Bob Evans Reports Fourth Quarter and Fiscal Year 2017 Results

• Fourth quarter net sales from continuing operations* totals $99.9 million, an increase of 4.9 percent from 13 week comparable fiscal 2016 (excludes 53^rd 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 14^th 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 53^rd 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.”

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.

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Source: Bob Evans Farms, Inc.