System same-store sales decreased 1.7%, consisting of a 1.6% decline at franchise drive-ins and a 3.2% decline at company-owned drive-ins during Sonic Corp’s (NASDAQ: SONC) first quarter of 2018. Despite beating analyst estimates, CEO Cliff Hudson noted, “As expected, our first quarter same-store sales declined modestly versus prior year reflecting continued intense competitive pressure and unfavorable weather.”
The company’s total sales decreased 18.6% year over year in the first quarter to $105.4 million. Hudson added, “Excluding the impact of weather, same-store sales were flat, indicating an improvement in underlying traffic trends.” Sonic also added five new drive-ins during the quarter.
Despite the considerable drop in sales, Sonic managed to improve earnings per share through extensive share repurchases. The company posted net income of $11.4 million in the first quarter of 2018, compared to $13.1 million in the year-ago period. Earnings per diluted share increased $0.01 to $0.29, as weighted average diluted shares outstanding decreased to 39.9 million from 46.5 million. Sonic repurchased 1.7 million shares during the quarter.
For fiscal-year 2018, Sonic expects 0-2% growth in system same-store sales and 70-80 new franchise drive-in openings. The company also estimates it will have $60-65 million in free cash flow for the year, and it will repurchase approximately $160 million in shares.
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