Bob Evans planning sale-leaseback of some restaurant properties
Bob Evans Farms Inc. announced its financial results for the fiscal 2016 first quarter ended Friday, July 24, 2015. On a GAAP basis, the company reported net income of $4.3 million, or $0.19 per diluted share, compared with a net loss of $1.0 million, or $0.04 per diluted share, in the corresponding period last year.
Bob Evans Restaurants’ net sales were $238.7 million, a decline of $1.5 million, or 0.6 percent, compared to net sales of $240.2 million in the corresponding period last year. Same-store sales declined 0.3 percent in the quarter, below the national Knapp-Track family dining index increase of 2.5 percent. Bob Evans closed 18 restaurants during the first quarter.
Executive Chairman Doug Benham said, “Our teams remain laser-focused on continuous improvement in both of our businesses and execution of our strategic initiatives. BEF Foods is achieving promising results. At Bob Evans Restaurants, we are implementing our strategy of improving the quality of our food offerings; significantly lowering discounting that was historically utilized to drive transactions; and optimizing our investments in labor to deliver a better guest experience.
“We are continuing our CEO search as the CEO Search Committee of the Board of Directors remains engaged in a thoughtful and thorough process to identify and appoint the right chief executive to lead the company forward,” he added.
Chief Financial Officer Mark Hood said, “We continued to make progress in the improvement of Bob Evans Farms’ operating performance during the first quarter of fiscal 2016. The improvement continues to be led by BEF Foods which posted strong operating results for the third consecutive quarter. We also saw improvement in Bob Evans Restaurants’ operating performance during the quarter. Although same-store sales declined by 0.3 percent, sales were more profitable.”
Hood continued, “We have completed our review of alternatives concerning a transaction for our owned restaurant properties and determined, along with our external advisors, that given our current business and market conditions, a sale-leaseback transaction of up to $200 million is the most appropriate path to further enhance shareholder value. We would anticipate net proceeds of $165 to $170 million from such a transaction. The sale-leaseback of the restaurant properties would be in addition to the previously announced pursuit of a sale-leaseback of our headquarters building and select industrial properties for which we expect net proceeds of $85 to $90 million. We expect to use net proceeds from these transactions to pay down debt and repurchase shares while maintaining a prudent adjusted leverage level.”
The Wall Street Journal reports that the company has been under pressure to make such a move by billionaire Thomas Sandell, one of the company’s largest shareholders. Bob Evans is still considering separating its food and restaurant business—a move first sought by Sandell, a former Bear Stearns trader now at the helm of New York hedge fund Sandell Asset Management Corp.
Source: Bob Evans Farms, Wall Street Journal