Bob Evans Farms, Inc.
Jun 5, 2012

Bob Evans Reports Fiscal 2012 Full-Year And Fourth-Quarter Results; Provides FY 2013 Outlook

Company announces reported 4Q 2012 earnings per diluted share of $0.76, and fiscal 2012 earnings per diluted share of $2.45; non-GAAP EPS, adjusted for 4Q tax benefits, is $0.68 for the quarter, or $2.42 for the full year, at the higher end of earnings guidance
Sets fiscal year 2013 EPS guidance at $2.66 to $2.72; reaffirms long-term annual earnings growth guidance of 7-10 percent
Farm-Fresh Refresh Program continues to deliver strong results; 50% of Bob Evans Restaurants expected to be converted by end of fiscal 2013
Bob Evans Restaurants to open up to 10 new restaurants during fiscal 2013; Company pleased with the performance of its two new locations in Arkansas, representing expansion of Bob Evans Restaurants' footprint to a 19th state
Foods segment garners market share gains in sausage and side dish categories during fiscal 2012; continued plant optimization initiatives and summer product launches expected to drive profitable growth in side dish and frozen categories
Continued strong free cash flow generation enabled return of nearly $100 million to shareholders via dividends and share repurchases during fiscal 2012, while investing nearly $90 million in fixed assets

COLUMBUS, Ohio – June 5, 2012 – Bob Evans Farms, Inc. (NASDAQ: BOBE) today announced its financial results for the fiscal 2012 fourth quarter and full year ended Friday, April 27, 2012.

Fiscal 2012 commentary
Chairman and Chief Executive Officer Steve Davis said, “We achieved the higher end of our EPS guidance range this year.  We are particularly pleased with this performance as it caps three years of repositioning each of our businesses for profitable top-line growth.  Importantly, we also continued to reduce debt and return capital to shareholders in the form of dividends and share repurchases, while investing in important growth projects.  This disciplined and balanced approach to capital allocation has been critical to our past success, and it will continue to drive our strategy.

“Our aggressive roll-out of the Farm-Fresh Refresh remodel program at Bob Evans Restaurants continues to generate returns of nearly 20 percent.  Furthermore, with the recent successful opening of two new Bob Evans Restaurant locations in Arkansas, our 19th state, we are leveraging the brand recognition the Foods segment has achieved with its presence on grocery store shelves nationally.  Bob Evans Restaurants plans to open up to 10 new restaurants during fiscal 2013 to augment the growth generated by improving trends in the core business, including continued double-digit growth of our off-premise sales layers, as well as the lift provided by the Farm-Fresh Refresh program.”

Davis continued, “Last week, our Foods segment announced its latest plant optimization initiative concerning expansion of its Sulphur Springs, Texas plant.  This initiative will enable us to better serve the customers of our high-potential side dish and frozen products businesses, while also providing significant annual cost savings.  We believe the initiative will increase annual operating income by approximately $7 to $8 million beginning in fiscal 2015.  We expect savings of $4 to $5 million during fiscal 2014, which will be the transition year for the project.  Our plant optimization initiatives have helped us offset the cumulative impact of more than $70 million in sow cost increases since 2009.  We believe these initiatives will allow us to compete effectively, and maintain margins in the future.  

“The Foods segment faced the dual challenges of continued sow cost increases and a highly promotional competitive environment this year.  As a result, margins were adversely impacted.  Nonetheless, as with our two restaurant segments, we are focused on transforming the Foods segment to deliver top-line and bottom-line growth, even under challenging market conditions.  Just as we are evolving our restaurant concepts with off-premise sales layers, the Foods segment is evolving to meet the needs of its customers who are increasingly seeking healthy, convenient products that cater to their time-constrained, on-the-go lifestyles.  The Foods segment currently supplies more than 24,000 retail locations, and we believe it has the potential to serve at least 36,000 locations within the next five years.  Furthermore, we continue to pursue inorganic growth opportunities to grow the Foods segment profitably.

 “While much remains to be accomplished, we are energized by the opportunities that lie ahead.  We have long been known for delivering adjusted earnings growth due to our disciplined operating principles.  We believe we are now positioned well to deliver profitable top-line growth, and we are proceeding confidently.  We pulled back on restaurant development several years ago, because we knew we needed to improve our concepts and close underperforming restaurants.  Today, we are undergoing transformational remodel and rebuilding programs, while simultaneously building new restaurants in core and new geographies.  Likewise, the Foods segment underwent a transformation of its plant and distribution networks to ready itself for growth.  Now the foundation has been set, and we believe our Company is well-positioned for sustainable and profitable growth in fiscal 2013, and beyond.”

The Company is now separating its reporting of Bob Evans Restaurants and Mimi’s Café into two reportable segments.  Previously these two chains were aggregated into one reportable segment.   

 

Fiscal 2012 consolidated results
The Company reported consolidated operating income of $107.9 million in fiscal 2012. The full-year results include the negative net pretax impact of $3.9 million, or $2.7 million after tax, from the following items:

Excluding the $3.9 million negative net impact of these charges, the Company’s fiscal 2012 reported consolidated operating income of $107.9 million would have been approximately $111.8 million, or 6.8 percent of net sales.

Earnings per diluted share for fiscal 2012 were reported at $2.45.  Excluding the net negative impact of the aforementioned charges, diluted earnings per share would have been $2.54. 

The Company reported consolidated operating income of $88.5 million in fiscal 2011. The full-year fiscal 2011 results include the negative net pretax impact of $19.4 million, or $13.5 million after tax, from the following items:

 

Excluding the $19.4 million negative net impact of these charges, the Company’s fiscal 2011 reported consolidated operating income of $88.5 million would have been approximately $107.9 million, or 6.4 percent of net sales.

Earnings per diluted share for fiscal 2011 were reported at $1.78.  Excluding the net negative impact of the aforementioned charges, diluted earnings per share would have been $2.22.  During the fourth quarter of fiscal 2012, the tax rate recorded by the Company of 18.0% was due primarily to several significant tax benefits for favorable tax reserve adjustments, additional Work Opportunity Tax Credit, and benefits from investments in Corporate Owned Life Insurance.  Had the tax rate been 31.0%, consistent with Company guidance for the fourth quarter, our fiscal 2012 non-GAAP diluted EPS would have been $2.42, up 9.0% from last year’s $2.22.

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 the nearest comparable GAAP results.  Results in the following discussion are presented on a non-GAAP basis, excluding the items noted above.

Fiscal 2012 consolidated income statement summary
Below is a summary of the Company’s non-GAAP consolidated fiscal 2012 income statement.

 

Fiscal 2012 Bob Evans Restaurants segment summary
Bob Evans Restaurants’ non-GAAP fiscal 2012 operating income was $91.0 million, or 9.4 percent of net sales.   Bob Evans Restaurants’ non-GAAP fiscal 2011 operating income was $76.2 million, or 7.8 percent of net sales.   The increase in profitability was due primarily to favorable operating wages and other operating expenses.  Pre-opening expenses increased $2.2 million compared to last year.

Net sales – Bob Evans Restaurants’ non-GAAP net sales were $968.6 million in fiscal 2012, a 0.8 percent decrease compared to $976.7 million in fiscal 2011. Same-store sales at Bob Evans Restaurants decreased 0.6 percent in fiscal 2012, with average menu prices up 1.7 percent.

 

 

SSS Restaurants

 

Feb.

 

March

 

April

 

4Q  FY ’12

 

FY 2012

Bob Evans

554 

   2.2%

-2.0%

 -1.5%

-0.6%

-0.6%

 

During fiscal 2012, Bob Evans Restaurants:

Cost of sales – Bob Evans Restaurants’ non-GAAP cost of sales was 23.7 percent of net sales in fiscal 2012 and fiscal 2011. Average pricing for the year of 1.7% and ongoing efficiency initiatives were offset by commodity increases.

Operating wages – Bob Evans Restaurants’ non-GAAP cost of labor in fiscal 2012 was 38.2 percent of net sales, compared to 39.5 percent of net sales in fiscal 2011. The improvement resulted from labor productivity initiatives and a reduction in health insurance costs, partially offset by sales deleverage due to a decline in same-store sales.

Other operating expenses – Bob Evans Restaurants’ non-GAAP other operating expenses in fiscal 2012 were $167.8 million, or 17.3 percent of net sales, compared to $171.2 million, or 17.5 percent of net sales, in fiscal 2011. This decrease resulted from lower expenditures related to restaurant supplies, service contracts, utilities, and occupancy costs.  The rate decline was partially offset by sales deleverage.  

SG&A – Bob Evans Restaurants’ non-GAAP SG&A expenses were $61.4 million, or 6.3 percent of net sales, in fiscal 2012, compared with $64.1 million, or 6.6 percent of net sales, in fiscal 2011. The decline in expenses was due entirely to increased allocations of corporate expenses to the Mimi’s Café segment.  Allocations to Mimi’s Café increased $4.1 million, compared to fiscal 2011.

Depreciation – Bob Evans Restaurants’ depreciation expenses were $49.1 million, or 5.1 percent of net sales, in fiscal 2012, compared with $48.6 million, or 5.0 percent of net sales, in fiscal 2011.  The increase was due to increased capital spending in fiscal 2012 to support new restaurant development and the restaurant refresh program.  The average cost of a refresh was approximately $230,000 in fiscal 2012.
 
Fiscal 2012 Mimi’s Cafe segment summary
Mimi’s Café’s non-GAAP fiscal 2012 operating income was $1.0 million, compared with non-GAAP fiscal 2011 operating income of $6.0 million. The decrease in profitability was due primarily to an increase of $4.1 million in allocated SG&A to fully reflect the corporate support Mimi’s is receiving, as well as a charge of $1.3 million to reflect higher workers’ compensation expense from previously existing claims, primarily for claims arising in California.  Excluding those factors, operating income was approximately flat on reduced sales as cost control activities and efficiency improvements were able to offset the sales decline.

Net sales – Mimi’s Café's non-GAAP net sales were $364.1 million in fiscal 2012, a 4.3 percent decrease, compared to $380.3 million in fiscal 2011. Same-store sales at Mimi’s Cafe decreased 4.0 percent in fiscal 2012, with average menu prices up 3.4 percent.

During fiscal 2012, Mimi’s Café performed a minor remodel on one restaurant, and did not open or rebuild any restaurants.

 

 

SSS Restaurants

 

Feb.

 

March

 

April

 

4Q  FY ’12

 

FY 2012

Mimi’s Café

143 

  -0.2%

 -5.3%

 -3.6%

-3.1%

-4.0%

 

Cost of sales – Mimi’s Café’s non-GAAP cost of sales was 26.8 percent of net sales in fiscal 2012, compared to 27.3 percent of net sales in fiscal 2011. Cost of sales decreased in fiscal 2012 due to pricing and ongoing efficiency initiatives, including the actual-versus-theoretical food cost program, which were partially offset by commodity increases.

Operating wages – Mimi’s Café’s non-GAAP cost of labor in fiscal 2012 was 37.2 percent of net sales, compared to 37.1 percent of net sales in fiscal 2011. Operating wages as a percent of net sales increased as a result of the negative effect of the $1.3 million workers’ compensation provision, referenced above, and sales deleverage.

Other operating expenses – Mimi’s Café’s non-GAAP other operating expenses in fiscal 2012 were $81.3 million, or 22.3 percent of net sales, compared to $83.3 million, or 21.9 percent of net sales in fiscal 2011. The decrease in other operating expense dollars was the result of decreases in controllable expenses, such as utility costs, and gift/credit card processing fees. 

SG&A – Mimi’s Café’s non-GAAP SG&A expenses in fiscal 2012 were $25.3 million, or 6.9 percent of net sales, compared to $21.9 million, or 5.8 percent of net sales, in fiscal 2011. The SG&A increase resulted primarily from increased allocations of $4.1 million to better reflect the corporate support Mimi’s is receiving, partially offset by cost control initiatives.
 


Fiscal 2012 Foods segment summary
The Foods segment’s non-GAAP operating income was $19.7 million, or 6.3 percent of net sales, in fiscal 2012, compared with non-GAAP operating income of $25.8 million, or 8.1 percent of net sales, in fiscal 2011.  The operating income decline in fiscal 2012 was due primarily to a year-over-year increase in commodity costs, of which sows accounted for $4.6 million, and an increase in promotional discounts of $4.4 million, partially offset by a decline in SG&A expenses, as discussed below.

Net sales The Foods segment’s net sales were $314.7 million in fiscal 2012, down 1.6 percent, compared to $320.0 million in fiscal 2011. Total pounds sold were essentially flat, while an increase in promotional discounts of $4.4 million, primarily in response to competitive pressures to protect market share, contributed to the decline in net sales.  Promotional discounts and other selling allowances affect the income statement as a reduction to the gross sales line.  

Cost of sales – The Foods segment’s cost of sales was 57.5 percent of net sales in fiscal 2012, compared to 54.7 percent of net sales in fiscal 2011. The increase was due primarily to higher sow costs relative to the prior year.  Sow costs averaged $61.58 per hundredweight in fiscal 2012, compared to $57.17 in fiscal 2011. 

Operating wages – The Foods segment’s cost of labor was 8.8 percent of net sales in fiscal 2012, compared to 10.2 percent of net sales in fiscal 2011. The improvement was due to outsourcing of distribution services to a third party beginning in the second quarter of fiscal 2012, subsequent to the Company’s sale of its Springfield, Ohio, distribution center, as well as efficiencies resulting from the Company’s ongoing manufacturing productivity initiatives.  The operating wages and fringe benefits related to the sale of the distribution center are now classified as other operating expenses, as the distribution center is operated by an unrelated third party.  

Other operating expenses – The Foods segment’s other operating expenses were 6.1 percent of net sales in fiscal 2012, compared to 5.1 percent of net sales in fiscal 2011. The increase was due primarily to costs associated with outsourcing distribution services, as noted above.

SG&A – The Foods segment’s non-GAAP SG&A expenses were 18.3 percent of net sales in fiscal 2012, compared to 18.8 percent of net sales in fiscal 2011. The improvement was due to a reduction in consulting fees, tighter cost controls, lower incentive compensation, and lower advertising costs.

Fourth-quarter fiscal 2012 commentary
Fourth quarter results reflect same-store sales momentum that slowed during the middle of the quarter.  However, April reflected a moderating sales trend in both concepts.  During April, Bob Evans Restaurants implemented a $9.99 three-course dinner platform, headlined by three steak entrees, to address sales weakness at dinner.  Davis noted, “Early results of the $9.99 dinner program are encouraging.  Our $6 Farmhouse Deals, $6.99 Endless Farmhouse Lunch, and bakery offerings, have been driving results, particularly at breakfast and lunch, and the $9.99 dinner drove positive dinner traffic in May.  Dinner is a critical component of our plan to return to consistent positive same-store sales growth.  We plan to bring a similar offering to Mimi’s Café in the near future and expect it will also have a positive effect on sales.

“In our Foods segment, increased promotional spending, primarily in response to competitive pressures to protect market share, negatively affected results.  However, during the quarter we received an authorization from our largest customer for shipment of one of the new varieties of our frozen breakfast burritos that was launched in January.  We believe the effort we have put into rebuilding our frozen foods presence is beginning to pay off.  Along with our high-growth side dish business, we believe our new products pipeline in frozen products is set to facilitate growth in market segments that align well with our customers’ focus on value, quality, and convenience.”

Fourth-quarter fiscal 2012 consolidated results
The Company reported consolidated operating income of $28.8 million in the fourth quarter of fiscal 2012. The fourth-quarter results include the negative net pretax impact of $1.8 million, or $1.3 million after-tax, from the following items:

Excluding the $1.8 million negative net impact of these charges, the Company’s fourth quarter fiscal 2012 reported operating income would have been approximately $30.6 million, or 7.5 percent of net sales.

Earnings per diluted share for fourth quarter fiscal 2012 were reported at $0.76.  Excluding the net negative impact of the aforementioned charges, diluted earnings per share would have been $0.80.

The Company reported consolidated operating income of $27.8 million in the fourth quarter of fiscal 2011. The fourth quarter fiscal 2011 results include the negative net pretax impact of $5.1 million, or $3.9 million after tax, from the following items:

Excluding this negative total net impact of $5.1 million, the Company’s fourth quarter fiscal 2011 reported operating income would have been approximately $32.9 million, or 7.9 percent of net sales.

Earnings per diluted share for fourth quarter fiscal 2011 were reported at $0.60.  Excluding the net negative impact of the aforementioned charges, diluted earnings per share would have been $0.73.

During the fourth quarter of fiscal 2012, the tax rate recorded by the Company was 18.0%, driven primarily by favorable reserve adjustments.  Had the tax rate been 31.0%, as the Company guided to for the fourth quarter, non-GAAP diluted EPS would have been $0.68, down 6.8% from last year’s EPS of $0.73.

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 the nearest comparable GAAP results.  Results in the following discussion are presented on a non-GAAP basis excluding the items noted above.

Fourth-quarter fiscal 2012 consolidated income statement summary
Below is a summary of the Company’s consolidated fourth-quarter fiscal 2012 income statement.

Fourth-quarter fiscal 2012 Bob Evans Restaurants segment summary
Bob Evans Restaurants’ fiscal 2012 fourth-quarter non-GAAP operating income was $24.8 million, or 10.3 percent of net sales, compared with $21.3 million, or 8.8 percent of net sales, last year.  The primary drivers of the increase in profitability were cost of sales and other operating cost reductions.

Net sales – Bob Evans Restaurants’ non-GAAP net sales were $239.6 million in the fourth quarter of fiscal 2012, compared with sales of $241.3 million last year.  The decline of approximately 0.7 percent was driven by a same-store sales decline, and the impact of 10 restaurant closures since last year.  The fourth-quarter same-store sales decline of 0.6 percent lagged the Midscale Family Style segment, according to The NPD Group’s SalesTrack Weekly.  

During the fourth quarter of fiscal 2012, Bob Evans Restaurants:

Cost of sales – Bob Evans Restaurants’ non-GAAP cost of sales was 23.6 percent of net sales in the fourth quarter of fiscal 2012, compared to 24.2 percent in the fourth quarter of fiscal 2011. The decrease in cost of sales as a percent of net sales was due to pricing of approximately 1.7 percent and ongoing efficiency initiatives, including the actual-versus- theoretical food cost program, which were partially offset by commodity increases.

Operating wages – Bob Evans Restaurants’ non-GAAP cost of labor was 38.5 percent of net sales in the fourth quarter of fiscal 2012, flat with the fourth quarter of fiscal 2011. Labor productivity initiatives were offset by negative leverage due to declines in same-store sales.

Other operating expenses – Bob Evans Restaurants’ non-GAAP other operating expenses were 15.6 percent of net sales in the fourth quarter of fiscal 2012, compared to 16.6 percent of net sales in the fourth quarter of fiscal 2011. This decrease resulted from lower expenditures related to service contracts, advertising, utilities, and occupancy costs, partially offset by sales deleverage due to same-store sales declines, and an increase of pre-opening expenses of $1.0 million compared to last year.

SG&A – Bob Evans Restaurants’ non-GAAP SG&A expenses were 6.7 percent of net sales in the fourth quarter of fiscal 2012, compared with 6.8 percent in the fourth quarter of fiscal 2011. The decrease was due to increased allocations of corporate expenses to Mimi’s Café of approximately $0.9 million. 

Fourth-quarter fiscal 2012 Mimi’s Cafe segment summary
Mimi’s Cafe’s fourth-quarter fiscal 2012 non-GAAP operating income was $2.2 million, or 2.4 percent of net sales, compared with $4.0 million, or 4.1 percent of net sales, in 2011.  The primary drivers of the decline in earnings were decreased sales, a charge of $1.3 million to reflect higher workers’ compensation expense from previously existing claims, primarily for claims arising in California, and a $0.9 million increase in SG&A allocations, partially offset by cost of sales efficiencies and spending reductions in direct SG&A.

Net sales – Mimi’s Cafe’s non-GAAP net sales were $93.7 million, a 3.1 percent decrease compared to $96.8 million in the fourth quarter of fiscal 2011. The decrease resulted from declines in same-store sales of 3.1% in the fourth quarter of fiscal 2012, with average menu prices up 1.2%.  At Mimi’s Café, same-store sales declines of 3.1 percent trailed the Knapp Track™ casual dining index of 1.2 percent for the same period.

During the fourth quarter of fiscal 2012, Mimi’s Café performed a minor remodel on one restaurant, and did not open or rebuild any restaurants.

Cost of sales – Mimi’s Café’s non-GAAP cost of sales was 26.5 percent of net sales in the fourth quarter of fiscal 2012, compared to 27.0 percent in the fourth quarter of fiscal 2011. The decrease in cost of sales as a percent of net sales was due to the pricing increase, as well as ongoing efficiency initiatives including the actual-versus-theoretical food cost program, which were partially offset by commodity increases.

Operating wages – Mimi’s Cafe’s non-GAAP cost of labor was 37.3 percent of net sales in the fourth quarter of fiscal 2012, compared to 35.4 percent in the fourth quarter of fiscal 2011. The increase in cost resulted from a charge of $1.3 million to reflect higher workers’ compensation expense from previously existing claims, primarily for claims arising in California.  Excluding these charges, operating wages would have increased slightly as a percentage of sales, due primarily to sales deleverage. 

Other operating expenses – Mimi’s Café’s non-GAAP other operating expenses were 20.8 percent of net sales in the fourth quarter of fiscal 2012, compared to 21.2 percent of net sales in the fourth quarter of fiscal 2011. This decrease resulted from lower expenditures related to service contracts, restaurant supplies, utilities, and gift/credit card processing fees.

SG&A – Mimi’s Café’s non-GAAP SG&A expenses were $6.4 million, or 6.8 percent of net sales, in the fourth quarter of fiscal 2012, compared to $5.8 million, or 6.0 percent of net sales, in the fourth quarter of fiscal 2011. The increase was the result of the $0.9 million increase in corporate allocations to Mimi’s Café.  Direct SG&A declined year-over-year, reflecting Mimi’s ongoing cost reduction initiatives.

Fourth-quarter fiscal 2012 Foods segment summary
Non-GAAP operating income was $3.6 million, or 4.9 percent of net sales, in the fourth quarter, compared with $7.6 million, or 9.4 percent of sales, last year.  The primary driver of the decline was an increase in promotional discounts of $4.2 million.  

Net sales – The Foods segment’s fourth-quarter fiscal 2012 net sales were $73.2 million, down 9.2 percent, compared to $80.6 million in the fourth quarter of fiscal 2011. Volume was down 1.3 percent, in part due to the earlier fiscal year 2012 Easter holiday, which had the effect of shifting approximately $1.0 million of sales out of the fourth quarter of fiscal 2012, and into the first quarter of fiscal 2013.  Promotional discounts provided to retailers increased $4.2 million, primarily in response to competitive pressures to protect market share. Promotional discounts and other selling allowances are included as a reduction to net sales. 

Cost of sales – The Foods segment’s fourth-quarter fiscal 2012 cost of sales was 57.7 percent of net sales, compared to 54.6 percent of net sales in the fourth quarter of fiscal 2011. The increase was due primarily to the deleverage effect of the net sales decline.  Sow costs were about flat compared to last year’s fourth quarter.

Operating wages – The Foods segment’s fourth-quarter fiscal 2012 cost of labor was 8.4 percent of net sales, compared to 8.1 percent of net sales in the fourth quarter of fiscal 2011. The increase was due primarily to negative leverage as a result of significant increases in promotional discounts, which are netted against sales, and declines in total pounds sold. Partially offsetting these negative effects, were ongoing lean manufacturing productivity initiatives started in the second quarter of fiscal 2011, and the sale of the Springfield, Ohio, distribution center in the second quarter of fiscal 2012.  The operating wages and fringe benefits, related to the sale of the distribution center, are classified as other operating expenses, as the distribution center is now operated by an unrelated third party.

Other operating expenses – The Foods segment’s other operating expenses were 7.1 percent of net sales in the fourth quarter of fiscal 2012, compared to 5.6 percent of net sales in the fourth quarter of fiscal 2011. The cost increase was due to fees associated with the third-party distribution agreement related to the sale of the distribution center, 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 Foods segment’s non-GAAP SG&A expenses were 18.3 percent of net sales in the fourth quarter of fiscal 2012, compared to 19.2 percent of net sales in the fourth quarter of fiscal 2011. The improvement in costs resulted from general SG&A cost controls and lower incentive compensation.

Fiscal year 2013 and longer-term outlook
The Company expects earnings per share of approximately $2.66 to $2.72 in fiscal 2013. The Company also reaffirms its average annual long-term earnings growth rate guidance of approximately 7 to 10 percent.

This outlook relies on a number of important assumptions, including the risk factors discussed in the Company’s filings with the Securities & Exchange Commission.

Davis said, “We are excited and confident about capitalizing on the growth opportunities ahead, including: more significant new restaurant growth at Bob Evans Restaurants; the ongoing transformation of existing Bob Evans Restaurants with the Farm-Fresh Refresh remodel program; increased marketing support for Bob Evans Restaurants; continued Foods segment distribution and market share growth; and ongoing exploration of inorganic growth opportunities in the Foods segment.

“Rest assured, we are pursuing growth in a measured and disciplined manner.  We will not allow ourselves to abandon the discipline that has enabled our Company to deliver consistent adjusted earnings growth, even under challenging economic conditions.”

Particular assumptions for the Company’s full-year outlook include the following:

Consolidated Company highlights

The Company expects to spend its remaining $29.5 million of share repurchase authorization during fiscal 2013.

This estimate includes a total of approximately $20-$25 million for up to 10 new Bob Evans restaurants; $30-$35 million for the Farm-Fresh Refresh remodel program at Bob Evans Restaurants; $23-$26 million for the recently announced expansion of the Foods segment’s plant in Sulphur Springs, Texas; $6 million for enhancements to the Foods segment’s transportation center in Springfield, Ohio; $1 million for remodels of three Mimi’s Café restaurants; $20-$25 million related to construction of a new corporate campus in New Albany, Ohio; and $10-$12 million for ERP design and implementation.

 

Bob Evans Restaurants segment

The Company also expects pre-opening expenses related to new restaurant openings and Farm-Fresh Refresh remodel activity to grow $2.0 million, from $3.2 million in fiscal 2012 to $5.2 million in fiscal 2013.  The Company expects to record the majority of this incremental impact in the first, third and fourth quarters.

 

Mimi’s Café segment

The Company plans to remodel threeMimi’s Café restaurants at a total cost of approximately $1 million, but does not plan to build new Mimi’s Cafe restaurants during fiscal 2013. 

Foods segment

On May 29, 2012, the Company announced its intention to close two Foods’ production plants in the second quarter of fiscal year 2014.  The Company anticipates a total annual pretax benefit of approximately $7 million to $8 million.  Partial realization of the pretax benefits, amounting to $4 million to $5 million, will commence in fiscal 2014, with full realization expected by fiscal 2015.

The Company anticipates taking the following estimated pretax charges during fiscal 2013 and 2014: approximately $2.5 million to $3.5 million in cash for termination benefits and other employee costs; and approximately $1 million in cash for plant decommissioning costs, primarily during fiscal 2014.  The guidance provided excludes these costs.

Company to host conference call on Wednesday, June 6, 2012
The Company will host a conference call to discuss its year-end results at 10 a.m. (ET) on Wednesday, June 6, 2012. The dial-in number is (800) 690-3108, access code 79304596. A replay will be available at (800) 585-8367, access code 79304596.

To access the simultaneous webcast, go to 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 Café brand names. At the end of the fourth fiscal quarter (April 27, 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 Café 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 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 29, 2011, 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.

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