Post Earnings Coverage as Bob Evans Revenue from Continuing Operations Increased 4.6%; Raised Earnings Outlook

Upcoming AWS Coverage on Jack in the Box Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 22, 2017 / Active Wall St. announces its post-earnings coverage on Bob Evans Farms, Inc. (NASDAQ: BOBE). The Company announced its third quarter fiscal 2017 financial results on March 08, 2017. The restaurant chain missed top- and bottom-line estimates. On January 24, 2017, the Company entered into a definitive agreement with an affiliate of Golden Gate Capital to sell its Bob Evans Restaurants business. The results of operations of Bob Evans Restaurants (“BER”) have been treated as discontinued operations and all GAAP financial statement items for the current and prior periods reflect BER as a discontinued business. Register with us now for your free membership at:

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One of Bob Evans Farms’ competitors within the Restaurants space, Jack in the Box Inc. (NASDAQ: JACK), reported on February 22, 2017, earnings results for the first quarter ended January 22, 2017. AWS will be initiating a research report on Jack in the Box in the coming days.

Today, AWS is promoting its earnings coverage on BOBE; touching on JACK. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended January 27, 2017, Bob Evans’ net sales from continuing and discontinued operations totaled $335.95 million compared to net sales from continuing and discontinued operations of $346.51 in Q3 FY16. The Company’s sales came in below analysts’ consensus of $345 million.

Bob Evans reported net income of $8.2 million, or $0.41 per diluted share, for Q3 FY17 compared with net income of $12.9 million, or $0.62 per diluted share, in Q3 FY16. The Company’s non-GAAP net income was $15.0 million, or $0.75 per diluted share, in the reported quarter compared with net income of $12.9 million, or $0.62 per diluted share, in the corresponding period last year. The Company’s adjusted earnings per share came in marginally below market estimates of $0.76.

Bob Evans’ GAAP net income in Q3 FY17 consisted of $9.8 million from continuing operations and a $1.6 million loss from discontinued operations. Non-GAAP net income in the reported quarter included $10.8 million from continuing operations and $4.2 million from discontinued operations. The Company’s GAAP diluted earnings per share in Q3 FY17 consisted of $0.49 from continuing operations and a loss of $0.08 from discontinued operations. Bob Evans’ non-GAAP diluted earnings per share in Q3 FY17 comprised of $0.54 from continuing operations and $0.21 from discontinued operations.

Summary – Continuing Operations

For Q3 FY17, Bob Evans’ net sales from continuing operations were $112.8 million, up 4.6% compared to $107.9 million in Q3 FY16. Pounds sold increased 7.6% while average net selling price per pound declined 2.8% compared to the corresponding period last year. The decline in average net selling price reflects an increased sales mix of lower-priced, although higher-margin, side-dish products relative to sausage, as well as reduced net sausage pricing. From a net sales perspective, a 13.1% increase in side-dish pounds sold, a 2.8% increase in sausage pounds sold, and a 6.1% increase in external food service pounds sold were partially offset by a $1.6 million increase in trade spending (reduces net sales), and a 4.3% decline in frozen product pounds sold compared to the corresponding period last year.

Bob Evans’ GAAP operating income from continuing operations was $17.1 million for Q3 FY17 compared to $11.4 million in Q3 FY16. The Company’s non-GAAP operating income from continuing operations was $19.5 million in the reported quarter compared to $11.4 million in the corresponding period last year.

Summary – discontinued operations

Bob Evans’ net sales from discontinued operations were $223.1 million for Q3 FY17, down 6.5%, compared to net sales of $238.6 million in Q3 FY16. Same-store sales declined 2.6% with the balance of the net sales decline due to net restaurant closures during the past year. No restaurants were closed and one restaurant opened during the reported quarter. The Company operated 523 restaurants at the end of Q3 FY17.

Balance Sheet

Bob Evans cash balance and outstanding debt at the end of Q3 FY17 were $2.4 million and $330.1 million, respectively, compared to $6.3 million and $496.0 million at the end of Q3 FY16. The decrease in borrowings was primarily the result of the use of proceeds from recent real estate monetization transactions and operating cash flow to reduce debt, partially offset by share repurchases, capital expenditures, and dividend payments. On a pro-forma basis, assuming the 2016 sale-leaseback transactions occurred at the beginning of fiscal 2016, the Company’s quarter-end leverage ratio was 2.66.

Fiscal year 2017 outlook

Bob Evans raised its consolidated non-GAAP diluted earnings per share range to $2.22 to $2.32 from $2.15 to $2.30 per share previously, to reflect the impact of lower net sow costs and continued focus on operating efficiency.

Stock Performance

On Tuesday, March 21, 2017, the stock closed the trading session at $61.67, marginally up 0.98% from its previous closing price of $61.07. A total volume of 342.06 thousand shares have exchanged hands, which was higher than the 3-month average volume of 263.41 thousand shares. Bob Evans Farms’ stock price surged 15.00% in the last three months, 64.33% in the past six months, and 35.69% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 16.58%. The stock is trading at a PE ratio of 62.36 and has a dividend yield of 2.21%.

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