MTY Food Group (MTY) Q1 2025 earnings summary

Executive summary

• Resilient Q1 2025 performance despite macroeconomic and weather challenges, with stable same-store sales after leap year adjustment and digital sales up 7% to $292.6M, now 22% of total sales.

• Opened 70 locations and closed 102, resulting in a net decrease of 32; over 100 locations are under construction, supporting future growth.

• Normalized adjusted EBITDA rose 1% to CAD 60.2M ($60.2M), with franchise segment EBITDA up 1% to $44.0M and margin steady at 47%.

• Free cash flows net of lease payments were CAD 43.5M ($43.5M), up 18% year-over-year, representing 72% of normalized adjusted EBITDA.

• Net income attributable to owners dropped to CAD 1.7M ($0.07/diluted share) from CAD 17.3M ($0.71/diluted share) last year, mainly due to $21.5M in foreign exchange losses.

Financial highlights

• System sales increased 2.5% year-over-year to $1.36B, and revenues rose 2.2% to $284.8M, driven by strong corporate segment performance.

• Adjusted EPS excluding FX impact was CAD 0.87 per share, up from CAD 0.69 per share.

• Digital sales grew to $292.6M from $273.2M year-over-year.

• Cash flows from operations were $58.8M, up from $54.2M in Q1-2024.

• Free cash flows net of lease payments per diluted share: $1.87 (Q1-2025) vs $1.52 (Q1-2024).

Outlook and guidance

• Anticipates improved pace of restaurant openings in Q2 and Q3, with a commitment to net location growth and a strong development pipeline.

• Capital expenditures for 2025 expected to be materially lower than 2024, supporting higher free cash flows.

• Management expects stable normalized adjusted EBITDA margins and margin improvement through unit growth and efficiency gains.

• Strong cash flow and balance sheet flexibility support ongoing share buybacks, dividends, and potential acquisitions.

• Company is monitoring tariff impacts and expects to mitigate risks through domestic sourcing and pricing actions.