Sonic Corp. (NASDAQ: SONC), the nation's largest chain of drive-in
restaurants, today announced results for the fourth quarter and fiscal
year ended August 31, 2011. For fiscal 2011, the company reported
system-wide positive same-store sales of 0.5%, with an increase of 1.8%
at company drive-ins and 0.4% at franchise drive-ins. This improvement
compares to a decline of 7.8% for fiscal 2010.
Key highlights of the company's fourth quarter report included:
“It is encouraging to see our service and product initiatives making a
positive impact on sales,” said Clifford Hudson, Chairman and Chief
Executive Officer. “One of the notable achievements in fiscal 2011 was
company drive-in sales performance. Company drive-ins completed the
fiscal year with a 1.8% increase in same-store sales, out-performing the
system. This area of our business continues to present one of the best
near-term opportunities for disproportionate enhancement of earnings and
“In addition to showing sales improvements in fiscal 2011, we also
refinanced our debt at attractive terms,” continued Hudson. “This new
capital structure provides us financial flexibility at a favorable
interest rate. With this facility in place, we expect to generate
approximately $35 million to $40 million of free cash flow1 during
fiscal 2012. We believe the recently announced $30 million share
repurchase program is an effective use of our cash and will optimize
“We are pleased with the overall trajectory of our business. Same-store
sales for the system continue to be positive in the current fiscal
quarter which is on track with our expectations. While we expect
continued sales volatility due to external economic challenges, we
believe the improvements we have made to our business will continue to
yield positive results in 2012 and for the long term,” concluded Hudson.
For the 12 months ended August 31, 2011, revenues declined 0.9% to
$546.0 million from $550.9 million in the prior year. The decrease in
revenues is primarily attributable to the refranchising of 22 company
drive-ins over the last two fiscal years. For the fourth quarter ended
August 31, 2011, revenues decreased 2.5% to $151.2 million from $155.1
million in the year-earlier period.
Net income for fiscal year 2011 totaled $19.2 million or $0.31 per
diluted share compared with net income of $21.2 million or $0.34 per
diluted share for the same period in 2010. Excluding the items outlined
below, net income and net income per diluted share for the year
increased 9% and 10%, respectively. The company's net income for the
fourth quarter of fiscal 2011 totaled $12.3 million or $0.20 per diluted
share compared with net income of $4.7 million or $0.08 per diluted
share in the year-earlier quarter. During the fourth quarter of fiscal
2010, the company recognized an impairment charge of $15.0 million,
primarily comprised of a write down to fair value of company drive-ins.
The following non-GAAP adjustments are intended to supplement the
presentation of the company's financial results in accordance with GAAP.
The company believes that the presentation of these items 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.
For the 12 months ended August 31, 2011, system-wide same-store sales
increased 0.5% compared to the prior year. The increase was comprised of
a 1.8% increase at company drive-ins and a 0.4% increase in same-store
sales at franchise drive-ins for fiscal 2011. For the fourth fiscal
quarter ended August 31, 2011, system-wide same-store sales decreased
0.5% which was comprised of a 0.4% increase at company drive-ins and a
decrease of 0.6% at franchise drive-ins.
For fiscal 2011 there were 43 new drive-in openings including 40 new
franchise drive-ins. Across the Sonic system, a total of 17 new
drive-ins were opened in the fourth quarter, of which 14 were opened by
franchisees, versus 25 new drive-in openings during the fourth quarter
of fiscal 2010, of which 24 were franchise drive-ins. New franchise
drive-in openings in fiscal 2012 are expected to total between 30 and 40.
Fiscal Year 2012 Outlook
The company expects its initiatives to drive sales improvements going
forward. However, uncertainty with regard to the macroeconomic
environment and its impact on consumer confidence may result in
greater-than-expected sales volatility. The outlook for fiscal 2012
anticipates the following elements:
1 Free cash flow is defined as net income plus depreciation,
amortization and stock compensation expense, less capital expenditures
and debt principal payments.
Sonic, America's Drive-In, originally started as a hamburger and root
beer stand in 1953 in Shawnee, Oklahoma called Top Hat Drive-In, and
then changed its name to Sonic in 1959. The first drive-in to adopt the
Sonic name is still serving customers in Stillwater, Oklahoma. Sonic has
more than 3,500 drive-ins coast to coast, where approximately three
million customers eat every day. For more information about Sonic Corp.
and its subsidiaries, visit Sonic at www.sonicdrivein.com.
Earnings Conference Call
The company will host a conference call and online web simulcast this
afternoon beginning at 5:00 p.m. ET. The conference call can be accessed
live over the phone by dialing (888) 215-6896 or (913) 312-0728 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 2491252. The replay will be
available until Tuesday October 25, 2011. 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 will be available
on the investor section of the company's website, www.sonicdrivein.com.
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-owned 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-owned 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.
Note: Change in same-store sales based on drive-ins open for a
minimum of 15 months.
(percentage of company drive-in sales)
** Effective April 1, 2010, the Company revised its compensation
program. Most managers changed from partners to employees and their
compensation is now reflected in Payroll and employee benefits rather
than Noncontrolling interests.