Investing.com -- Shares in Sonic Corp (NASDAQ:SONC) rose sharply in after-hours trading after the Oklahoma City based fast-food restaurant chain reported strong sales and forward guidance with its recent quarterly earnings on Tuesday.
During Sonic's second quarter of Fiscal Year 2016, the company reported adjusted earnings of $9 million or 0.18 per share, up from per share earnings of 0.13 over the same period a year earlier. Sonic also finished with second quarter revenues of $133 million, up from $126 million in the same quarter in Fiscal Year 2015, amid a 6.5% increase in same-restaurant sales.
Analysts expected to see adjusted earnings per share of 0.16 on quarterly sales of $127 million.
"Our business continues to perform at an exceptional level, generating 6.5% same-store sales growth for the system while lapping our strongest same-store sales comparison in ten years," said Cliff Hudson, Sonic Corp. CEO. "Continued strength in core menu items, combined with highly effective limited-time-offer and value-based promotions, allowed us to increase market share in a highly competitive environment. The combination of sales leverage and a favorable commodity cost environment helped to generate another quarter of solid margin improvement at the drive-in level."
In addition, Sonic improved margins at company drive-ins by 60 basis points on the quarter amid slight declines in food and packing expenses. Sonic also opened five new franchise drive-ins and purchased 0.9 million shares over the three-month period.
Moving forward, Sonic improved its forward outlook for annual EPS growth to a level between 20 and 25%, from previous forecasts of 16 to 20%, following the strong quarterly results. For the year as a whole, Sonic expects to open 50-60 new franchises.
"As we look to sustain our recent momentum, we continue to invest aggressively in our people and technology initiatives, which we believe will further differentiate the experience we provide to our consumers," Hudson added. "We remain confident in the ability of our multi-layered growth strategy to increase EPS through same-store sales growth, improved margins, increased royalty revenues, accelerated new drive-in development and the deployment of free cash flow."
Shares in Sonic gained 1.19 or 3.65% to 33.75 in after-hours trading.