Industry News | March 13, 2001

Sonic Adds 35 Drive-Ins, Reports Sales

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Sonic Corp. (Nasdaq/NM:SONC) today announced that its operating division has entered into an agreement that provides for the acquisition of 35 franchise drive-ins, all of which are located in the Tulsa, Oklahoma market. The stores are expected to become part of company operations in the next 30 days. Terms of the agreement were not disclosed.

In announcing the acquisition, Clifford Hudson, Sonic's Chairman and Chief Executive Officer, said, "This is an exciting opportunity for us to augment our revenue and earnings growth while not significantly affecting the franchising side of our business, which is a centerpiece of our company's continuing growth strategy. These types of acquisitions provide a lower-risk vehicle for deploying excess cash flow, given that the stores are located in a core market and are already proven performers.''

The company also reported today that estimated system-wide same-store sales improved considerably during January and February versus December and same-store sales during that time period were in the anticipated range of a 2% to 4% increase, adjusting for the extra sales day occurring in February 2000. However, the company noted that unseasonably cold and wet weather during December affected not only sales performance for that month, but also resulted in fewer franchise store openings during the quarter than anticipated. As a result of these factors and continued pressure on some restaurant level costs, most notably utility costs, the company believes that earnings for its second quarter ending February 28, 2001, will likely be at the lower end of the $.20 to $.22 range of current analyst expectations. In the second quarter last year, Sonic reported revenues of $58.4 million and net income of $5.2 million or $0.18 per diluted share (adjusted for a three-for-two stock split distributed in November 2000). The company expects to report results for the second quarter ending February 28, 2001, during the last week of March 2001.

"Despite the impact that difficult weather conditions during December may have on this quarter's performance, we remain confident in the strategies we have in place to drive 18% to 20% growth in earnings per share over the longer term,'' Hudson noted. "As the strong sales performance during January and February indicates, our business remains very healthy and the same fundamentals of our multi-layered growth strategy that have produced consistent growth in the past remain in place.''