increase in trade spending (reduces net sales) to reflect current market conditions including sow costs, as well as a 42.6 percent decline in foodservice volume.  

BEF Foods’ GAAP operating income was $15.9 million, compared to GAAP operating income of $3.0 million in the year ago period.  BEF Foods’ non-GAAP operating income was $15.9 million, compared to $3.7 million in the prior year, an improvement of $12.1 million.  Approximately $1.0 million of deleverage from lower net sales driven by the increase in trade spending and a decline in foodservice volume previously discussed, was offset by a combination of $14.2 million in cost of goods sold favorability resulting from $9.9 million of lower sow costs, improved production yields, and an increased sales mix of retail items.  The favorability was partially offset by a $0.3 million increase in labor and benefit cost rates; $0.4 million of higher operating expenses due to increased advertising expenditures; and a $0.3 million increase in S,G&A expenses due to increased performance-based compensation expense, partially offset by cost savings initiatives.

First-quarter fiscal 2016 Corporate and Other summary
Corporate and Other’s GAAP operating costs were $17.4 million, compared to GAAP operating costs of $17.9 million in the year ago period.  Corporate and Other’s non-GAAP operating costs were $17.4 million, compared to $15.4 million in the prior year, an increase of $2.0 million due to $1.2 million of increased S,G&A costs associated primarily with higher performance-based compensation expense, partially offset by cost savings initiatives, and $0.8 million resulting from increased depreciation expense related primarily to ERP capital expenditures.

First-quarter fiscal 2016 net interest expense – The Company’s net interest expense was $2.6 million in the first quarter, an increase of $0.5 million, compared to $2.1 million in the corresponding period last year.  The borrowing rate on the Company’s outstanding debt was 1.94 percent at the end of the first quarter, compared to 1.91 percent at the end of the comparable prior year period.   

First-quarter fiscal 2016 taxes – The Company’s provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items.  The Company recognized GAAP tax expense of 24.3 percent for the first quarter of fiscal 2016, as compared to a 34.5 percent benefit for the prior year period.  The decrease in the tax rate was primarily driven by discrete items booked in the first quarter related to interest received on refunds for amended returns filed, uncertain tax positions, and equity compensation, as well as the impact of yearly variances in the forecasted annual rate related to wage credits, officers’ life insurance, and the domestic productions activities deduction.  For non-GAAP items, the tax rate was 28 percent, reflecting the Company’s annual non-GAAP estimated tax rate.

First-quarter fiscal 2016 balance sheet highlights – The Company’s cash balance and revolver borrowings at the end of the first quarter of fiscal 2016 were $6.1 million and $487.7 million, respectively, compared to $3.6 million and $458.8 million, respectively, in the prior year.  The Company was in compliance with its debt covenants at the end of the first quarter.  The increase in borrowings was primarily the result of the Company’s $60.6 million share repurchase activity during the first quarter, partially offset by increased net income, lower capital expenditures, and other changes in operating cash flow.  The Company’s leverage ratio as defined in its credit agreement was 3.22 at the end of the quarter, down from 3.37 in the prior quarter.

Fiscal year 2016 outlook
Chief Financial Officer Mark Hood said, “As first quarter earnings performance exceeded our expectations, we are raising our fiscal 2016 diluted EPS guidance range to $1.85 to $2.00, from $1.75 to $1.95.  We remain focused on executing our turnaround plans and improving operating efficiencies where we now expect to achieve $17 million of cost savings in fiscal 2016, an additional $3 million over our prior estimate.  However, our guidance remains cautious as a result of commodity headwinds associated with avian influenza, continued efforts to reduce restaurant discounts while growing transactions, and general economic conditions, including volatility in financial markets.  Our guidance includes the estimated impact of the previously announced pursuit of a sale-leaseback of our headquarters building and select industrial properties, but does not include the impact of a potential restaurant real estate transaction.  Our guidance also includes increased marketing investments in the second and third fiscal quarters, incentive compensation at targeted levels, higher interest costs, and a higher effective tax rate relative to the prior year.”

Summary of performance drivers:  fiscal 2016 guidance versus fiscal 2015

 

 

 

1Q (actual)

 

2Q

 

3Q

 

4Q 


Full

Year
sss% 2016 (guidance)   -0.3 % flat to low-
single digits
low-single
digits
low-single
digits
1.0% to
2.0%
sss% 2015 (actual)   -2.0 %   0.0 %   3.8 %   2.1 %   0.9 %
sow costs (per hundredweight) 2016 (guidance) $ 38.75   $ 52   $ 55   $ 62   $ 52  
sow costs (per hundredweight) 2015 (actual) $ 87.87   $ 78.82   $ 67.79   $ 43.02   $ 69.41  

 

Guidance Metric FY ‘16
Consolidated net sales $1.33 to $1.39 billion
Bob Evans Restaurants same-store sales 1.0% to 2.0%
Bob Evans Restaurants commodity pricing approximately 5% (including eggs)
BEF Foods net sales $373 to $383 million
Capital expenditures $78 to $82 million
ERP implementation (included in S,G&A) $2.5 to $3.5 million
Depreciation and amortization $82 to $86 million
Net interest expense $12.5 to $13.5 million
Tax rate 27.5%  to 28.5%
Diluted weighted-average share count 22.0 million shares
Non-GAAP earnings per diluted share $1.85 to $2.00
   

This outlook is subject to a number of factors beyond the Company’s control, including the risk factors discussed in the Company’s fiscal 2015 Annual Report on Form 10‑K and its other subsequent filings with the Securities and Exchange Commission. 

Investor Conference Call
The Company will host a conference call to discuss its first-quarter fiscal 2016 results at 10 a.m. (ET) on Wednesday, September 2, 2015. The dial-in number is (855) 468-0551, access code 83140551. A replay will be available at (800) 585-8367, access code 83140551.

A simultaneous webcast will be available at http://investors.bobevans.com/events.cfm. The archived webcast will also be available on the Web site.

(1)Non-GAAP Financial Measures
The Company uses non-GAAP financial measures to monitor and evaluate the ongoing performance of the Company.  The Company believes the additional measures are useful to investors for financial analysis.  Excluding these items reflects operating results that are more indicative of the Company’s ongoing operating performance and improve comparability to prior periods.  However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures.  Reconciliations to the applicable GAAP financial measures are included in the attached schedules. 

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain statements in this news release that are not historical facts are forward-looking statements. Forward-looking statements involve various important assumptions, risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events. We discuss these factors and events, along with certain other risks, uncertainties and assumptions, under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 24, 2015, and in our other filings with the Securities and Exchange Commission. We note these factors for investors as contemplated by the Private Securities Litigation Reform Act of 1995. Predicting or identifying all such risk factors is impossible. Consequently, investors should not consider any such list to be a complete set of all potential risks and uncertainties.  Any strategic transaction with respect to our headquarters, our BEF Foods Facilities or a portion of our restaurant real estate remains subject to evaluation by the Board and there can be no assurance if and when any such transaction will be undertaken or consummated.  Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect circumstances or events that occur after the date of the statement to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to us or any person acting on behalf of the Company are qualified by the cautionary statements in this section.

About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name.  At the end of the first fiscal quarter (July 24, 2015), Bob Evans Restaurants owned and operated 549 family restaurants in 19 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods segment, is also a leading producer and distributor of refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food items under the Bob Evans and Owens brand names.  For more information about Bob Evans Farms, Inc., visit www.bobevans.com

 
BOBE–E 


Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
First quarter Fiscal 2016, three months ended July 24, 2015, compared to the corresponding period a year ago:
 
(in thousands, except per share amounts)         Basic EPS   Diluted EPS
  Three Months Ended   Three Months Ended   Three Months Ended
  July 24, 2015   July 25, 2014   July 24, 2015   July 25, 2014   July 24, 2015   July 25, 2014
Operating Income (Loss) as Reported                      
Bob Evans Restaurants $ 9,796     $ 14,927                  
BEF Foods 15,851     3,045                  
Corporate and Other (17,385 )   (17,908 )                
Total operating income from continuing operations 8,262     64                  
Net interest expense 2,606     1,616                  
Per-tax Income (loss) from continuing operations 5,656     (1,552 )                
Provision (Benefit) for income taxes 1,376     (536 )                
Net Income (Loss) as reported 4,280     (1,016 )   $ 0.19     $ (0.04 )   $ 0.19     $ (0.04 )
                       
Adjustments                      
Bob Evans Restaurants                      
Impairments including  from Assets Held for Sale     1,577                  
Severance/Restructuring     91                  
Activism, Strategic Initiatives and Other     163                  
Litigation Reserves 10,500                      
  10,500     1,831                  
                       
BEF Foods                      
Severance/Restructuring     666                  
      666                  
                       
Corporate and Other                      
Severance/Restructuring     192                  
Loss on Sale of Assets     117                  
Activism, Strategic Initiatives and Other     2,226                  
      2,535                  
Total adjustments                      
Impairments including  from Assets Held for Sale     1,577                  
Severance/Restructuring     949                  
Loss on Sale of Assets     117                  
Activism, Strategic Initiatives and Other     2,389                  
Litigation Reserves 10,500                      
  10,500     5,032                  
                       
Non-GAAP operating income                      
Bob Evans Restaurants 20,296     16,758                  
BEF Foods 15,851     3,711                  
Corporate and Other (17,385 )   (15,373 )                
Total non-GAAP operating income 18,762     5,096                  
Adjustments to net interest expense     445                  
Non-GAAP net interest expense 2,606     2,061                  
Non-GAAP pre-tax income before taxes 16,156     3,035                  
Adjustments to income tax provision 3,076     1,259                  
Non-GAAP income tax provision 4,452     723                  
Non-GAAP net income $ 11,704     $ 2,312     $ 0.51     $ 0.10     $ 0.51     $ 0.10  
                       
Weighted Average Shares Outstanding         22,733     23,535     22,881     23,677  

  

First quarter Fiscal 2016, three months ended July 24, 2015, compared to the corresponding period a year ago:
     
(in thousands)   Three Months Ended
    Consolidated Results   Bob Evans Restaurants
    July 24, 2015   % of Sales   July 25, 2014   % of Sales   July 24, 2015   % of Sales   July 25, 2014   % of Sales
Operating income as reported                                
                                 
Net Sales   $ 321,713         $ 326,341         $ 238,669         $ 240,151      
Cost of sales   96,322     29.9 %   114,168     35.0 %   61,469     25.8 %   63,211     26.3 %
Operating wage and fringe benefit expenses   104,959     32.6 %   104,429     32.0 %   95,465     40.0 %   94,840     39.5 %
Other operating expenses   51,589     16.0 %   53,714     16.5 %   39,935     16.7 %   42,505     17.7 %
Selling, general and administrative expenses   40,428     12.6 %   32,416     9.9 %   18,524     7.8 %   8,855     3.7 %
Depreciation and amortization expense   20,153     6.3 %   19,973     6.1 %   13,480     5.6 %   14,236     5.9 %
Impairments       %   1,577     0.5 %       %   1,577     0.7 %
Total as reported   8,262     2.6 %   64     %   9,796     4.1 %   14,927     6.2 %
                                 
Adjustments                                
                                 
Net Sales                                
Cost of sales                                
Operating wage and fringe benefit expenses           (14 )               (14 )    
Other operating expenses           (149 )               (149 )    
Selling, general and administrative expenses   (10,500 )       (3,292 )       (10,500 )       (91 )    
Depreciation and amortization expense                                
Impairments           (1,577 )               (1,577 )    
Total Adjustments   10,500         5,032         10,500         1,831      
                                 
Non-GAAP operating income                                
                                 
Net Sales   321,713         326,341         238,669         240,151      
Cost of sales   96,322     29.9 %   114,168     35.0 %   61,469     25.8 %   63,211     26.3 %
Operating wage and fringe benefit expenses   104,959     32.6 %   104,415     32.0 %   95,465     40.0 %   94,826     39.5 %
Other operating expenses   51,589     16.0 %   53,565     16.4 %   39,935     16.7 %   42,356     17.7 %
Selling, general and administrative expenses   29,928     9.4 %   29,124     8.9 %   8,024     3.4 %   8,764     3.6 %
Depreciation and amortization expense   20,153     6.3 %   19,973     6.1 %   13,480     5.6 %   14,236     5.9 %
Impairments       %       %       %       %
Total non-GAAP operating income   $ 18,762     5.8 %   $ 5,096     1.6 %   $ 20,296     8.5 %   $ 16,758     7.0 %

  

(in thousands) Three Months Ended
  BEF Foods   Corporate and Other
  July 24,
2015
  % of
Sales
  July 25,
2014
  % of
Sales
  July 24,
2015
    July 25,
2014
Operating income as reported                        
                         
Net Sales $ 83,044         $ 86,190         $       $  
Cost of sales 34,853     42.0 %   50,957     59.1 %          
Operating wage and fringe benefit expenses 9,494     11.4 %   9,589     11.1 %          
Other operating expenses 11,654     14.0 %   11,209     13.0 %          
Selling, general and administrative expenses 6,795     8.2 %   7,114     8.3 %   15,109       16,447  
Depreciation and amortization expense 4,397     5.3 %   4,276     5.0 %   2,276       1,461  
Impairments     %       %          
Total as Reported 15,851     19.1 %   3,045     3.5 %   (17,385 )     (17,908 )
                         
Adjustments                        
                         
Net Sales                        
Cost of sales                        
Operating wage and fringe benefit expenses                        
Other operating expenses                        
Selling, general and administrative expenses         (666 )             (2,535 )
Depreciation and amortization expense                        
Impairments                        
Total adjustments         666               2,535  
                         
Non-GAAP operating income                        
                         
Net Sales 83,044         86,190                
Cost of sales 34,853     42.0 %   50,957     59.1 %          
Operating wage and fringe benefit expenses 9,494     11.4 %   9,589     11.1 %          
Other operating expenses 11,654     14.0 %   11,209     13.0 %          
Selling, general and administrative expenses 6,795     8.2 %   6,448     7.5 %   15,109       13,912  
Depreciation and amortization expense 4,397     5.3 %   4,276     5.0 %   2,276       1,461  
Impairments     %       %          
Total non-GAAP operating income $ 15,851     19.1 %   $ 3,711     4.3 %   $ (17,385 )     $ (15,373 )

 

(in thousands, except per share amounts) Consolidated Results
  Three Months Ended
  July 24, 2015   % of sales   July 25, 2014   % of sales
          (as adjusted)   (as adjusted)
Net sales $ 321,713         $ 326,341      
Cost of sales 96,322       29.9 %   114,168       35.0 %
Operating wage and fringe benefit expenses 104,959       32.6 %   104,429       32.0 %
Other operating expenses 51,589       16.0 %   53,714       16.5 %
Selling, general and administrative expenses 40,428       12.6 %   32,416       9.9 %
Depreciation and amortization expense 20,153       6.3 %   19,973       6.1 %
Impairments     —%   1,577       0.5 %
Operating Income 8,262       2.6 %   64     —%
Net interest expense 2,606       0.8 %   1,616       0.5 %
Income (Loss) Before Income Taxes 5,656       1.8 %   (1,552 )     (0.5 )%
Provision (Benefit) for income taxes 1,376       0.4 %   (536 )     (0.2 )%
Net Income (Loss) $ 4,280       1.3 %   $ (1,016 )     (0.3 )%
               
Earnings (Loss) per share              
Basic $ 0.19         $ (0.04 )    
Diluted $ 0.19         $ (0.04 )    
               
Cash dividends paid per share $ 0.31         $ 0.31      
               
Weighted average shares outstanding              
Basic 22,733         23,535      
Dilutive Shares 148              
Diluted 22,881         23,535      
               
Shares outstanding at quarter end 22,352         23,328      

The number of dilutive shares that were not included in the computation of dilutive earnings per share, because to do so would have been antidilutive, were 205,144 shares for the three months ended July 24, 2015.

Income taxes as a percentage of pre-tax income were 24.3% for the three months ended July 24, 2015 and a 34.5% benefit for the three months ended July 25, 2014.

(in thousands) Three Months Ended
  Bob Evans Restaurants   BEF Foods
  July 24, 2015   July 25, 2014   July 24, 2015   July 25, 2014
Net sales $ 238,669         $ 240,151         $ 83,044         $ 86,190      
Cost of sales 61,469     25.8 %   63,211     26.3 %   34,853     42.0 %   50,957     59.1 %
Operating wage and fringe benefit expenses 95,465     40.0 %   94,840     39.5 %   9,494     11.4 %   9,589     11.1 %
Other operating expenses 39,935     16.7 %   42,505     17.7 %   11,654     14.0 %   11,209     13.0 %
Selling, general and administrative expenses 18,524     7.8 %   8,855     3.7 %   6,795     8.2 %   7,114     8.3 %
Depreciation and amortization expense 13,480     5.6 %   14,236     5.9 %   4,397     5.3 %   4,276     5.0 %
Impairments     %   1,577     0.7 %       %       %
Operating income $ 9,796     4.1 %   $ 14,927     6.2 %   $ 15,851     19.1 %   $ 3,045     3.5 %

  

(in thousands) Three Months Ended
  Corporate and Other
  July 24, 2015   July 25, 2014
Net sales $     $  
Cost of sales      
Operating wage and fringe benefit expenses      
Other operating expenses      
Selling, general and administrative expenses 15,109     16,447  
Depreciation and amortization expense 2,276     1,461  
Impairments      
Operating loss $ (17,385 )   $ (17,908 )

 

Consolidated Balance Sheets

(in thousands, except par value amounts) Unaudited
July 24, 2015
  April 24, 2015
Assets
Current Assets    
Cash and equivalents $ 6,064     $ 6,358  
Accounts receivable, net 25,436     26,100  
Inventories 26,715     24,620  
Deferred income taxes 16,117     16,117  
Federal and state income taxes receivable 14,766     23,722  
Prepaid expenses and other current assets 6,083     5,035  
Current assets held for sale 21,371     22,243  
Total Current Assets 116,552     124,195  
Property, Plant and Equipment 1,598,566     1,588,966  
Less accumulated depreciation 776,541     757,488  
Net Property, Plant and Equipment 822,025     831,478  
Other Assets      
Deposits and other 5,144     3,756  
Notes receivable 19,154     18,544  
Rabbi trust assets 32,133     32,302  
Goodwill and other intangible assets 19,947     19,986  
Non-current deferred tax assets 2,326     2,326  
Total Other Assets 78,704     76,914  
Total Assets $ 1,017,281     $ 1,032,587  
Liabilities and Stockholders’ Equity
Current Liabilities      
Current portion of long-term debt $ 413     $ 409  
Accounts payable 37,745     30,019  
Accrued property, plant and equipment purchases 3,241     4,820  
Accrued non-income taxes 15,513     14,951  
Accrued wages and related liabilities 22,478     34,529  
Self-insurance reserves 21,292     18,900  
Deferred gift card revenue 12,529     13,714  
Current reserve for uncertain tax provision 1,594     1,594  
Other accrued expenses 42,854     34,156  
Total Current Liabilities 157,659     153,092  
Long-Term Liabilities      
Deferred compensation 19,653     22,481  
Reserve for uncertain tax positions 2,746     2,767  
Deferred income taxes 17,825     17,825  
Deferred rent and other 5,826     5,755  
Credit facility borrowings and other long term debt 490,644     450,676  
Total Long-Term Liabilities 536,694     499,504  
Stockholders’ Equity      
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at July 24, 2015, and April 24, 2015 426     426  
Capital in excess of par value 238,714     235,958  
Retained earnings 833,490     836,362  
Treasury stock, 20,286 shares at July 24, 2015, and 19,231 shares at April 24, 2015, at cost (749,702 )   (692,755 )
Total Stockholders’ Equity 322,928     379,991  
Total Liabilities and Stockholders’ Equity $ 1,017,281     $ 1,032,587  

 

Consolidated Statements of Cash Flows (unaudited)

(in thousands) Three Months Ended
  July 24, 2015   July 25, 2014
Operating activities:      
Net income (Loss) $ 4,280     $ (1,016 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization 20,153     19,973  
Impairments     1,577  
Gain on disposal of fixed assets (701 )   (139 )
Loss (Gain) on long-term investments 169     (958 )
(Gain) Loss Deferred compensation (138 )   1,452  
Share based compensation 2,048     850  
Accretion on long-term note receivable (499 )   (445 )
Amortization of deferred financing costs 418     147  
Cash provided by (used for) assets and liabilities:      
Accounts receivable 664     1,842  
Inventories (2,095 )   1,788  
Prepaid expenses and other current assets (1,048 )   (1,949 )
Accounts payable 7,726     (423 )
Federal and state income taxes 8,935     3,615  
Accrued wages and related liabilities (7,160 )   (2,413 )
Self-insurance 2,392     (507 )
Accrued non-income taxes 562     (405 )
Deferred revenue (1,185 )   (1,231 )
Other assets and liabilities 5,624     (2,499 )
Net cash provided by operating activities 40,145     19,259  
Investing activities:      
Purchase of property, plant and equipment (12,264 )   (16,702 )
Proceeds from sale of property, plant and equipment 1,597     338  
Deposits and other (98 )   (243 )
Net cash used in investing activities (10,765 )   (16,607 )
Financing activities:      
Cash dividends paid (7,028 )   (7,224 )
Gross proceeds from credit facility borrowings and other long-term debt 170,739     97,159  
Gross repayments of credit facility borrowings and other long-term debt (130,768 )   (94,288 )
Payments of debt issuance costs (1,705 )   (1,279 )
Purchase of treasury stock (60,564 )    
Proceeds from share-based compensation 165     197  
Cash paid for taxes on share-based compensation (617 )   (1,675 )
Excess tax benefits from stock-based compensation 104     257  
Net cash used in financing activities (29,674 )   (6,853 )
Net decrease in cash and equivalents (294 )   (4,201 )
Cash and equivalents at the beginning of the period 6,358     7,826  
Cash and equivalents at the end of the period $ 6,064     $ 3,625  

Summary of Operating Efficiency Savings Fiscal 2016 to date – (July 24, 2015) 

(in millions) Consolidated   Bob Evans
Restaurants
  BEF Foods   Corporate and
Other
S,G&A              
Wage-Related $ 2.7    $ 1.0    $ 0.3    $ 1.4 
Non Wage-Related 0.4    0.2    —    0.2 
Total S,G&A 3.1    1.2   0.3    1.6 
               
Non-S,G&A              
Wage-Related 0.1    —    0.1    — 
Non Wage-Related 0.3    —    0.3    — 
Total Non-S,G&A 0.4       0.4     
               
Grand Total $ 3.5    $ 1.2    $ 0.7    $ 1.6 


Bob Evans Restaurants openings and closings, by quarter

Fiscal
Year
  Beginning
Total
  Q1   Q2*   Q3*   Q4*   Full Year   Closings*   Ending
Total
2016   567    —    —      —      20    548 
2015   561                  567 
2014   560                561 
2013   565      —    —    —        560 
2012   563    —      —          565 

 *Includes estimate for remaining quarters in fiscal 2016

  

Bob Evans Same-Store Sales Day Part Performance

First-quarter Fiscal 2016 SSS% Day Part Performance – Total Chain
Day Part   On-Premises   Off-Premises   Total
Breakfast       (0.7 )%       8.3 %       0.5  %
Lunch       (0.7 )%       7.8 %       1.0  %
Dinner       (5.8 )%       8.5 %       (2.5 )%
Total       (2.2 )%       13.9 %       (0.3 )%
             
First-quarter Fiscal 2016 SSS% Day Part Performance – Restaurants offering Broasted Chicken
Day Part   On-Premises   Off-Premises   Total
Breakfast       (1.4 )%       2.4 %       (0.1 )%
Lunch       (0.5 )%       10.0 %       1.4  %
Dinner       (3.4 )%       7.4 %       0.7  %
Total       (1.7 )%       15.2 %       0.7  %
             
First-quarter Fiscal 2016 SSS% Day Part Performance – Restaurants without Broasted Chicken
Day Part   On-Premises   Off-Premises   Total
Breakfast       —%       17.5 %       1.1  %
Lunch       (1.0 )%       18.3 %       0.6  %
Dinner       (8.8 )%       5.0 %       (7.0 )%
Total       (2.8 )%       12.4 %       (1.4 )%

 

Bob Evans Restaurants key restaurant sales data

  Bob Evans Restaurants
Average annual store sales ($) – FY15 $ 1,720,000  
   
Q1 FY2016 day part mix (%):  
Breakfast    33 %
Lunch    36 %
Dinner    31 %
   
Q1 FY2016 dine-in check average per guest ($):  
Breakfast $ 9.32  
Lunch $ 9.71  
Dinner $ 9.89  
   
Q1 FY2016 dine-in check average per guest ($): $ 9.62  
Q1 FY2016 dine-in check average per ticket ($): $ 18.93  
Q1 FY2016 carry-out check average per ticket ($): $ 14.50  

 


BEF Foods historical sow cost review (average cost per hundredweight)

Fiscal Year   Q1   Q2   Q3   Q4   Average
2016   $ 38.75                 $ 38.75  
2015   $ 87.87     $ 78.82     $ 67.79     $ 43.02     $ 69.41  
2014   $ 63.24     $ 77.33     $ 72.36     $ 78.47     $ 73.23  
2013   $ 54.19     $ 43.22     $ 58.73     $ 59.07     $ 53.87  
2012   $ 57.06     $ 67.82     $ 60.56     $ 60.41     $ 61.58  
                     
BEF Foods total pounds sold review                
                     
Fiscal Year   Q1   Q2   Q3   Q4   Average
2016   0.4 %               0.4 %
2015   (6.1 )%   (4.5 )%   5.5 %   0.9 %   (0.9 )%
2014   13.0 %   0.2 %   (11.1 )%   (6.9 )%   (2.4 )%
2013   7.2 %   16.1 %   13.1 %   21.4 %   14.6 %
2012   (2.7 )%   3.1 %   0.9 %   (1.3 )%   0.1 %
                     
BEF Foods total pounds sold, by category            
                     
Fiscal 2016                    
                     
Category   Q1   Q2   Q3   Q4    
Sausage   22.0 %                
Sides   49.6 %                
Food Service – External   14.1 %                
Food Service – Intersegment   6.2 %                
Frozen   4.6 %                
Other   3.5 %                
                     
Fiscal 2015                    
                     
Category   Q1   Q2   Q3   Q4    
Sausage   19.3 %   20.5 %   26.2 %   23.7 %    
Sides   42.5 %   46.9 %   48.0 %   49.8 %    
Food Service – External   24.0 %   18.0 %   12.8 %   11.8 %    
Food Service – Intersegment   6.0 %   6.0 %   5.5 %   5.8 %    
Frozen   4.6 %   5.0 %   4.1 %   4.8 %    
Other   3.6 %   3.6 %   3.4 %   4.1 %    

 

BEF Foods net sales review (dollars in thousands)

 

  Q1 2016   Q1 2015
Gross sales $ 97,797     $ 94,870  
Less: promotions 12,853     7,600  
Less: discounts 1,274     806  
Less: returns and slotting 626     274  
Net sales $ 83,044     $ 86,190  

CONTACT: Contact:         
Scott C. Taggart
Vice President, Investor Relations
(614) 492-4954

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