Bob Evans Farms Disappoints On Results; Will Not Spin Off BEF Foods

Bob Evans Farms Inc BOBE reported fiscal third quarter financial results Tuesday and missed expectations.

Net sales came in at $357.2 million, below expectations of $359.33 million, and an increase of $17.0 million, or 5.0 percent, compared to the prior year period.

Third quarter 2015 same-store sales for Bob Evans Restaurants increased 3.8 percent.

Non-GAAP net income was $14.3 million, or $0.60 per diluted share, below expectations of $0.70. In the prior year period, non-GAAP net income was $8.2 million, or $0.31 per diluted share.

On a GAAP basis, net income was $5.9 million, or $0.25 per diluted share, compared with net income of $6.2 million, or $0.24 per diluted share, in the comparable period last year.

The Board of Directors also announced that the company will not pursue a sale or spin-off of the BEF Foods business segment at this time and that J.P. Morgan was retained during the third quarter to assist with continued evaluation of strategic alternatives for the company's real estate.

A review of of the company's G&A and operating cost structures was expected to yield a $35 million annual cost savings opportunity over three years.

The non-executive Chair of the Board, Mary Kay Haben, said that CEO candidates are being vetted and that an update on the search process would be provided "as soon as it is warranted."

Chief Financial Officer Mark Hood commented, "Our third-quarter results reflect improved net sales in both our Bob Evans Restaurants and BEF Foods business segments. The improvement in sales combined with lower sow costs and improved plant efficiencies at BEF Foods led to solid profit growth at BEF Foods in the third quarter. While Bob Evans Restaurants' same-store sales increased 3.8 percent in the quarter, higher discounting, food, and labor costs resulted in a decline in the segment's operating income, demonstrating the challenges we face in turning around performance."

The company announced a quarterly dividend of $0.31 per share payable on March 23, 2015, to stockholders of record at the close of business on March 9, 2015.

The fiscal 2015 GAAP diluted EPS guidance was lowered to a range of $0.70 to $0.90 per share.

The fiscal 2015 Non-GAAP EPS guidance range was lowered to a range of $1.40 to $1.60 per share. Analysts had expected non-GAAP fiscal 2015 EPS of $1.97.

Bob Evans Farms Inc traded $48.94 in the after hours session, down 17.94 percent.

Posted In: EarningsNewsGuidance
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