Mr. Eric Lefebvre reports

MTY REPORTS FIRST QUARTER RESULTS FOR FISCAL 2026

MTY Food Group Inc. has released the financial results for its first quarter of fiscal 2026 ended March 1, 2026, and declared a quarterly dividend of 37.0 cents per share, payable on May 15, 2026, to shareholders registered in the company's records at the end of the business day on May 5, 2026.

"Our asset-light, well-diversified model continues to demonstrate its strong cash flow profile despite persistent macroeconomic headwinds," said Eric Lefebvre, chief executive officer of MTY. "Our results in the quarter reflect the depressed consumer sentiment during the period, which is starting to show early signs of improvement in March. We continue to navigate this challenging environment, investing where appropriate and demonstrating cost discipline to put the business in a stronger position once consumer demand normalizes and improves.

"Same-store sales reflect this environment with a headwind of 2.5 per cent as our Canadian operations showed greater resilience than the U.S. and international segments. Our pipeline of store locations remains robust for 2026, with the normal seasonal activity in Q1 of higher closures post the holiday season.

"We believe store locations will be a bright spot for 2026, continuing the trend from the second half of 2025. These new store locations are increasingly underpinned by experienced operators choosing to expand their footprint under MTY banners. We believe the strength of our brands and the experience of our team and franchise operators set us up to perform well once the consumer rebound is under way."

First quarter results

Network:

• At the end of the first quarter of 2026, MTY's network had 7,034 locations in operation, of which 6,786 were franchised or under operator agreements and 248 were corporate owned. The geographical split among MTY's locations remained stable year over year at 57 per cent in the United States, 35 per cent in Canada and 8 per cent international.
• During the first quarter of 2026, MTY's network opened 52 locations (Q1 2025: 70 locations) and closed 90 others (Q4 2024: 102 locations). The company also ended a master franchise licensing agreement with TCBY, leading to an eight-store-location reduction.
• System sales reached $1.3-billion in the first quarter of 2026. The U.S. and international segments experienced an overall sales decrease of 7.1 per cent while Canada demonstrated resilience with a more modest decrease of 1.7 per cent. Half of the decrease in the U.S. and international segments was the result of foreign exchange variation.
• Same-store sales decreased 2.5 per cent year over year in the first quarter. By region, Canada remained relatively stable with a modest 0.8-per-cent decrease while the U.S. and international segments recorded declines of 3.6 per cent and 1.3 per cent, respectively.
• Digital sales remained resilient in the first quarter at $292.5-million, including the impact of foreign exchange rates, compared with $292.6-million in Q1 2025. Excluding the impact of foreign exchange, Canada delivered strong digital sales growth of 13 per cent while the United States remained steady.

Financial:

• Company revenue was $267.8-million in the first quarter, a decrease of 6.0 per cent, primarily attributable to lower revenue from corporate stores in the United States while Canada remained resilient, supported by growth in food processing, distribution and retail.
• Net income attributable to owners totalled $36.9-million, or $1.62 per share, in the first quarter compared with $1.7-million, or seven cents per share, for the same period in 2025. The year-over-year improvement was mainly attributable to a foreign exchange gain related to the revaluation of U.S.-dollar-denominated intercompany debt.
• Normalized adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which excludes acquisition-related expenses and SAP project implementation costs, remained steady year over year to reach $60.1-million in the first quarter of 2026, positively impacted by a $5.5-million employee retention credit related to the 2020-2022 fiscal year received from the U.S. government.

Liquidity and capital resources

In the first quarter of 2026, cash flows generated by operating activities amounted to $40.9-million compared with $64.6-million in the first quarter of 2025. The change was primarily attributable to lower working capital due to timing of payroll and benefit accruals and lower interest expense accruals, timing of payments made and an increase in royalties and vendor rebates receivables, as well as higher income taxes paid. Excluding the variations in non-cash working capital items, income taxes, interest paid and other, operations generated $59.9-million, compared with $58.6-million last year.

MTY reimbursed $17.7-million of its long-term debt and paid $8.5-million in dividends to shareholders. As at March 1, 2026, MTY had $56-million of cash on hand and long-term debt of $605.1-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 $250-million and $262-million (U.S.) had been drawn at quarter-end.

Strategic review

On Nov. 17, 2025, MTY Group announced that the board of directors of the company had initiated a strategic review process and engaged a financial adviser to identify, review and evaluate potential strategic alternatives with a view toward continuing to enhance shareholder value. While the company cannot provide a specific timeline or assurance that any transaction will result, MTY confirms that the process referred to in its previous press release is continuing. The company will provide an update or make an announcement as appropriate or as required by law.

Outlook

MTY continues to navigate a dynamic operating environment. The macroeconomic conditions continue to create short-term headwinds and the company continues actively implementing a range of strategic initiatives to position the business for growth once the environment improves. These include and are not limited to driving menu innovation, maintaining product quality and consistency, enhancing both on-line and in-store customer experiences, and reinforcing a strong value proposition across its banners.

The pipeline of future locations remains strong as MTY continues to see strong demand for its brands. It anticipates an improvement in the pace of openings in the coming quarters and remains confident in its ability to achieve net location growth in 2026 despite the slow start to the year as it.

Management notes certain macroeconomic and policy-related uncertainties could affect performance. To date, MTY has only seen modest direct impacts from tariffs and increases in oil and gas prices. In both Canada and the United States, the company primarily sources products domestically, which helps limit the potential exposure to tariffs. Oil and gas prices may have longer impacts should the war in the Middle East continue primarily impacting supply chain costs and margins for franchisees, corporate stores and the retail segment. Management remains confident in its ability to navigate potential impacts through its strong supply chain and procurement capabilities, strategic menu adjustments, and, when necessary, pricing actions.

Management expects stability in normalized adjusted EBITDA margins across each of its segments, though the company may experience some fluctuations in corporate store margins. Over all, management remains confident about its ability to drive margin improvement through positive unit growth, enhanced efficiencies, and a continuing reduction in the number of less profitable corporate stores.

Dividend payment

On April 10, 2026, MTY declared a quarterly dividend payment of 37 cents per common share. The dividend will be paid on May 15, 2026, to shareholders registered in the company's records at the end of the business day on May 5, 2026.

Conference call

MTY Group will hold a conference call to discuss its results on April 10, 2026, at 8:30 a.m. Eastern Time. All interested parties can instantly join the call by phone, by easily registering on-line and be connected into the conference call automatically, or by the conventional method by dialling 1-416-945-7677 or 1-888-699-1199 with the conference identification of 33884 followed by the number sign. Parties unable to call in at this time may access a recording by calling 1-888-660-6345 (North American toll-free) or 1-289-819-1450 (international participants) and entering the passcode 33884 followed by the number sign.

About MTY Food Group Inc.

MTY Group franchises and operates quick-service, fast-casual and casual dining restaurants over 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 45 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 7,034 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.

We seek Safe Harbor.