- Normalized adjusted EBITDA(1) increased 44% to
$72.9 million in the quarter compared
to $50.6 million in Q3-22.
- Free cash flows(1) increased 6% to $43.5 million in the quarter compared to
$40.9 million in Q3-22. Free cash
flows per diluted share(2) reached $1.77.
- Same-store sales(3) were positive in Canada and in the US compared to Q3-22:
Canada up by 3% and US up by 2%;
International was flat.
- System sales(3) reached $1.5 billion in the quarter, up 33% compared to
Q3-22. System sales up 55% in the US, 14% Internationally and 4% in
Canada.
- Normalized adjusted EBITDA franchising margins(2)
improved to 54% during the quarter compared to 53% in the prior
year.
- Net income attributable to owners of $38.9 million in the quarter, or $1.59 per diluted share, compared to $22.4 million, or $0.92 per diluted share in Q3-22.
- During the quarter, the Company's network opened 87
locations compared to 63 locations in Q3-22 and closed 92 locations
compared to 117 locations in Q3-22.
- As at August 31, 2023, 90% of
the Company's network is comprised of quick service restaurant and
fast casual locations, and 97% of its locations are
franchised.
- Long-term debt repayments of $26.3
million for the quarter.
- Quarterly dividend payment of $0.25 per share on November 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, Oct. 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 third quarter ended August 31, 2023 and declared a quarterly dividend
of 25.0¢ per share, payable on November 15,
2023 to shareholders registered in the Company's records at
the end of the business day on November 3,
2023.
"MTY continued to reap the benefits of its dual growth strategy
in the third quarter of 2023 with normalized adjusted EBITDA
increasing 44% year-over-year to $72.9
million," stated Eric
Lefebvre, Chief Executive Officer of MTY. "Clearly, we are
elated with our latest acquisitions, which helped raise system
sales 33% to $1.5 billion in the
quarter, but we are also pleased by our same-store sales
improvement of 3% over the prior year. As a result, we continue to
deliver profitable growth with exceptional predictability despite a
mixed economic environment marked by higher interest rates,
inflationary pressure and heightened price sensitivity on the part
of consumers."
"From an operating standpoint, MTY opened 87 new locations and
closed 92 others during the third quarter. Excluding newly acquired
brands, the average monthly unit volume of a new location opened in
fiscal 2023 was approximately $53,000
compared to a recently closed one at $37,000. As such, we are enhancing our growth
profile while we continue to push towards becoming break-even in
terms of new restaurant openings," Mr. Lefebvre added.
Financial
Highlights
(in thousands of $,
except per
share
information)
|
Q3-2023
|
Q3-2022
|
9
Months
2023
|
9
Months
2022
|
Revenue
|
298,080
|
171,540
|
889,302
|
474,552
|
Adjusted
EBITDA(1)
|
72,870
|
48,920
|
210,381
|
132,206
|
Normalized adjusted
EBITDA(1)
|
72,932
|
50,592
|
211,539
|
133,878
|
Net income attributable
to
owners
|
38,892
|
22,435
|
87,638
|
67,691
|
Cash flows from
operations(2,3)
|
51,745
|
42,274
|
138,775
|
111,160
|
Free cash
flows(1,2,3)
|
43,462
|
40,900
|
111,779
|
102,304
|
Free cash flows per
diluted
share(2,3,4)
|
1.77
|
1.67
|
4.56
|
4.18
|
Net income per share,
basic
|
1.59
|
0.92
|
3.59
|
2.77
|
Net income per share,
diluted
|
1.59
|
0.92
|
3.58
|
2.77
|
System
sales(5)
|
1,467,100
|
1,104,700
|
4,299,600
|
3,044,700
|
Digital
sales(5)
|
249,000
|
194,100
|
762,000
|
611,800
|
(1)
|
This is a non-GAAP
measure. Please refer to the "Non-GAAP Measures" section at the end
of this press release.
|
(2)
|
Prior period amounts
have been restated to reflect a reclassification between cash flows
provided by operating activities and the effect of foreign exchange
rate changes on cash.
|
(3)
|
The Company has
reassessed the presentation of certain acquisition accounts,
leading to the reclassification of accounts that were previously
reported as Accounts payable and accrued liabilities to
Cash.
|
(4)
|
This is a non-GAAP
ratio. Please refer to the "Non-GAAP Ratios" section at the end of
this press release.
|
(5)
|
This is a supplementary
financial measure. Please refer to the "Supplementary Financial
Measures" section at the end of this press release.
|
THIRD QUARTER RESULTS
Network
- At the end of the third quarter of 2023, MTY's network had
7,119 locations in operation, of which 6,895 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 third quarter of 2023, MTY's network opened 87
locations (Q3 2022 – 63) and closed 92 locations (Q3 2022 –
117).
- System sales increased 33% year-over-year to $1.5 billion in the third quarter of 2023. The US
contributed most of the growth with a 55% improvement
year-over-year, largely attributable to the acquisitions of BBQ
Holdings, Inc. ("BBQ Holdings") in September
2022 as well as Wetzel's Pretzels and Sauce Pizza and Wine
in December 2022.
- Same-store sales improved 3% year-over-year in the third
quarter of 2023. Canada and the US
reported same-store sales growth of 3% and 2%, respectively, while
the International region was stable compared to the third quarter
of 2022.
Financial
- Company revenue grew 74% to $298.1
million in the third quarter of 2023 from $171.5 million in the third quarter of 2022. In
the US and International segment, a $104.6
million surge in corporate-owned location revenues, largely
due to the BBQ Holdings, Wetzel's Pretzels and Sauce Pizza and Wine
acquisitions, contributed to the year-over-year revenue growth. It
was complemented by a $17.6 million
(37%) increase in franchising revenues in the US and International
segment, including $13.4 million from
acquisitions. In Canada, revenue
from franchise operations improved 3% year-over-year on the
strength of heightened system sales, while the food processing,
distribution and retail division posted similar growth.
- Normalized adjusted EBITDA, which excludes acquisition-related
expenses, rose 44% year-over-year to $72.9
million in the third quarter of 2023, mainly driven by
recent acquisitions.
- Net income attributable to owners totaled $38.9 million, or $1.59 per share ($1.59 per diluted share), in the third quarter of
2023 compared to $22.4 million, or
$0.92 per share ($0.92 per diluted share), in the same period in
2022. The year-over-year increase can mainly be attributed to
higher normalized adjusted EBITDA and lower income taxes. These
factors were partially offset by several items including, amongst
others, higher depreciation of property, plant and equipment and
right-of-use assets, as well as greater interest on long-term
debt.
LIQUIDITY AND CAPITAL RESOURCES
- In the third quarter of 2023, cash flows generated by operating
activities amounted to $51.7 million
compared to $42.3 million in the
third quarter of 2022.
- MTY reimbursed $26.3 million of
its long-term debt and paid $6.1
million in dividends to shareholders in the third quarter of
2023.
- As at August 31, 2023, MTY had
$54.3 million of cash on hand and
long-term debt of
$784.3 million, mainly in the form of
bank facilities and promissory notes on acquisitions. The Company
also had a revolving credit facility with an authorized amount of
$900.0 million, of which US$571.8 million had been drawn at quarter-end.
Recently implemented hedging strategies, including three-year and
two-year fixed interest rate swaps, have provided the Company with
monthly savings of approximately $0.6
million on interest payments.
CONFERENCE CALL
The MTY Group will hold a conference call to discuss its results
on October 11, 2023, at 8:30 AM Eastern Time. Interested parties can join
the call by dialing 1-604-638-5340 (Vancouver or overseas) 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 0405. This
recording will be available on Wednesday,
October 11, 2023, as of 11:30 AM
Eastern Time until 11:59 PM Eastern Time on Wednesday,
October 18, 2023.
ABOUT MTY FOOD GROUP INC.
MTY Group franchises and operates quick-service, fast casual and
casual dining restaurants under more than 90 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 7,119 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) and normalized adjusted EBITDA as a % of revenue
(normalized adjusted EBITDA divided by revenue) are non-GAAP
ratios, 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. The Company believes
that normalized adjusted EBITDA as a % of revenue is a useful
metric because it is consistent with the indicators management uses
internally to measure the Company's profitability from operations,
including to gauge the effectiveness of cost management measures,
as well as provides a measure of the Company's performance that
does not include the impact of transaction costs related to
acquisitions, which may vary in occurrence and in amount. 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, condensed
interim consolidated financial statements and notes thereto for the
third quarter ended August 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.