Bob Evans Farms Inc. announced its financial results for the fiscal 2012 fourth quarter and full year ended Friday, April 27, 2012. The company reported consolidated operating income of $107.9 million in fiscal 2012, up from $88.5 million in fiscal 2011. Consolidated non-GAAP net sales were $1.65 billion in fiscal 2012, a 1.8 percent decrease, compared to $1.68 billion in fiscal 2011. This decrease was the result of same-store sales declines at Bob Evans Restaurants and Mimi's Cafe, partially offset by sales generated by new restaurants not currently in the same-store sales base. Net sales in the Foods segment were down due to an increase in promotional discounts from the prior year.
Chairman and CEO Steve Davis said, "We achieved the higher end of our EPS guidance range this year. We are particularly pleased with this performance as it caps three years of repositioning each of our businesses for profitable top-line growth. Importantly, we also continued to reduce debt and return capital to shareholders in the form of dividends and share repurchases, while investing in important growth projects. This disciplined and balanced approach to capital allocation has been critical to our past success, and it will continue to drive our strategy.
"Our aggressive roll-out of the Farm-Fresh Refresh remodel program at Bob Evans Restaurants continues to generate returns of nearly 20 percent. Furthermore, with the recent successful opening of two new Bob Evans Restaurant locations in Arkansas, our 19th state, we are leveraging the brand recognition the Foods segment has achieved with its presence on grocery store shelves nationally. Bob Evans Restaurants plans to open up to 10 new restaurants during fiscal 2013 to augment the growth generated by improving trends in the core business, including continued double-digit growth of our off-premise sales layers, as well as the lift provided by the Farm-Fresh Refresh program," he added
Davis continued, "Last week, our Foods segment announced its latest plant optimization initiative concerning expansion of its Sulphur Springs, Texas plant. This initiative will enable us to better serve the customers of our high-potential side dish and frozen products businesses, while also providing significant annual cost savings. We believe the initiative will increase annual operating income by approximately $7 to $8 million beginning in fiscal 2015. We expect savings of $4 to $5 million during fiscal 2014, which will be the transition year for the project. Our plant optimization initiatives have helped us offset the cumulative impact of more than $70 million in sow cost increases since 2009. We believe these initiatives will allow us to compete effectively, and maintain margins in the future.
"The Foods segment faced the dual challenges of continued sow cost increases and a highly promotional competitive environment this year. As a result, margins were adversely impacted. Nonetheless, as with our two restaurant segments, we are focused on transforming the Foods segment to deliver top-line and bottom-line growth, even under challenging market conditions. Just as we are evolving our restaurant concepts with off-premise sales layers, the Foods segment is evolving to meet the needs of its customers who are increasingly seeking healthy, convenient products that cater to their time-constrained, on-the-go lifestyles. The Foods segment currently supplies more than 24,000 retail locations, and we believe it has the potential to serve at least 36,000 locations within the next five years. Furthermore, we continue to pursue inorganic growth opportunities to grow the Foods segment profitably.
"While much remains to be accomplished, we are energized by the opportunities that lie ahead. We have long been known for delivering adjusted earnings growth due to our disciplined operating principles. We believe we are now positioned well to deliver profitable top-line growth, and we are proceeding confidently. We pulled back on restaurant development several years ago, because we knew we needed to improve our concepts and close underperforming restaurants. Today, we are undergoing transformational remodel and rebuilding programs, while simultaneously building new restaurants in core and new geographies. Likewise, the Foods segment underwent a transformation of its plant and distribution networks to ready itself for growth. Now the foundation has been set, and we believe our company is well-positioned for sustainable and profitable growth in fiscal 2013, and beyond."
The company expects earnings per share of approximately $2.66 to $2.72 in fiscal 2013. The Company also reaffirms its average annual long-term earnings growth rate guidance of approximately 7 to 10 percent.
Davis said, "We are excited and confident about capitalizing on the growth opportunities ahead, including: more significant new restaurant growth at Bob Evans Restaurants; the ongoing transformation of existing Bob Evans Restaurants with the Farm-Fresh Refresh remodel program; increased marketing support for Bob Evans Restaurants; continued Foods segment distribution and market share growth; and ongoing exploration of inorganic growth opportunities in the Foods segment.
"Rest assured, we are pursuing growth in a measured and disciplined manner. We will not allow ourselves to abandon the discipline that has enabled our Company to deliver consistent adjusted earnings growth, even under challenging economic conditions."
Source: Bob Evans Farms Inc.
