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Bob Evans Reports Fiscal 2016 Third-Quarter Results

  • Q3 2016 net sales total $346.5 million. GAAP and non-GAAP net income(1) of $0.62 per diluted share, represents an increase of 148 percent and 3 percent, respectively, compared to the prior-year period. GAAP and non-GAAP consolidated operating income increase 135 percent and 2 percent, respectively, compared to the prior-year period

  • BEF Foods’ Q3 2016 non-GAAP operating income increases 33 percent compared to the prior-year period. Refrigerated side-dish and sausage pounds sold increase 16 and 11 percent, respectively

  • Bob Evans Restaurants’ Q3 2016 non-GAAP operating income declines 14 percent compared to the prior-year period. Breakfast sales stabilize following product upgrades; continued enhancements underway across all dayparts to drive improved sales trends

  • Company raises fiscal year 2016 non-GAAP diluted EPS guidance range from $1.85 to $2.00, to $1.90 to $2.00

  • Company repurchases $51.7 million (1.3 million shares) during Q3 2016 and $14.6 million (0.4 million shares) during Q4 through February 29, 2016, bringing year-to-date fiscal 2016 share repurchases to $171.3 million (3.9 million shares)

  • Quarterly dividend of $0.34 per share payable on March 14, 2016, to stockholders of record at the close of business on February 29, 2016

NEW ALBANY, Ohio, March 01, 2016 (GLOBE NEWSWIRE) -- Bob Evans Farms, Inc. (NASDAQ:BOBE) today announced its financial results for the fiscal 2016 third quarter ended Friday, January 22, 2016. On a GAAP basis, the Company reported net income of $12.9 million, or $0.62 per diluted share, compared with net income of $5.9 million, or $0.25 per diluted share, in the corresponding period last year. On a non-GAAP basis, net income was $12.9 million, or $0.62 per diluted share, compared with net income of $14.3 million, or $0.60 per diluted share, in the corresponding period last year.

Third-quarter fiscal 2016 commentary
President and Chief Executive Officer Saed Mohseni said, “BEF Foods delivered another strong quarter with 33 percent year-over-year non-GAAP operating income growth and continued double-digit pounds-sold growth of both its refrigerated side-dish and sausage product lines. During its transformation over the last several years, BEF Foods’ plant network has been optimized as nine production facilities have been reduced to four. Furthermore, its sales mix has become more profitable and its margin structure has become more stable as our higher-margin, nationally-distributed refrigerated side-dish product line continues to grow faster than our regional sausage business which is subject to more input cost volatility. BEF Foods continues to successfully execute its strategy of replacing lower-margin food service sales with higher-margin branded retail sales. With our refrigerated side dish manufacturing facility operating near peak capacity this past holiday season, I am pleased to report the expansion of our Lima, Ohio, plant is on-schedule and on-budget. We expect to bring the new capacity on-line this summer in preparation to meet holiday demand later this calendar year.

“While BEF Foods’ performance reflects the impact of a successful transformation process, Bob Evans Restaurants is earlier in its turnaround. A third-quarter same-store sales decline of 3.6 percent reflects a 6.5 percent decline in transactions, partially offset by 2.9 percent of pricing and favorable menu mix. We expected sales challenges as we rationalize our pricing and discounting strategies and work to improve the guest experience. However, we are encouraged by the results of our recent efforts to significantly improve the quality of our breakfast offerings, along with implementing new initiatives to elevate the guest experience and redefine the price-value relationship at Bob Evans Restaurants. Earlier this year, a few months after launching our upgraded breakfast menu, Bob Evans Restaurants was named ‘Favorite Breakfast Chain’ by Market Force Information®. We are moving in the right direction and there is much more to come. Breakfast sales have stabilized and we are working to implement similar improvements across all dayparts.

“At the corporate level, we continued to make progress with our real estate monetization initiatives as we closed on a $30 million mortgage of our corporate support center early in the fourth quarter and reached an agreement for a $200 million sale-leaseback of up to 145 restaurant properties that we expect to close by the end of the fiscal year. Additionally, we have realized nearly $12 million of cost savings fiscal year-to-date, as part of our three-year plan to reduce annual corporate and other expenses by $35 million. We expect to achieve total fiscal 2016 savings of $18 million, equating to an annual savings rate of nearly $30 million.”

Third-quarter fiscal 2016 Bob Evans Restaurants segment summary
Bob Evans Restaurants’ net sales were $238.6 million, a decline of $11.8 million, or 4.7 percent, compared to net sales of $250.4 million in the corresponding period last year. Same-store sales declined 3.6 percent in the quarter, with the balance of the net sales decline due to net restaurant closures. Bob Evans opened one new restaurant during the third quarter and has closed 20 restaurants fiscal year-to-date.

Same-Store Sales
(SSS) Restaurants
NovemberDecemberJanuary3Q FY ’16
540-3.2%-4.3%-3.4%-3.6%


Bob Evans Restaurants’ GAAP operating income was $14.5 million, compared to GAAP operating income of $14.2 million in the corresponding period last year. Bob Evans Restaurants’ non-GAAP operating income was $14.5 million, or 6.1 percent of sales, compared to $16.8 million, or 6.7 percent of sales, in the prior year, a decline of $2.3 million. The decline resulted from an approximately $3.9 million margin impact of lower sales combined with the net impact of a $0.4 million increase in food cost rate; a $2.3 million increase in labor and benefit cost rate driven primarily by an increase in average hourly wage rates, partially offset by a reduction in health insurance costs and direct labor hours; a $0.8 million decline in other operating expenses driven primarily by lower utility costs; a $2.3 million decline in S,G&A costs (excluding property gains) due primarily to a decline in severance and bonus compensation costs; a $1.0 million decline in depreciation expense; and a $0.2 million gain net of impairment on the sale of nonoperating restaurants.

Third-quarter fiscal 2016 BEF Foods segment summary
BEF Foods’ net sales were $107.9 million, an increase of $1.1 million, or 1.0 percent, compared to $106.8 million in the corresponding period last year. Pounds sold increased 8.8 percent while average net selling price per pound declined 7.8 percent compared to the prior year period. The decline in average net selling price reflects an increased sales mix of lower-priced side-dish products relative to sausage, as well as reduced net sausage pricing (through increased trade spending) to remain price-competitive in a lower sow cost environment. From a net sales perspective, a 16.1 percent increase in side-dish pounds sold and an 11.1 percent increase in sausage pounds sold were partially offset by an $8.2 million increase in trade spending (reduces net sales) and a 10.8 percent decline in foodservice pounds sold.

BEF Foods’ GAAP operating income was $20.6 million, compared to $15.3 million in the year ago period. BEF Foods’ non-GAAP operating income was $20.6 million, or 19.1 percent of sales, compared to $15.5 million, or 14.5 percent of sales, in the prior year, an improvement of $5.1 million. The improvement resulted from approximately $3.4 million of favorable sales mix, and $2.3 million resulting from decreased S,G&A costs, plant efficiencies, and sales leverage; partially offset by $0.6 million of increased net sow cost ($8.2 million of increased trade spending partially offset by $7.6 million of sow cost favorability).

Third-quarter fiscal 2016 Corporate and Other summary
Corporate and Other’s GAAP operating costs were $17.0 million, compared to $21.8 million in the year ago period. Corporate and Other’s non-GAAP operating costs were $17.0 million, compared to $14.5 million in the prior year, an increase of $2.5 million due to $1.5 million of increased S,G&A costs associated with increased bonus and stock compensation and ERP support costs, partially offset by cost savings; and $1.0 million resulting from increased depreciation and amortization expense related to ERP capital expenditures.

Third-quarter fiscal 2016 net interest expense – The Company’s GAAP net interest expense of $2.4 million was flat compared to the prior-year period. The borrowing rate on the Company’s outstanding debt was 2.18 percent at the end of the quarter, compared to 2.42 percent at the end of the prior-year period.

Third-quarter fiscal 2016 taxes – The Company’s provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. The Company recognized GAAP and non-GAAP tax expense of 17.6 percent for the quarter, as compared to a GAAP benefit of 12.4 percent and non-GAAP expense of 3.6 percent for the prior-year period. This increase reduced third-quarter diluted non-GAAP earnings per share by approximately $0.11. The increase in the tax rate was driven primarily by the impact of yearly variances in the forecasted annual rate, as well as discrete items booked in the third quarter of fiscal year 2015. The year-to-date non-GAAP tax rate was approximately 25 percent, reflecting the Company’s annual non-GAAP estimated tax rate. Due primarily to recent federal legislation providing a five-year extension to the Work Opportunity Tax Credit (WOTC) program, the year-to-date tax rate was reduced by approximately 230 basis points.

Third-quarter fiscal 2016 balance sheet highlights – The Company’s cash balance and revolver borrowings at the end of the quarter were $7.7 million and $492.9 million, respectively, compared to $3.8 million and $444.4 million, respectively, in the prior year. The Company was in compliance with its debt covenants at the end of the quarter. The increase in borrowings was primarily the result of share repurchases, capital expenditures, and dividend payments; partially offset by operating cash flow and proceeds from the sale of nonoperating restaurant properties. The Company’s leverage ratio as defined in its credit agreement was 3.15 at the end of the quarter, a decrease from 3.69 in the prior-year period. The impact of share repurchases, net of interest cost, increased third-quarter diluted non-GAAP earnings per share by approximately $0.05.

Fiscal year 2016 outlook
Chief Administrative and Chief Financial Officer Mark Hood said, "We are increasing our non-GAAP diluted EPS guidance range from $1.85 to $2.00, to $1.90 to $2.00. This change reflects third quarter performance that exceeded our estimates along with an updated outlook for BEF Foods’ and Bob Evans Restaurants’ operating performance during the fourth quarter. We expect sow costs net of trade spending to be a headwind compared to the fourth quarter of fiscal 2015 and we continue to expect restaurant same-store sales growth will decline by low-single digits.

“As noted previously, our guidance includes the estimated impact of monetization of our corporate support center and select industrial properties, but does not include the impact of a potential restaurant real estate transaction which we believe will close late in the fourth quarter and have only a small impact on fiscal year 2016 results.”

Summary of performance drivers: fiscal 2016 guidance versus fiscal 2015

1Q (actual)2Q (actual)3Q (actual)
4Q
Full
Year
sss% 2016 (guidance) -0.3% -3.2% -3.6%negative
low-single
digits
-2.5% to -2.0%
sss% 2015 (actual) -2.0% -0.1% 3.8% 2.1% 0.9%
sow costs (per hundredweight) 2016 (guidance)$38.75 $53.31 $41.53 $48 $45
sow costs (per hundredweight) 2015 (actual)$87.87 $78.82 $67.79 $43.02 $69.41


Guidance MetricFY ‘16
Consolidated net salesapproximately $1.34 billion
Bob Evans Restaurants same-store sales-2.5% to -2.0%
Bob Evans Restaurants commodity pricingapproximately flat
BEF Foods net sales$380 to $390 million
Capital expenditures$70 to $74 million
ERP implementation (included in S,G&A)$2.0 to $2.5 million
Depreciation and amortization$81 to $84 million
Net interest expense$10 to $11 million
Tax rateapproximately 25%
Diluted weighted-average share count21.5 million shares
Non-GAAP earnings per diluted share$1.90 to $2.00

This outlook is subject to a number of factors beyond the Company’s control, including the risk factors discussed in the Company’s fiscal 2015 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 to discuss its third-quarter fiscal 2016 results at 10 a.m. (ET) on Wednesday, March 2, 2016. The dial-in number is (855) 468-0551, access code 48270452. A replay will be available at (800) 585-8367, access code 48270452.

A simultaneous webcast will be available at http://investors.bobevans.com/events.cfm. The archived webcast will also be available on the Web site.

(1)Non-GAAP Financial Measures
The Company uses non-GAAP financial measures to monitor and evaluate the ongoing performance of the Company. The Company believes the additional measures are useful to investors for financial analysis. Excluding these items reflects operating results that are more indicative of the Company’s ongoing operating performance and improve comparability to prior periods. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Reconciliations to the applicable GAAP financial measures are included in the attached schedules.

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. We discuss these factors and events, along with certain other risks, uncertainties and assumptions, under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 24, 2015, 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. Any strategic transaction with respect to our restaurant real estate remains subject to closing conditions and there can be no assurance of such a closing. 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. owns and operates full-service restaurants under the Bob Evans Restaurants brand name. At the end of the third fiscal quarter (January 22, 2016), Bob Evans Restaurants owned and operated 548 family restaurants in 18 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods segment, is also a leading producer and distributor of refrigerated 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.bobevans.com.

BOBE–E
Source: Bob Evans Farms, Inc.


Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Third quarter Fiscal 2016, Three months ended January 22, 2016 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
January 22,
2016
January 23,
2015
January 22,
2016
January 23,
2015
January 22,
2016
January 23,
2015
Operating Income (Loss) as Reported
Bob Evans Restaurants$14,453 $14,153
BEF Foods20,609 15,274
Corporate and Other(17,002) (21,754)
Operating Income18,060 7,673
Net interest expense2,367 2,406
Income Before Income Taxes15,693 5,267
Provision (benefit) for income taxes2,762 (653)
Net Income as reported12,931 5,920 $0.62 $0.25 $0.62 $0.25
Adjustments
Bob Evans Restaurants
Impairments 1,672
Severance/Restructuring 781
Activism, Strategic Initiatives and Other 168
2,621
BEF Foods
Severance/Restructuring 189
189
Corporate and Other
Severance/Restructuring 302
Loss on Sale of Assets 1,728
Activism, Strategic Initiatives and Other 1,386
CEO Separation 3,836
7,252
Total adjustments
Impairments 1,672
Severance/Restructuring 1,272
Loss on Sale of Assets 1,728
Activism, Strategic Initiatives and Other 1,554
CEO Separation 3,836
10,062
Non-GAAP operating income (loss)
Bob Evans Restaurants14,453 16,774
BEF Foods20,609 15,463
Corporate and Other(17,002) (14,502)
Total non-GAAP operating income18,060 17,735
Adjustments to net interest expense 471
Non-GAAP net interest expense2,367 2,877
Non-GAAP Income Before Taxes15,693 14,858
Adjustments to income tax provision (benefit) 1,194
Non-GAAP Provision for Income Taxes2,762 541
Non-GAAP Net Income$12,931 $14,317 $0.62 $0.61 $0.62 $0.60
Weighted Average Shares Outstanding 20,692 23,515 20,803 23,746


Third quarter Fiscal 2016, Three months ended January 22, 2016 compared to the corresponding period a year ago:
(in thousands) Three Months Ended
Consolidated Results Bob Evans Restaurants
January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
Operating income as reported
Net Sales $346,505 $357,177 $238,608 $250,389
Cost of sales 118,581 34.2% 124,544 34.9% 66,255 27.8% 69,134 27.6%
Operating wage and fringe benefit expenses 106,607 30.8% 109,116 30.5% 95,792 40.1% 98,317 39.3%
Other operating expenses 53,592 15.5% 54,804 15.3% 40,731 17.1% 41,882 16.7%
Selling, general and administrative expenses 29,005 8.4% 38,965 11.0% 6,938 2.9% 10,589 4.2%
Depreciation and amortization expense 19,856 5.7% 20,403 5.7% 13,635 5.7% 14,642 5.8%
Impairments 804 0.2% 1,672 0.5% 804 0.3% 1,672 0.7%
Total as reported 18,060 5.2% 7,673 2.1% 14,453 6.1% 14,153 5.7%
Adjustments
Net Sales
Cost of sales
Operating wage and fringe benefit expenses (230) (230)
Other operating expenses (378) (378)
Selling, general and administrative expenses (7,782) (341)
Depreciation and amortization expense
Impairments (1,672) (1,672)
Total Adjustments 10,062 2,621
Non-GAAP operating income
Net Sales 346,505 357,177 238,608 250,389
Cost of sales 118,581 34.2% 124,544 34.9% 66,255 27.8% 69,134 27.6%
Operating wage and fringe benefit expenses 106,607 30.8% 108,886 30.5% 95,792 40.1% 98,087 39.2%
Other operating expenses 53,592 15.5% 54,426 15.2% 40,731 17.1% 41,504 16.6%
Selling, general and administrative expenses 29,005 8.4% 31,183 8.7% 6,938 2.9% 10,248 4.1%
Depreciation and amortization expense 19,856 5.7% 20,403 5.7% 13,635 5.7% 14,642 5.8%
Impairments 804 0.2% % 804 0.3% %
Total non-GAAP operating income $18,060 5.2% $17,735 5.0% $14,453 6.1% $16,774 6.7%


(in thousands)Three Months Ended
BEF Foods Corporate and Other
January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
January 22,
2016
January 23,
2015
Operating income (loss) as reported
Net Sales$107,897 $106,788 $ $
Cost of sales52,326 48.5% 55,410 51.9%
Operating wage and fringe benefit expenses10,815 10.0% 10,799 10.1%
Other operating expenses12,861 11.9% 12,922 12.1%
Selling, general and administrative expenses7,473 7.0% 8,021 7.5% 14,595 20,355
Depreciation and amortization expense3,813 3.5% 4,362 4.1% 2,407 1,399
Impairments % %
Total as Reported20,609 19.1% 15,274 14.3% (17,002) (21,754)
Adjustments
Net Sales
Cost of sales
Operating wage and fringe benefit expenses
Other operating expenses
Selling, general and administrative expenses (189) (7,252)
Depreciation and amortization expense
Impairments
Total adjustments 189 7,252
Non-GAAP operating income (loss)
Net Sales107,897 106,788
Cost of sales52,326 48.5% 55,410 51.9%
Operating wage and fringe benefit expenses10,815 10.0% 10,799 10.1%
Other operating expenses12,861 11.9% 12,922 12.1%
Selling, general and administrative expenses7,473 7.0% 7,832 7.3% 14,595 13,103
Depreciation and amortization expense3,813 3.5% 4,362 4.1% 2,407 1,399
Impairments % %
Total non-GAAP operating income (loss)$20,609 19.1% $15,463 14.5% $(17,002) $(14,502)


Bob Evans Farms, Inc.
Earnings Release Fact Sheet (unaudited)
Third quarter Fiscal 2016, Nine months ended January 22, 2016, compared to the corresponding period a year ago:
(in thousands, except per share amounts) Basic EPS Diluted EPS
Nine Months Ended Nine Months Ended Nine Months Ended
January 22,
2016
January 23,
2015
January 22,
2016
January 23,
2015
January 22,
2016
January 23,
2015
Operating Income (Loss) as Reported
Bob Evans Restaurants$37,585 $49,709
BEF Foods50,443 24,675
Corporate and Other(50,272) (57,635)
Operating Income37,756 16,749
Net interest expense7,856 6,225
Income Before Income Taxes29,900 10,524
Provision (benefit) for income taxes6,258 (419)
Net Income as reported23,642 10,943 $1.08 $0.47 $1.08 $0.46
Adjustments
Bob Evans Restaurants
Impairments 3,249
Severance/Restructuring318 872
Activism, Strategic Initiatives and Other 469
Litigation Reserves10,500
10,818 4,590
BEF Foods
Severance/Restructuring 855
Loss on Sale of Assets3,606
Activism, Strategic Initiatives and Other 17
3,606 872
Corporate and Other
Severance/Restructuring 494
Loss on Sale of Assets 1,846
Activism, Strategic Initiatives and Other 7,333
CEO Separation 3,836
13,509
Total adjustments
Impairments 3,249
Severance/Restructuring318 2,221
Loss on Sale of Assets3,606 1,846
Activism, Strategic Initiatives and Other 7,819
CEO Separation 3,836
Litigation Reserves10,500
14,424 18,971
Non-GAAP operating income (loss)
Bob Evans Restaurants48,403 54,299
BEF Foods54,049 25,547
Corporate and Other(50,272) (44,126)
Total non-GAAP operating income52,180 35,720
Adjustments to net interest expense(480) 1,374
Non-GAAP net interest expense7,376 7,599
Non-GAAP Income Before Taxes44,804 28,121
Adjustments to income tax provision (benefit)4,712 3,288
Non-GAAP Provision for Income Taxes10,970 2,869
Non-GAAP Net Income$33,834 $25,252 $1.55 $1.08 $1.54 $1.06
Weighted Average Shares Outstanding 21,845 23,487 21,989 23,717


Third quarter Fiscal 2016, Nine months ended January 22, 2016, compared to the corresponding period a year ago:
(in thousands)Nine Months Ended
Consolidated Results Bob Evans Restaurants
January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
Operating income as reported
Net Sales$993,239 $1,016,796 $708,018 $731,691
Cost of sales317,611 32.0% 354,723 34.9% 189,447 26.8% 196,509 26.9%
Operating wage and fringe benefit expenses315,894 31.8% 319,158 31.4% 284,714 40.2% 287,991 39.4%
Other operating expenses161,407 16.3% 162,713 16.0% 123,732 17.5% 126,677 17.3%
Selling, general and administrative expenses99,366 9.9% 100,353 9.9% 30,806 4.3% 25,015 3.4%
Depreciation and amortization expense60,116 6.1% 59,851 5.9% 40,645 5.7% 42,541 5.8%
Impairments1,089 0.1% 3,249 0.3% 1,089 0.2% 3,249 0.4%
Total as reported$37,756 3.8% $16,749 1.6% $37,585 5.3% $49,709 6.8%
Adjustments
Net Sales$ $ $ $
Cost of sales
Operating wage and fringe benefit expenses (259) (259)
Other operating expenses (642) (642)
Selling, general and administrative expenses(14,424) (14,821) (10,818) (440)
Depreciation and amortization expense
Impairments (3,249) (3,249)
Total Adjustments$14,424 $18,971 $10,818 $4,590
Non-GAAP operating income
Net Sales$993,239 $1,016,796 $708,018 $731,691
Cost of sales317,611 32.0% 354,723 34.9% 189,447 26.8% 196,509 26.9%
Operating wage and fringe benefit expenses315,894 31.8% 318,899 31.4% 284,714 40.2% 287,732 39.3%
Other operating expenses161,407 16.3% 162,071 15.9% 123,732 17.5% 126,035 17.2%
Selling, general and administrative expenses84,942 8.4% 85,532 8.4% 19,988 2.8% 24,575 3.4%
Depreciation and amortization expense60,116 6.1% 59,851 5.9% 40,645 5.7% 42,541 5.8%
Impairments1,089 0.1% % 1,089 0.2% %
Total non-GAAP operating income$52,180 5.3% $35,720 3.5% $48,403 6.8% $54,299 7.4%


(in thousands)Nine Months Ended
BEF Foods Corporate and Other
January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
January 22,
2016
January 23,
2015
Operating income (loss) as reported
Net Sales$285,221 $285,105 $ $
Cost of sales128,164 44.9% 158,214 55.5%
Operating wage and fringe benefit expenses31,180 10.9% 31,167 10.9%
Other operating expenses37,675 13.2% 36,036 12.6%
Selling, general and administrative expenses25,353 9.0% 22,053 7.8% 43,208 53,285
Depreciation and amortization expense12,406 4.3% 12,960 4.5% 7,064 4,350
Impairments % %
Total as Reported$50,443 17.7% $24,675 8.7% $(50,272) $(57,635)
Adjustments
Net Sales$ $ $ $
Cost of sales
Operating wage and fringe benefit expenses
Other operating expenses
Selling, general and administrative expenses(3,606) (872) (13,509)
Depreciation and amortization expense
Impairments
Total adjustments$3,606 $872 $ $13,509
Non-GAAP operating income (loss)
Net Sales$285,221 $285,105 $ $
Cost of sales128,164 44.9% 158,214 55.5%
Operating wage and fringe benefit expenses31,180 10.9% 31,167 10.9%
Other operating expenses37,675 13.2% 36,036 12.6%
Selling, general and administrative expenses21,747 7.8% 21,181 7.5% 43,208 39,776
Depreciation and amortization expense12,406 4.3% 12,960 4.5% 7,064 4,350
Impairments % %
Total non-GAAP operating income (loss)$54,049 18.9% $25,547 9.0% $(50,272) $(44,126)


(in thousands, except per share amounts)Three Months Ended Nine Months Ended
January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
January 22,
2016
% of
Sales
January 23,
2015
% of
Sales
Net Sales$346,505 $357,177 $993,239 $1,016,796
Cost of sales118,581 34.2%124,544 34.9% 317,611 32.0%354,723 34.9%
Operating wage and fringe benefit expenses106,607 30.8%109,116 30.5% 315,894 31.8%319,158 31.4%
Other operating expenses53,592 15.5%54,804 15.3% 161,407 16.3%162,713 16.0%
Selling, general and administrative expenses29,005 8.4%38,965 11.0% 99,366 9.9%100,353 9.9%
Depreciation and amortization expense19,856 5.7%20,403 5.7% 60,116 6.1%59,851 5.9%
Impairments804 0.2%1,672 0.5% 1,089 0.1%3,249 0.3%
Operating Income18,060 5.2%7,673 2.1% 37,756 3.8%16,749 1.6%
Net interest expense2,367 0.7%2,406 0.7% 7,856 0.8%6,225 0.6%
Income Before Income Taxes15,693 4.5%5,267 1.5% 29,900 3.0%10,524 1.0%
Provision (Benefit) for income taxes2,762 0.8%(653)(0.2)% 6,258 0.6%(419)%
Net Income$12,931 3.7%$5,920 1.7% $23,642 2.4%$10,943 1.1%
Earnings Per Share — Net Income
Basic$0.62 $0.25 $1.08 $0.47
Diluted$0.62 $0.25 $1.08 $0.46
Cash Dividends Paid Per Share$0.34 $0.31 $0.96 $0.93
Weighted Average Shares Outstanding
Basic20,692 23,515 21,845 23,487
Dilutive shares111 231 144 230
Diluted20,803 23,746 21,989 23,717
Shares outstanding at quarter end20,126 23,402


Consolidated Balance Sheets
(in thousands, except par values)January 22, 2016 April 24, 2015
Assets
Current Assets
Cash and equivalents$7,680 $6,358
Accounts receivable, net28,827 26,100
Inventories23,275 24,620
Deferred income taxes16,974 16,117
Federal and state income taxes receivable4,530 23,722
Prepaid expenses and other current assets8,235 5,035
Current assets held for sale12,221 22,243
Total Current Assets101,742 124,195
Property, Plant and Equipment1,564,698 1,585,882
Less accumulated depreciation799,768 756,015
Net Property, Plant and Equipment764,930 829,867
Other Assets
Deposits and other5,093 3,756
Notes receivable20,420 18,544
Rabbi trust assets20,534 32,302
Goodwill and other intangible assets19,868 19,986
Non-current deferred tax assets2,326 2,326
Long-term assets held for sale 1,611
Total Other Assets68,241 78,525
Total Assets$934,913 $1,032,587
Liabilities and Stockholders’ Equity
Current Liabilities
Current portion of long-term debt$417 $409
Accounts payable28,238 30,019
Accrued property, plant and equipment purchases3,283 4,820
Accrued non-income taxes17,832 14,951
Accrued wages and related liabilities22,851 34,529
Self-insurance reserves21,644 18,900
Deferred gift card revenue18,659 13,714
Current reserve for uncertain tax provision1,481 1,594
Other accrued expenses43,059 34,156
Total Current Liabilities157,464 153,092
Long-Term Liabilities
Deferred compensation17,607 22,481
Reserve for uncertain tax positions2,807 2,767
Deferred income taxes18,546 17,825
Deferred rent and other8,309 5,755
Credit facility borrowings and other long-term debt495,626 450,676
Total Long-Term Liabilities542,895 499,504
Stockholders’ Equity
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at January 22, 2016, and April 24, 2015426 426
Capital in excess of par value241,156 235,958
Retained earnings838,564 836,362
Treasury stock, 22,512 shares at January 22, 2016, and 19,231 shares at April 24, 2015, at cost(845,592) (692,755)
Total Stockholders’ Equity234,554 379,991
Total Liabilities and Stockholders' Equity$934,913 $1,032,587


Consolidated Statements of Cash Flows
Nine Months Ended
January 22, 2016 January 23, 2015
Operating activities:
Net income$23,642 $10,943
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization60,116 59,851
Impairments1,089 3,249
Loss on disposal of fixed assets820 1,624
Loss (Gain) on rabbi trust assets1,768 (204)
(Gain) Loss Deferred compensation(1,146) 1,953
Share based compensation4,656 2,158
Accretion on long-term note receivable(1,539) (1,374)
Deferred income taxes(136) (4,596)
Amortization of deferred financing costs1,762 749
Cash provided by (used for) assets and liabilities:
Accounts receivable(2,727) 2,585
Inventories1,345 (166)
Prepaid expenses and other current assets1,555 (267)
Accounts payable(1,781) 505
Federal and state income taxes19,119 4,279
Accrued wages and related liabilities(6,633) 3,583
Self-insurance2,744 1,125
Accrued non-income taxes2,881 (3,320)
Deferred gift card revenue4,945 5,250
Other assets and liabilities5,001 (6,927)
Net cash provided by operating activities117,481 81,000
Investing activities:
Purchase of property, plant and equipment(48,663) (58,921)
Proceeds from sale of property, plant and equipment64,065 9,696
Liquidation of rabbi trust assets5,245
Deposits and other(582) (246)
Net cash provided by (used in) investing activities20,065 (49,471)
Financing activities:
Cash dividends paid(21,132) (21,711)
Gross proceeds from credit facility borrowings and other long-term debt506,626 316,253
Gross repayments of credit facility borrowings and other long-term debt(461,668) (327,995)
Payments of debt issuance costs(2,517) (1,279)
Purchase of treasury stock(156,654)
Proceeds from share-based compensation214 478
Cash paid for taxes on share-based compensation(1,177) (1,790)
Excess tax benefits from share-based compensation84 513
Net cash used in financing activities(136,224) (35,531)
Net decrease in cash and equivalents1,322 (4,002)
Cash and equivalents at the beginning of the period6,358 7,826
Cash and equivalents at the end of the period$7,680 $3,824


Summary of Operating Efficiency Savings Fiscal 2016 year to date (dollars in millions)
Consolidated Bob Evans Restaurants BEF Foods Corporate and Other
S,G&A
Wage-Related$7.4 $3.1 $0.7 $3.6
Non Wage-Related1.3 0.7 0.6
Total S,G&A8.7 3.8 0.7 4.2
Non-S,G&A
Wage-Related0.3 0.3
Non Wage-Related2.7 2.7
Total Non-S,G&A3.0 3.0
Year to date total$11.7 $3.8 $3.7 $4.2


Bob Evans Restaurants’ openings and closings, by quarter
Fiscal Year Beginning
Total
Q1 Q2 Q3 Q4* Full Year* Closings Ending
Total*
2016 567 1 1 20 548
2015 561 1 2 4 7 1 567
2014 560 1 1 1 1 4 3 561
2013 565 2 2 7 560
2012 563 2 2 4 2 565
*Includes estimate for remaining quarters in fiscal 2016


Bob Evans Third-quarter Fiscal 2016 Same-Store Sales Day Part Performance - Total Chain
Day Part On-Premises Off-Premises Total
Breakfast (0.8)% 6.5% 0.1%
Lunch (4.5)% (2.3)% (4.1)%
Dinner (8.2)% (2.2)% (6.8)%
Total (4.3)% (0.3)% (3.6)%


Bob Evans Restaurants’ same-store sales analysis (18-month core; 540 restaurants)
Fiscal 2016 Fiscal 2015* Fiscal 2014*
Total Pricing /
Mix
Transactions Total Pricing /
Mix
Transactions Total Pricing /
Mix
Transactions
May(0.3)% 3.9% (4.2)% (1.9)% 1.3% (3.1)% (0.5)% 2.8% (3.4)%
June(0.9)% 4.4% (5.3)% (1.2)% 1.2% (2.4)% (0.4)% 2.8% (3.1)%
July0.3% 5.8% (5.5)% (2.7)% 0.9% (3.6)% (1.2)% 2.2% (3.3)%
Q1(0.3)% 4.8% (5.0)% (2.0)% 1.1% (3.2)% (0.7)% 2.6% (3.2)%
August(1.3)% 3.3% (4.6)% (2.4)% 2.0% (4.4)% (0.8)% 3.0% (3.7)%
September(3.8)% 2.9% (6.6)% 1.7% 2.6% (0.9)% (2.2)% 2.6% (4.8)%
October(4.4)% 1.5% (5.8)% 0.4% 2.5% (2.1)% (2.6)% 1.6% (4.3)%
Q2(3.2)% 2.5% (5.7)% (0.1)% 2.4% (2.4)% (1.9)% 2.3% (4.2)%
November(3.2)% 2.5% (5.6)% 2.9% 2.8% —% 1.7% 2.8% (1.1)%
December(4.3)% 3.4% (7.7)% 3.9% 1.3% 2.6% (3.5)% 2.8% (6.3)%
January(3.4)% 3.1% (6.5)% 5.2% 2.3% 2.9% (4.7)% 4.2% (8.8)%
Q3(3.6)% 2.9% (6.5)% 3.8% 2.2% 1.6% (1.7)% 3.3% (5.0)%
February 2.4% 3.1% (0.6)% (6.7)% 3.0% (9.8)%
March 0.9% 2.9% (2.0)% (4.1)% 2.1% (6.3)%
April 2.3% 4.0% (1.7)% (2.6)% 1.8% (4.4)%
Q4 2.1% 3.4% (1.3)% (4.3)% 2.3% (6.6)%
Fiscal Year(2.4)% 3.4% (5.7)% 0.9% 2.3% (1.4)% (2.1)% 2.6% (4.7)%
* Prior year data presentation reflects Company's current same store sales methodology.


Bob Evans Restaurants key restaurant sales data
Bob Evans Restaurants
Average annual store sales ($) - FY15$1,730,000
Q3 FY2016 day part mix (%):
Breakfast32%
Lunch38%
Dinner30%
Q3 FY2016 dine-in check average per guest ($):
Breakfast$9.31
Lunch$9.73
Dinner$9.65
Q3 FY2016 dine-in check average per guest ($):$9.56
Q3 FY2016 dine-in check average per ticket ($):$18.62
Q3 FY2016 carry-out check average per ticket ($):$15.78


BEF Foods historical sow cost review (average cost per hundredweight)
Fiscal Year Q1 Q2 Q3 Q4 Average
2016 $38.75 $53.31 $41.53 $44.84
2015 $87.87 $78.82 $67.79 $43.02 $69.41
2014 $63.24 $77.33 $72.36 $78.47 $73.23
2013 $54.19 $43.22 $58.73 $59.07 $53.87
2012 $57.06 $67.82 $60.56 $60.41 $61.58
BEF Foods total pounds sold review (inclusive of pounds sold to Bob Evans Restaurants)
Fiscal Year Q1 Q2 Q3 Q4 Average
2016 0.4% 5.7% 9.4% 5.5%
2015 (6.1)% (4.5)% 5.5% 0.9% (0.9)%
2014 13.0% 0.2% (11.1)% (6.9)% (2.4)%
2013 7.2% 16.1% 13.1% 21.4% 14.6%
2012 (2.7)% 3.1% 0.9% (1.3)% 0.1%
BEF Foods total pounds sold, by category
Fiscal 2016
Category Q1 Q2 Q3 Q4
Sides 49.6% 50.7% 50.9%
Sausage 22.0% 22.3% 26.6%
Food Service - External 14.1% 12.5% 10.4%
Food Service - Intersegment 6.2% 6.6% 6.0%
Frozen 4.6% 4.5% 3.1%
Other 3.5% 3.4% 3.0%
Fiscal 2015
Category Q1 Q2 Q3 Q4
Sides 42.5% 46.9% 48.0% 49.8%
Sausage 19.3% 20.5% 26.2% 23.7%
Food Service - External 24.0% 18.0% 12.8% 11.8%
Food Service - Intersegment 6.0% 6.0% 5.5% 5.8%
Frozen 4.6% 5.0% 4.1% 4.8%
Other 3.6% 3.6% 3.4% 4.1%


BEF Foods net sales review (dollars in thousands)
Q3 FY16Q3 FY15
Gross sales$ 134,555 $ 125,327
Less: promotions 25,448 17,047
Less: discounts 698 775
Less: returns and slotting 512 717
Net sales$ 107,897 $ 106,788
YTD 2016YTD 2015
Gross sales$ 342,287 $ 324,805
Less: promotions 52,373 35,039
Less: discounts 2,531 2,677
Less: returns and slotting 2,162 1,984
Net sales$ 285,221 $ 285,105

Contact: Scott C. Taggart Vice President, Investor Relations (614) 492-4954

Source:Bob Evans Farms, Inc.