Mr. Eric Lefebvre reports

MTY REPORTS SECOND QUARTER RESULTS FOR FISCAL 2023 AND DECLARES ITS QUARTERLY DIVIDEND

MTY Food Group Inc. has released financial results for its second quarter ended May 31, 2023, and declared its quarterly dividend of 25 cents per share, payable on Aug. 15, 2023, to shareholders registered in the company's records at the end of the business day on Aug. 2, 2023.

"We are delighted by our ongoing strong financial performance in the second quarter of 2023, marked by normalized adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] of $74.6-million and record-high system sales of $1.5-billion," stated Eric Lefebvre, chief executive officer of MTY. "This growth momentum not only reflects the seamless integration of recent acquisitions in the U.S., but also the internal strength of new locations and same-store sales increasing 5 per cent year-over-year.

"We opened 73 new locations and closed 77 others during the second quarter, representing our best quarterly net result in the last nine years. Narrowing the gap between openings and closings ranks as a key objective postpandemic, as we continue to invest in our banners, support our franchise partners and improve operating efficiency.

"Given our increased leverage following the acquisitions completed in recent months and the rising interest rates, the company intends to keep a watchful eye on accretive, tuck-in acquisitions on an opportunistic basis, and prioritize paying down debt and building a reserve to improve future capital allocation flexibility," Mr. Lefebvre added.

Second quarter results

Network:

• At the end of the second quarter of 2023, MTY's network had 7,124 locations in operation, of which 6,900 were franchised or under operator agreements and 224 were corporate-owned. The geographical split among MTY's locations consisted of 58 per cent based in the United States, 35 per cent in Canada and 7 per cent international.
• During the second quarter of 2023, MTY's network opened 73 locations (Q2 2022 -- 47) and closed 77 locations (Q2 2022 -- 91).
• System sales increased 39 per cent year-over-year to a record-high $1.5-billion in the second quarter of 2023. The U.S. contributed most of the growth, with a 63-per-cent improvement year-over-year, largely attributable to the acquisitions of BBQ Holdings in the fourth quarter of 2022, as well as Wetzel's Pretzels, and Sauce Pizza and Wine in the first quarter of 2023. Excluding acquisitions, quick service and casual dining sales contributed the most to the increase, with growths of 11 per cent and 4 per cent, respectively.
• Same-store sales, which were positive in all geographic regions, improved 5 per cent year-over-year in the second quarter of 2023. Canada reported the strongest growth in same-store sales, with a 6-per-cent increase from the second quarter of 2022, followed by the U.S. and international regions with improvements of 4 per cent and 2 per cent, respectively. The second quarter of 2023 represented the first fully comparable quarter on a year-over-year basis since the outbreak of COVID-19 in March, 2020.

Financial:

• Company revenue grew 88 per cent to $305.2-million in the second quarter of 2023, from $162.5-million in the second quarter of 2022. BBQ Holdings, Wetzel's Pretzels, and Sauce Pizza and Wine acquisitions were the primary contributors to the revenue growths of $16.5-million and $119.9-million, respectively, in franchise operations and corporate stores in the U.S. and international segment. In Canada, revenue from franchise operations improved 10 per cent on the strength of organic growth from increased customer traffic.
• Normalized adjusted EBITDA, which excludes acquisition-related expenses, rose 57 per cent year-over-year to $74.6-million in the second quarter of 2023, mainly driven by the BBQ Holdings, Wetzel's Pretzels, and Sauce Pizza and Wine acquisitions.
• Net income attributable to owners totalled $30.4-million, or $1.24 per share ($1.24 per diluted share), in the second quarter of 2023, compared with $28.6-million, or $1.17 per share ($1.17 per diluted share), in the same period in 2022. The year-over-year increase can be attributed to higher normalized adjusted EBITDA and lower income taxes.

Liquidity and capital resources:

• In the second quarter of 2023, cash flows generated by operating activities amounted to $56.3-million compared with $30.1-million in the second quarter of 2022.
• MTY reimbursed $26.8-million of its long-term debt and paid $6.1-million in dividends to shareholders in the second quarter of 2023.
• As at May 31, 2023, MTY had $62.6-million of cash on hand and long-term debt of $816.2-million, mainly in the form of bank facilities and promissory notes on acquisitions. The company also had a revolving credit facility of $900-million, of which $590.3-million (U.S.) had been drawn at quarter-end. Various hedging strategies were implemented during the quarter to provide better predictability of cash flows and additional financial flexibility.

Normal course issuer bid

On June 29, 2022, MTY announced the renewal of its NCIB program. The NCIB began on July 3, 2022, and ended on July 2, 2023. The NCIB was again renewed on June 29, 2023, for a period beginning on July 3, 2023, and ending on July 2, 2024, or on such earlier date when the company completes its purchases or elects to terminate the NCIB. The renewed period allows MTY to purchase 1,220,673 of its common shares. These purchases will be made on the open market, plus brokerage fees, through the facilities of the Toronto Stock Exchange and/or alternative trading systems at the prevailing market price at the time of the transaction, in accordance with the TSX's applicable policies. All common shares purchased pursuant to the NCIB will be cancelled.

Conference call

The MTY Group will hold a conference call to discuss its financial results on July 11, 2023, at 8:30 a.m. ET. Interested parties can join the call by dialling 1-604-638-5340 (for international participants) or 1-800-319-4610 (elsewhere in North America). Parties unable to call in at this time may access a recording by calling 1-855-669-9658 and entering the passcode 0262. This recording will be available on Tuesday, July 11, 2023, as of 11:30 a.m. ET until 11:59 p.m. ET on Tuesday, July 18, 2023.

About MTY Food Group Inc.

MTY Food Group franchises and operates quick-service, fast-casual and casual dining restaurants under more than 80 different banners in Canada, the United States and internationally. Based in Montreal, MTY is a family whose heart beats to the rhythm of its brands, the very soul of its multibranded strategy. For over 40 years, it has been increasing its presence by delivering new concepts of restaurants, making acquisitions and forging strategic alliances, which have allowed it to reach new heights year after year. By combining new trends with operational know-how, the brands forming the MTY Group now touch the lives of millions of people every year. With 7,124 locations, the many flavours of the MTY Group hold the key to responding to the different tastes and needs of today's consumers as well as those of tomorrow.

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