The Groupe MTY offices are seen in Montreal on January 23, 2020. THE CANADIAN PRESS/Ryan Remiorz
MTY Food Group Inc., based in Montreal, faced challenges in its first quarter due to adverse weather and economic conditions, resulting in lower profits compared to the previous year. The company, which owns various fast-food brands like Thai Express and Manchu Wok, reported a profit of $17.3 million, or 71 cents per diluted share, for the quarter ending Feb. 29, down from $18.4 million, or 75 cents per diluted share, a year earlier.
CEO Eric Lefebvre attributed the decline in profits to extreme weather conditions, particularly in January and the first two weeks of February, which affected sales of frozen treats in their quick-serve restaurants. Additionally, poorly timed snowstorms impacted sales in certain regions, as people preferred to stay indoors during inclement weather rather than seek out the company's offerings, such as ice cream and smoothies.
The challenging economic environment further compounded MTY's difficulties, with high interest rates and inflation limiting consumer spending. As a result, the company's revenue for the quarter decreased to $278.6 million from $286.0 million in the same quarter last year. Same-store sales also fell by three percent year-over-year.
Despite the tough quarter, MTY continued its expansion efforts, opening 75 new locations while closing 79 others. By the end of the quarter, the company operated 7,112 locations across 90 banners, primarily in the U.S., Canada, and other international markets. In Canada, where competition in the fast-food sector is intensifying, MTY faces challenges from both domestic and U.S. brands expanding their presence.
While competition remains fierce, Lefebvre noted that competitors have not yet aggressively pursued pricing or discounts. However, he cautioned that this could change, and MTY needs to be prepared for potential pricing pressure in the future.
Regarding acquisitions, Lefebvre indicated that the company was not currently considering any significant deals but remained open to smaller opportunities. MTY ended the quarter with $50.6 million in cash and long-term debt of $736.2 million, mainly from bank facilities and promissory notes.
During the quarter, MTY also repaid $34.6 million of its long-term debt, paid $6.8 million in dividends to shareholders, and repurchased and canceled 70,800 shares for $3.6 million. Despite these financial maneuvers, MTY's share price closed down 9.93 percent to $45.16 on Friday, reflecting investor concerns about the company's performance.
In summary, MTY Food Group faced challenges in its first quarter due to adverse weather conditions and economic headwinds, leading to lower profits and revenue compared to the previous year. Despite these difficulties, the company continued its expansion efforts and remained cautious about potential future challenges in the competitive fast-food market.
