Sonic Corp (SONC) Tops Q2 EPS by 2c

Sonic Corp (NASDAQ: SONC) reported Q2 EPS of $0.14, $0.02 better than the analyst estimate of $0.12. Revenue for the quarter came in at $126.22 million versus the consensus estimate of $123.58 million.

System same-store sales increased 11.5%, consisting of an 11.5% same-store sales increase at franchise drive-ins and an increase of 11.2% at company drive-ins.

“Successful company initiatives combined with an improving macro environment resulted in an exceptionally strong second fiscal quarter with 11.5% same-store sales growth. We are particularly pleased that traffic drove two-thirds of our same-store sales increase,” said Cliff Hudson, Sonic Corp. CEO. “This increase is primarily a result of growth in our core menu items and product innovation, complemented by our national media strategy. As we move into the second half of fiscal 2015 we expect our business momentum to continue. In addition, we expect technology initiatives to provide an additional layer of growth to build sales and profits over the next several years.

“We also executed accelerated share repurchase agreements during the second quarter to purchase $75 million of stock. Our fiscal year-to-date share repurchases now total $95 million, representing approximately 5% of our outstanding shares as of the beginning of the fiscal year. Since our current repurchase program began in fiscal 2012, we have repurchased nearly $242 million of stock representing 23% of our outstanding shares. We have completed these repurchases while strengthening our balance sheet, which reflects the stability of our franchise business model.

Fiscal Year 2015 Outlook

The company expects its initiatives to drive 25% to 27% earnings per share growth, on an adjusted basis, in fiscal 2015 as compared to the adjusted non-GAAP earnings per share for fiscal 2014. The macroeconomic environment may impact results. The outlook for the second half of fiscal 2015 anticipates the following elements:

• Positive same-store sales in the low to mid-single digit range for the system for the third and fourth fiscal quarters;
• Company drive-in same-store sales growth expected to outperform franchisees as a result of the recent implementation of new digital menu boards and point-of-sale systems;
• Incremental royalty revenue growth from same-store sales improvements, new unit development, and 900 drive-ins converting to a higher royalty rate structure at the beginning of fiscal 2015;
• 34 to 44 new franchise drive-in openings, resulting in net unit growth for the system;
• Drive-in-level margin improvement of between 100 to 150 basis points, reflecting an improving outlook for commodity cost inflation and leverage from company drive-in same-store sales growth;
• Selling, general and administrative expenses of $39.5 million to $40.5 million, reflecting increased investment in human resources to support the brand initiatives described above;
• Depreciation and amortization expense of $23 million to $23.5 million;
• Net interest expense of $13 million to $13.5 million; and
• An income tax rate of between 36% and 37%, reflecting the benefit of various ongoing tax credit programs.

The company anticipates the following elements for fiscal 2015:

• Capital expenditures of $30 million to $40 million;
• Free cash flow of $70 million to $80 million;
• The planned repurchase of $105 million of stock; and
• A quarterly cash dividend of $0.09 per share resulting in an estimated payout of $19 million.

For earnings history and earnings-related data on Sonic Corp (SONC) click here.

You May Also Be Interested In

• IDT Corp. (IDT) Tops Q3 EPS by 2c; offer guidance
• Broadcom results, guidance beat on soaring AI chip sales; stock slips after hours
• Cognyte Software (CGNT) Misses Q1 EPS by 5c ; Offers Guidance