* Net income per diluted share for the quarter totaled $0.12 versus $0.22 in the prior-year quarter
* System-wide same-store sales declined 3.6% for the first quarter, reflecting a challenging economic climate; same-store sales at partner drive-ins (drive-ins in which the company owns a majority interest) declined 6.6%
* System-wide new drive-in openings totaled 39 and 21 relocations or rebuilds were completed versus 36 and 15, respectively, in the prior-year first quarter, reflecting continued investment by franchisees in the Sonic system
* Sonic refranchised one market during the first quarter and one additional market subsequent to the end of the quarter, for a combined total of 17 drive-ins.
"The economic environment continues to weigh heavily on consumer discretionary spending," Clifford Hudson, Chairman and Chief Executive Officer, said. "We have responded to the current downturn, as we have previously discussed, by taking a more strategic approach to pricing to provide our customers broader choices at different price points. Our new value menu, launched last week, figures prominently in this effort, ensuring that Sonic is well-positioned to offer both our signature selection of premium products alongside new, value-oriented options for customers seeking lower-priced choices. The new value menu has a full range of products that appeal to consumers across all day parts, and is being supported with higher levels of national cable television advertising, as well as local radio spots and other media initiatives.
"While sales and earnings for the first quarter reflect challenging conditions, we believe the addition of the value menu, in conjunction with other initiatives, provides a good foundation as we begin calendar year 2009," Hudson added. "We are excited about the increased breadth of our menu, its reach to a broader segment of consumers, and its potential impact on future sales."
Hudson noted that to date the company has refranchised 17 drive-ins in two smaller markets. "These transactions reflect our franchisees' confidence in the Sonic brand, and its future success, and we are pleased to see this momentum in our re-franchising program," he said. As previously announced, the company intends to reduce the overall percentage of partner drive-ins to a range of 12% to 14% of the system over the next few years from approximately 20% at the end of fiscal 2008.
For the first quarter ended November 30, 2008, revenues declined 3% to $184.1 million from $190.2 million in the year-earlier period. Net income for the quarter declined 48% to $7.1 million or $0.12 per diluted share from $13.6 million or $0.22 per diluted share in the year-earlier period. Lower sales at partner drive-ins, combined with ongoing restaurant operating cost pressures, had a disproportionate impact on the decline in first quarter earnings.
For the first fiscal quarter ended November 30, 2008, system-wide same-store sales declined 3.6% versus an increase of 2.1% for same quarter last year. The decline in system-wide same-store sales was composed of 2.9% lower same-store sales at franchise drive-ins and a 6.6% decline at partner drive-ins.
System-wide drive-in openings totaled 39 in the first quarter, including 34 franchise drive-ins, versus 36 new drive-in openings the first quarter of fiscal 2008, including 31 by franchisees. Franchisees completed 19 rebuilds and relocations along with 128 retrofits in the first quarter of fiscal 2009 compared with 15 and 202, respectively, in the prior-year period.
"While our business, along with many others, faces a challenging environment in the near term, the Sonic brand remains strong, and we continue to make significant progress in our transition from a regional to a national chain," Hudson said. "Our focus remains squarely on providing high quality, differentiated products and friendly customer service that have long been our hallmark. The addition of the everyday value menu, which was designed with our customers' current needs clearly in mind, together with our re-franchising initiative, should help create momentum in the short term and position us well for even greater success over the longer term as economic conditions improve."
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