Bob Evans Reports Fiscal 2013 Second-Quarter Results
Bob Evans Reports Fiscal 2013 Second-Quarter Results
COLUMBUS, Ohio, Nov. 19, 2012 -
Bob Evans Restaurants’ net sales increase 1.4%; reports positive same-store sales of 1.0%. BEF Foods’ net sales increase 6.3%; volume up 16.1%
Company announces 2Q 2013 earnings per diluted share of $0.36; non-GAAP EPS, adjusted for restructuring and other items, is $0.53 for the quarter, up 12.8% from last year. Both results are reduced by approximately $2.0 million of unusual and Farm Fresh Refresh program expense items which equate to $0.05 per diluted share
Company to accelerate Farm Fresh Refresh restaurant remodeling program with 56% of the chain to be remodeled by the end of fiscal 2013, and all 565 restaurants to be completed by the end of fiscal 2014, one year earlier than the prior projection
Integration of Kettle Creations on schedule; a key component of BEF Foods’ strategy to aggressively grow its side dish business and internalize manufacturing capability; acquisition raises level of vertical integration from 55% to 82%
Company exploring strategic alternatives for its Mimi’s Cafe business segment
Company reaffirms fiscal year 2013 EPS guidance of $2.67 to $2.73. Board of Directors approves 27.5 cents per share dividend payable to shareholders of record as of November 26, 2012
Company raises long-term annual non-GAAP EPS growth guidance to 8 to 12 percent, from the previous guidance range of 7 to 10 percent
Bob Evans Farms, Inc (NASDAQ: BOBE) today announced its results for the fiscal 2013 second quarter ended Friday, October 26, 2012.
Second-quarter fiscal 2013 commentary
Chairman and Chief Executive Officer Steve Davis said the second-quarter operating results of the Company’s two Bob Evans-branded business segments, Bob Evans Restaurants and BEF Foods, reflect the positive impact of recent investments in growth and productivity initiatives designed to position the Company for continued sustainable revenue and profit growth in fiscal 2013 and beyond.
Davis noted, “Bob Evans Restaurants has generated positive same-store sales for three of the last four quarters based upon our guests’ favorable reactions to both the Farm Fresh Refresh remodeling program and our launch of value-oriented sales layers available at every day part. All of our sales layers - dine-in, carryout, bakery and catering - are contributing to both the revenue and margin lift we are generating through the Farm Fresh Refresh remodels. In response to consistently high returns on investment, positive guest feedback, and operating results, we are accelerating the rollout of the Farm Fresh Refresh program. We now expect to have the entire chain remodeled by the end of fiscal 2014, one year ahead of our original plan.
“BEF Foods is also performing well with positive volume gains in three of the last four quarters. Our high-growth refrigerated side dish business, up more than 12% during the second quarter, and food service business, up more than 44% during the second quarter, continue to drive revenue growth and enhance the margin structure of the business. The acquisition of the Kettle Creations® brand and manufacturing facility at the beginning of the second quarter raises the level of vertical integration within BEF Foods to 82%, and enables us to continue growing and innovating economically with side dish products to serve our retail and food service customers.”
Davis continued, “The sustainability and long-term growth potential of the transformations we have achieved in our core Bob Evans Restaurants and BEF Foods segments provide us with the confidence to raise our long-term annual non-GAAP EPS growth guidance to 8 to 12 percent, from the previous guidance range of 7 to 10 percent. Furthermore, the strategic fit and long-term growth potential of Mimi’s Cafe relative to our other businesses prompted us to initiate a process to evaluate our strategic alternatives for that segment, including but not limited to a potential sale. We have been working with our independent financial advisor, Lazard, to assist us in that process.”
Second-quarter fiscal 2013 consolidated results
The Company reported consolidated operating income of $16.8 million in the second quarter of fiscal 2013. The second-quarter results include the negative net pretax impact of $7.2 million, or $4.8 million after-tax, from the following items:
— $1.2 million in noncash charges for impairment of a non-operating
property in Bob Evans Restaurants that increased the SG&A line
— $0.3 million income for a gain on the sale of assets in Bob Evans
Restaurants that decreased the SG&A line
— $1.5 million in noncash charges for straight-line rent adjustments in
Mimi’s Cafe that increased the other operating expenses line
— $0.6 million in charges for strategic activities in Mimi’s Cafe that
increased the SG&A line
— $1.0 million in charges for merger and acquisition related costs in BEF
Foods that increased the SG&A line
— $3.2 million in charges for severance and retention payments in BEF
Foods that increased the SG&A line
Excluding the $7.2 million negative net impact of these charges, the Company’s second quarter fiscal 2013 reported operating income would have been approximately $24.0 million, or 5.8 percent of net sales.
Earnings per diluted share for the second quarter of fiscal 2013 were $0.36.. Excluding the net negative impact of the aforementioned charges, non-GAAP diluted earnings per share would have been $0.53. Both results were reduced by approximately $2.0 million of unusual and Farm Fresh Refresh program expense items, which equate to $0.05 per diluted share. These items are comprised of additional other operating expenses to support our Farm Fresh Refresh program; as well as several large unusual items, including a product recall in SG&A of the BEF Foods segment and accruals for lawsuits that impacted SG&A of both restaurant segments.
The Company reported consolidated operating income of $21.3 million in the second quarter of fiscal 2012. The second quarter fiscal 2012 results included a negative net pretax impact of $2.1 million, or $1.4 million after-tax, from the following items:
— $2.4 million primarily in fixed asset impairment charges and other
physical assets in Bob Evans Restaurants that increased the SG&A line
— $0.3 million in severance charges in Mimi’s Cafe that increased the SG&A
line
— $0.6 million net gain in the BEF Foods segment primarily related to the
sale of a distribution facility that decreased the SG&A line
Excluding the $2.1 million negative net impact of these charges, the Company’s second quarter fiscal 2012 reported operating income would have been approximately $23.4 million, or 5.8 percent of net sales.
Earnings per diluted share for the second quarter of fiscal 2012 were $0.42.. Excluding the net negative impact of the aforementioned charges, non-GAAP diluted earnings per share would have been $0.47.
During the second quarter of fiscal 2013, the effective tax rate recorded by the Company was 32.3%.
As a result of the items noted above, the Company uses non-GAAP financial measures excluding those items. These financial measures are used by management to monitor and evaluate the ongoing performance of the Company. The Company believes that the additional measures are useful to investors for financial analysis. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Please see the table in this release for a reconciliation of non-GAAP measures to GAAP results. Results in the following discussion are presented on a non-GAAP basis excluding the items noted above.
Second-quarter fiscal 2013 consolidated income statement summary
Below is a summary of the Company’s consolidated second-quarter fiscal 2013 income statement.
— Net sales - Consolidated net sales were $410.9 million in the second
quarter of fiscal 2013, a 0.9 percent increase, compared to $407.2
million in the second quarter of fiscal 2012. This growth was the result
of a net sales increase in the BEF Foods segment as well as new
restaurant and same-store sales increases at Bob Evans Restaurants,
partially offset by same-store sales declines at Mimi’s Cafe.
— Operating income - Consolidated non-GAAP operating income was $24.0
million, or 5.8% of net sales, in the second quarter of fiscal 2013,
compared to $23.4 million, or 5.8% of net sales, in the second quarter
of fiscal 2012. The improvement was due to strength at BEF Foods,
partially offset by incremental costs from investments at Bob Evans
Restaurants and same-store sales declines at Mimi’s Cafe.
— Net interest expense - The Company’s net interest expense was $1.5
million in the second quarter of fiscal 2013, compared to $2.0 million
in fiscal 2012. The decrease in net interest expense in the second
quarter of fiscal 2013 was a result of principal repayments on our
private placement debt, partially offset by interest on incremental
borrowings on our low-cost variable-rate revolving credit facility.
— Income taxes - The Company’s non-GAAP effective tax rate in the second
quarter of fiscal 2013 was 32.9 percent, compared to 34.1 percent in the
second quarter of fiscal 2012. The lower effective tax rate in fiscal
2013 reflects the impact of settlements with certain taxing authorities.
— Diluted weighted-average shares outstanding - The Company’s diluted
weighted-average shares outstanding were 28.5 million in the second
quarter of fiscal 2013, compared to 30.1 million in the second quarter
of fiscal 2012. The Company did not repurchase any shares in the second
quarter of fiscal 2013. The Company repurchased 877,417 shares for $26.6
million in the second quarter of fiscal 2012.
Second-quarter fiscal 2013 Bob Evans Restaurants segment summary
Bob Evans Restaurants’ fiscal 2013 second-quarter non-GAAP operating income was $20.7 million, or 8.4 percent of net sales, compared with $23.4 million, or 9.6 percent of net sales, last year. The primary drivers of the decrease in profitability were: $2.4 million of increases in SG&A due to higher costs associated with the Company’s 401k Plan and long-term incentives, incremental training costs along with the full year effect of unfilled headcount from the earlier part of last year, and incremental legal accruals; investments in restaurant supplies and pre-opening expenses for the Farm Fresh Refresh remodeling program; and $1.1 million in incremental depreciation primarily related to the remodel program. These items were partially offset by positive same-store sales of 1.0 percent and the beneficial sales effect of new restaurants.
When a restaurant is refreshed, it is closed for an average of five to seven days. During the second quarter the Company refreshed 45 restaurants (which we define as “transitional” restaurants) with a total of 290 closed restaurant days. During the second quarter of last year, the Company refreshed 31 restaurants with a total of 221 closed restaurant days. The Company refreshed 81 restaurants during the first half of fiscal 2013 with a total of 544 closed restaurant days. During the first half of fiscal 2012, the Company refreshed 33 restaurants with a total of 228 closed restaurant days. As part of the refresh process, the Company also incurs pre-opening expenses for training restaurant staff to operate the restaurant more efficiently and local marketing to support re-opening sales. A typical restaurant yields positive cumulative profit flow-through by the twelfth week to offset: the opportunity cost of lost sales due to closed restaurant days; initial operational inefficiencies; and pre-opening expenses.
Prior to the second quarter, 155 restaurants were completed. The refreshed restaurants are on-track to deliver the incremental five percent sales lift and 20 percent returns achieved in Dayton, Ohio, the Company’s first refresh market.
By the third quarter, our total Farm Fresh Refresh initiative is projected to reach critical mass. At that point, the cumulative profit contribution of the refreshed restaurants is expected to exceed the negative impact of closed restaurant days and pre-opening expenses in the transition markets; which supports the Company’s reaffirmation of its fiscal 2013 earnings per share guidance of $2.67 to $2.73. Further supporting the reaffirmation is year-over-year positive sales growth (on top of the initial first year post-remodel sales lift) in the Dayton, Ohio, market.
Net sales - Bob Evans Restaurants’ net sales were $246.3 million in the second quarter of fiscal 2013, compared with sales of $242.8 million in the corresponding period last year. The increase of approximately 1.4 percent was driven by the 1.0 percent increase in same-store sales, with the remainder coming from new restaurants. The second-quarter same-store sales increase of 1.0 percent exceeded the Midscale Family Style segment, according to The NPD Group’s SalesTrack Weekly.
Category SSS Restaurants Aug. Sept. Oct. 2Q FY ‘13 FY ‘13 YTD
- -————-————-
Bob Evans Family 552 1.5% -0.4% 1.6% 1.0% 1.0%
———— —- —- ———- —- —-
During the second quarter of fiscal 2013, Bob Evans Restaurants:
— Refreshed 45 restaurants.
— Did not open or rebuild any restaurants.
Cost of sales - Bob Evans Restaurants’ cost of sales was 23.8 percent of net sales in the second quarter of fiscal 2013, compared to 23.4 percent in the second quarter of fiscal 2012. The increase in cost of sales as a percent of net sales was due to commodity increases and mix, which were partially offset by menu pricing of approximately 1.9 percent, and ongoing efficiency initiatives, including the actual-versus-theoretical food cost program.
Operating wages - Bob Evans Restaurants’ cost of labor was 37.4 percent of net sales in the second quarter of fiscal 2013, compared to 37.9 percent of net sales in fiscal 2012. The decline in operating wages as a percent of net sales in the second quarter of fiscal 2013 was due primarily to sales leverage from improvement in same-store sales of 1.0 percent and labor efficiency initiatives.
Other operatingexpenses - Bob Evans Restaurants’ other operating expenses were 18.1 percent of net sales in the second quarter of fiscal 2013, compared to 18.0 percent of net sales in the second quarter of fiscal 2012. The increase resulted primarily from increases in expenditures related to the Farm Fresh Refresh remodeling program. Restaurant supply expenses increased approximately $0.6 million. Part of this increase was due to incremental maintenance spending during the refresh of the Columbus, Ohio, market, which is one of our oldest markets. We have subsequently value engineered the remodel program to minimize this incremental spend going forward, while maintaining the Farm Fresh Refresh program’s strong returns. Additionally, pre-opening expenses were up approximately $0.3 million as a result of increased remodels compared to last year. Both items are components of the $2.0 million, or $0.05 per diluted share, of unusual and Farm Fresh Refresh program expense items referenced above.
SG&A - Bob Evans Restaurants’ non-GAAP SG&A expenses were $17.3 million, or 7.0 percent of net sales, in the second quarter of fiscal 2013, compared with $15.0 million, or 6.2 percent of net sales, in the second quarter of fiscal 2012. The $2.4 million increase was due to higher costs associated with the Company’s 401k Plan and long-term incentives, incremental training costs along with the full year effect of unfilled headcount from the earlier part of last year, and incremental legal accruals. The legal accruals were a component of the $2.0 million, or $0.05 per diluted share, of unusual and Farm Fresh Refresh program expense items referenced above.
Second-quarter fiscal 2013 Mimi’s Cafe segment summary
Mimi’s Cafe’s second-quarter fiscal 2013 non-GAAP operating loss was $5.3 million, or 6.6 percent of net sales, compared to an operating loss of $3.4 million, or 3.9 percent of net sales, in the second quarter of fiscal 2012. The primary driver of the operating loss was the same-store sales decline in the second quarter of fiscal 2013.
Net sales - Mimi’s Cafe’s net sales were $81.3 million in the second quarter of fiscal 2013, down $4.7 million, compared to $86.1 million in the corresponding period last year. The decrease resulted from declines in same-store sales of 5.6 percent, which included 0.9 percent in average menu price increases. At Mimi’s Cafe, the same-store sales decline trailed the Knapp Track(TM) casual dining index of -0.1 percent for the same period.
Category SSS Restaurants Aug. Sept. Oct. 2Q FY ‘13 FY ‘13 YTD
- -————-————-
Mimi’s Cafe Casual 145 -6.8% -4.2% -5.8% -5.6% -4..4%
————— —-—————— —— ——
During the second quarter of fiscal 2013, Mimi’s Cafe remodeled one restaurant and did not open or rebuild any restaurants.
Cost of sales - Mimi’s Cafe’s cost of sales was 26.1 percent of net sales in the second quarter of fiscal 2013, compared to 26.7 percent in the second quarter of fiscal 2012. The decrease in cost of sales as a percent of net sales was due to food cost initiatives, ongoing efficiency initiatives including the actual-versus-theoretical food cost program and a new menu, which were partially offset by commodity increases.
Operating wages - Mimi’s Cafe’s cost of labor was 39.5 percent of net sales in the second quarter of fiscal 2013, compared to 38.6 percent in the second quarter of fiscal 2012. The increase in operating wages as a percent of net sales was due to deleverage from declines in same-store sales as well as incremental labor hired in anticipation of the significantly higher than average sales seasonality of the upcoming holiday period.
Other operatingexpenses - Mimi’s Cafe’s non-GAAP other operating expenses were $20.8 million, or 25.6 percent of net sales, in the second quarter of fiscal 2013, compared to $21.3 million, or 24.7 percent of net sales, in the second quarter of fiscal 2012. Reduced spending was driven by cost controls. The increase in other operating expenses as a percent of net sales was due to deleverage from declines in same-store sales.
SG&A - Mimi’s Cafe’s non-GAAP SG&A expenses were $6.8 million, or 8.4 percent of net sales, in the second quarter of fiscal 2013, compared to $6.1 million, or 7.0 percent of net sales, in the second quarter of fiscal 2012. The increase in SG&A was the result of incremental legal accruals and increases in corporate allocations driven by higher costs associated with the Company’s 401k Plan and long-term incentive compensation. The legal accruals were a component of the $2.0 million, or $0.05 per diluted share, of unusual and Farm Fresh Refresh program expense items referenced above.
Second-quarter fiscal 2013 BEF Foods segment summary
BEF Foods’ second-quarter fiscal 2013 non-GAAP operating income was $8.6 million, or 10.4 percent of net sales, in the second quarter of fiscal 2013, compared to $3.4 million, or 4.3 percent of net sales, in the corresponding period last year. The primary driver of the increase in operating income was an increase in total pounds sold of 16.1 percent and a 36.3 percent decline in sow costs.
The acquisition of Kettle Creations during the second quarter of this year, and the sale of the Company’s distribution facility located in Springfield, Ohio, to a third-party distributor during the second quarter of last year, impacted cost of sales, operating wages and other operating expenses. Prior to the acquisition of Kettle Creations, all costs were included in cost of sales. Subsequent to the acquisition, as an owned facility, labor costs are included in operating wages, reducing the cost of sales line and increasing operating wages as a result. Conversely, when Bob Evans sold the distribution facility, operating wages were effectively reclassified to other operating expenses.
Net sales - The BEF Foods segment’s second-quarter fiscal 2013 net sales were $83.3 million, an increase of 6.3 percent, compared to $78.3 million in the second quarter of fiscal 2012. Total pounds sold increased 16.1 percent.. Promotional discounts and other selling allowances are included as a reduction to net sales. Promotional discounts provided to retailers increased $4.3 million. The profit effect of increased discounts was offset by a $6.5 million decrease in sow costs.
Cost of sales - The BEF Foods segment’s second-quarter fiscal 2013 cost of sales was 47.4 percent of net sales, compared to 58.8 percent of net sales in the second quarter of fiscal 2012. The decrease was due primarily to the decline in sow costs as well as the impact of the Kettle Creations acquisition as discussed earlier.
Operating wages - The BEF Foods segment’s second-quarter fiscal 2013 cost of labor was 11.3 percent of net sales, compared to 9.2 percent of net sales in the second quarter of fiscal 2012. As noted above, the increase was primarily due to the Company’s acquisition of Kettle Creations and an increase in hourly wages to produce product for the high volume holiday season in the second quarter of fiscal 2013. Offsetting these increases was the impact of the sale of the warehouse facility as noted earlier.
Other operatingexpenses - The BEF Foods segment’s other operating expenses were 8.2 percent of net sales in the second quarter of fiscal 2013, compared to 5.4 percent of net sales in the second quarter of fiscal 2012. The cost increase was due to fees associated with the third-party distribution agreement related to the sale of the distribution center that occurred during the second quarter of fiscal 2012, and volume-related increases in hauling and freight expenses, partially offset by Lean manufacturing productivity initiatives. The fees associated with the third-party distribution agreement are now classified as other operating expenses as noted above.
SG&A - The BEF Foods segment’s non-GAAP SG&A expenses were 18.9 percent of net sales in the second quarter of fiscal 2013, compared to 19.2 percent of net sales in the second quarter of fiscal 2012. The improvement in costs resulted primarily from deferring some advertising costs until the third quarter, partially offset by approximately $0.4 million of costs associated with a product recall. The recall costs were a component of the $2.0 million, or $0.05 per diluted share, of unusual and Farm Fresh Refresh program expense items referenced above.
Board of Directors approves payment of quarterly dividend
The Company’s Board of Directors approved payment of the quarterly dividend at the current rate of 27.5 cents per share. The dividend is payable on December 10, 2012, to shareholders of record at the close of business on November 26, 2012.
Fiscal year 2013 and long-term outlook
The Company reaffirmed its fiscal 2013 earnings per share outlook of $2.67 to $2.73 non-GAAP earnings per diluted share. The Company also raised its long-term annual non-GAAP EPS growth guidance to 8 to 12 percent, from the previous guidance range of 7 to 10 percent. The long-term guidance was increased in response to the success the Company has achieved with the Farm Fresh Refresh remodeling program, sales layer growth, new restaurant openings, and the growth in the BEF Foods business segment coupled with the evaluation of strategic alternatives for Mimi’s Cafe.
This outlook relies on a number of important assumptions, including the risk factors discussed in the Company’s securities filings. Particular assumptions for the Company’s full-year outlook include the following:
Consolidated company highlights
— Net sales - approximately $1.7 billion.
— Depreciation and amortization - approximately $85 to $95 million.
— Net interest expense - approximately $8.0 to $9.0 million, down from
$9.5 to $10.5 million, to reflect the impact of lower priced revolver
debt.
— Effective tax rate - approximately 33.5 to 34.5 percent.
— Diluted weighted-average share count - approximately 28.2 million.
— Capital expenditures - approximately $130 to $150 million, down from
previous guidance of $150 to $160 million, reflecting the effect of the
Kettle Creations acquisition which reduced the need for planned internal
capital expenditures, the acceleration of the Farm Fresh Refresh
remodeling program, and the reduction of Bob Evans new restaurant
openings in fiscal 2013 from ten to two.
Bob Evans Restaurants segment
— Net sales: Full-year same-store sales in the 1.0 to 2.0 percent range,
driven by the sales lift from Farm Fresh Refresh remodels, new value
platforms, and increased marketing investment. The Company plans to
accelerate 45 incremental Farm Fresh Refresh remodels into fiscal 2013
and have the entire chain remodeled by the end of fiscal 2014, one year
ahead of the original schedule. Additional new restaurants, beyond the
two opened during the first quarter, will not be opened in fiscal 2013
to free up the human capital necessary to successfully complete the
remodels.
— Cost of sales: Commodity inflation at 1.0 to 2.0 percent, down from
previous guidance of 2.5 to 3.5 percent. Although volatility is
increasing, price increases are not expected at the level we originally
forecasted.
— Operating margins: 9.0 to 9.5 percent, down from previous guidance of
9.2 to 9.7 percent, reflecting incremental expenses, related to the Farm
Fresh Refresh remodeling program (which includes the previously noted
five to seven closed days, margin impact from start-up operational
inefficiencies, and pre-opening expenses, all of which impact each
remodeled restaurant) and legal accruals.
The Companynow expects pre-opening expenses related to Farm Fresh Refresh remodel activity to increase $1.5 million compared to the prior year. Fiscal year 2013 pre-opening expenses are expected to be relatively flat to last year due to the reduction of new restaurants in fiscal 2013 from ten to two, in favor of accelerating the Farm Fresh Refresh remodeling program. The Company refrains from refreshing restaurants during the peak seasonality period during the calendar year-end holidays. The Company expects to refresh 114 restaurants during the second half of fiscal 2013, compared with 54 during the second half of fiscal 2012.
Mimi’s Cafe segment
— Net sales: Full-year same-store sales in the -4.0 to -1.0 percent range,
down from previous guidance of -2.0 to 1.0 percent, reflecting softness
in second quarter sales trends.
— Cost of sales: Commodity inflation at 1.0 to 2.0 percent, down from
previous guidance of 2.5 to 3.5 percent.
— Operating margins: -1.5 to 0.0 percent, down from previous guidance of
0.5 to 1.5 percent, reflecting the top line softness noted above.
The Company plans to remodel threeMimi’s Cafe restaurants at a total cost of approximately $1 million, but does not plan to build new Mimi’s Cafe restaurants during fiscal 2013.
BEF Foods segment
— Net sales: Overall net sales of $330 million to $350 million, unchanged
from previous guidance.
— Cost of sales: Based on recent cost trends, and liquidations in the herd
as a result of the drought, average sow costs of approximately $55 to
$60 per hundredweight for the full year, up from previous guidance of
$45 to $55 per hundredweight. Historically, in situations like this, sow
prices decline initially, and then increase rapidly when demand and
supply rebalance. During November, sow costs have been in the upper
$50’s to lower $60’s range.
— Operating margins: 9.5 to 11.0 percent, compared to previous guidance of
9.0 to 11.0 percent, as a result of volume leverage, cost of sales
favorability, and the benefit of the Kettle Creations acquisition.
On May 29, 2012, the Company announced its intention to close two BEF Foods’ production plants in the second quarter of fiscal 2014. Partial realization of the pretax benefits, amounting to an estimated $4 to $5 million, will commence in fiscal 2014. The Company anticipates a total annual ongoing pretax benefit of approximately $7 to $8 million beginning in fiscal 2015.
The Company, consistent with its commitment to enhance shareholder value, is exploring a range of strategic alternatives for the Mimi’s Cafe business segment, including but not limited to a potential sale of the business or its assets. In order to assist the Company in evaluating strategic alternatives, including discussions with third parties, the Company is utilizing Lazard, its independent financial advisor. While there have been confidential discussions with third parties, the Company cannot assure any outcome of this process.
Company to host conference call on Tuesday, November 20, 2012
The Company will host a conference call to discuss its second-quarter fiscal 2013 results at 10 a.m. (ET) on Tuesday, November 20, 2012. The dial-in number is (800) 690-3108, access code 41608034. A replay will be available at (800) 585-8367, access code 41608034.
To access the simultaneous webcast, go to http://www.bobevans.com/ir. The archived webcast will also be available on the Web site.
About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans and Mimi’s Cafe brand names. At the end of the second fiscal quarter (October 26, 2012), Bob Evans owned and operated 565 family restaurants in 19 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States, while Mimi’s Cafe owned and operated 145 casual restaurants located in 24 states, primarily in California and other western states. Bob Evans Farms, Inc. is also a leading producer and distributor of pork sausage and a variety of complementary convenience food items under the Bob Evans and Owens brand names. For more information about Bob Evans Farms, Inc., visit http://www.bobevans.com.
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 27, 2012, 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. 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.
Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Fiscal 2013 - Quarter 2
Note: amounts are in thousands, except per share amounts
Second quarter (Q2), ended Oct. 26, 2012, compared to the corresponding period a year ago:
Three Months Ended Six Months Ended
Oct 26, 2012 Oct 28, 2011 Oct 26, 2012 Oct 28, 2011
——- ——- ——- ——-
Operating Income as Reported
Bob Evans Restaurants $19,781 $21,031 $37,811 $43,976
Mimi’s Cafe (7,507) (3,673) (8,356) (4,766)
BEF Foods 4,483 3,972 12,566 9,615
Total Operating Income 16,757 21,330 42,021 48,825
Adjustments
Bob Evans Restaurants
Impairment 1,227 2,806 1,227 2,806
Severance/Restructuring 13 - 797 -
Gain on Sale of Assets (327) (407) (197) (407)
Total Bob Evans Restaurants Adjustments 913 2,399 1,827 2,399
Mimi’s Cafe
Severance/Restructuring 619 287 619 287
Leases 1,541 - 1,541 -
Total Mimi’s Cafe Adjustments 2,160 287 2,160 287
BEF Foods
Impairment - 87 - 87
Severance/Restructuring 3,185 - 3,945 -
Merger and Acquisition Related Costs 955 - 1,399 -
Gain on Sale of Assets (3) (689) (5) (689)
Total BEF Foods Adjustments 4,137 (602) 5,339 (602)
Total Adjustments
Impairment 1,227 2,893 1,227 2,893
Severance/Restructuring 3,817 287 5,361 287
Merger and Acquisition Related Costs 955 - 1,399 -
Gain on Sale of Assets (330) (1,096) (202) (1,096)
Leases 1,541 - 1,541 -
7,210 2,084 9,326 2,084
Adjusted Operating Income
Bob Evans Restaurants 20,694 23,430 39,638 46,375
Mimi’s Cafe (5,347) (3,386) (6,196) (4,479)
BEF Foods 8,620 3,370 17,905 9,013
Total Adjusted Operating Income $23,967 $23,414 $51,347 $50,909
======= ======= ======= =======
Consolidated Bob Evans Restaurants
Three Months Ended Three Months Ended
Oct 26, 2012 % of Sales Oct 28, 2011 % of Sales Oct 26, 2012 % of Sales Oct 28, 2011 % of Sales
——- —- ——- —- ——- —- ——- —-
Operating Income as Reported
Net Sales $410,877 $407,185 $246,302 $242,803
Cost of Sales 119,292 29.0% 125,842 30.9% 58,625 23.8% 56,831 23.4%
Operating Wages 133,606 32.5% 132,424 32.5% 92,079 37.4% 91,929 37.9%
Other Operating 73,711 17.9% 69,185 17.0% 44,562 18.1% 43,703 18.0%
SG&A 45,539 11.1% 38,165 9.4% 18,251 7.4% 17,382 7.2%
Depr & Amort 21,972 5.3% 20,239 5.0% 13,004 5.3% 11,927 4.9%
Total as Reported 16,757 4.1% 21,330 5.2% 19,781 8.0% 21,031 8.7%
Adjustments
Other Operating (1,541) - - -
SG&A (5,669) (2,084) (913) (2,399)
Total Adjustments 7,210 2,084 913 2,399
Adjusted Operating Income
Net Sales 410,877 407,185 246,302 242,803
Cost of Sales 119,292 29.0% 125,842 30.9% 58,625 23.8% 56,831 23.4%
Operating Wages 133,606 32.5% 132,424 32.5% 92,079 37.4% 91,929 37.9%
Other Operating 72,170 17.6% 69,185 17.0% 44,562 18.1% 43,703 18.0%
SG&A 39,870 9.7% 36,081 8.9% 17,338 7.0% 14,983 6.2%
Depr & Amort 21,972 5.3% 20,239 5.0% 13,004 5.3% 11,927 4.9%
Total Adjusted Operating Income 23,967 5.8% 23,414 5.8% 20,694 8.4% 23,430 9.6%
Net Interest Expense 1,473 1,985
——- ——-
Income Before Income Taxes as
Reported 15,284 19,345
Adjustments 7,210 2,084
——- ——-
Adjusted Income Before Income Taxes 22,494 21,429
Provision for Income Taxes as
Reported 4,942 6,598
Income Tax Effect of Adjustment 2,451 711
——- —-
Adjusted Provision for Income Taxes 7,393 7,309
Net Income as Reported 10,342 12,747
Adjustments 4,759 1,373
——- ——-
Adjusted Net Income 15,101 14,120
Earnings Per Share
Basic as Reported 0.36 0.42
Adjustments 0.17 0.05
—— ——
Adjusted Basic 0.53 0.47
Diluted as Reported 0.36 0.42
Adjustments 0.17 0.05
—— ——
Adjusted Diluted 0.53 0.47
Average Shares Outstanding
Basic 28,398 30,090
Diluted 28,536 30,141
Mimi’s Cafe BEF Foods
Three Months Ended Three Months Ended
Oct 26 2012 % of Sales Oct 28, 2011 % of Sales Oct 26 2012 % of Sales Oct 28, 2011 % of Sales
—— —- ——- —- —— —- ——- —-
Operating Income as
Reported
Net Sales $81,322 $86,070 $83,253 $78,312
Cost of Sales 21,228 26.1% 22,994 26.7% 39,440 47.4% 46,018 58.8%
Operating Wages 32,136 39.5% 33,252 38.6% 9,392 11.3% 7,243 9.2%
Other Operating 22,339 27.5% 21,257 24.7% 6,810 8.2% 4,225 5.4%
SG&A 7,413 9.1% 6,354 7.4% 19,873 23.9% 14,429 18.4%
Depr & Amort 5,713 7.0% 5,886 6.8% 3,255 3.9% 2,425 3.1%
Total as Reported (7,507) -9.2% (3,673) -4.3% 4,483 5.4% 3,972 5.1%
Adjustments
Other Operating (1,541) - - -
SG&A (619) (287) (4,137) 602
Total Adjustments 2,160 287 4,137 (602)
Adjusted Operating Income
Net Sales 81,322 86,070 83,253 78,312
Cost of Sales 21,228 26.1% 22,994 26.7% 39,440 47.4% 46,018 58.8%
Operating Wages 32,136 39.5% 33,252 38.6% 9,392 11.3% 7,243 9.2%
Other Operating 20,798 25.6% 21,257 24.7% 6,810 8.2% 4,225 5.4%
SG&A 6,794 8.4% 6,067 7.0% 15,736 18.9% 15,031 19.2%
Depr & Amort 5,713 7.0% 5,886 6.8% 3,255 3.9% 2,425 3.1%
Total Adjusted Operating
(Loss) Income (5,347) -6.6% (3,386) -3.9% 8,620 10.4% 3,370 4.3%
====== ====== ===== =====
Consolidated Bob Evans Restaurants
Six Months Ended Six Months Ended
Oct 26, 2012 % of Sales Oct 28, 2011 % of Sales Oct 26, 2012 % of Sales Oct 28, 2011 % of Sales
——- —- ——- —- ——- —- ——- —-
Operating Income as Reported
Net Sales $820,592 $812,545 $494,268 $486,588
Cost of Sales 240,076 29.3% 246,929 30.4% 118,101 23.9% 114,702 23.6%
Operating Wages 266,319 32.5% 265,847 32.7% 185,457 37.5% 185,022 38.0%
Other Operating 145,218 17.7% 136,436 16.8% 90,311 18.3% 85,916 17.7%
SG&A 83,975 10.2% 73,890 9.1% 36,694 7.4% 32,666 6.7%
Depr & Amort 42,983 5.2% 40,618 5.0% 25,894 5.2% 24,306 5.0%
Total as Reported 42,021 5.1% 48,825 6.0% 37,811 7.6% 43,976 9.0%
Adjustments
Other Operating (1,541) - - -
SG&A (7,785) (2,084) (1,827) (2,399)
Total Adjustments 9,326 2,084 1,827 2,399
Adjusted Operating Income
Net Sales 820,592 812,545 494,268 486,588
Cost of Sales 240,076 29.3% 246,929 30.4% 118,101 23.9% 114,702 23.6%
Operating Wages 266,319 32.5% 265,847 32.7% 185,457 37.5% 185,022 38.0%
Other Operating 143,677 17.5% 136,436 16.8% 90,311 18.3% 85,916 17.7%
SG&A 76,190 9.3% 71,806 8.8% 34,867 7.1% 30,267 6.2%
Depr & Amort 42,983 5.2% 40,618 5.0% 25,894 5.2% 24,306 5.0%
Total Adjusted Operating Income 51,347 6.3% 50,909 6.3% 39,638 8.0% 46,375 9.5%
Net Interest Expense 3,529 4,096
——- ——-
Income Before Income Taxes as
Reported 38,492 44,729
Adjustments 9,326 2,084
——- ——-
Adjusted Income Before Income Taxes 47,818 46,813
Provision for Income Taxes as
Reported 13,142 14,170
Income Tax Effect of Adjustment 3,170 711
——- —-
Adjusted Provision for Income Taxes 16,312 14,881
Net Income as Reported 25,350 30,559
Adjustments 6,156 1,373
——- ——-
Adjusted Net Income 31,506 31,932
Earnings Per Share
Basic as Reported 0.90 1.01
Adjustments 0.22 0.05
—— ——
Adjusted Basic 1.11 1.06
Diluted as Reported 0.89 1.01
Adjustments 0.22 0.05
—— ——
Adjusted Diluted 1.11 1.06
Average Shares Outstanding
Basic 28,307 30,204
Diluted 28,449 30,290
Mimi’s Cafe BEF Foods
Six Months Ended Six Months Ended
Oct 26, 2012 % of Sales Oct 28, 2011 % of Sales Oct 26, 2012 % of Sales Oct 28, 2011 % of Sales
——- —- ——- —- ——- —- ——- —-
Operating Income as
Reported
Net Sales $167,596 $175,437 $158,728 $150,520
Cost of Sales 44,258 26.4% 46,952 26.8% 77,717 49.0% 85,276 56.7%
Operating Wages 64,240 38.3% 66,328 37.8% 16,623 10.5% 14,498 9.6%
Other Operating 42,179 25.2% 41,766 23.8% 12,728 8.0% 8,754 5.8%
SG&A 13,805 8.2% 13,372 7.6% 33,475 21.1% 27,850 18.5%
Depr & Amort 11,470 6.8% 11,785 6.7% 5,619 3.5% 4,527 3.0%
Total as Reported (8,356) -5.0% (4,766) -2.7% 12,566 7.9% 9,615 6.4%
Adjustments
Other Operating (1,541) - - -
SG&A (619) (287) (5,339) 602
Total Adjustments 2,160 287 5,339 (602)
Adjusted Operating Income
Net Sales 167,596 175,437 158,728 150,520
Cost of Sales 44,258 26.4% 46,952 26.8% 77,717 49.0% 85,276 56.7%
Operating Wages 64,240 38.3% 66,328 37.8% 16,623 10.5% 14,498 9.6%
Other Operating 40,638 24.2% 41,766 23.8% 12,728 8.0% 8,754 5.8%
SG&A 13,186 7.9% 13,085 7.5% 28,136 17.7% 28,452 18.9%
Depr & Amort 11,470 6.8% 11,785 6.7% 5,619 3.5% 4,527 3.0%
Total Adjusted Operating
Income (6,196) -3.7% (4,479) -2.6% 17,905 11.3% 9,013 6.0%
Consolidated Results
———
Three Months Ended
Oct. 26, 2012 % of sales Oct. 28, 2011 % of sales
——— —- ——— —-
Net sales $410,877 $407,185
Cost of sales 119,292 29.0% 125,842 30.9%
Operating wages 133,606 32.5% 132,424 32.5%
Other operating 73,711 17.9% 69,185 17.0%
S,G&A 45,539 11.1% 38,165 9.4%
Depr. & Amort. 21,972 5.3% 20,239 5.0%
——— —- ——— —-
Operating income 16,757 4.1% 21,330 5.2%
Interest 1,473 0.4% 1,985 0.5%
——- —- ——- —-
Pre-tax income 15,284 3.7% 19,345 4.7%
Income Taxes 4,942 1.2% 6,598 1.6%
——- —- ——- —-
Net Income $10,342 2.5% $12,747 3.1%
EPS - basic $0.36 $0.42
EPS - diluted $0.36 $0.42
Dividends paid per share:
$0.28 $0.25
Weighted average shares outstanding:
Basic 28,398 30,090
Dilutive stock options 138 51
—- —-
Diluted 28,536 30,141
Shares outstanding at
quarter end: 28,100 29,615
Income taxes, as a percentage of pre-tax income, were 32.3% vs. 34.1%
Segment Results
-
Three Months Ended
Bob Evans Restaurants Mimi’s Cafe BEF Foods
—
Oct. 26, 2012 Oct. 28, 2011 Oct. 26, 2012 Oct. 28, 2011 Oct. 26, 2012 Oct. 28, 2011
——— ————————— ——— ———
Net sales $246,302 $242,803 $81,322 $86,070 $83,253 $78,312
Cost of sales 23.8% 23.4% 26.1% 26.7% 47.4% 58.8%
Operating wages 37.4% 37.9% 39.5% 38.6% 11.3% 9.2%
Other operating 18.1% 18.0% 27.5% 24.7% 8.2% 5.4%
S,G&A 7.4% 7.2% 9.1% 7.4% 23.9% 18.4%
Depr. & Amort. 5.3% 4.9% 7.0% 6.8% 3.9% 3.1%
Operating income 8.0% 8.7% -9.2% -4.3% 5.4% 5.1%
Consolidated Results
———
Six Months Ended
Oct. 26, 2012 % of sales Oct. 28, 2011 % of sales
——— —- ——— —-
Net sales $820,592 $812,545
Cost of sales 240,076 29.3% 246,929 30.4%
Operating wages 266,319 32.5% 265,847 32.7%
Other operating 145,218 17.7% 136,436 16.8%
S,G&A 83,975 10.2% 73,890 9.1%
Depr. & Amort. 42,983 5.2% 40,618 5.0%
——— —- ——— —-
Operating income 42,021 5.1% 48,825 6.0%
Interest 3,529 0.4% 4,096 0.5%
——- —- ——- —-
Pre-tax income 38,492 4.7% 44,729 5.5%
Income Taxes 13,142 1.6% 14,170 1.7%
——— —- ——— —-
Net Income $25,350 3.1% $30,559 3.8%
EPS - basic $0.90 $1.01
EPS - diluted $0.89 $1.01
Dividends paid per share:
$0.53 $0.45
Weighted average shares outstanding:
Basic 28,307 30,204
Dilutive stock options 142 86
—- —-
Diluted 28,449 30,290
Shares outstanding at
quarter end: 28,100 29,615
Income taxes, as a percentage of pre-tax income, were 34.1% vs.31.7%
Segment Results
-
Six Months Ended
Bob Evans Restaurants Mimi’s Cafe BEF Foods
———
Oct. 26, 2012 Oct. 28, 2011 Oct. 26, 2012 Oct. 28, 2011 Oct. 26, 2012 Oct. 28, 2011
——— ———————————— ———
Net sales $494,268 $486,588 $167,596 $175,437 $158,728 $150,520
Cost of sales 23.9% 23.6% 26.4% 26.8% 49.0% 56.7%
Operating wages 37.5% 38.0% 38.3% 37.8% 10.5% 9.6%
Other operating 18.3% 17.7% 25.2% 23.8% 8.0% 5.8%
S,G&A 7.4% 6.7% 8.2% 7.6% 21.1% 18.5%
Depr. & Amort. 5.2% 5.0% 6.8% 6.7% 3.5% 3.0%
—- —- —- —- —- —-
Operating income 7.6% 9.0% -5.0% -2.7% 7.9% 6.4%