Bob Evans Farms, Inc. (Exact name of registrant as specified in its charter) |
Delaware | 0-1667 | 31-4421866 |
(State or other jurisdiction of incorporation or organization) | (Commission File No.) | (I.R.S. Employer Identification No.) |
BOB EVANS FARMS, INC. | |||
Date: December 6, 2017 | By: | /s/ Mark E. Hood | |
Mark E. Hood, Chief Financial Officer and Chief Administrative Officer |
▪ | Net sales increase 22.3 percent to $117.6 million compared to $96.2 million1 in the comparable period in fiscal 2017; net sales increased 6.2 percent excluding Pineland net sales and sales to Bob Evans Restaurants (now 3rd party); |
▪ | Retail side-dish and sausage pounds-sold increased 15.9 percent (excluding Pineland) and 4.5 percent, respectively, when compared to the comparable period last year; |
▪ | GAAP net income of $0.11 per diluted share compared to net loss per share of $0.211 in the prior year. Non-GAAP net income of $0.35 per diluted share, an increase of 16.7 percent compared to $0.301 in the prior year; |
▪ | Adjusted EBITDA decreased 1.9 percent to $17.7 million as compared to $18.0 million1 in the comparable period in fiscal 2017; |
▪ | On September 18, 2017, the Company and Post Holdings entered into a definitive agreement in which Post will acquire Bob Evans for $77 per share. |
▪ | Quarterly dividend of $0.34 per share payable on December 22, 2017, to stockholders of record at the close of business on December 11, 2017. |
(in thousands, except per share amounts) | Basic EPS | Diluted EPS | |||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||||||||
Operating Income as Reported | |||||||||||||||||||||||
Operating income | $ | 2,643 | $ | (4,768 | ) | ||||||||||||||||||
Net interest expense | 1,015 | 1,335 | |||||||||||||||||||||
Income (Loss) from Continuing Operations Before Taxes | 1,628 | (6,103 | ) | ||||||||||||||||||||
Benefit for income taxes from continuing operations | (622 | ) | (1,969 | ) | |||||||||||||||||||
Net Income (Loss) from Continuing Operations as Reported | 2,250 | (4,134 | ) | $ | 0.11 | $ | (0.21 | ) | $ | 0.11 | $ | (0.21 | ) | ||||||||||
Income before taxes from discontinued operations | — | 5,830 | |||||||||||||||||||||
Provision for income taxes from discontinued operations | — | 1,478 | |||||||||||||||||||||
Income from Discontinued Operations as Reported | — | 4,352 | $ | — | $ | 0.22 | $ | — | $ | 0.22 | |||||||||||||
Net Income as Reported | 2,250 | 218 | $ | 0.11 | $ | 0.01 | $ | 0.11 | $ | 0.01 | |||||||||||||
Adjustments to Continuing Operations | |||||||||||||||||||||||
Merger related costs | 5,876 | — | |||||||||||||||||||||
Separation costs | 1,352 | — | |||||||||||||||||||||
Integration costs | 22 | — | |||||||||||||||||||||
Impairment | — | 16,000 | |||||||||||||||||||||
Severance/Restructuring | — | 168 | |||||||||||||||||||||
Accretion income on note receivable | — | (1,133 | ) | ||||||||||||||||||||
Total Adjustments to Continuing Operations | 7,250 | 15,035 | |||||||||||||||||||||
Adjustments to Discontinued Operations | |||||||||||||||||||||||
Legal and professional fees | — | 310 | |||||||||||||||||||||
Total Adjustments to Discontinued Operations | — | 310 | |||||||||||||||||||||
Non-GAAP Operating Income from Continuing Operations | 9,893 | 11,400 | |||||||||||||||||||||
Non-GAAP net interest expense | 1,015 | 2,468 | |||||||||||||||||||||
Non-GAAP income from continuing operations before taxes | 8,878 | 8,932 | |||||||||||||||||||||
Adjustments to tax expense from continuing operations | 2,433 | 4,934 | |||||||||||||||||||||
Non-GAAP provision for income taxes from continuing operations | 1,811 | 2,965 | |||||||||||||||||||||
Non-GAAP Net Income from Continuing Operations | 7,067 | 5,967 | $ | 0.35 | $ | 0.30 | $ | 0.35 | $ | 0.30 | |||||||||||||
Non-GAAP income from discontinued operations before taxes | — | 6,140 | |||||||||||||||||||||
Adjustments to tax expense from discontinued operations | — | (555 | ) | ||||||||||||||||||||
Non-GAAP provision for income taxes from discontinued operations | — | 923 | |||||||||||||||||||||
Non-GAAP Net Income from Discontinued Operations | — | 5,217 | $ | — | $ | 0.26 | $ | — | $ | 0.26 | |||||||||||||
Non-GAAP Net Income | $ | 7,067 | $ | 11,184 | $ | 0.35 | $ | 0.56 | $ | 0.35 | $ | 0.56 | |||||||||||
Weighted Average Shares Outstanding | 20,188 | 19,825 | 20,221 | 19,964 |
(in thousands) | ||||||||||||||
Three Months Ended | ||||||||||||||
October 27, 2017 | % of Sales | October 28, 2016 | % of Sales | |||||||||||
Operating Income from Continuing Operations, as Reported | ||||||||||||||
Net Sales | $ | 117,626 | $ | 96,158 | ||||||||||
Cost of goods sold | 82,920 | 70.5 | % | 62,881 | 65.4 | % | ||||||||
Gross Margin | 34,706 | 29.5 | % | 33,277 | 34.6 | % | ||||||||
Advertising and marketing costs | 5,313 | 4.5 | % | 3,543 | 3.7 | % | ||||||||
Selling costs | 4,257 | 3.6 | % | 4,099 | 4.3 | % | ||||||||
Distribution costs | 5,373 | 4.6 | % | 4,674 | 4.9 | % | ||||||||
General and administrative costs | 10,308 | 8.8 | % | 9,522 | 9.9 | % | ||||||||
Amortization of intangible assets | 936 | 0.8 | % | 39 | — | % | ||||||||
Impairment, restructuring and other exit costs | 5,876 | 5.0 | % | 16,168 | 16.8 | % | ||||||||
Operating Income (Loss) | 2,643 | 2.2 | % | (4,768 | ) | (5.0 | )% | |||||||
Non-GAAP Adjustments to Continuing Operations | ||||||||||||||
General and administrative | (1,374 | ) | — | |||||||||||
Impairment, restructuring and other exit costs | (5,876 | ) | (16,168 | ) | ||||||||||
Total Adjustments to Operating Income | 7,250 | 16,168 | ||||||||||||
Non-GAAP Operating Income from Continuing Operations | ||||||||||||||
Net Sales | $ | 117,626 | $ | 96,158 | ||||||||||
Cost of sales | 82,920 | 70.5 | % | 62,881 | 65.4 | % | ||||||||
Gross Margin | 34,706 | 29.5 | % | 33,277 | 34.6 | % | ||||||||
Advertising and marketing | 5,313 | 4.5 | % | 3,543 | 3.7 | % | ||||||||
Selling costs | 4,257 | 3.6 | % | 4,099 | 4.3 | % | ||||||||
Distribution costs | 5,373 | 4.6 | % | 4,674 | 4.9 | % | ||||||||
General and administrative | 8,934 | 7.6 | % | 9,522 | 9.9 | % | ||||||||
Amortization of intangible assets | 936 | 0.8 | % | 39 | — | % | ||||||||
Impairment, restructuring and other exit costs | — | — | % | — | — | % | ||||||||
Total non-GAAP operating income | $ | 9,893 | 8.4 | % | $ | 11,400 | 11.8 | % | ||||||
Depreciation and amortization from Continuing Operations | 7,543 | 5,723 | ||||||||||||
Stock compensation expense from Continuing Operations | 249 | 904 | ||||||||||||
Adjusted EBITDA | $ | 17,685 | $ | 18,027 |
(in thousands, except per share amounts) | Basic EPS | Diluted EPS | |||||||||||||||||||||
Six Months Ended | Six Months Ended | Six Months Ended | |||||||||||||||||||||
October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||||||||
Operating Income (Loss) as Reported | |||||||||||||||||||||||
Operating income | $ | 13,721 | $ | 3,498 | |||||||||||||||||||
Net interest expense | 1,475 | 2,822 | |||||||||||||||||||||
Income from Continuing Operations Before Taxes | 12,246 | 676 | |||||||||||||||||||||
Provision for income taxes from continuing operations | 2,947 | 233 | |||||||||||||||||||||
Net Income from Continuing Operations as Reported | 9,299 | 443 | $ | 0.46 | $ | 0.02 | $ | 0.46 | $ | 0.02 | |||||||||||||
Income before taxes from discontinued operations | 10,857 | ||||||||||||||||||||||
Provision for income taxes from discontinued operations | 1,919 | ||||||||||||||||||||||
Income from Discontinued Operations as Reported | — | 8,938 | $ | — | $ | 0.45 | $ | — | $ | 0.45 | |||||||||||||
Net Income as Reported | 9,299 | 9,381 | $ | 0.46 | $ | 0.47 | $ | 0.46 | $ | 0.47 | |||||||||||||
Adjustments to Continuing Operations | |||||||||||||||||||||||
Merger related costs | 5,876 | — | |||||||||||||||||||||
Separation costs | 1,786 | — | |||||||||||||||||||||
Integration costs | 579 | — | |||||||||||||||||||||
Impairment | — | 16,000 | |||||||||||||||||||||
Severance / Restructuring | (291 | ) | 168 | ||||||||||||||||||||
Accretion income on note receivable | — | (1,133 | ) | ||||||||||||||||||||
Total Adjustments to Continuing Operations | 7,950 | 15,035 | |||||||||||||||||||||
Adjustments to Discontinued Operations | |||||||||||||||||||||||
Legal and professional fees | — | 310 | |||||||||||||||||||||
Store closure costs | — | 807 | |||||||||||||||||||||
Litigation settlement costs | — | (278 | ) | ||||||||||||||||||||
Total Adjustments to Discontinued Operations | — | 839 | |||||||||||||||||||||
Non-GAAP Operating Income from Continuing Operations | 21,671 | 19,666 | |||||||||||||||||||||
Non-GAAP net interest expense | 1,475 | 3,955 | |||||||||||||||||||||
Non-GAAP income before taxes from continuing operations | 20,196 | 15,711 | |||||||||||||||||||||
Adjustments to tax expense from continuing operations | 2,748 | 4,934 | |||||||||||||||||||||
Non-GAAP provision for income taxes from continuing operations | 5,695 | 5,167 | |||||||||||||||||||||
Non-GAAP net income from continuing operations | 14,501 | 10,544 | $ | 0.72 | $ | 0.53 | $ | 0.72 | $ | 0.53 | |||||||||||||
Non-GAAP income before taxes from discontinued operations | — | 11,696 | |||||||||||||||||||||
Adjustments to tax expense from discontinued operations | — | (414 | ) | ||||||||||||||||||||
Non-GAAP (benefit) provision for income taxes from discontinuing operations | — | 1,505 | |||||||||||||||||||||
Non-GAAP net income from discontinued operations | — | 10,191 | $ | — | $ | 0.52 | $ | — | $ | 0.51 | |||||||||||||
Non-GAAP net income | $ | 14,501 | $ | 20,735 | $ | 0.72 | $ | 1.05 | $ | 0.72 | $ | 1.04 | |||||||||||
Weighted Average Shares Outstanding | 20,166 | 19,807 | 20,201 | 19,982 |
(in thousands) | |||||||||||||
Six Months Ended | |||||||||||||
October 27, 2017 | % of Sales | October 28, 2016 | % of Sales | ||||||||||
Operating income from Continuing Operations, as reported | |||||||||||||
Net Sales | $ | 226,891 | $ | 182,099 | |||||||||
Cost of goods sold | 158,746 | 70.0 | % | 120,301 | 66.1 | % | |||||||
Gross Margin | 68,145 | 30.0 | % | 61,798 | 33.9 | % | |||||||
Advertising and marketing costs | 8,377 | 3.7 | % | 6,782 | 3.7 | % | |||||||
Selling costs | 8,690 | 3.8 | % | 7,813 | 4.3 | % | |||||||
Distribution costs | 10,736 | 4.7 | % | 8,623 | 4.8 | % | |||||||
General and administrative costs | 18,908 | 8.4 | % | 18,836 | 10.3 | % | |||||||
Amortization of intangible assets | 1,837 | 0.8 | % | 78 | — | % | |||||||
Impairment, restructuring and other exit costs | 5,876 | 2.6 | % | 16,168 | 8.9 | % | |||||||
Operating Income | 13,721 | 6.0 | % | 3,498 | 1.9 | % | |||||||
Non-GAAP Adjustments to Continuing Operations | |||||||||||||
General and administrative | (2,074 | ) | — | ||||||||||
Impairment, restructuring and other exit costs | (5,876 | ) | (16,168 | ) | |||||||||
Total Adjustments to Operating Income | 7,950 | 16,168 | |||||||||||
Non-GAAP Operating Income from Continuing Operations | |||||||||||||
Net Sales | $ | 226,891 | $ | 182,099 | |||||||||
Cost of goods sold | 158,746 | 70.0 | % | 120,301 | 66.1 | % | |||||||
Gross Margin | 68,145 | 30.0 | % | 61,798 | 33.9 | % | |||||||
Advertising and marketing costs | 8,377 | 3.7 | % | 6,782 | 3.7 | % | |||||||
Selling costs | 8,690 | 3.8 | % | 7,813 | 4.3 | % | |||||||
Distribution costs | 10,736 | 4.7 | % | 8,623 | 4.8 | % | |||||||
General and administrative costs | 16,834 | 7.4 | % | 18,836 | 10.3 | % | |||||||
Amortization of intangible assets | 1,837 | 0.8 | % | 78 | — | % | |||||||
Impairment, restructuring and other exit costs | — | — | % | — | — | % | |||||||
Total non-GAAP operating income | $ | 21,671 | 9.6 | % | $ | 19,666 | 10.8 | % | |||||
Depreciation and amortization from Continuing Operations | 14,989 | 10,859 | |||||||||||
Stock compensation expense from Continuing Operations | 546 | 1,628 | |||||||||||
Adjusted EBITDA | $ | 37,206 | $ | 32,153 |
Three Months Ended | Six Months Ended | ||||||||||||||
October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Net Sales | $ | 117,626 | $ | 96,158 | $ | 226,891 | $ | 182,099 | |||||||
Cost of goods sold | 82,920 | 62,881 | 158,746 | 120,301 | |||||||||||
Gross Margin | 34,706 | 33,277 | 68,145 | 61,798 | |||||||||||
Operating expenses: | |||||||||||||||
Advertising and marketing costs | 5,313 | 3,543 | 8,377 | 6,782 | |||||||||||
Selling costs | 4,257 | 4,099 | 31,132 | 31,198 | |||||||||||
Distribution costs | 5,373 | 4,674 | 44,372 | 37,640 | |||||||||||
General and administrative costs | 10,308 | 9,522 | 8,377 | 6,782 | |||||||||||
Amortization of intangible assets | 936 | 39 | 8,690 | 7,813 | |||||||||||
Impairment, restructuring and other exit costs | 5,876 | 16,168 | 10,736 | 8,623 | |||||||||||
Operating Income (Loss) | 2,643 | (4,768 | ) | 18,908 | 18,836 | ||||||||||
Net interest expense | 1,015 | 1,335 | 1,837 | 78 | |||||||||||
Income (Loss) from Continuing Operations Before Income Taxes | 1,628 | (6,103 | ) | 5,876 | 16,168 | ||||||||||
(Benefit) Provision for income taxes | (622 | ) | (1,969 | ) | 13,721 | 3,498 | |||||||||
Income (Loss) from Continuing Operations | 2,250 | (4,134 | ) | 1,475 | 2,822 | ||||||||||
Income from Discontinued Operations, net of Income Taxes | — | 4,352 | 12,246 | 676 | |||||||||||
Net Income | $ | 2,250 | $ | 218 | $ | 9,299 | $ | 9,381 | |||||||
Earnings Per Share — Income (Loss) from Continuing Operations | |||||||||||||||
Basic | $ | 0.11 | $ | (0.21 | ) | $ | 0.46 | $ | 0.02 | ||||||
Diluted | $ | 0.11 | $ | (0.21 | ) | $ | 0.46 | $ | 0.02 | ||||||
Earnings Per Share — Income from Discontinued Operations | |||||||||||||||
Basic | $ | — | $ | 0.22 | $ | — | $ | 0.45 | |||||||
Diluted | $ | — | $ | 0.22 | $ | — | $ | 0.45 | |||||||
Earnings Per Share — Net Income | |||||||||||||||
Basic | $ | 0.11 | $ | 0.01 | $ | 0.46 | $ | 0.47 | |||||||
Diluted | $ | 0.11 | $ | 0.01 | $ | 0.46 | $ | 0.47 | |||||||
Cash Dividends Paid Per Share | $ | 0.34 | $ | 0.34 | $ | 8.18 | $ | 0.68 | |||||||
Weighted Average Shares Outstanding | |||||||||||||||
Basic | 20,188 | 19,825 | 20,166 | 19,807 | |||||||||||
Dilutive shares | 33 | 139 | 35 | 175 | |||||||||||
Diluted | 20,221 | 19,964 | 20,201 | 19,982 |
Unaudited October 27, 2017 | April 28, 2017 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and equivalents | $ | 1,438 | $ | 210,886 | |||
Accounts receivable, net | 41,782 | 28,071 | |||||
Inventories | 29,709 | 17,210 | |||||
Federal and state income taxes receivable | 15,155 | 2,895 | |||||
Prepaid expenses and other current assets | 6,268 | 6,833 | |||||
Current assets held for sale | 3,334 | 3,334 | |||||
Total Current Assets | 97,686 | 269,229 | |||||
Property, plant and equipment | 296,745 | 244,554 | |||||
Less accumulated depreciation | 133,386 | 113,814 | |||||
Net Property, Plant and Equipment | 163,359 | 130,740 | |||||
Other Assets | |||||||
Deposits and other | 1,896 | 2,118 | |||||
Rabbi trust assets | 23,346 | 22,353 | |||||
Goodwill | 99,829 | 19,634 | |||||
Other intangible assets, net | 35,167 | 39 | |||||
Deferred income tax assets | 5,291 | 5,131 | |||||
Total Other Assets | 165,529 | 49,275 | |||||
Total Assets | $ | 426,574 | $ | 449,244 | |||
Liabilities and Stockholders’ Equity | |||||||
Current Liabilities | |||||||
Current debt payable | $ | 1,588 | $ | 428 | |||
Accounts payable | 24,004 | 13,424 | |||||
Accrued property, plant and equipment purchases | 1,353 | 1,283 | |||||
Accrued non-income taxes | 1,126 | 3,353 | |||||
Accrued wages and related liabilities | 5,933 | 16,404 | |||||
Self-insurance reserves | 4,829 | 7,878 | |||||
Current taxes payable | 1,483 | 27,954 | |||||
Current reserve for uncertain tax provision | 1,481 | 1,481 | |||||
Other accrued expenses | 18,160 | 17,905 | |||||
Total Current Liabilities | 59,957 | 90,110 | |||||
Non-Current Liabilities | |||||||
Deferred compensation | 17,125 | 17,277 | |||||
Reserve for uncertain tax positions | 2,595 | 1,795 | |||||
Deferred income tax liabilities | 18,655 | 50 | |||||
Other non-current liabilities | 29,552 | 6,097 | |||||
Credit facility borrowings and other non-current debt | 125,023 | 2,267 | |||||
Total Non-Current Liabilities | 192,950 | 27,486 | |||||
Stockholders’ Equity | |||||||
Common stock, $0.01 par value; authorized 100,000 shares; issued 42,638 shares at October 27, 2017, and April 28, 2017 | 426 | 426 | |||||
Capital in excess of par value | 258,025 | 260,619 | |||||
Retained earnings | 775,580 | 931,315 | |||||
Treasury stock, 22,663 shares at October 27, 2017, and 22,842 shares at April 28, 2017, at cost | (860,364 | ) | (860,712 | ) | |||
Total Stockholders’ Equity | 173,667 | 331,648 | |||||
Total Liabilities and Stockholders' Equity | $ | 426,574 | $ | 449,244 |
Six Months Ended | |||||||
October 27, 2017 | October 28, 2016 | ||||||
Operating activities: | |||||||
Net income | $ | 9,299 | $ | 9,381 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 14,989 | 35,218 | |||||
Impairments | — | 16,523 | |||||
Gain on disposal of fixed assets | (35 | ) | (1,664 | ) | |||
Gain on rabbi trust assets | (994 | ) | (967 | ) | |||
Loss on deferred compensation | 1,479 | 1,115 | |||||
Share-based compensation | 546 | 3,263 | |||||
Accretion on long-term note receivable | — | (1,133 | ) | ||||
Deferred income taxes | (1 | ) | (5,903 | ) | |||
Amortization of deferred financing costs | 154 | 720 | |||||
Cash provided by (used for) assets and liabilities: | |||||||
Accounts receivable | (7,703 | ) | (10,930 | ) | |||
Inventories | (9,283 | ) | (8,338 | ) | |||
Prepaid expenses and other current assets | 1,334 | 491 | |||||
Accounts payable | 8,356 | 4,110 | |||||
Federal and state income taxes | (38,638 | ) | (11,185 | ) | |||
Accrued wages and related liabilities | (10,900 | ) | (6,941 | ) | |||
Self-insurance | (3,049 | ) | (1,740 | ) | |||
Accrued non-income taxes | (2,227 | ) | (1,450 | ) | |||
Deferred revenue | — | (2,096 | ) | ||||
Other assets and liabilities | (2,482 | ) | (7,060 | ) | |||
Net cash (used in) provided by operating activities | (39,155 | ) | 11,414 | ||||
Investing activities: | |||||||
Acquisition of Pineland Farms Potato Company | (115,811 | ) | — | ||||
Purchase of property, plant and equipment | (9,817 | ) | (37,086 | ) | |||
Proceeds from sale of property, plant and equipment | 11 | 10,688 | |||||
Deposits and other | 82 | 130 | |||||
Net cash used in investing activities | (125,535 | ) | (26,268 | ) | |||
Financing activities: | |||||||
Cash dividends paid | (163,013 | ) | (13,452 | ) | |||
Gross proceeds from credit facility borrowings and other long-term debt | 147,500 | 189,179 | |||||
Gross repayments of credit facility borrowings and other long-term debt | (23,585 | ) | (166,490 | ) | |||
Cash paid for taxes on share-based compensation | (5,660 | ) | (667 | ) | |||
Excess tax benefits from share-based compensation | — | (1,729 | ) | ||||
Net cash (used in) provided by financing activities | (44,758 | ) | 6,841 | ||||
Net cash used in operations | (209,448 | ) | (8,013 | ) | |||
Cash and equivalents at the beginning of the period | 210,886 | 12,896 | |||||
Cash and equivalents at the end of the period | $ | 1,438 | $ | 4,883 |
BEF Foods total pounds sold, by category | ||||||||||
Fiscal 2018 | ||||||||||
Category | Q1 | Q2 | Q3 | Q4 | YTD | |||||
Sides | 43.5% | 46.2% | 44.9% | |||||||
Sausage | 17.1% | 17.0% | 17.0% | |||||||
Food Service | 35.3% | 32.9% | 34.0% | |||||||
Frozen | 2.6% | 2.3% | 2.4% | |||||||
Other | 1.5% | 1.6% | 1.7% | |||||||
Fiscal 2017 | ||||||||||
Category | Q1 | Q2 | Q3 | Q4 | FY 2017 | |||||
Sides | 51.4% | 52.5% | 52.5% | 54.0% | 52.6% | |||||
Sausage | 21.2% | 21.9% | 24.9% | 22.3% | 22.7% | |||||
Food Service - External | 11.6% | 10.7% | 10.1% | 11.1% | 10.8% | |||||
Food Service - Sales to discontinued operations | 8.3% | 9.0% | 7.7% | 7.7% | 8.1% | |||||
Frozen | 3.9% | 3.4% | 2.7% | 3.0% | 3.2% | |||||
Other | 3.6% | 2.5% | 2.1% | 1.9% | 2.6% |