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%.

• 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 charges and revaluation losses.

• System sales reached CAD 1.47 billion, with U.S. and international growth offsetting a Canadian decline, and digital sales increasing to CAD 270.7 million.

• The network ended the quarter with 7,066 locations globally, a net decrease due to higher closures, especially at Papa Murphy's, but with 67 openings and 108 closures in Q3.

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

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 rose to CAD 66.4 million, up 23% year-over-year, driven by income tax receipts.

• Free cash flow net of lease payments increased to CAD 49.3 million from CAD 32.1 million last year.

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

Outlook and guidance

• Focus remains on organic growth and opportunistic acquisitions, with confidence in long-term objectives and improved location openings expected.

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

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