MTY Food Group (MTY) Q1 2026 earnings summary

Executive summary

• Macroeconomic headwinds persisted in Q1 2026, with low consumer confidence impacting same-store sales and traffic, though early Q2 data shows sequential improvement.

• Same-store sales declined 2.5% year-over-year; Canada down 0.8%, U.S. down 3.6%, with Canada showing greater resilience.

• Net income attributable to owners rose sharply to CAD 36.9 million (CAD 1.62 per diluted share) from CAD 1.7 million (CAD 0.07 per share) year-over-year, driven by a foreign exchange gain on US-dollar denominated intercompany debt.

• Digital sales held steady at 23% of total sales or $292.5 million, with 13% growth in Canada and flat performance in the U.S.

• Opened 52 locations and closed 90 in Q1, with a robust pipeline of nearly 200 stores under construction; at quarter-end, 7,034 locations were in operation.

Financial highlights

• Normalized Adjusted EBITDA was CAD 60.1 million (or $59.8 million), flat year-over-year, benefiting from a CAD 5.5 million Employee Retention Credit.

• Franchise revenue was CAD 90.7 million, down from CAD 92.9 million year-over-year, mainly due to FX and lower system sales.

• Corporate Store segment Adjusted EBITDA was CAD 13.2 million (12% margin), up 8% year-over-year, including the ERC.

• Food Processing, Distribution & Retail segment EBITDA was CAD 3.7 million on CAD 40.8 million revenue; margins at 9% vs. 10% last year.

• Cash flows from operations were CAD 40.9 million, down from CAD 64.6 million year-over-year; free cash flow after lease repayments was CAD 29 million.

Outlook and guidance

• Cautious optimism for Q2 as early data shows improvement in sales and traffic.

• Expectation of net location growth for 2026, supported by a strong pipeline and experienced franchisees.

• Strategic initiatives focus on menu innovation, customer experience, and value proposition.

• Working capital expected to be flat for 2026 compared to last year.

• No further Employee Retention Credits anticipated.