- Normalized adjusted EBITDA(1) increased 25% to
$53.5 million in Q4-22 and 11% to a
record $187.4 million in
2022.
- Cash flows from operating activities amounted to
$35.5 million in Q4-22 and
$142.8 million in 2022.
- Free cash flows per diluted share(2) totaled
$1.34 in Q4-22 and $5.37 in 2022.
- System sales(3) reached $1.2 billion in the quarter and $4.3 billion in the last twelve months.
- Net income attributable to owners of $7.1 million in Q4-22, or $0.29 per diluted share, and $74.8 million, or $3.06 per diluted share, in 2022. In both cases,
the decline is mainly due to acquisition-related transaction costs
and higher non-cash impairment charges on intangible
assets.
- Long-term debt repayments of $23.9
million in Q4-22 and $80.2
million in 2022.
- Quarterly dividend payment of $0.25 per share on February 15, 2023.
- Acquisition of Wetzel's Pretzels on December 8, 2022 for a cash consideration of
approximately $282.0 million
(US$207.0 million).
- Acquisition of Sauce Pizza and Wine on December 15, 2022 for a total consideration of
$14.8 million (US$10.8 million).
(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, Feb. 16,
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 fourth quarter and fiscal year
ended November 30, 2022.
"We are extremely proud of the results realized during 2022, a
year marked by COVID-related restrictions early in the year, labour
and supply chain challenges, inflationary pressure and uncertain
market conditions," said Eric
Lefebvre, Chief Executive Officer of MTY. "We delivered
record normalized adjusted EBITDA of more than $187 million, generated cash flows from
operations of $143 millions and our
system sales exceeded $4 billion for
the first time on the strength of well-executed organic and
acquisition-related growth. For 2023, the acquisitions of BBQ
Holdings, for which only two months of activity are reflected in
our 2022 results, Wetzel's Pretzels and Sauce Pizza and Wine, which
were both realized in early 2023, are expected to have a strong
positive impact on the business and help us achieve
new heights."
"In the fourth quarter of 2022, we continued our growth momentum
with both normalized adjusted EBITDA and system sales increasing
25% year-over-year to $53.5 million
and $1.2 billion, respectively," Mr.
Lefebvre added. "We are particularly pleased about generating a
healthy organic growth in the quarter to complement our expansion
through acquisition. Looking ahead to 2023, achieving growth
organically and via M&A will remain our main objective."
Financial
Highlights
(in thousands of $,
except per
share information)
|
Q4-2022
|
Q4-2021
|
2022
|
2021
|
Revenue
|
241,970
|
146,285
|
716,522
|
551,903
|
Adjusted
EBITDA(1)
|
49,876
|
42,831
|
182,082
|
168,622
|
Normalized adjusted
EBITDA(1)
|
53,474
|
42,831
|
187,352
|
168,622
|
Net income attributable
to
owners
|
7,126
|
24,877
|
74,817
|
85,639
|
Cash flows from
operations
|
35,524
|
31,898
|
142,797
|
139,299
|
Free cash
flows(1)
|
32,853
|
35,603
|
131,270
|
139,001
|
Free cash flows per
diluted
share(2)
|
1.34
|
1.44
|
5.37
|
5.62
|
EPS basic
|
0.29
|
1.01
|
3.06
|
3.47
|
EPS diluted
|
0.29
|
1.00
|
3.06
|
3.46
|
System
sales(3)
|
1,206,500
|
962,500
|
4,251,200
|
3,631,300
|
Digital
sales(3)
|
208,500
|
193,700
|
820,300
|
803,600
|
(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.
|
FOURTH QUARTER RESULTS
Network
- At the end of the quarter, MTY's network had 6,788 locations in
operation, of which 6,589 were franchised or under operator
agreements and the remaining 199 locations were operated by the
Company. As a result of the acquisition of BBQ Holdings, the
geographical split of MTY's locations changed slightly, with 56% in
the US, 37% in Canada and 7%
Internationally located.
- System sales grew 25% year-over-year to $1.2 billion in the fourth quarter with the
acquisition of BBQ Holdings which complemented the organic growth
generated by existing locations.
Financial
- The Company's revenue rose 65% year-over-year to $242.0 million in the fourth quarter mainly
driven by the BBQ Holdings acquisition. The two-month impact of the
transaction delivered growth for franchise operations and corporate
restaurants of $4.3 million and
$67.6 million, respectively, in the
US and International segment. In Canada, franchise operations and food
processing, distribution and retail were the major revenue
contributors with year-over-year growth of 25% and 22%,
respectively.
- Normalized adjusted EBITDA, which excludes acquisition-related
expenses, improved 25% year-over-year to $53.5 million in the fourth quarter of 2022 on
the strength of the BBQ Holdings acquisition in the US and
International segment and a return to pre-pandemic market
conditions in Canada.
- Net income attributable to owners totaled $7.1 million, or $0.29 per share ($0.29 per diluted share), in the fourth quarter
compared to $24.9 million, or
$1.01 per share ($1.00 per diluted share), for the same period in
2021. The decrease was mainly due to higher non-cash impairment
charges on intangible assets, higher interest on long-term debt, a
decrease in the gain on revaluation of financial liabilities
recorded at fair value, a decrease in the gain on disposal of
property, plant and equipment, as well as acquisition-related
transaction costs incurred for the acquisitions of BBQ Holdings and
Wetzel's Pretzels.
FISCAL 2022 RESULTS
Network
- System sales improved 17% to $4.3
billion in fiscal 2022. Excluding acquisitions, systems
sales were up 12% year-over-year with Canada contributing the majority of the
growth. The casual dining and quick service restaurant concepts in
Canada led the increase,
representing 31% and 23% of the total year-over-year growth,
respectively. Major brands in Canada such as Allô! Mon Coco, Baton Rouge,
Ben & Florentine, Manchu Wok, and Thaï Express greatly
outperformed the prior year as customers returned to in-person
dining post-pandemic.
- Digital sales in 2022 amounted to $820.3
million, or 20% of system sales, compared to $803.6 million, or 23% of system sales, in 2021.
Digital sales pertain mostly to take-out orders and delivery sales,
which benefited from the Company's increased investments in online
ordering and third-party delivery options.
- MTY's network acquired 332 locations (2021 – nil), opened 245
locations (2021 – 218 locations and three locations through a joint
venture) and closed 507 locations (2021 – 489 locations and one
location through a joint venture) during the fiscal year.
Financial
- The Company's revenue rose 30% to $716.5
million in fiscal 2022. The year-over-year revenue growth
can mainly be attributed to a 123% revenue surge from US and
International corporate stores, mostly attributable to the BBQ
Holdings acquisition as well as a 32% increase from franchise
operations and 30% improvement from food processing, distribution
and retail channels, both in Canada.
- Normalized adjusted EBITDA grew 11% to a record $187.4 million in 2022 from $168.6 million in 2021.
- Net income attributable to owners totaled $74.8 million, or $3.06 per share ($3.06 per diluted share), in 2022 compared to
$85.6 million, or $3.47 per share ($3.46 per diluted share), in 2021.
LIQUIDITY AND CAPITAL RESOURCES
- In fiscal 2022, cash flows generated by operating activities
reached $142.8 million compared to
$139.3 million in 2021.
- MTY reimbursed $80.2 million of
its long-term debt and paid $20.5
million in dividends to its shareholders in fiscal 2022. The
Company also repurchased and cancelled 256,400 of its shares for
$14.6 million through its Normal
Course Issuer Bid in the past fiscal year.
- As at November 30, 2022, the
Company had $59.5 million of cash on
hand and long-term debt of
$561.0 million, mainly in the form of
bank facilities and promissory notes on acquisitions.
NEAR-TERM OUTLOOK
The actions taken by MTY to strengthen the Company and its
network during the COVID-19 pandemic have allowed MTY to be in a
good position to tackle future challenges the industry will face.
The restaurant industry is extremely competitive, and the pace of
changes, innovations and shifts in customer preferences is
accelerating every day. MTY's entrepreneurial roots give it an
advantage in the current environment and the team is prepared to
face any situation.
At the date of this press release, MTY and its franchisees are
still feeling the impact of various supply chain challenges, which
come from inflation and from disruptions and shortages in the
supply of certain products. This comes in addition to rising
interest rates and increased construction costs. While some aspects
of the business are gradually stabilizing, there remains some
uncertainty as to what the new baseline is going to be once this
period of high volatility fades away.
The Company's franchisees and suppliers also face significant
labour shortages that, in certain cases, affect their ability to
conduct business optimally. These labour shortages, combined with
increases in minimum wage rates in many jurisdictions in which the
network operates, are expected to lead to increased overtime and
labour costs, as well as to an inability to generate 100% of the
potential sales of some of the restaurants.
Despite the above-mentioned challenges, sales are for the most
part back to pre-pandemic levels or better, and for the locations
that are lagging because of geography or type of restaurants,
trends are encouraging. With the brands' focus on innovation,
product quality, consistency and superior store design combined
with the adjustments made during the pandemic to adapt to new
customer expectations, management believes the network is
positioned well to thrive in the future, even if a recession were
to happen.
In the short term, management's primary focus will continue to
be the success of existing locations. More specifically, the teams
will assist franchisees to generate sales growth, open new
locations of existing concepts and ultimately achieve their
profitability objectives. Management will also focus on the
integration of the recently acquired brands.
Management will maintain its focus on maximizing shareholder
value by adding new locations of its existing concepts and remains
committed to seek potential acquisitions to increase the Company's
market share.
CONFERENCE CALL
The MTY Group will hold a conference call to discuss its
financial results today at 8:30 AM Eastern Time.
Interested parties can join the call by dialing 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 885053. This recording will be available today, as
of 11:30 AM Eastern Time, until 11:59 PM Eastern Time on Thursday, February
23, 2023.
ABOUT MTY FOOD GROUP INC.
MTY Group franchises and operates quick-service, fast casual and
casual dining restaurants under more than 80 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 6,788 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 plus share of
net profit (loss) of a joint venture accounted for using the equity
method), normalized adjusted EBITDA (revenue less operating
expenses (excluding transaction costs related to acquisitions) plus
share of net profit (loss) of a joint venture accounted for using
the equity method) 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 consolidated financial
statements and notes thereto for the three and twelve months ended
November 30, 2022, 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.