BOBE Bob Evans Farms, Inc. (delisted)

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 summaryBob 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	February4 weeks			March4 weeks			April5 weeks			4Q  FY ’1613 weeks			FY ’1652 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 summaryBEF 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 compensation.  Operating 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 resultsConsolidated 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 summaryBob 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 summaryBEF 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 outlookChief 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 Metric	FY ‘17
Consolidated net sales		$1.28 to $1.33 billion
Bob Evans Restaurants same-store sales		negative low-single digit to flat
Bob Evans Restaurants commodity pricing		approximately 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 rate		24% to 25%
Diluted weighted-average share count		approximately 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 CallThe 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 MeasuresThe 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 1995Certain 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 expense	2,944				2,424
Income Before Income Taxes	(4,479		)		(1,487		)
Provision (benefit) for income taxes	(5,059		)		(7,097		)
Net Income as reported	580				5,610					$	0.03			$	0.24			$	0.03			$	0.24
Adjustments
Bob Evans Restaurants
Impairments	6,710				2,851
Severance/Restructuring	1,441				1,190
Loss on Sale of Assets	9,560				—
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/Restructuring	1,165				2,177
Activism, Strategic Initiatives and Other	—				1,748
CEO Separation	—				(148		)
	1,165				3,777
Total adjustments
Impairments	6,710				5,612
Severance/Restructuring	2,606				3,520
Loss on Sale of Assets	9,560				—
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 Restaurants	11,573				16,650
BEF Foods	20,569				18,231
Corporate and Other	(18,145		)		(17,134		)
Total non-GAAP operating income	13,997				17,747
Adjustments to net interest expense	—				485
Non-GAAP net interest expense	2,944				2,909
Non-GAAP  Income Before Taxes	11,053				14,838
Adjustments to income tax provision (benefit)	6,581				8,758
Non-GAAP Provision for Income Taxes	1,522				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 sales	44,810				43.8	%		40,853				43.4	%		—				—
Operating wage and fringe benefit expenses	10,991				10.7	%		10,499				11.1	%		—				—
Other operating expenses	14,755				14.4	%		12,937				13.7	%		—				—
Selling, general and administrative expenses	7,451				7.3	%		7,659				8.2	%		16,825				19,564
Depreciation and amortization expense	3,818				3.7	%		4,180				4.4	%		2,485				1,347
Impairments	—				—	%		2,761				2.9	%		—				—
Total as Reported	20,569				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 Sales	102,394							94,206							—				—
Cost of sales	44,810				43.8	%		40,853				43.4	%		—				—
Operating wage and fringe benefit expenses	10,991				10.7	%		10,499				11.1	%		—				—
Other operating expenses	14,755				14.4	%		12,937				13.7	%		—				—
Selling, general and administrative expenses	7,451				7.3	%		7,506				8.0	%		15,660				15,787
Depreciation and amortization expense	3,818				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 Foods	71,011				39,993
Corporate and Other	(69,583		)		(78,546		)
Operating Income	36,221				17,686
Net interest expense	10,800				8,649
Income Before Income Taxes	25,421				9,037
Provision (benefit) for income taxes	1,199				(7,516		)
Net Income as reported	24,222				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
Impairments	6,710				6,174
Severance/Restructuring	1,760				2,070
Loss on Sale of Assets	9,560				—
Activism, Strategic Initiatives and Other	—				465
Litigation Reserves	7,156				6,000
	25,186				14,709
BEF Foods
Impairments	—				2,761
Severance/Restructuring	—				1,008
Loss on Sale of Assets	3,606				—
Activism, Strategic Initiatives and Other	—				17
	3,606				3,786
Corporate and Other
Severance/Restructuring	1,165				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
Impairments	6,710				8,935
Severance/Restructuring	2,925				5,741
Loss on Sale of Assets	13,166				1,846
Activism, Strategic Initiatives and Other	—				9,573
CEO Separation	—				3,688
Litigation Reserves	7,156				6,000
	29,957				35,783
Non-GAAP operating income (loss)
Bob Evans Restaurants	59,979				70,948
BEF Foods	74,617				43,779
Corporate and Other	(68,418		)		(61,258		)
Total non-GAAP operating income	66,178				53,469
Adjustments to net interest expense	(480		)		1,859
Non-GAAP net interest expense	10,320				10,508
Non-GAAP Income Before Taxes	55,858				42,961
Adjustments to income tax provision	11,293				12,046
Non-GAAP Provision for Income Taxes	12,492				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 sales	425,585				31.8	%		457,744				33.9	%		252,611				26.6	%		258,677				26.7	%
Operating wage and fringe benefit expenses	427,148				31.9	%		423,539				31.4	%		384,977				40.5	%		381,874				39.4	%
Other operating expenses	222,060				16.6	%		217,991				16.2	%		169,630				17.8	%		169,018				17.4	%
Selling, general and administrative expenses	139,822				10.5	%		143,295				10.6	%		46,984				4.8	%		40,733				4.2	%
Depreciation and amortization expense	79,607				5.9	%		80,074				5.9	%		53,833				5.7	%		57,236				5.9	%
Impairments	8,384				0.6	%		8,861				0.7	%		8,384				0.9	%		6,100				0.6	%
Total as reported	36,221				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 Adjustments	29,957							35,783							25,186							14,709
Non-GAAP operating income
Net Sales	1,338,827							1,349,190							951,212							969,877
Cost of sales	425,585				31.8	%		457,744				33.9	%		252,611				26.6	%		258,677				26.7	%
Operating wage and fringe benefit expenses	426,013				31.8	%		423,496				31.4	%		383,842				40.4	%		381,831				39.4	%
Other operating expenses	222,060				16.6	%		217,283				16.1	%		169,630				17.8	%		168,310				17.4	%
Selling, general and administrative expenses	117,710				8.9	%		117,124				8.7	%		29,643				3.0	%		32,875				3.3	%
Depreciation and amortization expense	79,607				5.9	%		80,074				5.9	%		53,833				5.7	%		57,236				5.9	%
Impairments	1,674				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 sales	172,974				44.6	%		199,067				52.5	%		—				—
Operating wage and fringe benefit expenses	42,171				10.9	%		41,665				11.0	%		—				—
Other operating expenses	52,430				13.5	%		48,974				12.9	%		—				—
Selling, general and administrative expenses	32,805				8.5	%		29,712				7.9	%		60,033				72,849
Depreciation and amortization expense	16,224				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 adjustments	3,606							3,786							1,165				17,288
Non-GAAP operating income (loss)
Net Sales	387,615							379,313							—				—
Cost of sales	172,974				44.6	%		199,067				52.5	%		—				—
Operating wage and fringe benefit expenses	42,171				10.9	%		41,665				11.0	%		—				—
Other operating expenses	52,430				13.5	%		48,974				12.9	%		—				—
Selling, general and administrative expenses	29,199				7.5	%		28,687				7.6	%		58,868				55,561
Depreciation and amortization expense	16,224				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 sales	107,974			31.2	%		103,020			31.0	%		425,585			31.8	%		457,744			33.9	%
Operating wage and fringe benefit expenses	111,261			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 expenses	40,448			11.7	%		42,942			12.9	%		139,822			10.5	%		143,295			10.6	%
Depreciation and amortization expense	19,492			5.6	%		20,223			6.1	%		79,607			5.9	%		80,074			5.9	%
Impairments	7,295			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 expense	2,944			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
Basic	19,779						23,506						21,336						23,489
Dilutive shares	142						158						158						160
Diluted	19,921						23,664						21,494						23,649
Shares outstanding at quarter end	19,756						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, net	28,893				26,100
Inventories	24,997				24,620
Federal and state income taxes receivable	—				23,722
Prepaid expenses and other current assets	9,307				5,035
Current assets held for sale	31,644				22,243
Total Current Assets	107,737				108,078
Land	145,453				214,692
Buildings and improvements	585,218				839,148
Machinery and equipment	500,469				445,718
Construction in process	32,273				38,354
Total Property, Plant and Equipment	1,263,413				1,537,912
Less accumulated depreciation	665,777				732,697
Net Property, Plant and Equipment	597,636				805,215
Other Assets
Deposits and other	4,622				3,756
Notes receivable	20,886				18,544
Rabbi trust assets	20,662				32,302
Goodwill and other intangible assets	19,829				19,986
Deferred income tax assets	29,002				4,836
Long-term assets held for sale	—				26,263
Total Other Assets	95,001				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 payable	37,518				30,019
Accrued property, plant and equipment purchases	5,308				4,820
Accrued non-income taxes	15,696				14,951
Accrued wages and related liabilities	26,358				34,529
Self-insurance reserves	20,169				18,900
Deferred gift card revenue	14,147				13,714
Current taxes payable	9,473				—
Current reserve for uncertain tax provision	1,481				1,594
Other accrued expenses	31,988				34,156
Total Current Liabilities	165,557				153,092
Long-Term Liabilities
Deferred compensation	17,761				22,481
Reserve for uncertain tax positions	2,752				2,767
Deferred income tax liabilities	—				4,218
Deferred rent and other	5,851				5,755
Deferred gain on sale leaseback transactions	56,371				—
Credit facility borrowings and other long-term debt	335,638				450,676
Total Long-Term Liabilities	418,373				485,897
Stockholders’ Equity
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at April 29, 2016, and April 24, 2015	426				426
Capital in excess of par value	244,304				235,958
Retained earnings	832,323				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’ Equity	216,444				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 amortization	79,607				80,074
Impairments	8,384				6,100
Impairment of Intangible Assets	—				2,761
Loss on disposal of fixed assets	4,532				2,204
Loss (Gain) on rabbi trust assets	1,640				(742		)
(Gain) Loss on deferred compensation	(765		)		2,013
Share-based compensation	6,127				2,967
Accretion of non-current note receivable	(2,082		)		(1,859		)
Deferred income taxes	(28,384		)		(14,791		)
Amortization of deferred financing costs	2,188				1,099
Cash provided by (used for) assets and liabilities:	—
Accounts receivable	(2,793		)		4,588
Inventories	(377		)		623
Prepaid expenses and other current assets	483				(563		)
Accounts payable	7,499				955
Federal and state income taxes	33,067				1,504
Accrued wages and related liabilities	(3,101		)		11,005
Self-insurance	1,269				(974		)
Accrued non-income taxes	745				(2,892		)
Deferred revenue	433				747
Other assets and liabilities	(9,058		)		(8,267		)
Net cash provided by operating activities	123,636				103,105
Investing activities:
Purchase of property, plant and equipment	(65,694		)		(74,517		)
Proceeds from sale of property, plant and equipment	257,246				10,036
Proceeds from liquidation of rabbi trust assets	5,245				—
Deposits and other	(537		)		(135		)
Net cash used in investing activities	196,260				(64,616		)
Financing activities:
Cash dividends paid	(27,861		)		(29,056		)
Gross proceeds from credit facility borrowings and other long-term debt	672,349				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 compensation	214				534
Cash paid for taxes on share-based compensation	(1,314		)		(1,738		)
Excess tax benefits from share-based compensation	1,661				228
Net cash used in financing activities	(313,358		)		(39,957		)
Net cash provided by (used in) operations	6,538				(1,468		)
Cash and equivalents at the beginning of the period	6,358				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-Related	4.5				1.1				0.2				3.2
Total S,G&A	14.6				5.4				1.4				7.8
Non-S,G&A
Wage-Related	0.4					—			0.4				—
Non Wage-Related	5.1				3.6				1.5				—
Total Non-S,G&A	5.5				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: promotions	20,700				15,542
Less: discounts	775				763
Less: returns and slotting	762				615
Net sales	$	102,394			$	94,206

	YTD 2016				YTD 2015
Gross sales	$	466,918			$	435,930
Less: promotions	73,073				50,578
Less: discounts	3,305				3,441
Less: returns and slotting	2,925				2,598
Net sales	$	387,615			$	379,313

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