MONTREAL, April 11, 2025 (GLOBE NEWSWIRE) -- 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 first quarter of fiscal 2025 ended February 28, 2025 and declared a quarterly dividend of 33.0¢ per share, payable on May 15, 2025 to shareholders registered in the Company’s records at the end of the business day on May 1, 2025.
"Our same-store sales held relatively stable, once adjusted for the leap year impact — demonstrating the strength and resilience of our portfolio,” said Eric Lefebvre, CEO of MTY. “While adverse weather conditions temporarily pressured performance, particularly in our US frozen treats segment, the start of Q2 signals a return to more normal operating conditions. Canada continues to perform consistently, underscoring the stability of our operations.”
"I believe this quarter’s modest decline in unit count is a temporary setback, rather than a trend,” Lefebvre continued. “Delays in openings are challenges we consistently navigate, particularly in Q1, which has historically been our slowest quarter for net openings. Our development pipeline for Q2, Q3 and beyond is robust, and we remain fully committed to expanding our footprint over the medium to long term.”
"Once again, this quarter showcased our ability to generate strong free cash flow growth, reinforcing the financial strength and asset light nature our business. While we remain disciplined in evaluating strategic acquisition opportunities that align with our long-term vision, we continue to see significant value in share repurchases at current levels as a highly accretive use of capital,” Lefebvre noted.
| Financial Highlights (in thousands of $, except per share information) |
Q1-2025 | Q1-2024 |
| Revenue | 284,792 | 278,644 |
| Adjusted EBITDA(1) | 58,450 | 59,262 |
| Normalized adjusted EBITDA(1) | 60,190 | 59,535 |
| Net income attributable to owners | 1,743 | 17,305 |
| Cash flows from operations | 58,802 | 54,178 |
| Free cash flows net of lease payments(1) | 43,527 | 36,922 |
| Free cash flows net of lease payments per diluted share(2) | 1.87 | 1.52 |
| Earnings per share, basic | 0.07 | 0.71 |
| Earnings per share, diluted | 0.07 | 0.71 |
| System sales(3) | 1,364,800 | 1,331,700 |
| Digital sales(3) | 292,600 | 273,200 |
(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 2025, MTY’s network had 7,047 locations in operation, of which 6,791 were franchised or under operator agreements and 256 were corporate-owned. The geographical split among MTY’s locations remained stable year-over-year at 57% in the US, 35% in Canada and 8% International.
• During the first quarter of 2025, MTY’s network opened 70 locations (Q1 2024 – 75 locations) and closed 102 others (Q1 2024 – 79 locations).
• System sales increased by 2% year-over-year to reach $1.36 billion in the first quarter of 2025 compared to $1.33 billion in prior year. The US segment achieved overall sales growth of 3%, due to a positive impact of foreign exchange rates while Canada achieved organic growth of 1% compared to prior year.
• Same-store sales(1) decreased 1.5% year-over-year in the first quarter. By region, Canada fell 0.4%, the US dropped 2.2%, and International declined 3.5%. The 2025 results were negatively impacted by the 2024 leap year, which added an extra sales day. This impact was not reflected in same-store sales calculations.
(1) This is a supplementary financial measure. Please refer to the “Supplementary Financial Measures” section at the end of this press release.
Financial
• Company revenue increased by 2% to reach $284.8 million in the first quarter, driven by strong performance in the corporate segment, both in Canada and the US.
• Normalized adjusted EBITDA, which excludes acquisition-related expenses and SAP project implementation costs, increased by $0.7 million year-over-year to reach $60.2 million in the first quarter of 2025 primarily due to changes in recurring revenue and expense streams.
• Net income attributable to owners totaled $1.7 million, or $0.07 per share ($0.07 per diluted share), in the first quarter compared to $17.3 million, or $0.71 per share ($0.71 per diluted share), for the same period in 2024. The year-over-year decrease can mainly be attributed to foreign exchange losses of $21.5 million taken primarily on intercompany loans which was offset by a gain on translation on the unaudited condensed interim consolidated statement of comprehensive income.
Segment Performance
• The franchise segment saw stable revenues year-over-year driven by favorable foreign exchange, offset by lower organic system sales in the US along with a slight drop in turnkey projects in Canada. Operating expenses were up 2% driven by higher wages and a $2.0 million foreign exchange headwind. Normalized adjusted EBITDA was up 1%, with margins remaining relatively stable at 47%.
• Corporate segment revenues increased by 3% to $125.9 million, due mainly to increased corporate locations in both Canada and the US. Operating expenses were also higher given costs associated with the greater number of stores. Normalized adjusted EBITDA came in at $12.2 million, relatively stable year-over-year. Margins were in line with last year at 10%.
• Food processing, distribution and retail revenues grew by 7% to $38.2 million, primarily due to stronger sales in the Canadian retail segment, including a $3.5 million improvement from the Company’s signature Baton Rouge ribs, partially offset by a change in Mikes frozen pizza sales. Normalized adjusted EBITDA was $4.0 million, up from $3.7 million last year, with margins holding steady at 10%.
LIQUIDITY AND CAPITAL RESOURCES
• In the first quarter of 2025, cash flows generated by operating activities amounted to $58.8 million compared to $54.2 million in the first quarter of 2024. The increase is mainly due to lower interest paid on long-term debt, resulting from ongoing repayments and favourable market interest rates that reduced overall borrowing costs.
• MTY reimbursed $8.7 million of its long-term debt, paid $7.7 million in dividends to shareholders, and repurchased 287,400 shares for a total consideration of $13.8 million in the first quarter of 2025.
• As at February 28, 2025, MTY had $68.8 million of cash on hand and long-term debt of $712.7 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 million, of which CAD$270 million and US$303 million had been drawn at quarter-end.
NEAR-TERM OUTLOOK
• In Q1, same-store sales faced pressure from extreme weather conditions, particularly in the US. However, Q2 is off to a better start, with more normalized basket and traffic trends across the Company’s geographies. While that momentum is encouraging , the Company is also prepared for potential headwinds as consumers adjust to the impacts of the recently announced tariffs. As the Company navigates these potential headwinds, management remains focused on the factors within its control – driving menu innovation, maintaining product quality and consistency, enhancing both online and in-store customer experiences, and reinforcing the business’ strong value proposition.
• The pipeline of future locations remains strong. Management anticipates an improvement in the pace of openings in Q2 and Q3. This is supported by favorable seasonal trends and continued strong demand for our brands, especially some of our largest brands. While it remains mindful of continued potential delays, management is encouraged by the strong demand it is seeing from some of its new and existing franchisees.
• The tariff landscape remains fluid and management is actively monitoring developments while implementing mitigation strategies. In both Canada and the US, the Company primarily sources products domestically, which helps limit the potential exposure. While we remain vigilant, we are confident in our ability to navigate potential impacts through our strong supply chain and procurement capabilities, strategic menu adjustments, and, when necessary, pricing actions.
• For 2025, management expects stability in normalized adjusted EBITDA margins across all three of its segments, though the Company may experience seasonal fluctuations in corporate store margins. We also expect capex to be lower than prior year, resulting in a positive impact to free cash flows.Looking further ahead, MTY remains optimistic about its ability to drive margin improvement through positive unit growth, enhanced efficiencies, and an ongoing reduction in the number of less profitable corporate stores.
DIVIDEND PAYMENT
On April 11, 2025, MTY declared a quarterly dividend payment of $0.33 per common share. The dividend will be paid on May 15, 2025, to shareholders registered in the Company's records at the end of the business day on May 1, 2025.
CONFERENCE CALL
The MTY Group will hold a conference call to discuss its results on April 11, 2025, at 8:30 AM Eastern Time. All interested parties can instantly join the call by phone, by following the URL https://emportal.ink/3Rwxc2e to easily register and be connected into the conference call automatically or the conventional method by dialing 1-416-945-7677 or 1-888-699-1199 with the conference identification of 51342#. Parties unable to call in at this time may access a recording by calling 1-888-660-6345 (North American Toll Free) or 1-289-819-1450 (International participants) and entering the passcode 51342#.
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