Bob Evans Farms, Inc.
Jun 14, 2016

Bob Evans Reports Fiscal 2016 Fourth-Quarter and Full-Year Results; Provides Fiscal Year 2017 Outlook

             
NEW ALBANY, Ohio, June 14, 2016 (GLOBE NEWSWIRE) -- Bob Evans Farms, Inc. (NASDAQ:BOBE) today announced its financial results for the fiscal 2016 fourth quarter ended Friday, April 29, 2016.  On a GAAP basis, the Company reported net income of $0.6 million, or $0.03 per diluted share, compared with net income of $5.6 million, or $0.24 per diluted share, last year.  On a non-GAAP basis, net income was $9.5 million, or $0.48 per diluted share, compared with net income of $13.2 million, or $0.56 per diluted share, last year.  

Fourth-quarter fiscal 2016 commentary
President and Chief Executive Officer Saed Mohseni said, "BEF Foods capped an excellent year with continued strong volume and profit growth.  The expansion of our Lima, Ohio, refrigerated side-dish manufacturing facility is nearing completion and we expect its new production capacity to be brought on-line later this summer; enabling us to meet peak holiday demand this fall and achieve continued distribution and sales growth in the years ahead. 

"At Bob Evans Restaurants, fourth-quarter same-store sales were in-line with our expectations.  During the quarter, we made progress redesigning our restaurant menu, improved core menu items, and focused on guest hospitality to ensure a better guest experience.  The new menu, to be introduced late-August, will be more guest-friendly, preserving guest favorites at every daypart, while better highlighting value and providing each guest with more meal options and flexibility.  In the interim, we introduced our summer bacon promotion late May with special bacon-themed items at every daypart including a Bacon Lover's Omelet, Bacon Cheeseburger, Strawberry Bacon Salad, and a three-course Bacon-Topped Chicken Dinner."

Mohseni continued, "At the corporate level, we completed our previously announced real estate monetization initiatives with completion of a $197 million sale-leaseback transaction of 143 restaurant properties. Along with the $52 million sale-leaseback of two BEF Foods production facilities earlier in the year, these transactions have helped support nearly $500 million of capital returned to shareholders through share repurchases and dividends during the last three years.  With these significant financial transactions behind us, our focus in fiscal 2017 is to profitably grow both BEF Foods and Bob Evans Restaurants while continuing to improve the efficiency at all levels of our company from the restaurant and plant-level to the home office.  We believe this will deliver sustainable long-term shareholder value as we fulfill the promise of our corporate mission:  providing high-quality food with hospitality and integrity, whether in our restaurants or to our retailers."

Fourth-quarter fiscal 2016 Bob Evans Restaurants segment summary
Bob Evans Restaurants' net sales, excluding the 53rd week of fiscal 2016, were $226.5 million, a decline of $11.7 million, or 4.9 percent, compared to net sales of $238.2 million last year. Same-store sales declined 3.0 percent with the balance of the net sales decline due to net restaurant closures earlier in the year.  Twenty-one restaurants were closed during the 53rd week of fiscal 2016 and no new restaurants opened during the fourth quarter.  At the end of fiscal 2016, the Company operated 527 restaurants.  As previously announced, we expect to close six additional leased restaurants during fiscal 2017.    

      
 

Same-Store Sales
(SSS) Restaurants
 

February
4 weeks
 

March
4 weeks
 

April
5 weeks
 

4Q  FY '16
13 weeks
 

FY '16
52 weeks
540 -1.1% -2.3% -4.9% -3.0% -2.5%
                

Bob Evans Restaurants' GAAP operating loss was $2.8 million, compared to GAAP operating income of $6.5 million last year.  Bob Evans Restaurants' non-GAAP operating income was $11.6 million, compared to $16.7 million last year, a decline of $5.1 million.  The decline in non-GAAP operating income was due to lower sales and investment in labor hours to support efforts to improve guest hospitality along with increased hourly wage rates as a result of minimum wage increases, partially offset by cost savings of $2.8 million.  Operating income of $2.3 million was attributable to the 53rd week of fiscal 2016. 

Fourth-quarter fiscal 2016 BEF Foods segment summary
BEF Foods' net sales, excluding the 53rd week of fiscal 2016, were $95.3 million, an increase of $1.1 million, or 1.1 percent, compared to $94.2 million last year.  Pounds sold increased 7.1 percent while average net selling price per pound declined 5.5 percent compared to 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 through increased trade spending.  From a net sales perspective, a 13.7 percent increase in side-dish pounds sold, a 0.6 percent increase in sausage pounds sold, and a 3.7 percent increase in food service pounds sold were partially offset by a $4.0 million increase in trade spending (reduces net sales) and an 11.2 percent decline in frozen product pounds sold.

BEF Foods' GAAP operating income was $20.6 million, compared to $15.3 million last year.  BEF Foods' non-GAAP operating income was $20.6 million compared to $18.2 million last year, an improvement of $2.4 million.  The improvement in non-GAAP operating income was due primarily to increased sales, favorable sales mix, and $0.7 million of cost savings, partially offset by $3.9 million of increased net sow cost ($4.0 million of increased trade spending partially offset by $0.1 million of sow cost favorability) and increased incentive- and stock-based compensationOperating income of $2.1 million was attributable to the 53rd week of fiscal 2016. 

Fourth-quarter fiscal 2016 Corporate and Other summary
Corporate and Other GAAP operating costs were $19.3 million, compared to $20.9 million last year.  Corporate and Other non-GAAP operating costs were $18.1 million, compared to $17.1 million last year, an increase of $1.0 million due primarily to increased incentive- and stock-based compensation and the impact of the 53rd week of fiscal 2016, partially offset by $2.1 million of cost savings.

Fourth-quarter fiscal 2016 net interest expense - The borrowing rate on the Company's outstanding debt was 2.44 percent at the end of the quarter, compared to 2.19 percent at the end of last year.   

Fourth-quarter fiscal 2016 taxes - The Company recorded a GAAP tax benefit of $5.1 million for the fourth quarter of fiscal 2016, as compared to a tax benefit of $7.1 million last year.  The effective income tax rate in the fourth quarter of fiscal 2016 was substantially different than the statutory rate due to the Company's increased domestic production activities deduction as a result of increased taxable income and the utilization of tax credits.  The effective tax rate in the fourth quarter of fiscal 2015 was substantially different than the statutory rate due to the impact of final fiscal year permanent items against lower than projected pretax earnings and the expiration of the statute of limitations on several uncertain tax position reserves.  The non-GAAP tax rate was approximately 13.8 percent for the fourth quarter, reflecting the Company's annual non-GAAP estimated tax rate, compared to 11.2 percent last year.  The increase in the tax rate reduced fourth quarter diluted non-GAAP earnings per share by approximately $0.01.

Fiscal-year 2016 consolidated operating results
Consolidated GAAP operating income was $36.2 million, compared to $17.7 million last year.  Consolidated non-GAAP operating income was $66.2 million, compared to $53.5 million last year, a 24 percent improvement.  Consolidated GAAP net income of $24.2 million, or $1.13 per diluted share, compared with net income of $16.6 million, or $0.70 per diluted share last year, a 61 percent improvement.  On a non-GAAP basis, net income was $43.4 million, or $2.02 per diluted share, a 24 percent increase compared with $1.63 per diluted share last year.

Fiscal-year 2016 Bob Evans Restaurants segment summary
Bob Evans Restaurants' net sales, excluding the 53rd week of fiscal 2016, were $934.5 million, a decline of $35.4 million, or 3.7 percent, compared to net sales of $969.9 million last year.  Same-store sales declined 2.5 percent during fiscal 2016 with the balance of the net sales decline due to net restaurant closures.  During fiscal 2016, Bob Evans opened one and closed 41 restaurants.

Bob Evans Restaurants' GAAP operating income was $34.8 million, compared to GAAP operating income of $56.2 million last year.  Bob Evans Restaurants' non-GAAP operating income was $60.0 million compared to $70.9 million last year, a decline of $10.9 million.  The decline in non-GAAP operating income was due primarily to lower sales and higher labor costs resulting from increased wage rates as well as increased labor hours to improve the guest experience, partially offset by cost savings of $9.0 million.  Operating income of $2.3 million was attributable to the 53rd week of fiscal 2016. 

Fiscal-year 2016 BEF Foods segment summary
BEF Foods' net sales, excluding the 53rd week of fiscal 2016, were $380.5 million, an increase of $1.2 million, or 0.3 percent, compared to $379.3 million last year.  Pounds sold increased 5.8 percent while average net selling price per pound declined 5.2 percent compared to last year.  The decline in average net selling price reflects an increased sales mix of lower-priced (and higher margin) side-dish products relative to sausage, as well as reduced net sausage pricing through increased trade spending.  From a net sales perspective, a 15.2 percent increase in side-dish pounds sold and a 9.9 percent increase in sausage pounds sold were partially offset by a $21.5 million increase in trade spending (reduces net sales), a 21.7 percent decline in foodservice pounds sold, and an 8.4 percent reduction in frozen product pounds sold.  

BEF Foods' GAAP operating income was $71.0 million, compared to $40.0 million last year.  BEF Foods' non-GAAP operating income was $74.6 million compared to $43.8 million last year, an improvement of $30.8 million.  The improvement in non-GAAP operating income was due primarily to increased sales and favorable sales mix, $3.3 million of cost savings, and $2.6 million of favorable net sow cost ($24.1 million of sow cost favorability, partially offset by $21.5 million of increased trade spending), partially offset by increased incentive- and stock-based compensation.  Operating income of $2.1 million was attributable to the 53rd week of fiscal 2016. 

Fiscal-year 2016 Corporate and Other summary
Corporate and Other GAAP operating costs were $69.6 million, compared to $78.5 million last year.  Corporate and Other non-GAAP operating costs were $68.4 million, compared to $61.3 million last year, an increase of $7.2 million due primarily to increased incentive- and stock-based compensation, ERP support costs, depreciation and amortization expense related to ERP capital expenditures, and the impact of the 53rd week of fiscal 2016, partially offset by $7.8 million of cost savings.

Fiscal-year 2016 net interest expense - The borrowing rate on the Company's outstanding debt was 2.44 percent at the end of fiscal 2016, compared to 2.19 percent at the end of fiscal 2015.     

Fiscal-year 2016 taxes - The Company recorded a GAAP tax provision expense of $1.2 million (4.7 percent) for fiscal 2016, as compared to a tax benefit of $7.5 million (83 percent) in fiscal 2015. The effective income tax rate in fiscal 2016 and 2015 was substantially different than the statutory rate due to the Company's domestic production activities deduction and the utilization of tax credits.  The non-GAAP tax rate for fiscal 2016 was 22.4 percent, reflecting the impact of permanent items on income when adjusted for nonrecurring items, compared to 10.5 percent for fiscal 2015.  The increase in the tax rate reduced fiscal year 2016 diluted non-GAAP earnings per share by approximately $0.30.

Fiscal-year 2016 balance sheet highlights - The Company's cash balance and outstanding debt at the end of the year were $12.9 million and $339.1 million, respectively, compared to $6.4 million and $451.1 million, last year.  The Company was in compliance with its debt covenants at the end of the year.  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.  The Company's leverage ratio as defined in its credit agreement was 2.44 at the end of the year.  On a pro-forma basis, assuming the 2016 sale-leaseback transactions occurred at the beginning of the fiscal year, the Company's year-end leverage ratio would have been 3.19, compared to 3.37 in the prior year.  

Fiscal year 2017 outlook
Chief Administrative and Chief Financial Officer Mark Hood said, "Fiscal 2016 was notable for several important developments that position us well to achieve our fiscal 2017 non-GAAP diluted earnings per share guidance range of $2.00 to $2.15, of which the midpoint represents a 10 percent increase compared to fiscal 2016 52-week non-GAAP diluted earnings per share of $1.89.  This guidance range does not include the impact of potential share repurchase activity during fiscal year 2017.  We completed three real estate monetization transactions during fiscal 2016 that supported $172 million of share repurchases and more than $110 million of debt reduction.  Furthermore, we made progress on cost reduction initiatives at all levels of the organization as we have eliminated approximately $30 million of annual costs.  We also invested in projects to enable and support future profitable growth including continued implementation of our ERP system along with testing of our restaurant technology platform that will begin rolling out to our restaurants later this summer with system-wide implementation expected to be complete by the end of fiscal 2017.

"At Bob Evans Restaurants, we expect negative low-single digit to flat same-store sales for fiscal year 2017.  Our guidance also incorporates incremental investments in restaurant labor hours and marketing - particularly during the first half of the year - to support our efforts in improving guest hospitality and to better communicate our value offerings at every daypart.  BEF Foods' net sales in fiscal 2017 are expected to be $400 to $420 million, with our refrigerated side-dish product line generating most of the growth.   We anticipate incremental marketing expenditures at BEF Foods to support continued volume growth, particularly of our refrigerated side dishes.  Additionally, there will be some labor inefficiencies as we build staffing for production startup of line four at our refrigerated side-dish facility."

Hood continued, "Our fiscal 2017 capital expenditure budget of $75 to $80 million is comprised of the following:  approximately $20 million for the restaurant technology platform, $12 million for the expansion of BEF Foods refrigerated side-dish facility, $35 million for maintenance and equipment upgrades in both Bob Evans Restaurants and BEF Foods, with the balance budgeted for IT expenditures and infrastructure, and opening of one new Bob Evans Restaurant.

"From a corporate perspective, we have $78.5 million remaining on our share repurchase authorization and we expect to execute additional repurchases during fiscal 2017 while maintaining a prudent leverage ratio.  We anticipate a tax rate of approximately 24 to 25 percent during fiscal 2017."

  
Guidance MetricFY ‘17
Consolidated net sales$1.28 to $1.33 billion
Bob Evans Restaurants same-store salesnegative low-single digit to flat
Bob Evans Restaurants commodity pricingapproximately flat
BEF Foods net sales$400 to $420 million
BEF Foods sow cost (per hundredweight) $52-$55
Capital expenditures$75 to $80 million
Depreciation and amortization$71 to $75 million
Net interest expense$12 to $14 million
Tax rate24% to 25%
Diluted weighted-average share countapproximately 20 million shares
Remaining share repurchase authorization$78.5 million
GAAP diluted earnings per share$1.95 to $2.12
Non-GAAP diluted earnings per share$2.00 to $2.15
  

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

Investor Conference Call
The Company will host a conference call to discuss its fourth-quarter fiscal 2016 results at 8:30 a.m. (ET) on Wednesday, June 15, 2016.  The dial-in number is (855) 468-0551, access code 16240692.  A replay will be available at (800) 585-8367, access code16240692.

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

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

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

About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name.  At the end of the fourth fiscal quarter (April 29, 2016), Bob Evans Restaurants owned and operated 527 family restaurants in 18 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods segment, is also a leading producer and distributor of refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food items under the Bob Evans and Owens brand names.  For more information about Bob Evans Farms, Inc., visit www.bobevans.com

BOBE-E

 

 

Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Fourth quarter Fiscal 2016 compared to the corresponding period a year ago:

(in thousands, except per share amounts)    Basic EPS Diluted EPS
 14 weeks
ended
 13 weeks
ended
 14 weeks
ended
 13 weeks
ended
 14 weeks
ended
 13 weeks
ended
 April 29, 2016 April 24, 2015 April 29, 2016 April 24, 2015 April 29, 2016 April 24, 2015
Operating Income (Loss) as Reported           
Bob Evans Restaurants$(2,794) $6,531         
BEF Foods 20,569  15,317         
Corporate and Other(19,310) (20,911)        
Operating Income(1,535) 937         
Net interest expense2,944  2,424         
Income Before Income Taxes(4,479) (1,487)        
Provision (benefit) for income taxes(5,059) (7,097)        
Net Income as reported580  5,610  $0.03  $0.24  $0.03  $0.24 
            
Adjustments            
Bob Evans Restaurants           
Impairments6,710  2,851         
Severance/Restructuring1,441  1,190         
Loss on Sale of Assets9,560            
Activism, Strategic Initiatives and Other  78         
Litigation Reserves(3,344) 6,000         
 14,367  10,119         
BEF Foods           
Impairments  2,761          
Severance/Restructuring  153         
   2,914         
Corporate and Other           
Severance/Restructuring1,165  2,177         
Activism, Strategic Initiatives and Other  1,748          
CEO Separation  (148)        
 1,165  3,777         
Total adjustments           
Impairments6,710  5,612         
Severance/Restructuring2,606  3,520         
Loss on Sale of Assets9,560           
Activism, Strategic Initiatives and Other  1,826         
CEO Separation  (148)        
Litigation Reserves(3,344) 6,000         
 15,532  16,810         
Non-GAAP operating income  (loss)           
Bob Evans Restaurants11,573  16,650         
BEF Foods20,569  18,231         
Corporate and Other(18,145) (17,134)        
Total non-GAAP operating income13,997  17,747         
Adjustments to net interest expense  485         
Non-GAAP net interest expense2,944  2,909         
Non-GAAP  Income Before Taxes11,053  14,838         
Adjustments to income tax provision (benefit)6,581  8,758         
Non-GAAP Provision for Income Taxes1,522  1,661         
Non-GAAP Net Income$9,531  $13,177  $0.48  $0.56  $0.48  $0.56 
             
Weighted Average Shares Outstanding    19,854  23,506  19,995  23,664 
                

 

Fourth quarter Fiscal 2016 compared to the corresponding period a year ago:

  Consolidated Results Bob Evans Restaurants
  14 weeks ended 13 weeks ended 14 weeks ended 13 weeks ended
  April 29,
2016
 % of
Sales
 April 24,
2015
 % of
Sales
 April 29,
2016
 % of
Sales
 April 24,
2015
 % of
Sales
Operating income as reported                
                  
Net Sales $345,587    $332,393    $243,193    $238,187   
Cost of sales 107,974  31.2% 103,020  31.0% 63,164  26.0% 62,167  26.1%
Operating wage and fringe benefit expenses 111,261  32.2% 104,381  31.4% 100,270  41.2% 93,882  39.4%
Other operating expenses 60,652  17.6% 55,278  16.6% 45,897  18.9% 42,341  17.8%
Selling, general and administrative expenses 40,448  11.7% 42,942  12.9% 16,172  6.6% 15,719   6.6%
Depreciation and amortization expense 19,492  5.6% 20,223  6.1% 13,189  5.4% 14,696  6.2%
Impairments 7,295  2.1% 5,612  1.7% 7,295  3.0% 2,851  1.2%
Total as reported  (1,535) (0.4)% 937  0.3% $(2,794) (1.1)% 6,531  2.7%
                 
Adjustments                 
                  
Net Sales                
Cost of sales                
Operating wage and fringe benefit expenses (1,135)   (11)   (1,135)   (11)  
Other operating expenses     (66)       (66)  
Selling, general and administrative expenses (7,687)   (11,121)   (6,522)   (7,191)  
Depreciation and amortization expense                
Impairments (6,710)   (5,612)   (6,710)   (2,851)  
Total Adjustments 15,532    16,810    14,367     10,119   
                 
Non-GAAP operating income                
                 
Net Sales 345,587    332,393    243,193    238,187   
Cost of sales 107,974  31.2% 103,020  31.0% 63,164  26.0% 62,167  26.1%
Operating wage and fringe benefit expenses 110,126  31.9% 104,370  31.4% 99,135   40.8% 93,871  39.4%
Other operating expenses 60,652  17.6% 55,212  16.6% 45,897  18.9% 42,275  17.7%
Selling, general and administrative expenses 32,761  9.4% 31,821  9.6% 9,650  3.9% 8,528  3.6%
Depreciation and amortization expense 19,492  5.6% 20,223  6.1% 13,189  5.4% 14,696  6.2%
Impairments  585  0.2%   % 585  0.2%   %
Total non-GAAP operating income $13,997  4.1% $17,747  5.3%  $11,573  4.8% $16,650  7.0%
                              


 BEF Foods Corporate and Other
 14 weeks ended 13 weeks ended 14 weeks ended 13 weeks ended
 April 29,
2016
 % of Sales April 24,
2015
 % of Sales April 29, 2016 April 24, 2015
Operating income (loss) as reported            
             
Net Sales$102,394    $94,206    $  $ 
Cost of sales44,810  43.8%  40,853  43.4%    
Operating wage and fringe benefit expenses10,991  10.7% 10,499  11.1%    
Other operating expenses14,755  14.4% 12,937  13.7%    
Selling, general and administrative expenses7,451  7.3% 7,659  8.2% 16,825  19,564 
Depreciation and amortization expense3,818  3.7% 4,180  4.4% 2,485  1,347 
Impairments  % 2,761  2.9%    
Total as Reported20,569  20.1% 15,317  16.3%  (19,310) (20,911)
            
Adjustments           
            
Net Sales           
Cost of sales           
Operating wage and fringe benefit expenses           
Other operating expenses           
Selling, general and administrative expenses    (153)   (1,165) (3,777)
Depreciation and amortization expense           
Impairments    (2,761)      
Total adjustments    2,914    1,165  3,777 
            
Non-GAAP operating income (loss)           
             
Net Sales102,394    94,206       
Cost of sales44,810  43.8% 40,853  43.4%    
Operating wage and fringe benefit expenses10,991  10.7% 10,499  11.1%    
Other operating expenses14,755  14.4% 12,937  13.7%    
Selling, general and administrative expenses7,451  7.3% 7,506  8.0% 15,660  15,787 
Depreciation and amortization expense3,818  3.7% 4,180   4.4% 2,485  1,347 
Impairments  %   %    
Total non-GAAP operating income (loss)$20,569  20.1% $18,231  19.4% $(18,145) $(17,134)
                      

 

Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Fiscal 2016 compared to the corresponding period a year ago:

(in thousands, except per share amounts)    Basic EPS Diluted EPS
 53 weeks
ended
 52 weeks
ended
 53 weeks
ended
 52 weeks
ended
 53 weeks
ended
 52 weeks
ended
 April 29,
2016
 April 24,
2015
 April 29,
2016
 April 24,
2015
 April 29,
2016
 April 24,
2015
Operating Income (Loss) as Reported           
Bob Evans Restaurants$34,793  $56,239         
BEF Foods71,011  39,993         
Corporate and Other(69,583) (78,546)        
Operating Income36,221  17,686         
Net interest expense10,800  8,649         
Income Before Income Taxes25,421  9,037         
Provision (benefit) for income taxes1,199  (7,516)        
Net Income as reported24,222  16,553  $1.14  $0.70  $1.13  $0.70 
Less Diluted EPS Impact of 53rd week        $(0.13)  
Adjusted Diluted EPS Excluding 53rd week        $1.00   
             
Adjustments           
Bob Evans Restaurants           
Impairments6,710  6,174         
Severance/Restructuring1,760  2,070         
Loss on Sale of Assets9,560           
Activism, Strategic Initiatives and Other  465          
Litigation Reserves7,156  6,000         
 25,186  14,709         
BEF Foods           
Impairments  2,761         
Severance/Restructuring  1,008         
Loss on Sale of Assets3,606           
Activism, Strategic Initiatives and Other   17         
 3,606  3,786         
Corporate and Other           
Severance/Restructuring1,165   2,663         
Loss on Sale of Assets  1,846         
Activism, Strategic Initiatives and Other  9,091         
CEO Separation  3,688         
 1,165  17,288         
Total adjustments           
Impairments6,710  8,935         
Severance/Restructuring2,925  5,741         
Loss on Sale of Assets13,166  1,846         
Activism, Strategic Initiatives and Other   9,573         
CEO Separation  3,688         
Litigation Reserves7,156  6,000         
 29,957   35,783         
Non-GAAP operating income (loss)           
Bob Evans Restaurants59,979  70,948          
BEF Foods74,617  43,779         
Corporate and Other(68,418) (61,258)        
Total non-GAAP operating income66,178  53,469          
Adjustments to net interest expense(480) 1,859         
Non-GAAP net interest expense10,320  10,508         
Non-GAAP Income Before Taxes55,858  42,961         
Adjustments to income tax provision11,293  12,046         
Non-GAAP Provision for Income Taxes12,492  4,530         
Non-GAAP Net Income$43,366  $38,431  $2.03  $1.64  $2.02  $1.63 
Less Diluted EPS Impact of 53rd week        $(0.13)  
Adjusted Diluted EPS Excluding 53rd week         $1.89   
            
Weighted Average Shares Outstanding    21,336  23,489  21,494  23,649 
                

 

Fiscal 2016 compared to the corresponding period a year ago:

 Consolidated Results Bob Evans Restaurants
 53 weeks ended 52 weeks ended 53 weeks ended 52 weeks ended
 April 29,
2016
 % of
Sales
 April 24,
2015
 % of
Sales
 April 29,
2016
 % of
Sales
 April 24,
2015
 % of
Sales
Operating income as reported                
                
Net Sales$1,338,827    $1,349,190    951,212    $969,877   
Cost of sales425,585  31.8% 457,744  33.9% 252,611  26.6% 258,677  26.7%
Operating wage and fringe benefit expenses427,148  31.9% 423,539  31.4% 384,977  40.5% 381,874  39.4%
Other operating expenses222,060  16.6% 217,991  16.2% 169,630  17.8% 169,018  17.4%
Selling, general and administrative expenses139,822  10.5% 143,295  10.6% 46,984  4.8% 40,733  4.2%
Depreciation and amortization expense79,607  5.9% 80,074  5.9% 53,833  5.7%  57,236  5.9%
Impairments8,384  0.6% 8,861  0.7% 8,384  0.9% 6,100  0.6%
Total as reported36,221  2.7% 17,686  1.3% $34,793  3.7% $56,239  5.8%
                
Adjustments               
                 
Net Sales               
Cost of sales               
Operating wage and fringe benefit expenses(1,135)   (43)   (1,135)   (43)  
Other operating expenses    (708)       (708)  
Selling, general and administrative expenses(22,112)   (26,171)   (17,341)   (7,858)  
Depreciation and amortization expense                
Impairments(6,710)   (8,861)   (6,710)   (6,100)  
Total Adjustments29,957    35,783    25,186    14,709   
                 
Non-GAAP operating income               
                 
Net Sales1,338,827    1,349,190     951,212    969,877   
Cost of sales425,585  31.8% 457,744  33.9% 252,611  26.6% 258,677  26.7%
Operating wage and fringe benefit expenses426,013  31.8% 423,496  31.4% 383,842  40.4% 381,831   39.4%
Other operating expenses222,060  16.6% 217,283  16.1% 169,630  17.8% 168,310  17.4%
Selling, general and administrative expenses117,710   8.9% 117,124  8.7% 29,643  3.0% 32,875  3.3%
Depreciation and amortization expense79,607  5.9% 80,074  5.9% 53,833  5.7% 57,236  5.9%
Impairments1,674  0.1%   % 1,674  0.2%   %
Total non-GAAP operating income$66,178  4.9% $53,469  4.0% $59,979  6.3%  $70,948  7.3%
                            


 BEF Foods Corporate and Other
 53 weeks ended 52 weeks ended 53 weeks ended 52 weeks ended
 April 29,
2016
 % of Sales April 24,
2015
 % of Sales April 29, 2016 April 24, 2015
Operating income (loss) as reported           
             
Net Sales$387,615    $379,313    $  $ 
Cost of sales172,974  44.6% 199,067  52.5%    
Operating wage and fringe benefit expenses42,171  10.9% 41,665  11.0%    
Other operating expenses52,430  13.5% 48,974  12.9%    
Selling, general and administrative expenses32,805  8.5% 29,712  7.9% 60,033  72,849 
Depreciation and amortization expense16,224  4.2% 17,141  4.5% 9,550  5,697 
Impairments  % 2,761  0.7%    
Total as Reported$71,011  18.3% $39,993  10.5% $(69,583) $(78,546)
            
Adjustments           
            
Net Sales           
Cost of sales           
Operating wage and fringe benefit expenses           
Other operating expenses           
Selling, general and administrative expenses(3,606)   (1,025)   (1,165) (17,288)
Depreciation and amortization expense            
Impairments    (2,761)      
Total adjustments3,606    3,786    1,165  17,288 
            
Non-GAAP operating income (loss)           
             
Net Sales387,615    379,313        
Cost of sales172,974  44.6% 199,067  52.5%    
Operating wage and fringe benefit expenses42,171  10.9% 41,665  11.0%    
Other operating expenses52,430  13.5% 48,974  12.9%    
Selling, general and administrative expenses29,199  7.5% 28,687  7.6% 58,868  55,561 
Depreciation and amortization expense16,224  4.2% 17,141  4.5% 9,550  5,697 
Impairments  %   %    
Total non-GAAP operating income (loss) $74,617  19.3% $43,779  11.5% $(68,418) $(61,258)
                       


Consolidated Statements of Net Income           
(in thousands, except per share amounts)14 weeks ended 13 weeks ended 53 weeks ended 52 weeks ended
 April 29,
2016
% of
Sales
 April 24,
2015
% of
Sales
 April 29,
2016
% of
Sales
 April 24,
2015
% of
Sales
Net Sales$345,587   $332,393   $1,338,827   $1,349,190  
Cost of sales107,974 31.2% 103,020 31.0% 425,585 31.8% 457,744 33.9%
Operating wage and fringe benefit expenses111,261 32.2% 104,381 31.4% 427,148 31.9% 423,539 31.4%
Other operating expenses 60,652 17.6% 55,278 16.6% 222,060 16.6% 217,991 16.2%
Selling, general and administrative expenses40,448 11.7% 42,942 12.9% 139,822 10.5% 143,295 10.6%
Depreciation and amortization expense19,492 5.6% 20,223 6.1% 79,607 5.9% 80,074 5.9%
Impairments7,295 2.1% 5,612 1.7% 8,384 0.6% 8,861 0.7%
Operating Income (1,535)(0.4)% 937 0.3% 36,221 2.7% 17,686 1.3%
Net interest expense2,944 0.9% 2,424 0.7% 10,800 0.8% 8,649 0.6%
Income Before Income Taxes(4,479)(1.3)% (1,487)(0.4)% 25,421 1.9% 9,037 0.7%
Provision (Benefit) for income taxes(5,059)(1.5)% (7,097)(2.1)% 1,199 0.1% (7,516)(0.6)%
Net Income$580 0.2% $5,610 1.7% $24,222 1.8%  $16,553 1.2%
            
Earnings Per Share — Net Income           
Basic$0.03   $0.24   $1.14   $0.70  
Diluted$0.03   $0.24   $1.13   $0.70  
            
Cash Dividends Paid Per Share$0.34   $0.31   $1.30   $1.24  
            
Weighted Average Shares Outstanding           
Basic19,779   23,506   21,336   23,489   
Dilutive shares142   158   158   160  
Diluted19,921   23,664   21,494   23,649  
            
Shares outstanding at quarter end19,756   23,407        
              

 

Consolidated Balance Sheets

(in thousands, except par value amounts)April 29, 2016 April 24, 2015
Assets   
Current Assets   
Cash and equivalents$12,896  $6,358 
Accounts receivable, net28,893  26,100 
Inventories24,997  24,620 
Federal and state income taxes receivable  23,722 
Prepaid expenses and other current assets9,307  5,035 
Current assets held for sale31,644  22,243 
Total Current Assets107,737  108,078 
Land145,453  214,692 
Buildings and improvements585,218  839,148 
Machinery and equipment500,469  445,718 
Construction in process32,273  38,354 
Total Property, Plant and Equipment1,263,413  1,537,912 
Less accumulated depreciation665,777  732,697 
Net Property, Plant and Equipment597,636  805,215 
Other Assets   
Deposits and other4,622  3,756 
Notes receivable20,886  18,544 
Rabbi trust assets20,662  32,302 
Goodwill and other intangible assets19,829  19,986 
Deferred income tax assets29,002  4,836 
Long-term assets held for sale  26,263 
Total Other Assets95,001  105,687 
Total Assets$800,374  $1,018,980 
Liabilities and Stockholders' Equity   
Current Liabilities   
Current portion of long-term debt$3,419  $409 
Accounts payable37,518  30,019 
Accrued property, plant and equipment purchases5,308  4,820 
Accrued non-income taxes15,696  14,951 
Accrued wages and related liabilities26,358  34,529 
Self-insurance reserves20,169  18,900 
Deferred gift card revenue14,147  13,714 
Current taxes payable9,473   
Current reserve for uncertain tax provision1,481  1,594 
Other accrued expenses31,988  34,156 
Total Current Liabilities165,557  153,092 
Long-Term Liabilities   
Deferred compensation17,761  22,481 
Reserve for uncertain tax positions2,752  2,767 
Deferred income tax liabilities  4,218 
Deferred rent and other5,851  5,755 
Deferred gain on sale leaseback transactions56,371   
Credit facility borrowings and other long-term debt335,638  450,676 
Total Long-Term Liabilities418,373  485,897 
Stockholders' Equity   
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at April 29, 2016, and April 24, 2015426  426 
Capital in excess of par value244,304  235,958 
Retained earnings832,323  836,362 
Treasury stock, 22,881 shares at April 29, 2016, and 19,231 shares at April 24, 2015, at cost(860,609) (692,755)
Total Stockholders' Equity216,444  379,991 
Total Liabilities and Stockholders' Equity$800,374  $1,018,980 
        

 

Consolidated Statements of Cash Flows

 53 weeks ended 52 weeks ended
(in thousands)April 29, 2016 April 24, 2015
Operating activities:   
Net income$24,222  $16,553 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization79,607  80,074 
Impairments8,384  6,100 
Impairment of Intangible Assets  2,761 
Loss on disposal of fixed assets4,532  2,204 
Loss (Gain) on rabbi trust assets1,640  (742)
(Gain) Loss on deferred compensation(765) 2,013 
Share-based compensation6,127  2,967 
Accretion of non-current note receivable(2,082)  (1,859)
Deferred income taxes(28,384) (14,791)
Amortization of deferred financing costs2,188  1,099 
Cash provided by (used for) assets and liabilities:   
Accounts receivable(2,793) 4,588 
Inventories(377) 623 
Prepaid expenses and other current assets483  (563)
Accounts payable7,499  955 
Federal and state income taxes33,067  1,504 
Accrued wages and related liabilities(3,101) 11,005 
Self-insurance 1,269  (974)
Accrued non-income taxes745  (2,892)
Deferred revenue433  747 
Other assets and liabilities(9,058) (8,267)
Net cash provided by operating activities123,636  103,105 
Investing activities:   
Purchase of property, plant and equipment(65,694) (74,517)
Proceeds from sale of property, plant and equipment257,246  10,036 
Proceeds from liquidation of rabbi trust assets5,245   
Deposits and other(537) (135)
Net cash used in investing activities196,260  (64,616)
Financing activities:   
Cash dividends paid(27,861) (29,056)
Gross proceeds from credit facility borrowings and other long-term debt672,349  579,895 
Gross repayments of credit facility borrowings and other long-term debt(783,339) (588,541)
Payments of debt issuance costs(3,555) (1,279)
Purchase of treasury stock(171,513)  
Proceeds from share-based compensation214  534 
Cash paid for taxes on share-based compensation(1,314) (1,738)
Excess tax benefits from share-based compensation1,661  228 
Net cash used in financing activities(313,358) (39,957)
Net cash provided by (used in) operations6,538  (1,468)
Cash and equivalents at the beginning of the period6,358  7,826 
Cash and equivalents at the end of the period$12,896  $6,358 
        

 

Summary of Operating Efficiency Savings Fiscal 2016 (dollars in millions)

 Consolidated Bob Evans Restaurants BEF Foods Corporate and Other
S,G&A       
Wage-Related$10.1  $4.3  $1.2  $4.6 
Non Wage-Related4.5  1.1  0.2  3.2 
Total S,G&A14.6  5.4  1.4  7.8 
        
Non-S,G&A       
Wage-Related0.4     0.4   
Non Wage-Related5.1  3.6  1.5   
Total Non-S,G&A5.5  3.6  1.9   
        
Year to date total$20.1  $9.0  $3.3  $7.8 
                 

 

Bob Evans Restaurants openings and closings, by quarter

Fiscal Year Beginning
Total
 Q1 Q2 Q3 Q4 Full Year Closings Ending
Total*
2016 567      1    1  41  527 
2015 561   1    2  4  7  1  567 
2014 560  1  1  1  1  4  3  561 
2013 565  2        2  7  560 
2012 563    2    2  4  2  565 
                         

 

Bob Evans Same-Store Sales Day Part Performance

Fourth-quarter Fiscal 2016 SSS% Day Part Performance - Total Chain
Day Part On-Premises Off-Premises Total
Breakfast  (0.1)%  7.1%  0.7%
Lunch  (3.1)%  (3.6)%  (3.2)%
Dinner  (7.1 )%  (3.1)%  (6.2)%
Total  (3.3)%  (1.1)%  (3.0)%
             


Fiscal 2016 SSS% Day Part Performance - Total Chain
Day Part On-Premises Off-Premises Total
Breakfast  (0.7)%  8.3%  0.2%
Lunch  (2.9)%  1.0%  (2.4)%
Dinner  (7.2)%  1.1%  (5.4)%
Total  (3.4)%  2.6%  (2.5)%
             

 

Bob Evans Restaurants same-store sales analysis (18-month core; 540 restaurants)

 Fiscal 2016 Fiscal 2015* Fiscal 2014*
 Total Pricing /
Mix
 Transactions Total Pricing /
Mix
 Transactions Total Pricing / Mix Transactions
May (0.3)%  3.9%   (4.2)%  (1.9)%  1.3%  (3.1)%  (0.5)%   2.8%  (3.4)%
June (0.9)%   4.4%  (5.3)%  (1.2)%  1.2%  (2.4)%  (0.4)%  2.8%  (3.1)%
July 0.3%  5.8%  (5.5)%  (2.7)%  0.9%  (3.6)%  (1.2)%  2.2%  (3.3)%
Q1 (0.3)%  4.8 %  (5.0)%  (2.0)%  1.1%  (3.2)%  (0.7)%  2.6%  (3.2)%
                  
August (1.3)%  3.3%  (4.6)%  (2.4)%  2.0%  (4.4)%  (0.8)%  3.0%  (3.7)%
September (3.8)%  2.9%  (6.6)%  1.7%  2.6%  (0.9)%  (2.2)%  2.6%  (4.8)%
October (4.4)%  1.5%  (5.8)%  0.4%  2.5%  (2.1)%  (2.6 )%  1.6%  (4.3)%
Q2 (3.2)%  2.5%  (5.7)%  (0.1)%  2.4%   (2.4)%  (1.9)%  2.3%  (4.2)%
                   
November (3.2)%  2.5%  (5.6)%  2.9%  2.8%  %  1.7%  2.8%  (1.1)%
December (4.3)%  3.4%  (7.7)%  3.9%  1.3%  2.6%  (3.5)%  2.8%  (6.3)%
January (3.4)%  3.1%  (6.5)%  5.2%  2.3%  2.9%  (4.7)%  4.2%  (8.8)%
Q3 (3.6)%  2.9%  (6.5)%  3.8%  2.2%  1.6%  (1.7)%  3.3%  (5.0)%
                  
February (1.1)%  0.9%  (2.0)%  2.4%  3.1%  (0.6)%  (6.7)%  3.0%  (9.8)%
March (2.3)%  2.2%  (4.5)%  0.9%  2.9%  (2.0)%   (4.1)%  2.1%  (6.3)%
April (4.9)%  1.4%  (6.3)%  2.3%  4.0%  (1.7)%  (2.6)%  1.8%  (4.4)%
Q4 (3.0)%  1.5%  (4.4)%  2.1%  3.4%  (1.3)%  (4.3)%   2.3%  (6.6)%
                  
Fiscal Year (2.5)%  2.9%  (5.4)%  0.9%  2.3%  (1.4 )%  (2.1)%  2.6%  (4.7)%

* Prior year data presentation reflects Company's current same store sales methodology.

 

Bob Evans Restaurants key restaurant sales data

  Bob Evans Restaurants
Approximate annual store sales in fiscal 2016 $1.7 million
     
FY2016 day part mix (%): Q4 2016 Fiscal 2016
Breakfast 32% 32%
Lunch 37% 37%
Dinner 31% 31%
     
FY2016 dine-in check average per guest ($): Q4 2016 Fiscal 2016
Breakfast $9.47  $9.35 
Lunch $9.78  $9.72 
Dinner $9.84  $9.78 
     
  Q4 2016 Fiscal 2016
FY2016 dine-in check average per guest ($): $9.69  $9.61 
FY2016 dine-in check average per ticket ($): $18.60  $18.68 
FY2016 carry-out check average per ticket ($): $15.75  $15.17 
         

 

BEF Foods historical sow cost review (average cost per hundredweight)
Fiscal Year Q1 Q2 Q3 Q4  Average
2016 $38.75  $53.31  $41.53  $42.84  $44.31 
2015 $87.87  $78.82  $67.79  $43.02   $69.41 
2014 $63.24  $77.33  $72.36  $78.47  $73.23 
2013 $54.19  $43.22  $58.73  $59.07  $53.87 
2012 $57.06  $67.82  $60.56  $60.41  $61.58 
           
           
BEF Foods total pounds sold growth (inclusive of pounds sold to Bob Evans Restaurants)
Fiscal Year Q1 Q2 Q3 Q4  Average
2016  0.4%  5.7%   9.4%  17.8%  8.6%
2015  (6.1)%  (4.5)%  5.5%  0.9%  (0.9)%
2014  13.0%  0.2%  (11.1)%  (6.9)%  (2.4)%
2013  7.2%  16.1%  13.1%  21.4%  14.6%
2012  (2.7)%  3.1%  0.9%  (1.3)%  0.1%
           
           
BEF Foods total pounds sold, by category      
Fiscal 2016          
Category Q1 Q2 Q3 Q4  
Sides  49.6%  50.7%  50.9%  51.4%  
Sausage  22.0%  22.3%  26.6%  21.7%  
Food Service - External  14.1%  12.5%  10.4%  11.4%  
Food Service - Intersegment  6.2%  6.6%  6.0%  8.1%  
Frozen  4.6%  4.5%  3.1%  3.9%  
Other  3.5%  3.4%  3.0%  3.5%  
           
Fiscal 2015          
Category  Q1 Q2 Q3 Q4  
Sides  42.5%  46.9%  48.0%  49.8%  
Sausage  19.3%  20.5%  26.2%  23.7%  
Food Service - External  24.0%  18.0%  12.8%  11.8%  
Food Service - Intersegment  6.0%  6.0%  5.5%  5.8%  
Frozen  4.6%  5.0%  4.1%   4.8%  
Other  3.6%  3.6%  3.4%  4.1%  
                   

 

BEF Foods net sales review (dollars in thousands)

 Q4 FY16 Q4 FY15
Gross sales$124,631  $111,126 
Less: promotions20,700  15,542 
Less: discounts775  763 
Less: returns and slotting762  615 
Net sales$102,394  $94,206 


 YTD 2016 YTD 2015
Gross sales$466,918  $435,930 
Less: promotions73,073  50,578 
Less: discounts3,305  3,441 
Less: returns and slotting2,925  2,598 
Net sales$387,615  $379,313 
        
Contact:

Scott C. Taggart

Vice President, Investor Relations

(614) 492-4954

Source: Bob Evans Farms, Inc.

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