Industry News | October 18, 2001

Sonic Sees 24% EPS Increase

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Sonic Corp. (Nasdaq/NM: SONC) today reported record earnings and revenues for its fourth quarter and fiscal year ended August 31, 2001. The company's fourth quarter results reflected the operating momentum that began to build earlier in the year - a trend driven by increased same-store sales and average unit volumes, a record pace for drive-in openings, higher franchising income, and improved profitability at the corporate level.

For the fourth quarter, net income increased 24% to $13.5 million versus $10.8 million in the same period last year; on a diluted per share basis, net income rose 20% to $0.48 from $0.40 in the year-earlier period. Revenues for the fourth quarter were up 29% to $104.8 million compared with $81.5 million in the fourth quarter last year.

For fiscal 2001, net income rose 19% to $39.0 million from $32.6 million the previous year, while net income per diluted share increased 20% to $1.40 compared with $1.17 last year. At $330.6 million, total revenues for fiscal 2001 were 18% ahead of the $280.1 million reported in fiscal 2000.

"We are pleased to have ended fiscal 2001 in such a strong fashion, with revenues, same-store sales and profits all exceeding expectations," said Clifford Hudson, chairman and chief executive officer. "These results, highlighted by our 15th consecutive year of same-store sales growth and another new record for drive-in openings, underscore the strength of the Sonic brand and the ongoing success of our multi-layered growth strategy."

Hudson noted that Sonic's strong sales performance resulted from ongoing initiatives including increased media spending, strong promotions and new product news, newly redesigned menus, and strategies to further penetrate underserved day parts, including an expanded breakfast program. "We continue to look for highly differentiated ways to surprise and delight our customers," he added. "Our emphasis remains on delivering a one-of-a-kind fast-food dining experience through unique menu selections, high quality, made-to-order food, and the best service in the business."

According to Hudson, Sonic's system-wide same-store sales for the fourth quarter rose 4.9% - well ahead of the 2.8% increase reported in the same period last year and exceeding the company's strong results in the third quarter to extend the significant rebound in same-store sales from the weather-affected first half of fiscal 2001. For fiscal 2001, system-wide same-store sales increased 1.8% versus 3.0% in the previous year. System-wide average unit volumes increased 5.0% and 2.5%, respectively for the fourth quarter and full-year periods. ¶

Sonic ended fiscal 2001 with a total of 2,359 drive-in restaurants in operation. Marking a historic year for drive-in development, the company opened a record total of 191 new restaurants during the past year, including 157 by franchisees, versus a total of 174 in the prior-year. In the fourth quarter alone, Sonic opened a record 68 drive-ins, including 56 by franchisees, versus a total of 62 in the fourth quarter of fiscal 2000. The company expects that its drive-in development will continue at a record pace next year, based on plans for an additional 190 to 200 new drive-in openings in fiscal 2002.

Concluding, Hudson said: "We believe Sonic remains soundly positioned to deliver strong earnings growth again in fiscal 2002, and we are maintaining our earnings per share target growth in the range of 18% to 20% for the year. Underlying this goal are several expectations, including continuing same-store sales growth of between 2% to 4% for the year as a whole, the increasing benefit of the franchising income related to the company's unique ascending royalty rate, franchisee-focused unit growth that extends the record pace we set this past year, and continued leverage of our corporate expenses as we expand our system. We remain excited about the prospects of another record year in the making for fiscal 2002, despite the uncertainties caused by the September 11 terrorist attacks on our nation and the near-term impact that shaken consumer confidence may have on our first quarter results. Our proven growth strategies remain in place and are expected to continue to drive the company's sales and earnings to new levels in the coming year."