Bob Evans Farms (BOBE) Tops Q3 EPS by 8c; Boosts Low End of FY EPS Outlook

Bob Evans Farms (NASDAQ: BOBE) reported Q3 EPS of $0.62, $0.08 better than the analyst estimate of $0.54. Revenue for the quarter came in at $346.5 million versus the consensus estimate of $347.52 million.

GUIDANCE:

Bob Evans Farms sees FY2016 EPS of $1.90-$2.00, versus prior guidance of $1.85-$2.00 and the consensus of $1.91.

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.”

For earnings history and earnings-related data on Bob Evans Farms (BOBE) click here.

You May Also Be Interested In

• American Express (AXP) down despite beating Q1 estimates on top and bottom lines
• Safe & Green (SGBX) Provides Update on Audit and Planned 10-K Filing
• Senesco Technologies, Inc. (SNT) Reports Q1 EPS of $0.02