Bob Evans Q3 results shows growth in most sectors
Bob Evans Farms Inc. announced its results for the fiscal 2013 third quarter ended Friday, January 25, 2013. The company reported net sales increase of 1.4%. Bob Evans Restaurants achieved positive same-store sales of 1.6%, its third consecutive quarter with positive same-store sales, despite approximately 50 basis points of weather-related impact. BEF Foods' net sales increased 7.5%, and volume was up 13.1%. Partially offsetting these increases, Mimi's Cafe's same-store sales decline 4.0%.
Consolidated net sales were $434.4 million in the third quarter of fiscal 2013, a 1.4 percent increase, compared to $428.3 million in the third quarter of fiscal 2012. This growth was the result of a net sales increase in the BEF Foods segment as well as new restaurant and same-store sales increases at Bob Evans Restaurants, partially offset by same-store sales declines at Mimi's Cafe. The BEF Foods segment's third-quarter fiscal 2013 net sales were $97.8 million, an increase of 7.5 percent, compared to $91.0 million in the third quarter of fiscal 2012. Total pounds sold increased 13.1 percent.
Commenting on third-quarter fiscal 2013 results, Chairman and CEO Steve Davis said, "I am very proud of our highly disciplined teams this quarter. In the midst of several complex transformational projects, we did not lose sight of driving positive sales results in Bob Evans Restaurants and BEF Foods. While successfully accelerating the Farm Fresh Refresh remodeling program at Bob Evans Restaurants; insourcing a product line formerly produced by a third party for BEF Foods; and completing the sale of Mimi's Cafe, we simultaneously drove sales growth in both of our Bob Evans-branded business segments.
"While there have been significant investments and expenses associated with transforming our Company for growth this quarter, all have been undertaken with an eye on positioning Bob Evans Restaurants and BEF Foods for sustainable growth in the years ahead, and driving returns on invested capital. Not only did we successfully execute transformational projects in each of our business segments, from a corporate perspective we improved our operational flexibility, and reduced the cost of our debt structure substantially, by pre-paying our private placement notes with cash on hand and funds from our lower-cost credit facility. We also restructured our restaurant operating entities by converting them to limited liability companies, which streamlined our organizational structure and generated an estimated tax benefit of $53 to $63 million, the majority of which we expect to realize during the next two years. We believe we are now well-positioned to deliver on our long-term annual non-GAAP EPS growth guidance of 8 to 12 percent in the years ahead through a combination of positive top-line results and ongoing cost initiatives to leverage sales growth in both businesses."
Davis continued, "The Farm Fresh Refresh remodeling program continues to drive positive sales and return on invested capital trends at Bob Evans Restaurants. This was the third consecutive quarter of same-store sales gains at Bob Evans Restaurants. Importantly, restaurants that have been remodeled for more than a year are building on their already impressive first-year sales gains as this group generated positive same-store sales of 2.7 percent during the quarter. The Farm Fresh Refresh remodeling program was designed to drive dine-in sales, as well as develop new sales layers including bakery, carryout, and catering. We believe the continued strong sales performance of remodeled restaurants reflects progress in meeting those objectives, and it gives us confidence in our decision to accelerate the completion of the remodeling program in fiscal 2014, one year earlier than originally anticipated. Accelerating the Farm Fresh Refresh remodeling program not only provides an opportunity to realize the financial benefits of the program early, it enables us to transition sooner to a more meaningful level of sales layer development and new restaurant openings beginning in fiscal 2015.
"At BEF Foods, we grew for a third straight quarter with net sales and volume gains of 7.5 percent and 13.1 percent, respectively. Our second-quarter fiscal 2013 acquisition of the Kettle Creations brand and manufacturing facility is already accretive to earnings, and we believe will become more so after its current expansion is complete. During the third quarter, we grew refrigerated side dish sales by 9.2 percent compared to the same period last year. Expansion and innovation at Kettle Creations' manufacturing facility was a key element in driving that growth. BEF Foods is now nearly 90 percent vertically integrated, and we believe that provides us with tremendous advantage as we improve our operating cost structure. It also enhances our product innovation capabilities as we continue to grow the refrigerated side dish business, now our largest product category."
Davis added, "We announced an agreement to sell our Mimi's Cafe business segment on January 28, 2013, and subsequently closed the transaction on February 15, 2013. The transaction represents a turning point for our Company as we are now better focused on driving growth of our two Bob Evans-branded businesses. We have tremendous respect for the team at Mimi's Cafe, and wish them success as they continue their brand transformation under the ownership of LeDuff America Inc. We will provide transitional services to Mimi's Cafe for approximately a year."
Source: Bob Evans Farms Inc.