FORM 8-K |
Bob Evans Farms, Inc. (Exact name of registrant as specified in its charter) |
Delaware | 0-1667 | 31-4421866 |
(State or other jurisdiction of incorporation or organization) | (Commission File No.) | (I.R.S. Employer Identification No.) |
99.1 | News release issued by Bob Evans Farms, Inc. on August 31, 2016 announcing the financial results for the first quarter of fiscal year 2017 ended July 29, 2016 | Filed herewith |
BOB EVANS FARMS, INC. | |||
Date: August 31, 2016 | By: | /s/ Mark E. Hood | |
Mark E. Hood, Chief Financial Officer and Chief Administrative Officer |
▪ | Q1 2017 net sales total $306.3 million; GAAP net income of $0.46 per diluted share, non-GAAP net income(1) of $0.48 per diluted share |
▪ | BEF Foods reports Q1 side-dish and sausage volume growth of 12.5 percent and 4.9 percent, respectively. Side-dish manufacturing facility expansion complete and ready to support continued volume gains, particularly in West Coast growth markets |
▪ | Bob Evans Restaurants’ Q1 same-store sales decline 4.3 percent, Q2-to-date same-store sales declines through August 29, moderate to -2.0 percent, following hospitality and food quality improvements. Comprehensive menu redesign launches system-wide September 1 |
▪ | Company raises fiscal year 2017 diluted EPS guidance range to $2.00 to $2.17 on a GAAP basis, and $2.05 to $2.20 on a non-GAAP basis |
▪ | Quarterly dividend of $0.34 per share payable on September 19, 2016, to stockholders of record at the close of business on September 5, 2016 |
Same-Store Sales (SSS) Restaurants | May | June | July | 1Q FY ’17 |
521 | -2.8% | -6.1% | -4.1% | -4.3% |
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) | $50-$53 |
Capital expenditures | $75 to $80 million |
Depreciation and amortization | $71 to $75 million |
Net interest expense | $10 to $12 million |
Tax rate | 23.5% to 24.5% |
Diluted weighted-average share count | approximately 20 million shares |
Remaining share repurchase authorization | $78.5 million |
GAAP diluted earnings per share | $2.00 to $2.17 |
Non-GAAP diluted earnings per share | $2.05 to $2.20 |
(in thousands, except per share amounts) | Basic EPS | Diluted EPS | |||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
July 29, 2016 | July 24, 2015 | July 29, 2016 | July 24, 2015 | July 29, 2016 | July 24, 2015 | ||||||||||||||||||
Operating Income (Loss) as Reported | |||||||||||||||||||||||
Bob Evans Restaurants | $ | 11,602 | $ | 9,796 | |||||||||||||||||||
BEF Foods | 15,387 | 15,851 | |||||||||||||||||||||
Corporate and Other | (13,291 | ) | (17,385 | ) | |||||||||||||||||||
Operating Income | 13,698 | 8,262 | |||||||||||||||||||||
Net interest expense | 1,893 | 2,606 | |||||||||||||||||||||
Income Before Income Taxes | 11,805 | 5,656 | |||||||||||||||||||||
Provision (benefit) for income taxes | 2,643 | 1,376 | |||||||||||||||||||||
Net Income as reported | 9,162 | 4,280 | $ | 0.46 | $ | 0.19 | $ | 0.46 | $ | 0.19 | |||||||||||||
Adjustments | |||||||||||||||||||||||
Bob Evans Restaurants | |||||||||||||||||||||||
Store closure costs | 807 | — | |||||||||||||||||||||
Litigation Reserves | (278 | ) | 10,500 | ||||||||||||||||||||
529 | 10,500 | ||||||||||||||||||||||
Total adjustments | |||||||||||||||||||||||
Store closure costs | 807 | — | |||||||||||||||||||||
Litigation Reserves | (278 | ) | 10,500 | ||||||||||||||||||||
529 | 10,500 | ||||||||||||||||||||||
Non-GAAP operating income (loss) | |||||||||||||||||||||||
Bob Evans Restaurants | 12,131 | 20,296 | |||||||||||||||||||||
BEF Foods | 15,387 | 15,851 | |||||||||||||||||||||
Corporate and Other | (13,291 | ) | (17,385 | ) | |||||||||||||||||||
Total non-GAAP operating income | 14,227 | 18,762 | |||||||||||||||||||||
Adjustments to net interest expense | — | — | |||||||||||||||||||||
Non-GAAP net interest expense | 1,893 | 2,606 | |||||||||||||||||||||
Non-GAAP Income Before Taxes | 12,334 | 16,156 | |||||||||||||||||||||
Adjustments to income tax provision (benefit) | 141 | 3,076 | |||||||||||||||||||||
Non-GAAP Provision for Income Taxes | 2,784 | 4,452 | |||||||||||||||||||||
Non-GAAP Net Income | $ | 9,550 | $ | 11,704 | $ | 0.48 | $ | 0.51 | $ | 0.48 | $ | 0.51 | |||||||||||
Weighted Average Shares Outstanding | 19,792 | 22,733 | 19,964 | 22,881 |
(in thousands) | Three Months Ended | |||||||||||||||||||||||||||
Consolidated Results | Bob Evans Restaurants | |||||||||||||||||||||||||||
July 29, 2016 | % of Sales | July 24, 2015 | % of Sales | July 29, 2016 | % of Sales | July 24, 2015 | % of Sales | |||||||||||||||||||||
Operating income as reported | ||||||||||||||||||||||||||||
Net Sales | $ | 306,317 | $ | 321,713 | $ | 220,376 | $ | 238,669 | ||||||||||||||||||||
Cost of sales | 93,250 | 30.4 | % | 96,322 | 29.9 | % | 55,236 | 25.1 | % | 61,469 | 25.8 | % | ||||||||||||||||
Operating wage and fringe benefit expenses | 100,698 | 32.9 | % | 104,959 | 32.6 | % | 91,515 | 41.5 | % | 95,465 | 40.0 | % | ||||||||||||||||
Other operating expenses | 55,642 | 18.2 | % | 51,589 | 16.0 | % | 42,544 | 19.3 | % | 39,935 | 16.7 | % | ||||||||||||||||
Selling, general and administrative expenses | 25,455 | 8.3 | % | 40,428 | 12.6 | % | 8,404 | 3.8 | % | 18,524 | 7.8 | % | ||||||||||||||||
Depreciation and amortization expense | 17,574 | 5.7 | % | 20,153 | 6.3 | % | 11,075 | 5.0 | % | 13,480 | 5.6 | % | ||||||||||||||||
Total as reported | 13,698 | 4.5 | % | 8,262 | 2.6 | % | 11,602 | 5.3 | % | 9,796 | 4.1 | % | ||||||||||||||||
Adjustments | ||||||||||||||||||||||||||||
Net Sales | — | — | — | — | ||||||||||||||||||||||||
Cost of sales | — | — | — | — | ||||||||||||||||||||||||
Operating wage and fringe benefit expenses | — | — | — | — | ||||||||||||||||||||||||
Other operating expenses | (340 | ) | — | (340 | ) | — | ||||||||||||||||||||||
Selling, general and administrative expenses | (189 | ) | (10,500 | ) | (189 | ) | (10,500 | ) | ||||||||||||||||||||
Depreciation and amortization expense | — | — | — | — | ||||||||||||||||||||||||
Total Adjustments | 529 | 10,500 | 529 | 10,500 | ||||||||||||||||||||||||
Non-GAAP operating income | ||||||||||||||||||||||||||||
Net Sales | 306,317 | 321,713 | 220,376 | 238,669 | ||||||||||||||||||||||||
Cost of sales | 93,250 | 30.4 | % | 96,322 | 29.9 | % | 55,236 | 25.1 | % | 61,469 | 25.8 | % | ||||||||||||||||
Operating wage and fringe benefit expenses | 100,698 | 32.9 | % | 104,959 | 32.6 | % | 91,515 | 41.5 | % | 95,465 | 40.0 | % | ||||||||||||||||
Other operating expenses | 55,302 | 18.1 | % | 51,589 | 16.0 | % | 42,204 | 19.2 | % | 39,935 | 16.7 | % | ||||||||||||||||
Selling, general and administrative expenses | 25,266 | 8.3 | % | 29,928 | 9.4 | % | 8,215 | 3.7 | % | 8,024 | 3.4 | % | ||||||||||||||||
Depreciation and amortization expense | 17,574 | 5.7 | % | 20,153 | 6.3 | % | 11,075 | 5.0 | % | 13,480 | 5.6 | % | ||||||||||||||||
Total non-GAAP operating income | $ | 14,227 | 4.6 | % | $ | 18,762 | 5.8 | % | $ | 12,131 | 5.5 | % | $ | 20,296 | 8.5 | % |
(in thousands) | Three Months Ended | |||||||||||||||||||||
BEF Foods | Corporate and Other | |||||||||||||||||||||
July 29, 2016 | % of Sales | July 24, 2015 | % of Sales | July 29, 2016 | July 24, 2015 | |||||||||||||||||
Operating income (loss) as reported | ||||||||||||||||||||||
Net Sales | $ | 85,941 | $ | 83,044 | $ | — | $ | — | ||||||||||||||
Cost of sales | 38,014 | 44.2 | % | 34,853 | 42.0 | % | — | — | ||||||||||||||
Operating wage and fringe benefit expenses | 9,184 | 10.7 | % | 9,494 | 11.4 | % | — | — | ||||||||||||||
Other operating expenses | 13,098 | 15.2 | % | 11,654 | 14.0 | % | — | — | ||||||||||||||
Selling, general and administrative expenses | 6,464 | 7.6 | % | 6,795 | 8.2 | % | 10,586 | 15,109 | ||||||||||||||
Depreciation and amortization expense | 3,794 | 4.4 | % | 4,397 | 5.3 | % | 2,705 | 2,276 | ||||||||||||||
Total as Reported | 15,387 | 17.9 | % | 15,851 | 19.1 | % | (13,291 | ) | (17,385 | ) | ||||||||||||
Adjustments | ||||||||||||||||||||||
Net Sales | — | — | — | — | ||||||||||||||||||
Cost of sales | — | — | — | — | ||||||||||||||||||
Operating wage and fringe benefit expenses | — | — | — | — | ||||||||||||||||||
Other operating expenses | — | — | — | — | ||||||||||||||||||
Selling, general and administrative expenses | — | — | — | — | ||||||||||||||||||
Depreciation and amortization expense | — | — | — | — | ||||||||||||||||||
Total adjustments | — | — | — | — | ||||||||||||||||||
Non-GAAP operating income (loss) | ||||||||||||||||||||||
Net Sales | 85,941 | 83,044 | — | — | ||||||||||||||||||
Cost of sales | 38,014 | 44.2 | % | 34,853 | 42.0 | % | — | — | ||||||||||||||
Operating wage and fringe benefit expenses | 9,184 | 10.7 | % | 9,494 | 11.4 | % | — | — | ||||||||||||||
Other operating expenses | 13,098 | 15.2 | % | 11,654 | 14.0 | % | — | — | ||||||||||||||
Selling, general and administrative expenses | 6,464 | 7.6 | % | 6,795 | 8.2 | % | 10,586 | 15,109 | ||||||||||||||
Depreciation and amortization expense | 3,794 | 4.4 | % | 4,397 | 5.3 | % | 2,705 | 2,276 | ||||||||||||||
Total non-GAAP operating income (loss) | $ | 15,387 | 17.9 | % | $ | 15,851 | 19.1 | % | $ | (13,291 | ) | $ | (17,385 | ) |
(in thousands, except per share amounts) | Three Months Ended | |||||||||
July 29, 2016 | % of Sales | July 24, 2015 | % of Sales | |||||||
Net Sales | $ | 306,317 | $ | 321,713 | ||||||
Cost of sales | 93,250 | 30.4 | % | 96,322 | 29.9 | % | ||||
Operating wage and fringe benefit expenses | 100,698 | 32.9 | % | 104,959 | 32.6 | % | ||||
Other operating expenses | 55,642 | 18.2 | % | 51,589 | 16.0 | % | ||||
Selling, general and administrative expenses | 25,455 | 8.3 | % | 40,428 | 12.6 | % | ||||
Depreciation and amortization expense | 17,574 | 5.7 | % | 20,153 | 6.3 | % | ||||
Operating Income | 13,698 | 4.5 | % | 8,262 | 2.6 | % | ||||
Net interest expense | 1,893 | 0.6 | % | 2,606 | 0.8 | % | ||||
Income Before Income Taxes | 11,805 | 3.9 | % | 5,656 | 1.8 | % | ||||
Provision (Benefit) for income taxes | 2,643 | 0.9 | % | 1,376 | 0.4 | % | ||||
Net Income | $ | 9,162 | 3.0 | % | $ | 4,280 | 1.3 | % | ||
Earnings Per Share — Net Income | ||||||||||
Basic | $ | 0.46 | $ | 0.19 | ||||||
Diluted | $ | 0.46 | $ | 0.19 | ||||||
Cash Dividends Paid Per Share | $ | 0.34 | $ | 0.31 | ||||||
Weighted Average Shares Outstanding | ||||||||||
Basic | 19,792 | 22,733 | ||||||||
Dilutive shares | 172 | 148 | ||||||||
Diluted | 19,964 | 22,881 | ||||||||
Shares outstanding at quarter end | 19,764 | 22,352 |
(in thousands, except par values) | July 29, 2016 | April 29, 2016 | |||||
Assets | |||||||
Current Assets | |||||||
Cash and equivalents | $ | 4,402 | $ | 12,896 | |||
Accounts receivable, net | 30,023 | 28,893 | |||||
Inventories | 25,843 | 24,997 | |||||
Federal and state income taxes receivable | 4,431 | — | |||||
Prepaid expenses and other current assets | 11,391 | 9,307 | |||||
Current assets held for sale | 30,539 | 31,644 | |||||
Total Current Assets | 106,629 | 107,737 | |||||
Property, plant and equipment | 1,276,861 | 1,263,413 | |||||
Less accumulated depreciation | 678,912 | 665,777 | |||||
Net Property, Plant and Equipment | 597,949 | 597,636 | |||||
Other Assets | |||||||
Deposits and other | 4,449 | 4,622 | |||||
Notes receivable | 21,564 | 20,886 | |||||
Rabbi trust assets | 20,943 | 20,662 | |||||
Goodwill and other intangible assets | 19,790 | 19,829 | |||||
Non-current deferred tax assets | 28,818 | 29,002 | |||||
Total Other Assets | 95,564 | 95,001 | |||||
Total Assets | $ | 800,142 | $ | 800,374 | |||
Liabilities and Stockholders’ Equity | |||||||
Current Liabilities | |||||||
Current portion of long-term debt | $ | 3,421 | $ | 3,419 | |||
Accounts payable | 37,599 | 37,518 | |||||
Accrued property, plant and equipment purchases | 6,186 | 5,308 | |||||
Accrued non-income taxes | 14,433 | 15,696 | |||||
Accrued wages and related liabilities | 16,202 | 26,358 | |||||
Self-insurance reserves | 19,639 | 20,169 | |||||
Deferred gift card revenue | 12,793 | 14,147 | |||||
Current taxes payable | 589 | 9,473 | |||||
Current reserve for uncertain tax provision | 1,481 | 1,481 | |||||
Other accrued expenses | 26,225 | 31,988 | |||||
Total Current Liabilities | 138,568 | 165,557 | |||||
Long-Term Liabilities | |||||||
Deferred compensation | 18,143 | 17,761 | |||||
Reserve for uncertain tax positions | 2,547 | 2,752 | |||||
Deferred rent and other | 6,153 | 5,851 | |||||
Long-term deferred gain | 55,571 | 56,371 | |||||
Credit facility borrowings and other long-term debt | 361,134 | 335,638 | |||||
Total Long-Term Liabilities | 443,548 | 418,373 | |||||
Stockholders’ Equity | |||||||
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at July 29, 2016, and April 29, 2016 | 426 | 426 | |||||
Capital in excess of par value | 243,758 | 244,304 | |||||
Retained earnings | 834,676 | 832,323 | |||||
Treasury stock, 22,874 shares at July 29, 2016, and 22,881 shares at April 29, 2016, at cost | (860,834 | ) | (860,609 | ) | |||
Total Stockholders’ Equity | 218,026 | 216,444 | |||||
Total Liabilities and Stockholders' Equity | $ | 800,142 | $ | 800,374 |
Three Months Ended | |||||||
July 29, 2016 | July 24, 2015 | ||||||
Operating activities: | |||||||
Net income | $ | 9,162 | $ | 4,280 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 17,574 | 20,153 | |||||
Loss (Gain) on disposal of fixed assets | 276 | (701 | ) | ||||
(Gain) Loss on rabbi trust assets | (281 | ) | 169 | ||||
Loss (Gain) on deferred compensation | 279 | (138 | ) | ||||
Share-based compensation | 1,440 | 2,048 | |||||
Accretion on long-term note receivable | (558 | ) | (499 | ) | |||
Deferred income taxes | 184 | — | |||||
Amortization of deferred financing costs | 406 | 418 | |||||
Cash provided by (used for) assets and liabilities: | |||||||
Accounts receivable | (1,130 | ) | 664 | ||||
Inventories | (846 | ) | (2,095 | ) | |||
Prepaid expenses and other current assets | (2,084 | ) | (1,048 | ) | |||
Accounts payable | 81 | 7,726 | |||||
Federal and state income taxes | (13,520 | ) | 8,935 | ||||
Accrued wages and related liabilities | (10,156 | ) | (7,160 | ) | |||
Self-insurance | (530 | ) | 2,392 | ||||
Accrued non-income taxes | (1,263 | ) | 562 | ||||
Deferred revenue | (1,354 | ) | (1,185 | ) | |||
Other assets and liabilities | (5,584 | ) | 5,624 | ||||
Net cash (used in) provided by operating activities | (7,904 | ) | 40,145 | ||||
Investing activities: | |||||||
Purchase of property, plant and equipment | (18,985 | ) | (12,264 | ) | |||
Proceeds from sale of property, plant and equipment | 2,109 | 1,597 | |||||
Deposits and other | (206 | ) | (98 | ) | |||
Net cash used in investing activities | (17,082 | ) | (10,765 | ) | |||
Financing activities: | |||||||
Cash dividends paid | (6,724 | ) | (7,028 | ) | |||
Gross proceeds from credit facility borrowings and other long-term debt | 97,272 | 170,739 | |||||
Gross repayments of credit facility borrowings and other long-term debt | (71,784 | ) | (130,768 | ) | |||
Payments of debt issuance costs | — | (1,705 | ) | ||||
Purchase of treasury stock | — | (60,564 | ) | ||||
Proceeds from share-based compensation | — | 165 | |||||
Cash paid for taxes on share-based compensation | (640 | ) | (617 | ) | |||
Excess tax benefits from share-based compensation | (1,632 | ) | 104 | ||||
Net cash provided by (used in) financing activities | 16,492 | (29,674 | ) | ||||
Net decrease in cash and equivalents | (8,494 | ) | (294 | ) | |||
Cash and equivalents at the beginning of the period | 12,896 | 6,358 | |||||
Cash and equivalents at the end of the period | $ | 4,402 | $ | 6,064 |
Fiscal 2017 | Fiscal 2016 | ||||||||||
Total | Pricing / Mix | Transactions | Total | Pricing / Mix | Transactions | ||||||
May | (2.8)% | 1.2% | (4.0)% | (0.3)% | 3.9% | (4.2)% | |||||
June | (6.1)% | 1.2% | (7.3)% | (0.9)% | 4.4% | (5.3)% | |||||
July | (4.1)% | 1.1% | (5.2)% | 0.3% | 5.8% | (5.5)% | |||||
Q1 | (4.3)% | 1.2% | (5.5)% | (0.3)% | 4.8% | (5.0)% | |||||
August | (1.3)% | 3.3% | (4.6)% | ||||||||
September | (3.8)% | 2.9% | (6.6)% | ||||||||
October | (4.4)% | 1.5% | (5.8)% | ||||||||
Q2 | (3.2)% | 2.5% | (5.7)% | ||||||||
November | (3.2)% | 2.5% | (5.6)% | ||||||||
December | (4.3)% | 3.4% | (7.7)% | ||||||||
January | (3.4)% | 3.1% | (6.5)% | ||||||||
Q3 | (3.6)% | 2.9% | (6.5)% | ||||||||
February | (1.1)% | 0.9% | (2.0)% | ||||||||
March | (2.3)% | 2.2% | (4.5)% | ||||||||
April | (4.9)% | 1.4% | (6.3)% | ||||||||
Q4 | (3.0)% | 1.5% | (4.4)% | ||||||||
Fiscal Year | (4.3)% | 1.2% | (5.5)% | (2.5)% | 2.9% | (5.4)% |
First-quarter Fiscal 2017 SSS% Day Part Performance - Total Chain | ||||||
Day Part | On-Premises | Off-Premises | Total | |||
Breakfast | (2.0)% | 5.8% | (1.2)% | |||
Lunch | (3.6)% | (3.8)% | (3.6)% | |||
Dinner | (8.6)% | (7.2)% | (8.4)% | |||
Total | (4.5)% | (3.2)% | (4.3)% |
Bob Evans Restaurants | |||
Average annual store sales ($) - FY16 | $1.7 million | ||
Q1 FY2017 day part mix (%): | |||
Breakfast | 34 | % | |
Lunch | 36 | % | |
Dinner | 30 | % | |
Q1 FY2017 dine-in check average per guest ($): | |||
Breakfast | $ | 9.51 | |
Lunch | $ | 9.93 | |
Dinner | $ | 10.09 | |
Q1 FY2017 dine-in check average per guest ($): | $ | 9.82 | |
Q1 FY2017 dine-in check average per ticket ($): | $ | 19.23 | |
Q1 FY2017 carry-out check average per ticket ($): | $ | 16.59 |
BEF Foods total pounds sold, by category | ||||||||||
Fiscal 2017 | ||||||||||
Category | Q1 | Q2 | Q3 | Q4 | YTD | |||||
Sides | 51.4% | 51.4% | ||||||||
Sausage | 21.2% | 21.2% | ||||||||
Food Service - External | 11.6% | 11.6% | ||||||||
Food Service - Intersegment | 8.3% | 8.3% | ||||||||
Frozen | 3.9% | 3.9% | ||||||||
Other | 3.6% | 3.6% | ||||||||
Fiscal 2016 | ||||||||||
Category | Q1 | Q2 | Q3 | Q4 | FY 2016 | |||||
Sides | 49.6% | 50.7% | 50.9% | 51.4% | 50.7% | |||||
Sausage | 22.0% | 22.3% | 26.6% | 21.7% | 23.3% | |||||
Food Service - External | 14.1% | 12.5% | 10.4% | 11.4% | 11.9% | |||||
Food Service - Intersegment | 6.2% | 6.6% | 6.0% | 8.1% | 6.7% | |||||
Frozen | 4.6% | 4.5% | 3.1% | 3.9% | 4.0% | |||||
Other | 3.5% | 3.4% | 3.0% | 3.5% | 3.4% |