Sonic (SONC 23.65, -1.15, -4.6%) is the nation's largest drive-in restaurant chain, which provides it a unique niche in a competitive quick-service restaurant industry. That uniqueness worked against the company in its fiscal fourth quarter, however, as Hurricane Harvey and unfavorable weather in general negatively impacted Sonic's sales prospects.
After Monday's close, Sonic divulged that it recorded adjusted net income of $0.45 per diluted share for its fiscal fourth quarter, unchanged from the same period a year ago and slightly ahead of analysts' average expectation.
The lack of earnings growth was disappointing, yet it was commendable in light of the fact that Sonic's revenues fell 23.8% year-over-year to $123.6 million. That decline was paced by a 3.3% decline in system same-store sales, which featured a 4.8% drop at company drive-ins and a 3.2% decline at franchise drive-ins.
The sales weakness was attributed to the inclement weather, an intense competitive environment, and a move-linked promotional environment that failed to trigger the same type of traffic to its drive-ins that a product bundling effort did in the summer of 2016.
Despite the sales weakness, Sonic's bottom-line was protected somewhat by expense savings and share buyback activity.
Investors, though, don't appear pleased with the quarterly results, which is understandable since the sales shortcomings weren't just related to bad weather. Shares of SONC are trading 4.6% lower in pre-market action.
Looking to fiscal 2018, Sonic said it continues to expect adjusted earnings per share to increase 5% to 10% year-over-year.
The fiscal 2018 outlook is predicated among other things on an expectation that system same-store sales will be approximately flat to up 2%, that there will be 70 to 80 new franchise drive-in openings, and that drive-in level margins will be between 15.1% and 15.7%, depending on the degree of same-store sales growth at company drive-ins.