Bob Evans Farms, Inc.
Mar 8, 2017

Bob Evans Reports Fiscal 2017 Third-Quarter Results; Raises Fiscal Year 2017 Guidance

(1) On January 24, 2017, the Company entered into a definitive agreement with an affiliate of Golden Gate Capital ("GGC") pursuant to which the Company agreed to sell its Bob Evans Restaurants business.   The results of operations of Bob Evans Restaurants ("BER") have been treated as discontinued operations and all GAAP financial statement items for the current and prior periods reflect BER as a discontinued business.   All costs not directly attributable to BER remain in continuing operations.  Assets being sold in the transaction include all assets associated with BER as well as our corporate headquarters.  All assets being sold and liabilities being assumed by GGC are classified as held for sale on the Company's consolidated balance sheet.

Adjusted or non-GAAP results presented herein include both continuing and discontinued operations and exclude special items for comparability.  Descriptions of measures excluding special items are provided in non-GAAP financial measures and reconciliations of such non-GAAP measures to the most comparable GAAP measures are provided in the tables at the end of this release.

(2) The Company is unable to provide GAAP EPS guidance at this time as the Company cannot reliably forecast the timing and magnitude of the gain on the sale of BER, the amount of non-cash costs associated with acceleration of stock based compensation awards and other restructuring, impairment and acquisition and divestiture related costs that may occur, and the income tax effects of these items.

NEW ALBANY, Ohio, March 08, 2017 (GLOBE NEWSWIRE) -- Bob Evans Farms, Inc. (NASDAQ:BOBE) today announced its financial results for the fiscal 2017 third quarter ended Friday, January 27, 2017.  On a GAAP basis, the Company reported net income of $8.2 million, or $0.41 per diluted share, compared with net income of $12.9 million, or $0.62 per diluted share, in the corresponding period last year.  Non-GAAP net income was $15.0 million, or $0.75 per diluted share, compared with net income of $12.9 million, or $0.62 per diluted share, in the corresponding period last year.

Third-quarter fiscal 2017 commentary
President and Chief Executive Officer Saed Mohseni said, "BEF Foods achieved year-over-year market share and pounds sold growth in its key product categories and distribution channels.  Retail channel pounds sold increased nearly 8 percent, with retail side-dish and sausage gains of approximately 13 percent and 3 percent, respectively, driving market share gains in core and national markets.  Food service sales were likewise strong with 19 percent year-over-year pounds sold growth.  We expect completion of our acquisition of Pineland Farms Potato Company by May 1, 2017, and look forward to its contribution to continued sales and profit growth of BEF Foods during fiscal year 2018 and beyond.

"As we said on January 24, 2017, when we announced the upcoming sale of Bob Evans Restaurants and the acquisition of Pineland Farms Potato Company, these transactions represent the beginning of a new era at Bob Evans Farms in which the Company will focus on realizing the full potential of its BEF Foods business.  We are progressing as expected with the sale of Bob Evans Restaurants to Golden Gate Capital, and expect to complete the transaction at the end of the fourth quarter.  The new Bob Evans Farms, further strengthened by the manufacturing and intellectual capital of Pineland Farms Potato Company, is positioned to be a higher profit and higher growth company that is expected to provide better returns to shareholders and an enhanced array of products for a growing national customer base."

Third-quarter fiscal 2017 summary - continuing operations
Net sales from continuing operations were $112.8 million, an increase of $4.9 million, or 4.6 percent, compared to $107.9 million in the corresponding period last year.  Pounds sold increased 7.6 percent while average net selling price per pound declined 2.8 percent compared to the corresponding period last year.  The decline in average net selling price reflects an increased sales mix of lower-priced, although higher-margin, side-dish products relative to sausage, as well as reduced net sausage pricing.  From a net sales perspective, a 13.1 percent increase in side-dish pounds sold, a 2.8 percent increase in sausage pounds sold, and a 6.1 percent increase in external food service pounds sold were partially offset by a $1.6 million increase in trade spending (reduces net sales), and a 4.3 percent decline in frozen product pounds sold compared to the corresponding period last year.

GAAP operating income from continuing operations was $17.1 million, compared to $11.4 million last year.  Non-GAAP operating income from continuing operations was $19.5 million, compared to $11.4 million in the corresponding period last year, an improvement of $8.1 million.  The improvement was due primarily to the aforementioned increase in pounds sold, the favorable sales mix of higher-margin side dish items, lower SG&A costs, and $1.2 million of lower net sow costs; partially offset by increased advertising expense, and increased freight expense resulting from increased pounds sold.  SG&A expenses totaling $5.8 million ($17.2 million year-to-date), previously identified as "corporate and other" costs, are now included within continuing operations.  Of these costs, $2.0 million ($5.8 million year-to-date) represent costs primarily related to wages and benefits for terminated employees that will no longer be in the Company's expense base in fiscal 2018.

Third-quarter fiscal 2017 summary - discontinued operations
The Company has classified the results of operations, impairment charges and separation costs related to BER as discontinued operations.

Net sales from discontinued operations were $223.1 million, a decline of $15.5 million, or 6.5 percent, compared to net sales of $238.6 million in the corresponding period last year. Same-store sales declined 2.6 percent with the balance of the net sales decline due to net restaurant closures during the past year. No restaurants were closed and one restaurant opened during the quarter.  The Company operated 523 restaurants at the end of the quarter.

  Same-Store Sales (SSS)  
Restaurants
  November    December    January    Q3  FY '17  
521-1.2%-6.7%0.0%-2.6%

GAAP pretax loss from discontinued operations was $4.6 million, compared to GAAP pretax income from discontinued operations of $6.6 million last year.  Non-GAAP pretax income from discontinued operations was $2.5 million, compared to $6.6 million last year, a decline of $4.1 million.  The decline in non-GAAP pretax income from discontinued operations was due to lower sales and increased hourly wage rates and investment in labor hours to support efforts to improve guest hospitality; partially offset by lower commodity costs, lower healthcare costs and reduced discounting.

Third-quarter fiscal 2017 net interest expense - GAAP and non-GAAP net interest expense from continuing operations was $2.1 million in the third quarter, a decline of $0.3 million, compared to $2.4 million in the corresponding period last year.  The borrowing rate on the Company's outstanding debt was 2.52 percent at the end of the third quarter, compared to 2.18 percent for the prior year period.  All borrowings are included in continuing operations; interest related to the headquarters mortgage is included within discontinued operations.

Third-quarter fiscal 2017 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 for continuing operations of 34.3 percent for the third quarter of fiscal 2017, as compared to 29.2 percent for the prior year period. The change in the tax rate was driven primarily by the yearly variances in the forecasted annual tax rate related to officer's life insurance and the domestic productions activities deduction.  Year-to-date, the Company recognized GAAP tax expense for continuing operations of 34.3 percent, compared to 31.0 percent for the prior year.  For non-GAAP items, the tax rate was 37.7 percent for continuing operations, reflecting the Company's non-GAAP annual estimated tax rate adjusted for the impact of third quarter discrete items.  Year-to-date, the Company's non-GAAP estimated tax rate for continuing operations adjusted for the impact of discrete items was 35.4 percent.  Discontinued operations are presented net of income tax expense or benefit.

Third-quarter fiscal 2017 balance sheet highlights - The Company's cash balance and outstanding debt at the end of the quarter were $2.4 million and $330.1 million, respectively, compared to $6.3 million and $496.0 million at the end of the corresponding period last year.  The Company was in compliance with its debt covenants at the end of the quarter.  The decrease in borrowings was primarily the result of the use of proceeds from recent real estate monetization transactions and operating cash flow to reduce debt, partially offset by share repurchases, capital expenditures, and dividend payments.  On a pro-forma basis, assuming the 2016 sale-leaseback transactions occurred at the beginning of fiscal 2016, the Company's quarter-end leverage ratio was 2.66.

Fiscal year 2017 outlook
Chief Administrative and Chief Financial Officer Mark Hood said, "We have raised our consolidated non-GAAP diluted earnings per share range to $2.22 to $2.32, from $2.15 to $2.30 per share previously, to reflect the impact of lower net sow costs and continued focus on operating efficiency.   We are unable to provide GAAP EPS guidance at this time as the Company cannot reliably forecast the timing and magnitude of the gain on the sale of BER, the amount of non-cash costs associated with acceleration of stock based compensation awards and other restructuring, impairment and acquisition and divestiture related costs that may occur, and the income tax effects of these items.  Remaining guidance items are presented for continuing operations.  The sale of BER, acquisition of Pineland Farms Potato Company, and establishment of our new credit facility remain on-track for completion."

Guidance Metric  FY ‘17
BEF Foods net sales  $390 to $410 million
BEF Foods sow cost (per hundredweight)  $41-$44
Capital expenditures - continuing operations  $30 to $35 million
Depreciation and amortization - continuing operations  $28 to $30 million
Net interest expense  $9 to $10 million (excluding mortgage interest included in discontinued operations)
Non-GAAP Tax rate - continuing operations  35% to 36%
Diluted weighted-average share count  approximately 20 million shares
Share repurchase authorization   $100 million
Non-GAAP diluted earnings per share  - consolidated  $2.22 to $2.32

This outlook is subject to a number of factors beyond the Company's control, including the risk factors discussed in the Company's fiscal 2016 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 third-quarter fiscal 2017 results at 8:30 a.m. (ET) on Wednesday, March 8, 2017.  The dial-in number for the conference call is (855) 468-0551, access code 69455358.  A replay will be available at (800) 585-8367, access code 69455358.

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

(3)Non-GAAP Financial Measures
Our non-GAAP measures are used by analysts, investors and other interested parties to compare our performance with the performance of other companies that report similar non-GAAP measures. We believe these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of core business operating results. We believe the non-GAAP measures, when viewed in conjunction with U.S. GAAP results and the accompanying reconciliations, enhance the comparability of results against prior periods and allow for greater transparency of financial results and business outlook. In addition, we use non-GAAP data internally to assess performance and facilitate management's internal comparison of our financial performance to that of prior periods, as well as trend analysis for budgeting and planning purposes. The presentation of our non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Furthermore, our non-GAAP measures may not be comparable to similarly titled measures reported by other companies and may have limitations as an analytical tool.

Reconciliations of the Company's projected adjusted diluted EPS for fiscal year 2017 and the most directly comparable GAAP financial measures are omitted from this release because the Company is unable to provide such reconciliations without unreasonable effort.  In particular, in light of the pending transactions referenced in this release, management is not able to calculate certain amounts necessary to provide corresponding forecasted financial measures calculated in accordance with GAAP and related reconciliations at this time as the Company cannot reliably forecast the timing and magnitude of the gain on the sale of BER, the amount of non-cash costs associated with acceleration of stock based compensation awards and other restructuring, impairment and acquisition and divestiture related costs that may occur, and the income tax effects of these items.

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. The risks and uncertainties in connection with such forward-looking statements related to the proposed transactions include, but are not limited to, the occurrence of any event, change or other circumstances that could delay the closing of either the sale of BER or the acquisition of Pineland Farms; the possibility of non-consummation of the proposed transactions and the termination of the respective transaction agreements; the failure to satisfy any of the conditions to the respective transaction agreements; adverse effects on the Company's common stock because of the failure to complete either of the proposed transactions; the Company's businesses experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees and business partners; significant transaction costs related to the proposed transactions; and the dependence on the proposed special dividend following the consummation of the sale of BER.  Additional information about the factors and events that could cause actual results to differ materially from those predicted by the forward looking statements, along with certain other risks, uncertainties and assumptions related to the Company and its business, may be found in our Annual Report on Form 10-K for the fiscal year ended April 29, 2016, our Quarterly Report on Form 10-Q for the quarter ended January 27, 2017, 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.

About Bob Evans Farms, Inc.
Bob Evans Farms, Inc., through its BEF Foods segment, is 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.  Bob Evans Farms, Inc. also owns and operates full-service restaurants under the Bob Evans Restaurants brand name.  At the end of the third fiscal quarter (January 27, 2017), Bob Evans Restaurants owned and operated 523 family restaurants in 18 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States.  The Company announced a definitive agreement for the sale of Bob Evans Restaurants in a press release dated January 24, 2017.  For more information about Bob Evans Farms, Inc., visit www.bobevans.com.

BOBE-E

Source: Bob Evans Farms, Inc.

 
Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Third quarter Fiscal 2017, Three months ended January 27, 2017 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
 January 27,
2017
  January 22,
2016
 January 27,
2017
 January 22,
2016
 January 27,
2017
 January 22,
2016
Operating Income (Loss) as Reported            
Operating Income$17,121   $11,424         
Net interest expense 2,139    2,367         
Income Before Taxes from Continuing Operations 14,982    9,057         
Provision for income taxes from continuing operations 5,144    2,641         
Net Income as reported from continuing operations 9,838    6,416  $0.50  $0.31  $0.49  $0.31 
             
(Loss) / Income before taxes from discontinued operations (4,567)   6,636         
(Benefit) / Provision for income taxes from discontinued operations (2,950)    121         
(Loss) / Income from discontinued operations as reported (1,617)   6,515  $(0.09) $0.31  $(0.08) $0.31 
             
Net income as reported 8,221    12,931  $0.41  $0.62  $0.41  $0.62 
             
Adjustments to Continuing Operations            
Severance/Restructuring 2,559             
Legal and professional fees 571            
Reserve on note receivable (744)             
Total Adjustments to Continuing Operations 2,386             
             
Adjustments to Discontinued Operations             
Legal and professional fees 5,221              
Termination benefits 1,842             
Total Adjustments to Discontinued Operations 7,063             
             
Non-GAAP Operating Income from Continuing Operations 19,507    11,424          
Non-GAAP net interest expense 2,139    2,367         
Non-GAAP income before taxes from continuing operations 17,368    9,057         
Adjustments to tax expense from continuing operations 1,400    31         
Non-GAAP provision for income taxes from continuing operations 6,544    2,672         
Non-GAAP net income from continuing operations 10,824    6,385  $0.55  $0.31  $0.54  $0.31 
             
Non-GAAP income before taxes from discontinued operations 2,496    6,636         
Adjustments to tax expense from discontinued operations 1,273    (31)        
Non-GAAP (benefit) provision for income taxes from discontinued operations (1,677)   90         
Non-GAAP net income from discontinued operations 4,173    6,546  $0.21  $0.31  $0.21  $0.31 
             
Non-GAAP net income$14,997   $12,931  $0.76  $0.62  $0.75  $0.62 
             
Weighted Average Shares Outstanding      19,847  20,692  20,068  20,803 


 
Third quarter Fiscal 2017, Three months ended January 27, 2017 compared to the corresponding period a year ago:
 
(in thousands)  
  Three Months Ended
  January 27, 2017  % of
Sales
   January 22, 2016  % of
Sales
Operating Income from Continuing Operations, as reported           
            
Net Sales $112,820      $107,897    
Cost of sales 48,933   43.4%  52,326   48.5%
Operating wage and fringe benefit expenses 11,150   9.9%  10,822   10.0%
Other operating expenses 15,826   14.0%  12,846   11.9%
Selling, general and administrative expenses 14,201   12.6%  15,453   14.3%
Depreciation and amortization expense 6,333   5.6%  5,026   4.7%
Impairments (744)  (0.7)%     %
Total operating income as reported 17,121   15.2%  11,424   10.6%
            
Non-GAAP Adjustments to Continuing Operations           
            
Net Sales            
Cost of sales           
Operating wage and fringe benefit expenses            
Other operating expenses           
Selling, general and administrative expenses (3,130)         
Depreciation and amortization expense           
Impairments 744          
Total Adjustments 2,386          
            
Non-GAAP Operating Income from Continuing Operations            
            
Net Sales 112,820      107,897     
Cost of sales 48,933   43.4%  52,326   48.5%
Operating wage and fringe benefit expenses 11,150   9.9%  10,822   10.0%
Other operating expenses 15,826   14.0%  12,846   11.9%
Selling, general and administrative expenses 11,071   9.8%  15,453   14.3%
Depreciation and amortization expense 6,333   5.6%  5,026   4.7%
Impairments    %     %
Total non-GAAP operating income $19,507   17.3%  $11,424   10.6%


 
Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Third quarter Fiscal 2016, nine months ended January 27, 2017, compared to the corresponding period a year ago:
 
(in thousands, except per share amounts)     Basic EPS  Diluted EPS
 Nine Months Ended Nine Months Ended  Nine Months Ended
 January 27,
2017
  January 22,
2016
 January 27,
2017
  January 22,
2016
  January 27,
2017
  January 22,
2016
Operating Income (Loss) as Reported               
Operating Income$20,618    $22,741            
Net interest expense4,961   7,856            
Income Before Taxes from Continuing Operations15,657   14,885            
Provision for income taxes from continuing operations5,377   4,608            
Net Income as reported from continuing operations10,280   10,277  $0.52   $0.47   $0.51   $0.47 
                 
Income before taxes from discontinued operations6,290   15,016            
(Benefit) / Provision for Income taxes from discontinued operations(1,033)  1,651            
Income from discontinued operations as reported7,323   13,365  $0.37   $0.61   $0.37   $0.61 
                
Net income as reported17,603   23,642  $0.89   $1.08   $0.88   $1.08 
                
Adjustments to Continuing Operations                
Severance/Restructuring2,728               
Reserve on note receivable15,256               
Legal and professional fees571               
Loss on sale of assets   3,606            
Accretion income on note receivable(1,133)               
Write off of unamortized debt costs   480             
Total Adjustments to Continuing Operations17,422    4,086            
                
Adjustments to Discontinued Operations               
Legal and professional fees5,532                 
Termination benefits1,842   318             
Store closure costs807               
Litigation settlement costs(278)  10,500            
Total Adjustments to Discontinued Operations7,903   10,818            
                
Non-GAAP Operating Income from Continuing Operations39,173   26,347            
Non-GAAP net interest expense6,094   7,376            
Non-GAAP income before taxes from continuing operations33,079   18,971            
Adjustments to tax expense from continuing operations6,335   1,501            
Non-GAAP provision for income taxes from continuing operations11,712   6,109            
Non-GAAP net income from continuing operations21,367    12,862  $1.08   $0.59   $1.07   $0.58 
                 
Non-GAAP income before taxes from discontinued operations14,193   25,834            
Adjustments to tax expense from discontinued operations859   3,211            
Non-GAAP (benefit) provision for income taxes from discontinuing operations(174)  4,862            
Non-GAAP net income from discontinued operations14,367   20,972   $0.72   $0.96   $0.71   $0.96 
                
Non-GAAP net income$35,734   $33,834   $1.80   $1.55   $1.78   $1.54 
                
Weighted Average Shares Outstanding     19,836   21,845   20,055   21,989 


 
Third quarter Fiscal 2016, nine months ended January 27, 2017, compared to the corresponding period a year ago:
 
(in thousands) 
 Nine Months Ended
 January 27, 2017  % of
Sales
  January 22, 2016  % of
Sales
Operating income from Continuing Operations, as reported          
           
Net Sales$294,919      $285,221    
Cost of sales127,171   43.1%  128,164   44.9%
Operating wage and fringe benefit expenses31,132   10.6%  31,198   10.9%
Other operating expenses44,372   15.0%  37,640   13.2%
Selling, general and administrative expenses39,179   13.3%  49,512   17.4%
Depreciation and amortization expense17,191   5.8%  15,966   5.6%
Impairments15,256   5.2%     %
Total as reported 20,618   7.0%   22,741   8.0%
           
Non-GAAP Adjustments to Continuing Operations          
           
Net Sales           
Cost of sales          
Operating wage and fringe benefit expenses          
Other operating expenses          
Selling, general and administrative expenses(3,299)      (3,606)   
Depreciation and amortization expense —         
Impairments(15,256)         
Total Adjustments 18,555       3,606    
           
Non-GAAP Operating Income from Continuing Operations          
           
Net Sales 294,919       285,221    
Cost of sales 127,171    43.1%   128,164   44.9%
Operating wage and fringe benefit expenses  31,132   10.6%   31,198   10.9%
Other operating expenses 44,372   15.0%   37,640    13.2%
Selling, general and administrative expenses 35,880   12.2%   45,906   16.2%
Depreciation and amortization expense 17,191   5.8%   15,966   5.6%
Impairments    %      %
Total non-GAAP operating income$39,173   13.3%  $26,347   9.2%
 

Non-GAAP Financial Measures

Our non-GAAP measures are used by analysts, investors and other interested parties to compare our performance with the performance of other companies that report similar non-GAAP measures. We believe these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of core business operating results. We believe the non-GAAP measures, when viewed in conjunction with U.S. GAAP results and the accompanying reconciliations, enhance the comparability of results against prior periods and allow for greater transparency of financial results and business outlook. In addition, we use non-GAAP data internally to assess performance and facilitate management's internal comparison of our financial performance to that of prior periods, as well as trend analysis for budgeting and planning purposes. The presentation of our non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Furthermore, our non-GAAP measures may not be comparable to similarly titled measures reported by other companies and may have limitations as an analytical tool.

Reconciliations of the Company's projected adjusted diluted EPS for fiscal year 2017 and the most directly comparable GAAP financial measures are omitted from this release because the Company is unable to provide such reconciliations without unreasonable effort.  In particular, in light of the pending transactions referenced in this release, management is not able to calculate certain amounts necessary to provide corresponding forecasted financial measures calculated in accordance with GAAP and related reconciliations at this time as the Company cannot reliably forecast the timing and magnitude of the gain on the sale of BER, the amount of non-cash costs associated with acceleration of stock based compensation awards and other restructuring, impairment and acquisition and divestiture related costs that may occur, and the income tax effects of these items.

 
Consolidated Statements of Net Income
 
  Three Months Ended  Nine Months Ended
  January 27,
2017
  January 22,
2016
  January 27,
2017
  January 22,
2016
Net Sales $112,820   $107,897   $294,919    $285,221 
Cost of sales 48,933   52,326   127,171   128,164 
Operating wage and fringe benefit expenses 11,150    10,822   31,132   31,198 
Other operating expenses 15,826   12,846   44,372   37,640 
Selling, general and administrative expenses  14,201   15,453   39,179   49,512 
Depreciation and amortization expense 6,333   5,026   17,191   15,966 
Impairments (744)     15,256    
Operating Income 17,121   11,424   20,618   22,741 
Net interest expense 2,139    2,367   4,961   7,856 
Income from Continuing Operations Before Income Taxes 14,982   9,057   15,657   14,885 
Provision for income taxes 5,144   2,641   5,377   4,608 
Income from Continuing Operations 9,838   6,416   10,280   10,277 
(Loss) Income from Discontinued Operations, net of Income Taxes (1,617)  6,515   7,323   13,365 
Net Income $8,221   $12,931   $17,603    $23,642 
            
Earnings Per Share — Income from Continuing Operations           
Basic $0.50   $0.31   $0.52   $0.47 
Diluted $0.49   $0.31   $0.51   $0.47 
            
Earnings Per Share — (Loss) Income from Discontinued Operations           
Basic $(0.09)  $0.31   $0.37   $0.61 
Diluted $(0.08)  $0.31   $0.37   $0.61 
            
Earnings Per Share — Net Income           
Basic $0.41   $0.62   $ 0.89   $1.08 
Diluted $0.41   $0.62   $0.88   $1.08 
            
Cash Dividends Paid Per Share $0.34    $0.34   $1.02   $0.96 
            
Weighted Average Shares Outstanding           
Basic 19,847   20,692   19,836   21,845 
Dilutive shares 221    111   219   144 
Diluted 20,068   20,803   20,055   21,989 


 
Consolidated Balance Sheets
 
 Unaudited
January 27, 2017
  April 29, 2016
Assets
Current Assets    
Cash and equivalents$2,430    $11,609 
Accounts receivable, net29,258   24,613 
Inventories19,455   17,093 
Federal and state income taxes receivable9,338    
Prepaid expenses and other current assets3,967   5,716 
Current assets held for sale499,943   48,707 
Total Current Assets564,391   107,738 
Property, plant and equipment236,855   219,103 
Less accumulated depreciation103,505   89,851 
Net Property, Plant and Equipment133,350    129,252 
Other Assets    
Deposits and other2,518   3,841 
Notes receivable, net   20,886 
Rabbi trust assets21,540   20,662 
Goodwill and other intangible assets19,712   19,829 
Non-current deferred tax assets24,878   29,002 
Non-current assets held for sale   469,164 
Total Other Assets68,648   563,384 
Total Assets$766,389   $800,374 
Liabilities and Stockholders' Equity
Current Liabilities    
Current portion of long-term debt$3,425    $3,419 
Accounts payable14,941   15,841 
Accrued property, plant and equipment purchases1,743    4,024 
Accrued non-income taxes11,040   14,474 
Accrued wages and related liabilities12,830   16,370 
Self-insurance reserves9,263   11,288 
Current taxes payable    9,473 
Current reserve for uncertain tax provision1,481   1,481 
Other accrued expenses15,566   13,280 
Current liabilities held for sale128,764   75,907 
Total Current Liabilities199,053   165,557 
Long-Term Liabilities    
Deferred compensation18,147   17,761 
Reserve for uncertain tax positions2,392   2,752 
Other non-current liabilities 921   377 
Long-term deferred gain2,252   2,432 
Credit facility borrowings and other long-term debt326,626   335,638 
Non-current liabilities held for sale   59,413 
Total Long-Term Liabilities350,338   418,373 
Stockholders' Equity    
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at January 27, 2017, and April 29, 2016426   426 
Capital in excess of par value248,144   244,304 
Retained earnings829,356   832,323 
Treasury stock, 22,869 shares at January 27, 2017, and 22,881 shares at April 29, 2016, at cost(860,928)  (860,609)
Total Stockholders' Equity216,998   216,444 
Total Liabilities and Stockholders' Equity$766,389   $800,374 


 
Consolidated Statements of Cash Flows
 
 Nine Months Ended
 January 27, 2017  January 22, 2016
Operating activities:    
Net income$17,603   $23,642 
Income from discontinued operations7,323   13,365 
Income from continuing operations10,280   10,277 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization17,191    15,966 
Impairments15,256    
Loss on disposal of fixed assets34   3,439 
(Gain) Loss on rabbi trust assets(878)  1,768 
Loss (Gain) on deferred compensation1,433   (1,146)
Share-based compensation3,151   2,235 
Accretion on long-term note receivable(1,133)  (1,539)
Deferred income taxes4,124   (136)
Amortization of deferred financing costs1,033   1,762 
Cash provided by (used for) assets and liabilities:    
Accounts receivable(4,645)   (3,405)
Inventories(2,362)  2,532 
Prepaid expenses and other current assets1,749   1,162 
Accounts payable(900)  (970)
Federal and state income taxes(19,171)  19,119 
Accrued wages and related liabilities(3,540)  2,956 
Self-insurance(2,025)  2,312 
Accrued non-income taxes(3,434)  2,005 
Other assets and liabilities8,330   4,395 
Net cash provided by operating activities24,493   62,732 
Investing activities:    
Purchase of property, plant and equipment(23,669)  (23,989)
Proceeds from sale of property, plant and equipment95   50,539 
Liquidation of rabbi trust assets   5,245 
Deposits and other371   (566)
Net cash (used in) provided by investing activities(23,203)  31,229 
Financing activities:    
Cash dividends paid(20,182)  (21,132)
Gross proceeds from credit facility borrowings and other long-term debt277,894   506,626 
Gross repayments of credit facility borrowings and other long-term debt(286,964)   (461,668)
Payments of debt issuance costs   (2,517)
Purchase of treasury stock   (156,654)
Proceeds from share-based compensation   214 
Cash paid for taxes on share-based compensation(702)  (1,177)
Excess tax benefits from share-based compensation(1,688)  84 
Net cash used in financing activities(31,642)  (136,224)
Net cash used in operations(30,352)  (42,263)
Net cash provided by operating activities of discontinued operations36,565   54,781 
Net cash used in investing activities of discontinued operations(15,392)  (11,165)
Net cash provided by discontinued operations21,173   43,616 
Cash and equivalents at the beginning of the period11,609   4,994 
Cash and equivalents at the end of the period$2,430    $6,347 


 
Consolidated Results for Continuing and Discontinued Operations
 
(in thousands except earnings per share amounts)               
   Three Months Ended  Nine Months Ended
GAAP Consolidated Results  January 27,
2017
  January 22,
2016
  %
Change
  January 27,
2017
   January 22,
2016
  %
Change
Net Sales from Continuing Operations  $112,820   $107,897   4.6%  $294,919   $285,221   3.4%
Net Sales from Discontinued Operations  223,126   238,608   (6.5)%  663,307   708,018   (6.3)%
Total Net Sales  335,946   346,505   (3.0)%  958,226   993,239   (3.5)%
                   
Operating Margin from Continuing Operations  15.2%  10.6%  460 bps  7.0%  8.0%  (100 bps)
Operating Margin from Discontinued Operations  (1.9)%  2.8%  (470 bps)  1.1%  2.1%  (100 bps)
Total Operating Margin  3.9%  5.2%  (130 bps)  2.9%  3.8%  (90 bps)
                   
Diluted EPS from Continuing Operations  $0.49   $ 0.31   58.1%  $0.51   $0.47   8.5%
Diluted EPS from Discontinued Operations  $(0.08)  $0.31   (125.8)%  $0.37   $0.61   (39.3)%
Diluted EPS  $0.41   $0.62   (33.9)%  $0.88   $1.08   (18.5)%
                   
Non-GAAP Adjustments           —            — 
Net Sales from Continuing Operations           —            — 
Net Sales from Discontinued Operations           —            — 
Total Net Sales                  
                   
Operating Margin from Continuing Operations  2.1%  %     6.3%  1.3%   
Operating Margin from Discontinued Operations  3.2%  %     1.2%  1.5%   
Total Operating Margin  2.8%  %     2.8%  1.5%   
                   
Diluted EPS from Continuing Operations  $0.05   $      $0.56   $0.11    
Diluted EPS from Discontinued Operations  $0.29   $       $0.34   $0.35     
Diluted EPS  $0.34   $      $0.90   $0.46    
                   
Non-GAAP Consolidated Results                  
Net Sales from Continuing Operations  $112,820   $107,897   4.6%  $294,919   $285,221   3.4%
Net Sales from Discontinued Operations  223,126   238,608   (6.5)%  663,307   708,018   (6.3)%
Total Net Sales  335,946   346,505   (3.0)%  958,226   993,239   (3.5)%
                   
Operating Margin from Continuing Operations  17.3%  10.6%  670 bps  13.3%  9.2%  410 bps
Operating Margin from Discontinued Operations  1.3%  2.8%  (150 bps)  2.3%  3.6%  (130 bps)
Total Operating Margin  6.7%  5.2%  150 bps  5.7%  5.3%  40 bps
                   
Diluted EPS from Continuing Operations  $0.54   $0.31   74.2%   $1.07   $0.58   84.5%
Diluted EPS from Discontinued Operations  $0.21   $0.31   (32.3)%  $0.71   $0.96   (26.0)%
Diluted EPS  $0.75   $0.62    21.0%  $1.78   $1.54   15.6%


BEF Foods total pounds sold, by category         
Fiscal 2017               
Category  Q1  Q2  Q3  Q4  YTD
Sides  51.4%  52.5%  52.5%     52.2%
Sausage   21.2%  21.9%  24.9%      22.9%
Food Service - External  11.6%  10.7%  10.1%     10.7%
Food Service - Sales to discontinued operations   8.3%  9.0%  7.7%     8.3%
Frozen  3.9%  3.4%  2.7%     3.3%
Other  3.6%  2.5%  2.1%     2.6%
                
Fiscal 2016                
Category  Q1  Q2  Q3  Q4  FY 2016
Sides  49.6%  50.7%  50.9 %  51.4%  50.7%
Sausage  22.0%  22.3%  26.6%  21.7%   23.3%
Food Service - External  14.1%  12.5%  10.4%  11.4%  11.9%
Food Service - Sales to discontinued operations  6.2%  6.6%  6.0%  8.1%  6.7%
Frozen  4.6%  4.5%  3.1%  3.9%  4.0%
Other  3.5%  3.4%  3.0%  3.5%  3.4%

 

Contact:           

Scott C. Taggart

Vice President, Investor Relations

(614) 492-4954

Source: Bob Evans Farms, Inc.

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