MTY Food Group expects to continue to drive ‘strong’ free cash flows in 2025

The company said, “MTY continues to navigate a dynamic operating environment. Second-quarter same-store sales performance highlighted a clear contrast between its two core markets. While macroeconomic conditions created short-term headwinds in the U.S., the Company is 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 online and in-store customer experiences, and reinforcing a strong value proposition across its banners. The pipeline of future locations remains strong. This quarter’s net openings came in slightly below plan, however MTY anticipates an improvement in the pace of openings in the coming quarters and continues to see strong demand for its brands, especially the larger ones. To date MTY has only seen modest direct impacts from tariffs, however the landscape remains fluid and management is actively monitoring developments while implementing mitigation strategies. In both Canada and the US, the Company primarily sources products domestically, which helps limit the potential exposure. 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. For 2025, management expects stability in normalized adjusted EBITDA margins across all three of its segments, though the Company may experience some fluctuations in corporate store margins, such as this quarter. Overall, management remains confident about its ability to drive margin improvement through positive unit growth, enhanced efficiencies, and an ongoing reduction in the number of less profitable corporate stores. Management expects to continue to drive strong free cash flows in 2025. This will be supported by lower capex than prior year.”