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Sonic Reports Improved Sales And Operating Income

Stocks in this article: SONC

Please replace release due to revisions to the Sales Analysis information found in the Unaudited Supplemental Information tables.

The corrected release reads:

SONIC REPORTS IMPROVED SALES AND OPERATING INCOME

Sonic Corp. (NASDAQ: SONC), the nation's largest chain of drive-in restaurants, today announced results for its second fiscal quarter ended February 29, 2012. Key highlights of the company's second quarter report included:

  • The company's net income per diluted share for the second quarter of fiscal 2012 was $0.03 compared with net income per diluted share of $0.07 for the second quarter of fiscal 2011; excluding a gain on early extinguishment of debt, net income per diluted share was $0.02 in the second quarter of fiscal 2011;
  • System-wide same-store sales increased 3.5% during the second quarter, with an increase of 3.6% at franchise drive-ins and a 3.1% increase at company drive-ins; and
  • The company opened 10 franchise locations during the second quarter of fiscal 2012 compared to five franchise openings in the prior-year same period.

“We are pleased with our second quarter results and believe they reflect our ongoing focus on improving our products and service,” said Cliff Hudson, Chairman and Chief Executive Officer. “We believe a continued focus on innovative and distinctive products to drive sales across multiple day-parts, combined with our new creative strategy which was implemented at the end of the quarter, will continue to distinguish Sonic from the competition and will help drive more consistent and sustained same-store sales growth going forward. We are especially pleased with the addition of James O’Reilly as our new Chief Marketing Officer. His depth of experience in the quick-service restaurant industry will assist our efforts to build on these initiatives.”

“Despite commodity cost pressure, we were able to improve drive-in level margins reflecting leverage from improved sales. From a capital perspective, we expect to generate $50 million to $55 million in free cash flow 1 during the current fiscal year. As we have done in the recent past, we will utilize the strength and flexibility of our business model to grow operating income and use our free cash flow to invest in our brand, opportunistically pay down debt or repurchase stock,” concluded Hudson.

Financial Overview

For the second fiscal quarter ended February 29, 2012, revenues increased 1.4% to $115.1 million from $113.5 million in the year-earlier period. The increase was primarily comprised of improved same-store sales partially offset by a decline from the refranchising of 31 stores during the quarter. The company's net income for the second quarter of fiscal 2012 totaled $1.7 million or $0.03 per diluted share compared with reported net income of $4.3 million or $0.07 per diluted share in the year-earlier quarter. Excluding a $5.2 million ($3.3 million after-tax) gain from the early extinguishment of debt in the quarter ended February 28, 2011, net income per diluted share was $0.02 for the second quarter of fiscal 2011.

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