OKLAHOMA CITY Sonic Corp. posted a 13.4-percent drop in its third-quarter net income as increased debt and higher interest expenses related to the company's recapitalization and share repurchases deflated a revenue jump of 12.6 percent to $209.9 million.
For the quarter ended May 31, Sonic earned $20.6 million, down from net income of $23.8 million in the year-ago third quarter. Per-share earnings rose to 31 cents in the latest quarter, up from 27 cents a year ago, as the company's share buybacks reduced the average year-to-year share count by 24.3 percent.
The company's strong revenue gain for the fiscal 2007 third quarter was aided by a systemwide same-store sales increase of 4 percent. Sonic said new product news, continued growth in non-traditional day parts, remodeled restaurants and increased media expenditures were sales drivers this quarter and for the first weeks of its current fourth quarter.
The company said it expects revenue growth between 10 percent and 12 percent in the fourth quarter and systemwide same-store sales increases between 2 percent and 4 percent. Offsetting the chain's strong sales will be increases to dairy and soybean costs, as well as labor expenses and growth in corporate overhead, the company reported. To stem those challenges, Sonic said it expects to increase prices at its franchised locations in late July. The company did not detail the planned price increases.
