Market Overview

Bob Evans Reports Fourth Quarter and Fiscal Year 2017 Results

Share:
  • Fourth quarter net sales from continuing operations* totals $99.9 million, an increase of 4.9 percent from 13 week comparable fiscal 2016 (excludes 53rd week); consolidated GAAP net income of $5.39 per diluted share compared to $0.03 in the prior year and non-GAAP net income of $0.61 per diluted share, an increase of 27.1% from $0.48 in the prior year;

  • Fiscal year 2017 net sales from continuing operations totals $394.8 million, an increase of 3.8 percent from the 52 week comparable fiscal 2016 (excludes 53rd week); consolidated GAAP net income of $6.28 per diluted share compared to $1.13 in the prior year and non-GAAP net income of $2.38 per diluted share, an increase of 17.8% from $2.02 in the prior year;

  • Fourth quarter retail side-dish and sausage pounds sold increased 11.5 percent and 9.2 percent, respectively, when compared on a 13 week vs. 13 week basis.  Q4 food service volume increased 5.7 percent, also on a 13 week vs. 13 week comparison;

  • On May 1, 2017, the Company completed the previously announced acquisition of Pineland Farms Potato Company;

  • On April 28, 2017, the Company completed the sale of the Bob Evans Restaurants segment and completed a new $300 million credit facility;

  • Company reiterates fiscal year 2018 guidance for net sales of $470 million at the midpoint of its range and EBITDA of $105 million at the midpoint of its range; and initiates guidance for diluted EPS of $2.06 to $2.24;

  • Quarterly dividend of $0.34 per share payable on June 26, 2017, to stockholders of record at the close of business on June 12, 2017.  Special dividend of $7.50 per share is payable June 16, 2017.  $100 million share repurchase authorization remains in place through December 31, 2017.

* On April 28, 2017, the Company completed the sale of Bob Evans Restaurants to Golden Gate Capital.  As a result, the results of operations of Bob Evans Restaurants ("BER") have been reported as discontinued operations and all financial statement items for the current and prior periods reflect BER as a discontinued business.  Adjusted, or non-GAAP, results presented herein include both continuing and discontinued operations and exclude certain items for comparability.  Descriptions of measures excluding these items are provided in non-GAAP financial measures and reconciliations of such non-GAAP measures to the most comparable GAAP measure are provided in the tables at the end of this release.

NEW ALBANY, Ohio, June 15, 2017 (GLOBE NEWSWIRE) -- Bob Evans Farms, Inc. (NASDAQ:BOBE) today announced its financial results for the fiscal 2017 fourth quarter ended Friday, April 28, 2017.  On a GAAP basis, the Company reported consolidated net income of $108.9 million, or $5.39 per diluted share, compared with net income of $0.6 million, or $0.03 per diluted share, in the corresponding period last year.  Non-GAAP consolidated net income was $12.2 million, or $0.61 per diluted share, compared with non-GAAP net income of $9.5 million, or $0.48 per diluted share, in the corresponding period last year.

  • Net sales from continuing operations in the fourth quarter were $99.9 million, a decrease of $2.5 million, or 2.4 percent, compared to $102.4 million in the corresponding period last year. Excluding the impact of an extra week in the fourth quarter of fiscal 2016, net sales increased 4.9 percent.  The fourth quarter of fiscal 2017 included 13 weeks compared to 14 weeks in fiscal 2016.
     
  • GAAP net income in the fourth quarter of $108.9 million consists of $6.8 million from continuing operations and $102.1 million from discontinued operations. GAAP net income in the prior year period of $0.6 million consisted of $5.9 million from continuing operations and a $5.3 million loss from discontinued operations. Non-GAAP net income in the fourth quarter of $12.2 million includes $11.7 million from continuing operations and $0.5 million from discontinued operations.  Non-GAAP net income in the prior year period of $9.5 million included $6.5 million from continuing operations and $3.0 million from discontinued operations.
     
  • GAAP diluted earnings per share in the fourth quarter of $5.39 consists of $0.33 from continuing operations and $5.06 from discontinued operations.  GAAP diluted earnings per share of $0.03 for the prior-year period consisted of $0.30 from continuing operations and a loss of $0.27 from discontinued operations.  Non-GAAP diluted earnings per share in the fourth quarter of $0.61 consists of $0.58 from continuing operations and $0.03 from discontinued operations.  Non-GAAP diluted earnings per share of $0.48 for the prior-year period consisted of $0.32 from continuing operations and $0.16 from discontinued operations.  The impact of the 53rd week on Q4 2016 and fiscal 2016 diluted earnings per share was $0.13.

Fourth-quarter fiscal 2017 commentary
President and Chief Executive Officer Mike Townsley said, "We closed the fiscal year with strong fourth quarter earnings, exceeding our full year guidance, and completed the strategic transactions that have reshaped Bob Evans into a higher growth and higher margin, pure-play packaged foods company. We are now focusing our attention on capitalizing on the growth opportunities in our refrigerated side-dish business while completing the integration of Pineland Farms Potato Company. The Pineland acquisition provides the added production capacity as well as the product and channel opportunities to support our growth."

"Fourth quarter net sales from continuing operations increased 4.9 percent as compared to the comparable 13 week period in the prior year, driven by the continuation of double digit growth in our high margin refrigerated side-dish business. With the sale of BER complete, we can strategically expand our food service sales effort, leveraging Pineland Farms' strength in this large channel of distribution."

Fourth-quarter fiscal 2017 summary - continuing operations
Net sales from continuing operations were $99.9 million, a decrease of $2.5 million, or 2.4 percent, compared to $102.4 million in the corresponding period last year. Excluding the 14th week in the prior year period, net sales from continuing operations increased 4.9 percent. Pounds sold for the fourth quarter, adjusted for a 13 week vs. 13 week comparison, increased 7.0 percent while average net selling price per pound declined 2.3 percent compared to the corresponding period 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. From a net sales perspective, an 11.5 percent increase in side-dish pounds sold, a 9.2 percent increase in sausage pounds sold, and a 11.5 percent increase in food service pounds sold were partially offset by a 5.1 percent increase in trade spending and a 17.0 percent decline in frozen product pounds sold, all compared to the comparable 13 week period in the prior year.

GAAP operating income from continuing operations was $9.5 million, compared to $10.3 million in the corresponding period last year.  Non-GAAP operating income from continuing operations was $13.8 million, compared to $11.3 million in the corresponding period last year, an improvement of $2.5 million.  The improvement was due primarily to the aforementioned increase in pounds sold and the favorable sales mix of higher-margin side-dish items; partially offset by higher production costs, and increased freight expense resulting from increased pounds sold.  S,G&A expenses totaling $6.2 million, previously identified as "corporate and other" costs, are now included within continuing operations.  Of these costs, $0.7 million represent costs primarily related to wages and benefits for terminated employees that will no longer be in the Company's expense base in fiscal 2018.

Fourth-quarter fiscal 2017 summary - discontinued operations
Net sales from discontinued operations were $213.5 million, a decline of $29.7 million, or 12.2 percent, compared to net sales of $243.2 million in the corresponding period last year. The sales decline was primarily the result of a 3.9 percent decline in same store sales as well as closing 26 stores.

GAAP income before taxes from discontinued operations was $160.7 million, compared to GAAP loss before taxes from discontinued operations of $12.2 million last year.  The increase primarily reflects a $155.7 million gain on the sale of BER.  Non-GAAP income before taxes from discontinued operations was $3.1 million, compared to $2.3 million last year, an increase of $0.8 million.

Fourth-quarter fiscal 2017 net interest expense
GAAP net interest expense was $4.3 million in the fourth quarter, an increase of $1.7 million, compared to $2.6 million in the corresponding period last year.  Non-GAAP net interest expense was $2.2 million in the fourth quarter, a decrease of $0.4 million, compared to $2.6 million in the corresponding period last year.  Net interest expense on all revolving credit borrowings are included in continuing operations, while net interest expense related to the headquarters mortgage is included within discontinued operations.

Fourth-quarter fiscal 2017 taxes
The Company recognized a GAAP tax benefit for continuing operations of 28.6 percent for the fourth quarter of fiscal 2017, as compared to tax expense of 23.6 percent for the prior year period. On a non-GAAP basis, the Company recognized a tax benefit of 1.1 percent for the fourth quarter of fiscal 2017, as compared to tax expense of 25.8 percent for the prior year period. The change in the tax rate was driven primarily by the sale of the Bob Evans Restaurant business.

Fiscal-year 2017 summary - continuing operations
Net sales for the full year from continuing operations were $394.8 million, an increase of $7.2 million, or 1.9 percent, compared to $387.6 million in the prior year.  Excluding the 53rd week during fiscal 2016, net sales from continuing operations increased 3.8 percent.  Pounds sold for fiscal 2017, on a 52 week vs. 52 week basis, increased 7.0 percent while average net selling price per pound declined 3.4 percent compared to the prior 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 12.7 percent increase in side-dish pounds sold, a 5.9 percent increase in sausage pounds sold, and a 1.6 percent increase in food service pounds sold were partially offset by a 12.0 percent increase in trade spending and an 11.9 percent decline in frozen product pounds sold, all compared to the comparable 52 week period in the prior year.

For fiscal year 2017, GAAP operating income from continuing operations was $30.1 million, compared to $33.1 million in the prior year.  Non-GAAP operating income from continuing operations was $53.0 million, compared to $37.7 million in the prior year, an improvement of $15.3 million. The improvement was due primarily to the aforementioned increase in pounds sold and the favorable sales mix of higher-margin side-dish items, partially offset by a $4.9 million increase in trade spending net of lower sow costs, lower average net selling prices and higher production costs and increased freight expense resulting from increased pounds sold.  S,G&A expenses totaling $23.4 million, previously identified as "corporate and other" costs, are now included within continuing operations.  Of these costs, $6.4 million represent costs primarily related to wages and benefits for terminated employees that will no longer be in the Company's expense base in fiscal 2018.

Fiscal-year 2017 summary - discontinued operations
For the fiscal year ended April 28, 2017, net sales from discontinued operations were $876.8 million, a decline of $74.4 million, or 7.8 percent, compared to net sales of $951.2 million in the prior year. The decline in sales was primarily the result of a 3.2 percent decrease in same store sales and 26 store closings.

For the fiscal year ended April 28, 2017, GAAP income before taxes from discontinued operations was $167.0 million, compared to GAAP income before taxes from discontinued operations of $2.8 million in the prior year.  The increase primarily reflects a $150.2 million gain on the sale of BER.  Non-GAAP income before taxes from discontinued operations was $17.3 million, compared to $28.2 million in the prior year, a decline of $10.9 million.

Fiscal-year 2017 net interest expense
GAAP net interest expense was $9.2 million for fiscal year 2017, a decrease of $1.2 million, compared to $10.4 million in the prior year.  Non-GAAP net interest expense was $8.3 million for fiscal year 2017, a decrease of $1.6 million, compared to $9.9 million in the prior year.  Net interest expense on all revolving credit borrowings are included in continuing operations, while net interest expense related to the headquarters mortgage is included within discontinued operations.

Fiscal-year 2017 taxes
The Company recognized GAAP tax expense for continuing operations of 18.5 percent for fiscal year 2017, as compared to 28.4 percent for the prior year.  The change in the tax rate was driven primarily by officer's life insurance and discrete items.  On a non-GAAP basis, the tax rate was 25.9 percent for continuing operations.  Discontinued operations are presented net of income tax expense or benefit.

Fiscal-year 2017 balance sheet highlights
The Company's cash balance and outstanding debt at April 28, 2017 were $210.9 million and $2.7 million, respectively, compared to $12.9 million and $339.1 million at the end of the prior year.  The decrease in borrowings and increase in cash balance were the result of proceeds associated with the sale of BER.

Fiscal year 2018 outlook
Chief Administrative and Chief Financial Officer Mark Hood said, "We are initiating fiscal 2018 GAAP diluted earnings per share guidance in a range of $2.06 to $2.24.  Additionally, we are providing fiscal 2018 guidance ranges for both net sales and EBITDA that are consistent with the preliminary fiscal 2018 guidance of $470 million and $105 million, respectively, that we issued on January 24. 2017."

Guidance Metric         FY ‘18
Net sales         $464 to $476 million
EBITDA         $102 to $108 million
GAAP diluted earnings per share         $2.06 to $2.24
Sow cost (per hundredweight)         $43 to $46
Capital expenditures         $25 to $30 million
Net interest expense         $3.8 to $4.3 million
GAAP tax rate         34.5% to 35.5%
Diluted weighted-average share count         approximately 20.4 million shares
Share repurchase authorization         $100 million

This outlook is subject to a number of factors beyond the Company's control, including the risk factors discussed in the Company's fiscal 2017 Annual Report on Form 10‑K and its other subsequent filings with the Securities and Exchange Commission.

Investor Conference Call
The Company will host a conference call today, Thursday, June 15, 2017 to discuss its fourth quarter and fiscal year 2017 results at 8:30 a.m. Eastern Time.

The call can be accessed live over the telephone by dialing (855) 468-0551, or for international callers (484) 756-4323, access code 5876489.  A replay will be available shortly after the call and can be accessed by dialing (855) 859-2056, or for international callers (404) 537-3406, access code 5876489.

Interested parties may also listen to a simultaneous webcast available on the Company's website at http://investors.bobevans.com/events.cfm.  The webcast will be archived in the same location for approximately 90 days following the call.

(1) EBITDA and other non-GAAP financial measures
We define EBITDA as earnings before interest, taxes, depreciation and amortization including stock compensation. Management uses EBITDA and the other non-GAAP measures included in this release as key metrics in the evaluation of underlying Company performance and in making financial, operating and planning decisions. The Company believes these measures are useful to investors because they increase transparency, assist investors in understanding the underlying performance of the Company and assist in the analysis of ongoing operating trends. We believe EBITDA is frequently used by analysts, investors and other interested parties in their evaluation of the Company's performance as compared to our competitors, many of which present EBITDA measures when reporting their results.  We believe the non-GAAP measures used in this release provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of core business operating results. We believe these non-GAAP measures, when viewed in conjunction with U.S. GAAP results and the accompanying reconciliations, enhance the comparability of results against prior periods and allow for greater transparency of financial results and business outlook. The presentation of EBITDA and other non-GAAP measures included in this release should not be considered as an alternative to net income, determined in accordance with U.S. GAAP, as an indicator of the Company's operating performance, as an indicator of cash flows, or as a measure of liquidity. While EBITDA and our other non-GAAP measures are frequently used as measures of operations, they are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation.

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.  Additional information about the factors and events that could cause actual results to differ materially from those predicted by the forward looking statements, along with certain other risks, uncertainties and assumptions related to the Company and its business, may be found in our Annual Report on Form 10-K for the fiscal year ended April 28, 2017, 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.

About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. is a leading producer and distributor of refrigerated potato, pasta and vegetable-based 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.bobevansgrocery.com.

BOBE-E

Source: Bob Evans Farms, Inc.

Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Fourth quarter Fiscal 2017 compared to the corresponding period a year ago:
 
(in thousands, except per share amounts)         Basic EPS   Diluted EPS
  Three Months Ended   Three Months Ended   Three Months Ended
  April 28,
2017
  April 29,
2016
  April 28,
2017
  April 29,
2016
  April 28,
2017
  April 29,
2016
Operating Income (Loss) as Reported                      
Operating Income from Continuing Operations $ 9,508     $ 10,334                  
Net Interest Expense 4,254     2,571                  
Income Before Taxes from Continuing Operations 5,254     7,763                  
(Benefit) Provision for Income Taxes from Continuing Operations (1,503 )   1,831                  
Net Income as Reported from Continuing Operations 6,757     5,932     $ 0.34     $ 0.30     $ 0.33     $ 0.30  
                       
Income (Loss) Before Taxes from Discontinued Operations 160,662     (12,242 )                
Provision (Benefit) for Income Taxes from Discontinued Operations 58,552     (6,891 )                
Income (Loss) from Discontinued Operations as Reported 102,110     (5,351 )   $ 5.13     $ (0.27 )   $ 5.06     $ (0.27 )
                       
Net Income as Reported 108,867     581     $ 5.47     $ 0.03     $ 5.39     $ 0.03  
                       
Adjustments to Continuing Operations                      
Accelerated stock compensation 3,992                      
Legal and professional fees 646                      
Severance/Restructuring (305 )   972                  
Write off of unamortized debt costs 2,005                      
Total Adjustments to Continuing Operations 6,338     972                  
                       
Adjustments to Discontinued Operations                      
Gain on sale of restaurants (155,698 )                    
Restaurant depreciation (11,846 )                    
Accelerated stock compensation 6,513                      
Severance 2,464     193                  
Impairment     6,710                  
Sale leaseback     9,560                  
Litigation settlement     (3,344 )                
Store closure costs     1,441                  
Write off of unamortized debt costs 973                      
Total Adjustments to Discontinued Operations (157,594 )   14,560                  
                       
Non-GAAP Operating Income from Continuing Operations 13,841     11,306                  
Non-GAAP Net Interest Expense 2,249     2,571                  
Non-GAAP  Income Before Taxes from Continuing Operations 11,592     8,735                  
Adjustments to Tax Expense from Continuing Operations 1,378     421                  
Non-GAAP Provision for Income Taxes from Continuing Operations (125 )   2,252                  
Non-GAAP Net Income from Continuing Operations 11,717     6,483     $ 0.59     $ 0.33     $ 0.58     $ 0.32  
                       
Non-GAAP Income before taxes from Discontinued Operations 3,068     2,318                  
Adjustments to Tax Expense from Discontinued Operations (55,985 )   6,161                  
Non-GAAP Provision for Income Taxes from Discontinued Operations 2,567     (730 )                
Non-GAAP Net Income from Discontinued Operations 501     3,048     $ 0.02     $ 0.15     $ 0.03     $ 0.16  
                       
Non-GAAP Net Income $ 12,218     $ 9,531     $ 0.61     $ 0.48     $ 0.61     $ 0.48  
                       
Weighted Average Shares Outstanding         19,896     19,854     20,188     19,995  


Fourth quarter Fiscal 2017 compared to the corresponding period a year ago:
 
(in thousands)   Consolidated Results
    Three Months Ended   Three Months Ended
    April 28, 2017   % of Sales   April 29, 2016   % of Sales
Operating Income from Continuing Operations as Reported                
                 
Net Sales   $ 99,923         $ 102,394      
Cost of sales   43,649     43.7 %   44,810     43.8 %
Operating wage and fringe benefit expenses   8,832     8.8 %   10,991     10.7 %
Other operating expenses   14,030     14.0 %   14,746     14.4 %
Selling, general and administrative expenses   17,064     17.2 %   16,436     16.0 %
Depreciation and amortization expense   6,840     6.8 %   5,077     5.0 %
Impairments       %       %
Total Operating Income as Reported   9,508     9.5 %   10,334     10.1 %
                     
Non-GAAP Adjustments to Continuing Operations                    
                     
Net Sales                    
Cost of sales                    
Operating wage and fringe benefit expenses                    
Other operating expenses                    
Selling, general and administrative expenses   (4,333 )         (972 )      
Depreciation and amortization expense                    
Impairments                    
Total Adjustments   4,333           972        
                     
Non-GAAP Operating Income from Continuing Operations                    
                     
Net Sales   99,923           102,394        
Cost of sales   43,649     43.7 %   44,810     43.8 %
Operating wage and fringe benefit expenses   8,832     8.8 %   10,991     10.7 %
Other operating expenses   14,030     14.0 %   14,746     14.4 %
Selling, general and administrative expenses   12,731     12.8 %   15,464     15.1 %
Depreciation and amortization expense   6,840     6.8 %   5,077     5.0 %
Impairments       %       %
Total Non-GAAP Operating Income   $ 13,841     13.9 %   $ 11,306     11.0 %


Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Fiscal 2017 compared to the corresponding period a year ago:
 
(in thousands, except per share amounts)         Basic EPS   Diluted EPS
  Twelve Months Ended   Twelve Months Ended   Twelve Months Ended
  April 28,
2017
  April 29,
2016
  April 28,
2017
  April 29,
2016
  April 28,
2017
  April 29,
2016
Operating Income (Loss) as Reported                      
Operating Income $ 30,126     $ 33,074                  
Net Interest Expense 9,216     10,427                  
Income Before Taxes from Continuing Operations 20,910     22,647                  
Provision for Income Taxes from Continuing Operations 3,874     6,439                  
Net Income as Reported from Continuing Operations 17,036     16,208     $ 0.86     $ 0.76     $ 0.85     $ 0.75  
                       
Income (Loss) Before Taxes from Discontinued Operations 166,952     2,774                  
Provision (Benefit) for Income Taxes from Discontinued Operations 57,521     (5,240 )                
Income (Loss) from Discontinued Operations as Reported 109,431     8,014     $ 5.51     $ 0.38     $ 5.43     $ 0.38  
                       
Net Income as Reported 126,467     24,222     $ 6.37     $ 1.14     $ 6.28     $ 1.13  
                       
Adjustments to Continuing Operations                      
Accelerated stock compensation 4,467                      
Severance/Restructuring 1,948     972                  
Legal and professional fees 1,217                      
Sale leaseback (plants)     4,085                  
Impairment of note receivable 15,256                      
Write off of unamortized debt costs 2,005                      
Accretion income on note receivable (1,133 )                    
Total Adjustments to Continuing Operations 23,760     5,057                  
                       
Adjustments to Discontinued Operations                      
Gain on sale of restaurants, net of transaction costs (150,167 )                    
Restaurant depreciation (11,846 )                    
Accelerated stock compensation 6,855                      
Severance 3,964     512                  
Impairment     6,710                  
Sale leaseback (restaurants)     9,562                  
Litigation settlement (278 )   7,155                  
Store closure costs 807     1,441                  
Write off of unamortized debt costs 973                      
Total Adjustments to Discontinued Operations (149,692 )   25,380                  
                       
Non-GAAP Operating Income from Continuing Operations 53,014     37,652                  
Non-GAAP Net Interest Expense 8,344     9,948                  
Non-GAAP  Income Before Taxes from Continuing Operations 44,670     27,704                  
Adjustments to Tax Expense from Continuing Operations 7,713     1,922                  
Non-GAAP Provision for Income Taxes from Continuing Operations 11,587     8,361                  
Non-GAAP Net Income from Continuing Operations 33,083     19,343     $ 1.67     $ 0.91     $ 1.64     $ 0.90  
                       
Non-GAAP Income before Taxes from Discontinued Operations 17,260     28,154                  
Adjustments to Tax Expense from Discontinued Operations (55,125 )   9,371                  
Non-GAAP Provision for Income Taxes from Discontinued Operations 2,396     4,131                  
Non-GAAP Net Income from Discontinued Operations 14,864     24,023     $ 0.75     $ 1.12     $ 0.74     $ 1.12  
                       
Non-GAAP Net Income $ 47,947     $ 43,366     $ 2.42     $ 2.03     $ 2.38     $ 2.02  
                       
Weighted Average Shares Outstanding         19,839     21,336     20,132     21,494  


Fiscal 2017 compared to the corresponding period a year ago:
 
(in thousands) Consolidated Results
  Twelve Months Ended
  April 28, 2017   % of Sales   April 29, 2016   % of Sales
Operating Income from Continuing Operations as Reported              
               
Net Sales $ 394,842         $ 387,616      
Cost of sales 170,820     43.3 %   172,973     44.6 %
Operating wage and fringe benefit expenses 39,964     10.1 %   42,189     10.9 %
Other operating expenses 58,402     14.8 %   52,387     13.5 %
Selling, general and administrative expenses 56,243     14.2 %   65,949     17.1 %
Depreciation and amortization expense 24,031     6.1 %   21,044     5.4 %
Impairments 15,256     3.9 %       %
Total Operating Income as Reported 30,126     7.6 %   33,074     8.5 %
                   
Non-GAAP Adjustments to Continuing Operations                  
                   
Net Sales                  
Cost of sales                  
Operating wage and fringe benefit expenses                  
Other operating expenses                  
Selling, general and administrative expenses (7,632 )         (4,577 )      
Depreciation and amortization expense                  
Impairments (15,256 )                
Total Adjustments 22,888           4,577        
                   
Non-GAAP Operating Income from Continuing Operations                  
                   
Net Sales 394,842           387,616        
Cost of sales 170,820     43.3 %   172,973     44.6 %
Operating wage and fringe benefit expenses 39,964     10.1 %   42,189     10.9 %
Other operating expenses 58,402     14.8 %   52,387     13.5 %
Selling, general and administrative expenses 48,611     12.3 %   61,372     15.9 %
Depreciation and amortization expense 24,031     6.1 %   21,044     5.4 %
Impairments     %       %
Total Non-GAAP Operating Income $ 53,014     13.4 %   $ 37,651     9.7 %


Consolidated Statements of Net Income
 
  2017   2016   2015
Net Sales $ 394,842     $ 387,616     $ 379,313  
Cost of sales 170,820     172,973     199,067  
Operating wage and fringe benefit expenses 39,964     42,189     41,717  
Other operating expenses 58,402     52,387     49,381  
Selling, general and administrative expenses 56,243     65,949     73,380  
Depreciation and amortization expense 24,031     21,044     18,364  
Impairments 15,256         2,761  
Operating Income (Loss) 30,126     33,074     (5,357 )
Net interest expense 9,216     10,427     8,649  
Income (Loss) from Continuing Operations Before Income Taxes 20,910     22,647     (14,006 )
Provision (Benefit) for income taxes 3,874     6,439     (8,626 )
Income (Loss) from Continuing Operations 17,036     16,208     (5,380 )
Income from Discontinued Operations, Net of Income Taxes 109,431     8,014     21,933  
Net Income $ 126,467     $ 24,222     $ 16,553  
           
Earnings (Loss) Per Share - Income from Continuing Operations          
Basic $ 0.86     $ 0.76     $ (0.23 )
Diluted $ 0.85     $ 0.75     $ (0.23 )
           
Earnings Per Share - Income from Discontinued Operations          
Basic $ 5.51     $ 0.38     $ 0.93  
Diluted $ 5.43     $ 0.38     $ 0.93  
           
Earnings Per Share - Net Income          
Basic $ 6.37     $ 1.14     $ 0.70  
Diluted $ 6.28     $ 1.13     $ 0.70  
           
Cash Dividends Paid Per Share $ 1.36     $ 1.30     $ 1.24  
           
Weighted Average Shares Outstanding          
Basic 19,839     21,336     23,489  
Dilutive Shares 293     158     160  
Diluted 20,132     21,494     23,649  


Consolidated Balance Sheets
 
  April 28, 2017   April 29, 2016
Assets
Current Assets      
Cash and equivalents $ 210,886     $ 11,609  
Accounts receivable, net 28,071     24,613  
Inventories 17,210     17,093  
Federal and state income taxes receivable 2,895      
Prepaid expenses and other current assets 6,833     5,716  
Current assets held for sale 3,334     48,707  
Total Current Assets 269,229     107,738  
Land 291     330  
Buildings and improvements 25,351     21,203  
Machinery and equipment 214,366     176,611  
Construction in process 4,546     20,959  
Total Property, Plant and Equipment 244,554     219,103  
Less accumulated depreciation 113,814     89,851  
Net Property, Plant and Equipment 130,740     129,252  
Other Assets      
Deposits and other 2,118     3,841  
Notes receivable     20,886  
Rabbi trust assets 22,353     20,662  
Goodwill and other intangible assets 19,673     19,829  
Deferred income tax assets 5,131     29,002  
Non-current assets held for sale     469,164  
Total Other Assets 49,275     563,384  
Total Assets $ 449,244     $ 800,374  
Liabilities and Stockholders' Equity
Current Liabilities      
Current portion of long-term debt $ 428     $ 3,419  
Accounts payable 13,424     15,841  
Accrued property, plant and equipment purchases 1,283     4,024  
Accrued non-income taxes 3,353     890  
Accrued wages and related liabilities 16,404     16,370  
Self-insurance reserves 10,692     11,288  
Current taxes payable 27,954     9,473  
Current reserve for uncertain tax positions 1,481     1,481  
Other accrued expenses 17,905     13,614  
Current liabilities held for sale     89,157  
Total Current Liabilities 92,924     165,557  
Non-Current Liabilities      
Deferred compensation 17,277     17,761  
Reserve for uncertain tax positions 1,795     2,752  
Deferred income tax liabilities 50      
Deferred rent and other 1,091     377  
Deferred gain on sale leaseback transactions 2,192     2,432  
Credit facility borrowings and other long-term debt 2,267     335,638  
Non-current liabilities held for sale     59,413  
Total Non-Current Liabilities 24,672     418,373  
Stockholders' Equity      
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at April 28, 2017, and April 29, 2016 426     426  
Capital in excess of par value 260,619     244,304  
Retained earnings 931,315     832,323  
Treasury stock, 22,842 shares at April 28, 2017, and 22,881 shares at April 29, 2016, at cost (860,712 )   (860,609 )
Total Stockholders' Equity 331,648     216,444  
Total Liabilities and Stockholders' Equity $ 449,244     $ 800,374  


Consolidated Statements of Cash Flows
 
  2017   2016   2015
Operating activities:          
Net income $ 126,467     $ 24,222     $ 16,553  
           
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization 60,090     79,607     80,074  
Impairments 15,256     8,384     8,861  
(Gain) Loss on disposal of fixed assets (168,859 )   4,532     2,204  
(Gain) Loss on rabbi trust assets (1,691 )   1,640     (742 )
Loss (Gain) on deferred compensation 2,514     (765 )   2,013  
Share-based compensation 17,197     6,127     2,967  
Accretion of non-current note receivable (1,133 )   (2,082 )   (1,859 )
Deferred income taxes 23,921     (28,384 )   (14,791 )
Amortization of deferred financing costs 4,201     2,188     1,099  
Cash provided by (used for) assets and liabilities:          
Accounts receivable (2,700 )   (2,793 )   4,588  
Inventories (751 )   (377 )   623  
Prepaid expenses and other current assets (1,377 )   483     (563 )
Accounts payable (10,281 )   7,499     955  
Federal and state income taxes 14,629     33,067     1,504  
Accrued wages and related liabilities (1,160 )   (3,101 )   11,005  
Self-insurance (1,474 )   1,269     (974 )
Accrued non-income taxes (756 )   745     (2,892 )
Deferred revenue (337 )   433     747  
Other assets and liabilities (198 )   (9,058 )   (8,267 )
Net cash provided by operating activities 73,558     123,636     103,105  
Investing activities:          
Purchase of property, plant and equipment (65,768 )   (65,694 )   (74,517 )
Proceeds from sale of property, plant and equipment 557,061     257,246     10,036  
Proceeds from liquidation of rabbi trust assets     5,245      
Deposits and other 330     (537 )   (135 )
Net cash provided by (used in) investing activities 491,623     196,260     (64,616 )
Financing activities:          
Cash dividends paid (26,915 )   (27,861 )   (29,056 )
Gross proceeds from credit facility borrowings and other long-term debt 413,268     672,349     579,895  
Gross repayments of credit facility borrowings and other long-term debt (750,668 )   (783,339 )   (588,541 )
Payments of debt issuance costs (1,542 )   (3,555 )   (1,279 )
Purchase of treasury stock     (171,513 )    
Proceeds from share-based compensation 518     214     534  
Cash paid for taxes on share-based compensation (1,353 )   (1,314 )   (1,738 )
Excess tax benefits from share-based compensation (499 )   1,661     228  
Net cash (used in) financing activities (367,191 )   (313,358 )   (39,957 )
Net cash provided by (used in) operations 197,990     6,538     (1,468 )
Cash and equivalents at the beginning of the period 12,896     6,358     7,826  
Cash and equivalents at the end of the period $ 210,886     $ 12,896     $ 6,358  


Results from continuing and discontinued operations
 
(in thousands except earnings per share amounts)                    
    Three Months Ended   Twelve Months Ended
GAAP Consolidated Results   April 28,
2017
  April 29,
2016
  % Change   April 28,
2017
  April 29,
2016
  % Change
Net Sales from Continuing Operations   $ 99,923     $ 102,394     (2.4 )%   $ 394,842     $ 387,616     1.9 %
Net Sales from Discontinued Operations   213,479     243,193     (12.2 )%   876,786     951,211     (7.8 )%
Total Net Sales   $ 313,402     $ 345,587     (9.3 )%   $ 1,271,628     $ 1,338,827     (5.0 )%
                                             
Operating Margin from Continuing Operations   9.5 %   10.1 %   (60 bps)   7.6 %   8.5 %   (90 bps)
Operating Margin from Discontinued Operations   2.8 %   (4.9 )%   770 bps   2.2 %   0.3 %   180 bps
Total Operating Margin   4.9 %   (0.4 )%   530 bps   3.9 %   2.7 %   120 bps
                                             
Diluted EPS from Continuing Operations   $ 0.33     $ 0.30     10.0 %   $ 0.85     $ 0.75     13.3 %
Diluted EPS from Discontinued Operations   $ 5.06     $ (0.27 )   (1,974.1 )%   $ 5.43     $ 0.38     1,328.9 %
Diluted EPS   $ 5.39     $ 0.03     17,866.7 %   $ 6.28     $ 1.13     455.8 %
                                             
Non-GAAP Adjustments                                            
Net Sales from Continuing Operations   $     $     %   $     $     %
Net Sales from Discontinued Operations           %           %
Total Net Sales   $     $     %   $     $     %
                                             
Operating Margin from Continuing Operations   4.3 %   0.9 %   340 bps   5.8 %   1.2 %   460 bps
Operating Margin from Discontinued Operations   (1.3 )%   6.0 %   (730 bps)   (0.1 )%   2.7 %   (280 bps)
Total Operating Margin   0.5 %   4.5 %   (400 bps)   1.8 %   2.2 %   (40 bps)
                                             
Diluted EPS from Continuing Operations   $ 0.25     $ 0.02     1,150.0 %   $ 0.79     $ 0.15     426.7 %
Diluted EPS from Discontinued Operations   $ (5.03 )   $ 0.43     (1,269.8 )%   $ (4.69 )   $ 0.74     (733.8 )%
Diluted EPS   $ (4.78 )   $ 0.45     (1,162.2 )%   $ (3.90 )   $ 0.89     (538.2 )%
                                             
Non-GAAP Consolidated Results                                            
Net Sales from Continuing Operations   $ 99,923     $ 102,394     (2.4 )%   $ 394,842     $ 387,616     1.9 %
Net Sales from Discontinued Operations   213,479     243,193     (12.2 )%   876,786     951,211     (7.8 )%
Total Net Sales   $ 313,402     $ 345,587     (9.3 )%   $ 1,271,628     $ 1,338,827     (5.0 )%
                                             
Operating Margin from Continuing Operations   13.9 %   11.0 %   290 bps   13.4 %   9.7 %   370 bps
Operating Margin from Discontinued Operations   1.4 %   1.1 %   30 bps   2.1 %   3.0 %   (90 bps)
Total Operating Margin   5.4 %   4.1 %   130 bps   5.6 %   4.9 %   70 bps
                                             
Diluted EPS from Continuing Operations   $ 0.58     $ 0.32     81.3 %   $ 1.64     $ 0.90     82.2 %
Diluted EPS from Discontinued Operations   $ 0.03     $ 0.16     (81.3 )%   $ 0.74     $ 1.12     (33.9 )%
Diluted EPS   $ 0.61     $ 0.48     27.1 %   $ 2.38     $ 2.02     17.8 %


Net sales from continuing operations                
Reconciliation of 52 vs 53 weeks                
    Three Months Ended   Twelve Months Ended
(in thousands)   April 28, 2017   April 29, 2016   April 28, 2017   April 29, 2016
Net Sales   $ 99,923   $ 102,394   $ 394,842   $ 387,616
53rd week         7,120         7,120
Adjusted Net Sales   $ 99,923   $ 95,274   $ 394,842   $ 380,496


Total pounds sold, by category            
Fiscal 2017                    
Category   Q1   Q2   Q3   Q4   YTD
Sides   51.4 %   52.5 %   52.5 %   54.0 %   52.6 %
Sausage   21.2 %   21.9 %   24.9 %   22.3 %   22.7 %
Food Service - External   11.6 %   10.7 %   10.1 %   11.1 %   10.8 %
Food Service - Sales to discontinued operations   8.3 %   9.0 %   7.7 %   7.7 %   8.1 %
Frozen   3.9 %   3.4 %   2.7 %   3.0 %   3.2 %
Other   3.6 %   2.5 %   2.1 %   1.9 %   2.6 %
                     
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 - Sales to discontinued operations   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 %

 

Contact:
Scott Van Winkle
Managing Director, ICR
(617) 956-6736
scott.vanwinkle@icrinc.com

View Comments and Join the Discussion!