Sonic's Quarterly Earnings Per Share Jump 33%

Same-Store Sales Increase 5.3%

OKLAHOMA CITY - January 5, 2016 - (BUSINESS WIRE) - Sonic Corp. (NASDAQ:SONC), the nation's largest chain of drive-in restaurants, today announced results for its first fiscal quarter ended November 30, 2015.

Key highlights of the company's first quarter of fiscal year 2016 included:

  • Net income per diluted share increased 33% to $0.24 compared with net income per diluted share of $0.18 in the prior-year period;
  • System same-store sales increased 5.3%, consisting of a 5.4% same-store sales increase at franchise drive-ins and an increase of 4.4% at company drive-ins;
  • Company drive-in margins improved by 140 basis points;
  • 13 new drive-ins opened; and
  • The company purchased 1.8 million shares representing 3.4% of its outstanding shares since the end of fiscal 2015.

"Our solid business momentum continues with another quarter of robust same-store sales," said Cliff Hudson, Sonic Corp. CEO. "Improvements in core menu items, combined with limited-time-offer promotions, drove healthy same-store sales growth of 5.3% for the system during the quarter, building upon 8.5% same-store sales growth in the prior-year quarter. We saw particularly strong top line contribution from two premium chicken products and targeted value offerings. The combination of sales leverage, a favorable cost environment and technology-driven cost savings generated another quarter of meaningful incremental profits at the company drive-in level.

"With more than five consecutive years of both positive same-store sales growth and double-digit adjusted earnings per share growth, we continue to focus on our multi-layered growth strategy, which is comprised of initiatives to drive same-store sales growth, improve margins, increase royalty revenues, accelerate new drive-in development and deploy free cash flow1. In addition to strong sales and profit growth, we are especially pleased to have repurchased more than 1.8 million shares during the first fiscal quarter at an average price of $25.73, representing 3.4% of our outstanding shares since fiscal 2015." Hudson continued, "Looking forward, we believe our technology initiatives will be key contributors to driving sales, profits and new unit development."

Same-Store Sales

For the first fiscal quarter ended November 30, 2015, system same-store sales increased 5.3%, which was comprised of a 5.4% same-store sales increase at franchise drive-ins and an increase of 4.4% at company drive-ins.

Financial Overview

For the first fiscal quarter of 2016, the company's net income increased to $12.5 million or $0.24 per diluted share compared with net income of $10.1 million or $0.18 per diluted share in the same period in the prior year.

Fiscal Year 2016 Outlook

While the macroeconomic environment may impact results, the company continues to expect its initiatives to drive 16% to 20% earnings per share growth for fiscal 2016. 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;
  • Capital expenditures of $35 million to $40 million;
  • Free cash flow 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; 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) 312-3048 or (719) 457-2648 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 3322264. The replay will be available until Tuesday, January 12, 2016. 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.

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

SONC-F

 

 

 

 

 

 

 

 

 

SONIC CORP.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

 

 

 

 

Three months ended

 

 

 

November 30,

 

 

 

2015

 

 

2014

Revenues:

 

 

 

 

 

 

 

 

Company Drive-In sales

 

 

$

103,883

 

 

 

$

100,138

 

Franchise Drive-Ins:

 

 

 

 

 

 

 

 

Franchise royalties and fees

 

 

 

39,922

 

 

 

 

38,264

 

Lease revenue

 

 

 

1,592

 

 

 

 

1,065

 

Other

 

 

 

406

 

 

 

 

389

 

Total revenues

 

 

 

145,803

 

 

 

 

139,856

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Company Drive-Ins:

 

 

 

 

 

 

 

 

Food and packaging

 

 

 

28,946

 

 

 

 

28,573

 

Payroll and other employee benefits

 

 

 

36,364

 

 

 

 

35,271

 

Other operating expenses, exclusive of

 

 

 

 

 

 

 

 

depreciation and amortization included below

 

 

 

22,908

 

 

 

 

22,605

 

Total cost of Company Drive-In sales

 

 

 

88,218

 

 

 

 

86,449

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 

20,940

 

 

 

 

18,788

 

Depreciation and amortization

 

 

 

10,999

 

 

 

 

11,660

 

Other operating (income) expense, net

 

 

 

(399

)

 

 

 

421

 

Total costs and expenses

 

 

 

119,758

 

 

 

 

117,318

 

Income from operations

 

 

 

26,045

 

 

 

 

22,538

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

6,222

 

 

 

 

6,281

 

Interest income

 

 

 

(100

)

 

 

 

(102

)

Net interest expense

 

 

 

6,122

 

 

 

 

6,179

 

Income before income taxes

 

 

 

19,923

 

 

 

 

16,359

 

Provision for income taxes

 

 

 

7,465

 

 

 

 

6,274

 

Net income

 

 

$

12,458

 

 

 

$

10,085

 

 

 

 

 

 

 

 

 

 

Basic income per share

 

 

$

0.25

 

 

 

$

0.19

 

Diluted income per share

 

 

$

0.24

 

 

 

$

0.18

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares

 

 

 

50,221

 

 

 

 

53,360

 

Weighted average diluted shares

 

 

 

51,325

 

 

 

 

54,827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SONIC CORP.

Unaudited Supplemental Information

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

November 30,

 

 

 

2015

 

 

2014

Drive-Ins in Operation

 

 

 

 

 

 

Company:

 

 

 

 

 

 

Total at beginning of period

 

 

387

 

 

 

391

 

Opened

 

 

-

 

 

 

1

 

Sold to franchisees

 

 

(2

)

 

 

(2

)

Closed (net of re-openings)

 

 

(3

)

 

 

(1

)

Total at end of period

 

 

382

 

 

 

389

 

Franchise:

 

 

 

 

 

 

Total at beginning of period

 

 

3,139

 

 

 

3,127

 

Opened

 

 

13

 

 

 

12

 

Acquired from the company

 

 

2

 

 

 

2

 

Closed (net of re-openings)

 

 

(7

)

 

 

(13

)

Total at end of period

 

 

3,147

 

 

 

3,128

 

System-wide:

 

 

 

 

 

 

Total at beginning of period

 

 

3,526

 

 

 

3,518

 

Opened

 

 

13

 

 

 

13

 

Closed (net of re-openings)

 

 

(10

)

 

 

(14

)

Total at end of period

 

 

3,529

 

 

 

3,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

November 30,

 

 

 

2015

 

 

2014

 

 

 

($ in thousands)

Sales Analysis

 

 

 

 

 

 

 

 

 

 

Company Drive-Ins:

 

 

 

 

 

 

 

 

 

 

Total sales

 

 

$

103,883

 

 

 

$

100,138

 

Average drive-in sales

 

 

 

270

 

 

 

 

259

 

Change in same-store sales

 

 

 

4.4

%

 

 

 

7.9

%

Franchised Drive-Ins:

 

 

 

 

 

 

 

 

 

 

Total sales

 

 

$

968,956

 

 

 

$

908,276

 

Average drive-in sales

 

 

 

310

 

 

 

 

294

 

Change in same-store sales

 

 

 

5.4

%

 

 

 

8.5

%

System-wide:

 

 

 

 

 

 

 

 

 

 

Change in total sales

 

 

 

6.4

%

 

 

 

9.2

%

Average drive-in sales

 

 

$

305

 

 

 

$

290

 

Change in same-store sales

 

 

 

5.3

%

 

 

 

8.5

%

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

SONIC CORP.

Unaudited Supplemental Information

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

November 30,

 

 

 

2015

 

 

2014

 

 

 

(In thousands)

Revenues

 

 

 

 

 

 

 

 

Company Drive-In sales

 

 

$

103,883

 

 

$

100,138

Franchise Drive-Ins:

 

 

 

 

 

 

 

 

Franchise royalties

 

 

 

39,462

 

 

 

36,776

Franchise fees

 

 

 

460

 

 

 

1,488

Lease revenue

 

 

 

1,592

 

 

 

1,065

Other

 

 

 

406

 

 

 

389

Total revenues

 

 

$

145,803

 

 

$

139,856

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

November 30,

 

 

 

2015

 

 

2014

Margin Analysis (percentage of Company Drive-In sales)

 

 

 

 

 

 

 

 

Company Drive-Ins:

 

 

 

 

 

 

 

 

Food and packaging

 

 

27.9

%

 

 

28.5

%

Payroll and employee benefits

 

 

35.0

 

 

 

35.2

 

Other operating expenses

 

 

22.0

 

 

 

22.6

 

Cost of Company Drive-In sales

 

 

84.9

%

 

 

86.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 30,

 

 

August 31,

 

 

 

2015

 

 

2015

 

 

 

(In thousands)

Selected Balance Sheet Data

 

 

 

Cash and cash equivalents

 

 

$

36,821

 

 

$

27,191

Current assets

 

 

 

86,706

 

 

 

85,438

Property, equipment and capital leases, net

 

 

 

416,650

 

 

 

421,406

Total assets

 

 

$

616,117

 

 

$

620,024

 

 

 

 

 

 

 

 

 

Current liabilities, including capital lease obligations and

 

 

 

 

 

 

 

 

long-term debt due within one year

 

 

$

79,278

 

 

$

87,821

Obligations under capital leases due after one year

 

 

 

19,835

 

 

 

20,763

Long-term debt due after one year

 

 

 

473,300

 

 

 

428,238

Total liabilities

 

 

 

636,854

 

 

 

602,591

Stockholders' equity (deficit)

 

 

$

(20,737)

 

 

$

17,433

 

 

 

 

 

 

 

 

 

SOURCE  Sonic Corp.

Contact:

Corey Horsch
Sonic Corp.
Vice President of Investor Relations and Treasurer
405-225-4800

###

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