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Bob Evans Reports Fiscal 2013 Second-Quarter Results

Date : 11/20/2012 @ 2:30AM
Source : PR Newswire (US)
Stock : Bob Evans Farms, Inc. (MM) (BOBE)
Quote : 48.75  0.0 (0.00%) @ 11:35AM
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Bob Evans Reports Fiscal 2013 Second-Quarter Results

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Bob Evans Reports Fiscal 2013 Second-Quarter Results

COLUMBUS, Ohio, Nov. 19, 2012 /PRNewswire/ --

Bob Evans Restaurants' net sales increase 1.4%; reports positive same-store sales of 1.0%. BEF Foods' net sales increase 6.3%; volume up 16.1%

Company announces 2Q 2013 earnings per diluted share of $0.36; non-GAAP EPS, adjusted for restructuring and other items, is $0.53 for the quarter, up 12.8% from last year. Both results are reduced by approximately $2.0 million of unusual and Farm Fresh Refresh program expense items which equate to $0.05 per diluted share

Company to accelerate Farm Fresh Refresh restaurant remodeling program with 56% of the chain to be remodeled by the end of fiscal 2013, and all 565 restaurants to be completed by the end of fiscal 2014, one year earlier than the prior projection

Integration of Kettle Creations on schedule; a key component of BEF Foods' strategy to aggressively grow its side dish business and internalize manufacturing capability; acquisition raises level of vertical integration from 55% to 82%

Company exploring strategic alternatives for its Mimi's Cafe business segment

Company reaffirms fiscal year 2013 EPS guidance of $2.67 to $2.73. Board of Directors approves 27.5 cents per share dividend payable to shareholders of record as of November 26, 2012

Company raises long-term annual non-GAAP EPS growth guidance to 8 to 12 percent, from the previous guidance range of 7 to 10 percent

Bob Evans Farms, Inc (NASDAQ: BOBE) today announced its results for the fiscal 2013 second quarter ended Friday, October 26, 2012.

Second-quarter fiscal 2013 commentary

Chairman and Chief Executive Officer Steve Davis said the second-quarter operating results of the Company's two Bob Evans-branded business segments, Bob Evans Restaurants and BEF Foods, reflect the positive impact of recent investments in growth and productivity initiatives designed to position the Company for continued sustainable revenue and profit growth in fiscal 2013 and beyond.

Davis noted, "Bob Evans Restaurants has generated positive same-store sales for three of the last four quarters based upon our guests' favorable reactions to both the Farm Fresh Refresh remodeling program and our launch of value-oriented sales layers available at every day part. All of our sales layers – dine-in, carryout, bakery and catering – are contributing to both the revenue and margin lift we are generating through the Farm Fresh Refresh remodels. In response to consistently high returns on investment, positive guest feedback, and operating results, we are accelerating the rollout of the Farm Fresh Refresh program. We now expect to have the entire chain remodeled by the end of fiscal 2014, one year ahead of our original plan.

"BEF Foods is also performing well with positive volume gains in three of the last four quarters. Our high-growth refrigerated side dish business, up more than 12% during the second quarter, and food service business, up more than 44% during the second quarter, continue to drive revenue growth and enhance the margin structure of the business. The acquisition of the Kettle Creations® brand and manufacturing facility at the beginning of the second quarter raises the level of vertical integration within BEF Foods to 82%, and enables us to continue growing and innovating economically with side dish products to serve our retail and food service customers."

Davis continued, "The sustainability and long-term growth potential of the transformations we have achieved in our core Bob Evans Restaurants and BEF Foods segments provide us with the confidence to raise our long-term annual non-GAAP EPS growth guidance to 8 to 12 percent, from the previous guidance range of 7 to 10 percent. Furthermore, the strategic fit and long-term growth potential of Mimi's Cafe relative to our other businesses prompted us to initiate a process to evaluate our strategic alternatives for that segment, including but not limited to a potential sale. We have been working with our independent financial advisor, Lazard, to assist us in that process."

Second-quarter fiscal 2013 consolidated results

The Company reported consolidated operating income of $16.8 million in the second quarter of fiscal 2013. The second-quarter results include the negative net pretax impact of $7.2 million, or $4.8 million after-tax, from the following items:

  • $1.2 million in noncash charges for impairment of a non-operating property in Bob Evans Restaurants that increased the SG&A line
  • $0.3 million income for a gain on the sale of assets in Bob Evans Restaurants that decreased the SG&A line
  • $1.5 million in noncash charges for straight-line rent adjustments in Mimi's Cafe that increased the other operating expenses line
  • $0.6 million in charges for strategic activities in Mimi's Cafe that increased the SG&A line
  • $1.0 million in charges for merger and acquisition related costs in BEF Foods that increased the SG&A line
  • $3.2 million in charges for severance and retention payments in BEF Foods that increased the SG&A line

Excluding the $7.2 million negative net impact of these charges, the Company's second quarter fiscal 2013 reported operating income would have been approximately $24.0 million, or 5.8 percent of net sales.

Earnings per diluted share for the second quarter of fiscal 2013 were $0.36. Excluding the net negative impact of the aforementioned charges, non-GAAP diluted earnings per share would have been $0.53. Both results were reduced by approximately $2.0 million of unusual and Farm Fresh Refresh program expense items, which equate to $0.05 per diluted share. These items are comprised of additional other operating expenses to support our Farm Fresh Refresh program; as well as several large unusual items, including a product recall in SG&A of the BEF Foods segment and accruals for lawsuits that impacted SG&A of both restaurant segments.

The Company reported consolidated operating income of $21.3 million in the second quarter of fiscal 2012. The second quarter fiscal 2012 results included a negative net pretax impact of $2.1 million, or $1.4 million after-tax, from the following items:

  • $2.4 million primarily in fixed asset impairment charges and other physical assets in Bob Evans Restaurants that increased the SG&A line
  • $0.3 million in severance charges in Mimi's Cafe that increased the SG&A line
  • $0.6 million net gain in the BEF Foods segment primarily related to the sale of a distribution facility that decreased the SG&A line

Excluding the $2.1 million negative net impact of these charges, the Company's second quarter fiscal 2012 reported operating income would have been approximately $23.4 million, or 5.8 percent of net sales.

Earnings per diluted share for the second quarter of fiscal 2012 were $0.42. Excluding the net negative impact of the aforementioned charges, non-GAAP diluted earnings per share would have been $0.47.

During the second quarter of fiscal 2013, the effective tax rate recorded by the Company was 32.3%.

As a result of the items noted above, the Company uses non-GAAP financial measures excluding those items. These financial measures are used by management to monitor and evaluate the ongoing performance of the Company. The Company believes that the additional measures are useful to investors for financial analysis. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Please see the table in this release for a reconciliation of non-GAAP measures to GAAP results. Results in the following discussion are presented on a non-GAAP basis excluding the items noted above.

Second-quarter fiscal 2013 consolidated income statement summary

Below is a summary of the Company's consolidated second-quarter fiscal 2013 income statement.

  • Net sales – Consolidated net sales were $410.9 million in the second quarter of fiscal 2013, a 0.9 percent increase, compared to $407.2 million in the second quarter of fiscal 2012. This growth was the result of a net sales increase in the BEF Foods segment as well as new restaurant and same-store sales increases at Bob Evans Restaurants, partially offset by same-store sales declines at Mimi's Cafe.
  • Operating income – Consolidated non-GAAP operating income was $24.0 million, or 5.8% of net sales, in the second quarter of fiscal 2013, compared to $23.4 million, or 5.8% of net sales, in the second quarter of fiscal 2012. The improvement was due to strength at BEF Foods, partially offset by incremental costs from investments at Bob Evans Restaurants and same-store sales declines at Mimi's Cafe.
  • Net interest expense – The Company's net interest expense was $1.5 million in the second quarter of fiscal 2013, compared to $2.0 million in fiscal 2012. The decrease in net interest expense in the second quarter of fiscal 2013 was a result of principal repayments on our private placement debt, partially offset by interest on incremental borrowings on our low-cost variable-rate revolving credit facility.
  • Income taxes – The Company's non-GAAP effective tax rate in the second quarter of fiscal 2013 was 32.9 percent, compared to 34.1 percent in the second quarter of fiscal 2012. The lower effective tax rate in fiscal 2013 reflects the impact of settlements with certain taxing authorities.
  • Diluted weighted-average shares outstanding – The Company's diluted weighted-average shares outstanding were 28.5 million in the second quarter of fiscal 2013, compared to 30.1 million in the second quarter of fiscal 2012. The Company did not repurchase any shares in the second quarter of fiscal 2013. The Company repurchased 877,417 shares for $26.6 million in the second quarter of fiscal 2012.

Second-quarter fiscal 2013 Bob Evans Restaurants segment summary

Bob Evans Restaurants' fiscal 2013 second-quarter non-GAAP operating income was $20.7 million, or 8.4 percent of net sales, compared with $23.4 million, or 9.6 percent of net sales, last year. The primary drivers of the decrease in profitability were: $2.4 million of increases in SG&A due to higher costs associated with the Company's 401k Plan and long-term incentives, incremental training costs along with the full year effect of unfilled headcount from the earlier part of last year, and incremental legal accruals; investments in restaurant supplies and pre-opening expenses for the Farm Fresh Refresh remodeling program; and $1.1 million in incremental depreciation primarily related to the remodel program. These items were partially offset by positive same-store sales of 1.0 percent and the beneficial sales effect of new restaurants.

When a restaurant is refreshed, it is closed for an average of five to seven days. During the second quarter the Company refreshed 45 restaurants (which we define as "transitional" restaurants) with a total of 290 closed restaurant days. During the second quarter of last year, the Company refreshed 31 restaurants with a total of 221 closed restaurant days. The Company refreshed 81 restaurants during the first half of fiscal 2013 with a total of 544 closed restaurant days. During the first half of fiscal 2012, the Company refreshed 33 restaurants with a total of 228 closed restaurant days. As part of the refresh process, the Company also incurs pre-opening expenses for training restaurant staff to operate the restaurant more efficiently and local marketing to support re-opening sales. A typical restaurant yields positive cumulative profit flow-through by the twelfth week to offset: the opportunity cost of lost sales due to closed restaurant days; initial operational inefficiencies; and pre-opening expenses.

Prior to the second quarter, 155 restaurants were completed. The refreshed restaurants are on-track to deliver the incremental five percent sales lift and 20 percent returns achieved in Dayton, Ohio, the Company's first refresh market.

By the third quarter, our total Farm Fresh Refresh initiative is projected to reach critical mass. At that point, the cumulative profit contribution of the refreshed restaurants is expected to exceed the negative impact of closed restaurant days and pre-opening expenses in the transition markets; which supports the Company's reaffirmation of its fiscal 2013 earnings per share guidance of $2.67 to $2.73. Further supporting the reaffirmation is year-over-year positive sales growth (on top of the initial first year post-remodel sales lift) in the Dayton, Ohio, market.

Net sales – Bob Evans Restaurants' net sales were $246.3 million in the second quarter of fiscal 2013, compared with sales of $242.8 million in the corresponding period last year. The increase of approximately 1.4 percent was driven by the 1.0 percent increase in same-store sales, with the remainder coming from new restaurants. The second-quarter same-store sales increase of 1.0 percent exceeded the Midscale Family Style segment, according to The NPD Group's SalesTrack Weekly.


Category

SSS Restaurants

Aug.

Sept.

Oct.

2Q FY '13

FY '13 YTD

Bob Evans

Family

552

1.5%

-0.4%

1.6%

1.0%

1.0%

During the second quarter of fiscal 2013, Bob Evans Restaurants:

  • Refreshed 45 restaurants.
  • Did not open or rebuild any restaurants.

Cost of sales – Bob Evans Restaurants' cost of sales was 23.8 percent of net sales in the second quarter of fiscal 2013, compared to 23.4 percent in the second quarter of fiscal 2012. The increase in cost of sales as a percent of net sales was due to commodity increases and mix, which were partially offset by menu pricing of approximately 1.9 percent, and ongoing efficiency initiatives, including the actual-versus-theoretical food cost program.

Operating wages – Bob Evans Restaurants' cost of labor was 37.4 percent of net sales in the second quarter of fiscal 2013, compared to 37.9 percent of net sales in fiscal 2012. The decline in operating wages as a percent of net sales in the second quarter of fiscal 2013 was due primarily to sales leverage from improvement in same-store sales of 1.0 percent and labor efficiency initiatives.

Other operating expenses – Bob Evans Restaurants' other operating expenses were 18.1 percent of net sales in the second quarter of fiscal 2013, compared to 18.0 percent of net sales in the second quarter of fiscal 2012. The increase resulted primarily from increases in expenditures related to the Farm Fresh Refresh remodeling program. Restaurant supply expenses increased approximately $0.6 million. Part of this increase was due to incremental maintenance spending during the refresh of the Columbus, Ohio, market, which is one of our oldest markets. We have subsequently value engineered the remodel program to minimize this incremental spend going forward, while maintaining the Farm Fresh Refresh program's strong returns. Additionally, pre-opening expenses were up approximately $0.3 million as a result of increased remodels compared to last year. Both items are components of the $2.0 million, or $0.05 per diluted share, of unusual and Farm Fresh Refresh program expense items referenced above.

SG&A – Bob Evans Restaurants' non-GAAP SG&A expenses were $17.3 million, or 7.0 percent of net sales, in the second quarter of fiscal 2013, compared with $15.0 million, or 6.2 percent of net sales, in the second quarter of fiscal 2012. The $2.4 million increase was due to higher costs associated with the Company's 401k Plan and long-term incentives, incremental training costs along with the full year effect of unfilled headcount from the earlier part of last year, and incremental legal accruals. The legal accruals were a component of the $2.0 million, or $0.05 per diluted share, of unusual and Farm Fresh Refresh program expense items referenced above.

Second-quarter fiscal 2013 Mimi's Cafe segment summary

Mimi's Cafe's second-quarter fiscal 2013 non-GAAP operating loss was $5.3 million, or 6.6 percent of net sales, compared to an operating loss of $3.4 million, or 3.9 percent of net sales, in the second quarter of fiscal 2012. The primary driver of the operating loss was the same-store sales decline in the second quarter of fiscal 2013.

Net sales – Mimi's Cafe's net sales were $81.3 million in the second quarter of fiscal 2013, down $4.7 million, compared to $86.1 million in the corresponding period last year. The decrease resulted from declines in same-store sales of 5.6 percent, which included 0.9 percent in average menu price increases. At Mimi's Cafe, the same-store sales decline trailed the Knapp Track™ casual dining index of -0.1 percent for the same period.


Category

SSS Restaurants

Aug.

Sept.

Oct.

2Q FY '13

FY '13 YTD

Mimi's Cafe

Casual

145

-6.8%

-4.2%

-5.8%

-5.6%

-4.4%

During the second quarter of fiscal 2013, Mimi's Cafe remodeled one restaurant and did not open or rebuild any restaurants.

Cost of sales – Mimi's Cafe's cost of sales was 26.1 percent of net sales in the second quarter of fiscal 2013, compared to 26.7 percent in the second quarter of fiscal 2012. The decrease in cost of sales as a percent of net sales was due to food cost initiatives, ongoing efficiency initiatives including the actual-versus-theoretical food cost program and a new menu, which were partially offset by commodity increases.

Operating wages – Mimi's Cafe's cost of labor was 39.5 percent of net sales in the second quarter of fiscal 2013, compared to 38.6 percent in the second quarter of fiscal 2012. The increase in operating wages as a percent of net sales was due to deleverage from declines in same-store sales as well as incremental labor hired in anticipation of the significantly higher than average sales seasonality of the upcoming holiday period.

Other operating expenses – Mimi's Cafe's non-GAAP other operating expenses were $20.8 million, or 25.6 percent of net sales, in the second quarter of fiscal 2013, compared to $21.3 million, or 24.7 percent of net sales, in the second quarter of fiscal 2012. Reduced spending was driven by cost controls. The increase in other operating expenses as a percent of net sales was due to deleverage from declines in same-store sales.

SG&A – Mimi's Cafe's non-GAAP SG&A expenses were $6.8 million, or 8.4 percent of net sales, in the second quarter of fiscal 2013, compared to $6.1 million, or 7.0 percent of net sales, in the second quarter of fiscal 2012. The increase in SG&A was the result of incremental legal accruals and increases in corporate allocations driven by higher costs associated with the Company's 401k Plan and long-term incentive compensation. The legal accruals were a component of the $2.0 million, or $0.05 per diluted share, of unusual and Farm Fresh Refresh program expense items referenced above.

Second-quarter fiscal 2013 BEF Foods segment summary

BEF Foods' second-quarter fiscal 2013 non-GAAP operating income was $8.6 million, or 10.4 percent of net sales, in the second quarter of fiscal 2013, compared to $3.4 million, or 4.3 percent of net sales, in the corresponding period last year. The primary driver of the increase in operating income was an increase in total pounds sold of 16.1 percent and a 36.3 percent decline in sow costs.

The acquisition of Kettle Creations during the second quarter of this year, and the sale of the Company's distribution facility located in Springfield, Ohio, to a third-party distributor during the second quarter of last year, impacted cost of sales, operating wages and other operating expenses. Prior to the acquisition of Kettle Creations, all costs were included in cost of sales. Subsequent to the acquisition, as an owned facility, labor costs are included in operating wages, reducing the cost of sales line and increasing operating wages as a result. Conversely, when Bob Evans sold the distribution facility, operating wages were effectively reclassified to other operating expenses.

Net sales – The BEF Foods segment's second-quarter fiscal 2013 net sales were $83.3 million, an increase of 6.3 percent, compared to $78.3 million in the second quarter of fiscal 2012. Total pounds sold increased 16.1 percent. Promotional discounts and other selling allowances are included as a reduction to net sales. Promotional discounts provided to retailers increased $4.3 million. The profit effect of increased discounts was offset by a $6.5 million decrease in sow costs.

Cost of sales – The BEF Foods segment's second-quarter fiscal 2013 cost of sales was 47.4 percent of net sales, compared to 58.8 percent of net sales in the second quarter of fiscal 2012. The decrease was due primarily to the decline in sow costs as well as the impact of the Kettle Creations acquisition as discussed earlier.

Operating wages – The BEF Foods segment's second-quarter fiscal 2013 cost of labor was 11.3 percent of net sales, compared to 9.2 percent of net sales in the second quarter of fiscal 2012. As noted above, the increase was primarily due to the Company's acquisition of Kettle Creations and an increase in hourly wages to produce product for the high volume holiday season in the second quarter of fiscal 2013. Offsetting these increases was the impact of the sale of the warehouse facility as noted earlier.

Other operating expenses – The BEF Foods segment's other operating expenses were 8.2 percent of net sales in the second quarter of fiscal 2013, compared to 5.4 percent of net sales in the second quarter of fiscal 2012. The cost increase was due to fees associated with the third-party distribution agreement related to the sale of the distribution center that occurred during the second quarter of fiscal 2012, and volume-related increases in hauling and freight expenses, partially offset by Lean manufacturing productivity initiatives. The fees associated with the third-party distribution agreement are now classified as other operating expenses as noted above.

SG&A – The BEF Foods segment's non-GAAP SG&A expenses were 18.9 percent of net sales in the second quarter of fiscal 2013, compared to 19.2 percent of net sales in the second quarter of fiscal 2012. The improvement in costs resulted primarily from deferring some advertising costs until the third quarter, partially offset by approximately $0.4 million of costs associated with a product recall. The recall costs were a component of the $2.0 million, or $0.05 per diluted share, of unusual and Farm Fresh Refresh program expense items referenced above.

Board of Directors approves payment of quarterly dividend

The Company's Board of Directors approved payment of the quarterly dividend at the current rate of 27.5 cents per share. The dividend is payable on December 10, 2012, to shareholders of record at the close of business on November 26, 2012.

Fiscal year 2013 and long-term outlook

The Company reaffirmed its fiscal 2013 earnings per share outlook of $2.67 to $2.73 non-GAAP earnings per diluted share. The Company also raised its long-term annual non-GAAP EPS growth guidance to 8 to 12 percent, from the previous guidance range of 7 to 10 percent. The long-term guidance was increased in response to the success the Company has achieved with the Farm Fresh Refresh remodeling program, sales layer growth, new restaurant openings, and the growth in the BEF Foods business segment coupled with the evaluation of strategic alternatives for Mimi's Cafe.

This outlook relies on a number of important assumptions, including the risk factors discussed in the Company's securities filings. Particular assumptions for the Company's full-year outlook include the following:

Consolidated company highlights

  • Net sales approximately $1.7 billion.
  • Depreciation and amortization – approximately $85 to $95 million.
  • Net interest expense – approximately $8.0 to $9.0 million, down from $9.5 to $10.5 million, to reflect the impact of lower priced revolver debt.
  • Effective tax rate approximately 33.5 to 34.5 percent.
  • Diluted weighted-average share count approximately 28.2 million.
  • Capital expenditures approximately $130 to $150 million, down from previous guidance of $150 to $160 million, reflecting the effect of the Kettle Creations acquisition which reduced the need for planned internal capital expenditures, the acceleration of the Farm Fresh Refresh remodeling program, and the reduction of Bob Evans new restaurant openings in fiscal 2013 from ten to two.

Bob Evans Restaurants segment

  • Net sales: Full-year same-store sales in the 1.0 to 2.0 percent range, driven by the sales lift from Farm Fresh Refresh remodels, new value platforms, and increased marketing investment. The Company plans to accelerate 45 incremental Farm Fresh Refresh remodels into fiscal 2013 and have the entire chain remodeled by the end of fiscal 2014, one year ahead of the original schedule. Additional new restaurants, beyond the two opened during the first quarter, will not be opened in fiscal 2013 to free up the human capital necessary to successfully complete the remodels.
  • Cost of sales: Commodity inflation at 1.0 to 2.0 percent, down from previous guidance of 2.5 to 3.5 percent. Although volatility is increasing, price increases are not expected at the level we originally forecasted.
  • Operating margins: 9.0 to 9.5 percent, down from previous guidance of 9.2 to 9.7 percent, reflecting incremental expenses, related to the Farm Fresh Refresh remodeling program (which includes the previously noted five to seven closed days, margin impact from start-up operational inefficiencies, and pre-opening expenses, all of which impact each remodeled restaurant) and legal accruals.

The Company now expects pre-opening expenses related to Farm Fresh Refresh remodel activity to increase $1.5 million compared to the prior year. Fiscal year 2013 pre-opening expenses are expected to be relatively flat to last year due to the reduction of new restaurants in fiscal 2013 from ten to two, in favor of accelerating the Farm Fresh Refresh remodeling program. The Company refrains from refreshing restaurants during the peak seasonality period during the calendar year-end holidays. The Company expects to refresh 114 restaurants during the second half of fiscal 2013, compared with 54 during the second half of fiscal 2012.

Mimi's Cafe segment

  • Net sales: Full-year same-store sales in the -4.0 to -1.0 percent range, down from previous guidance of -2.0 to 1.0 percent, reflecting softness in second quarter sales trends.
  • Cost of sales: Commodity inflation at 1.0 to 2.0 percent, down from previous guidance of 2.5 to 3.5 percent.
  • Operating margins: -1.5 to 0.0 percent, down from previous guidance of 0.5 to 1.5 percent, reflecting the top line softness noted above.

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

BEF Foods segment

  • Net sales: Overall net sales of $330 million to $350 million, unchanged from previous guidance.
  • Cost of sales: Based on recent cost trends, and liquidations in the herd as a result of the drought, average sow costs of approximately $55 to $60 per hundredweight for the full year, up from previous guidance of $45 to $55 per hundredweight. Historically, in situations like this, sow prices decline initially, and then increase rapidly when demand and supply rebalance. During November, sow costs have been in the upper $50's to lower $60's range.
  • Operating margins: 9.5 to 11.0 percent, compared to previous guidance of 9.0 to 11.0 percent, as a result of volume leverage, cost of sales favorability, and the benefit of the Kettle Creations acquisition.

On May 29, 2012, the Company announced its intention to close two BEF Foods' production plants in the second quarter of fiscal 2014. Partial realization of the pretax benefits, amounting to an estimated $4 to $5 million, will commence in fiscal 2014. The Company anticipates a total annual ongoing pretax benefit of approximately $7 to $8 million beginning in fiscal 2015.

The Company, consistent with its commitment to enhance shareholder value, is exploring a range of strategic alternatives for the Mimi's Cafe business segment, including but not limited to a potential sale of the business or its assets. In order to assist the Company in evaluating strategic alternatives, including discussions with third parties, the Company is utilizing Lazard, its independent financial advisor. While there have been confidential discussions with third parties, the Company cannot assure any outcome of this process.

Company to host conference call on Tuesday, November 20, 2012

The Company will host a conference call to discuss its second-quarter fiscal 2013 results at 10 a.m. (ET) on Tuesday, November 20, 2012. The dial-in number is (800) 690-3108, access code 41608034. A replay will be available at (800) 585-8367, access code 41608034.

To access the simultaneous webcast, go to www.bobevans.com/ir. The archived webcast will also be available on the Web site.

About Bob Evans Farms, Inc.

Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans and Mimi's Cafe brand names. At the end of the second fiscal quarter (October 26, 2012), Bob Evans owned and operated 565 family restaurants in 19 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States, while Mimi's Cafe owned and operated 145 casual restaurants located in 24 states, primarily in California and other western states. Bob Evans Farms, Inc. is also a leading producer and distributor of pork sausage and a variety of complementary convenience food items under the Bob Evans and Owens brand names. For more information about Bob Evans Farms, Inc., visit www.bobevans.com.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements in this news release that are not historical facts are forward-looking statements. Forward-looking statements involve various important assumptions, risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events. We discuss these factors and events, along with certain other risks, uncertainties and assumptions, under the heading "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 27, 2012, and in our other filings with the Securities and Exchange Commission. We note these factors for investors as contemplated by the Private Securities Litigation Reform Act of 1995. Predicting or identifying all such risk factors is impossible. Consequently, investors should not consider any such list to be a complete set of all potential risks and uncertainties. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect circumstances or events that occur after the date of the statement to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to us or any person acting on behalf of the Company are qualified by the cautionary statements in this section.

Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Fiscal 2013 – Quarter 2

Note: amounts are in thousands, except per share amounts

Second quarter (Q2), ended Oct. 26, 2012, compared to the corresponding period a year ago:



Three Months Ended


Six Months Ended



Oct 26, 2012


Oct 28, 2011


Oct 26, 2012


Oct 28, 2011

Operating Income as Reported









Bob Evans Restaurants

$

19,781

$

21,031

$

37,811

$

43,976

Mimi's Cafe


(7,507)


(3,673)


(8,356)


(4,766)

BEF Foods


4,483


3,972


12,566


9,615










Total Operating Income


16,757


21,330


42,021


48,825










Adjustments









Bob Evans Restaurants









Impairment


1,227


2,806


1,227


2,806

Severance/Restructuring


13


-


797


-

Gain on Sale of Assets


(327)


(407)


(197)


(407)

Total Bob Evans Restaurants Adjustments


913


2,399


1,827


2,399










Mimi's Cafe









Severance/Restructuring


619


287


619


287

Leases


1,541


-


1,541


-










Total Mimi's Cafe Adjustments


2,160


287


2,160


287










BEF Foods









Impairment


-


87


-


87

Severance/Restructuring


3,185


-


3,945


-

Merger and Acquisition Related Costs


955


-


1,399


-

Gain on Sale of Assets


(3)


(689)


(5)


(689)










Total BEF Foods Adjustments


4,137


(602)


5,339


(602)










Total Adjustments









Impairment


1,227


2,893


1,227


2,893

Severance/Restructuring


3,817


287


5,361


287

Merger and Acquisition Related Costs


955


-


1,399


-

Gain on Sale of Assets


(330)


(1,096)


(202)


(1,096)

Leases


1,541


-


1,541


-












7,210


2,084


9,326


2,084

Adjusted Operating Income









Bob Evans Restaurants


20,694


23,430


39,638


46,375

Mimi's Cafe


(5,347)


(3,386)


(6,196)


(4,479)

BEF Foods


8,620


3,370


17,905


9,013










Total Adjusted Operating Income

$

23,967

$

23,414

$

51,347

$

50,909


 


Consolidated


Bob Evans Restaurants


Three Months Ended


Three Months Ended



Oct 26, 2012


% of Sales


Oct 28, 2011


% of Sales


Oct 26, 2012


% of Sales


Oct 28, 2011


% of Sales

Operating Income as Reported


































Net Sales

$

410,877



$

407,185



$

246,302



$

242,803



Cost of Sales


119,292


29.0%


125,842


30.9%


58,625


23.8%


56,831


23.4%

Operating Wages


133,606


32.5%


132,424


32.5%


92,079


37.4%


91,929


37.9%

Other Operating


73,711


17.9%


69,185


17.0%


44,562


18.1%


43,703


18.0%

SG&A


45,539


11.1%


38,165


9.4%


18,251


7.4%


17,382


7.2%

Depr & Amort


21,972


5.3%


20,239


5.0%


13,004


5.3%


11,927


4.9%


















Total as Reported


16,757


4.1%


21,330


5.2%


19,781


8.0%


21,031


8.7%


















Adjustments


































Other Operating


(1,541)




-




-




-



SG&A


(5,669)




(2,084)




(913)




(2,399)




















Total Adjustments


7,210




2,084




913




2,399




















Adjusted Operating Income


































Net Sales


410,877




407,185




246,302




242,803



Cost of Sales


119,292


29.0%


125,842


30.9%


58,625


23.8%


56,831


23.4%

Operating Wages


133,606


32.5%


132,424


32.5%


92,079


37.4%


91,929


37.9%

Other Operating


72,170


17.6%


69,185


17.0%


44,562


18.1%


43,703


18.0%

SG&A


39,870


9.7%


36,081


8.9%


17,338


7.0%


14,983


6.2%

Depr & Amort


21,972


5.3%


20,239


5.0%


13,004


5.3%


11,927


4.9%


















Total Adjusted Operating Income


23,967


5.8%


23,414


5.8%


20,694


8.4%


23,430


9.6%


















Net Interest Expense


1,473




1,985











Income Before Income Taxes as Reported


15,284




19,345











Adjustments


7,210




2,084











Adjusted Income Before Income Taxes


22,494




21,429











Provision for Income Taxes as Reported


4,942




6,598











Income Tax Effect of Adjustment


2,451




711











Adjusted Provision for Income Taxes


7,393




7,309











Net Income as Reported


10,342




12,747











Adjustments


4,759




1,373











Adjusted Net Income


15,101




14,120











Earnings Per Share

















Basic as Reported


0.36




0.42











Adjustments


0.17




0.05











Adjusted Basic


0.53




0.47











Diluted as Reported


0.36




0.42











Adjustments


0.17




0.05











Adjusted Diluted


0.53




0.47




























Average Shares Outstanding

















Basic


28,398




30,090











Diluted


28,536




30,141












 



Mimi's Cafe


BEF Foods



Three Months Ended


Three Months Ended



Oct 26 2012


% of Sales


Oct 28, 2011


% of Sales


Oct 26 2012


% of Sales


Oct 28, 2011


% of Sales

Operating Income as Reported


































Net Sales

$

81,322



$

86,070



$

83,253



$

78,312



Cost of Sales


21,228


26.1%


22,994


26.7%


39,440


47.4%


46,018


58.8%

Operating Wages


32,136


39.5%


33,252


38.6%


9,392


11.3%


7,243


9.2%

Other Operating


22,339


27.5%


21,257


24.7%


6,810


8.2%


4,225


5.4%

SG&A


7,413


9.1%


6,354


7.4%


19,873


23.9%


14,429


18.4%

Depr & Amort


5,713


7.0%


5,886


6.8%


3,255


3.9%


2,425


3.1%


















Total as Reported


(7,507)


-9.2%


(3,673)


-4.3%


4,483


5.4%


3,972


5.1%


















Adjustments


































Other Operating


(1,541)




-




-




-



SG&A


(619)




(287)




(4,137)




602





































Total Adjustments


2,160




287




4,137




(602)




















Adjusted Operating Income


































Net Sales


81,322




86,070




83,253




78,312



Cost of Sales


21,228


26.1%


22,994


26.7%


39,440


47.4%


46,018


58.8%

Operating Wages


32,136


39.5%


33,252


38.6%


9,392


11.3%


7,243


9.2%

Other Operating


20,798


25.6%


21,257


24.7%


6,810


8.2%


4,225


5.4%

SG&A


6,794


8.4%


6,067


7.0%


15,736


18.9%


15,031


19.2%

Depr & Amort


5,713


7.0%


5,886


6.8%


3,255


3.9%


2,425


3.1%


















Total Adjusted Operating (Loss) Income


(5,347)


-6.6%


(3,386)


-3.9%


8,620


10.4%


3,370


4.3%



















 



Consolidated


Bob Evans Restaurants



Six Months Ended


Six Months Ended



Oct 26, 2012


% of Sales


Oct 28, 2011


% of Sales


Oct 26, 2012


% of Sales


Oct 28, 2011


% of Sales

Operating Income as Reported


































Net Sales

$

820,592



$

812,545



$

494,268



$

486,588



Cost of Sales


240,076


29.3%


246,929


30.4%


118,101


23.9%


114,702


23.6%

Operating Wages


266,319


32.5%


265,847


32.7%


185,457


37.5%


185,022


38.0%

Other Operating


145,218


17.7%


136,436


16.8%


90,311


18.3%


85,916


17.7%

SG&A


83,975


10.2%


73,890


9.1%


36,694


7.4%


32,666


6.7%

Depr & Amort


42,983


5.2%


40,618


5.0%


25,894


5.2%


24,306


5.0%


















Total as Reported


42,021


5.1%


48,825


6.0%


37,811


7.6%


43,976


9.0%


















Adjustments


































Other Operating


(1,541)




-




-




-



SG&A


(7,785)




(2,084)




(1,827)




(2,399)




















Total Adjustments


9,326




2,084




1,827




2,399




















Adjusted Operating Income


































Net Sales


820,592




812,545




494,268




486,588



Cost of Sales


240,076


29.3%


246,929


30.4%


118,101


23.9%


114,702


23.6%

Operating Wages


266,319


32.5%


265,847


32.7%


185,457


37.5%


185,022


38.0%

Other Operating


143,677


17.5%


136,436


16.8%


90,311


18.3%


85,916


17.7%

SG&A


76,190


9.3%


71,806


8.8%


34,867


7.1%


30,267


6.2%

Depr & Amort


42,983


5.2%


40,618


5.0%


25,894


5.2%


24,306


5.0%


















Total Adjusted Operating Income


51,347


6.3%


50,909


6.3%


39,638


8.0%


46,375


9.5%


















Net Interest Expense


3,529




4,096











Income Before Income Taxes as Reported


38,492




44,729











Adjustments


9,326




2,084











Adjusted Income Before Income Taxes


47,818




46,813











Provision for Income Taxes as Reported


13,142




14,170











Income Tax Effect of Adjustment


3,170




711











Adjusted Provision for Income Taxes


16,312




14,881











Net Income as Reported


25,350




30,559











Adjustments


6,156




1,373











Adjusted Net Income


31,506




31,932











Earnings Per Share

















Basic as Reported


0.90




1.01











Adjustments


0.22




0.05











Adjusted Basic


1.11




1.06











Diluted as Reported


0.89




1.01











Adjustments


0.22




0.05











Adjusted Diluted


1.11




1.06











Average Shares Outstanding


































Basic


28,307




30,204











Diluted


28,449




30,290












 



Mimi's Cafe


BEF Foods



Six Months Ended


Six Months Ended



Oct 26, 2012


% of Sales


Oct 28, 2011


% of Sales


Oct 26, 2012


% of Sales


Oct 28, 2011


% of Sales

Operating Income as Reported


































Net Sales

$

167,596



$

175,437



$

158,728



$

150,520



Cost of Sales


44,258


26.4%


46,952


26.8%


77,717


49.0%


85,276


56.7%

Operating Wages


64,240


38.3%


66,328


37.8%


16,623


10.5%


14,498


9.6%

Other Operating


42,179


25.2%


41,766


23.8%


12,728


8.0%


8,754


5.8%

SG&A


13,805


8.2%


13,372


7.6%


33,475


21.1%


27,850


18.5%

Depr & Amort


11,470


6.8%


11,785


6.7%


5,619


3.5%


4,527


3.0%


















Total as Reported


(8,356)


-5.0%


(4,766)


-2.7%


12,566


7.9%


9,615


6.4%


















Adjustments


































Other Operating


(1,541)




-




-




-



SG&A


(619)




(287)




(5,339)




602




















Total Adjustments


2,160




287




5,339




(602)




















Adjusted Operating Income


































Net Sales


167,596




175,437




158,728




150,520



Cost of Sales


44,258


26.4%


46,952


26.8%


77,717


49.0%


85,276


56.7%

Operating Wages


64,240


38.3%


66,328


37.8%


16,623


10.5%


14,498


9.6%

Other Operating


40,638


24.2%


41,766


23.8%


12,728


8.0%


8,754


5.8%

SG&A


13,186


7.9%


13,085


7.5%


28,136


17.7%


28,452


18.9%

Depr & Amort


11,470


6.8%


11,785


6.7%


5,619


3.5%


4,527


3.0%


















Total Adjusted Operating Income


(6,196)


-3.7%


(4,479)


-2.6%


17,905


11.3%


9,013


6.0%


 



Consolidated Results



Three Months Ended



Oct. 26, 2012


% of sales


Oct. 28, 2011


% of sales

Net sales

$

410,877



$

407,185












Cost of sales


119,292


29.0%


125,842


30.9%

Operating wages


133,606


32.5%


132,424


32.5%

Other operating


73,711


17.9%


69,185


17.0%

S,G&A


45,539


11.1%


38,165


9.4%

Depr. & Amort.


21,972


5.3%


20,239


5.0%










Operating income


16,757


4.1%


21,330


5.2%










Interest


1,473


0.4%


1,985


0.5%










Pre-tax income


15,284


3.7%


19,345


4.7%










Income Taxes


4,942


1.2%


6,598


1.6%










Net Income

$

10,342


2.5%

$

12,747


3.1%










EPS - basic

$

0.36



$

0.42



EPS - diluted

$

0.36



$

0.42












Dividends paid per share:


$

0.28



$

0.25












Weighted average shares outstanding:












Basic


28,398




30,090



Dilutive stock options


138




51



Diluted


28,536




30,141












Shares outstanding at quarter end:


28,100




29,615












Income taxes, as a percentage of pre-tax income, were 32.3% vs. 34.1%






Segment Results


Three Months Ended



Bob Evans Restaurants


Mimi's Cafe


BEF Foods



Oct. 26, 2012


Oct. 28, 2011


Oct. 26, 2012


Oct. 28, 2011


Oct. 26, 2012


Oct. 28, 2011

Net sales

$

246,302

$

242,803

$

81,322

$

86,070

$

83,253

$

78,312














Cost of sales


23.8%


23.4%


26.1%


26.7%


47.4%


58.8%

Operating wages


37.4%


37.9%


39.5%


38.6%


11.3%


9.2%

Other operating


18.1%


18.0%


27.5%


24.7%


8.2%


5.4%

S,G&A


7.4%


7.2%


9.1%


7.4%


23.9%


18.4%

Depr. & Amort.


5.3%


4.9%


7.0%


6.8%


3.9%


3.1%



























Operating income


8.0%


8.7%


-9.2%


-4.3%


5.4%


5.1%





























Consolidated Results


Six Months Ended



Oct. 26, 2012


% of sales


Oct. 28, 2011


% of sales

Net sales

$

820,592



$

812,545












Cost of sales


240,076


29.3%


246,929


30.4%

Operating wages


266,319


32.5%


265,847


32.7%

Other operating


145,218


17.7%


136,436


16.8%

S,G&A


83,975


10.2%


73,890


9.1%

Depr. & Amort.


42,983


5.2%


40,618


5.0%










Operating income


42,021


5.1%


48,825


6.0%










Interest


3,529


0.4%


4,096


0.5%










Pre-tax income


38,492


4.7%


44,729


5.5%










Income Taxes


13,142


1.6%


14,170


1.7%










Net Income

$

25,350


3.1%

$

30,559


3.8%










EPS - basic

$

0.90



$

1.01



EPS - diluted

$

0.89



$

1.01












Dividends paid per share:


$

0.53



$

0.45



Weighted average shares outstanding:












Basic


28,307




30,204



Dilutive stock options


142




86



Diluted


28,449




30,290












Shares outstanding at quarter end:


28,100




29,615












Income taxes, as a percentage of pre-tax income, were 34.1% vs.31.7%


Segment Results


Six Months Ended



Bob Evans Restaurants


Mimi's Cafe


BEF Foods



Oct. 26, 2012


Oct. 28, 2011


Oct. 26, 2012


Oct. 28, 2011


Oct. 26, 2012


Oct. 28, 2011

Net sales

$

494,268

$

486,588

$

167,596

$

175,437

$

158,728

$

150,520














Cost of sales


23.9%


23.6%


26.4%


26.8%


49.0%


56.7%

Operating wages


37.5%


38.0%


38.3%


37.8%


10.5%


9.6%

Other operating


18.3%


17.7%


25.2%


23.8%


8.0%


5.8%

S,G&A


7.4%


6.7%


8.2%


7.6%


21.1%


18.5%

Depr. & Amort.


5.2%


5.0%


6.8%


6.7%


3.5%


3.0%














Operating income


7.6%


9.0%


-5.0%


-2.7%


7.9%


6.4%
















 

Future quarters represent estimates for fiscal year 2013.


















Bob Evans Restaurants openings and closings, by quarter:


























Fiscal Year


Beginning Total


Q1


Q2


Q3


Q4


Total


Closings


Ending Total


















2013


565


2


-


-


-


2


2


565

2012


563


-


2


-


2


4


2


565

2011


569


-


-


-


2


2


8


563

2010


570


-


-


-


-


-


1


569

2009


571


-


-


-


1


1


2


570

Rebuilt Bob Evans Restaurant openings, by quarter:














Fiscal Year


Q1


Q2


Q3


Q4


Total














2013


-


-


-


-


-


2012


-


2


-


1


3


2011


-


-


1


1


2


2010


1


1


-


-


2


2009


1


3


-


-


4

























Bob Evans Restaurant remodel openings and pre-opening expense, by fiscal year and quarter:














2013


Q1


Q2


Q3


Q4


Total














Cincinnati


2


-


-


-


2


Other markets


2


-


-


-


2


Columbus


24


17


-


-


41


Charleston


8


-


-


3


11


Ft. Wayne


-


7


5


-


12


Indianapolis


-


15


14


-


29


Flint


-


6


8


-


14


Louisville


-


-


7


16


23


Pittsburgh


-


-


-


16


16


Cleveland


-


-


7


38


45


Total restaurants


36


45


41


73


195














Pre-Opening Expense

$

510

$

773

$

615