MTY Food Group Inc.

Normalized adjusted EBITDA was CAD 60.2 million in Q2, down CAD 9.8 million year over year. Franchise segment profit was CAD 50.6 million, down 5%; franchise revenues were CAD 98.6 million versus CAD 102.8 million last year; franchise EBITDA was CAD 50.9 million versus CAD 54.0 million, with margin at 52% versus 53%. Corporate segment profit and adjusted EBITDA were both CAD 5.7 million versus CAD 11.3 million last year, with margin at 5% versus 9%; corporate revenues were down 15% to CAD 111.7 million. Food processing, distribution, and retail segment EBITDA was CAD 3.6 million on revenues of CAD 39.3 million, with margin at 9% versus 12%. Net income attributable to owners was CAD 15.4 million, or CAD 0.67 per diluted share, versus CAD 57.3 million or CAD 2.49 last year. Cash flows from operations were CAD 43 million versus CAD 34.4 million, and free cash flow net of lease repayments was CAD 32.2 million versus CAD 17.8 million. Net debt was about CAD 531 million, down CAD 49 million year over year, and debt to EBITDA was about 1.9x. Management did not provide formal next-quarter or full-year financial guidance, but said Q3 should carry the bulk of the 68 planned closures, H2 openings should accelerate, and excluding the planned closures the company expects to be net store positive for the year; including them, it will likely be net store negative.

Eric Lefebvre framed Q2 as a difficult quarter driven by weak consumer confidence, lower traffic, and pressure in corporate stores, especially Papa Murphy’s and other QSR banners. His main strategic message was discipline: protect cash, support franchisees, keep growing the pipeline, and take decisive action on underperforming assets. He sounded constructive on Canada, where June improved, and emphasized that the closure plan is intended to improve portfolio quality and long-term returns.

Renée St-Onge focused on the mechanics behind the quarter’s decline and the balance-sheet strength. She cited CAD 60.2 million normalized adjusted EBITDA, lower franchise and corporate segment earnings, and the impact of impairments on right-of-use assets tied to planned closures plus a CAD 42.7 million foreign exchange hit to net income. She also highlighted stronger operating cash flow of CAD 43 million, free cash flow net of lease repayments of CAD 32.2 million, and net debt of about CAD 531 million with leverage around 1.9x, which she described as giving the company optionality for shareholder returns.

Analysts pressed management on June sales trends, the impact and cadence of the 68 store closures, consumer differences between the U.S. and Canada, and inflation on labor, rent, and food. Management said Canada improved in June while the U.S. was more mixed, with Papa Murphy’s particularly weak in a competitive pizza market. On closures, they said about 45 to 50 are Papa Murphy’s, the rest other banners, the process will take six to nine months with most closures in Q3, and the CAD 10 million loss figure refers to four-wall EBITDA. They also said labor pressure has eased, food inflation—especially proteins like chicken, beef, and ribs—remains a major issue, and CapEx should be around last year’s level.