Bob Evans Farms Inc. announced its financial results for the fiscal 2013 fourth quarter and full year ended Friday, April 26, 2013. The company achieved positive 4Q 2013 same-store sales of 0.5% and positive same-store sales of 1.0% for fiscal year 2013. BEF Foods' 4Q 2013 net sales increased 26.1% and volume by 21.4%. Fiscal year 2013 net sales increased 10.8%, and volume was up 14.6%.
The company took many significant strategic actions during fiscal 2013 that impacted profitability including: the acquisition of Kettle Creations; the sale of Mimi's Cafe; initiation of the consolidation of ready-to-eat production at the Sulphur Springs, Texas, facility; the conversion of the restaurant operating entities to limited liability companies; the sale of the corporate campus and other facilities; the early payment of the company's private placement notes; and other restructuring activities. As a result, the company reported a net loss of $2.9 million, or $0.10 per share, in fiscal 2013.
The BEF Foods segment's net sales were $348.8 million in fiscal 2013, an increase of 10.8 percent, compared to $314.7 million in fiscal 2012. Total pounds sold increased 14.6 percent, driven by strong growth in the side dish business, restaurant insourcing and foodservice. Promotional discounts increased $6.7 million, compared to fiscal 2012, primarily to support volume earlier in the year when sow costs dropped. Promotional discounts and other selling allowances affect the income statement as a reduction of gross sales. As a result, the net average selling price declined during the low sow cost period in response to those low input costs. The Kettle Creations acquisition accounted for $5.2 million of the net sales increase, and 2.9 percentage points of the volume increase.
Chairman and CEO Steve Davis said, "Results at Bob Evans Farms, Inc. for fiscal year 2013 reflect continued successful execution against our three strategic pillars: transformation of our core businesses to enable expansion; investment in high return on capital growth opportunities; and disciplined capital allocation to drive shareholder value.
"We believe the acceleration of the Farm Fresh Refresh remodeling program at Bob Evans Restaurants; the Kettle Creations acquisition and ongoing plant network optimization at BEF Foods; and the divestiture of the Mimi's Cafe restaurant chain have transformed our company with a significantly upgraded asset base and margin structure capable of driving profitable revenue growth in fiscal 2014 and beyond. During the past year, these transformational investments and events have given us the confidence to raise our long-term annual non-GAAP growth guidance to 8 to 12 percent."
Davis continued, "Our strategy is to invest in growth opportunities that deliver on the two criteria most relevant to today's restaurant and grocery consumers: value and convenience. The extensive investments in infrastructure, marketing, and product development at both Bob Evans Restaurants and BEF Foods have been undertaken to deliver on these criteria. Positive same-store sales at Bob Evans Restaurants and double-digit volume growth at BEF Foods during fiscal year 2013 indicate those investments are beginning to generate a return. We expect to build on this success during fiscal year 2014 with the culmination of the Farm Fresh Refresh remodeling program as we complete the remaining 233 Bob Evans Restaurants; and at BEF Foods, with the completion of plant expansion projects at the Kettle Creations facility in Lima, Ohio, that produces the majority of our refrigerated side dish products, and at our facility located in Sulphur Springs, Texas, that produces our ready-to-eat products.
"With the divestiture of Mimi's Cafe, and the impending completion of extensive transformational investments in both Bob Evans Restaurants and BEF Foods, our company's growth story has become very simple and well-defined. We are a strong brand with two growing businesses dedicated to delivering on the value and convenience expectations of today's restaurant and grocery consumers. Success in that regard will be measured by continued net sales growth. Through leveraging net sales growth and further improvement in our operations, we are also committed to earnings growth with our goal of improving non-GAAP operating margin by 300 to 350 basis points by fiscal 2018. We believe this dual approach of improving our relevance to consumers, while continuing to refine our operational processes is the most prudent approach to achieving sustainable earnings growth, and higher returns on invested capital for our shareholders."
In regard to the fiscal fourth quarter, Davis noted, "Bob Evans Restaurants experienced a challenging sales environment during February due to several winter weather events and macro-economic challenges. However, we recovered during March and April to deliver positive same-store sales of 0.5 percent for the quarter. As consumer spending increased during the quarter, our proven value-oriented sales layers, particularly our $9.99 Three-Course Dinners, and off-premise offerings, including our Family Meals-to-Go and $5 Carryout-to-Go programs, drove positive same-store sales results as they have for most of the fiscal year.
"BEF Foods performed very well during the fiscal fourth quarter, as overall volume grew 21 percent, with refrigerated side dishes, food service, sausage, and frozen products growing 21 percent, 42 percent, 2 percent, and 23 percent, respectively. Excluding the impact of the Kettle Creations acquisition, overall volume grew 17 percent. The vertical integration and expansion of our refrigerated side dish production capabilities as a result of the Kettle Creations acquisition, and the expansion of our Sulphur Springs, Texas, prepared foods plant, should allow us to drive the types of productivity gains we experienced with our fresh sausage production."
Source: Bob Evans Farms Inc.
