- Normalized adjusted EBITDA(1) increased 57% to
$74.6 million in the quarter compared
to $47.6 million in Q2-22.
- Free cash flows(1) increased 78% to $45.1 million in the quarter compared to
$25.3 million in Q2-22. Free cash
flows per diluted share(2) reached $1.84.
- Same-store sales(3) were positive in all
geographical segments compared to Q2-22: Canada up by 6%, US by 4% and International by
2%.
- System sales(3) reached an all-time record high
of $1.5 billion in the quarter, up
39% compared to Q2-22. System sales up 63% in the US, 18%
Internationally and 7% in Canada.
- Net income attributable to owners of $30.4 million in the quarter, or $1.24 per diluted share, compared to $28.6 million, or $1.17 per diluted share, in Q2-22.
- During the quarter, the Company's network opened 73
locations compared to 47 locations in Q2-22, and closed 77
locations compared to 91 locations in Q2-22.
- As at May 31, 2023, 90% of the
Company's network was comprised of quick service restaurant and
fast casual locations, and 97% of its locations were
franchised.
- Long-term debt repayments of $26.8
million for the quarter.
- Renewal of Normal Course Issuer Bid Program ("NCIB") on
June 29, 2023.
- Quarterly dividend payment of $0.25 per share on August
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 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.
|
MONTREAL, July 11,
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 its second quarter ended May 31, 2023 and declares its quarterly dividend
of 25.0¢ per share, payable on August 15,
2023 to shareholders registered in the Company's records at
the end of the business day on August 2,
2023.
"We are delighted by our ongoing strong financial performance in
the second quarter of 2023, marked by normalized adjusted EBITDA of
$74.6 million and record-high system
sales of $1.5 billion," stated
Eric Lefebvre, Chief Executive
Officer of MTY. "This growth momentum not only reflects the
seamless integration of recent acquisitions in the US, but also the
internal strength of new locations and same-store sales increasing
5% year-over-year."
"We opened 73 new locations and closed 77 others during the
second quarter, representing our best quarterly net result in the
last nine years. Narrowing the gap between openings and closings
ranks as a key objective post-pandemic as we continue to invest in
our banners, support our franchise partners and improve operating
efficiency."
"Given our increased leverage following the acquisitions
completed in recent months and the rising interest rates, the
Company intends to keep a watchful eye on accretive, tuck-in
acquisitions on an opportunistic basis and prioritize paying down
debt and building a reserve to improve future capital allocation
flexibility. ," Mr. Lefebvre added.
Financial
Highlights
(in thousands of $,
except per share information)
|
Q2-2023
|
Q2-2022
|
Revenue
|
305,219
|
162,518
|
Adjusted
EBITDA(1)
|
74,648
|
47,649
|
Normalized adjusted
EBITDA(1)
|
74,648
|
47,649
|
Net income attributable
to owners
|
30,359
|
28,619
|
Cash flows from
operations
|
56,321
|
30,055
|
Free cash
flows(1)
|
45,144
|
25,299
|
Free cash flows per
diluted share(2)
|
1.84
|
1.04
|
Net income per share,
basic
|
1.24
|
1.17
|
Net income per share,
diluted
|
1.24
|
1.17
|
System
sales(3)
|
1,470,028
|
1,054,348
|
Digital
sales(3)
|
266,815
|
206,916
|
|
(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.
|
SECOND QUARTER RESULTS
Network
- At the end of the second quarter of 2023, MTY's network
had 7,124 locations in operation, of which 6,900 were franchised or
under operator agreements and 224 were corporate-owned. The
geographical split among MTY's locations consisted of 58% based in
the US, 35% in Canada and 7%
International.
- During the second quarter of 2023, MTY's network opened 73
locations (Q2 2022 – 47) and closed 77 locations (Q2 2022 –
91).
- System sales increased 39% year-over-year to a record-high
$1.5 billion in the second quarter of
2023. The US contributed most of the growth with a 63% improvement
year-over-year, largely attributable to the acquisitions of BBQ
Holdings in the fourth quarter of 2022 as well as Wetzel's
Pretzels and Sauce Pizza and Wine in the first quarter of 2023.
Excluding acquisitions, quick service and casual dining sales
contributed the most to the increase with growths of 11% and 4%,
respectively.
- Same-store sales, which were positive in all geographic
regions, improved 5% year-over-year in the second quarter of 2023.
Canada reported the strongest
growth in same-store sales with a 6% increase from the second
quarter of 2022, followed by the US and International regions with
improvements of 4% and 2%, respectively. The second quarter of 2023
represented the first fully comparable quarter on a year-over-year
basis since the outbreak of COVID-19 in March 2020.
Financial
- Company revenue grew 88% to $305.2
million in the second quarter of 2023 from $162.5 million in the second quarter of 2022. BBQ
Holdings, Wetzel's Pretzels, and Sauce Pizza and Wine
acquisitions were the primary contributors to the revenue growths
of $16.5 million and $119.9 million, respectively, in franchise
operations and corporate stores in the US and International
segment. In Canada, revenue from
franchise operations improved 10% on the strength of organic
growth from increased customer traffic.
- Normalized adjusted EBITDA, which excludes acquisition-related
expenses, rose 57% year-over-year to $74.6
million in the second quarter of 2023, mainly driven by the
BBQ Holdings, Wetzel's Pretzels, and Sauce Pizza and Wine
acquisitions.
- Net income attributable to owners totaled $30.4 million, or $1.24 per share ($1.24 per diluted share), in the second quarter
of 2023 compared to $28.6 million, or
$1.17 per share ($1.17 per diluted share), in the same period in
2022. The year-over-year increase can be attributed to higher
normalized adjusted EBITDA and lower income taxes.
LIQUIDITY AND CAPITAL RESOURCES
- In the second quarter of 2023, cash flows generated by
operating activities amounted to $56.3
million compared to $30.1
million in the second quarter of 2022.
- MTY reimbursed $26.8 million of
its long-term debt and paid $6.1
million in dividends to shareholders in the second quarter
of 2023.
- As at May 31, 2023, MTY had
$62.6 million of cash on hand and
long-term debt of $816.2 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$590.3 million had been drawn at quarter-end.
Various hedging strategies were implemented during the quarter to
provide better predictability of cash flows and additional
financial flexibility.
NORMAL COURSE ISSUER BID
On June 29, 2022, MTY announced
the renewal of its NCIB program. The NCIB began on July 3, 2022, and ended on July 2, 2023. The NCIB was again renewed on
June 29, 2023, for a period beginning
on July 3, 2023, and ending on
July 2, 2024, or on such earlier date
when the Company completes its purchases or elects to terminate the
NCIB. The renewed period allows MTY to purchase 1,220,673 of its
common shares. These purchases will be made on the open market,
plus brokerage fees through the facilities of the TSX and/or
alternative trading systems at the prevailing market price at the
time of the transaction, in accordance with the TSX's applicable
policies. All common shares purchased pursuant to the NCIB will be
cancelled.
CONFERENCE CALL
The MTY Group will hold a conference call to discuss its
financial results on July 11,
2023, at 8:30 AM Eastern Time. Interested parties can
join the call by dialing 1-604-638-5340 (for international
participants) or 1-800-319-4610 (elsewhere in North America). Parties unable to call in at
this time may access a recording by calling 1-855-669-9658 and
entering the passcode 0262. This recording will be available
on Tuesday, July 11, 2023, as
of 11:30 AM Eastern Time until 11:59 PM Eastern Time on Tuesday, July
18, 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 7,124 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),
digital sales (sales made by customers through online ordering
platforms), and same-store sales (comparative sales generated by
stores that have been open for at least 13 months or that have been
acquired more than 13 months ago).
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
second quarter ended May 31, 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.