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    Sonic's Q4 Sales Rise Headed Into Inspire Brands Merger

  • Industry News October 16, 2018
    Sonic Drive-In
    On September 25, Sonic and Inspire Brands, Inc. announced that they entered into a definitive merger agreement under which Inspire will acquire Sonic for $43.50 per share in cash in a transaction valued at approximately $2.3 billion including the assumption of Sonic’s debt.

    Sonic Corp. announced results for its fourth fiscal quarter ended August 31.

    Key highlights of the company’s fourth quarter of fiscal year 2018 included:

    • Net income per diluted share increased 2 percent to $0.51 versus $0.50 in the prior-year period; adjusted net income per diluted share increased 16% to $0.52 versus $0.45 in the prior-year period;
    • System same-store sales rose 2.6 percent, consisting of a 2.6 percent same-store sales increase at franchise drive-ins and a 2.5 percent increase at company drive-ins;
    • Company drive-in margins declined by 80 basis points as compared to the year-ago period;
    • 23 system drive-ins opened; and
    • The company repurchased approximately 890,000 outstanding shares.

    Key highlights of the company’s fiscal year 2018 included:

    • Net income per diluted share increased 29 percent to $1.87 versus $1.45 in the prior-year; adjusted net income per diluted share increased 19 percent to $1.49 versus $1.25 in the prior-year;
    • System same-store sales declined 0.3 percent, consisting of a 0.3 percent same-store sales decrease at franchise drive-ins and a 0.8 percent decrease at company drive-ins;
    • Company drive-in margins were flat compared to the prior year;
    • 41 system drive-ins opened; and
    • The company repurchased 5.2 million outstanding shares.

    “I am proud of the progress we made over the course of fiscal 2018, culminating in solid same-store sales performance in the fiscal fourth quarter. I thank our operators for their sustained efforts to offer the most personalized experience in the quick service restaurant industry and their confidence in underwriting a strong future for the brand through investments in drive-ins, people and technology, as well as their dedication to their employees and communities,” says Cliff Hudson, Sonic Corp. CEO. “Over the past year, our team implemented initiatives to enhance our marketing reach, refresh our advertising, introduce exciting new product news and complete the rollout of mobile Order Ahead to the entire system. The future is bright for the Sonic brand.”

    During fiscal year 2018, the company repurchased 5.2 million shares of its common stock for $139.2 million, representing 12 percent of shares outstanding, and made aggregate dividend payments of $24 million. The company ended the fiscal year with a 4.7x net-debt-to-EBITDA leverage ratio based on $144.8 million of EBITDA for the fiscal year.

    For the fourth fiscal quarter of 2018, the company’s net income totaled $18.6 million or $0.51 per diluted share compared to net income of $20.8 million or $0.50 per diluted share in the same period of the prior year. Excluding the items outlined below, net income was flat and net income per diluted share increased 16% to $0.52. The lower tax rate resulting from federal tax reform benefitted adjusted earnings per share by approximately $0.05. Excluding the total impact of federal tax reform, adjusted net income per diluted share improved 4 percent to $0.47 in the fourth quarter of fiscal year 2018.

    The following analysis of non-GAAP adjustments is intended to supplement the presentation of the company’s financial results in accordance with GAAP. The company believes the presentation of this analysis provides useful information to investors and management regarding the underlying business trends and the performance of the company’s ongoing operations and is helpful for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the financial results of the company and predicting future performance.

    On September 25, Sonic and Inspire Brands, Inc. announced that they entered into a definitive merger agreement under which Inspire will acquire Sonic for $43.50 per share in cash in a transaction valued at approximately $2.3 billion including the assumption of Sonic’s debt.

    Inspire is a multi-brand restaurant company whose portfolio includes more than 4,700 Arby’s, Buffalo Wild Wings, and Rusty Taco locations worldwide. Following the completion of the transaction, Sonic will be a privately held subsidiary of Inspire and will continue to be operated as an independent brand.

    News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.