Bob Evans Farms Inc.
) has announced fourth quarter 2012 adjusted earnings of 80 cents
per share, surpassing the Zacks Consensus Estimate as well as
year-ago earnings of 73 cents per share. On a GAAP basis, earnings
were 76 cents versus 60 cents recorded a year before.
In full-fiscal 2012, adjusted earnings were $2.54 versus $2.22
earned in 2011. On a GAAP basis, earnings were $2.45 versus $1.78
in 2011. The better-than-expected results were mainly driven by
cost-control initiatives by the company.
The Columbus, Ohio-based company that owns and operates under
the brands Bob Evans and Mimi's Cafes posted adjusted net sales of
$406.5 million. Net sales in the quarter under review fell short of
both the Zacks Consensus Estimate of $418.0 million and the
year-over-year sales of $418.7 million hurt by net sales decline in
the Foods segment. Waning same-store sales (comps) at Mimi's Cafe
and at Bob Evans Restaurants also dampened sales growth. Same
store-sales at Bob Evans restaurants dipped 0.6% while Mimi's
Cafe's comps plunged 3.1%.
Segment wise, net sales at Bob Evans Restaurant was down 0.7% at
$239.6 million while sales at Mimi's Café recorded an even steeper
decline of 3.1% to $93.7 million. Food segment's net sales dropped
the most by 9.2% to $73.2 million. The change in timing of the
Easter holiday compared to the prior year adversely affected the
Food segment, by around $1.0 million in sales.
Cost of sales fell 40 basis points (bps) from the year-ago
quarter to 30.3% due to cost saving initiatives and minimal pricing
action that helped to counter higher raw material costs. Other
operating expenses fell 40 bps to 15.2% and selling general and
administrative expense decreased 20 bps to 8.8%. However, operating
wages increased 90 bps to 32.8%.
Consolidated operating margin dropped 40 bps to 7.5% due to
sales de-leverage at Mimi Cafes and Foods segment coupled with
higher promotional discount in the Foods segment. Adjusted
operating income of Bob Evans fell 7.0% year over year to $30.6
million. Mix also suffered in the quarter, as higher priced sausage
was down while lower-priced food service was up.
During the reported quarter, the company opened two new Bob
Evans restaurants, revamped 39 outlets and rebuilt one. Thus, at
the end of the quarter, the company operated 565 Bob Evans
restaurants and 145 Mimi's Cafe restaurants. The company did not
open or build any Mimi's Cafe during the quarter but remodeled one
For 2013, the company plans $150-$160 million of capital
At the end of the quarter, cash and cash equivalents were $35.9
million, long-term debt was $97.1 million and stockholders' equity
was $656.6 million.
During the fourth quarter, the chain bought back 619,000 shares
with an average share price of $37.56.
The company expects to exercise its remaining $29.5 million of
share repurchase activity during fiscal 2013.
For fiscal 2013, Bob Evans Farms expects earnings per share in
the range of $2.66 to $2.72. The company also reaffirmed its
revenue guidance of $1.7 billion and long-term earnings per share
growth of 7% to 10%.
The company expects same-store sales at Bob Evans restaurants to
grow 1% to 3%. Same-store sales growth at Mimi's Cafe restaurants
is estimated in the range of negative 2% to 1%. Net sales of the
Food Product segment are projected in the range of $340 million to
$360 million in 2013 buoyed by potential strength in side dish.
While the company's cost saving efforts are appreciable, its
slackened revenue is the pocket of weakness. Mimi's Cafes specially
need some measures to bolster sales. The company' is being wary of
its competitors due to intensive promotional environment.
However, the company's long-term initiatives look promising.
Recently, the company revealed its plan to close two Foods'
production plants in the second quarter of fiscal 2014 which will
augur well for its earnings.
Bob Evans, which competes with the likes of
Brinker International Inc.
), currently retains a Zacks #2 Rank (short-term Buy rating). We
are maintaining our long-term Neutral recommendation on the
BOB EVANS FARMS (BOBE): Free Stock Analysis
BRINKER INTL (EAT): Free Stock Analysis Report
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