MTY Food Group (MTY) Q4 2025 earnings summary

Executive summary

• Q4 2025 marked a return to profitability with net income attributable to owners of CAD 32.1 million (CAD 1.40 per diluted share), reversing a prior loss, mainly due to lower impairments and a one-time CAD 29.5 million gift card breakage income.

• 19 net new store openings in Q4 2025, resulting in the first annual positive net unit growth since 2013, ending the year with 7,080 locations.

• Free cash flow generation was robust, leverage decreased, and the store network is at its healthiest in over a decade.

• System sales increased 3% to $1.41 billion, aided by a 53rd week and positive FX, but decreased 2% excluding these effects.

• The board's strategic review is ongoing, with no timeline or assurance of outcome provided.

Financial highlights

• Normalized Adjusted EBITDA for Q4 was CAD 87.7 million, up 48% year-over-year, driven by a one-time CAD 29.5 million gift card breakage income.

• Revenue grew 7% year-over-year to $305.4 million in Q4 2025, driven by US franchise operations and processing, distribution, and retail segments.

• Free cash flow, net of lease payments, was CAD 37.7 million, up 38% year-over-year.

• Quarterly dividend was raised by 12% to CAD 0.37 per share, paid February 13, 2026.

• Ended the quarter with net debt of approximately CAD 580 million and a debt to EBITDA ratio of about 2x.

Outlook and guidance

• Management expects continued strong free cash flow into 2026, supported by lower CapEx.

• Franchisee EBITDA growth is expected to outpace same-store sales growth.

• Anticipates improvement in store opening pace, with strong demand for larger brands.

• Expects stable normalized adjusted EBITDA margins, with potential fluctuations in corporate store margins.

• Strategic initiatives focus on menu innovation, product quality, and customer experience enhancements.