Columbus, OH - Bob Evans Farms, Inc announced financial results for its fourth fiscal quarter and year ended April 24, 1998.
For the 13-week period ended April 24, 1998, net income advanced 29 percent to $12.5 million, or $0.30 per share, from $9.7 million, or $0.23 per share, a year ago. Net income for the year was $1.10 per share ($1.09 on a diluted basis), or $45.7 million, up 28 percent from $0.86 per share, or $36.1 million, in fiscal 1997. Net sales increased 8 percent for both the quarter and the year, at $220.5 million and $886.8 million, respectively. Favorable raw material costs in the company's food products business and same- store sales gains in its restaurant segment contributed to improved profitability for both periods.
Operating income in the food products segment rose 77 percent for the quarter, which benefited from average hog costs of $31.00, compared with $50.00 a year earlier. Although the company reduced wholesale sausage prices slightly in April, they were near the year-ago level for most of the quarter. Promotional activity increased, which helped produce a 5 percent volume gain for comparable products (principally sausage). With new products also making a growing contribution, overall sales of the food products segment were up 7 percent for the quarter. For the full fiscal year, food products sales rose 6 percent, and the segment's operating income more than doubled.
Daniel E. Evans, chairman of the board and chief executive officer, commented, “Most of the improvement in the hog market occurred in the second half, so we expect our raw material cost comparisons to remain favorable for much of fiscal 1999. While changes in our sausage margins sometimes overshadow other developments in food products, we were also very encouraged in fiscal 1998 by the performance of several of our newer products -- most notably, pre-seasoned home fries, our new 20-ounce sausage gravy product and frozen biscuits and rolls.”
Quarterly same-store sales in the company's family restaurant business rose 4.4 percent from a year ago, which is the sixth consecutive quarter of increase. For the full year, same-store sales grew 4.6 percent. Overall, the segment's net sales increased 9 percent for the quarter and 8 percent for the year; operating income for the two periods was affected by higher wage and fringe benefit expenses, but still rose 8 percent and 14 percent, respectively.
“We are pleased with the continued strength in our same-store sales despite increasingly challenging year-to-year comparisons,” Evans said. “Our success is attributable to the quality of our menu items and the related marketing programs, as well as an intensified commitment to providing excellent customer service, which is a key element behind our strong sales momentum.”
Evans concluded, “Our encouraging fiscal 1998 results demonstrate the fundamental strength of the Bob Evans brand, and the soundness of our ongoing emphasis on product quality and customer service. However, we are far from satisfied with our financial performance. To produce better long-term returns for stockholders, we will need to accelerate sales growth and improve profitability on both sides of our business. By working towards a faster restaurant opening pace, broadening the food products business -- geographically as well as through new products -- and taking advantage of carefully selected acquisition opportunities, we are confident we can meet our objectives.”
On May 1, 1998, the board of directors declared a quarterly cash dividend of eight cents ($0.08) per share on the company's outstanding common stock. The dividend was payable June 1, 1998, to stockholders of record at the close of business on May 15, 1998.
Bob Evans Farms, Inc. owns and operates 408 full-service, family restaurants in 20 states, principally in the midwestern, mid-Atlantic and southeastern United States, as well as Texas. The company also is a leading producer of pork sausage under the Bob Evans and Owens brand names. Other operations include Mrs. Giles Country Kitchens, a producer of fresh deli salads, and Hickory Specialties, which manufactures charcoal and smoke- flavoring products.
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