Sonic Corp. (NASDAQ: SONC), the nation's largest chain of drive-in restaurants, today announced results for its third fiscal quarter ended May 31, 2012. Key highlights of the company's third quarter report included:
- The company's net income per diluted share for the third quarter of fiscal 2012 was $0.24 compared with a net loss per diluted share of $0.08 for the third quarter of fiscal 2011; excluding debt extinguishment costs in the year-earlier quarter, net income per diluted share was $0.21;
- System-wide same-store sales increased 2.8% during the third quarter, with an increase of 3.7% at company drive-ins and a 2.7% increase at franchise drive-ins; and
- Restaurant-level operating margins improved 140 basis points to 17%.
“Strong third quarter sales were driven by a layered day-part promotional strategy anchored by an integrated creative campaign that showcased multiple existing and new products appealing across all day-parts. We believe this effective use of creative and day-part promotional strategy complements the company’s strong foundation of improved service, product quality and pricing and will help us achieve consistent, sustainable sales growth going forward,” said Clifford Hudson, Chairman and Chief Executive Officer. “We are working to increase shareholder value using a multi-layered growth strategy which incorporates sales growth, leverage from higher sales, use of cash, increasing royalty revenue and new drive-in development to achieve double digit earnings per share growth. We were very pleased that positive same-store sales in the third quarter fueled other layers in our multi-layered growth strategy including operating leverage and increased franchising revenue resulting in a 14% increase in earnings per share, on an adjusted basis.
“With respect to return on capital, we are pleased to report Sonic completed its $30 million share repurchase program in early June. Fiscal year to date, stock repurchases totaled approximately four million shares or over 6% of the stock that was outstanding as of the beginning of our fiscal year,” added Hudson. “Over the next two to three years we will continue to utilize the strength and flexibility of our business model to grow operating income and use our free cash flow
to opportunistically invest in our brand, repurchase stock and pay down debt. We expect each of the layers in our growth strategy to contribute to our ability to grow earnings per share at a rate in the low-to-mid teens in both the near term and longer term.”
For the third fiscal quarter ended May 31, 2012, the company's net income totaled $14.4 million or $0.24 per diluted share compared with a net loss of $4.7 million or $0.08 per diluted share in the year-earlier quarter, which reflected costs associated with the May 2011 refinancing of Sonic's previously outstanding debt. Excluding the $17.8 million after-tax costs from the early extinguishment of debt in the quarter ended May 31, 2011, net income per diluted share was $0.21 for the third quarter of fiscal 2011.