Mty Food Group Inc. · TSX:MTY
Mty Food — Q3 2023 Earnings Presentation
31 slides from Mty Food's earnings presentation, Oct 11, 2023
Slide 1: Investor Presentation
OCTOBER 11, 2023 INVESTOR P R E S E N T AT I O N
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation may contain written and oral statements that constitute forward-looking statements. These forward-looking statements may involve, but are not limited to, comments with respect to our business or financial objectives, our strategies or future actions, our
Slide 3: Non-GAAP Measures, Non-GAAP Ratios and Supplementary Financial Measures
NON-GAAP MEASURES, NON-GAAP RATIOS AND SUPPLEMENTARY FINANCIAL MEASURES Unless otherwise indicated, the financial information presented below, including tabular Free cash flows – Represents the net cash flows: provided by operating activities; used in amounts, is expressed in Canadian dollars and pr
Slide 4: Adoption of IFRS 16, Leases
ADOPTION OF IFRS 16, LEASES Effective December 1, 2019, the Company implemented IFRS 16, Leases, but has not restated comparatives for the 2019 reporting period, as permitted under the specific transitional provisions in the standard. Please refer to the section Changes in accounting policies in the
Slide 5: Investment Thesis
INVESTMENT THESIS • Proven consolidator with disciplined acquisition strategy • Track record of growth • Strong cash flow generation ability • Recurring revenue streams in the franchising segment • Diversified portfolio of approximately 90 brands • Knowledgeable and committed team • Well positioned
Slide 6: MTY Group at a Glance
MTY GROUP AT A GLANCE Franchises and operates quick-service, fast casual and casual dining restaurants 90 brands MTY Group Underlying Network International 3% Non-traditional Food court 21% 16% 40% 34% Corporate Franchise Stores $1,138M Operation 65% $5.5B 32% 7,119 LTM Q3-2023 US LTM Q3-2023 Cana
Slide 7: Diversified Portfolio of Approximately 90 Brands
DIVERSIFIED PORTFOLIO OF APPROXIMATELY 90 BRANDS Protects MTY from shifts in customer preferences Asian & Indian Frozen treats & smoothies American Sandwiches & salads Mediterranean Italian Breakfast Mexican Coffee & snacks 7
Slide 8: Strong Brands Make Up a Large Part of Portfolio
STRONG BRANDS MAKE UP A LARGE PART OF PORTFOLIO Top 10 brands represent 65% of system sales(1) Frozen treats & smoothies represent 32% of locations Breakfast 3% Italian 2% Mediterranean 1% Mexican 7% Sandwiches & salads 6% 32% 35% $5.5B 65% Coffee & snacks 7,119 Frozen treats & smoothies Other Brand
Slide 9: International Network in 40 Countries
INTERNATIONAL NETWORK IN 40 COUNTRIES 7,119 locations and $5.5B in system sales (1) for LTM Q3-2023 Canada International 2,520 $1,785M 491 $152M US 4,108 $3,569M (1) This is a supplementary financial measure. Please refer to page 3 of this presentation. 9
Slide 10: Creating a More Sustainable MTY
CREATING A MORE SUSTAINABLE MTY PLANNING FOR THE FUTURE AND WORKING TOWARDS DELIVERING POSITIVE, LONG-TERM OUTCOMES FOR ALL Our 2022 Sustainability Report Aligning to the UNITED NATIONS SUSTAINABLE Update can be found here. DEVELOPMENT GOALS PILLARS FOOD We Serve PLANET We Live On PEOPLE We Interact
Slide 11: Strategy & Future Growth
GROUPE MTY GROUP STRATEGY & FUTURE GROWTH 11
Slide 12: Growth Strategy – Increasing Market Share
GROWTH STRATEGY – INCREASING MARKET SHARE LEVERAGING DEVELOPPING our solid platforms to expand our Canadian brands throughout North America in the US FOCUSING SEEKING on high quality of revenues that international Master franchise are recurring in nature opportunities IMPROVING UPGRADING MTY’s digit
Slide 13: Growth Strategy – Acquisitions
GROWTH STRATEGY – ACQUISITIONS REINFORCING Canadian platform by regions Strong reputation for paying a ‘fair’ price LEVERAGING our US platform to integrate acquisitions PROVIDING Experienced integration team additional depth and breadth in offering PAYING FAIR PRICE for good quality earning potentia
Slide 14: Financial History
FINANCIAL HISTORY 14
Slide 15: Track Record of Growth
TRACK RECORD OF GROWTH(1&2) Revenues (M$) Adjusted EBITDA(3) (M$) Normalized Adjusted EBITDA(3) 265 1,131 260 187 169 182 152 169 717 147 138 138 551 511 552 2019 2020 2021 2022 LTM 2019 2020 2021 2022 LTM 2019 2020 2021 2022 LTM Q3-23 Q3-23 Q3-23 Net Income (Loss) (M$) Operating Cash Flow(4) (M$) F
Slide 16: Network Evolution
NETWORK EVOLUTION System Sales by System Sales by Geography (M$)(1) Type (M$)(1) 5,506 5,506 3,620 3,620 2019 2020 2021 2022 LTM 2019 2020 2021 2022 LTM Q3-23 Q3-23 Food Court Street front Non-traditonal Canada US International Locations by Type Locations by Geography 7,373 7,119 7,373 7,119 2019 20
Slide 17: Growing Normalized Adjusted EBITDA Consistently
GROWING NORMALIZED ADJUSTED EBITDA(1) CONSISTENTLY Normalized Adjusted EBITDA as a % of Revenues(2) is primarily driven by the franchising segment 300 55% $265M 250 48% 48% 49% 50% 48% 45% 45% 49% 50% 200 37% 35% 34% 34% 150 31% 28% 31% 27% 26% 23% 100 50 $43M - 2014 2015 2016 2017 2018 2019 2020 20
Slide 18: Optimizing Financing Structure
OPTIMIZING FINANCING STRUCTURE Maintaining a solid balance sheet 800 3.3x 3.2x 3.0x 600 2.7x 2.8x Acquisition 400 of Kahala 1.8x $730M 1.8x 1.9x 200 0.5x 0.3x - 2014 (1) 2015 (1) 2016 2017 2018 2019 2020 2021 2022 LTM Q3-23 Net Debt (2) Net Debt / LTM Norm. Adj. EBITDA(3) (1) On a total debt basis (
Slide 19: Increasing Dividends Consistently
INCREASING DIVIDENDS CONSISTENTLY Dividend typically represents 15-20% of FCF(1) Dividend payments $1.00 restored as at July 9 $0.84 Temporarily $0.66 suspended $0.60 the dividend in response $0.46 $0.46 to COVID-19 $0.40 $0.37 $0.34 The number of shares increased in $0.19 2017 2014 2015 2016 2017 2
Slide 20: Q3-2023 Results
Q3-2023 RESULTS 20
Slide 21: Q3-23 Revenues Increase Mainly Due to Acquisitions
Q3-23 REVENUES INCREASE MAINLY DUE TO ACQUISITIONS Acquisitions of BBQ Holdings, Wetzel’s Pretzel and Sauce Pizza and Wine contributed to the increases in revenue for franchise operations and corporate restaurants in the US and International segment of 37% and 1,743%, respectively $298.1M $298.1M $1
Slide 22: Q3-23 Normalized Adjusted EBITDA Increased
Q3-23 NORMALIZED ADJUSTED EBITDA(1) INCREASED Normalized adjusted EBITDA(1) increased 44% year-over-year in Q3-2023 on the strength of latest acquisitions. Normalized adjusted EBITDA as a % of revenue(2) was 24% in Q3-2023. $72.9M $72.9M $50.6M $50.6M Q3-22 Q3-23 Q3-22 Q3-23 Franchise Corporate Food
Slide 23: Q3-23 Metrics
Q3-23 METRICS Normalized Adjusted EBITDA / share(1) Net income FCF(2)/ diluted Net income / diluted $39.1M share(1,3) share $1.59 $2.98 $1.67 $1.77 $22.6M $0.92 $2.07 Q3-22 Q3-23 Q3-22 Q3-23 Q3-22 Q3-23 Q3-22 Q3-23 FCF/diluted share improved mostly due to higher normalized adjusted EBITDA (1) This i
Slide 24: Q3-23 Healthy Financial Position
Q3-23 HEALTHY FINANCIAL POSITION Healthy cash position of $54.3M and $900M revolving credit facility, of which US$571.8M had been drawn at quarter-end Net Debt(1) Revolver $781M $754M $730M $900M $900M $900M $900M Higher $501M $600M flexibility and lower cost $260M thanks to various hedging strategi
Slide 25: Appendix
APPENDIX 25
Slide 26: Knowledgeable and Committed Management Team
KNOWLEDGEABLE AND COMMITTED MANAGEMENT TEAM Eric Lefebvre Renée St-Onge Jason Brading Nick Rupp Marie-Line Beauchamp Chief Executive Officer Chief Financial Officer COO Quick Service COO Papa Murphy’s COO Casual Dining Restaurants International Restaurants Marc Benzacar Jeff Smit Al Hank Vincent Mon
Slide 27: Milestones in ~40-Year History
MILESTONES IN ~40-YEAR HISTORY MTY has realized over 50 brand acquisitions since 1999* 1st acquisition: • Fontaine Santé Acquires Acquires Kahala Brands Papa Murphy’s Listed on Vancouver Acquires Stock Exchange Acquires BBQ Holdings Acquires • Casa Grecque Acquires Acquires • The Works Burger • Sout
Slide 28: Typical Seasonality of MTY Results
TYPICAL SEASONALITY OF MTY RESULTS System sales(1) fluctuate with the seasons Q1 Q2 Q3 Q4 Dec-Jan-Feb March-Apr-May June-July-Aug Sept-Oct-Nov Winter Spring Summer Fall Sales for Frozen treats & SOFT STRONG STRONGEST SOFT smoothies Sales for Papa Murphy’s STRONG STRONG SOFT STRONGEST Sales for Wetze
Slide 29: Stock Price Performance Since Listed on TSX
STOCK PRICE PERFORMANCE SINCE LISTED ON TSX As at October 11, 2023, management and the Board own 16% of shares 80 Shares outstanding 24.4M Float 20.4M 52 week average daily volume 34,881 October 11 60 52 week high-low (intraday) $73.50-$52.50 $54.54 Market capitalization $1.3B 40 20 0 Source: Yahoo
Slide 30: Valuation Conundrum
VALUATION CONUNDRUM Calculations based on Q3-23 data (in thousands except stock price) Bloomberg / Factset MTY Stock price as at August 31, 2023 $66.11 $66.11 # shares 24,413 24,413 Market cap. $1,613,974 $1,613,974 Bloomberg & LTD 772,640 772,640 Factset do not account for Current LTD 11,698 11,698
Slide 31: MTY Group
GROUPE MTY GROUP