Chairman and Chief Executive Officer Steve Davis said, "The unusually severe winter weather, particularly in the northern Midwest, the region with the heaviest concentration of Bob Evans Restaurants, has had a significant negative impact on Bob Evans Restaurants' performance throughout the third quarter to date. Based on fiscal third quarter results through the first half of January, we estimate a negative operating profit impact of $3.0 million to $3.5 million for lost sales, and additional weather-related operating expenses of $1.0 million to $1.5 million. Severe weather continues to negatively impact restaurant guest traffic and sales, and increase operating expenses. With well-below average temperatures and additional snow in the forecast, it is likely we will experience an additional weather impact during the remainder of the quarter. Although we are seeing improvement in same-store sales in states not impacted by severe weather such as Florida, overall same-store sales trends are lower than our flat to 1 percent guidance.
"Additionally, BEF Foods is experiencing higher than expected sow costs. As a result, we expect a negative sow cost impact of $4.5 million to $5.5 million above our previous forecast for the second half of fiscal 2014 and we are raising our sow cost guidance for the second half of fiscal 2014 to $72 to $77 per hundredweight, from the previous guidance range of $65 to $70. Sow costs have averaged $72.66 per hundredweight quarter-to-date, a nearly 24% increase relative to average costs of $58.72 per hundredweight during the third quarter of fiscal 2013. Finally, professional fees including fees related to litigation and legal matters and remediation efforts related to our internal controls during the second half of fiscal 2014 are expected to be $2.0 million to $2.5 million higher than initially forecast."
Davis continued, "As a result of these factors, we now expect non-GAAP earnings per diluted share for fiscal year 2014 of $2.20 to $2.30, including the net accretive effect of our $225 million fiscal 2014 share repurchase program. As we work to put these challenges in fiscal 2014 behind us, we remain committed to delivering improved sales and earnings growth in fiscal year 2015. We expect fiscal year 2015 to produce earnings growth exceeding our long-term average annual growth guidance of 8 to 12 percent, thereby providing strong free cash flow which, along with our $750 million revolving line of credit, will further enhance our ability to invest in the profitable growth of our businesses while rewarding our shareholders with continued dividend and share repurchase programs.
"Improved earnings during fiscal year 2015 are expected to result from the significant margin innovation and transformational investment programs at both Bob Evans Restaurants and BEF Foods. At Bob Evans Restaurants, our chain-wide Farm Fresh Refresh remodel program will be complete and we expect to open ten new restaurants during fiscal 2015. As a result, we expect more consistent positive same-sales trends in addition to cost savings from the absence of closed store days and expenses related to the Farm Fresh Refresh remodel program as well as labor savings from our workforce management initiatives. At BEF Foods, we expect to realize the sales and operating cost benefits of our recent state-of-the-art expansions of our Sulphur Springs, Texas, ready-to-eat plant and Lima, Ohio, refrigerated side dish plant. The same operating discipline and lean manufacturing techniques that we applied to our sausage business are now being brought to bear on our recently vertically integrated refrigerated side dish business."
Further details regarding third quarter performance and the revised outlook for fiscal year 2014 will be addressed in the Company's earnings release for the third quarter of fiscal 2014 to be issued after the market closes on March 4, 2014.
About Bob Evans Farms, Inc.
Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name. At the end of the second fiscal quarter (October 25, 2013), Bob Evans Restaurants owned and operated 561 family restaurants in 19 states, primarily in the Midwest, mid-Atlantic and Southeast regions of the United States. Bob Evans Farms, Inc., through its BEF Foods, Inc. segment, is also a leading producer and distributor of refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food items under the Bob Evans and Owens brand names.
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