Bob Evans Farms, Inc. announced its financial results for the fiscal 2016 second quarter that ended October 23. On a GAAP basis, the company reported net income of $6.4 million, or $0.29 per diluted share, compared with net income of $6.0 million, or $0.25 per diluted share, in the corresponding period last year. On an adjusted basis, non-GAAP net income was $9.2 million, or $0.41 per diluted share, compared with net income of $8.6 million, or $0.36 per diluted share, in the corresponding period last year.
Executive Chairman Doug Benham says, “Our teams continue focusing their efforts on improvements in both of our businesses and execution of strategic initiatives. BEF Foods had another successful quarter with double-digit pounds sold percentage gains in both refrigerated dinner side dishes and sausage and is poised for a strong holiday selling season. At Bob Evans Restaurants, second-quarter same-store sales performance did not meet our expectations. Turnarounds are often choppy, and our second quarter restaurant sales results reflect that. We continue testing and evaluating promotional and menu strategies to drive sustainable and profitable sales growth. We are committed to the overall strategy we outlined last quarter: improving the quality of our food offerings; lowering overall discounting that was historically used to drive transactions; and optimizing our menu design and investments in labor to deliver a better guest experience. We recently relaunched a more profitable three-course dinner platform system-wide to address weakness at dinner; began rolling out further product enhancements to our breakfast menu, including a new coffee blend and improved hot cakes and omelets; and introduced Broasted Chicken Tenders in our restaurant locations where the Broasted Chicken platform has been rolled out (55 percent of system). All of these actions are designed to drive increased transactions and sales gains by elevating our food quality and guest experience.”
"At the corporate level, we identified an additional $5 million of cost savings opportunities during the second quarter; bringing expected fiscal 2016 savings to nearly $20 million, equating to an annual savings rate of $28 million," he adds. "We also completed a $51.6 million sale-leaseback transaction of two BEF Foods manufacturing facilities and are progressing with the previously announced initiatives to monetize our corporate headquarters and up to $200 million of restaurant properties. During the quarter, we also amended our credit facility to enable the sale-leaseback of the restaurant properties and eliminate the $150 million limit on fiscal 2016 share repurchases. We remain confident in the continued success of BEF Foods and our expectations for a turnaround of Bob Evans Restaurants. This confidence is reflected not only in our reaffirmation of fiscal 2016 earnings guidance, but by recent board approval of a $100 million increase in the company's share repurchase authorization and a 9.7 percent increase in the quarterly dividend. We were also pleased to announce two weeks ago that effective January 1, 2016, Saed Mohseni will join Bob Evans Farms to assume the role of president and chief executive officer. Saed brings a strong track record as a restaurant operator with an intense focus on raising the quality of the overall guest experience. Saeds passion and more than 30 years of experience in these areas will be critical enablers of Bob Evans Restaurants turnaround and continued profitable growth at BEF Foods. On behalf of Bob Evans board, management, and team members, I welcome Saed to Bob Evans."
Chief administrative officer and chief financial officer Mark Hood says, "We posted strong operating results at BEF Foods for the fourth consecutive quarter. BEF Foods non-GAAP operating income increased 176 percent to $17.6 million. This increase is a result of a 12.6 percent increase in retail pounds sold, with double-digit growth in both our refrigerated side dish and sausage categories, combined with lower sow costs net of trade ($3.4 million) and improved plant operating efficiencies. We are on track with our key initiatives in fiscal 2016, including ERP implementation in our plants and the expansion of our refrigerated side-dish manufacturing facility. We look forward to further leveraging the momentum we have created at BEF Foods."