Earnings Review and Free Research Report: Sonic Reported Better than Expected Earnings

LONDON, UK / ACCESSWIRE / October 18, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Sonic Corp. (NASDAQ: SONC), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=SONC, following the Company's reporting of its fourth quarter fiscal 2017 and full-year fiscal 2017 operating results on October 16, 2017. The fast food Company's sales declined on a y-o-y basis, partially attributed to an intense competitive environment and unfavorable weather conditions, including the devastation caused by Hurricane Harvey. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Earnings Reviewed

For the three months ended August 31, 2017, Sonic reported total revenues of $123.57 million compared to total revenues of $162.19 million in Q4 FY16. For FY17, the Company recorded revenues of $477.27 million versus $606.32 million in FY16. Sonic's quarterly sales fell short of analysts' estimates of $126.1 million.

During Q4 FY17, Sonic's system same-store sales declined 3.3%; consisting of a 3.2% same-store sales decrease at franchise drive-ins and a 4.8% decrease at Company drive-ins. In the reported quarter, the Company drive-in margins increased by 230 basis points versus the year-ago comparable period. For FY17, Sonic's system same-store sales dropped 3.3%; comprising of a 3.2% same-store sales decline at franchise drive-ins, and a decrease of 4.7% at Company drive-ins. For the full fiscal year, the Company drive-in margins contracted by 60 basis points.

During Q4 FY17, Sonic's Franchise segment's revenue decreased by approximately $200,000, or 40 basis points, as a result of same-store sales decline, offset by increased royalty from the Company's refranchising efforts. Sonic's total adjusted operating margin improved 420 basis points to 28.5% in the reported quarter, driven primarily by a higher mix of franchise stores.

For Q4 FY17, Sonic reported net income of $20.8 million, or $0.50 per diluted share, compared to net income of $25.4 million, or $0.53 per diluted share, in Q4 FY16. On an adjusted basis, the Company's net income per diluted share remained flat at $0.45, but topped Wall Street's estimates of $0.43 per share.

For FY17, Sonic's net income totaled $63.7 million, or $1.45 per diluted share, versus net income of $64.1 million, or $1.29 per diluted share, for FY16. On an adjusted basis, the Company's net income and net income per diluted share decreased 14% and 3%, respectively.

Drive-In Openings

During Q4 FY17, Sonic opened 27 new drive-ins while for the full fiscal year, it added 66 new drive-ins. During FY17, the Company opened 36 net new drive-ins, including 22 during the fourth quarter. Sonic's current area development pipeline is up 7% on a y-o-y basis and the Company is targeting 78 gross new unit openings for 2018 and 40 to 50 remodels or relocations as it works towards its 2%-3% annual net unit growth target.

Cash Matters

During Q4 FY17, Sonic repurchased 1.8 million shares for approximately $45 million. For FY17, the Company repurchased 6.7 million shares of its common stock, representing approximately 13.5% of outstanding shares for the fiscal year for approximately $173 million.

FY18 Outlook

For FY18, Sonic reiterated that it expects adjusted earnings per share to increase 5% to 10% on y-o-y basis, and is also estimating approximately 0% to 2% same-store sales growth for the system and Drive-in-level margins of 15.1% to 15.7%, depending on the degree of same-store sales growth at Company drive-ins.

Sonic is projecting capital expenditure of $38 million to $40 million. Excluding spending on build-to-suit drive-in development, the Company expects capital outlays to be in the range of $34 million to $36 million. Sonic is expecting a repurchase of approximately $160 million in shares across the fiscal year and an expected quarterly cash dividend of $0.16 per share.

Stock Performance

On Tuesday, October 17, 2017, the stock closed the trading session at $26.00, climbing 4.84% from its previous closing price of $24.80. A total volume of 4.04 million shares have exchanged hands, which was higher than the 3-month average volume of 773.57 thousand shares. Sonic's stock price advanced 3.54% in the last three months, 7.22% in the past six months, and 1.01% in the previous twelve months. The stock is trading at a PE ratio of 17.80 and has a dividend yield of 2.15%. The stock currently has a market cap of $1.09 billion.

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