Bob Evans (BOBE) Stock Gains On Q1 Earnings & Sales Beat
Zacks Investment Research | Aug 31, 2017 07:57AM ET
Shares of Bob Evans Farms, Inc. (NASDAQ:BOBE) rallied 7% in the trading session on Aug 30, after the company reported better-than-expected first-quarter fiscal 2018 results.
Per management, Bob Evans reported “strong sales performance in both sides and sausage and good profit performance despite higher than forecasted sow costs.”
Recent Developments
In May 2017, Bob Evans completed the sale of its restaurant business — Bob Evans Restaurants — to private equity firm Golden Gate Capital for $565 million. Additionally, the company expanded its packaged food business with the acquisition of Pineland Farms Potato Company for $115 million using the funds raised from the sale of its restaurant business.
Through the transactions, the company has been successfully repositioned as high growth, high margin pure-play packaged food business with strong cash flow.
Earnings and Revenues Discussion
Bob Evans’ fiscal first-quarter adjusted earnings of 37 cents per share surpassed the Zacks Consensus Estimate of 35 cents by 5.7%. Moreover, the bottom line jumped 60.9% year over year on higher revenues.
Net sales of $109.3 million were up 27.1% year over year. The uptick was partially driven by $8.6 million of sales from the company's recently acquired Pineland business and $5.2 million of sales to Bob Evans Restaurants (“BER”), which was eliminated in the prior year. Also, the top line came above the Zacks Consensus Estimate of $102.3 million by 6.8%.
While pounds sold for the fiscal first quarter increased 53.3% year over year (14.6% growth excluding Pineland and BER), average net selling price per pound declined 17.1% from prior-year quarter. This downturn in average net selling price is reflective of an increased mix of food service sales due to the company’s recent transactions.
Margins Expand
Adjusted operating income improved 42.5% year over year to $11.8 million in the reported quarter. Also, adjusted operating income margin expanded 120 basis points (bps) to 10.8% of net sales. The improvement came on the back of increase in pounds sold and net sales, partially offset by higher production costs, increased freight expense and amortization expense.
Meanwhile, adjusted EBITDA (earnings before interest, tax, depreciation and amortization) in the quarter rose 38.3% year over year to $19.5 million. The adjusted EBITDA margin expanded 140 bps to 17.8% (of net sales).
Bob Evans Farms, Inc. Price and EPS Surprise
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