Mr. Eric Lefebvre reports

MTY REPORTS THIRD QUARTER RESULTS FOR FISCAL 2023 AND DECLARES QUARTERLY DIVIDEND

MTY Food Group Inc. has released financial results for its third quarter ended Aug. 31, 2023, and has declared a quarterly dividend of 25 cents per share, payable on Nov. 15, 2023, to shareholders registered in the company's records at the end of the business day on Nov. 3, 2023.

"MTY continued to reap the benefits of its dual growth strategy in the third quarter of 2023 with normalized adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] increasing 44 per cent year-over-year to $72.9-million," stated Eric Lefebvre, chief executive officer of MTY. "Clearly, we are elated with our latest acquisitions, which helped raise system sales 33 per cent to $1.5-billion in the quarter, but we are also pleased by our same-store sales improvement of 3 per cent over the prior year. As a result, we continue to deliver profitable growth with exceptional predictability despite a mixed economic environment marked by higher interest rates, inflationary pressure and heightened price sensitivity on the part of consumers.

"From an operating standpoint, MTY opened 87 new locations and closed 92 others during the third quarter. Excluding newly acquired brands, the average monthly unit volume of a new location opened in fiscal 2023 was approximately $53,000 compared to a recently closed one at $37,000. As such, we are enhancing our growth profile while we continue to push towards becoming break-even in terms of new restaurant openings," Mr. Lefebvre added.

Third quarter results

Network:

• At the end of the third quarter of 2023, MTY's network had 7,119 locations in operation, of which 6,895 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 third quarter of 2023, MTY's network opened 87 locations (Q3 2022 -- 63) and closed 92 locations (Q3 2022 -- 117).
• System sales increased 33 per cent year-over-year to $1.5-billion in the third quarter of 2023. The U.S. contributed most of the growth with a 55-per-cent improvement year-over-year, largely attributable to the acquisitions of BBQ Holdings Inc. in September, 2022, as well as Wetzel's Pretzels and Sauce Pizza and Wine in December, 2022.
• Same-store sales improved 3 per cent year-over-year in the third quarter of 2023. Canada and the U.S. reported same-store sales growth of 3 per cent and 2 per cent, respectively, while the international region was stable compared with the third quarter of 2022.

Financial:

• Company revenue grew 74 per cent to $298.1-million in the third quarter of 2023 from $171.5-million in the third quarter of 2022. In the U.S. and international segment, a $104.6-million surge in corporate-owned location revenues, largely due to the BBQ Holdings, Wetzel's Pretzels, and Sauce Pizza and Wine acquisitions, contributed to the year-over-year revenue growth. It was complemented by a $17.6-million (37-per-cent) increase in franchising revenues in the U.S. and international segment, including $13.4-million from acquisitions. In Canada, revenue from franchise operations improved 3 per cent year-over-year on the strength of heightened system sales, while the food processing, distribution and retail division posted similar growth.
• Normalized adjusted EBITDA, which excludes acquisition-related expenses, rose 44 per cent year-over-year to $72.9-million in the third quarter of 2023, mainly driven by recent acquisitions.
• Net income attributable to owners totalled $38.9-million, or $1.59 per share ($1.59 per diluted share), in the third quarter of 2023 compared with $22.4-million, or 92 cents per share (92 cents per diluted share), in the same period in 2022. The year-over-year increase can mainly be attributed to higher normalized adjusted EBITDA and lower income taxes. These factors were partially offset by several items including, amongst others, higher depreciation of property, plant and equipment and right-of-use assets, as well as greater interest on long-term debt.

Liquidity and capital resources:

• In the third quarter of 2023, cash flows generated by operating activities amounted to $51.7-million compared with $42.3-million in the third quarter of 2022.
• MTY reimbursed $26.3-million of its long-term debt and paid $6.1-million in dividends to shareholders in the third quarter of 2023.
• As at Aug. 31, 2023, MTY had $54.3-million of cash on hand and long-term debt of $784.3-million, mainly in the form of bank facilities and promissory notes on acquisitions. The company also had a revolving credit facility with an authorized amount of $900-million, of which $571.8-million (U.S.) had been drawn at quarter-end. Recently implemented hedging strategies, including three-year and two-year fixed interest rate swaps, have provided the company with monthly savings of approximately $600,000 on interest payments.

Conference call

The MTY Group will hold a conference call to discuss its results on Oct. 11, 2023, at 8:30 a.m. Eastern Time. Interested parties can join the call by dialling 1-604-638-5340 (Vancouver or overseas) 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 0405. This recording will be available on Wednesday, Oct. 11, 2023, as of 11:30 a.m. Eastern Time until 11:59 p.m. Eastern Time on Wednesday, Oct. 18, 2023.

About MTY Food Group Inc.

The MTY Group franchises and operates quick-service, fast-casual and casual dining restaurants under more than 90 different banners in Canada, the U.S. 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 7,119 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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