BOB EVANS REPORTS FISCAL 2014 SECOND-QUARTER RESULTS Company announces 2Q 2014 earnings per diluted share of $0.23; non-GAAP diluted EPS was $0.35 for the quarter; net sales from continuing operations increased 1 percent
Higher than expected year-over-year increase in sow prices, and other short-term cost impacts reduced diluted GAAP and non-GAAP EPS by approximately $0.27 per diluted share. Growth and transformation-related expenses impacted diluted EPS by an additional $0.05 per share
Company updates fiscal year 2014 non-GAAP EPS guidance to incorporate accretion from expected impact of share repurchases of approximately $0.09 to $0.11 per diluted share; guidance range set at $2.60 to $2.65
Bob Evans Restaurants completed 66 Farm Fresh Refresh remodels during 2Q 2014, 126 completed year-to-date; remodel program to be completed by the end of fiscal year 2014
BEF Foods’ 2Q 2014 net sales increase 10.6%, driven primarily by sales mix; volume up 0.2%
Company announces $50 million expansion of fiscal 2014 share repurchase program; program now totals $225 million for fiscal 2014
Company reaffirms long-term annual non-GAAP earnings growth guidance of 8 to 12 percent and 5-year non-GAAP net operating margin improvement guidance of 300 to 350 basis points
NEW ALBANY, Ohio – December 3, 2013 – Bob Evans Farms, Inc. (NASDAQ: BOBE) today announced its financial results for the fiscal 2014 second quarter ended Friday, October 25, 2013.
Second-quarter fiscal 2014 commentary
Chairman and Chief Executive Officer Steve Davis said, “The confidence we have in our ability to successfully execute our growth strategies, and reap the benefits of our recent transformational growth investments in Bob Evans Restaurants and BEF Foods, is reflected in our announcement of an incremental $50 million for share repurchases. This increase brings our expected share repurchase activity to $225 million for fiscal 2014, and our forecasted year-end fiscal 2014 leverage ratio to approximately three times adjusted debt to EBITDAR, our previously announced target. We believe a three times leverage ratio is a prudent level of leverage that will allow us to invest in our businesses, return meaningful capital to shareholders, and maintain flexibility for acquisitions.
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“Furthermore, our updated fiscal 2014 non-GAAP earnings per share guidance range of $2.60 to $2.65 including the accretive effect of the share repurchase, reflects our confidence the Company’s transformational investments will transition from generating net costs during the first half of the fiscal year, to generating net benefits during the second half of fiscal 2014. The new workforce management initiative and accelerated Farm Fresh Refresh remodeling program at Bob Evans Restaurants, and the Lima, Ohio, and Sulphur Springs, Texas, plant expansion projects at BEF Foods, are fundamental to achieving our five-year 300 to 350 basis point operating margin improvement goal in each of our businesses by fiscal year 2018.”
Davis continued, “At Bob Evans Restaurants, we completed 66 Farm Fresh Refresh restaurant remodels and opened our second Bob Evans Express location at our corporate headquarters. Additionally, we restructured and strengthened the Bob Evans Restaurants marketing team to more effectively leverage the sales growth opportunities enabled by the Farm Fresh Refresh program and our new restaurant prototype design. Finally, we opened a restaurant in Finneytown, Ohio, that embodies the important elements of the Farm Fresh Refresh remodeling program, while also incorporating new, more modern, design elements that will ultimately reduce building construction costs by an estimated 10 to 15 percent.
“At BEF Foods, we completed major plant expansion projects at our Lima, Ohio, refrigerated side dish manufacturing facility, as well as at our ready-to-eat production facility located in Sulphur Springs, Texas. We also announced the closure of our Richardson, Texas, fresh sausage production plant, reducing our fresh sausage plant network to two facilities with sufficient capacity to meet our anticipated volume needs. The cumulative effect of the BEF Foods’ plant closures, capacity additions, and other efficiency initiatives we have announced during the last two years is expected to add approximately 250 basis points to the segment’s operating margin during fiscal 2015. Unfortunately, we were also negatively affected by a $0.9 million profit impact due to lost sales, and increased costs associated with a supplier dispute related to BEF Foods’ side dish business. Despite the impacts of record high sow costs which negatively impacted the quarter by approximately $9 million on a year-over-year basis, growth and transformational investment-related expenses, and our supplier dispute, we remain committed to driving our growth strategies and achieving our long-term 8 to 12 percent average adjusted annual non-GAAP earnings growth guidance.”
Second-quarter fiscal 2014 consolidated results and GAAP to non-GAAP reconciliation
The following commentary addresses comparisons to financial results as presented in fiscal year 2013 when Mimi’s Café was a component of the Company’s ongoing operations. The Company believes this allows for enhanced understanding of the transition from fiscal year 2013 results to fiscal year 2014 results. Mimi’s Café operations have been classified as discontinued operations during fiscal year 2014, and will be reflected as such in the Company’s second quarter Form 10-Q filing, with fiscal year 2013 financial statements recast to reflect the discontinued operations.
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