Columbus, OH - Bob Evans Farms, Inc. announced increases of more than 30 percent in earnings per share for its second fiscal quarter and first half ended Oct. 23, 1998.
The results benefited from strong volume growth and improved profitability in both the restaurant and the food products segments. For the 13 weeks ended Oct. 23, 1998, total net sales were $239.3 million, up 7 percent from $224.7 million a year ago. Net income rose 32 percent to $15.4 million, or $0.37 per share, from $11.7 million, or $0.28 per share a year ago. For the six-month period, net sales increased 7 percent to $479.7 million, while net income advanced 34 percent to $29.5 million, or $0.71 per share.
In a mid-October news release, the company stated that based on results from the first two months of the quarter, it was comfortable with analysts' earnings estimates. “We exceeded those expectations because both of our business segments performed particularly well in the final weeks of the quarter,” said Daniel E. Evans, chairman of the board and chief executive officer.
Same-store sales in Bob Evans' restaurant segment rose 5.5 percent for the quarter, their eighth consecutive quarterly gain. The segment's operating profit margin improved to 10.6 percent from 9.9 percent a year ago as a result of lower food costs and other operating expenses -- with the exception of labor-related costs, which were up slightly. Overall, restaurant operating profits rose 14 percent for the quarter on a 7 percent sales increase. The company opened two new restaurants during the first half, bringing the total to 408, but remains on track to open approximately 20 for the full fiscal year.
Evans commented, “Restaurant sales and margins benefited from our continued focus on providing outstanding customer service, as well as a redesign of the Bob Evans menu to incorporate an improved layout and several successful new products. Following the strengthening of our store-level operations over the last two years, we are looking forward to an increased expansion pace in the second half of fiscal 1999 and in fiscal 2000.”
In the food products segment, pounds sold of comparable products (principally sausage) rose 10 percent from a year ago, driven by price reductions and increased promotional activity in the company's sausage business. Hog costs fell further during the quarter, averaging $25.00 per hundredweight, compared with $32.00 in the first quarter and $46.00 in the corresponding period last year. As a result, the segment's operating profits were more than double the year-ago level on a 5 percent sales increase.
“Although our hog costs may move up some from their current level, we now expect hog costs to remain relatively moderate through the end of our current fiscal year and into fiscal 2000,” Evans said. “We are also introducing several new items in our food products business this fall and they appear to have strong potential.”
Evans concluded, “We believe that sustained revenue and profit growth in both of our businesses will be the key to long-term total returns to Bob Evans stockholders. In addition, we are taking advantage of opportunities to apply our substantial financial resources to enhance stockholder returns. During the second quarter, we nearly fulfilled our initial fiscal 1999 authorization to repurchase one million shares of Bob Evans common stock. As a result, the board of directors authorized the repurchase of up to an additional one million shares. The board also showed its confidence in our prospects for continued growth in earnings and cash flow when they approved a 12.5 percent increase in our quarterly cash dividend.”
On Nov. 3, 1998, the board of directors declared a quarterly cash dividend of nine cents ($0.09) per share on the company's outstanding common stock, payable Dec. 1, 1998, to stockholders of record at the close of business on Nov. 13, 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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