Bob Evans Farms, Inc. (BOBE)

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Bob Evans Farms Inc. (BOBE)

F3Q09 Earnings Call

February 11, 2009 10:00 am ET


David Poplar – Vice President of Investor Relations

Steve Davis – Chairman of the Board & Chief Executive Officer

Donald J. Radkoski – Chief Financial Officer

Tod P. Spornhauer – Senior Vice President of Finance & Controller


Michael Gallo - C.L. King & Associates, Inc.

Brad Ludington - Keybanc Capital Markets

Will Hamilton - SMH Capital

Stephen Anderson - MKM Partners LLC

Greg Ruedy - Stephens, Inc.

[Michael Toladano – GTHC]



Good morning. My name is Cynthia and I will be your conference operator today. At this time I would like to welcome everyone to the Bob Evans Farms third quarter earnings release conference call. (Operator Instructions) I would now like to turn today’s call over to David Poplar, Vice President of Investor Relations. Please go ahead sir.

David Poplar

Good morning and thank you for joining us today for the Bob Evans third quarter 2009 conference call. This is Dave Poplar and I’m here with Steve Davis, Chairman of the Board and Chief Executive Officer; Don Radkoski, our Chief Financial Officer; and Tod Spornhauer, our Senior Vice President of Finance and Controller. We will start with some prepared remarks and then we’ll open up the call for questions.

Our comments today contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include projections regarding anticipated future results. A number of risks and uncertainties could cause actual results to differ materially from these forward-looking statements. Please refer to our recent filings with the Securities and Exchange Commission for a discussion of these risk factors. We caution investors not to place undue reliance on forward-looking statements which speak only as of the date of this presentation. We undertake no obligation to update our forward-looking statements to reflect future events, circumstances and such.

And finally some of our comments today will refer to non-GAAP financial measures. In accordance with the Securities and Commission’s Regulation G, we have presented a reconciliation of any non-GAAP information to the most directly comparable GAAP financial measure in our current report on Form 8-K filed with the SEC today. You can also find this reconciliation in yesterday’s earning release which is available on the Investor Relations section of our corporate website at

And with that I’ll now turn the call over to Steve.

Steve Davis

Thanks Dave and good morning everyone and thank you for joining us as we discuss our third quarter financial results. I’m going to start with a few highlights and then Tod will provide us with the financial details on the quarter. As you saw in our release we have reaffirmed our guidance for fiscal 2009 and Don will provide you with more information about the assumptions underlying our current estimate. After that I’ll have an update on the progress of our best brand builders and then we’ll be happy to take your questions.

The key take-away I’d like to leave you with is that after we exclude the impact of certain charges in the quarter, our operating performance essentially met our expectations and these results have given us the confidence to reaffirm our guidance for the year.

For the third quarter of 2009, we reported an operating loss of $46.4 million and a net loss of $51.4 million. These results include the negative pretax impact of $75.3 million in charges which Tod will explain in greater detail in a few minutes. In the third quarter last year we reported operating income of $32.7 million and net income of $20 million.

Excluding the $75.3 million in net charges this quarter, our fiscal 2009 third quarter operating loss of $46.4 million would instead have been operating income of $28.9 million, which compares to adjusted operating income of $30.4 million in the third quarter of fiscal 2008. Tod will reconcile both of these numbers for you momentarily.

In our Restaurant segment, average same store sales at Bob Evans were down 1.3% in the quarter. At Mimi’s Café our average same store sales were down 6.8%. While net sales were up 3.0% in our food products segment, our operating income was down primarily due to significantly higher sow costs which increased 59% compared to third quarter of fiscal 2008. Tod will explain these issues in more detail now as he reviews the quarter’s financial highlights. Tod.

Tod P. Spornhauer

Thanks Steve and good morning everyone. I’m going to take a few minutes to walk through the income statement to help explain our third quarter financial performance. Please keep in mind that all third quarter fiscal 2008 results expressed as a percentage of net sales reflect the impact of the $6.6 million included in last year’s sales for gift certificate and gift card breakage at Bob Evans Restaurants. This will obviously impact comparisons to this year’s performance as will the 2009 items that I will mention as we go along.

I will start by discussing consolidated results, followed by the results of our two business segments. Consolidated net sales for the quarter were $443.8 million, down 1.3% compared to $449.7 million in the third quarter of fiscal 2008. The decrease reflects same store sales declines at both Bob Evans Restaurants and Mimi’s Café, partially offset by new Restaurant openings at Mimi’s Café and sales increases in the food products segment. Also affecting the comparison was the previously mentioned $6.6 million in pretax income for gift card breakage which benefited the net sales line in last year’s third quarter.

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