MTY Food Group Inc.
has released financial results for the first quarter of fiscal 2024 ended
Feb. 29, 2024
, and declared a quarterly dividend of
28 cents
per share, payable on
May 15, 2024
, to shareholders registered in the company's records at the end of the business day on
May 3, 2024
.
Highlights:
- Cash flows provided by operating activities increased
$20.7 million
to
$54.2 million
in the quarter from
$33.5 million
in Q1-23.
- Free cash flows net of lease payments(1) more than doubled to reach
$36.9 million
in the quarter, compared to
$15.4 million
in Q1-23. Free cash flows net of lease payments per diluted share(2) reached
$1.52
for the quarter compared to
$0.63
in Q1-23.
- Net income attributable to owners decreased by 6% at
$17.3 million
, or
$0.71
per diluted share compared to
$18.4 million
, or
$0.75
per diluted share in Q1-23.
- Normalized adjusted EBITDA(1) decreased 7% to
$59.5 million
in the quarter from
$64.0 million
in Q1-23.
- System sales(3) for the quarter slightly decreased 2% to
$1.33 billion
from
$1.36 billion
in Q1-23. System sales decreased 2% in
Canada
and 3% in the US, while International sales remained stable.
- Ended the quarter with 7,112 locations compared to 7,116 locations in Q4-23.
- Repurchased and cancelled 70,800 shares for a total consideration of
$3.6 million
in Q1-24.
- Long-term debt repayments of
$34.6 million
for the quarter with a total reduction in long-term debt of
$103.5 million
since Q1-23.
- Quarterly dividend payment of
$0.28
per share on
May 15, 2024
.
"Following two years of strong system sales growth amid a challenging economic environment, first-quarter results were adversely affected by reduced consumer spending and extreme weather, primarily in the first 6 weeks of 2024," stated
Eric Lefebvre
, Chief Executive Officer of MTY. "Despite slightly slower sales, we generated the highest operating cash flows in our history in the first quarter, enhancing our ability to reimburse debt and build a treasure chest for future growth opportunities."
Financial Highlights (in thousands of $, except per share information) Q1-2024 Q1-2023
Revenue 278,644 286,003
Adjusted EBITDA(1) 59,262 62,863
Normalized adjusted EBITDA(1) 59,535 63,959
Net income attributable to owners 17,305 18,387
Cash flows from operations 54,178 33,467
Free cash flows net of lease payments(1) 36,922 15,433
Free cash flows net of lease payments per diluted share(2) 1.52 0.63
Net income per share, basic 0.71 0.75
Net income per share, diluted 0.71 0.75
System sales(3) 1,331,700 1,362,500
Digital sales(3) 273,200 246,200
FIRST QUARTER RESULTS
Network
At the end of the first quarter of 2024, MTY's network had 7,112 locations in operation, of which 6,890 were franchised or under operator agreements and 222 were corporate-owned. The geographical split among MTY's locations remained stable year-over-year at 58% in the US, 35% in
Canada
and 7% International.
During the first quarter of 2024, MTY's network opened 75 locations (Q1 2023 - 76 locations) and closed 79 others (Q1 2023 - 115 locations).
System sales decreased 2% year-over-year to
$1.33 billion
in the first quarter of 2024 compared to
$1.36 billion
in the prior year. The decline was generalized across most of our network, as reduced consumer spending and extreme weather in certain regions during the quarter negatively affected sales.
Similarly and for the same reasons, same-store sales(1) declined 3% year-over-year in the first quarter.
Financial
Company revenue declined 3% year-over-year to
$278.6 million
in the first quarter mainly due to less recurring revenue streams that were tightly correlated to reduced system sales. In
Canada
, revenue from franchise operations decreased 7% year-over-year, while food processing, distribution and retail sales dropped 8%. Lower revenues from these subdivisions were partially offset by an 11% increase from corporate-owned stores due to a net increase in such locations year-over-year. In the
U.S.
and International segment, revenues from both franchise operations and corporate-owned stores decreased 1% year-over-year, while food processing, distribution and retail sales dropped
$0.7 million
mainly attributed to the termination of a retail licensing agreement. Lower revenue levels from these subdivisions were partially offset by higher sales of materials and services to franchisees and greater initial franchise fees, demonstrating the strength of the Company's pipeline for new openings.
U.S.
revenues were also positively impacted by the acquisitions of
Wetzel's Pretzels
and Sauce Pizza and Wine, which were finalized in
December 2022
.
Normalized adjusted EBITDA, which excludes acquisition-related expenses and SAP project implementation costs, decreased 7% year-over-year to
$59.5 million
in the first quarter of 2024 mainly because of lower system sales.
Net income attributable to owners totaled
$17.3 million
, or
$0.71
per share (
$0.71
per diluted share), in the first quarter compared to
$18.4 million
, or
$0.75
per share (
$0.75
per diluted share), for the same period in 2023. The year-over-year decrease can mainly be attributed to lower EBITDA and impairment charges on property, plant and equipment and intangibles assets.
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 2024, cash flows generated by operating activities amounted to
$54.2 million
compared to
$33.5 million
in the first quarter of 2023.
MTY reimbursed
$34.6 million
of its long-term debt, paid
$6.8 million
in dividends to shareholders, and repurchased 70,800 shares for a total consideration of
$3.6 million
in the first quarter of 2024.
As at
February 29, 2024
, MTY had
$50.6 million
of cash on hand and long-term debt of
$736.2 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$536.3 million
had been drawn at quarter-end. Hedging strategies, including three-year and two-year fixed interest rate swaps, have provided the Company with quarterly savings of approximately
$1.9 million
on interest payments.
DIVIDEND PAYMENT
On
April 12, 2024
, MTY declared a quarterly dividend payment of
$0.28
per common share. The dividend will be paid on
May 15, 2024
to shareholders registered in the Company's records at the end of the business day on
May 3, 2024
.
CONFERENCE CALL
The MTY Group
will hold a conference call to discuss its results on
April 12, 2024
, 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 0769. This recording will be available on
Friday, April 12, 2024
, as of
11:30 AM Eastern Time until 11:59 PM Eastern Time
on
Friday, April 19, 2024
.
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 45 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 7,112 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.
We seek Safe Harbor.
