Bob Evans Farms Q2 Profit Down 46%; Lowers Top End Of Full-year Outlook

(RTTNews) - Restaurant chain Bob Evans Farms Inc. (BOBE) on Tuesday reported a 46 percent decline in profit for the second quarter from last year on lower sales, in addition to the impact of higher than expected increase in sow prices as well as start-up costs.

Both revenue and adjusted earnings per share missed analysts' expectations. Looking ahead, the company lowered the top end of its earnings guidance range for fiscal 2014. In addition, Bob Evans Farms raised its fiscal 2014 share repurchase program by $50 million.

Columbus, Ohio-based Bob Evans Farms' second-quarter net income was $6.12 million or $0.23 per share, down from $11.31 million or $0.40 per share in the year-ago period.

The latest quarter's results were reduced by about $0.27 per share due to a higher than expected year-over-year increase in sow prices and other short-term cost impacts. The results were also impacted by about $0.05 per share due to start-up costs and other expenses associated with transformational growth investments.

Excluding one-time items, adjusted earnings for the quarter were $0.35 per share, compared to $0.53 per share in the prior-year period. On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.55 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined 19 percent to $332.60 million from $410.88 million in the same period last year. Analysts had a consensus revenue estimate of $339.60 million for the quarter.

Excluding Mimi's cafe operations that have been classified as discontinued operations, net sales increased about 1 percent to $332.60 million from $329.56 million in the year-ago quarter. The increase in consolidated net sales was due to 10.6 percent sales growth at BEF Foods, partially offset by a sales decline of 2.4 percent at Bob Evans Restaurants.

During the quarter, Bob Evans Restaurants completed 66 Farm Fresh Refresh remodels and completed 126 completed year-to-date. The company expects to complete its remodel program by the end of fiscal year 2014.

Looking ahead to fiscal 2014, Bob Evans now forecasts adjusted earnings in a range of $2.60 to $2.65 per share, compared to the prior range of $2.60 to $2.67 per share. Analysts currently expect earnings of $2.72 per share for fiscal year 2014.

The revised outlook includes accretion from expected impact of share repurchases of about $0.09 to $0.11 per share.

The company said it will expand its fiscal 2014 share repurchase program by $50 million. The program now totals $225 million for fiscal 2014.

The company also reaffirmed its long-term annual adjusted earnings growth guidance of 8 to 12 percent and 5-year adjusted net operating margin improvement guidance of 300 to 350 basis points.

BOBE closed Tuesday's regular trading session at $46.02, down $0.05 or 0.11 percent on a volume of 43,729 shares.