Sonic's Earnings Aren't Immune (SONC)

Sonic Corp. (NASDAQ: SONC) has come out after the close with reduced guidance. The outdoor drive-up burger chain is feeling the pinch from raw materials costs, labor costs, food costs, transport costs, and probably a gas-starved suburban driver client base. 

The company sees a 10% decline in Q3 net income to $0.28 EPS versus $0.31 in the prior year.  The company noted that Q3 revenues were up 1% to $213.0 million.  First Call is expecting $0.31 EPS on $219.95 million.

It also sees a -0.4% decline in system-wide same-store sales resulting primarily from weather-affected sales in March; system-wide same-store sales improved as the quarter progressed and returned to the company’s targeted growth range of 2% to 4% in May.  The company did notes that the traffic for the quarter was slightly positive.

The company also had an opening of 41 new drive-ins in Q3, with the relocation or rebuild of 17 existing drive-ins, and the completion of 279 retrofits.

Sonic expects that its Fiscal 2008 EPS will increase in the range of 4% to 6% in fiscal 2008 versus fiscal 2007 earnings per diluted share of $0.96.  While that number is adjusted for prior-year debt refinancing charges.  That is only out to August 2008 and the First Call estimate is $1.05 EPS.

Sonic shares closed up 1.3% at $16.51 in regular trading, and its shares are down over 3.5% at $15.90 in after-hours.  Its 52-week trading range is $15.65 to $26.19.

Jon C. Ogg
June 24, 2008