Exhibit 99.1

 

BOB EVANS REPORTS FISCAL 2015 SECOND-QUARTER RESULTS

 

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Q2 2015 net sales total $333.3 million, an increase of $0.7 million, or 0.2 percent, compared to prior year period results. GAAP net income of $0.25 per diluted share compared to net income of $0.23 per diluted share in the prior year period. Adjusted net income(1) of $0.36 per diluted share compared to $0.35 per diluted share in the prior year period

 

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Company narrows fiscal 2015 diluted EPS guidance range to $1.90 to $2.10 to reflect a moderate extension of the Broasted® Chicken platform rollout to Q2 2016 and expected commodity cost increases

 

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Bob Evans Restaurants reports fiscal November same-store sales (through 11/26) of 0.8 percent, marking three consecutive months of positive same-store sales. Q3 QTD same-store sales through Thanksgiving Day (11/27) were 2.7 percent.

 

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Combined Thanksgiving Eve and Thanksgiving Day same-store sales increased 25 percent

 

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Bob Evans Restaurant locations offering the Broasted Chicken platform continued driving same-store sales at the lunch and dinner day parts; outperforming restaurants without the platform by 130 and 690 basis points at lunch and dinner, respectively during Q2 2015

 

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Improved plant efficiencies contribute to a 280 basis point improvement in BEF Foods’ Q2 2015 adjusted operating margin. Side-dish volume up 9% over prior year as sales momentum builds ahead of key winter holiday selling season

 

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Quarterly dividend of $0.31 per share payable on December 15, 2014, to stockholders of record at the close of business on December 1, 2014

 

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Board of Directors’ Finance Committee is engaged in a comprehensive, fresh review of strategic, financial and capital allocation plans; Company has been working with advisory firms to assist in driving sustainable productivity and operating cost improvements to achieve 300 to 350 basis point long-term operating margin improvement goal by fiscal 2018 and has also retained Deloitte to complete a comprehensive review of the Company’s S,G&A structure

NEW ALBANY, Ohio – December 2, 2014 – Bob Evans Farms, Inc. (NASDAQ: BOBE) today announced its financial results for the fiscal 2015 second quarter ended Friday, October 24, 2014. On a GAAP basis, the Company reported net income of $6.0 million, or $0.25 per diluted share, compared with net income of $6.1 million, or $0.23 per diluted share, in the comparable period last year. On an adjusted basis⁽¹⁾, net income was $8.6 million, or $0.36 per diluted share, compared with net income of $9.5 million, or $0.35 per diluted share, in the comparable period last year.

Second-quarter fiscal 2015 commentary

Chief Executive Officer Steve Davis said, “Performance at Bob Evans Restaurants and BEF Foods continues to improve as we leverage the recent multi-year investment programs in both businesses. At Bob Evans Restaurants, ‘Carryout Acceleration’ and ‘Own Our Nights’ are two key programs paving the way for successful introduction of the Broasted Chicken platform as

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well as for an improved guest experience and sales trends overall. These programs are not only improving execution in the parts of the business most relevant to the Broasted Chicken rollout; they are driving performance across the entire system where our Sweet and Stacked breakfast offerings and Slow-Roasted lunch and dinner platforms continue to perform well. As we have noted previously, Broasted Chicken is one of several initiatives expected to drive positive same-store sales. Our Slow-Roasted and Sweet and Stacked platforms are also vital elements of our menu innovation program.

“At Bob Evans Restaurants, the Broasted Chicken platform rollout continues to leverage the Farm Fresh Refresh program’s positive impact on our dine-in and off-premise capabilities. The new platform drove meaningful same-store sales growth during the lunch and dinner day parts with second quarter same-store sales outperformance of 130 and 690 basis points at lunch and dinner, respectively, compared to restaurants that have not yet introduced the platform. Off-premise same-store sales increased 21.3 percent in restaurants offering Broasted Chicken, while off-premise same-store sales at all other locations grew 10.7 percent.”

Davis continued, “At BEF Foods, we are well positioned to meet our customers’ needs during the peak holiday selling season. We are also continuing our efforts to improve the operating efficiency of our plants. Our $1.6 million year-to-date investment in outside consulting services to drive plant operating efficiency gains subsequent to our recent plant expansions has paid off as operating inefficiencies were reduced to $1.3 million during the second quarter, a $1.0 million improvement from the first quarter.

“We expect BEF Food’s margins to improve during the third and fourth quarters as the Company leverages lower forecasted sow costs, and increased expected plant efficiency with increased sales volume. While we have modestly lowered our sow cost guidance to reflect recent sow cost trends, we remain cautious with our pricing and trade spending strategies. Trade spending was reduced $1.3 million during the first half of the fiscal year to enable strategic incremental trade expenditures during the remainder of the year to capture volume through increased advertising and other trade expenditures.

“We are also working with leading global professional services firms, to assist us in developing sustainable productivity and operating cost improvements to achieve our 300 to 350 basis point long-term operating margin improvement goal by fiscal 2018. In addition, we have retained Deloitte to complete a comprehensive review of the Company’s S,G&A structure. We believe there are meaningful opportunities to improve our cost structure and enhance performance at all levels. Working with independent experts enables us to drill down and accelerate the process. Furthermore, as part of our focus on cost efficiencies, the Company is exiting its interest in a private aircraft.

“Finally, the Finance Committee of the Board, three of whose five members were newly elected to the Board at the 2014 annual meeting and all of whom are independent, is engaged in a fresh, comprehensive review of the Company’s strategic, financial and capital allocation plans, including ideas that have been proposed by the Company’s stockholders. To assist in the process, the Committee has unanimously determined to engage Lazard to serve as independent financial advisor. The Board, external advisors and management are aligned and working cooperatively together to drive shareholder value and achieve our current-year and long-term earnings objectives.”

Second-quarter fiscal 2015 Bob Evans Restaurants segment summary

Bob Evans Restaurants’ net sales were $241.2 million, an increase of $0.7 million, or 0.3 percent, compared to net sales of $240.5 million in the corresponding period last year. Same-store sales were flat in the quarter, slightly trailing the national Knapp-Track™ family dining index increase of 0.3 percent. In Bob Evans Restaurants’ top three Knapp-Track™ regions – East North Central, South Atlantic, and Mid-Atlantic – which comprise 82 percent of the chain as measured by restaurant count, same-store sales results outperformed the regional Knapp-Track™ family dining indices by 10 to 180 basis points.

 

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Same-Store Sales (SSS) Restaurants		August				September				October				2Q FY ’15				3Q (QTD: 11-27-14)
557			-2.5	%			1.8	%			0.4	%			0.0	%			2.7	%

Second-quarter Fiscal 2015 SSS% Day Part Performance – Total Chain

 

Day Part		On-Premise				Off-Premise				Total
Breakfast			-1.4	%			13.7	%			-0.3	%
Lunch			-1.4	%			14.0	%			0.1	%
Dinner			-2.6	%			13.0	%			0.1	%
Total			-1.7	%			13.5	%			0.0	%

Second-quarter Fiscal 2015 SSS% Day Part Performance – Restaurants offering Broasted Chicken

 

Day Part		On-Premise				Off-Premise				Total
Breakfast			-3.2	%			11.7	%			-1.7	%
Lunch			-1.8	%			22.3	%			1.2	%
Dinner			0.3	%			24.4	%			5.5	%
Total			-1.6	%			21.3	%			1.8	%

Second-quarter Fiscal 2015 SSS% Day Part Performance – Restaurants without Broasted Chicken

 

Day Part		On-Premise				Off-Premise				Total
Breakfast			-1.0	%			14.3	%			0.0	%
Lunch			-1.2	%			11.1	%			-0.1	%
Dinner			-3.3	%			8.7	%			-1.4	%
Total			-1.8	%			10.7	%			-0.5	%

Bob Evans Restaurants’ non-GAAP operating income was $9.6 million, compared to non-GAAP operating income of $13.6 million in the corresponding period last year. The primary drivers of the $4.0 million decline were: a $4.1 million negative impact of higher food costs, with approximately $3.6 million attributable to menu mix and increased commodity costs, with the remainder primarily attributable to discounted sales; a $0.6 million negative impact of operating expense associated primarily with increased service contract expenses; partially offset by approximately $1.3 million of labor cost favorability due to the Company’s ongoing efforts to optimize restaurant staffing through its workforce management process, although $0.9 million of incremental training and labor costs associated with the Broasted Chicken platform rollout and Carryout Acceleration programs resulted in a net labor benefit of $0.4 million; and approximately $0.3 million of sales leverage.

Second-quarter fiscal 2015 BEF Foods segment summary

BEF Foods’ net sales were $92.1 million, flat compared to the prior year period as a 9.0 percent increase in side-dish volume was offset by lower sausage sales. $3.0 million of increased sausage pricing and $0.3 million of reduced trade spending was offset by a 4.5 percent decline in total pounds sold resulting primarily from a 16.4 percent decline in sausage pounds sold that was partially offset by the side-dish volume growth. Adjusting for the sale of the Company’s Irvine, California, production facility during the second quarter of fiscal 2014, net sales would have increased 1.6 percent on a dollar basis, and volume would have declined 1.6 percent.

BEF Foods’ non-GAAP operating income was $3.2 million, compared to non-GAAP operating income of $0.6 million in the corresponding period last year. The primary drivers of the $2.6 million increase were: $2.5 million of favorability resulting primarily from lower advertising

 

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expenses and reduced headcount; $1.9 million of cost of goods sold favorability resulting from the effect of a higher sales mix of non-sausage products net of increased sow and trim costs ($0.8 million) and increased freight-in costs to plants; $0.2 million of other operating expense favorability from reduced insurance costs and repair and maintenance expenses; partially offset by $1.1 million of incremental depreciation as a result of plant expansions in the prior year, and $0.8 million of increased labor costs also related to the plant expansions.

Net interest expense – The Company’s non-GAAP net interest expense was $2.7 million in the second quarter of fiscal 2015, an increase of $2.1 million, compared to $0.6 million in the corresponding period last year. The year-over-year increase was due to borrowing related to funding of share repurchases and capital expenditures in the second half of fiscal 2014. The borrowing rate on the Company’s outstanding debt was 2.16 percent at the end of the second quarter, compared to 1.43 percent at the end of the comparable prior year period.

Taxes – The 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’s effective income tax rate was 11.3 percent for the quarter, as compared to 28.6 percent for the corresponding period a year ago. The decrease in the tax rate was driven primarily by an increase in the domestic production activities deduction, benefits from a Company owned life insurance policy recorded in the second quarter, and discrete items related to prior year Work Opportunity Tax Credits, state refunds received, and other items. For non-GAAP items, the tax rate was 26.1 percent, reflecting the Company’s annual estimated tax rate.

Balance sheet highlights – The Company’s cash balance and revolver borrowings at the end of the second quarter of fiscal 2015 were $3.7 million and $465.0 million, respectively. The Company was in compliance with its debt covenants at the end of the second quarter of fiscal 2015. The Company’s leverage ratio as defined in its credit agreement was 3.81 at the end of the quarter, up from 3.69 in the prior quarter.

Fiscal year 2015 commentary and outlook

“We are narrowing our fiscal 2015 diluted EPS guidance range to $1.90 to $2.10. Bob Evans Restaurants’ same-store sales guidance reflects an extended roll-out schedule for the Broasted Chicken platform to ensure continued strong operational execution and prudent management of implementation expenses. From a development perspective, we expect to open a total of 7 Bob Evans Restaurant locations, and up to 10 Bob Evans Express locations, during fiscal 2015. Food costs are expected to rise 60 to 80 basis points during the second half of fiscal 2015 compared to the prior year due to increased commodity prices and continued off-premise sales mix growth. We also expect continuation of increased health care costs during the second half of fiscal 2015. Offsetting these factors, third and fourth quarter sow cost guidance has been reduced to $73 to $78 per hundredweight, from $80 to $90 per hundredweight, and our full fiscal year estimate is now $78 to $82 per hundredweight, reflecting recent sow cost trends and current predictions from our supply chain experts. Our expected depreciation expense and tax rate assumptions have also been reduced for fiscal 2015, and we continue to focus on reducing our tax rate through effective tax planning strategies.

“We also recently committed to a plan to sell our ownership interest in an aircraft jointly owned with the Greif Corporation. The sale is expected to be completed prior to the end of the current fiscal year and may result in a loss on disposal of $1.7 to $2.2 million. Finally, we expect to spend approximately $2 million during the second half of fiscal 2015 for services provided by advisory firms to review strategic initiatives, and assist in driving sustainable productivity improvements and cost efficiencies,” said Chief Financial Officer Mark Hood.

 

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Summary of performance drivers: fiscal 2015 guidance versus fiscal 2014

 

		1Q (actual)		2Q (actual)		3Q		4Q		Full Year
sss% 2015 (guidance)		-2.0%		0.0%		mid-single digit		mid-single digit		1.5% to 2.5%
sss% 2014 (actual)		-0.6%		-1.9%		-1.8%		-4.1%		-2.1%
sow costs (per hundredweight) 2015 (guidance)		$87.87		$78.82		$73 to $78		$73 to $78		$78 to $82
sow costs (per hundredweight) 2014 (actual)		$63.24		$77.33		$72.36		$78.47		$73.23
estimated Broasted Chicken rollout (% of restaurants)		6%		39%		45%		55%		Note: 100% expected 2Q FY’16

 

Guidance Metric		FY ‘15
Consolidated net sales		$1.35 to $1.37 billion
Bob Evans Restaurants same-store sales		1.5% to 2.5 percent
BEF Foods net sales		$388 to $398 million
Capital expenditures		$80 to $85 million
ERP implementation (included in S,G&A)		$3.5 to $4.5 million
Depreciation and amortization		$81 to $85 million
Net interest expense		$9.5 to $10.5 million
Tax rate		20 to 22 percent
Diluted weighted-average share count		23.8 million shares
Adjusted earnings per diluted share		$1.90 to $2.10

This outlook is subject to a number of factors beyond the Company’s control, including the risk factors discussed in the Company’s fiscal 2014 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 second-quarter fiscal 2015 results at 10 a.m. (ET) on Wednesday, December 3, 2014. The dial-in number is (855) 468-0551, access code 34994177. A replay will be available at (800) 585-8367, access code 34994177.

A simultaneous webcast will be available at 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.

 

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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 25, 2014, 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. owns and operates full-service restaurants under the Bob Evans Restaurants brand name. At the end of the second fiscal quarter (October 24, 2014), Bob Evans Restaurants owned and operated 562 family restaurants in 19 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.

Broasted is a registered trademark of The Broaster Company, LLC.

Contact:

Scott C. Taggart

Vice President, Investor Relations

(614) 492-4954

BOBE–E

Source: Bob Evans Farms, Inc.

 

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Bob Evans Farms, Inc.

Earnings Release Fact Sheet (unaudited)

Second quarter Fiscal 2015, three months ended October 24, 2014, compared to the corresponding period a year ago:

Note: amounts are in thousands, except per share amounts

 

										Basic EPS								Diluted EPS
		Three Months Ended								Three Months Ended								Three Months Ended
		Oct 24, 2014				Oct 25, 2013				Oct 24, 2014				Oct 25, 2013				Oct 24, 2014				Oct 25, 2013
Operating Income (Loss) as Reported
Bob Evans Restaurants			6,712				11,912
BEF Foods			2,300				(3,017	)
Total operating income from continuing operations			9,012				8,895
Net interest expense			2,203				140
Per-tax Income from continuing operations			6,809				8,755
Expense for income taxes			770				2,502
Income from continuing operations as reported			6,039				6,253			$	0.26			$	0.23			$	0.25			$	0.23
Total operating and pre-tax loss from discontinued operations			—				(180	)
Income tax benefit			—				(46	)
Loss from discontinued operations as reported			—				(134	)			—				—				—				—
Net income as reported			6,039				6,119			$	0.26			$	0.23			$	0.25			$	0.23
Adjustments
Bob Evans Restaurants
Impairments including from Assets Held for Sale			—				1,955
Severance/Restructuring			—				1,348
Loss (Gain) on Sale of Assets			—				(1,214	)
Activism and Other			2,933				(422	)
			2,933				1,667
BEF Foods
Impairments including from Assets Held for Sale							3,000
Severance/Restructuring			—				766
Loss on Sale of Assets			—				(112	)
Activism and Other			946				—
			946				3,654
Discontinued Operations
Adjustment to discontinued operations			—				180
			—				180
Total adjustments
Impairments including from Assets Held for Sale			—				4,955
Severance/Restructuring			—				2,114
Loss (Gain) on Sale of Assets			—				(1,326	)
Activism and Other			3,879				(422	)
Adjustment to discontinued operations			—				180
			3,879				5,501
Non-GAAP operating income from continuing operations
Bob Evans Restaurants			9,645				13,579
BEF Foods			3,246				637
Total non-GAAP operating income			12,891				14,216
Continuing Operations
Adjustments to net interest expense			458				419
Non-GAAP net interest expense			2,661				559
Non-GAAP pre-tax income from continuing operations			10,230				13,657
Adjustments to income tax provision			835				1,650
Non-GAAP income tax provision			1,605				4,152
Non-GAAP net income from continuing operations			8,625				9,505			$	0.37			$	0.35			$	0.36			$	0.35
Discontinued Operations
Adjustments to income tax benefit			—				56
Non-GAAP income tax provision			—				10
Non-GAAP loss from discontinued operations			—				(10	)			—				—				—				—
Non-GAAP net income			8,625				9,495			$	0.37			$	0.35			$	0.36			$	0.35
Shares Outstanding											23,509				27,086				23,735				27,184

 

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Second quarter Fiscal 2015, six months ended October 24, 2014, compared to the corresponding period a year ago:

 

										Basic EPS								Diluted EPS
		Six Months Ended								Six Months Ended								Six Months Ended
		Oct 24, 2014				Oct 25, 2013				Oct 24, 2014				Oct 25, 2013				Oct 24, 2014				Oct 25, 2013
Operating Income (Loss) as Reported
Bob Evans Restaurants			8,427				18,394
BEF Foods			649				2,500
Total operating income from continuing operations			9,076				20,894
Net interest expense (income)			3,819				(16	)
Per-tax Income from continuing operations			5,257				20,910
Expense for income taxes			234				6,281
Income from continuing operations as reported			5,023				14,629			$	0.21			$	0.54			$	0.21			$	0.53
Total operating and pre-tax loss from discontinued operations			—				(180	)
Income tax benefit			—				(46	)
Loss from discontinued operations as reported			—				(134	)			—				—				—				—
Net income as reported			5,023				14,495			$	0.21			$	0.53			$	0.21			$	0.53
Adjustments
Bob Evans Restaurants
Impairments including from Assets Held for Sale			1,577				11,743
Severance/Restructuring			285				760
Loss (Gain) on Sale of Assets			105				(1,300	)
Activism and Other			4,765				(15	)
			6,732				11,188
BEF Foods
Impairments including from Assets Held for Sale			—				3,000
Severance/Restructuring			664				1,767
Loss on Sale of Assets			13				52
Activism and Other			1,500				23
			2,177				4,842
Discontinued Operations
Adjustment to discontinued operations			—				180
			—				180
Total adjustments
Impairments including from Assets Held for Sale			1,577				14,743
Severance/Restructuring			949				2,527
Loss (Gain) on Sale of Assets			118				(1,248	)
Activism and Other			6,265				8
Adjustment to discontinued operations			—				180
			8,909				16,210
Non-GAAP operating income from continuing operations
Bob Evans Restaurants			15,159				29,582
BEF Foods			2,826				7,342
Total non-GAAP operating income			17,985				36,924
Continuing Operations
Adjustments to net interest expense			903				1,081
Non-GAAP net interest expense			4,722				1,065
Non-GAAP pre-tax income from continuing operations			13,263				35,859
Adjustments to income tax provision			2,094				4,865
Non-GAAP income tax provision			2,328				11,146
Non-GAAP net income from continuing operations			10,935				24,713			$	0.47			$	0.91			$	0.46			$	0.90
Discontinued Operations
Adjustments to income tax benefit			—				56
Non-GAAP income tax provision			—				10
Non-GAAP loss from discontinued operations			—				(10	)			—				—				—				—
Non-GAAP net income			10,935				24,703				0.47				0.91				0.46				0.90
Shares Outstanding											23,467				27,287				23,698				27,402

 

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Second quarter Fiscal 2015, three months ended October 24, 2014, compared to the corresponding period a year ago:

(Note that the prior year excludes discontinued operations)

 

		Consolidated Results																Bob Evans Restaurants
		Three Months Ended																Three Months Ended
		Oct 24, 2014				% of Sales				Oct 25, 2013				% of Sales				Oct 24, 2014				% of Sales				Oct 25, 2013				% of Sales
Operating income as reported
Net sales			333,279								332,600								241,151								240,500
Cost of sales			116,012				34.8	%			113,605				34.2	%			64,165				26.6	%			59,921				24.9	%
Operating wage and fringe benefit expenses			102,785				30.8	%			101,971				30.7	%			92,006				38.2	%			91,954				38.2	%
Other operating expenses			49,973				15.0	%			49,460				14.9	%			42,702				17.7	%			42,013				17.5	%
Selling, general and administrative expenses			36,022				10.8	%			36,617				11.0	%			20,777				8.6	%			19,213				8.0	%
Depreciation and amortization expense			19,475				5.8	%			18,281				5.5	%			14,789				6.1	%			14,716				6.1	%
Impairment of assets held for sale			—				—	%			3,771				1.1	%			—				—	%			771				0.3	%
Total as Reported			9,012				2.7	%			8,895				2.7	%			6,712				2.8	%			11,912				5.0	%
Adjustments
Net sales			—								—								—								—
Cost of sales			—								—								—								—
Operating wage and fringe benefit expenses			(15	)							453								(15	)							453
Other operating expenses			(115	)							—								(115	)							—
Selling, general and administrative expenses			(3,749	)							(2,003	)							(2,803	)							(1,349	)
Depreciation and amortization expense			—								—								—								—
Impairment of assets held for sale			—								(3,771	)							—								(771	)
Total adjustments			3,879								5,321								2,933								1,667
Non-GAAP operating income
Net sales			333,279								332,600								241,151								240,500
Cost of sales			116,012				34.8	%			113,605				34.2	%			64,165				26.6	%			59,921				24.9	%
Operating wage and fringe benefit expenses			102,770				30.8	%			102,424				30.8	%			91,991				38.1	%			92,407				38.4	%
Other operating expenses			49,858				15.0	%			49,460				14.9	%			42,587				17.7	%			42,013				17.5	%
Selling, general and administrative expenses			32,273				9.7	%			34,614				10.4	%			17,974				7.5	%			17,864				7.4	%
Depreciation and amortization expense			19,475				5.8	%			18,281				5.5	%			14,789				6.1	%			14,716				6.1	%
Impairment of assets held for sale			—				—	%			—				—	%			—				—	%			—				—	%
Total non-GAAP operating income			12,891				3.9	%			14,216				4.3	%			9,645				4.0	%			13,579				5.6	%

 

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		BEF Foods
		Three Months Ended
		Oct 24, 2014				% of Sales				Oct 25, 2013				% of Sales
Operating income as reported
Net sales			92,128								92,100
Cost of sales			51,847				56.3	%			53,684				58.3	%
Operating wage and fringe benefit expenses			10,779				11.7	%			10,017				10.9	%
Other operating expenses			7,271				7.9	%			7,447				8.1	%
Selling, general and administrative expenses			15,245				16.5	%			17,404				18.9	%
Depreciation and amortization expense			4,686				5.1	%			3,565				3.9	%
Impairment of assets held for sale			—				—	%			3,000				3.3	%
Total as Reported			2,300				2.5	%			(3,017	)			(3.3	)%
Adjustments
Net sales			—								—
Cost of sales			—								—
Operating wage and fringe benefit expenses			—								—
Other operating expenses			—								—
Selling, general and administrative expenses			(946	)							(654	)
Depreciation and amortization expense			—								—
Impairment of assets held for sale			—								(3,000	)
Total adjustments			946								3,654
Non-GAAP operating income
Net sales			92,128								92,100
Cost of sales			51,847				56.3	%			53,684				58.3	%
Operating wage and fringe benefit expenses			10,779				11.7	%			10,017				10.9	%
Other operating expenses			7,271				7.9	%			7,447				8.1	%
Selling, general and administrative expenses			14,299				15.5	%			16,750				18.2	%
Depreciation and amortization expense			4,686				5.1	%			3,565				3.9	%
Impairment of assets held for sale			—				—	%			—				—	%
Total non-GAAP operating income			3,246				3.5	%			637				0.7	%

 

10

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Second quarter Fiscal 2015, six months ended October 24, 2014, compared to the corresponding period a year ago:

(Note that the prior year excludes discontinued operations)

 

		Consolidated Results																Bob Evans Restaurants
		Six Months Ended																Six Months Ended
		Oct 24, 2014				% of Sales				Oct 25, 2013				% of Sales				Oct 24, 2014				% of Sales				Oct 25, 2013				% of Sales
Operating income as reported
Net sales			659,619								662,049								481,302								485,051
Cost of sales			229,475				34.8	%			220,246				33.3	%			127,376				26.5	%			122,574				25.3	%
Operating wage and fringe benefit expenses			207,214				31.4	%			204,817				30.9	%			186,847				38.8	%			185,175				38.2	%
Other operating expenses			99,481				15.1	%			98,382				14.9	%			85,207				17.7	%			83,326				17.2	%
Selling, general and administrative expenses			74,667				11.3	%			69,819				10.5	%			43,057				8.9	%			37,295				7.7	%
Depreciation and amortization expense			39,448				6.0	%			35,511				5.4	%			30,130				6.3	%			28,907				6.0	%
Impairment of assets held for sale			258				—	%			12,380				1.9	%			258				0.1	%			9,380				1.9	%
Total as Reported			9,076				1.4	%			20,894				3.2	%			8,427				1.8	%			18,394				3.8	%
Adjustments
Net sales			—								—								—								—
Cost of sales			—								—								—								—
Operating wage and fringe benefit expenses			(29	)							453								(29	)							453
Other operating expenses			(262	)							33								(262	)							—
Selling, general and administrative expenses			(8,360	)							(4,187	)							(6,183	)							(2,312	)
Depreciation and amortization expense			—								51								—								51
Impairment of assets held for sale			(258	)							(12,380	)							(258	)							(9,380	)
Total adjustments			8,909								16,030								6,732								11,188
Non-GAAP operating income
Net sales			659,619								662,049								481,302								485,051
Cost of sales			229,475				34.8	%			220,246				33.3	%			127,376				26.5	%			122,574				25.3	%
Operating wage and fringe benefit expenses			207,185				31.4	%			205,270				31.0	%			186,818				38.8	%			185,628				38.3	%
Other operating expenses			99,219				15.0	%			98,415				14.9	%			84,945				17.6	%			83,326				17.2	%
Selling, general and administrative expenses			66,307				10.1	%			65,632				9.9	%			36,874				7.7	%			34,983				7.2	%
Depreciation and amortization expense			39,448				6.0	%			35,562				5.4	%			30,130				6.3	%			28,958				6.0	%
Impairment of assets held for sale			—				—	%			—				—	%			—				—	%			—				—	%
Total non-GAAP operating income			17,985				2.7	%			36,924				5.6	%			15,159				3.1	%			29,582				6.1	%

 

11

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		BEF Foods
		Six Months Ended
		Oct 24, 2014				% of Sales				Oct 25, 2013				% of Sales
Operating income as reported
Net sales			178,317								176,998
Cost of sales			102,099				57.3	%			97,672				55.2	%
Operating wage and fringe benefit expenses			20,367				11.4	%			19,642				11.1	%
Other operating expenses			14,274				8.0	%			15,056				8.5	%
Selling, general and administrative expenses			31,610				17.7	%			32,524				18.4	%
Depreciation and amortization expense			9,318				5.2	%			6,604				3.7	%
Impairment of assets held for sale			—				—	%			3,000				1.7	%
Total as Reported			649				0.4	%			2,500				1.4	%
Adjustments
Net sales			—								—
Cost of sales			—								—
Operating wage and fringe benefit expenses			—								—
Other operating expenses			—								33
Selling, general and administrative expenses			(2,177	)							(1,875	)
Depreciation and amortization expense			—								—
Impairment of assets held for sale			—								(3,000	)
Total adjustments			2,177								4,842
Non-GAAP operating income
Net sales			178,317								176,998
Cost of sales			102,099				57.3	%			97,672				55.2	%
Operating wage and fringe benefit expenses			20,367				11.4	%			19,642				11.1	%
Other operating expenses			14,274				8.0	%			15,089				8.5	%
Selling, general and administrative expenses			29,433				16.5	%			30,649				17.3	%
Depreciation and amortization expense			9,318				5.2	%			6,604				3.7	%
Impairment of assets held for sale			—				—	%			—				—	%
Total non-GAAP operating income			2,826				1.6	%			7,342				4.1	%

 

12

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		Consolidated Results
		Three Months Ended
		October 24, 2014				% of sales				October 25, 2013				% of sales
										(as adjusted)				(as adjusted)
Net sales		$	333,279							$	332,600
Cost of sales			116,012				34.8	%			113,605				34.2	%
Operating wage and fringe benefit expenses			102,785				30.8	%			101,971				30.7	%
Other operating expenses			49,973				15.0	%			49,460				14.9	%
Selling, general and administrative expenses			36,022				10.8	%			36,617				11.0	%
Depreciation and amortization expense			19,475				5.8	%			18,281				5.5	%
Impairment of assets held for sale			—				—	%			3,771				1.1	%
Operating income			9,012				2.7	%			8,895				2.7	%
Net interest expense (income)			2,203				0.7	%			140				—	%
(Loss) income before income taxes			6,809				2.0	%			8,755				2.6	%
(Benefit) provision for income taxes			770				0.2	%			2,502				0.8	%
(Loss) income from continuing operations			6,039				1.8	%			6,253				1.9	%
Loss from discontinued operations, net of income taxes			—				—	%			(134	)			—	%
Net loss (income)		$	6,039				1.8	%		$	6,119				1.8	%
Earnings per share—Net (loss) income
Basic		$	0.26							$	0.23
Diluted		$	0.25							$	0.23
Cash dividends paid per share		$	0.310							$	0.310
Weighted average shares outstanding
Basic			23,509								27,086
Dilutive Shares			226								98
Diluted			23,735								27,184
Shares outstanding at quarter end			23,600								26,463

The number of dilutive shares outstanding at October 24, 2014 that were not included in the computation of dilutive earnings per share, because to do so would have been antidilutive, were 42,354 shares for the three months ended October 24, 2014.

Income taxes related to continuing operations, as a percentage of pre-tax income, were 11.3% vs 28.6%.

 

		Three Months Ended
		Bob Evans Restaurants																BEF Foods
		October 24, 2014								October 25, 2013								October 24, 2014								October 25, 2013
Net sales		$	241,151							$	240,500							$	92,128							$	92,100
Cost of sales			64,165				26.6	%			59,921				24.9	%			51,847				56.3	%			53,684				58.3	%
Operating wage and fringe benefit expenses			92,006				38.2	%			91,954				38.2	%			10,779				11.7	%			10,017				10.9	%
Other operating expenses			42,702				17.7	%			42,013				17.5	%			7,271				7.9	%			7,447				8.1	%
Selling, general and administrative expenses			20,777				8.6	%			19,213				8.0	%			15,245				16.5	%			17,404				18.9	%
Depreciation and amortization expense			14,789				6.1	%			14,716				6.1	%			4,686				5.1	%			3,565				3.9	%
Impairment of assets held for sale			—				—	%			771				0.3	%			—				—	%			3,000				3.3	%
Operating income (loss)		$	6,712				2.8	%		$	11,912				5.0	%		$	2,300				2.5	%		$	(3,017	)			(3.3	)%

 

13

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		Consolidated Results
		Six Months Ended
		October 24, 2014				% of sales				October 25, 2013				% of sales
										(as adjusted)				(as adjusted)
Net sales		$	659,619							$	662,049
Cost of sales			229,475				34.8	%			220,246				33.3	%
Operating wage and fringe benefit expenses			207,214				31.4	%			204,817				30.9	%
Other operating expenses			99,481				15.1	%			98,382				14.9	%
Selling, general and administrative expenses			74,667				11.3	%			69,819				10.5	%
Depreciation and amortization expense			39,448				6.0	%			35,511				5.4	%
Impairment of assets held for sale			258				—	%			12,380				1.9	%
Operating income			9,076				1.4	%			20,894				3.2	%
Net interest expense (income)			3,819				0.6	%			(16	)			—	%
(Loss) income before income taxes			5,257				0.8	%			20,910				3.2	%
(Benefit) provision for income taxes			234				—	%			6,281				0.9	%
(Loss) income from continuing operations			5,023				0.8	%			14,629				2.2	%
Loss from discontinued operations, net of income taxes			—				—	%			(134	)			—	%
Net loss (income)		$	5,023				0.8	%		$	14,495				2.2	%
Earnings per share—Net (loss) income
Basic		$	0.21							$	0.53
Diluted		$	0.21							$	0.53
Cash dividends paid per share		$	0.620							$	0.585
Weighted average shares outstanding
Basic			23,467								27,287
Dilutive Shares			231								115
Diluted			23,698								27,402
Shares outstanding at quarter end			23,600								26,463

The number of dilutive shares outstanding at October 24, 2014 that were not included in the computation of dilutive earnings per share, because to do so would have been antidilutive, were 43,953 shares for the six months ended October 24, 2014.

Income taxes related to continuing operations, as a percentage of pre-tax income, were 4.5% vs 30.0%.

 

		Six Months Ended
		Bob Evans Restaurants																BEF Foods
		October 24, 2014								October 25, 2013								October 24, 2014								October 25, 2013
Net sales		$	481,302							$	485,051							$	178,317							$	176,998
Cost of sales			127,376				26.5	%			122,574				25.3	%			102,099				57.3	%			97,672				55.2	%
Operating wage and fringe benefit expenses			186,847				38.8	%			185,175				38.2	%			20,367				11.4	%			19,642				11.1	%
Other operating expenses			85,207				17.7	%			83,326				17.2	%			14,274				8.0	%			15,056				8.5	%
Selling, general and administrative expenses			43,057				8.9	%			37,295				7.7	%			31,610				17.7	%			32,524				18.4	%
Depreciation and amortization expense			30,130				6.3	%			28,907				6.0	%			9,318				5.2	%			6,604				3.7	%
Impairment of assets held for sale			258				0.1	%			9,380				1.9	%			—				—	%			3,000				1.7	%
Operating income (loss)		$	8,427				1.8	%		$	18,394				3.8	%		$	649				0.4	%		$	2,500				1.4	%

 

14

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Consolidated Balance Sheets

 

		(in thousands)
		Unaudited October 24, 2014				April 25, 2014
Assets
Current Assets
Cash and equivalents		$	3,737			$	7,826
Accounts receivable, net			30,582				30,688
Inventories			27,977				25,243
Deferred income taxes			18,656				18,656
Federal and state income tax receivables			25,133				25,824
Prepaid expenses			5,599				4,281
Current assets held for sale			5,221				3,308
Total Current Assets			116,905				115,826
Property, Plant and Equipment			1,620,776				1,588,790
Less accumulated depreciation			749,650				715,867
Net Property, Plant and Equipment			871,126				872,923
Other Assets
Deposits and other			4,543				3,442
Long-term note receivable			17,366				16,243
Long-term investments			33,275				31,972
Goodwill			19,634				19,634
Other intangible assets			3,192				3,270
Long-term assets held for sale			—				2,251
Total Other Assets			78,010				76,812
Total Assets		$	1,066,041			$	1,065,561
Liabilities and Stockholders’ Equity
Current Liabilities
Credit facility borrowings		$	—			$	458,898
Current portion of long-term debt			369				—
Accounts payable			32,901				29,064
Accrued property, plant and equipment purchases			8,430				5,841
Accrued non-income taxes			15,111				17,843
Accrued wages and related liabilities			19,974				21,574
Self-insurance			20,619				19,874
Deferred revenue			11,192				12,967
Other accrued expenses			31,055				33,024
Total Current Liabilities			139,651				599,085
Long-Term Liabilities
Deferred compensation			39,727				35,731
Federal and state income taxes			4,895				4,959
Deferred income taxes			32,829				32,829
Deferred rent and other			6,560				6,534
Long-term debt			468,344				835
Total Long-Term Liabilities			552,355				80,888
Stockholders’ Equity
Common stock, $.01 par value; authorized 100,000 shares; issued 42,638 shares at October 24, 2014, and April 25, 2014			426				426
Capital in excess of par value			222,711				225,562
Retained earnings			840,039				849,619
Treasury stock, 19,038 shares at October 24, 2014, and 19,175 shares at April 25, 2014, at cost			(689,141	)			(690,019	)
Total Stockholders’ Equity			374,035				385,588
Total Liabilities and Stockholders’ Equity		$	1,066,041			$	1,065,561

 

15

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Consolidated Statements of Cash Flows (unaudited)

 

		(in thousands)
		Six Months Ended
		October 24, 2014				October 25, 2013
						(as adjusted)
Operating activities:
Net income		$	5,023				14,495
Less loss from discontinued operations			—				134
Income from continuing operations			5,023				14,629
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			39,448				35,511
Impairment of assets held for sale			258				12,380
(Gain) / Loss on disposal and impairment of held and used fixed assets			943				1,484
(Gain) on long-term investments			(1,233	)			(777	)
Deferred compensation			880				(1,066	)
Stock based compensation			1,888				3,578
Accretion on long-term note receivable			(903	)			(1,081	)
Amortization of deferred financing costs			448				130
Cash provided by (used for) assets and liabilities:
Accounts receivable			106				(3,713	)
Inventories			(2,734	)			676
Prepaid expenses			(1,318	)			(602	)
Accounts payable			3,837				(1,193	)
Federal and state income taxes			627				8,614
Accrued wages and related liabilities			(1,600	)			(2,490	)
Self-insurance			745				434
Accrued non-income taxes			(2,732	)			3,760
Deferred revenue			(1,775	)			(1,891	)
Other assets and liabilities			(1,932	)			2,696
Net cash provided by operating activities			39,976				71,079
Investing activities:
Purchase of property, plant and equipment			(36,955	)			(117,673	)
Proceeds from sale of property, plant and equipment			1,108				5,638
Deposits and other			(261	)			5
Net cash used in investing activities			(36,108	)			(112,030	)
Financing activities:
Cash dividends paid			(14,603	)			(16,008	)
Net increase in credit facility			6,138				116,794
Proceeds from long-term debt			3,000				—
Payments of debt issuance costs			(1,279	)			—
Principal payments on long-term debt			(167	)			—
Purchase of treasury stock			—				(75,490	)
Proceeds from issuance of stock awards and treasury stock			239				11,148
Cash paid for net shares settled			(1,768	)			(2,306	)
Excess tax benefits from stock-based compensation			483				2,651
Net cash (used in) provided by financing activities			(7,957	)			36,789
Net cash (used in) operations			(4,089	)			(4,162	)
Net cash (used in) operating activities of discontinued operations			—				(134	)
Net cash (used in) discontinued operations			—				(134	)
Cash and equivalents at the beginning of the period			7,826				9,010
Cash and equivalents at the end of the period		$	3,737			$	4,714

 

16

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Bob Evans Restaurants openings and closings, by quarter

Future quarters represent estimates for fiscal 2015

 

Fiscal Year		Beginning Total				Q1				Q2				Q3				Q4				Full Year				Closings				Ending Total
2015			561				1				—				4				2				7				—				568
2014			560				1				1				1				1				4				3				561
2013			565				2				—				—				—				2				7				560
2012			563				—				2				—				2				4				2				565
2011			569				—				—				—				2				2				8				563

Bob Evans Restaurants same-store sales analysis (18-month core; 557 restaurants)

 

		Fiscal 2015												Fiscal 2014												Fiscal 2013
		Total				Pricing / Mix				Traffic				Total				Pricing / Mix				Traffic				Total				Pricing / Mix				Traffic
May			(1.6	)			1.5				(3.1	)			(0.9	)			3.0				(3.9	)			0.7				2.2				(1.5	)
June			(2.0	)			2.4				(4.4	)			0.3				3.0				(2.7	)			(0.3	)			1.9				(2.2	)
July			(2.3	)			1.6				(3.9	)			(1.0	)			3.8				(4.8	)			2.3				0.9				1.4
Q1			(2.0	)			1.8				(3.8	)			(0.6	)			3.3				(3.9	)			1.0				1.6				(0.6	)
August			(2.5	)			1.0				(3.5	)			(0.7	)			4.2				(4.9	)			1.5				0.9				0.6
September			1.8				1.0				0.8				(2.0	)			3.8				(5.8	)			(0.4	)			1.4				(1.9	)
October			0.4				1.0				(0.6	)			(2.9	)			2.2				(5.0	)			1.6				3.1				(1.5	)
Q2			0.0				1.1				(1.1	)			(1.9	)			3.3				(5.2	)			1.0				1.9				(0.9	)
November															0.4				2.2				(1.8	)			2.1				2.8				(0.7	)
December															(1.7	)			2.2				(3.9	)			(0.5	)			2.7				(3.2	)
January															(4.7	)			2.2				(6.9	)			3.1				2.7				0.4
Q3															(1.8	)			2.2				(3.9	)			1.6				2.8				(1.2	)
February															(6.7	)			1.9				(8.6	)			(4.0	)			3.1				(7.1	)
March															(3.6	)			1.5				(5.1	)			3.6				3.5				0.1
April															(2.7	)			1.5				(4.2	)			1.7				3.4				(1.7	)
Q4															(4.1	)			1.6				(5.8	)			0.5				3.4				(2.8	)
Fiscal year			(1.0	)			1.5				(2.5	)			(2.1	)			2.6				(4.7	)			1.0				2.4				(1.4	)

 

17

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Bob Evans Restaurants key restaurant sales data (core restaurants only)

 

		Bob Evans Restaurants
Average annual store sales ($)—FY14		$	1,706,000
Q2 FY2015 day part mix (%):
Breakfast			33	%
Lunch			37	%
Dinner			30	%
Q2 FY2015 dine-in check average per guest ($):
Breakfast		$	9.06
Lunch		$	9.58
Dinner		$	9.67
Q2 FY2015 dine-in check average per guest ($):		$	9.43
Q2 FY2015 dine-in check average per ticket ($):		$	18.38
Q2 FY2015 carry-out check average per ticket ($):		$	15.18

 

18

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BEF Foods historical sow cost review (average cost per hundredweight)

 

Fiscal Year		Q1				Q2				Q3				Q4				Average
2015		$	87.87			$	78.82											$	83.03
2014		$	63.24			$	77.33			$	72.36			$	78.47			$	73.23
2013		$	54.19			$	43.22			$	58.72			$	59.07			$	53.87
2012		$	57.06			$	67.82			$	60.56			$	60.41			$	61.58
2011		$	59.52			$	60.47			$	51.16			$	59.05			$	57.17

BEF Foods total pounds sold review

 

Fiscal Year		Q1				Q2				Q3				Q4				Average
2015			(6.1	)%			(4.5	)%											(5.3	)%
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	%
2011			(1.1	)%			(14.7	)%			(7.9	)%			(4.6	)%			(7.1	)%

BEF Foods total pounds sold, by category

Fiscal 2015

 

Category		Q1				Q2				Q3		Q4
Sausage			19.3	%			20.5	%
Sides			42.0	%			45.9	%
Frozen			4.6	%			5.0	%
Food Service			30.0	%			24.0	%
Other			4.1	%			4.6	%

Fiscal 2014

 

Category		Q1				Q2				Q3				Q4
Sausage			22.3	%			23.5	%			29.5	%			21.5	%
Sides			39.4	%			40.2	%			40.7	%			43.9	%
Frozen			5.0	%			5.1	%			4.8	%			4.8	%
Food Service			29.7	%			27.5	%			21.5	%			25.7	%
Other			3.6	%			3.7	%			3.5	%			4.1	%

BEF Foods net sales review (dollars in thousands)

 

		Q2 2015				Q2 2014
Gross sales		$	104,608			$	104,243
Less: promotions			(11,488	)			(11,616	)
Less: returns and slotting			(992	)			(527	)
Net sales		$	92,128			$	92,100

 

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