- Normalized adjusted EBITDA(1) increased 79% to
$64.0 million in the quarter,
compared to $35.6 million in
Q1-22.
- System sales(2) reached an all-time record-high
of $1.4 billion in the quarter, up
54% compared to Q1-22. System sales up 69% in the US, 32% in
Canada and 12%
Internationally.
- Organic growth contributed an increase of $7.1 million, or 20%, in normalized adjusted
EBITDA and an increase of 14% in system sales.
- Net income attributable to owners of $18.4 million in the quarter, or $0.75 per diluted share, compared to $16.6 million, or $0.68 per diluted share, in Q1-22.
- Long-term debt repayments of $29.6
million for the quarter.
- Quarterly dividend payment of $0.25 per share on May 15,
2023.
(1)
|
This is a non-GAAP
measure. Please refer to the "Non-GAAP Measures" section at the end
of this press release.
|
(2)
|
This is a supplementary
financial measure. Please refer to the "Supplementary Financial
Measures" section at the end of this press release.
|
|
|
MONTREAL, April 12,
2023 /CNW/ - MTY Food Group Inc. ("MTY", "MTY Group"
or the "Company") (TSX: MTY), one of the largest franchisors and
operators of multiple restaurant concepts worldwide, reported today
financial results for the first quarter ended February 28, 2023 and declares its quarterly
dividend of 25.0ยข per share, payable on May
15, 2023 to shareholders registered in the Company's records
at the end of the business day on May 3,
2023.
"We are pleased with our robust financial performance in the
first quarter of 2023, highlighted by normalized adjusted EBITDA of
$64.0 million and record-high system
sales of $1.4 billion," stated
Eric Lefebvre, Chief Executive
Officer of MTY. "Our acquisitions of Wetzel's Pretzels and Sauce
Pizza and Wine during the quarter, along with the earlier BBQ
Holdings transaction, largely contributed to 69% year-over-year
growth in system sales in the US market. On the Canadian side, we
delivered 32% system sales growth as the business rebounded from
pandemic-related restrictions in the first quarter last year. We
are particularly proud that our organic business complemented
acquisitional growth with year-over-year improvements of 20% and
14% in normalized adjusted EBITDA and system sales, respectively.
As a result, our profitable growth strategy is materializing as
planned early in 2023 with most key performance indicators flashing
green across our management dashboard."
"As anticipated, our normalized adjusted EBITDA margin decreased
year-over-year due to a higher corporate store contribution
following recent acquisitions, but all our segment margins are up
compared to the same period last year. Our consolidated margin has
shifted based on the increased relative weight of corporate
locations. This segment is a highly profitable business that will
help sustain our growth momentum on a long-term basis."
"In terms of capital allocation priorities for 2023, we will
continue to opportunistically seek acquisitions, reduce our debt,
invest in our business, and reward shareholders with healthy
dividends," Mr. Lefebvre concluded.
Financial
Highlights
(in thousands of $,
except per share information)
|
Q1-2023
|
Q1-2022
|
Revenue
|
286,003
|
140,494
|
Adjusted
EBITDA(1)
|
62,863
|
35,637
|
Normalized adjusted
EBITDA(1)
|
63,959
|
35,637
|
Net income attributable
to owners
|
18,387
|
16,637
|
Cash flows from
operations
|
36,728
|
38,831
|
Free cash
flows(1)
|
29,192
|
36,105
|
Free cash flows per
diluted share(2)
|
1.19
|
1.47
|
Net income per share,
basic
|
0.75
|
0.68
|
Net income per share,
diluted
|
0.75
|
0.68
|
System
sales(3)
|
1,362,500
|
885,700
|
Digital
sales(3)
|
246,200
|
210,800
|
(1)
|
This is a non-GAAP
measure. Please refer to the "Non-GAAP Measures" section at the end
of this press release.
|
(2)
|
This is a non-GAAP
ratio. Please refer to the "Non-GAAP Ratios" section at the end of
this press release.
|
(3)
|
This is a supplementary
financial measure. Please refer to the "Supplementary Financial
Measures" section at the end of this press release.
|
FIRST QUARTER RESULTS
Network
- At the end of the first quarter of 2023, MTY's network had
7,128 locations in operation, of which 6,895 were franchised or
under operator agreements and 233 were corporate. Following recent
acquisitions, the geographical split among MTY's locations slightly
shifted in favour of the US, with 58% based in the US, 35% in
Canada and 7% International.
- During the first quarter of 2023, MTY's network acquired 379
locations (Q1 2022 โ 31), opened 76 locations (Q1 2022 โ 75) and
closed 115 locations (Q1 2022 โ 121).
- System sales increased 54% year-over-year to $1.4 billion in the first quarter of 2023. The US
contributed most of the growth with a 69% improvement
year-over-year, largely driven by the acquisitions of BBQ Holdings
in September 2022 as well as Wetzel's
Pretzels and Sauce Pizza and Wine in December 2022. Excluding acquisitions, quick
service and casual dining sales rose 50% and 14%, respectively, in
the US. In Canada, MTY generated organic growth of 32% in the
first quarter of 2023 as the business rebounded from
government-imposed restrictions related to the COVID-19 pandemic in
the same period last year.
Financial
- The Company's revenue grew 104% year-over-year to $286.0 million in the first quarter of 2023. The
increase is mainly due to the BBQ Holdings, Wetzel's Pretzels, and
Sauce Pizza and Wine acquisitions which contributed to the
increases in revenue for franchise operations and corporate
restaurants in the US and International segment of 43% and 2,398%,
respectively. In Canada, franchise
operations, corporate restaurants, as well as food processing,
distribution and retail revenue improved 33%, 31% and 5%,
respectively, as the overall business recovered from
government-imposed restrictions related to the pandemic in the
first quarter of 2022.
- Normalized adjusted EBITDA, which excludes acquisition-related
expenses, increased 79% year-over-year to $64.0 million in the first quarter of 2023 on the
strength of recent acquisitions in the US and a return to
pre-pandemic market conditions in Canada.
- Net income attributable to owners totaled $18.4 million, or $0.75 per share ($0.75 per diluted share), in the first quarter of
2023 compared to $16.6 million, or
$0.68 per share ($0.68 per diluted share), in the same period in
2022. Net income attributable to owners in the first quarter of
2023 was negatively affected by higher interest on long-term debt;
an increase in the depreciation of property, plant and equipment
and right-of-use assets; additional unrealized foreign exchange
losses; and acquisition-related transaction expenses linked to the
Wetzel's Pretzels and Sauce Pizza and Wine deals. These factors
were partially offset by a loss on the remeasurement of a joint
venture that was incurred in the prior year.
LIQUIDITY AND CAPITAL
RESOURCES
- In the first quarter of 2023, cash flows generated by operating
activities totaled $36.7 million,
compared to $38.8 million for the
same period last year.
- MTY reimbursed $29.6 million of
its long-term debt and paid $6.1
million in dividends to its shareholders in the first
quarter of 2023.
- As at February 28, 2023, MTY had
$58.7 million of cash on hand and
long-term debt of $839.7 million,
mainly in the form of bank facilities and promissory notes on
acquisitions. The Company also had a revolving credit facility of
$900.0 million, of which US$609.0 million had been drawn at quarter-end. A
hedging strategy with interest swaps has been implemented to
provide additional financial flexibility.
CONFERENCE CALL
The MTY Group will hold a conference call to discuss its
financial results on April 12,
2023, at 8:30 AM Eastern Time. Interested parties can
join the call by dialing 1-416-764-8658 (Toronto or
overseas) or 1-888-886-7786 (elsewhere in North America). Parties unable to call in at
this time may access a recording by calling 1- 877-674-7070
and entering the passcode 523305. This recording will be
available on Wednesday, April 12,
2023, as of 11:30 AM Eastern Time until
11:59 PM Eastern Time
on Wednesday, April 19, 2023.
ABOUT MTY FOOD GROUP
INC.
MTY Group franchises and operates quick-service, fast casual and
casual dining restaurants under more than 85 different banners
in Canada, the US and
Internationally. Based in Montreal, MTY is a family whose heart beats to
the rhythm of its brands, the very soul of its multi-branded
strategy. For over 40 years, it has been increasing its presence by
delivering new concepts of restaurants, making
acquisitions, and forging strategic alliances,
which have allowed it to reach new heights year after
year. By combining new trends with operational know-how, the brands
forming the MTY Group now touch the lives of millions of people
every year. With 7,128 locations, the many flavours of the MTY
Group hold the key to responding to the different tastes and needs
of today's consumers as well as those of tomorrow.
NON-GAAP MEASURES
Adjusted EBITDA (revenue less operating expenses), normalized
adjusted EBITDA (revenue less operating expenses excluding
transaction costs related to acquisitions) and free cash flows (net
cash flows provided by operating activities, used in additions to
property, plant and equipment and intangible assets and provided by
proceeds on disposal of property, plant and equipment) are
non-GAAP (generally accepted accounting principles) measures, do
not have a standardized meaning prescribed by GAAP and are
therefore unlikely to be comparable to similar measures presented
by other issuers.
The Company believes that adjusted EBITDA is a useful metric
because it is consistent with the indicators management uses
internally to measure the Company's performance, to prepare
operating budgets and to determine components of executive
compensation. The Company believes that normalized adjusted EBITDA
is a useful metric for the same reasons as adjusted EBITDA, without
including the impact of transaction costs related to acquisitions,
which may vary in occurrence and in amount. The Company believes
that free cash flows are a useful metric because they provide the
Company with a measure related to decision-making about
cash-intensive matters such as capital expenditures, compensation,
and potential acquisitions. The Company also believes that these
measures are used by securities analysts, investors and other
interested parties and that these measures allow them to compare
the Company's operations and financial performance from period to
period and provide them with a supplemental measure of the
operating performance and financial position and thus highlight
trends in the core business that may not otherwise be apparent when
relying solely on GAAP measures.
Refer to the "Compliance with International Financial Reporting
Standards" section of the Company's Management's Discussion and
Analysis of the financial position and financial performance
("MD&A").
NON-GAAP RATIOS
Free cash flows per diluted share (free cash flows divided by
diluted shares) are a non-GAAP ratio, do not have a standardized
meaning prescribed by GAAP and are therefore unlikely to be
comparable to similar measures presented by other issuers. The
Company believes that free cash flows per diluted share are a
useful metric because they are used by securities analysts,
investors and other interested parties as a measure of the
Company's cash flows that are available to be distributed to debt
and equity shareholders, including to pay debt, to pay dividends,
and to repurchase shares. Refer to the "Compliance with
International Financial Reporting Standards" section of the
Company's MD&A.
SUPPLEMENTARY FINANCIAL
MEASURES
Management discloses supplementary financial measures as they
have been identified as relevant metrics to evaluate the
performance of the Company. These include system sales (sales of
all existing restaurants including those that have closed or have
opened during the period, as well as the sales of new concepts
acquired from the closing date of the transaction and forward) and
digital sales (sales made by customers through online ordering
platforms).
FORWARD-LOOKING
STATEMENTS
Certain information in this press release may constitute
"forward-looking" information that involves known and unknown
risks, uncertainties, future expectations and other factors, which
may cause the actual results, performance or achievements of the
Company or industry to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking information. When used in this press release, this
information may include words such as "anticipate", "estimate",
"may", "will", "expect", "believe", "plan" and other
terminology.
This information reflects current expectations regarding future
events and operating performance and speaks only as of the date of
this press release. Except as required by law, the Company
assumes no obligation to update or revise forward-looking
information to reflect new events or circumstances. Additional
information is available in the Company's MD&A, which can be
found on SEDAR at www.sedar.com.
Note to readers: The MD&A, the condensed
interim consolidated financial statements and notes thereto for the
first quarter ended February 28,
2023, are available on the SEDAR website at www.sedar.com
and on the Company's website at www.mtygroup.com.
SOURCE MTY Food Group Inc.