Sonic Corp. (NASDAQ: SONC) reported its third quarter financial results and topped earnings estimates, but fell short on revenue estimates. Despite the earnings beat, Sonic shares slipped by 9.8 percent during early trading on Wednesday.
For the first quarter, Sonic reported revenue of $118.31 million, falling 4.6 percent year over year and missing FactSet’s estimates of $118.9 million. The company reported adjusted EPS of 52 cents, topping FactSet’s estimates of 49 cents.
Same store sales declined by 0.2 percent, consisting of a 0.2 percent same store sale decrease at franchise drive-ins and 0.2 percent increase at company drive-ins. Sonic opened 5 new drive-in locations within the quarter.
"Our third quarter same-store sales performance reflects a material improvement in trend, driven by ongoing initiatives to increase marketing reach, refresh our advertising creative and introduce relevant new products, including the Sonic Signature Slinger and Pretzel Twist," said Cliff Hudson, Sonic CEO. "We continued to support a simplified everyday value message via the Carhop Classic promotion in April and May, which featured a Quarter-Pound Double Cheeseburger or Signature Slinger and Tots for $2.99. These broadly appealing value options offer compelling price points and are key to our efforts to drive traffic and increase sales.”
Looking ahead, Hudson expects Sonic to benefit from the current ongoing media strategies and strong product innovations. The company is continuing its mobile order technology after a successful test in the quarter. Sonic expects mobile orders to improve traffic, accelerate operating profit growth and generate strong free cash flow.
For 2018, Sonic forecasts adjusted EPS between $1.45 and $1.49. Excluding the tax reform, the company expects adjusted EPS to increase by 3 percent to 6 percent year over year. The company expects same-store sales to fall 1 percent to flat year over year.