Bob Evans Farms, Inc. (BOBE)

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Bob Evans Farms, Inc. (BOBE)

F4Q08 Earnings Call and Analyst Day

June 4, 2008 1:00 pm ET


Donald J. Radkoski - Chief Financial Officer, Secretary, Treasurer

David D. Poplar - Investor Relations

Mike Townsley - Vice President, Food Products Division

Steven A. Davis - Chairman of the Board, Chief Executive Officer


Will Hamilton - SMH Capital

Presentation on F4Q08 and Fiscal Year 2008 Results

Donald J. Radkoski

First of all, good afternoon, everyone. I would like to just start off firstly, welcome to all those who have traveled and came to join us. It is a pleasure to have you here and anxious about our first analyst day, as Dave mentioned.

I would like to just really just briefly go through really the highlights of the fourth quarter and for the fiscal year and give some really high level -- as Dave said, we’re not going to go into as much detail as we might on a quarterly call but we will hit some of the highlights and then I will spend a little bit of time talking about some of the key drivers.

First just from an overall standpoint, as you stand back and you think about the 2008 trends, you can -- Bob Evans Restaurants I think the overriding theme and food products really somewhat outperformed our expectations. You know, Mimi’s certainly faced difficult comparisons and key regions that we’re in at Mimi’s, you know, the sub-prime areas and we’ll talk more about that later.

And then, overriding as you think about, and I heard Steve say it two or three times, the concept of productivity and how do we work in the middle of the P&L in terms of delivering results in a really difficult cost environment, so that’s kind of our themes.

I am happy to report to you today as you look at our fourth quarter results, we came in at $0.52 on a reported basis and you can see that above the $0.42, or a $0.10 increase, 23.8% increase in earnings per share for the fourth quarter.

Included in those results were about $700,000 in gains on the sale of assets in the fourth quarter, and that compares with $200,000 in the fourth quarter a year ago.

Kind of jumping to the full year now versus when you look at our diluted earnings per share, you see that the total of $1.95, we are -- an increase of $0.29 -- are up 17.5%, so a nice improvement over fiscal 2007.

And I thought we would just point out to you that included in those numbers would be $5.1 million of pretax impact compared to 4.4 last year of what we consider special items. That would include the breakage of $6.6 million that we had in the third quarter, which was a plus to sales. We also had ready-to-serve closings in the third quarter, about $3.7 million, a third-party dispute, about $700,000. And then gains on sale, you can see we are at $2.9 million compared to 4.4. And just a quick comment there -- it is becoming much more difficult in today’s environment with the real estate market really to garner the [gains] and you have seen they’ve slowed down considerably from ’07 to ’08 and in our ’09 guidance that I will talk about later, we really haven’t factored any real estate gains or any -- they might be minimal but any real significant gains into those numbers.

This is the good news chart and Steve really touched on it with Bob Evans same-store sales, you can see up 1.8%. Our menu for the year would be about 2.5%. Our current menu is at 2.4%, so really this is just a credit certainly to our team in terms of delivering on the pipeline in the restaurants. It’s just good ready-to-serve operations that just helped drive these numbers, but up 1.8% for the full fiscal year.

As you look at Mimi’s Cafes, you can see for the full year down 2.4 and really the trend getting tougher, and we’ll talk some about that a little later, but the trend getting tougher, down 5.3% in the fourth quarter.

On a food product side, and this is probably one of the best charts -- again, Steve mentioned 25 quarters. It is pretty amazing that we’ve been able to stack up that many quarter upon quarter of increase driven pounds sold, and that has really helped drive the profitability in the food products group.

If you stand back and you look at the really kind of the trends that we are seeing on the restaurant side, there is no question we are in a difficult consumer environment. I don’t think anybody could argue that one. The commodities environment, I don’t think it’s much tougher than it seems like it’s been the last year in terms of the cost side of the equation. There’s not a whole lot of -- if any items that we consider going down. We are paying higher price for labor in our restaurants. Just to give you an idea, Bob Evans average was 4.2% higher at Bob Evans and 5.9% higher at Mimi’s. That’s just inflationary increases that we are having in labor rates, so the labor is much more expensive.

But when you look at the productivity initiatives, and that is where it’s kind of a tail of two cities. We have a tough cost environment but we’ve been able to offset it with productivity initiatives that really have made the difference.

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