Sonic Earnings Per Share Rise 47% for the Fourth Fiscal Quarter of 2015

41% Increase in Earnings Per Share for the Fiscal Year

OKLAHOMA CITY - October 19, 2015 - (BUSINESS WIRE) - Sonic Corp. (NASDAQ:SONC), the nation’s largest chain of drive-in restaurants, today announced results for its fourth fiscal quarter and year ended August 31, 2015.

Key highlights of the company's fiscal year 2015 included:

  • Net income per diluted share was $1.20 compared with net income per diluted share of $0.85 in fiscal 2014; excluding certain adjustments outlined below, net income per diluted share increased 31% to $1.10 compared with $0.84 in fiscal 2014;
  • System same-store sales increased 7.3%, consisting of a 7.3% same-store sales increase at franchise drive-ins and an increase of 6.9% at company drive-ins;
  • Company drive-in margins improved by 90 basis points;
  • 41 new drive-ins were opened, and 30 drive-ins were rebuilt; and
  • The company repurchased $124 million in stock representing 7.4% of the company's outstanding shares as of the beginning of the fiscal year.

Key highlights of the company's fourth quarter of fiscal year 2015 included:

  • Net income per diluted share was $0.50 compared with net income per diluted share of $0.34 in the prior-year period; excluding certain adjustments outlined below, net income per diluted share increased 26% to $0.43 compared with $0.34 in fiscal 2014;
  • System same-store sales increased 4.9%, consisting of a 4.9% same-store sales increase at franchise drive-ins and an increase of 4.5% at company drive-ins;
  • Company drive-in margins improved by 100 basis points; and
  • 18 new drive-ins were opened.

"By every measure fiscal 2015 was a great year for our customers and franchisees. We completed our fifth consecutive fiscal year of positive same-store sales growth with a 7.3% system same-store sales increase for the year. Incremental profits for our franchisees were the highest since the onset of the Great Recession. These results drove a 31% increase in fiscal 2015 earnings per share, on an adjusted basis," said Clifford Hudson, Sonic Corp. CEO. "Our strong financial performance has also been complemented by a disciplined approach to capital allocation. While we have invested in long-term initiatives to drive system sales performance, we have also returned substantial capital to shareholders. In fact, since 2011 we have returned a combined $289 million to shareholders via dividends and the repurchase of over 25% of our outstanding shares.

"Looking forward, we believe product innovation, combined with our promotional, media and technology initiatives, will continue to drive consistent positive same-store sales and EPS growth. Record unit volumes in existing and new drive-ins give us continued confidence in the growing strength of the Sonic brand," concluded Hudson.

Same-Store Sales

For the fourth fiscal quarter ended August 31, 2015, system same-store sales increased 4.9%, which was comprised of a 4.9% same-store sales increase at franchise drive-ins and an increase of 4.5% at company drive-ins. For the 12 months ended August 31, 2015, system same-store sales increased 7.3%, including a 7.3% same-store sales increase at franchise drive-ins and a 6.9% increase at company drive-ins.

Financial Overview

For the fourth fiscal quarter of 2015, the company's net income increased to $26.3 million or $0.50 per diluted share compared with net income of $18.8 million or $0.34 per diluted share in the same period in the prior year. Excluding the items outlined below, net income and net income per diluted share increased by 23% and 26%, respectively.

The following analysis of non-GAAP adjustments is intended to supplement the presentation of the company's financial results in accordance with GAAP. The company believes that the presentation of this analysis provides useful information to investors and management regarding the underlying business trends and the performance of the company's ongoing operations and is helpful for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the financial results of the company and predicting future performance.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 31, 2015

 

August 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net

 

Diluted

 

Net

 

Diluted

 

Net Income

 

Diluted EPS

 

 

Income

   

EPS

   

Income

   

EPS

   

$ Change

 

% Change

   

$ Change

 

% Change

Reported - GAAP

 

$

26,296

 

 

$

0.50

 

 

$

18,825

 

$

0.34

 

$

7,471

 

40

%

 

$

0.16

 

47

%

Federal tax benefit of prior-year statutory tax deduction

 

 

(1,477

)

 

 

(0.03

)

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Change in deferred tax valuation allowance

 

 

(1,701

)

 

 

(0.04

)

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted - Non-GAAP

 

$

23,118

 

 

$

0.43

 

 

$

18,825

 

$

0.34

 

$

4,293

 

23

%

 

$

0.09

 

26

%

For fiscal 2015, net income totaled $64.5 million or $1.20 per diluted share compared with net income of $47.9 million or $0.85 per diluted share for fiscal 2014. Excluding the items outlined below, net income and net income per diluted share increased by 26% and 31%, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal year ended

 

Fiscal year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 31, 2015

 

August 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net

   

Diluted

   

Net

   

Diluted

   

Net Income

   

Diluted EPS

 

 

 

Income

 

EPS

 

Income

 

EPS

 

$ Change

 

% Change

 

$ Change

 

% Change

Reported - GAAP

 

 

$

64,485

 

 

$

1.20

 

 

$

47,916

 

 

$

0.85

 

 

$

16,569

 

35

%

 

$

0.35

 

41

%

Federal tax benefit of prior-year statutory tax deduction

 

 

 

(3,199

)

 

 

(0.06

)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in deferred tax valuation allowance

 

 

 

(1,701

)

 

 

(0.04

)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Retroactive effect of federal tax law change

 

 

 

612

 

 

 

0.01

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Retroactive benefit of Work Opportunity Tax Credit and resolution of tax matters

 

 

 

(666

)

 

 

(0.01

)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit from the IRS's acceptance of a federal tax method change

 

 

 

-

 

 

 

-

 

 

 

(484

)

 

 

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted - Non-GAAP

 

 

$

59,531

 

 

$

1.10

 

 

$

47,432

 

 

$

0.84

 

 

$

12,099

 

26

%

 

$

0.26

 

31

%

Fiscal Year 2016 Outlook

While the macroeconomic environment may impact results, the company now expects its initiatives to drive 16% to 20% earnings per share growth for fiscal 2016 as compared to the previous outlook of 14% to 18% growth, reflecting higher share repurchase activity in the first half of the fiscal year. The outlook for fiscal 2016 anticipates the following elements:

  • 2% to 4% same-store sales growth for the system;
  • Royalty revenue growth from same-store sales improvements and new unit development;
  • 50 to 60 new franchise drive-in openings;
  • Drive-in-level margin improvement between 75 to 125 basis points, depending upon the degree of same-store sales growth at company drive-ins;
  • Selling, general and administrative expenses of $81.5 million to $82.5 million reflecting increased investment in human resources to support brand initiatives;
  • Depreciation and amortization expense of $45.5 million to $46.5 million as a result of capital investment in fiscal 2016;
  • Net interest expense of $26.5 million to $27.5 million;
  • Capital expenditures of $35 million to $40 million;
  • Free cash flow1 of $70 million to $75 million;
  • An income tax rate between 36.5% to 37.5%;
  • The planned repurchase of $126 million of stock across the fiscal year, with a higher concentration of share repurchases in the first half of the fiscal year; and
  • An expected quarterly cash dividend of $0.11 per share.

Earnings Conference Call

The company will host a conference call to review financial results at 5:00 PM ET this evening. The conference call can be accessed live over the phone by dialing (888) 455-2260 or (719) 325-2494 for international callers. A replay will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 9318637. The replay will be available until Monday, October 26, 2015. An online replay of the conference call will be available approximately two hours after the conclusion of the live broadcast. A link to this event may be found on the company's investor relations website at http://ir.sonicdrivein.com/.

About Sonic

SONIC, America's Drive-In is the nation's largest drive-in restaurant chain serving more than 3 million customers every day. Nearly 90 percent of SONIC's 3,500 drive-in locations are owned and operated by local business men and women. Over the past 60 years, SONIC has delighted guests with signature menu items, more than 1.3 million drink combinations and friendly service by iconic Carhops. To learn more about Sonic Corp. (NASDAQ/NM: SONC), please visit sonicdrivein.com or follow us on Facebook and Twitter.

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from those expressed in, or underlying, these forward-looking statements are detailed in the company's annual and quarterly report filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.

The tables that follow provide information regarding the number of company drive-ins, franchise drive-ins and system drive-ins in operation as of the end of the periods indicated. In addition, these tables provide information regarding franchise sales, system growth in sales, and both franchise and system average drive-in sales and change in same-store sales. System information includes both company and franchise drive-in information, which we believe is useful in analyzing the growth of our brand. While we do not record franchise drive-in sales as revenues, we believe this information is important in understanding our financial performance since we calculate and record franchise royalties based on a percentage of franchise sales. This information also is indicative of the financial health of our franchisees.

SONC-F

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SONIC CORP.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

 

 

 

Three months ended

 

Fiscal year ended

 

 

August 31,

 

August 31,

 

 

2015

   

2014

   

2015

   

2014

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Company Drive-In sales

 

$

125,215

 

 

$

119,002

 

 

$

436,031

 

 

$

405,363

 

Franchise Drive-Ins:

 

 

 

 

 

 

 

 

 

 

 

 

Franchise royalties and fees

 

 

46,967

 

 

 

41,818

 

 

 

161,342

 

 

 

138,416

 

Lease revenue

 

 

1,970

 

 

 

1,609

 

 

 

5,583

 

 

 

4,291

 

Other

 

 

1,114

 

 

 

1,340

 

 

 

3,133

 

 

 

4,279

 

Total revenues

 

 

175,266

 

 

 

163,769

 

 

 

606,089

 

 

 

552,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Company Drive-Ins:

 

 

 

 

 

 

 

 

 

 

 

 

Food and packaging

 

 

34,573

 

 

 

34,871

 

 

 

121,701

 

 

 

116,325

 

Payroll and other employee benefits

 

 

41,752

 

 

 

38,831

 

 

 

151,801

 

 

 

139,939

 

Other operating expenses, exclusive of

 

 

 

 

 

 

 

 

 

 

 

 

depreciation and amortization included below

 

 

24,952

 

 

 

23,796

 

 

 

90,436

 

 

 

85,845

 

Total cost of Company Drive-In sales

 

 

101,277

 

 

 

97,498

 

 

 

363,938

 

 

 

342,109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

21,711

 

 

 

18,885

 

 

 

79,336

 

 

 

69,415

 

Depreciation and amortization

 

 

11,258

 

 

 

11,123

 

 

 

45,892

 

 

 

42,210

 

Provision for impairment of long-lived assets

 

 

1,393

 

 

 

85

 

 

 

1,440

 

 

 

114

 

Other operating income, net

 

 

(902

)

 

 

(110

)

 

 

(945

)

 

 

(176

)

Total costs and expenses

 

 

134,737

 

 

 

127,481

 

 

 

489,661

 

 

 

453,672

 

Income from operations

 

 

40,529

 

 

 

36,288

 

 

 

116,428

 

 

 

98,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

6,133

 

 

 

6,287

 

 

 

25,114

 

 

 

25,382

 

Interest income

 

 

(118

)

 

 

(96

)

 

 

(408

)

 

 

(469

)

Net interest expense

 

 

6,015

 

 

 

6,191

 

 

 

24,706

 

 

 

24,913

 

Income before income taxes

 

 

34,514

 

 

 

30,097

 

 

 

91,722

 

 

 

73,764

 

Provision for income taxes

 

 

8,218

 

 

 

11,272

 

 

 

27,237

 

 

 

25,848

 

Net income

 

$

26,296

 

 

$

18,825

 

 

$

64,485

 

 

$

47,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per share

 

$

0.51

 

 

$

0.35

 

 

$

1.23

 

 

$

0.87

 

Diluted income per share

 

$

0.50

 

 

$

0.34

 

 

$

1.20

 

 

$

0.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares

 

 

51,736

 

 

 

54,022

 

 

 

52,572

 

 

 

55,164

 

Weighted average diluted shares

 

 

52,936

 

 

 

55,419

 

 

 

53,953

 

 

 

56,619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SONIC CORP.

Unaudited Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Fiscal year ended

 

 

August 31,

 

August 31,

 

 

2015

 

2014

 

2015

 

2014

Drive-Ins in Operation

 

 

 

 

 

 

 

 

Company:

 

 

 

 

 

 

 

 

Total at beginning of period

 

394

 

 

389

 

 

391

 

 

396

 

Opened

 

-

 

 

2

 

 

3

 

 

3

 

Sold to franchisees

 

(7

)

 

-

 

 

(6

)

 

(7

)

Closed (net of re-openings)

 

-

 

 

-

 

 

(1

)

 

(1

)

Total at end of period

 

387

 

 

391

 

 

387

 

 

391

 

Franchise:

 

 

 

 

 

 

 

 

Total at beginning of period

 

3,118

 

 

3,121

 

 

3,127

 

 

3,126

 

Opened

 

18

 

 

15

 

 

38

 

 

37

 

Acquired from the company

 

7

 

 

-

 

 

6

 

 

7

 

Closed (net of re-openings)

 

(4

)

 

(9

)

 

(32

)

 

(43

)

Total at end of period

 

3,139

 

 

3,127

 

 

3,139

 

 

3,127

 

System-wide:

 

 

 

 

 

 

 

 

Total at beginning of period

 

3,512

 

 

3,510

 

 

3,518

 

 

3,522

 

Opened

 

18

 

 

17

 

 

41

 

 

40

 

Closed (net of re-openings)

 

(4

)

 

(9

)

 

(33

)

 

(44

)

Total at end of period

 

3,526

 

 

3,518

 

 

3,526

 

 

3,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Fiscal year ended

 

 

August 31,

 

August 31,

 

 

2015

 

2014

 

2015

 

2014

 

 

($ in thousands)

 

($ in thousands)

Sales Analysis

 

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

Company Drive-Ins:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

 

$

125,215

 

 

$

119,002

 

 

$

436,031

 

 

$

405,363

 

Average drive-in sales

 

 

319

 

 

 

305

 

 

 

1,116

 

 

 

1,043

 

Change in same-store sales

 

 

4.5

%

 

 

4.9

%

 

 

6.9

%

 

 

3.5

%

Franchised Drive-Ins:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total sales

 

$

1,121,219

 

 

$

1,058,640

 

 

$

3,931,365

 

 

$

3,627,395

 

Average drive-in sales

 

 

360

 

 

 

343

 

 

 

1,261

 

 

 

1,170

 

Change in same-store sales

 

 

4.9

%

 

 

4.5

%

 

 

7.3

%

 

 

3.5

%

System-wide:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in total sales

 

 

5.9

%

 

 

5.2

%

 

 

8.3

%

 

 

3.9

%

Average drive-in sales

 

$

355

 

 

$

338

 

 

$

1,244

 

 

$

1,153

 

Change in same-store sales

 

 

4.9

%

 

 

4.6

%

 

 

7.3

%

 

 

3.5

%

Note: Change in same-store sales based on restaurants open for a minimum of 15 months.

 

 

 

 

 

 

 

 

 

 

 

 

 

SONIC CORP.

Unaudited Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Fiscal year ended

 

 

August 31,

 

August 31,

 

 

2015

 

2014

 

2015

 

2014

 

 

(In thousands)

   

(In thousands)

Revenues

 

 

 

   

 

 

 

 

 

   

 

 

Company Drive-In sales

 

$

125,215

 

$

119,002

 

$

436,031

 

$

405,363

Franchise Drive-Ins:

 

 

 

 

 

 

 

 

 

 

 

 

Franchise royalties

 

 

46,259

 

 

41,317

 

 

158,813

 

 

137,125

Franchise fees

 

 

708

 

 

501

 

 

2,529

 

 

1,291

Lease revenue

 

 

1,970

 

 

1,609

 

 

5,583

 

 

4,291

Other

 

 

1,114

 

 

1,340

 

 

3,133

 

 

4,279

Total revenues

 

$

175,266

 

$

163,769

 

$

606,089

 

$

552,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Fiscal year ended

 

 

August 31,

 

August 31,

 

 

2015

 

2014

 

2015

 

2014

Margin Analysis (percentage of Company Drive-In sales)

 

 

 

 

 

 

 

 

 

 

 

 

Company Drive-Ins:

 

 

 

 

 

 

 

 

 

 

 

 

Food and packaging

 

27.6

%

 

29.3

%

 

27.9

%

 

28.7

%

Payroll and employee benefits

 

33.4

 

 

32.6

 

 

34.8

 

 

34.5

 

Other operating expenses

 

19.9

 

 

20.0

 

 

20.8

 

 

21.2

 

Cost of Company Drive-In sales

 

80.9

%

 

81.9

%

 

83.5

%

 

84.4

%

 

 

 

 

 

 

 

 

 

 

August 31,

 

August 31,

 

 

2015

 

2014

 

 

(In thousands)

Selected Balance Sheet Data

 

 

Cash and cash equivalents

 

$

27,191

    

$

35,694

Current assets

 

 

85,438

 

 

95,712

Property, equipment and capital leases, net

 

 

421,406

 

 

441,969

Total assets

 

$

620,024

 

$

650,972

 

 

 

 

 

 

 

Current liabilities, including capital lease obligations and

 

 

 

 

 

 

long-term debt due within one year

 

$

87,821

 

$

79,511

Obligations under capital leases due after one year

 

 

20,763

 

 

23,050

Long-term debt due after one year

 

 

428,238

 

 

427,527

Total liabilities

 

 

602,591

 

 

588,297

Stockholders' equity

 

$

17,433

 

$

62,675

1 Free cash flow is defined as net income plus depreciation, amortization and stock compensation expenses, less capital expenditures.

SOURCE Sonic Corp.

Contact:

Corey Horsch
Sonic Corp.
Vice President of Investor Relations
and Treasurer
(405) 225-4846

###

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