• Home:
• News:
• SONIC Drive-In:

Sonic Same-Store Sales Grow 6.5% for the Quarter Ending February 29

By: SONIC Drive-In |  1,023 Shares     113 Reads

Two Year Winter Quarter Cumulative Sales Growth Totals 18%

OKLAHOMA CITY - March 29, 2016 - (BUSINESS WIRE) - Sonic Corp. (NASDAQ:SONC), the nation's largest chain of drive-in restaurants, today announced results for its second fiscal quarter ended February 29, 2016.

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

• Net income per diluted share increased 57% to $0.22 compared with $0.14 in the same period prior year; adjusted net income per diluted share increased 38% to $0.18 compared with adjusted net income per diluted share of $0.13 in the prior-year period;
• System same-store sales increased 6.5%, consisting of a 6.5% same-store sales increase at franchise drive-ins and an increase of 6.3% at company drive-ins;
• Company drive-in margins improved by 60 basis points;
• Five new franchise drive-ins opened; and
• The company purchased 0.9 million outstanding shares.

"Our business continues to perform at an exceptional level, generating 6.5% same-store sales growth for the system while lapping our strongest same-store sales comparison in ten years," said Cliff Hudson, Sonic Corp. CEO. "Continued strength in core menu items, combined with highly effective limited-time-offer and value-based promotions, allowed us to increase market share in a highly competitive environment. The combination of sales leverage and a favorable commodity cost environment helped to generate another quarter of solid margin improvement at the drive-in level.

"As we look to sustain our recent momentum, we continue to invest aggressively in our people and technology initiatives, which we believe will further differentiate the experience we provide to our consumers," continued Hudson. "And we are pleased to have repurchased 2.7 million shares in the first half of 2016, representing 5.2% of shares outstanding. We remain confident in the ability of our multi-layered growth strategy to increase EPS through same-store sales growth, improved margins, increased royalty revenues, accelerated new drive-in development and the deployment of free cash flow¹."

Same-Store Sales

For the second fiscal quarter ended February 29, 2016, system same-store sales increased 6.5%, which was comprised of a 6.5% same-store sales increase at franchise drive-ins and an increase of 6.3% at company drive-ins.

Financial Overview

For the second fiscal quarter of 2016, the company's net income increased to $10.8 million or $0.22 per diluted share compared with net income of $7.7 million or $0.14 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 29% and 38%, 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
			February 29, 2016										February 28, 2015
			Net					Diluted					Net					Diluted					Net Income								Diluted EPS
			Income					EPS					Income					EPS					$ Change				% Change				$ Change				% Change
Reported - GAAP			$	10,819				$	0.22				$	7,662				$	0.14				$	3,157			41	%			$	0.08			57	%
After-tax gain on sale of real estate				(1,211	)				(0.03	)				-					-
Retroactive benefit of Work Opportunity Tax Credit and resolution of tax matters				(585	)				(0.01	)				(666	)				(0.01	)
Adjusted - Non-GAAP			$	9,023				$	0.18				$	6,996				$	0.13				$	2,027			29	%			$	0.05			38	%

For the first six months of fiscal year 2016, net income totaled $23.3 million or $0.46 per diluted share compared with net income of $17.7 million or $0.32 per diluted share for the same period in 2015. Excluding the items outlined below, net income and net income per diluted share increased 26% and 35%, respectively.

			Six months ended								Six months ended
			February 29, 2016								February 28, 2015
			Net				Diluted				Net				Diluted				Net Income								Diluted EPS
			Income				EPS				Income				EPS				$ Change				% Change				$ Change				% Change
Reported - GAAP			$	23,277			$	0.46			$	17,747			$	0.32			$	5,530			31	%			$	0.14			44	%
After-tax gain on sale of real estate				(1,211)				(0.03)				-				-
Retroactive benefit of Work Opportunity Tax Credit and resolution of tax matters				(585)				(0.01)				(666)				(0.01)
Adjusted - Non-GAAP			$	21,481			$	0.42			$	17,081			$	0.31			$	4,400			26	%			$	0.11			35	%

Fiscal Year 2016 Outlook

While the macroeconomic environment may impact results, the company is revising its outlook for adjusted earnings per share growth for fiscal year 2016 from 16% to 20% to 20% to 25%. The outlook for fiscal 2016 anticipates the following elements:

• 4% to 6% 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 50 to 60 basis points, depending upon the degree of same-store sales growth at company drive-ins;
• Selling, general and administrative expenses of approximately $84.0 million to $85.0 million reflecting increased investment in human resources and technology to support brand initiatives;
• Depreciation and amortization expense of $45.0 million to $46.0 million as a result of capital investment in fiscal 2016;
• Capital expenditures of $35 million to $40 million;
• Free cash flow of approximately $75 million to $80 million;
• An income tax rate between 36.0% to 37.0%;
• The planned repurchase of $126 million of stock across the fiscal year; and
• An expected quarterly cash dividend of $0.11 per share.

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

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) 438-5448 or (719) 325-2491 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 8155461. The replay will be available until Tuesday, April 5, 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. For more than 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													Six months ended
				February 29,					February 28,								February 29,					February 28,
				2016					2015								2016					2015
Revenues:
Company Drive-In sales				$	95,313				$	92,309							$	199,196				$	192,447
Franchise Drive-Ins:
Franchise royalties and fees					36,047					32,407								75,969					70,671
Lease revenue					1,399					979								2,991					2,044
Other					401					524								807					913
Total revenues					133,160					126,219								278,963					266,075
Costs and expenses:
Company Drive-Ins:
Food and packaging					26,213					25,828								55,159					54,401
Payroll and other employee benefits					35,359					33,880								71,723					69,151
Other operating expenses, exclusive of
depreciation and amortization included below					20,100					19,924								43,008					42,529
Total cost of Company Drive-In sales					81,672					79,632								169,890					166,081
Selling, general and administrative					20,785					18,138								41,725					36,926
Depreciation and amortization					11,057					11,539								22,056					23,199
Other operating (income) expense, net					(2,566	)				(81			)					(2,965	)				340
Total costs and expenses					110,948					109,228								230,706					226,546
Income from operations					22,212					16,991								48,257					39,529
Interest expense					6,467					6,318								12,689					12,599
Interest income					(105	)				(97			)					(205	)				(199	)
Net interest expense					6,362					6,221								12,484					12,400
Income before income taxes					15,850					10,770								35,773					27,129
Provision for income taxes					5,031					3,108								12,496					9,382
Net income				$	10,819				$	7,662							$	23,277				$	17,747
Basic income per share				$	0.22				$	0.14							$	0.47				$	0.33
Diluted income per share				$	0.22				$	0.14							$	0.46				$	0.32
Weighted average basic shares					48,977					53,171								49,599					53,226
Weighted average diluted shares					49,988					54,660								50,656					54,744

 

SONIC CORP.
Unaudited Supplemental Information
			Three months ended								Six months ended
			February 29,				February 28,				February 29,				February 28,
			2016				2015				2016				2015
Drive-Ins in Operation
Company:
Total at beginning of period			382				389				387				391
Opened			-				-				-				1
Acquired from (sold to) franchisees			(7	)			3				(9	)			1
Closed (net of re-openings)			-				-				(3	)			(1	)
Total at end of period			375				392				375				392
Franchise:
Total at beginning of period			3,147				3,128				3,139				3,127
Opened			5				4				18				16
Acquired from (sold to) the company			7				(3	)			9				(1	)
Closed (net of re-openings)			(6	)			(13	)			(13	)			(26	)
Total at end of period			3,153				3,116				3,153				3,116
System-wide:
Total at beginning of period			3,529				3,517				3,526				3,518
Opened			5				4				18				17
Closed (net of re-openings)			(6	)			(13	)			(16	)			(27	)
Total at end of period			3,528				3,508				3,528				3,508

 

		Three months ended										Six months ended
		February 29,					February 28,					February 29,					February 28,
		2016					2015					2016					2015
		($ in thousands)										($ in thousands)
Sales Analysis
Company Drive-Ins:
Total sales		$	95,313				$	92,309				$	199,196				$	192,447
Average drive-in sales			253					237					522					496
Change in same-store sales			6.3	%				11.2	%				5.3	%				9.5	%
Franchised Drive-Ins:
Total sales		$	886,313				$	818,601				$	1,854,828				$	1,732,254
Average drive-in sales			283					267					593					561
Change in same-store sales			6.5	%				11.5	%				5.9	%				9.8	%
System-wide:
Change in total sales			7.8	%				12.8	%				6.7	%				10.9	%
Average drive-in sales		$	280				$	264				$	585				$	554
Change in same-store sales			6.5	%				11.5	%				5.9	%				9.8	%

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

SONIC CORP.
Unaudited Supplemental Information
			Three months ended								Six months ended
			February 29,				February 28,				February 29,				February 28,
			2016				2015				2016				2015
			(In thousands)								(In thousands)
Revenues
Company Drive-In sales			$	95,313			$	92,309			$	199,196			$	192,447
Franchise Drive-Ins:
Franchise royalties				35,807				32,236				75,269				69,012
Franchise fees				240				171				700				1,659
Lease revenue				1,399				979				2,991				2,044
Other				401				524				807				913
Total revenues			$	133,160			$	126,219			$	278,963			$	266,075

 

			Three months ended								Six months ended
			February 29,				February 28,				February 29,				February 28,
			2016				2015				2016				2015
Margin Analysis (percentage of Company Drive-In sales)
Company Drive-Ins:
Food and packaging			27.5	%			28.0	%			27.7	%			28.3	%
Payroll and employee benefits			37.1				36.7				36.0				35.9
Other operating expenses			21.1				21.6				21.6				22.1
Cost of Company Drive-In sales			85.7	%			86.3	%			85.3	%			86.3	%

 

			February 29,					August 31,
			2016					2015
			(In thousands)
Selected Balance Sheet Data
Cash and cash equivalents			$	36,106				$	27,191
Current assets				85,024					85,438
Property, equipment and capital leases, net				411,226					421,406
Total assets			$	606,747				$	620,024
Current liabilities, including capital lease obligations and
long-term debt due within one year			$	69,484				$	87,821
Obligations under capital leases due after one year				19,493					20,763
Long-term debt due after one year				484,863					428,238
Total liabilities				639,967					602,591
Stockholders' equity (deficit)			$	(33,220	)			$	17,433

SOURCE Sonic Corp.

Contact:

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

###

Comments:

comments powered by Disqus