MTY Food Group (MTY) Q2 2025 earnings summary

Executive summary

• Q2 saw Canadian operations rebound with stable growth, while U.S. operations faced broad-based declines due to economic uncertainty and cautious consumer behavior.

• Net income attributable to owners rose to $57.3M ($2.49/diluted share) in Q2-25, up from $27.3M ($1.13/diluted share) in Q2-24, mainly due to a $35M foreign exchange gain on intercompany loans.

• Revenue remained stable at $304.8M, with franchise and retail growth offset by a decline in the corporate segment.

• Digital sales grew 3% to $296.7M, now representing 21% of system sales, with ongoing investments in technology and data analytics.

• Store network saw a net decrease of one location, with 76 openings, 77 closures, and 108 under construction; 35 new openings in June signal a strong pipeline.

Financial highlights

• Canadian same store sales increased 1.4% year-over-year, while U.S. same store sales declined 3.8%; system sales reached $1.5B.

• Normalized adjusted EBITDA declined 5% to $70M, mainly due to lower U.S. corporate store margins and strategic reacquisition of underperforming stores.

• Franchise segment EBITDA grew 3% to $54M, retail segment EBITDA up 9%, with retail margins rising to 12%.

• Free cash flows net of lease payments were $23.6M, largely flat year-over-year.

• Adjusted EPS was $1.17 per diluted share, down from $1.25 in Q2-24.

Outlook and guidance

• Net location growth remains a medium- to long-term goal, with a strong pipeline of store openings and continued focus on closing underperforming locations.

• CapEx expected to remain lower than 2024, with only minor increases anticipated for ERP implementation.

• Corporate store EBITDA margins expected to remain around 9% over the medium term.

• Management expects stable normalized adjusted EBITDA margins across all segments for 2025, with some fluctuations in corporate store margins.

• Actively monitoring tariff impacts, with most products sourced domestically to limit exposure.