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Net income for the first quarter increased 12 percent to $9.6 million, versus $8.5 million in the same period last year, and rose 10 percent on a diluted per-share basis to $0.34 from $0.31 in the year-earlier period. Revenues for the first quarter were up 23 percent to $87.3 million compared with $71.0 million in the first quarter last year.
"We are pleased with our first quarter results, particularly the strong momentum that characterized our operations as the quarter ended," said Clifford Hudson, Sonic's chairman and CEO. "After a somewhat sluggish sales environment during September and October, same-store sales accelerated nicely during November and, for the month, were significantly ahead of our targeted range of 2 percent to 4 percent. These strong sales results continued in December and reflect the continued success of our core sales-driving strategies, which also produced a 4.8 percent gain in same-store sales during the last six months of fiscal 2001."
Hudson noted that strong promotions and new product news, coupled with higher media expenditures, played an important role in driving higher sales in the first quarter. During the quarter, Sonic also finalized its plans for a significant expansion of its breakfast program. The company plans to more than double the number of stores participating in the breakfast program from approximately four hundred stores today to well over nine hundred stores by the end of spring 2002.
"We are very encouraged by the response to our breakfast initiative from both customers and operators," Hudson said. "This is a key part of our ongoing efforts to further penetrate under-leveraged day parts which, in turn, supports our goal of increasing average unit volumes and profits.'"
According to Hudson, Sonic's systemwide same-store sales for the first quarter rose 2.1 percent. The company also opened 48 new drive-ins, including 36 franchise restaurants, and remains on track to add a record 190 to 200 new drive-ins to its chain in fiscal 2002. Results for the first quarter also were aided by improved restaurant level margins resulting from lower discounting versus a year ago as well as lower-than-expected beef and dairy costs.
"We believe Sonic remains in a very sound position," said Hudson, "to deliver industry-leading growth in sales and profits during the balance of fiscal 2002 and beyond. Our confidence reflects the proven success of our multi-layered growth strategy which includes continued strong sales growth, higher franchise income stemming from our unique ascending royalty rate, increased new unit openings, and ongoing operating leverage, particularly from corporate-level expenses. Our expected top line growth is based on new store development, as well as our target for 2 percent to 4 percent higher same-store sales that will be fueled by ongoing new product news, higher media expenditures, and our day part initiatives, including the expansion of the breakfast program. The resulting increase in average unit volumes should boost our franchise income and create the opportunity for leverage on the lower part of the income statement, resulting in 18 percent to 20 percent earnings growth during fiscal 2002."