MTY Food Group Inc.: First Quarter 2010 Results

MONTREAL, April 6 /CNW Telbec/ - MTY Food Group Inc. (TSX VENTURE:MTY), franchisor and operator of 1,597 quick service restaurants at quarter-end, reported its operating results for the first quarter of its 2010 fiscal period.

For the quarter ended February 28, 2010, net income increased 37% compared to the first quarter of 2009. MTY reported a net income of $3.0 million or $0.16 per share ($0.16 per diluted share) compared to a net income of $2.2 million or $0.12 per share ($0.12 per diluted share) for the same quarter last year. The increase in net income for the quarter is mainly attributed to the acquisitions of Country Style during the second quarter of 2009 as well as growth in the number of stores of existing banners.

Total revenue increased by 46% in the first quarter of 2010, reaching $14.3 million. During the same period, revenue from franchise locations generated revenues of $12.3 million, 57% higher than the $7.9 million generated last year.

Despite the lower number of corporate-owned locations in operation during the first quarter of 2010, revenue from corporate-owned locations increased 2% to $2.0 million compared to $1.9 million last year.

MTY realized an EBITDA of $5.5 million in the quarter ended February 28, 2010, up 35% from $4.1 million for the same period last year.

EBITDA from franchise locations increased from $4.0 million in 2009 to $5.3 million in 2010 due primarily to the acquisition of Country Style as well as to the growth in the number of stores during the last 12 months. Franchise locations' EBITDA as a percentage of revenue decreased from 51% in 2009 to 43% in 2010 as a result of the higher volume of sales made to franchisees, which typically generate lower profit margins.

EBITDA from corporate-owned locations increased from $0.0 million to $0.2 million, mainly because of lower cost of sales and to generally stronger overall performance of the remaining stores.

For the first quarter of 2010, 34 new locations were added while 7 existing locations were closed, representing a net addition of 27 locations, compared to a net addition of 1 store in the first quarter of 2009. During the quarter, 2 corporate-owned stores were sold to franchisees while 3 corporate-owned stores were added, for a total of 21 corporate-owned locations as at February 28, 2010.

Total system wide sales for the first 3 months of the 2010 fiscal period amounted to $105.0 million, up 30% compared to $80.6 million for the same quarter last year. The increase in system wide sales is primarily attributable to the acquisitions of Country Style during the second quarter of 2009 as well as to the sales generated by new franchise locations opened during the last 12 months.

Same store sales decreased by 1.2% during the first quarter of 2010, showing an improvement in the trend compared to the tendency we had witnessed in the second half of our 2009 fiscal period.

As at February 28, 2010 the Company had $20.3 million in cash and highly liquid temporary investments compared to $15.9 million at the end of the 2009 fiscal period. Cash flows from operations reached $4.3 million during the first quarter of 2010, compared to $1.3 million for the same period last year.

MTY continues to grow through the expansion of its existing concepts. Approximately 75 new locations have been planned for the 2010 fiscal year. Management remains committed to seek out potential acquisitions to further strengthen its market position.

On Behalf of the Board of Directors of

MTY Food Group Inc.

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Stanley Ma, Chairman, President & CEO

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

For further information: Jean-Francois Dube, Investor Relations, [phone], [email protected]; www.mtygroup.com