Sonic Corporation (NASDAQ: SONC) stock fell over 8.1% in the pre-market session on June 27th, 2018 (Source: Google finance) after the company missed the revenue estimates in the third quarter of FY 18. For the third fiscal quarter of 2018, the company’s net income totaled $21.6 million compared to net income of $18.8 million in the same period of the prior year.
SONC in the third quarter of FY 18 has reported the adjusted earnings per share of 52 cents, beating the analysts’ estimates for the adjusted earnings per share of 49 cents. The company had reported the adjusted revenue of $118.3 million in the third quarter of FY 18, beating the analysts’ estimates for revenue of $119.7 million. The System same-store sales have declined 0.2%, consisting of a 0.2% same-store sales decrease at franchise drive-ins and a 0.2% increase at company drive-ins. The company drive-in margins fell by 10 basis points as compared to the year-ago period. The company has opened 5 new drive-ins during the third quarter of 2018.
Going forward, SONC on the product front, are now promoting new Chicken Tenders as part of a $3.99 Crispy Tender Dinner, as well as Snow Cone Slushes featuring innovative flavors such as Pickle Juice and Tiger’s Blood. The company continues to roll out the mobile order ahead of technology across the system after a successful operational test in the third fiscal quarter. SONC expect to focus on delighting the guests and delivering a more convenient and personalized experience will continue to drive improved traffic, accelerate operating profit growth and generate strong free cash flow.
Moreover, during the third quarter, SONC has repurchased 1.5 million shares, bringing the total to 4.3 million shares repurchased for the first nine months of fiscal 2018, or 9.8% of shares outstanding. The company expects the leverage to remain near the high end of the 3.5-4.5x net-debt-to-EBITDA target and project returning a cumulative $500 to $600 million in capital to investors from fiscal 2018 through fiscal 2021 through a combination of dividends and share repurchases.
Additionally, SONC has doubled the weight in digital media and this now constitutes 20% of the marketing spend. The social digital channels continue to be highly effective and high effective than low cost, ways of driving customers into the ICE network through targeted offers. As it relates to harnessing consumer data, driving consumers into the network is probably the biggest priority over the coming months and years. And within internal goal to grow the customer database like fivefold over the next five years.