NEW ALBANY, OHIO — With the pending sale of its restaurant business to the San Francisco-based private equity firm Golden Gate Capital, Bob Evans Farms is on the cusp of becoming a pure play food company with operations primarily focused on refrigerated side dish and sausage production.
|Mike Townsley, president of BEF Foods|
“During the last several years, we’ve transformed Bob Evans Foods from a business with nine manufacturing facilities and a Midwest sales concentration to a far more efficient network with four manufacturing facilities supporting our high-growth refrigerated side-dish business,” said Mike Townsley, president of BEF Foods, who will become chief executive officer of Bob Evans Farms once the transaction is complete, during a Jan. 25 conference call to discuss the deal. “I believe we are very well positioned for continued success, with over a 50% national market share on our dinner side, along with our leading market share in our core sausage markets.”
By 2020, the company estimates its refrigerated side dish product mix will represent nearly two-thirds of overall annual sales volume. The spike will be due to the company’s pending acquisition of Pineland Farms Potato Co., Mars Hill, Maine, which was announced at the same time as the sale of the restaurant business on Jan. 24.
“The Pineland Farms Co. acquisition provides 180 million lbs of capacity, 50 million of that which comes on-line in April 2017,” Mr. Townsley said. “This also diversifies our production capability, with the addition of a state-of-the-art potato-processing facility located in northern Maine.”
He added that Pineland Farms is doing business in categories that Bob Evans Farms is not currently in.
“ … They do produce mashed potatoes, but they also are producing cuts, diced and shredded, and so hash browns and home fries, and that’s a part of the business we are not into in a big way with no manufacturing capabilities,” Mr. Townsley said.
Mark Hood, chief financial officer, said the company expects earnings per share to be in the range of $2.15 to $2.30 per share during fiscal 2017, assuming the closing April dates for both the restaurant divestment and Pineland acquisition are met.
|Mark Hood, c.f.o. of Bob Evans Farms|
“We are also providing F.Y. ‘18 Bob Evans Farms, Inc. preliminary revenue and EBITDA targets of $470 million and $105 million, respectively,” Mr. Hood said. “Our preliminary long-term annual sales and EBITDA growth expectations are mid-to-high single digits on revenue, and high-single to low-double digits on EBITDA growth, respectively. Our annual capital expenditure expectation is in the $25 million to $35 million range.”
Under the terms of the agreement with Golden Gate Capital for the sale of the restaurant business, Bob Evans Farms may solicit superior proposals from third parties through Feb. 28, 2017, Mr. Hood said.“It is not anticipated that any developments will be disclosed with regard to this process, unless the company's board of directors makes a decision with respect to a potential superior proposal,” he said.