MTY Food Group (MTY) Q3 2024 earnings summary

Executive summary

• Normalized adjusted EBITDA for Q3 2024 was CAD 71.9 million, or CAD 3.01 per diluted share, nearly flat year-over-year, while franchising segment EBITDA rose 2% to CAD 57.4 million with margin improvement to 56%.

• System sales reached CAD 1.47 billion, with U.S. and international growth offsetting a decline in Canada; digital sales rose to 19% of total sales or CAD 270.7 million.

• Free cash flow net of rent/lease payments hit a record CAD 49.3 million, or CAD 2.06 per diluted share, up from CAD 32.1 million last year.

• Net income attributable to owners was CAD 34.9 million (CAD 1.46 per diluted share), down from CAD 38.9 million (CAD 1.59 per share) last year, mainly due to impairment and revaluation charges.

• 67 new locations opened and 108 closed in Q3, ending with 7,066 locations globally; delays in inspections affected timing of openings.

Financial highlights

• Total revenue decreased to CAD 292.8 million from CAD 298.1 million year-over-year, mainly due to lower recurring revenue and reduced organic system sales.

• Cash flows from operating activities increased by CAD 14.9 million to CAD 66.4 million, a 23% year-over-year rise driven by income tax receipts.

• Same-store sales decreased 2% year-over-year in Q3 2024.

• Free cash flow net of lease payments rose to CAD 49.3 million from CAD 32.1 million year-over-year.

• Net income fell due to a CAD 3 million impairment charge and revaluation losses.

Outlook and guidance

• Focus remains on organic growth and disciplined acquisitions, with optimism for future cash flow and earnings growth despite macroeconomic challenges.

• Management expects improved location openings in coming quarters, citing innovation, product quality, and digital experience as key strengths.

• Restructuring initiatives are largely complete, with ongoing maintenance expected.

• ERP implementation is on track, with benefits expected to begin in March and total costs projected at CAD 7–10 million, 60–70% capitalized.