Bob Evan Farms Conference Call Highlights

reported its third quarter highlights on Tuesday. Shares of the company are down 12 percent. Below are some key highlights from its conference call.

• Last night we reported second quarter fiscal 2015 consolidated net sales of $333.3 million, an increase of $700,000 compared to last year. • Non-GAAP net income for the quarter was $8.6 million or $0.36 per diluted share compared to non-GAAP net income of $9.5 million or $0.35 per diluted share in the prior year period. • We also narrowed our full-year non-GAAP earnings per share guidance to $1.90 to $2.10 per diluted share. While our expected earnings have not changed, we have modified some of our performance and expectations. • At Bob Evans Restaurants, we have lowered same-store sales guidance to mid-single digit growth for the back half of the year. • Down from high single-digits, reflecting a modified rollout schedule for the Broasted Chicken platform through the second quarter of fiscal 2016 rather than the end of fiscal 2015. • From a development perspective, we expect to open a total of seven Bob Evans Restaurants locations and up to 10 Bob Evans Express locations during fiscal 2015. • Food costs are expected to rise 60 basis points to 80 basis points compared to the prior year due to higher commodity costs and continued growth in off-premise sales. • We also expect continuation of increased healthcare costs during the second half of fiscal 2015. • During the past six months we have also eliminated positions in the home office for which we expect to save approximately $2 million annually. • Additionally, our expected depreciation expense and tax rate assumptions have also been reduced for fiscal 2015. • We continue to focus on reducing our tax rate through effective tax planning strategies. • At Bob Evans Restaurants, overall same-store sales were flat for the quarter, slightly trailing the national Knapp-Track family dining index decline of 0.3%. • However, same-store sales were positive for the last nine weeks of the quarter and as indicated in our release, fiscal November was the third consecutive month of positive same-store sales. • From a competitive standpoint, Bob Evans Restaurants outperformed regional Knapp-Track results by up to 180 basis points in our three largest markets which comprise 82% of the Bob Evans system. • Bob Evans Restaurants reported non-GAAP operating income of $9.6 million during the second quarter, compared to $13.6 million in the prior year. • A $0.6 million increase in operating expense primarily as a result of increased service contract expenses partially offset by approximately $0.4 million of net labor costs favorability; • The company's ongoing efforts to optimize restaurants staffing through its workforce management process drove the decrease despite $0.9 million of incremental training. • At Bob Evans Farms Foods' net sales were flat compared to the prior year. Increased sausage pricing was offset by a 4.5% decline in total pounds sold during the quarter resulting primarily from a 16.4% decline in sausage pounds sold. • This was partially offset by a 9% increase in side dish pounds sold. • Adjusting for the sale of the company's Irvine, California production facility during the second quarter of fiscal 2014, net sales would have increased 1.6% on a dollar basis and volume would have declined 1.7%. • BEF Foods' second quarter non-GAAP operating income was $3.2 million compared to non-GAAP operating income of $0.6 million in the corresponding period last year. • Average sow cost for the quarter were $78.82 per hundredweight, a 1.9% increase over the prior-year period. • The primary drivers of the $2.6 million operating income increase were $2.5 million of just SG&A expense favorability resulting from lower advertising expenses and reduced head count. • The effective income tax rate was 11.3% for the quarter as compared to 28.6% for the corresponding period a year ago. • The East North Central region comprised of Illinois, Indiana, and Ohio and Michigan, is home to 319 of Bob Evans Restaurants or 57% of our total restaurants.