2024 ANNUAL REPORT
ADAPT.
INNOVATE.
GROW.
ADAPT. INNOVATE. GROW.
MTY Group franchises and operates quick-service, fast casual and casual dining restaurants under more than 90 different banners in
Canada, the US and Internationally. Based in Montreal, MTY is a family whose heart beats to the rhythm of its brands, the very soul of
its multi-branded 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 7,079 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.
1
(1) Locations as at November 30, 2024.
16%
SHOPPING MALL & OFFICE
TOWER FOOD COURT
62%
STREET FRONT
7,079
LOCATIONS BY TYPE(1)
22%
NON-TRADITIONAL
FORMAT
2
REVENUE(3) BY PRODUCT
43%
10%
13%
34%
$1,160M
2024 Revenue
Corporate stores
Franchise operation
Food processing, distribution & retail
Promotional funds
(1) This is a non-GAAP measure. Please refer to the Supplemental Information section of the Management Discussion and Analysis for a definition.
(2) This is a supplementary financial measure. Please refer to the Supplemental Information section of the Management Discussion and Analysis for a definition.
(3) In % of fiscal 2024 revenue, excluding intercos.
$24.2M
NET INCOME
ATTRIBUTABLE TO OWNERS
$264.5M
NORMALIZED
ADJUSTED EBITDA(1)
$204.8M
CASH FLOWS FROM
OPERATIONS
SYSTEM SALES(2) BY GEOGRAPHY
31%
19%
35%
3%
12%
$5,636M
2024 System Sales
Canada
Central US
East Coast US
West Coast US
International
3
4
RECORD FINANCIAL RESULTS
• System sales(1) of $5.6 billion
• Normalized adjusted EBITDA(2) of $264.5 million
• Cash flows from operations of $204.8 million
CAPITAL ALLOCATION
• Long-term debt payments of $102.3 million
• Dividend payments of $26.8 million
• Shares repurchased and cancelled of $41.8 million
• Capital expenditures and intangible assets of $27.7 million
FINANCIAL POSITION
• Net debt to normalized adjusted EBITDA ratio(3) of 2.5X
• Cash on hand of $50.4 million
• Available credit of $195.4 million
DIVIDEND PAYMENT
• Quarterly dividend payment of $0.33 per share on February 14, 2025.
(1) This is a supplementary financial measure. Please refer to the Supplemental Information section of the Management
Discussion and Analysis for a definition.
(2) This is a non-GAAP measure. Please refer to the Supplemental Information section of the Management Discussion
and Analysis for a definition.
(3) This is a non-GAAP ratio. Please refer to the Supplemental Information section of the Management Discussion and
Analysis for a definition.
FY 2024
HIGHLIGHTS
5
6
For the years ended November 30
(in thousands of Canadian $, except where indicated)
2024
2023
2022
2021
2020
OPERATING RESULTS
Revenue
1,159,604
1,169,334
716,522
551,903
511,117
Normalized adjusted EBITDA (1)
264,532
271,904
187,352
168,622
137,819
Income (loss) before taxes
15,805
109,985
96,170
112,072
(51,949)
Net income (loss) attributable to owners
24,170
104,082
74,817
85,639
(37,108)
Total comprehensive income (loss) attributable to owners
58,405
115,786
109,903
77,673
(49,726)
Earnings per share – basic ($ per share)
1.01
4.26
3.06
3.47
(1.50)
Earnings per share – diluted ($ per share)
1.01
4.25
3.06
3.46
(1.50)
Weighted daily average number of basic
common shares (in 000s of shares)
23,977
24,409
24,440
24,705
24,755
Weighted daily average number of diluted
common shares (in 000s of shares)
23,977
24,478
24,466
24,745
24,755
Number of shares outstanding (in 000s of shares)
23,426
24,333
24,413
24,670
24,706
NETWORK METRICS
System sales (2)
5,635,700
5,641,200
4,251,200
3,631,300
3,459,100
Digital sales (2)
1,118,500
1,027,400
820,300
803,600
636,400
Number of locations (#)
7,079
7,116
6,788
6,719
7,001
CASH FLOW
Cash flows from operations (4)
204,807
184,586
148,481
139,299
133,652
Cash flows from operations per diluted share ($ per share) (2,4)
8.54
7.54
6.07
5.63
5.40
Dividends paid on common stock
26,811
24,407
20,518
9,141
4,633
Dividends per common share ($ per share)
1.12
1.00
0.84
0.37
0.185
Shares repurchased and cancelled
41,815
4,167
14,618
2,184
18,866
Number of shares repurchased and cancelled (#)
906,900
80,800
256,400
36,600
364,774
BALANCE SHEET
Cash
50,409
58,895
59,479
61,231
44,302
Total assets
2,586,359
2,680,018
2,325,303
1,904,594
2,013,697
Long-term debt, including current portion
706,605
767,364
560,959
360,728
460,542
Shareholders’ equity
803,450
812,889
724,626
648,898
582,514
TRADING DATA ON COMMON SHARES
Close ($ per share)
47.75
51.50
61.25
55.19
51.65
52-week high ($ per share)
59.80
73.50
63.96
72.10
62.82
52-week low ($ per share)
40.45
49.91
45.20
47.15
14.23
Market capitalization (in millions $ per share)
1,119
1,253
1,495
1,362
1,276
(1) This is a non-GAAP measure. Please refer to section “Definition of non-GAAP measures” found in the Supplemental Information section of Management’s Discussion and Analysis.
(2) This is a supplementary financial measure. Please refer to section “Definition of supplementary financial measures” found in the Supplemental Information section of Management’s
Discussion and Analysis.
(3) This is a non-GAAP ratio. Please refer to section “Definition of non-GAAP ratios” found in the Supplemental Information section of Management’s Discussion and Analysis.
(4) Prior period amounts have been restated to reflect a reclassification between cash flows provided by operating activities and the effect of foreign exchange rate changes on cash.
5-YEAR
HIGHLIGHTS
7
MESSAGE FROM
ÉRIC LEFEBVRE
The year 2024 was one of stable operational and financial performance. It came on
the heels of a post-pandemic period of significant growth, and as such the return to
normalcy presented it challenges. Our teams and franchise partners take the necessary
steps to elevate their game to attract and retain consumers, whose expectations are
ever increasing.
Following the major acquisitions of late 2022 and early 2023, we saw the opportunity
to conduct a strategic review and a restructuring of our leadership team and many of
our operational and marketing teams to optimize the contribution of our most talented
teammates while making MTY more nimble and ready for the next stages of growth.
These strategic priorities and optimization objectives were executed during the year and
are expected to improve operational performances for years to come.
We are very proud of the free cash flows of $5.75 per share we generated during 2024.
While this is the highest free cash flows per share in our history, we are especially
proud of the consistency of our free cash flows over the years, during good times and
more difficult times. That consistency in turn gives us the confidence to work on a
capital allocation strategy that allows returning capital to shareholders, in the form of
dividends and share buybacks, and the repayment of our debt. During 2024, we returned
$68.6 million to our shareholders and paid back $102.3 million of our long-term debt,
positioning MTY favorably for future acquisition opportunities.
The last completed fiscal period was a period which was not favorable for acquisitions.
Although our board of directors and leadership team remain highly motivated to realize
more acquisitions, the quality and valuations of the assets on the market did not satisfy
our short and long-term accretion objectives, and hence made us exercise patience
and discipline.
Since MTY first became a public company in 1995, we have built a robust business
which we aim to strengthen further in the future. Macroeconomic and market conditions
fluctuate and can be more of less favorable at times. We believe we have made decisions
and acted at the right time in the interest of our shareholders over the past 30 years and
continue to believe that keeping a long-term mindset to create shareholder value is the
right approach.
Regardless of economic fluctuations and of the macroeconomic backdrop, our innovation,
execution and acquisition strategies have consistently served the Corporation, enabling
us to create value in the long term and extending our presence in North America
and worldwide.
8
MTY has become a diversified company; we are geographically diversified, with 66% of
our network sales coming from the US, 31% from Canada and 3% from other countries.
We are also diversified in the types of concepts we operate, with 28% of our sales
coming from casual dining restaurants, 9% from fast casual restaurants and 63% from
QSR. Last but not least, our historical food court predominance has shifted to street
front locations over the years: 76% of our restaurants are in street front locations, 15% in
mall and office tower food courts, and 9% are in non-traditional venues.
Every day we see how our customers’ needs and expectations evolve and change. Our
marketing and operations teams, who represent the majority of MTY’s employees, pay
close attention to the purchasing habits of our guests. What gives MTY an edge is a
unique combination of advantages in our markets; proximity, market-specific approach,
expert advice, flexibility of purchasing channels, just to name of few.
Looking ahead to fiscal 2025, MTY is on a solid foundation and ready to address the
challenges it faces. Our focus on combining organic growth, improving key financial
metrics and realizing immediately accretive acquisitions remains, with the ultimate goal
to maximize shareholder value.
In closing, I want to thank all our stakeholders including our guests, and the communities
in which we operate, as well as our employees, franchise partners, shareholders, and
dedicated Board members for their continued support.
Éric Lefebvre
President and Chief Executive Officer
“
Since MTY first became a public
company in 1995, we have built
a robust business which we aim to
strengthen further in the future.
”
9
SUSTAINABILITY
UPDATE
At MTY, we understand sustainability is a work in progress. It is a
journey that we take very seriously, and a great deal of thought is
put into setting meaningful goals according to our pillars of Food,
Planet and People. We are committed to tracking and sharing the
progress of our goals in our annual sustainability report.
10
The following is a sample of our recent achievements made:
ANIMAL WELFARE
As an ongoing commitment to animal welfare, MTY released its animal welfare program in
2024 in order to share our expectations of our vendors.
You may find MTY Animal Welfare Program here:
FOOD
PLANET
PEOPLE
11
EARLY IN FY 2024, TO INCREASE OUR COMMUNITY SUPPORT, WE
LAUNCHED THE MTY FOUNDATION.
Our foundation is committed to nourishing communities across Canada. We
believe that access to nutritious food is a fundamental human right, and we are
committed to addressing food insecurities, hunger, and malnutrition through
innovative solutions and strategic partnerships. With a focus on environmental
stewardship and social responsibility, we aim to create a future where everyone
has access to wholesome food, and where communities thrive in harmony with
the planet. To learn more, visit our website: Foundation MTY | Nourish. Empower.
Commit.
MTY
ANIMAL WELFARE
PROGRAM
11
2023
MTY
SUSTAINABILITY
REPORT
Our most recent Sustainability Report reflects the
progress MTY made against goals in 2023. To view
the complete 2023 MTY Sustainability Report,
please visit https://sustainability.mtygroup.com/
We’re looking forward to releasing our 2024 Sustainability Report.
In the upcoming report, we’ll be sharing updates regarding animal
welfare, greenhouse gas emissions, and more.
12
Management’s Discussion and Analysis
For the twelve months ended November 30, 2024
Key highlights
•
Normalized adjusted EBITDA(1) remained relatively stable at $59.4 million in the quarter, compared to
$60.4 million in Q4-23.
•
System sales(2) for the quarter improved by 2% or $30.3 million to reach $1,371.9 million compared
to $1,341.6 million in Q4-23 mostly due to organic growth.
•
Ended the quarter with 7079 locations with net positive openings of 13 locations for the quarter.
•
Franchising segment normalized adjusted EBITDA(1) increased 8% to reach $49.3 million in the
quarter, compared to $45.7 million in Q4-23 with normalized adjusted EBITDA as a % of revenue(2) of
51% compared to 47% in Q4-23.
•
Cash flows provided by operating activities were $43.7 million compared to $47.8 million in Q4-23.
•
Free cash flows net of lease payments(1) of $27.4 million in the quarter, compared to $33.4 million in
Q4-23. Free cash flows net of lease payments per diluted share(3) were $1.16 for the quarter
compared to $1.37 in Q4-23.
•
Net (loss) income attributable to owners of $(55.3) million, or $(2.34) per diluted share compared to
$16.4 million, or $0.67 per diluted share in Q4-23.
•
Repurchased and cancelled 314,700 shares for a consideration of $14.0 million in Q4-24, bringing
the year-to-date total to 906,900 shares for a consideration of $41.8 million.
•
Long-term debt repayments of $9.5 million for the quarter with net repayments of $79.5 million since
Q4-23.
•
Quarterly dividend payment of $0.33 per share on February 14, 2025.
(1) See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
(2) See section “Definition of supplementary financial measures” found in the Supplemental Information section for
definition.
(3) See section “Definition of non-GAAP ratios” found in the Supplemental Information section for definition.
Management’s Discussion and Analysis
For the twelve months ended months ended November 30, 2024
General
This Management's Discussion and Analysis of the financial position and financial performance ("MD&A") of MTY Food
Group Inc. ("MTY") is supplementary information and should be read in conjunction with the Company’s audited
consolidated financial statements and accompanying notes for the fiscal year ended November 30, 2024.
In the MD&A, "MTY Food Group Inc.", "MTY", or the "Company", designates, as the case may be, MTY Food Group
Inc. and its Subsidiaries, or MTY Food Group Inc., or one of its subsidiaries.
The disclosures and values in this MD&A were prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and with current
issued and adopted interpretations applied to fiscal years beginning on or after December 1, 2023.
This MD&A was prepared as at February 13, 2025. Supplementary information about MTY, including its latest annual
and quarterly reports, and press releases, is available on SEDAR+’s website at www.sedarplus.ca.
FORWARD-LOOKING STATEMENTS AND USE OF ESTIMATES
This MD&A and, in particular but without limitation, the sections of this MD&A entitled “Near-Term Outlook”, “Same-
Store Sales” and “Contingent Liabilities”, contain forward-looking statements. These forward-looking statements
include, but are not limited to, statements relating to certain aspects of the business outlook of the Company during the
course of 2024. Forward-looking statements also include any other statements that do not refer to independently
verifiable historical facts. A statement made is forward-looking when it uses what is known and expected today to make
a statement about the future. Forward-looking statements may include words such as "aim", "anticipate", "assumption",
"believe", "could", "expect", "goal", "guidance", "intend", "may", "objective", "outlook", "plan", "project", "seek", "should",
"strategy", "strive", "target" and "will". All such forward-looking statements are made pursuant to the "safe harbour"
provisions of applicable Canadian securities laws.
Unless otherwise indicated, forward-looking statements in this MD&A describe the Company’s expectations as at
February 13, 2025 and, accordingly, are subject to change after such date. Except as may be required by Canadian
securities laws, the Company does not undertake any obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on
several assumptions, which give rise to the possibility that actual results or events could differ materially from the
expectations expressed in or implied by such forward-looking statements and that the business outlook, objectives,
plans and strategic priorities may not be achieved. As a result, the Company cannot guarantee that any forward-looking
statement will materialize, and readers are cautioned not to place undue reliance on these forward-looking statements.
Forward-looking statements are provided in this MD&A for the purpose of giving information about management’s
current strategic priorities, expectations and plans and allowing investors and others to get a better understanding of
the business outlook and operating environment. Readers are cautioned, however, that such information may not be
appropriate for other purposes.
Forward-looking statements made in this MD&A are based on a number of assumptions that are believed to be
reasonable on February 13, 2025. Refer, in particular, to the section of this MD&A entitled “Risks and Uncertainties” for
a description of certain key economic, market and operational assumptions the Company has used in making forward-
looking statements contained in this MD&A. If the assumptions turn out to be inaccurate, the actual results could be
materially different from what is expected.
Page 2
In preparing the consolidated financial statements in accordance with IFRS and the MD&A, management must exercise
judgment when applying accounting policies and use assumptions and estimates that have an impact on the amounts
of assets, liabilities, sales and expenses reported and information on contingent liabilities and contingent assets
provided.
Unless otherwise indicated in this MD&A, the strategic priorities, business outlooks and assumptions described in the
previous MD&A remain substantially unchanged.
Important risk factors that could cause actual results or events to differ materially from those expressed in or implied by
the above-mentioned forward-looking statements and other forward-looking statements included in this MD&A include,
but are not limited to: the intensity of competitive activity and the resulting impact on the ability to attract customers’
disposable income; the Company’s ability to secure advantageous locations and renew existing leases at sustainable
rates; the arrival of foreign concepts; the ability to attract new franchisees; changes in customer tastes, demographic
trends and in the attractiveness of concepts, traffic patterns, occupancy cost and occupancy level of malls and office
towers; general economic and financial market conditions, the level of consumer confidence and spending, and the
demand for, and prices of, the products; the ability to implement strategies and plans in order to produce the expected
benefits; events affecting the ability of third-party suppliers to provide essential products and services; labour availability
and cost; stock market volatility; volatility in foreign exchange rates or borrowing rates; foodborne illness; operational
constraints, government orders and the event of the occurrence of epidemics, other pandemics and health risks.
These and other risk factors that could cause actual results or events to differ materially from the expectations
expressed in or implied by these forward-looking statements are discussed in this MD&A.
Readers are cautioned that the risks described above are not the only ones that could impact the Company. Additional
risks and uncertainties not currently known or that are currently deemed to be immaterial may also have a material
adverse effect on the business, financial condition or results of operations.
Except as otherwise indicated by the Company, forward-looking statements do not reflect the potential impact of any
non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business
combinations or other transactions that may be announced or that may occur after February 13, 2025. The financial
impact of these transactions and non-recurring and other special items can be complex and depend on the facts
particular to each of them. The Company therefore cannot describe the expected impact in a meaningful way or in the
same way that present known risks affecting the business.
CORE BUSINESS
MTY franchises and operates quick service, fast casual and casual dining restaurants. MTY aims to be the franchisor of
choice in North America and offers the market a range of offering through its many brands. MTY currently operates
under the following banners: Tiki-Ming, Sukiyaki, La Crémière, Panini Pizza Pasta, Villa Madina, Cultures, Thaï
Express, Vanellis, Kim Chi, “TCBY”, Sushi Shop, Koya Japan, Vie & Nam, Tutti Frutti, Taco Time, Country Style,
Valentine, Jugo Juice, Mr. Sub, Koryo Korean Barbeque, Mr. Souvlaki, Sushi Go, Mucho Burrito, Extreme Pita,
PurBlendz, ThaïZone, Madisons New York Grill & Bar, Café Dépôt, Muffin Plus, Sushi-Man, Van Houtte, Manchu Wok,
Wasabi Grill & Noodle, Tosto, Big Smoke Burger, Cold Stone Creamery, Blimpie, Surf City Squeeze, The Great Steak &
Potato Company, NrGize Lifestyle Café, Samurai Sam’s Teriyaki Grill, Frullati Café & Bakery, Johnnie’s New York
Pizzeria, Ranch One, America’s Taco Shop, Tasti D-Lite, Planet Smoothie, Maui Wowi, Pinkberry, Baja Fresh Mexican
Grill, La Salsa Fresh Mexican Grill, La Diperie, Steak Frites St-Paul, Giorgio Ristorante, The Works Gourmet Burger
Bistro, Dagwoods Sandwiches and Salads, The Counter Custom Burgers, Built Custom Burgers, Baton Rouge, Pizza
Delight, Scores, Toujours Mikes, Ben & Florentine, Grabbagreen, Timothy’s World Coffee, SweetFrog, Casa Grecque,
South Street Burger, Papa Murphy’s, Yuzu Sushi, Allô! Mon Coco, Turtle Jack’s Muskoka Grill, COOP Wicked Chicken,
Küto Comptoir à Tartares, Famous Dave’s, Village Inn, Barrio Queen, Granite City, Real Urban Barbecue, Tahoe Joe’s
Steakhouse, Bakers Square, Craft Republic, Fox & Hound, Champps, Wetzel's Pretzels, Sauce Pizza and Wine, Spice
Bros and Cakes N Shakes.
As at November 30, 2024, MTY had 7,079 locations in operation, of which 6,827 were franchised or under operator
agreements and the remaining 252 locations were operated by MTY.
MTY’s locations can be found in: i) mall and office tower food courts and shopping malls; ii) street front; and, iii) non-
traditional format within airports, petroleum retailers, convenience stores, cinemas, amusement parks, in other venues
or retailers shared sites, hospitals, universities, grocery stores, and food trucks or carts. Certain locations also offer
catering services. Over the last 45 years, MTY has developed several restaurant concepts, including Tiki-Ming, which
was the first concept it franchised. Details on other banners added through acquisitions can be found in the
supplemental section of this MD&A.
Page 3
MTY has also launched multiple ghost kitchens in existing restaurant locations. These ghost kitchens and the pre-
existing MTY restaurant locations are benefiting from the synergies of shared costs, streamlined workflows as well as
being able to respond to the increase in delivery and takeout orders.
Revenues from franchise locations are generated from royalty fees, franchise fees, sales of turnkey projects, rent, sign
rental, supplier contributions, gift card breakage and program fees and sales of other goods and services. Operating
expenses related to franchising include salaries, general and administrative costs associated with existing and new
franchisees, expenses in the development of new markets, costs of setting up turnkey projects, rent, supplies, finished
products and equipment sold.
Revenues and expenses from corporate-owned locations include sales generated and cost incurred from their
operations.
Promotional funds contributions are based on a percentage of gross sales as reported by the franchisees. The
Company is not entitled to retain these promotional fund payments received and is obligated to transfer these funds to
be used solely in promotional and marketing-related costs for specific restaurant banners.
MTY generates revenues from the food processing businesses discussed herein. The two plants produce various
products that range from ingredients and ready to eat food sold to restaurants or other food processing plants to
prepared food sold in retail stores. The plants generate most of their revenues selling their products to distributors,
retailers and franchisees. The Company also generates revenue from its distribution centers that serve primarily the
Valentine, Casa Grecque and Küto Comptoir à Tartares franchisees. Furthermore, the Company generates revenues
from the sale of retail products under various brand names, which are sold at a variety of retailers.
COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
Unless otherwise indicated, the financial information presented below, including tabular amounts, is prepared in
accordance with IFRS Accounting Standards. Definitions of all non-GAAP (“generally accepted accounting principles”)
measures, non-GAAP ratios and supplemental financial measures can be found in the supplemental information
section of this MD&A. The non-GAAP measures, non-GAAP ratios and supplemental financial measures used within
the context of this MD&A do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be
comparable to similar measures presented by other issuers.
Non-GAAP measures include:
-
Adjusted EBITDA: the Company believes that adjusted earnings before interest, taxes, depreciation and
amortization ("adjusted EBITDA") is a useful metric because it is consistent with the indicators management
uses internally to measure the Company’s performance, to prepare operating budgets and to determine
components of executive compensation.
-
Normalized adjusted EBITDA: the Company believes that normalized adjusted EBITDA is a useful metric for
the same reasons as adjusted EBITDA; additionally, the Company believes that normalized adjusted EBITDA
provides a measure of the Company’s performance that does not include the impact of transaction costs
related to acquisitions and SAP project implementation costs, which may vary in occurrence and in amount.
-
Free cash flows net of lease payments: the Company believes that free cash flows net of lease payments is a
useful metric because it provides the Company with a measure related to decision-making about cash-
intensive matters such as capital expenditures, compensation, and potential acquisitions.
Non-GAAP ratios include:
-
Adjusted EBITDA as a % of revenue: the Company believes that adjusted EBITDA as a % of revenue is a
useful metric because it is consistent with the indicators management uses internally to measure the
Company’s profitability from operations, including to gauge the effectiveness of cost management measures.
-
Normalized adjusted EBITDA as a % of revenue: the Company believes that normalized adjusted EBITDA as
a % of revenue is a useful metric for the same reasons as adjusted EBITDA as a % of revenue; additionally,
the Company believes that normalized adjusted EBITDA as a % of revenue provides a measure of the
Company’s performance that does not include the impact of transaction costs related to acquisitions and SAP
project implementation costs, which may vary in occurrence and in amount.
-
Free cash flows net of lease payments per diluted share: the Company believes that free cash flows net of
lease payments per diluted share is a useful metric because it is used by securities analysts, investors and
other interested parties as a measure of the Company’s cash flows that are available to be distributed to debt
and equity shareholders, including to pay debt, to pay dividends, and to repurchase shares.
Page 4
-
Debt-to-EBITDA: the Company believes that debt-to-EBITDA is a useful metric because it represents a
financial covenant that the Company must be in compliance with and, accordingly, a determining factor in the
Company’s credit availability.
The Company also believes that these measures are used by securities analysts, investors and other interested parties
and that these measures allow them to compare the Company’s operations and financial performance from period to
period and provide them with a supplemental measure of the operating performance and financial position and thus
highlight trends in the core business that may not otherwise be apparent when relying solely on GAAP measures.
HIGHLIGHTS OF SIGNIFICANT EVENTS
Credit agreement amendment
On March 15, 2024, the Company modified its existing credit facility payable to a syndicate of lenders. The modification
resulted in an extension for a period of three years with a new maturity date of March 15, 2027.
Normal Course Issuer Bid Program
On June 28, 2024, the Company announced the renewal of the NCIB. The NCIB began on July 3, 2024 and will end on
July 2, 2025 or on such earlier date when the Company completes its purchases or elects to terminate the NCIB. The
renewed period allows the Company to purchase 1,196,513 of its common shares. These purchases will be made on
the open market plus brokerage fees through the facilities of the TSX and/or alternative trading systems at the
prevailing market price at the time of the transaction, in accordance with the TSX’s applicable policies. All common
shares purchased pursuant to the NCIB will be cancelled.
During the three and twelve months ended November 30, 2024, the Company repurchased and cancelled a total of
314,700 and 906,900 common shares, respectively, (2023 – 80,800 and 80,800 respectively) under the current NCIB,
at a weighted average price of $45.26 and $46.36 per common share, respectively, (2023 – $51.58 and $51.58
respectively), for a total consideration of $14.0 million and $41.8 million, respectively, (2023 – $4.2 million and $4.2
million, respectively). An excess of $10.2 million and $30.6 million, respectively, (2023 – $3.2 million and $3.2 million,
respectively) of the shares’ repurchase value over their carrying amount was charged to retained earnings as share
repurchase premiums.
Page 5
SUMMARY OF ANNUAL FINANCIAL METRICS
(In thousands $, except EPS, dividend per common share and
number of common shares)
Year ended
November 30, 2024
Year ended
November 30, 2023
Total assets
2,586,359
2,680,018
Total long-term financial liabilities
704,141
756,936
Revenue
1,159,604
1,169,334
Income before taxes
15,805
109,985
Net income attributable to owners
24,170
104,082
Total comprehensive income attributable to owners
58,405
115,786
Cash flows from operations
204,807
184,586
Net income per share – basic
1.01
4.26
Net income per share – diluted
1.01
4.25
Dividends paid on common stock
26,811
24,407
Dividends per common share
1.12
1.00
Weighted daily average number of common shares – basic
23,977,313
24,409,176
Weighted daily average number of common shares – diluted
23,977,313
24,478,163
SUMMARY OF ANNUAL OPERATING METRICS
(In thousands $, except per share amounts)
Year ended
November 30, 2024
Year ended
November 30, 2023
Adjusted EBITDA (1)
263,037
270,746
Normalized adjusted EBITDA (1)
264,532
271,904
Income before taxes, excluding impairment charges
90,011
119,845
Cash flows from operations per diluted share (2)
8.54
7.54
Free cash flows net of lease payments (1)
137,882
110,467
(1)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
(2)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for
definition.
Page 6
SUMMARY OF QUARTERLY FINANCIAL METRICS
Quarters ended
(In thousands $, except per
share information)
February
May
August
November February
May
August
November
2023
2023
2023
2023
2024
2024
2024
2024
Revenue
286,003 305,219 298,080
280,032 278,644 303,739 292,753
284,468
Net income (loss)
attributable to owners
18,387 30,359
38,892
16,444
17,305 27,278
34,886
(55,299)
Total comprehensive
income (loss)
attributable to owners
27,453 32,867
34,906
20,560
14,089 33,796
22,723
(12,203)
Net income (loss) per
share
0.75
1.24
1.59
0.67
0.71
1.13
1.46
(2.34)
Net income (loss) per
diluted share
0.75
1.24
1.59
0.67
0.71
1.13
1.46
(2.34)
Cash flows provided by
operating activities
33,467 51,860
51,495
47,764
54,178 40,558
66,355
43,716
Page 7
SUMMARY OF QUARTERLY OPERATING METRICS
Quarters ended
(In thousands $, except
system sales, # of locations
and per share information)
February
May
August November February
May
August November
2023
2023
2023
2023
2024
2024
2024
2024
System sales (1 & 2)
1,362.5
1,470.0
1,467.1
1,341.6
1,331.7
1,459.4
1,472.7
1,371.9
# of locations
7,128
7,124
7,119
7,116
7,112
7,107
7,066
7,079
Adjusted EBITDA (3)
62,863 74,648 72,870
60,365
59,262
73,198 71,781
58,796
Normalized adjusted
EBITDA (3)
63,959 74,648 72,932
60,365
59,535
73,683 71,895
59,419
Free cash flows net of
lease payments (3)
15,433 29,547 32,130
33,357
36,922
24,321 49,271
27,368
Free cash flows net of
lease payments per
diluted share (4)
0.63
1.21
1.31
1.37
1.52
1.01
2.06
1.16
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
(2)
In millions $.
(3)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
(4)
See section “Definition of non-GAAP ratios” found in the Supplemental Information section for definition.
SEGMENT NOTE DISCLOSURE
Management monitors and evaluates the Company’s results based on geographical segments; these two segments
being Canada and US & International. The Company and its chief operating decision maker assess the performance of
each operating segment based on its segment profit and loss, which is equal to revenue less operating expenses.
Within those geographical segments, the Company’s chief operating decision maker also assesses the performance of
subdivisions based on the type of product or service provided. These subdivisions include franchising, corporate stores,
retail, food processing and distribution and promotional funds revenues and expenses.
Page 8
RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2024
Revenue
During the 2024 fiscal year, the Company’s total revenue decreased to $1,159.6 million, from $1,169.3 million a year
earlier. Revenues for the two segments of business are broken down as follows:
November 30, 2024
November 30, 2023
Segment
Subdivision
($ millions)
($ millions)
Variation
Canada
Franchise operation
147.5
154.5
(5%)
Corporate stores
45.3
32.0
42%
Food processing, distribution and retail
146.6
161.2
(9%)
Promotional funds
43.6
45.0
(3%)
Intercompany transactions
(4.6)
(4.8)
N/A
Total Canada
378.4
387.9
(2%)
US &
International
Franchise operation
245.4
242.4
1%
Corporate stores
455.5
462.0
(1%)
Food processing, distribution and retail
2.7
1.8
50%
Promotional funds
78.1
76.5
2%
Intercompany transactions
(0.5)
(1.3)
N/A
Total US & International
781.2
781.4
0%
Total revenue
1,159.6
1,169.3
(1%)
Canada revenue analysis:
Revenue from franchise locations in Canada decreased by 5%. Several factors contributed to the variation, as listed
below:
(In millions $)
Revenue, 2023 fiscal year
154.5
Decrease in recurring revenue streams (1)
(5.3)
Increase in initial franchise fees, renewal fees and transfer fees
0.9
Decrease in turnkey, sales of material to franchisees and rent revenues
(2.8)
Other non-material variations
0.2
Revenue, 2024 fiscal year
147.5
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
During the 2024 fiscal year, recurring revenue streams decreased by $5.3 million and were tightly correlated with the
2% decrease in system sales compared to the same period last year. The decrease was also impacted by one-time
revenues recorded in 2023 relating to insurance proceeds and royalty adjustments which did not occur in 2024.
Franchising revenues also decreased by $2.8 million in turnkey, sales of material to franchisees and rent revenues due
primarily to a reduction in turnkey revenues.
Revenue from corporate-owned locations increased by 42% to $45.3 million during the year due to a net increase in
corporate-owned locations year-over-year as well as a shift in the mix of restaurant concepts in the segment with an
increase in casual dining restaurants over prior year.
Food processing, distribution and retail revenues decreased by 9% due to lower sales in the retail segment, which are
the result of market conditions and the grocers' increased focus on promoting house labels. During the year ended
November 30, 2024, 169 products were sold in the Canadian retail market (2023 – 190).
The promotional fund revenue decrease of 3% is attributable to the decrease in system sales as well as the impact of
the various contribution rates.
Page 9
US & International revenue analysis:
Revenue from franchise locations in the US and International increased by 1%. Several factors contributed to the
variation, as listed below:
(In millions $)
Revenue, 2023 fiscal year
242.4
Decrease in recurring revenue streams (1)
(1.7)
Increase in initial franchise fees, renewal fees and transfer fees
1.0
Decrease in sales of material and services to franchisees
(0.8)
Increase in gift card breakage income
1.8
Increase due to acquisition
0.8
Impact of variation in foreign exchange rates
2.4
Other non-material variations
(0.5)
Revenue, 2024 fiscal year
245.4
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
During the 2024 fiscal year, franchise revenues increased by $3.0 million compared to prior year mostly due to the
increase in gift card breakage income of $1.8 million and the increase in initial franchise fees, renewal fees and transfer
fees of $1.0 million. The Company also recognized an additional $0.8 million in revenues due to the acquisitions of
Wetzel's Pretzels and Sauce Pizza and Wine which were not owned for all of 2023. Franchising revenues were also
positively impacted by the variation of foreign exchange rates which had a favorable impact of $2.4 million. This was
offset by a decrease in royalties and sale of material to franchisees mostly due to organic sales decrease in the casual
dining segment.
Revenue from corporate-owned locations decreased by 1% to $455.5 million during the year due to a decrease in
organic system sales compared to the same period last year.
Food processing, distribution and retail revenues reached $2.7 million compared to $1.8 million in prior year as a
results of the expansion of our retail line.
Operating expenses
During the 2024 fiscal year, operating expenses decreased slightly to $896.6 million, from $898.6 million a year ago.
Operating expenses for the two business segments were incurred as follows:
November 30, 2024
November 30, 2023
Segment
Subdivision
($ millions)
($ millions)
Variation
Canada
Franchise operation
79.0
79.3
0%
Corporate stores
46.4
32.9
41%
Food processing, distribution and retail
131.7
144.4
(9%)
Promotional funds
43.6
45.0
(3%)
Intercompany transactions
(2.1)
(2.1)
N/A
Total Canada
298.6
299.5
0%
US &
International
Franchise operation
112.5
117.4
(4%)
Corporate stores
409.6
408.9
0%
Food processing, distribution and retail
0.8
0.3
167%
Promotional funds
78.1
76.5
2%
Intercompany transactions
(3.0)
(4.0)
N/A
Total US & International
598.0
599.1
0%
Total operating expenses
896.6
898.6
0%
Page 10
Canada operating expenses analysis:
Operating expenses from franchise locations in Canada decreased slightly to $79.0 million from $79.3 million a year
earlier. The Canadian subdivision was impacted by several factors listed below:
(In millions $)
Operating expenses, 2023 fiscal year
79.3
Decrease in turnkey cost, cost of sale of material and services to franchisees and rent
(0.3)
Decrease in recurring controllable expenses (1) including wages, professional and
consulting services and other office expenses
(0.4)
Increase in SAP project implementation costs
1.5
Decrease in expected credit loss provision
(1.2)
Other non-material variations
0.1
Operating expenses, 2024 fiscal year
79.0
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
Operating expenses remained stable mainly due to the decrease in turnkey costs which were offset by an increase in
rents and rent provisions. As part of a long term strategy to improve operational efficiency, have greater scalability and
flexibility and increase data-driven decision making and increase of costs was due to the $1.5 million in SAP
implementation costs which were offset by the decrease in the expected credit loss provision of $1.2 million.
Expenses from corporate stores increased by $13.5 million compared to the same period last year, partly correlated to
the related increase in revenues and increased corporate store locations, and partially due to an increase in wages and
supply chain costs due to inflation.
The decreases in food processing, distribution and retail expenses of 9% as well as the variation in promotional funds
expense were tightly correlated to the related revenues.
US & International operating expenses analysis:
Operating expenses from franchise locations in the US & International decreased by 4%. Several factors contributed to
the variation, as listed below:
(In millions $)
Operating expenses, 2023 fiscal year
117.4
Increase in non-controllable expenses (1)
0.1
Decrease in cost of sale of material and services to franchisees and rent
(1.0)
Decrease in recurring controllable expenses (1) including wages, professional and
consulting services and other office expenses
(3.6)
Decrease in expected credit loss provision
(1.0)
Increase due to acquisition
0.1
Decrease due to transaction costs related to acquisitions
(1.2)
Increase due to impact of IFRS 16 on rent expense
1.0
Impact of variation in foreign exchange rates
1.1
Other non-material variations
(0.4)
Operating expenses, 2024 fiscal year
112.5
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
Operating expenses for franchised locations decreased by $4.9 million during the year, mainly due to a decrease of
$3.6 million in controllable expenses as well as a decrease of $1.2 million in acquisition related transaction costs, and
$1.0 million lower expected credit loss provisions.
Controllable expenses decreased primarily due to the discontinuance of the rejuvenation program, reductions in wage
from organizational improvements and lower professional and consulting fees from cost reduction initiatives that
enhanced operational efficiency and streamlined operations. This overall decrease was partially offset by unfavourable
foreign exchange impact of 1.1 million.
Expenses from corporate stores increased by $0.7 million compared to the same period last year, primarily due to the
acquisitions of Wetzel’s Pretzels and Sauce Pizza and Wine in the first quarter of 2023, a unfavourable foreign
exchange impact, higher wages and supply chain costs due to inflation.
Page 11
The increases in food processing, distribution and retail expenses as well as the variation in promotional funds expense
were tightly correlated to the related revenues.
Segment profit, Adjusted EBITDA (1) and Normalized adjusted EBITDA (1)
Fiscal year ended November 30, 2024
(In millions $)
Canada
US & International
Total
Revenue
378.4
781.2
1,159.6
Operating expenses
298.6
598.0
896.6
Segment profit and Adjusted EBITDA (1)
79.8
183.2
263.0
Segment profit and Adjusted EBITDA as a % of Revenue (2)
21%
23%
23%
SAP project implementation costs (3)
1.5
—
1.5
Normalized adjusted EBITDA (1)
81.3
183.2
264.5
Normalized adjusted EBITDA as a % of Revenue (2)
21%
23%
23%
Fiscal year ended November 30, 2023
(In millions $)
Canada
US & International
Total
Revenue
387.9
781.4
1,169.3
Operating expenses
299.5
599.1
898.6
Segment profit and Adjusted EBITDA (1)
88.4
182.3
270.7
Segment profit and Adjusted EBITDA as a % of Revenue (2)
23%
23%
23%
Transaction costs related to acquisitions (4)
—
1.2
1.2
Normalized adjusted EBITDA (1)
88.4
183.5
271.9
Normalized adjusted EBITDA as a % of Revenue (2)
23%
23%
23%
Below is a summary of performance segmented by product/service:
Fiscal year ended November 30, 2024
(In millions $)
Franchise
Corporate
Processing,
distribution
and retail
Promotional
funds
Intercompany
transactions
Total
Revenue
392.9
500.8
149.3
121.7
(5.1) 1,159.6
Operating expenses
191.5
456.0
132.5
121.7
(5.1)
896.6
Segment profit and Adjusted
EBITDA (1)
201.4
44.8
16.8
—
—
263.0
Segment profit and Adjusted EBITDA
as a % of Revenue (2)
51%
9%
11%
N/A
N/A
23%
SAP project implementation costs (3)
1.5
—
—
—
—
1.5
Normalized adjusted EBITDA (1)
202.9
44.8
16.8
—
—
264.5
Normalized adjusted EBITDA as a %
of Revenue (2)
52%
9%
11%
N/A
N/A
23%
Page 12
Fiscal year ended November 30, 2023
(In millions $)
Franchise
Corporate
Processing,
distribution
and retail
Promotional
funds
Intercompany
transactions
Total
Revenue
396.9
494.0
163.0
121.5
(6.1) 1,169.3
Operating expenses
196.7
441.8
144.7
121.5
(6.1)
898.6
Segment profit and Adjusted
EBITDA (1)
200.2
52.2
18.3
—
—
270.7
Segment profit and Adjusted EBITDA
as a % of Revenue (2)
50%
11%
11%
N/A
N/A
23%
Transaction costs related to
acquisitions (4)
1.2
—
—
—
—
1.2
Normalized adjusted EBITDA (1)
201.4
52.2
18.3
—
—
271.9
Normalized adjusted EBITDA as a %
of Revenue (2)
51%
11%
11%
N/A
N/A
23%
(1)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
(2)
See section “Definition of non-GAAP ratios” found in the Supplemental Information section for definition.
(3)
SAP project implementation costs are included in the Consulting and professional fees, wages and benefits and advertising,
travel, meals and entertainment as part of the Operating expenses in the consolidated financial statements.
(4)
Transaction costs are included in Consulting and professional fees and Other as part of Operating expenses in the
consolidated financial statements.
Several factors contributed to the variation, as listed below:
(In millions $)
Canada
US &
International
Total
Segment profit, 2023 fiscal year
88.4
182.3
270.7
Variance in recurring revenues and expenses (1)
(7.6)
(7.8)
(15.4)
Variance in turnkey, sales of material and services to
franchisees and rent for franchising segment
(3.5)
0.5
(3.0)
Variance in initial franchise fees, renewal fees and
transfer fees
0.9
1.0
1.9
Variance in expected credit loss provision
1.2
1.0
2.2
Variance due to acquisitions
—
1.2
1.2
Variance due to transaction costs related to acquisitions
—
1.2
1.2
Variance due to impact of IFRS 16 on rent revenue &
expense
0.2
—
0.2
Variance in gift card breakage
—
1.8
1.8
Impact of variation in foreign exchange rates
—
1.5
1.5
Other non-material variations
0.2
0.5
0.7
Segment profit, 2024 fiscal year
79.8
183.2
263.0
Normalized adjusted EBITDA (2), 2023 fiscal year
88.4
183.5
271.9
Variances in segment profit
(8.6)
0.9
(7.7)
Variance due to SAP project implementation costs
1.5
—
1.5
Variances in transaction costs related to acquisitions
—
(1.2)
(1.2)
Normalized adjusted EBITDA (2), 2024 fiscal year
81.3
183.2
264.5
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
(2)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
Total segment profit for the year ended November 30, 2024 was $263.0 million, a decrease of 3% compared to the prior
year, while normalized adjusted EBITDA was $264.5 million, a decrease of 3% compared to the prior year. Canada
contributed 31% of total normalized adjusted EBITDA a decrease of 8% or $7.1 million compared to the prior year,
Page 13
while the US & International normalized adjusted EBITDA remained stable at $183.2 million. The overall decrease was
primarily impacted by the decrease in recurring revenue streams, which were the result of lower system sales.
Calculation of Adjusted EBITDA (1) and Normalized adjusted EBITDA (1)
(In thousands $)
Year ended
November 30, 2024
Year ended
November 30, 2023
Income before taxes
15,805
109,985
Depreciation – property, plant and equipment and right-of-use
assets
59,949
54,934
Amortization – intangible assets
31,870
34,559
Interest on long-term debt
46,515
52,142
Net interest expense on leases
11,205
11,402
Impairment charge – right-of-use assets
1,259
428
Impairment charge – property, plant and equipment, intangible
assets and goodwill
72,947
9,432
Unrealized and realized foreign exchange loss
21,763
2,632
Interest income
(627)
(1,048)
(Gain) loss on de-recognition/lease modification of lease
liabilities
(407)
702
(Gain) loss on disposal of property, plant and equipment and
intangible assets
(194)
1,448
Revaluation of financial liabilities and derivatives recorded at
fair value
596
(3,676)
Restructuring
2,487
—
Gain on extinguishment of debt
(131)
—
Gain on contingent consideration from a business acquisition
—
(2,194)
Segment profit
263,037
270,746
SAP project implementation costs and transaction costs related
to acquisitions (2 & 3)
1,495
1,158
Normalized adjusted EBITDA
264,532
271,904
(1)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
(2)
SAP project implementation costs are included in the Consulting and professional fees, wages and benefits and advertising,
travel, meals and entertainment as part of the Operating expenses in the consolidated financial statements.
(3)
Transaction costs are included in Consulting and professional fees and Other as part of Operating expenses in the
consolidated financial statements.
Other income and expenses
Depreciation of property, plant and equipment and right-of-use assets increased by $5.0 million during the year ended
November 30, 2024, due to the revaluation of the preliminary purchase price related to BBQ Holdings in the fourth
quarter of 2023. The growth in corporate-owned locations year-over-year also contributed to the higher depreciation
expense.
Amortization of intangible assets decreased by $2.7 million due to the revaluation of the preliminary purchase price
allocations done in 2023.
Interest on long-term debt decreased by $5.6 million as a result of the Company entering into fixed interest rate swaps
which have resulted in savings of US$4.2 million (CAD$5.8 million) during the first twelve months of 2024 compared to
$3.2 million in the same period last year. On June 4, 2024, the Company sold a fixed interest rate swap, realizing
proceeds of $6.6 million from this transaction. The cumulative gain will be recognized on a straight-line basis over a
period equal to the original hedge date of April 10, 2026. The Company has also made net repayments of $79.5 million
of long-term debt since November 2023 resulting in lower interest.
During the twelve-month period ended November 30, 2024, the Company recognized impairment charges of $10.1
million on its property, plant and equipment, related to corporate locations (2023 - $0.2), $22.3 million on its intangible
assets, primarily related to the franchise rights and trademarks for twelve of its Canadian brands (2023 – $9.2 million,
Page 14
six brands) and an impairment on Goodwill of $40.5 million (2023 – nil) related to the Papa Murphy's brand due to lower
than expected past performance and lower expected future growth. The impairment charge on property, plant and
equipment was the result of the lower performance of some corporate stores while the impairment on intangible assets
was due to less than expected 2024 performance for some brands.
A weaker Canadian dollar relative to the US dollar resulted in a loss of $21.8 million in the 2024 fiscal year compared to
$2.6 million last year. Most of this loss relates to intercompany loans and is offset by gain on translation on the
consolidated statement of comprehensive income.
The Company has incurred restructuring costs of $2.5 million as part of a strategic realignment to streamline operations
and improve efficiency. These costs relate primarily to employee severance costs and in relation to the discontinuation
of one of its brands.
Net income (loss)
For the year ended November 30, 2024, a net income attributable to owners of $24.2 million was recorded, or $1.01
per share ($1.01 per diluted share) compared to a net income attributable to owners of $104.1 million or $4.26 per
share ($4.25 per diluted share) last year. Net income attributable to owners was mostly impacted by the impairment
charge mentioned in section “Other income and expenses” as well as the lower normalized adjusted EBITDA described
previously.
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED NOVEMBER 30,
2024
Revenue
During the fourth quarter of 2024, the Company’s total revenue increased to $284.5 million, from $280.0 million a year
earlier. Revenues for the two segments of business are broken down as follows:
Segment
Subdivision
November 30, 2024
November 30, 2023
Variation
($ millions)
($ millions)
Canada
Franchise operation
39.4
41.5
(5%)
Corporate stores
13.9
7.6
83%
Food processing, distribution and retail
34.2
38.0
(10%)
Promotional funds
11.4
11.0
4%
Intercompany transactions
(3.3)
(3.7)
N/A
Total Canada
95.6
94.4
1%
US &
International
Franchise operation
57.3
56.3
2%
Corporate stores
111.4
111.4
0%
Food processing, distribution and retail
0.6
0.3
100%
Promotional funds
19.7
17.9
10%
Intercompany transactions
(0.1)
(0.3)
N/A
Total US & International
188.9
185.6
2%
Total revenue
284.5
280.0
2%
Page 15
Canada revenue analysis:
Revenue from franchise locations in Canada decreased by 5%. Several factors contributed to the variation, as listed
below:
(In millions $)
Revenue, fourth quarter of 2023
41.5
Decrease in recurring revenue streams (1)
(1.0)
Increase in initial franchise fees, renewal fees and transfer fees
0.4
Decrease in turnkey, sales of material to franchisees and rent revenues
(1.4)
Other non-material variations
(0.1)
Revenue, fourth quarter of 2024
39.4
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
During the fourth quarter of 2024, recurring revenue streams decreased by $1.0 million, primarily due to one-time
revenues recorded in 2023 related to insurance proceeds and royalty adjustments which did not reoccur in 2024.
Revenue related to turnkey, sales of material to franchisees and rent revenues also decreased by $1.4 million on
account of a reduction in turnkey projects.
Revenue from corporate-owned locations increased by 83% to $13.9 million during the quarter due to a net increase in
corporate-owned locations year-over-year as well as a shift in the mix of restaurant concepts in the segment with an
increase in casual dining restaurants over prior year..
Food processing, distribution and retail revenues decreased by 10% due to lower sales in the retail segment, which are
the result of market conditions and grocers' increased focus on promoting house labels. In the fourth quarter of 2024,
however, the Company sold 163 products in the Canadian retail market (2023 – 182 products) despite these
constraints.
The promotional fund revenue increased by 4% due to the increase in system sales as well as the impact of the various
contribution rates.
US & International revenue analysis:
Revenue from franchise locations in the US and International increased by 2%. Several factors contributed to the
variation, as listed below:
(In millions $)
Revenue, fourth quarter of 2023
56.3
Decrease in recurring revenue streams (1)
(0.8)
Increase in sales of material and services to franchisees
0.3
Increase in gift card breakage income
1.0
Impact of variation in foreign exchange rates
0.5
Revenue, fourth quarter of 2024
57.3
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
During the fourth quarter of 2024, franchise revenues increased by $1.0 million mostly due to an increase in gift card
breakage of $1.0 million as well as a variation in foreign exchange rates which had a favourable impact of $0.5 million.
This was partially offset by a decrease in recurring revenue streams which decreased by $0.8 million. Royalties as a %
of sales decreased for the quarter from 5.12% to 4.95% as a result of a shift in system sales which had 53 weeks
reported in 2024 versus 52 weeks in 2023.
The increase in food processing, distribution and retail revenue is the result of the expansion of our retail line.
The promotional fund revenue increased by 10% due to the increase in system sales as well as the impact of the
various contribution rates.
Page 16
Operating expenses
During the fourth quarter of 2024, operating expenses increased by 3% to $225.7 million, from $219.6 million a year
ago. Operating expenses for the two business segments were incurred as follows:
Segment
Subdivision
November 30, 2024
November 30, 2023
($ millions)
($ millions)
Variation
Canada
Franchise operation
20.7
22.8
(9%)
Corporate stores
14.3
8.3
72%
Food processing, distribution and retail
30.9
34.1
(9%)
Promotional funds
11.4
11.0
4%
Intercompany transactions
(0.5)
(0.7)
N/A
Total Canada
76.8
75.5
2%
US &
International
Franchise operation
27.3
29.3
(7%)
Corporate stores
104.6
100.2
4%
Food processing, distribution and retail
0.2
—
N/A
Promotional funds
19.7
17.9
10%
Intercompany transactions
(2.9)
(3.3)
N/A
Total US & International
148.9
144.1
3%
Total operating expenses
225.7
219.6
3%
Canada operating expenses analysis:
Operating expenses from franchise locations in Canada decreased by $2.1 million, due to several factors listed below:
(In millions $)
Operating expenses, fourth quarter of 2023
22.8
Decrease in turnkey cost, cost of sale of material and services to franchisees and rent
(1.0)
Decrease in recurring controllable expenses (1) including wages, professional and
consulting services and other office expenses
(0.6)
Increase in SAP project implementation costs
0.6
Decrease in expected credit loss provision
(1.1)
Decrease due to impact of IFRS 16 on impairment of lease receivables
(0.1)
Other non-material variations
0.1
Operating expenses, fourth quarter of 2024
20.7
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
Operating expenses decreased by $2.1 million, primarily due to reductions in the expected credit loss provision, which
declined by $1.1 million compared to the same period last year as well as lower turnkey project costs which are aligned
with the decline in revenues. Controllable expenses decreased due to a reduction in wages as a results of restructuring
initiatives put into place in 2024. This was offset by the increase of $0.6 million in SAP implementation costs as part of
a long term strategy improve operational efficiency, have greater scalability and flexibility and increase data-driven
decision making.
Expenses from corporate stores increased by $6.0 million compared to the same period last year primarily due to a net
increase in corporate-owned locations year-over-year and in part due to higher wages and supply chain costs due to
inflation. The cost increase is tightly correlated to the increase in revenues.
The decreases in food processing, distribution and retail expenses as well as the variation in promotional funds
expense were tightly correlated to the related revenues.
Page 17
US & International operating expenses analysis:
Operating expenses from franchise locations in the US & International decreased by 7%. Several factors contributed to
the variation, as listed below:
(In millions $)
Operating expenses, fourth quarter of 2023
29.3
Decrease in non-controllable expenses (1)
(0.5)
Decrease in cost of sale of material and services to franchisees and rent
(1.5)
Increase in recurring controllable expenses (1) including wages, professional and
consulting services and other office expenses
0.1
Decrease in expected credit loss provision
(0.6)
Increase due to impact of IFRS 16 on rent expense
0.2
Impact of variation in foreign exchange rates
0.6
Other non-material variations
(0.3)
Operating expenses, fourth quarter of 2024
27.3
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
Operating expenses for franchise locations decreased to $27.3 million from $29.3 million during the fourth quarter of
2024. This decrease was primarily driven by a $1.5 million reduction in the cost of materials, services provided to
franchisees and rent, reflecting lower gift card program costs and lower rent expense. The Company also had $0.6
million lower expected credit loss provisions. The overall decrease was partially offset by unfavourable foreign
exchange impact of $0.6 million.
Corporate store expenses increased to $104.6 million, from $100.2 million compared to the same period last year,
mostly due to higher wages and supply chain costs due to inflation.
The variations of promotional funds expense were tightly correlated to the related revenues.
Segment profit, Adjusted EBITDA (1) and Normalized adjusted EBITDA (1)
Three-month period ended November 30, 2024
(In millions $)
Canada
US & International
Total
Revenue
95.6
188.9
284.5
Operating expenses
76.8
148.9
225.7
Segment profit, Adjusted EBITDA and Normalized adjusted
EBITDA (1)
18.8
40.0
58.8
Segment profit, Adjusted EBITDA and Normalized adjusted
EBITDA as a % of Revenue (2)
20%
21%
21%
SAP project implementation costs (3)
0.6
—
0.6
Normalized adjusted EBITDA (1)
19.4
40.0
59.4
Normalized adjusted EBITDA as a % of Revenue (2)
20%
21%
21%
Three-month period ended November 30, 2023
(In millions $)
Canada
US & International
Total
Revenue
94.4
185.6
280.0
Operating expenses
75.5
144.1
219.6
Segment profit, Adjusted EBITDA and Normalized adjusted
EBITDA (1)
18.9
41.5
60.4
Segment profit, Adjusted EBITDA and Normalized adjusted
EBITDA as a % of Revenue (2)
20%
22%
22%
Page 18
Below is a summary of performance segmented by product/service:
Three-month period ended November 30, 2024
(In millions $)
Franchise
Corporate
Processing,
distribution
and retail
Promotional
funds
Intercompany
transactions
Total
Revenue
96.7
125.3
34.8
31.1
(3.4)
284.5
Operating expenses
48.0
118.9
31.1
31.1
(3.4)
225.7
Segment profit, Adjusted EBITDA
and Normalized adjusted
EBITDA (1)
48.7
6.4
3.7
—
—
58.8
Segment profit, Adjusted EBITDA
and Normalized adjusted EBITDA
as a % of Revenue (2)
50%
5%
11%
N/A
N/A
21%
SAP project implementation costs (3)
0.6
—
—
—
—
0.6
Normalized adjusted EBITDA (1)
49.3
6.4
3.7
—
—
59.4
Normalized adjusted EBITDA as a %
of Revenue (2)
51%
5%
11%
N/A
N/A
21%
Three-month period ended November 30, 2023
(In millions $)
Franchise
Corporate
Processing,
distribution
and retail
Promotional
funds
Intercompany
transactions
Total
Revenue
97.8
119.0
38.3
28.9
(4.0)
280.0
Operating expenses
52.1
108.5
34.1
28.9
(4.0)
219.6
Segment profit, Adjusted EBITDA and
Normalized adjusted EBITDA (1)
45.7
10.5
4.2
—
—
60.4
Segment profit, Adjusted EBITDA and
Normalized adjusted EBITDA as a
% of Revenue (2)
47%
9%
11%
N/A
N/A
22%
(1)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
(2)
See section “Definition of non-GAAP ratios” found in the Supplemental Information section for definition.
(3)
SAP project implementation costs are included in the Consulting and professional fees, wages and benefits and advertising,
travel, meals and entertainment as part of the Operating expenses in the consolidated financial statements.
Page 19
Several factors contributed to the variation, as listed below:
(In millions $)
Canada
US &
International
Total
Segment profit, fourth quarter of 2023
18.9
41.5
60.4
Variance in recurring revenues and expenses (1)
(0.5)
(5.6)
(6.1)
Variance in turnkey, sales of material and services to
franchisees and rent for franchising segment
(1.4)
1.9
0.5
Variance in initial franchise fees, renewal fees and
transfer fees
0.4
—
0.4
Variance in expected credit loss provision
1.1
0.6
1.7
Variance due to transaction costs related to acquisitions
—
0.1
0.1
Variance due to impact of IFRS 16 on rent revenue &
expense
0.1
(0.1)
—
Variance in gift card breakage
—
1.0
1.0
Impact of variation in foreign exchange rates
—
0.3
0.3
Other non-material variations
0.2
0.3
0.5
Segment profit, fourth quarter of 2024
18.8
40.0
58.8
Normalized adjusted EBITDA (2), fourth quarter of 2023
18.9
41.5
60.4
Variances in segment profit
(0.1)
(1.5)
(1.6)
Variances due to SAP project implementation costs
0.6
—
0.6
Normalized adjusted EBITDA (2), fourth quarter of 2024
19.4
40.0
59.4
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
(2)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
Total segment profit for the three-month period ended November 30, 2024 was $58.8 million, a decrease of $1.6 million
compared to the same period last year, while normalized adjusted EBITDA was $59.4 million, a decrease of $1.1 million
or 2% compared to the prior year. Canada contributed 33% of total normalized adjusted EBITDA and an increase of 3%
or $0.5 million compared to the same period last year, while the US & International normalized adjusted EBITDA
decreased by $1.5 million.The fluctuation in normalized adjusted EBITDA was primarily impacted by the changes in
recurring revenue streams.
Page 20
Calculation of Adjusted EBITDA (1) and Normalized adjusted EBITDA (1)
(In thousands $)
Quarter ended
November 30, 2024
Quarter ended
November 30, 2023
(Loss) income before taxes
(71,205)
14,865
Depreciation – property, plant and equipment and right-of-
use assets
15,276
11,746
Amortization – intangible assets
8,253
8,054
Interest on long-term debt
10,427
12,450
Net interest expense on leases
2,821
2,938
Impairment charge – right-of-use assets
1,145
154
Impairment charge – property, plant and equipment,
intangible and goodwill
64,565
9,432
Unrealized and realized foreign exchange loss
26,284
2,652
Interest income
(100)
(233)
(Gain) loss on de-recognition/lease modification of lease
liabilities
(259)
20
Loss on disposal of property, plant and equipment and
intangible assets
552
1,063
Revaluation of financial liabilities and derivatives recorded at
fair value
240
(582)
Restructuring
797
—
Gain on contingent consideration from a business acquisition
—
(2,194)
Segment profit
58,796
60,365
SAP project implementation costs(2)
623
—
Normalized adjusted EBITDA
59,419
60,365
(1)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
(2)
SAP project implementation costs are included in the Consulting and professional fees, wages and benefits and advertising,
travel, meals and entertainment as part of the Operating expenses in the consolidated financial statements.
Other income and expenses
Depreciation of property, plant and equipment and right-of-use assets increased by $3.5 million due to the revaluation
of the preliminary purchase price related to BBQ Holdings in the fourth quarter of 2023. The growth in corporate-owned
locations year-over-year also contributed to the higher depreciation expense.
Interest on long-term debt decreased by $2.0 million as a result net repayments of $79.5 million of long-term debt since
November 2023 resulting in lower interest. The Company also continues to enter into fixed rate interest swaps which
have resulted in savings of US$0.7 million (CAD$1.0 million).
During the fourth quarter of 2024, the Company recognized impairment charges of $5.3 million (2023 – $0.2 million) on
its property, plant and equipment, primarily related to corporate locations and $18.8 million on its intangible assets,
primarily related to the trademarks and franchise rights for twelve brands (2023 – $9.2 million and six brands).The
Company recognized an impairment on Goodwill of $40.5 million (2023 - nil) related to the Papa Murphy's brand due to
lower than expected past performance and lower expected future growth. The impairment charge on property, plant and
equipment was the result of the lower performance of some corporate stores while the impairment on intangible assets
was due to less than expected 2024 performance for some brands.
During the fourth quarter of 2024, the Company recorded a loss of $26.3 million as a result of a weaker Canadian dollar
relative to the US dollar. Most of this loss relates to intercompany loans and is offset by gain on translation on the
consolidated statement of comprehensive income.
The Company has incurred restructuring costs of $0.8 million as part of a strategic realignment to streamline operations
and improve efficiency. These costs relate primarily to employee severance costs to the discontinuation of one of its
brands.
Page 21
Net income (loss)
For the three months ended November 30, 2024, a net loss attributable to owners of $55.3 million was recorded, or
$2.34 per share ($2.34 per diluted share) compared to net income of $16.4 million or $0.67 per share ($0.67 per diluted
share) last year. Net loss attributable to owners was mostly impacted by the impairment charged mentioned in section
“Other income and expenses” as well as the lower normalized adjusted EBITDA described previously.
CONTRACTUAL OBLIGATIONS
The obligations pertaining to the long-term debt and the minimum payments for the leases are as follows:
0 – 6
6 – 12
12 – 24
24 – 36
36 – 48
48 – 60
(In millions $)
Months
Months
Months
Months
Months
Months
Thereafter
$
$
$
$
$
$
$
Accounts payable and accrued
liabilities
134.4
—
—
—
—
—
—
Long-term debt (1)
3.7
—
—
704.6
—
—
—
Interest on long-term debt (2, 3 & 4)
20.7
21.0
41.8
17.3
—
—
—
Lease liabilities
67.2
67.2
116.5
97.3
76.2
55.0
118.3
Total contractual obligations
226.0
88.2
158.3
819.2
76.2
55.0
118.3
(1)
Amounts shown represent the total amount payable at maturity and are therefore undiscounted. Long-term debt includes
non-interest-bearing contract cancellation fees and holdbacks on acquisitions, contingent considerations on acquisition, non-
controlling interest option and revolving credit facility payable to a syndicate of lenders.
(2)
When future interest cash flows are variable, they are calculated using the interest rates prevailing at the end of the
reporting period.
(3)
Net of swap arrangement interest revenue.
(4)
Revolving credit facility was extended on March 15, 2024 for a period of 3 years and will mature on March 15, 2027.
LIQUIDITY AND CAPITAL RESOURCES
As at November 30, 2024, the amount held in cash totaled $50.4 million, a decrease of $8.5 million since the end of the
2023 fiscal period.
During the year ended November 30, 2024, MTY paid $26.8 million, (2023 – $24.4 million) in dividends to its
shareholders and repurchased and cancelled 906,900 of its shares (2023 – 80,800) for $41.8 million (2023 – $4.2
million) through its NCIB.
During the year ended November 30, 2024, cash flows generated by operating activities were $204.8 million, compared
to $184.6 million in the same period last year. The increase is mainly attributable to fluctuations in income taxes paid
and non-cash working capital items. Excluding the variations in non-cash working capital items, income taxes, interest
paid and other, operations generated $261.8 million, compared to $274.8 million last year.
The Company's revolving credit facility payable to a syndicate of lenders has an authorized amount of $900.0 million
(November 30, 2023 – $900.0 million), an accordion feature of $300.0 million (November 30, 2023 – $300.0 million)
and matures on March 15, 2027. As at November 30, 2024, CAD$8.0 million and US$497.2 million was drawn from the
revolving credit facility (November 30, 2023 – US$558.0 million).
Under this facility, the Company is required to comply with certain financial covenants, including:
•
a debt to EBITDA ratio (1) that must be less than or equal to 3.50:1.00;
•
a debt to EBITDA ratio (1) that must be less than or equal to 4.00:1.00 in the twelve months following
acquisitions with a consideration exceeding $150.0 million; and
•
an interest and rent coverage ratio that must be at least 2.00:1.00 at all times.
The revolving credit facility is repayable without penalty with the balance due on the date of maturity March 15, 2027.
As at November 30, 2024, the Company was in compliance with the covenants of the credit agreement.
(1)
See section “Definition of non-GAAP ratios” found in the Supplemental Information section for definition.
Page 22
LOCATION INFORMATION
MTY’s locations can be found in: i) food courts and shopping malls; ii) street front; and iii) non-traditional format within
petroleum retailers, convenience stores, grocery stores, cinemas, amusement parks, in other venues or retailers
shared sites, hospitals, universities and airports. The non-traditional locations are typically smaller in size, require lower
investment and generate lower revenue than the shopping malls, food courts and street front locations.
Number of locations
Three months
ended November 30,
Twelve months
ended November 30,
2024
2023
2024
2023
Franchises, beginning of the period
6,830
6,895
6,897
6,589
Corporate-owned, beginning of the period
Canada
52
43
43
41
US
184
181
176
158
Total, beginning of the period
7,066
7,119
7,116
6,788
Opened during the period
92
94
319
330
Closed during the period
(79)
(97)
(356)
(381)
Acquired during the period
—
—
—
379
Total, end of the period
7,079
7,116
7,079
7,116
Franchises, end of the period
6,827
6,897
Corporate-owned, end of the period
Canada
52
43
US
200
176
Total, end of the period
7,079
7,116
Page 23
Openings
During the fourth quarter of 2024, the Company’s network opened 92 locations (2023 – 94 locations). The breakdown
by geographical location and by location type is as follows:
Openings
Q4-24 vs Q4-23
38
46
43
39
11
9
Canada
US
International
Q4-24
Q4-23
Openings by Location Type Q4-24
Street front 53%
Shopping mall & office
tower food courts 18%
Non-traditional format 29%
During the year ended November 30, 2024, the Company’s network opened 319 locations (2023 – 330 locations). The
breakdown by geographical location and by location type is as follows:
Openings
YTD 2024 vs YTD 2023
117
129
151
148
51
53
Canada
US
International
YTD 2024
YTD 2023
Openings by Location Type YTD 2024
Street front 48%
Shopping mall & office
tower food courts 16%
Non-traditional format 36%
Page 24
Closures
During the fourth quarter of 2024, the Company’s network closed 79 locations (2023 – 97 locations). The breakdown by
geographical location and by location type is as follows:
Closures
Q4-24 vs Q4-23
38
58
39
35
2
4
Canada
US
International
Q4-24
Q4-23
Closures by Location Type
Q4-24
Street front 72%
Shopping mall & office
tower food courts 13%
Non-traditional format 15%
The average monthly sales of a newly opened location compared to a closed location by type is as follows:
Location type
(in thousands $)
New opening
Closure
Street front
57.7
45.5
Shopping mall & office tower food courts
37.7
32.4
Non-traditional format
35.8
16.0
During the year ended November 30, 2024, the Company’s network closed 356 locations (2023 – 381 locations). The
breakdown by geographical location and by location type is as follows:
Closures
YTD 2024 vs YTD 2023
145
159
200
195
11
27
Canada
US
International
YTD 2024
YTD 2023
Closures by Location Type
YTD 2024
Street front 66%
Shopping mall & office
tower food courts 16%
Non-traditional format 18%
Page 25
The table below provides the breakdown of MTY’s locations and system sales by type:
% of location count
% of system sales
Twelve months ended
November 30,
November 30,
Location type
2024
2023
2024
2023
Shopping mall & office tower food courts
16%
16%
15%
15%
Street front
62%
63%
76%
76%
Non-traditional format
22%
21%
9%
9%
The geographical breakdown of MTY’s locations and system sales is as follows:
% of location count
% of system sales
Twelve months ended
November 30,
November 30,
Geographical location
2024
2023
2024
2023
Canada
35%
35%
31%
32%
US
57%
58%
66%
65%
International
8%
7%
3%
3%
The territories that had the largest portions of total system sales were Quebec (Canada) with 17%, California (US) with
12%, Ontario (Canada) with 7%, Arizona (US), Washington (US), Oregon (US) and Florida (US) with 4% each.
The geographical distribution of system sales is as follows:
% of total system sales
Canada 31%
Central US 19%
East Coast US 12%
West Coast US 35%
International 3%
% of total US system sales
Central 29%
East Coast 19%
West Coast 52%
The breakdown by the types of concepts for MTY’s locations and system sales is as follows:
% of location count
% of system sales
Twelve months ended
November 30,
November 30,
Concept type
2024
2023
2024
2023
Quick service restaurant
79%
80%
63%
61%
Fast casual
11%
10%
9%
10%
Casual dining
10%
10%
28%
29%
Page 26
System sales
During the the three and twelve months ended-month periods ended November 30, 2024, MTY’s network generated
$1,371.9 million and $5,635.7 million in sales, respectively. The breakdown of system sales is as follows:
(millions of $)
Canada
US
International
TOTAL
First quarter of 2024
415.9
878.5
37.3
1,331.7
First quarter of 2023
423.9
901.2
37.4
1,362.5
Variance
(2%)
(3%)
(0%)
(2%)
Second quarter of 2024
436.3
983.6
39.5
1,459.4
Second quarter of 2023
450.1
980.1
39.8
1,470.0
Variance
(3%)
0%
(1%)
(1%)
Third quarter of 2024
456.8
973.8
42.1
1,472.7
Third quarter of 2023
473.2
952.8
41.1
1,467.1
Variance
(3%)
2%
2%
0%
Fourth quarter of 2024
441.6
893.8
36.5
1,371.9
Fourth quarter of 2023
437.0
869.3
35.3
1,341.6
Variance
1 %
3%
3%
2%
Year-to-date 2024
1,750.6
3,729.7
155.4
5,635.7
Year-to-date 2023
1,784.2
3,703.4
153.6
5,641.2
Variance
(2%)
1%
1%
(0%)
The overall movement in sales is distributed as follows:
Three-month sales
ended November 30
Twelve-month sales
ended November 30
(millions of $) Canada
US
International
TOTAL
Canada
US
International
TOTAL
Reported sales – 2023
437.0
869.3
35.3 1,341.6
1,784.2
3,703.4
153.6 5,641.2
Net increase in sales
generated by concepts
acquired during the last
24 months
—
—
—
—
0.1
8.3
0.1
8.5
Net variance in system sales
4.6
18.1
0.9
23.6
(33.7)
(16.5)
0.2
(50.0)
Cumulative impact of foreign
exchange variation
—
6.4
0.3
6.7
—
34.5
1.5
36.0
Reported sales – 2024
441.6
893.8
36.5 1,371.9 1,750.6 3,729.7
155.4 5,635.7
System sales for the three-month period ended November 30, 2024 increased by $30.3 million compared to the same
period last year. The US and international segment had overall positive system sales of $25.7 million, or 3% for the
quarter while Canada saw an organic growth of 1% or $4.6 million. Canada's increase came mostly from the casual
dining segment concepts with an improvement of 3% compared to prior year, while the fast casual saw a dip of 3%.
Removing the impact of foreign exchange, which contributed to $6.4 million of the growth in the US segment, the US
saw an increase of $18.1 million stemming from organic growth mostly from the QSR segment. The snack category,
with brands such as Cold Stone, Wetzel Pretzel's and SweetFrog, continued to outperform prior year.
For the twelve-month period ended November 30, 2024 system sales were slightly down by $5.5 million or less than
1% compared to 2023. Excluding the acquisitions of Wetzel’s Pretzels and Sauce Pizza and Wine, system sales for the
network decreased by $14.0 million, again less than 1%, with the US regions contributing to almost the entirety of the
decline.
Page 27
Papa Murphy’s and Cold Stone Creamery continue to be the only concepts that currently represent more than 10% of
system sales, generating approximately 18% and 16% respectively of the total sales of MTY’s network. Wetzel's
Pretzels, Famous Dave's and Village Inn are the third, fourth and fifth largest concepts in terms of systems sales,
generating less than 10% each of the network’s sales.
System wide sales include sales for corporate and franchise locations and excludes sales realized by the distribution
centers, by the food processing plants and by the retail division. System sales are converted from the currency in which
they are generated into Canadian dollars for presentation purposes; they are therefore subject to variations in foreign
exchange rates.
Same-Store Sales (1)
During the quarter ended November 30, 2024, same-store sales was consistent with prior year. By region, same-store
sales were broken down as follows for the last eight quarters:
Three months ended
February
May
August
November
February
May
August
November
Region
2023
2023
2023
2023
2024
2024
2024
2024
Canada
18.1 %
6.1 %
3.4 %
(1.2) %
(2.7) %
(3.6) %
(3.9) %
(0.1) %
US
5.2 %
3.6 %
2.0 %
(0.5) %
(3.6) %
(1.0) %
(1.1) %
0.1 %
International
(3.0) %
1.7 %
(0.3) %
(3.8) %
(7.4) %
(8.1) %
(7.0) %
(2.3) %
Total
10.1 %
4.7 %
2.6 %
(0.9) %
(3.3) %
(2.1) %
(2.3) %
0.0 %
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
In the fourth quarter of 2024, same-store sales were positive in the US segment by 0.1% while Canada saw a slight
decrease of 0.1%. The increase is consistent with the increase seen in system sales and is stemming primarily from a
increases in the QSR and fast casual segments.
By restaurant type (1), same-store sales were broken down as follows for the twelve months ended months ended
November 30, 2024 and 2023:
Three months ended
November 30
Twelve months ended
November 30
2024
2023
2024
2023
Quick service restaurant
(1.4) %
2.8 %
(2.1) %
10.9 %
Fast casual
(2.6) %
(4.4) %
(6.4) %
(0.3) %
Casual
2.4 %
(1.6) %
(1.2) %
6.7 %
Canada
(0.1) %
(1.2) %
(2.5) %
5.5 %
Quick service restaurant
1.6 %
0.4 %
(0.3) %
3.0 %
Fast casual
2.9 %
(2.1) %
0.9 %
1.0 %
Casual
(4.6) %
(3.3) %
(4.4) %
(2.5) %
US
0.1 %
(0.5) %
(1.3) %
2.5 %
Quick service restaurant
(2.7) %
(4.9) %
(6.7) %
(3.0) %
Fast casual
(2.8) %
13.9 %
(4.9) %
11.2 %
Casual
8.9 %
(10.8) %
(3.4) %
0.6 %
International
(2.3) %
(3.8) %
(6.5) %
(2.0) %
(1) Refer to the Supplemental Information section for a list of brands included in each category.
In the fourth quarter of 2024, quick service restaurant and fast casual restaurant remained resilient in the US with
comparable same-store sales year-over-year. The brands in these divisions are a great option for customers looking for
attractive but affordable menu options during economic uncertainty. The Canadian casual segment also saw an uplift in
sales with improvement in same-store sales of 2.4%.
Page 28
Digital sales
System sales versus digital sales breakdown is as follows for the year ended November 30, 2024 and 2023:
Canada – In store vs digital sales
1,750.6
1,784.2
247.2
246.4
1,503.4
1,537.8
14.1%
13.8%
Digital sales
In store
2024
2023
USA – In store vs digital sales
3,729.7
3,703.4
871.3
781.0
2,858.4
2,922.4
23.4%
21.1%
Digital sales
In store
2024
2023
(1)
US digital sales of the first quarter of 2023 missing digital sales of approximately 200 locations due to unavailability of
information.
Digital sales for the year ended November 30, 2024 increased by 9% compared to the same period last year, including
the impact of foreign exchange rates, from $1,027.4 million to $1,118.5 million, and represented 20% of total sales,
compared to 19% in the same period last year. Excluding the impact of foreign exchange and acquisitions, digital sales
grew by 8% in the period. The US saw an increase of $90.3 million or 12% compared to prior year mainly as a result of
shifts in consumer behavior as MTY continues to invest and improve the online experience. Canadian digital sales
increased by $0.8 million during the twelve-month period mainly due to the overall increase in system sales. The QSR
segment had the largest impact on Canada with online orders increasing by 23%.
System sales versus digital sales breakdown is as follows for the three months ended November 30, 2024 and 2023:
Canada – In store vs digital sales
441.6
437.0
61.1
56.8
380.5
380.2
13.8%
13.0%
Digital sales
In store
2024
2023
USA – In store vs digital sales
893.8
869.3
225.8
208.6
668.0
660.7
25.3%
24.0%
Digital sales
In store
2024
2023
Digital sales for the fourth quarter of 2024 increased by 8% compared to the same period last year, including the impact
of foreign exchange rates, from $265.4 million to $286.9 million, and represented 21% of total sales, compared to 20%
in the same period last year. Excluding the impact of foreign exchange, digital sales grew by 7% in the quarter.
Canadian digital sales increased by 8% compared to prior year, while US digital sales saw a growth of $17.2 million or
8%. First party online sales in Canada and the US represented 25% and 63%, respectively, of total digital sales for the
quarter compared to 26% and 64% in 2023.
Page 29
(1)
CAPITAL STOCK INFORMATION
Stock options
As at November 30, 2024, there were 400,000 options outstanding and 333,332 that were exercisable.
Share trading
MTY’s stock is traded on the Toronto Stock Exchange ("TSX") under the ticker symbol “MTY”. From December 1, 2023
to November 30, 2024, MTY’s share price fluctuated between $40.45 and $59.80. On November 30, 2024, MTY’s
shares closed at $47.75.
Capital stock
The Company’s outstanding share capital is comprised of common shares. An unlimited number of common shares are
authorized.
As at February 13, 2025, the Company’s issued and outstanding capital stock consisted of 23,192,861 shares
(November 30, 2023 – 24,332,661) and 400,000 granted and outstanding stock options (November 30, 2023 –
440,000). During the twelve months ended months ended November 30, 2024, MTY repurchased 314,700 and 906,900
shares, respectively, (2023 – 80,800) for cancellation through its NCIB.
Normal Course Issuer Bid Program
On June 28, 2024, the Company announced the renewal of the NCIB. The NCIB began on July 3, 2024 and will end on
July 2, 2025 or on such earlier date when the Company completes its purchases or elects to terminate the NCIB. The
renewed period allows the Company to purchase 1,196,513 of its common shares. These purchases will be made on
the open market plus brokerage fees through the facilities of the TSX and/or alternative trading systems at the
prevailing market price at the time of the transaction, in accordance with the TSX’s applicable policies. All common
shares purchased pursuant to the NCIB will be cancelled.
During the three and twelve months ended-month periods ended November 30, 2024, the Company repurchased and
cancelled a total of 314,700 and 906,900 common shares, respectively, (2023 – 80,800) under the current NCIB, at a
weighted average price of $45.26 and $46.36 per common share, respectively, (2023 – $51.58), for a total
consideration of $14.0 million and $41.8 million, respectively, (2023 – $4.2 million). An excess of $10.2 million and
$30.6 million, respectively, (2023 – $3.2 million) of the shares’ repurchase value over their carrying amount was
charged to retained earnings as share repurchase premiums.
SUBSEQUENT EVENT
Dividends
On January 22, 2025, the Company announced an increase to its quarterly dividend payment, from $0.28 per common
share to $0.33 per common share. The dividend of $0.33 per common share will be paid on February 14, 2025.
Grant of stock options
On January 16, 2025, the Company granted 40,000 stock options for an option price of $45.20 per share. The options
will vest and be exercisable as to one third of the grant on August 1, 2025, August 1, 2026 and August 1, 2027. The
options will expire on February 28, 2028.
SEASONALITY
Results of operations for any interim period are not necessarily indicative of the results of operations for the full year.
The Company expects that seasonality will continue to be a factor in the quarterly variation of its results. For example,
the Frozen treat category, which is a significant category in the US market, varies significantly during the winter season
as a result of weather conditions. This risk is offset by other brands that have better performance during winter seasons
such as Papa Murphy’s, which typically does better during winter months. Sales for shopping mall locations are also
higher than average in December during the holiday shopping period.
OFF-BALANCE SHEET ARRANGEMENTS
MTY has no off-balance sheet arrangements.
Page 30
CONTINGENT LIABILITIES
The Company is involved in legal claims associated with its current business activities. The timing of the outflows, if
any, is out of the control of the Company and is as a result undetermined at the moment. Contingent liabilities are
disclosed as provisions on the consolidated statement of financial position.
The provisions include $3.9 million (November 30, 2023 – $4.7 million) for litigations, disputes and other contingencies,
representing management’s best estimate of the outcome of litigations and disputes that are ongoing at the date of the
statement of financial position, as well as self-insured liabilities related to health and workers’ compensation and
general liability claims. These provisions are made of multiple items; the timing of the settlement of these provisions is
unknown given their nature, as the Company does not control the litigation timelines.
The provisions also varied in part due to foreign exchange fluctuations related to the US subsidiaries.
GUARANTEE
The Company has guaranteed leases on certain franchise stores in the event the franchisees are unable to meet their
remaining lease commitments. The maximum amount the Company may be required to pay under these agreements
was $12.5 million as at November 30, 2024 (November 30, 2023 – $16.4 million). In addition, the Company could be
required to make payments for percentage rents, realty taxes and common area costs. As at November 30, 2024, the
Company has accrued $1.6 million (November 30, 2023 – $1.6 million), included in Accounts payable and accrued
liabilities in the consolidated financial statements, with respect to these guarantees.
CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES
In the application of the Company’s accounting policies, which are described in Note 3 of the consolidated financial
statements, management is required to make judgments and to make estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
The following are the critical judgments, apart from those involving estimations, that management has made in the
process of applying the Company’s accounting policies and that have the most significant effect on the amounts
recognized in the financial statements.
Impairment of long-lived assets
The Company assesses whether there are any indicators of impairment for all long-lived assets at each reporting
period date. In addition, management is required to use judgment in determining the grouping of assets to identify a
CGU; the determination is done based on management’s best estimation of what constitutes the lowest level at which
an asset or group of assets has the possibility of generating cash inflows.
Impairment of property, plant and equipment and right-of-use assets
The Company performs an impairment test of its property, plant and equipment and right-of-use assets when there is
an indicator of impairment. The recoverable amounts of the Company’s corporate store assets are generally estimated
based on fair value less cost of disposal as this was determined to be higher than their value in use. The fair value less
cost of disposal of corporate stores is generally determined by estimating the liquidation value of the restaurant
equipment and any costs associated with exiting the lease.
During the years ended November 30, 2024 and 2023, the Company recognized impairment charges on its property,
plant and equipment (Note 15 of the consolidated financial statements). The total impairment on property, plant and
equipment of $10.1 million (2023 – $0.2 million) represents a write-down of the carrying value of the leasehold
improvements and equipment to their fair value less cost of disposal, which was higher than their value in use.
During the years ended November 30, 2024 and 2023, the Company also recognized impairment charges on its right-
of-use assets (Note 11 of the consolidated financial statements) of $1.3 million and $0.4 million, respectively.
Page 31
Business combinations
For business combinations, the Company must make assumptions and estimates to determine the purchase price
accounting of the business being acquired. To do so, the Company must determine, as of the acquisition date, the fair
value of the identifiable assets acquired, including such intangible assets as franchise rights and master franchise
rights, trademarks, step-in rights and liabilities assumed. Among other things, the determination of these fair market
values involves the use of key assumptions such as projected system sales, operating cash flows, discount rates,
royalty rates and average term life. Goodwill is measured as the excess of the fair value of the consideration
transferred including the recognized amount of any non-controlling interest in the acquiree over the net recognized
amount of the identifiable assets acquired and liabilities assumed, all measured at the acquisition date. These
assumptions and estimates have an impact on the asset and liability amounts recorded in the statement of financial
position on the acquisition date. In addition, the estimated useful lives of the acquired amortizable assets, the
identification of intangible assets and the determination of the indefinite or finite useful lives of intangible assets
acquired will have an impact on the Company’s future profit or loss.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the
end of the year ended November 30, 2024, that have a significant risk of causing a material adjustment to the carrying
amount of assets and liabilities within the next financial year.
Impairment of long-lived-assets
The Company uses judgment in determining the grouping of assets to identify its CGUs for purposes of testing for
impairment of property, plant and equipment, right-of-use assets, goodwill, trademarks and franchise rights.
In testing for impairment of property, plant and equipment and right-of-use assets, the Company determined that its
CGUs mostly comprise of individual stores or groups of stores and the assets are thereby allocated to each CGU.
In testing for impairment, goodwill acquired in a business combination is allocated to the CGUs that are expected to
benefit from the synergies of the business combination. In testing for impairment, trademarks and franchise rights are
allocated to the CGUs to which they relate. Furthermore, at each reporting period, judgment is used in determining
whether there has been an indication of impairment, which would require the completion of a quarterly impairment test,
in addition to the annual requirement.
Impairment of franchise rights and trademarks
The Company performs at least annually an impairment test of its trademarks. The recoverable amounts of the
Company’s assets are generally estimated based on value in use calculations using a discounted cash flow model as
this was determined to be higher than fair value less cost of disposal.
Discount rates are based on pre-tax rates that reflect the current market assessments, taking the time value of money
and the risks specific to the CGU into account.
During the year ended November 30, 2024, the Company recognized impairment charges of $22.3 million (2023 – $9.2
million) on its franchise rights, trademarks and other intangible assets (Note 15 of the consolidated financial
statements) representing a write-down of the carrying value to the recoverable amount. The fair value was determined
using key assumptions such as discount rates and projected operating cash flows. The fair value is classified as level 3
in the fair value hierarchy.
These calculations take into account the Company’s best estimate of projected operating cash flows. Projected
operating cash flows are estimated based on a multiyear extrapolation of the most recent historical actual results or
budgets and a terminal value calculated by discounting the final year in perpetuity.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the recoverable amount in use of the goodwill unit to
which goodwill has been allocated. The value in use calculation requires management to estimate the projected
operating cash flows expected to arise from the goodwill unit and a suitable discount rate in order to calculate present
value.
During the years ended November 30, 2024, the Company recognized impairment charges of $40.5 million on its
goodwill (Note 15 of the consolidated financial statements). During the year ended November 30, 2023, no impairment
charge on goodwill was required.
Page 32
CHANGES IN ACCOUNTING POLICIES
Policies applicable beginning December 1, 2023
IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors
In February 2021, the International Accounting Standard Board (“IASB”) issued Definition of Accounting Estimates
(Amendments to IAS 8) with amendments that are intended to help entities to distinguish between accounting policies
and accounting estimates. The changes to IAS 8 focus entirely on accounting estimates and clarify that: the definition of
a change in accounting estimates is replaced with a new definition. Entities develop accounting estimates if accounting
policies require items in financial statements to be measured in a way that involves measurement uncertainty. A change
in accounting estimate that results from new information or new developments is not the correction of an error; and a
change in an accounting estimate may affect only the current period’s profit or loss, or the profit or loss of both the
current period and future periods.
The amendments to IAS 8 were adopted effective December 1, 2023 and resulted in no significant adjustment.
IAS 12, Income Taxes
In May 2021, the IASB published Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction
(Amendments to IAS 12) that clarifies how companies account for deferred tax on transactions such as leases and
decommissioning obligations. The main change is an exemption from the initial recognition exemption, which does not
apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in
the recognition of equal deferred tax assets and liabilities.
The amendments to IAS 12 were adopted effective December 1, 2023 and resulted in no significant adjustment.
FUTURE ACCOUNTING CHANGES
A number of new standards, interpretations and amendments to existing standards were issued by the IASB that are
not yet effective for the year ended November 30, 2024 and have not been applied in preparing the consolidated
financial statements.
The following amendments may have a material impact on the consolidated financial statements of the Company:
Standard
Issue date
Effective date for
the Company
Impact
IAS 1
Presentation of Financial Statements
January 2020,
July 2020, February
2021 & October
2022
December 1, 2024
In assessment
IFRS 16
Leases
September 2022
December 1, 2024
In assessment
IAS 21
The Effects of Changes in Foreign
Exchange Rates
August 2023
December 1, 2025
In assessment
IFRS 18
Presentation and Disclosure of Financial
Statements
April 2024
December 1, 2028
In assessment
IFRS 9 &
IFRS 7
Financial Instruments &
Financial Instruments and Disclosures
May 2024
December 1, 2026
In assessment
IAS 1, Presentation of Financial Statements
In January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements
in place at the reporting date. The amendments in Classification of Liabilities as Current or Non-current (Amendments
to IAS 1) affect only the presentation of liabilities in the statement of financial position, not the amount or timing of
recognition of any asset, liability income or expenses, or the information that entities disclose about those items.
In July 2020, the IASB published Classification of Liabilities as Current or Non-current – Deferral of Effective Date
(Amendment to IAS 1) deferring the effective date of the January 2020 amendments to IAS 1 by one year.
In February 2021, the IASB issued Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2) with amendments that are intended to help preparers in deciding which accounting policies to disclose in
their financial statements. An entity is now required to disclose its material accounting policy information instead of its
Page 33
significant accounting policies and several paragraphs are added to IAS 1 to explain how an entity can identify material
accounting policy information and to give examples of when accounting policy information is likely to be material. The
amendments also clarify that: accounting policy information may be material because of its nature, even if the related
amounts are immaterial; accounting policy information is material if users of an entity’s financial statements would need
it to understand other material information in the financial statements; and if an entity discloses immaterial accounting
policy information, such information shall not obscure material accounting policy information.
In October 2022, the IASB published Non-current Liabilities with Covenants (Amendments to IAS 1) to clarify how
conditions with which an entity must comply within twelve months after the reporting period affect the classification of a
liability. The amendments modify the requirements introduced by Classification of Liabilities as Current or Non-current
on how an entity classifies debt and other financial liabilities as current or non-current in particular circumstances: only
covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability
as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial
statements to understand the risk that non-current liabilities with covenants could become repayable within twelve
months. The amendments also defer the effective date of the 2020 amendments to January 1, 2024.
The amendments to IAS 1 are effective for annual reporting periods beginning on or after January 1, 2024. Earlier
application is permitted. The Company will adopt the amendments on December 1, 2024.
IFRS 16, Leases
In September 2022, the IASB issued Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) with
amendments that clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the
requirements in IFRS 15, Revenue from Contracts with Customers, to be accounted for as a sale. The amendments
require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not
recognize any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent
a seller-lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a lease. The
amendments to IFRS 16 are effective for annual reporting periods beginning on or after January 1, 2024. Earlier
application is permitted. The Company will adopt the amendments on December 1, 2024.
IAS 21, The Effects of Changes in Foreign Exchange Rates
In August 2023, the IASB published Lack of Exchangeability (Amendments to IAS 21). The amendments specify when
a currency is exchangeable into another currency and when it is not, specify how an entity determines the exchange
rate to apply when a currency is not exchangeable, and require the disclosure of additional information when a
currency is not exchangeable. The amendments to IAS 21 are effective for annual reporting periods beginning on or
after January 1, 2025. Earlier application is permitted. The Company will adopt the amendments on December 1, 2025.
IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the IASB published a new standard: IFRS 18 Presentation and Disclosure in Financial Statements which
replaces IAS 1 Presentation of Financial Statements. New requirements have been introduced for presentation in the
statement of profit and loss, increased disclosure of management defined performance measures and defining the way
information is aggregated and disaggregated in the financial statements. The application of IFRS 18 is effective for
annual reporting beginning on or after January 1, 2027. Earlier application is permitted. The Company will adopt the
amendments on December 1, 2027.
IFRS 9 Financial Instruments and IFRS 7 Financial Instrument Disclosures
In May 2024, the IASB published Amendments to the Classification and Measurement of Financial Instruments
(Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures). The amendments to
IFRS 9 clarify de-recognition and classification of specific financial assets and liabilities respectively while the
amendments to IFRS 7 clarify the disclosure requirements for investments in equity instruments designated at fair
value through other comprehensive income and contractual terms that could change the timing or amount of
contractual cash flows on the occurrence or non-occurrence of a contingent event. The amendments to IFRS 9 and
IFRS 7 are effective for annual reporting beginning on or after January 1, 2026. Earlier application is permitted. The
Company will adopt the amendments on December 1, 2026.
RISKS AND UNCERTAINTIES
Despite the fact that the Company has various numbers of concepts, diversified in type of locations and geographies
across Canada and the US, the performance of the Company is also influenced by changes in demographic trends,
Page 34
traffic patterns, occupancy level of malls and office towers and the type, number, and location of competing restaurants.
In addition, factors such as innovation, increased food costs, labour and benefits costs, occupancy costs and the
availability of experienced management and hourly employees may adversely affect the Company. Changing consumer
preferences and discretionary spending patterns could oblige the Company to modify or discontinue concepts and/or
menus and could result in a reduction of revenue and operating income. Even if the Company was able to compete
successfully with other restaurant companies with similar concepts, it may be forced to make changes in one or more of
its concepts in order to respond to changes in consumer tastes or dining patterns. If the Company changes a concept,
it may lose additional customers who do not prefer the new concept and menu, and it may not be able to attract a
sufficient new customer base to produce the revenue needed to make the concept profitable. Similarly, the Company
may have different or additional competitors for its intended customers as a result of such a concept change and may
not be able to successfully compete against such competitors. The Company's success also depends on numerous
factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and
consumer confidence. Adverse changes in these factors could reduce customer traffic or impose practical limits on
pricing, either of which could reduce revenue and operating income.
The growth of MTY is dependent on maintaining the current franchise system, which is subject to many factors
including but not limited to the renewal of existing leases at sustainable rates, MTY’s ability to continue to expand by
obtaining acceptable store sites and lease terms, obtaining qualified franchisees, increasing comparable store sales
and completing acquisitions. The time, energy and resources involved in the integration of the acquired businesses into
the MTY system and culture could also have an impact on MTY’s results.
Labour is a key factor in the success of the Company. If the Company was unable to attract, motivate and retain a
sufficient number of qualified individuals, this could materially disrupt the Company’s business and operations and
adversely impact its operating results, including the delay of planned restaurant openings, the Company’s ability to
grow sales at existing restaurants and expand its concepts effectively. 2021, 2022 and 2023 saw a shortage of qualified
workers, as well as an increase in labour costs due to competition and increased wages which have persisted into
2024. These conditions have resulted in aggressive competition for talent, wage inflation and pressure to improve
benefits and workplace conditions to remain competitive and attract talent affecting the Company and its franchisees.
Restaurants in the Company’s network could be short staffed, the ability to meet customer demand could be limited and
operational efficiency could also be adversely impacted.
The impacts of a widespread health epidemic or pandemic, including various strains of avian flu or swine flu, such as
H1N1, or COVID-19, particularly if located in regions from which the Company derives a significant amount of revenue
or profit could continue to impact the Company in the future. The occurrence of such an outbreak or other adverse
public health developments can and could continue to materially disrupt the business and operations. Such events
could also significantly impact the industry and cause a temporary closure of restaurants, which could severely disrupt
MTY’s or the Company’s franchisees' operations and have a material adverse effect on the business, financial condition
and results of operations.
Outbreaks of avian flu occur from time to time around the world, and such outbreaks have resulted in confirmed human
cases. Public concern over avian flu generally may cause fear about the consumption of chicken, eggs and other
products derived from poultry, which could cause customers to consume less poultry and related products. Because
poultry is a menu offering for many of the Company’s Concepts, this would likely result in lower revenues and profits to
both MTY and franchisee partners. Avian flu outbreaks could also adversely affect the price and availability of poultry,
which could negatively impact profit margins and revenues.
Furthermore, other viruses may be transmitted through human contact or through the consumption of foods. The risk of
contracting viruses transmitted through human contact could cause employees or guests to avoid gathering in public
places, which could adversely affect restaurant guest traffic or the ability to adequately staff restaurants. MTY could
also be adversely affected if government authorities impose mandatory closures, seek voluntary closures, impose
restrictions on operations of restaurants, impose restrictions on customers via a vaccine passport to dine-in, or restrict
the import or export of products, or if suppliers issue mass recalls of products. Even if such measures are not
implemented and a virus or other disease does not spread significantly, the perceived risk of infection or health risk may
adversely affect the business and operating results. Viruses transmitted through the consumption of foods, such as
salmonella, could cause guests to have negative views of a brand, which could cause severe reputational and
potentially irreversible damages and, similar to viruses transmitted through human contact, may adversely affect the
business and operating results.
The Company’s operating results substantially depend upon its ability to obtain frequent deliveries of sufficient
quantities of products such as beef, chicken, and other products used in the production of items served and sold to
customers. Geopolitical events, such as trade tariffs, public health or pandemic outbreaks, war or hostilities in countries
in which suppliers or operations are located, terrorist or military activities, or natural disasters such as hurricanes,
tornadoes, floods, earthquakes and others, could lead to interruptions in the supply chain. Disruptions in supply chain
could impact delivery of food or other supplies to the Company’s restaurants. Delays or restrictions on shipping or
Page 35
manufacturing, closures of supplier or distributor facilities or financial distress or insolvency of suppliers or distributors
could disrupt operations or the operations of one or more suppliers or could severely damage or destroy one of more of
the stores or distribution centers located in the affected area. These delays or interruptions could impact the availability
of certain food and packaging items at the Company’s restaurants, including beef, chicken, pork and other core menu
products and could require the Company’s restaurants to serve a limited menu. The Company’s results of operations
and those of its franchisees could be adversely affected if its key suppliers or distributors are unable to fulfill their
responsibilities and the Company were unable to identify alternative suppliers or distributors in a timely manner or
effectively transition the impacted business to new suppliers or distributors. If a disruption of service from any of its key
suppliers or distributors were to occur, the Company could experience short-term increases in costs while supply and
distribution channels were adjusted and may be unable to identify or negotiate with new suppliers or distributors on
terms that are commercially reasonable.
Changes to interest rates could also impact MTY’s borrowing capacity, thereby affecting its ability to make accretive
acquisitions. Rising interest rates would also negatively impact franchisees’ borrowing capacity as well as their
available cash flows, thereby slowing down the build of new locations and causing cash flow strains on existing
franchisees.
Geopolitical events such as the occurrence of war or hostilities between countries, or threat of terrorist activities and the
responses to and results of these activities could also adversely impact the operations of the Company or its franchisee
network. These events could lead to supply chain interruptions, closures or destruction of restaurants, increases in
inflation and labour shortages.
Please refer to the November 30, 2024 Annual Information Form for further discussion on all risks and uncertainties.
ECONOMIC ENVIRONMENT RISK
The business of the Company is dependent upon numerous aspects of a healthy general economic environment, from
strong consumer spending to provide sales revenue, to available credit to finance the franchisees and the Company. In
case of turmoil in economic, credit and capital markets, the Company’s performance and market price may be
adversely affected. The Company’s current planning assumptions forecast that the restaurant industry will be impacted
by the current economic uncertainty in certain regions in which it operates. Exposure to health epidemics and
pandemics, as well as other geopolitical events, such as war or hostilities between countries, and rising interest rates
are risks to the Company and its franchise partners. Within a normal economic cycle, management is of the opinion
that these risks will not have a major impact on the Company due to the following reasons: 1) the Company generates
strong cash flows and has a healthy balance sheet; and 2) the Company has several concepts offering affordable
dining out options for consumers in an economic slowdown. During extreme economic turmoil, management believes
that the Company has the ability to overcome these risks until the economy re-establishes itself.
FINANCIAL INSTRUMENTS
In the normal course of business, the Company uses various financial instruments, which by their nature involve risk,
including market risk and the credit risk of non-performance by counterparties. These financial instruments are subject
to normal credit standards, financial controls, risk management and monitoring procedures.
The Company has determined that the fair values of its financial assets and financial liabilities with short-term and long-
term maturities approximate their carrying value. These financial instruments include cash, accounts receivable,
accounts payable and accrued liabilities, deposits and other liabilities. The table below shows the fair value and the
carrying amount of other financial instruments as at November 30, 2024 and November 30, 2023. Since estimates are
used to determine fair value, they must not be interpreted as being realizable in the event of a settlement of the
instruments.
Page 36
The classification, carrying value and fair value of financial instruments are as follows:
(In thousands $)
2024
2023
Carrying
amount
Fair
value
Carrying
amount
Fair
value
$
$
$
$
Financial assets
Loans and other receivables
3,994
3,994
5,389
5,389
Finance lease receivables
307,804
307,804
333,706
333,706
Financial liabilities
Long-term debt (1)
706,130
706,130
759,134
759,134
(1)
Excludes credit facility financing costs and non-controlling interest option in 9974644 Canada Inc.
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. It is established based on market
information available at the date of the consolidated statement of financial position. In the absence of an active market
for a financial instrument, the Company uses the valuation methods described below to determine the fair value of the
instrument. To make the assumptions required by certain valuation models, the Company relies mainly on external,
readily observable market inputs. Assumptions or inputs that are not based on observable market data are used in the
absence of external data. These assumptions or factors represent management’s best estimates of the assumptions or
factors that would be used by market participants for these instruments. The credit risk of the counterparty and the
Company’s own credit risk have been taken into account in estimating the fair value of all financial assets and financial
liabilities, including derivatives.
The following methods and assumptions were used to estimate the fair values of each class of financial instrument:
Loans and other receivables and Finance lease receivables – The carrying amount for these financial
instruments approximates fair value due to the short-term maturity of these instruments and/or the use of
market interest rates.
Long-term debt – The fair value of long-term debt is determined using the present value of future cash flows
under current financing agreements based on the Company’s current estimated borrowing rate for similar
debt.
Swaps
Cross currency interest rate swaps
On October 29, 2024, the Company entered into one floating to floating 3-month cross currency interest rate swap
(November 30, 2023 – one floating to floating 3-month cross currency interest rate swap and one floating to floating 2-
month cross currency interest rate swap). A derivative liability fair value of $3.1 million was recorded as at November
30, 2024 (November 30, 2023 – derivative liability of $2.6 million) in the current portion of derivative liabilities in the
consolidated statements of financial position. The Company has classified this as level 2 in the fair value hierarchy.
2024
2023
3-month
3-month
2-month
Receive – Notional
US$190.0 million
US$51.1 million US$142.9 million
Receive – Rate
6.51%
7.14%
7.14%
Pay – Notional
CA$262.0 million
CA$70.0 million CA$196.0 million
Pay – Rate
5.43%
6.66%
6.59%
Page 37
Fixed interest rate swaps
On March 24, 2023, the Company entered into a three-year SOFR fixed interest rate swap for a notional amount of
US$200.0 million. A fair value remeasurement gain of $0.2 million was recorded in the Company’s consolidated
statement of comprehensive income for the year ended November 30, 2024 (2023 – fair value remeasurement gain of
$6.3 million).
On June 4, 2024, the Company sold the fixed interest rate swap, realizing proceeds of $6.6 million from this
transaction. A derivative asset fair value of nil was recorded as at November 30, 2024 (2023 – $6.6 million). The
Company had classified this as level 2 in the fair value hierarchy and had designated this as a cash flow hedge of the
Company’s interest rate risk from its credit facility. Under the terms of this swap. the interest rate was fixed at 3.32%.
The cumulative gain on the hedging instrument, which was previously recognized in other comprehensive income
during the effective hedging period, will continue to be recognized in equity and will be amortized to the consolidated
statement of income until the termination of the hedged item on April 10, 2026. During the year, the Company recorded
a gain of $1.7 million in the consolidated statement of income related to this amortization.
On May 30, 2023, the Company entered into a two-year SOFR fixed interest rate swap for a notional amount of
US$100.0 million. The period of two years ends on May 30, 2025. Under the terms of this swap, the interest rate is
fixed at 3.64%, unless the 1-month term SOFR exceeds 5.50%; if the 1-month term SOFR exceeds 5.50%, the
Company will pay the 1-month term SOFR. A derivative asset fair value of $0.5 million was recorded as at November
30, 2024 (November 30, 2023 – $1.3 million). The Company has classified this as level 2 in the fair value hierarchy. A
fair value remeasurement loss of $0.8 million was recorded in the Company’s consolidated statement of income for the
year ended November 30, 2024 (2023 – fair value remeasurement gain of $1.3 million).
On January 22, 2024, the Company entered into a three-year SOFR fixed interest rate swap for a notional amount of
US$50.0 million. The period of three years ends on January 22, 2027. Under the terms of this swap, the Company will
received 0.25% unless the 1-month term SOFR falls below 2.95% or exceeds 5.50%. If the term SOFR falls below
2.95%, the Company will pay the difference between current rate and 2.95%. A derivative asset of less than $0.1 million
was recorded as at November 30, 2024 (November 30, 2023 – nil). The Company has classified this as level 2 in the
fair value hierarchy. A fair value remeasurement gain of less than $0.1 million was recorded in the Company’s
consolidated statement of income for the year ended November 30, 2024 (2023 – nil).
On September 19, 2024, the Company entered into a three-year CORRA fixed interest rate swap for a notional amount
of $100.0 million. The period of three years ends on September 17, 2027. Under the terms of this swap, the interest
rate is fixed at 2.79%. A derivative asset of $0.1 million was recorded as at November 30, 2024 (November 30, 2023–
nil). The Company has classified this as level 2 in the fair value hierarchy. A fair value remeasurement gain of $0.1
million was recorded in the Company’s consolidated statement of comprehensive income for the year ended November
30, 2024 (2023 – nil).
On September 24, 2024, the Company entered into a three-year CORRA fixed interest rate swap for a notional amount
of $50.0 million. The period of three years ends on September 24, 2027. Under the terms of this swap, the interest rate
is fixed at 2.77%. A derivative asset of $0.1 million was recorded as at November 30, 2024 (November 30, 2023 – nil).
The Company has classified this as level 2 in the fair value hierarchy. A fair value remeasurement gain of $0.1 million
was recorded in the Company’s consolidated statement of comprehensive income for the year ended November 30,
2024 (2023 – nil).
The swaps were recorded in the consolidated statements of financial position as follows:
(In thousands $)
Cross
currency
interest rate
swaps
2-year
SOFR fixed
interest rate
swap
3-year
SOFR fixed
interest rate
swap
3-year
CORRA fixed
interest rate
swap
3-year
CORRA fixed
interest rate
swap
Total
$
$
$
$
$
$
Current portion of
derivative
3,071
499
18
51
35
3,674
Long-term portion of
derivative
—
—
21
92
64
177
November 30, 2024
3,071
499
39
143
99
3,851
Page 38
Fair value hierarchy
The changes in the carrying amount of the financial liabilities classified as level 3 in the fair value hierarchy are as
follows:
(In thousands $)
2024
2023
$
$
Financial liabilities classified as level 3 as at November 30, 2023
10,067
13,346
Repayments
(6,304)
(875)
Revaluation of financial liabilities recorded at fair value
(121)
(2,404)
Financial liabilities classified as level 3 as at November 30, 2024
3,642
10,067
As at November 30, 2024 and November 30, 2023, the financial liabilities classified as level 3 in the fair value hierarchy
were comprised of the following:
(In thousands $)
2024
2023
$
$
Contingent considerations on Küto Comptoir à Tartares acquisition and 11554891
Canada Inc.
—
600
Fair value of non-controlling interest buyback obligation in 9974644 Canada Inc.
2,142
2,288
Obligation to repurchase 11554891 Canada Inc. partner
—
7,179
Financial liabilities classified as level 3
2,142
10,067
FINANCIAL RISK EXPOSURE
The Company, through its financial assets and financial liabilities, is exposed to various risks. The following analysis
provides a measurement of risks as at November 30, 2024.
Credit risk
The Company’s credit risk is primarily attributable to its trade receivables and finance lease receivables. The amounts
disclosed in the consolidated statement of financial position represent the maximum exposure to credit risk for each
respective financial asset as at the relevant dates. The Company believes that the credit risk of accounts receivable
and finance lease receivables is limited as other than receivables from international locations, the Company’s broad
client base is spread mostly across Canada and the US, which limits the concentration of credit risk.
The credit risk on the Company’s loans and other receivables is similar to that of its accounts receivable and finance
lease receivables.
Foreign exchange risk
Foreign exchange risk is the Company’s exposure to decreases or increases in financial instrument values cause by
fluctuations in exchange rates. The Company’s exposure to foreign exchange risk mainly comes from sales
denominated in foreign currencies. The Company’s US and foreign operations use the US dollar (“USD”) as functional
currency. The Company’s exposure to foreign exchange risk stems mainly from cash, accounts receivable, long-term
debt denominated in USD, other working capital items and financial obligations from its US operations. As at November
30, 2024, US$497.2 million (November 30, 2023 - US$558.0 million) was drawn from the revolving credit facility. Of that
amount, US$189.2 million (November 30, 2023 - US$194.0 million) was not exposed to foreign exchange risk as a
result of one (November 30, 2023 - two) cross currency interest rate swap, and US$308.0 million (November 30, 2023 -
US$364.0 million) was exposed to foreign exchange risk.
Fluctuations in USD exchange rates are deemed to have minimal risk as they are mostly offset by the stand-alone
operations of the Company’s US entities.
Page 39
As at November 30, 2024 and 2023, the Company has the following financial instruments denominated in foreign
currencies:
(In thousands $)
2024
2023
USD
CAD
USD
CAD
$
$
$
$
Financial assets
Cash
8,573
12,011
2,593
3,522
Accounts receivable
631
884
988
1,342
Financial liabilities
Accounts payable and deposits
(624)
(874)
(192)
(261)
Long-term debt
(308,000)
(431,508)
(364,000)
(494,385)
Net financial liabilities
(299,420)
(419,487)
(360,611)
(489,782)
All other factors being equal, a reasonable possible 5% rise in foreign currency exchange rates per Canadian dollar
would result in a loss of $15.0 (2023 – loss of $18.0) on the consolidated statements of income and comprehensive
income.
Interest rate risk
Interest rate risk is the Company’s exposure to increases and decreases in financial instrument values caused by the
fluctuation in interest rates. The Company is exposed to cash flow risk due to the interest rate fluctuation in its floating-
rate interest-bearing financial obligations. The Company from time to time may enter into fixed interest rate derivatives
to manage its cash flow risk exposure, with long-term commitments requiring Board approval to ensure compliance with
the Company’s risk management strategy. As at November 30, 2024, the Company holds floating-to-fixed interest rate
swaps in order to hedge a portion of the interest rate cash flow risk associated with floating interest rate debt.
Furthermore, upon refinancing of a borrowing, depending on the availability of funds in the market and lender
perception of the Company’s risk, the margin that is added to the reference rate, such as SOFR, CORRA or prime
rates, could vary and thereby directly influence the interest rate payable by the Company.
Long-term debt stems mainly from acquisitions of long-term assets and business combinations. The Company is
exposed to interest rate risk with its revolving credit facility which is used to finance the Company’s acquisitions. The
facility bears interest at a variable rate and as such the interest burden could change materially. $704.6 million
(November 30, 2023 – $757.8 million) of the credit facility was used as at November 30, 2024. A 100 basis points
increase in the bank’s prime rate would result in additional interest of $7.0 million per annum (2023 – $7.6 million) on
the outstanding credit facility.
Liquidity risk
Liquidity risk refers to the possibility of the Company not being able to meet its financial obligations when they become
due. The Company has contractual and fiscal obligations as well as financial liabilities and is therefore exposed to
liquidity risk. Such risk can result, for example, from a market disruption or a lack of liquidity. The Company actively
maintains its credit facility to ensure it has sufficient available funds to meet current and foreseeable financial
requirements at a reasonable cost.
As at November 30, 2024, the Company had an authorized revolving credit facility for which the available amount may
not exceed $900.0 million (November 30, 2023 – $900.0 million) and including an accordion feature amounting to
$300.0 million (November 30, 2023 – $300.0 million) to ensure that sufficient funds are available to meet its financial
requirements.
Page 40
The following are the contractual maturities of financial liabilities as at November 30, 2024:
(In millions $)
Carrying
amount
Contractual
cash flows
0 – 6
Months
6 – 12
Months
12 – 24
Months
Thereafter
$
$
$
$
$
$
Accounts payable and accrued liabilities
134.4
134.4
134.4
—
—
—
Long-term debt (1)
2.5
708.3
3.7
—
—
704.6
Interest on long-term debt (1)
N/A
100.8
20.7
21.0
41.8
17.3
Lease liabilities
815.1
597.7
67.2
67.2
116.5
346.8
952.0
1,541.2
226.0
88.2
158.3
1,068.7
(1)
When future interest cash flows are variable, they are calculated using the interest rates prevailing at the end of the
reporting period.
NEAR-TERM OUTLOOK
The restaurant industry in 2024 remains extremely competitive. The pace of technological changes, innovations and
shifts in customer preferences continue to accelerate, while trends appear and dissipate in short periods of time.
Industry players need to be increasingly agile in order to adapt to the market and create sustainable streams of
revenues that will carry from one generation of customers to the next. MTY’s entrepreneurial roots give it an advantage
in the current environment and the various teams are prepared to face any situation.
At the date of this report, although not completely gone, inflation and labour issues seem to be receding. Some
jurisdictions continue to increase minimum wages materially, putting additional pressure on the cost structure of
franchisees and the Company's corporate locations in an environment in which consumers are becoming increasingly
sensitive to price increases. MTY's team focus on innovation, product quality and consistency, superior store design,
seamless and appealing online interactions with customers and perceived value are all elements that position MTY well
to thrive in the future, even if macroeconomic pressures persist.
Management remains committed to maximize shareholder value by improving normalized adjusted EBITDA through
improved in-restaurant dining and online digital experiences as well as cost cutting measures. Organic growth of
system sales and store count of existing concepts remains a priority while MTY continues to seek potential acquisitions
in an effort to increase the Company’s market share.
CONTROLS & PROCEDURES
Disclosure controls and procedures
The Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) are responsible for establishing and
maintaining disclosure controls and procedures (“DC&P”). The Company’s DC&P are designed to provide reasonable
assurance that material information relating to the Company is made known to Management in a timely manner to allow
the information required to be disclosed under securities legislation to be recorded, processed, summarized and
reported within the time periods specified in securities legislation.
During the year ended November 30, 2024, MTY did not make any significant changes in, nor take any significant
corrective actions regarding internal controls or other factors that could significantly affect such internal controls. The
CEO and CFO periodically review the Company’s DC&P for design and operating effectiveness and conduct an
evaluation each quarter. As at November 30, 2024, the CEO and CFO were satisfied with the effectiveness of the
Company’s DC&P.
Internal controls over financial reporting
The CEO and the CFO are responsible for establishing and maintaining internal control over financial reporting. The
Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The
CEO and CFO, together with management, have concluded after having conducted an evaluation and to the best of
their knowledge that, there were no changes to the Company’s internal control over financial reporting that occurred
during the year ended November 30, 2024, that have materially affected or are reasonably likely to materially affect the
Company’s internal control over financial reporting.
Page 41
Limitations of controls and procedures
There are inherent limitations in the effectiveness of any control system, including the potential for human error and the
possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be
faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only
reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, the
management of the Company, including its CEO and CFO, does not expect that the control system can prevent or
detect all error or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to
future periods are subject to the risks that, over time, controls may become inadequate because of changes in an
entity’s operating environment or deterioration in the degree of compliance with policies or procedures.
Limitation on scope of design
The Company’s management, with the participation of its CEO and CFO, has limited the scope of the design of the
Company’s DC&P and internal controls over financial reporting to exclude controls, policies and procedures and
internal controls over financial reporting of certain special purpose entities (“SPEs”) on which the Company has the
ability to exercise de facto control and which have as a result been consolidated in the Company’s consolidated
financial statements. For the twelve months ended November 30, 2024, these SPEs represent less than 0.2% of the
Company’s current assets, 0.0% of its non-current assets, 0.1% of the Company’s current liabilities, 0.0% of non-
current liabilities, 0.9% of the Company’s revenue and 0.0% of the Company’s net income.
___________________________
Eric Lefebvre, CPA, MBA Chief Executive Officer
___________________________
Renee St-Onge, CPA Chief Financial Officer
Page 42
SUPPLEMENTAL INFORMATION
List of acquisitions
Other banners added through acquisitions include:
Fontaine Santé/Veggirama
1999
100%
18
—
La Crémière
2001
100%
71
3
Croissant Plus
2002
100%
18
2
Cultures
2003
100%
24
—
Thaï Express
May 2004
100%
6
—
Mrs. Vanelli’s
June 2004
100%
103
—
TCBY – Canadian master franchise right
September 2005
100%
91
—
Sushi Shop
September 2006
100%
42
5
Koya Japan
October 2006
100%
24
—
Sushi Shop – existing franchise locations
September 2007
100%
—
15
Tutti Frutti
September 2008
100%
29
—
Taco Time – Canadian master franchise rights
October 2008
100%
117
—
Country Style Food Services Holdings Inc.
May 2009
100%
475
5
Groupe Valentine inc.
September 2010
100%
86
9
Jugo Juice
August 2011
100%
134
2
Mr. Submarine
November 2011
100%
338
—
Koryo Korean BBQ
November 2011
100%
19
1
Mr. Souvlaki
September 2012
100%
14
—
SushiGo
June 2013
100%
3
2
Extreme Pita, PurBlendz and Mucho Burrito
("Extreme Brandz")
September 2013
100%
300 - 34 of which
in the US
5
ThaïZone
September 2013
March 2015
80% +
20%
25 and 3 mobile
restaurants
—
Madisons
July 2014
September 2018
90% +
10%
14
—
Café Dépôt, Muffin Plus, Sushi-Man and
Fabrika
October 2014
100%
88
13
Van
Houtte
Café
Bistros
–
perpetual
franchising license
November 2014
100%
51
1
Manchu Wok, Wasabi Grill & Noodle and
SenseAsian
December 2014
100%
115
17
Big Smoke Burger
September 2015
September 2016
60% +
40%
13
4
Kahala Brands Ltd - Cold Stone Creamery,
Blimpie, Taco Time, Surf City Squeeze, The
Great Steak & Potato Company, NrGize
Lifestyle Café, Samurai Sam’s Teriyaki Grill,
Frullati Café & Bakery, Rollerz, Johnnie`s New
York Pizzeria, Ranch One, America’s Taco
Shop, Cereality, Tasti D-Lite, Planet Smoothie,
Maui Wowi and Pinkberry
July 2016
100%
2,839
40
BF Acquisition Holdings, LLC – Baja Fresh
Mexican Grill and La Salsa Fresh Mexican
Grill
October 2016
100%
167
16
La Diperie
December 2016
March 2019
60%+
5%
5
—
Brand
Acquisition
year
%
ownership
# of franchised
locations
# of corporate
locations
Page 43
Steak Frites St-Paul and Giorgio Ristorante
May 2017
September 2018
83.25% +
9.25%
15
—
The Works Gourmet Burger Bistro
June 2017
100%
23
4
Dagwoods Sandwiches and Salads
September 2017
100%
20
2
The Counter Custom Burgers
December 2017
100%
36
3
Built Custom Burgers
December 2017
100%
5
—
Imvescor Restaurant Group - Baton Rouge,
Pizza Delight, Scores, Toujours Mikes, and
Ben & Florentine
March 2018
100%
253
8
Grabbagreen
March 2018
100%
26
1
Timothy’s World Coffee and Mmmuffins -
perpetual franchising license
April 2018
100%
32
7
SweetFrog Premium Frozen Yogurt
September 2018
100%
331
—
Casa Grecque
December 2018
100%
31
—
South Street Burger
March 2019
100%
24
13
Papa Murphy’s
May 2019
100%
1,301
103
Yuzu Sushi
July 2019
100%
129
—
Allô! Mon Coco
July 2019
100%
40
—
Turtle Jack’s Muskoka Grill, COOP Wicked
Chicken and Frat’s Cucina
December 2019
70%
20
3
Küto Comptoir à Tartares
December 2021
100%
31
—
BBQ Holdings – Famous Dave’s, Village Inn,
Barrio Queen, Granite City, Real Urban
Barbecue, Tahoe Joe’s Steakhouse, Bakers
Square, Craft Republic, Fox & Hound and
Champps
September 2022
100%
198
103
Wetzel's Pretzels
December 2022
100%
328
38
Sauce Pizza and Wine
December 2022
100%
—
13
Brand
Acquisition
year
%
ownership
# of franchised
locations
# of corporate
locations
Definition of non-GAAP measures
The following non-GAAP measures can be found in the analysis of the MD&A:
Adjusted EBITDA
Represents revenue less operating expenses. See reconciliation of adjusted EBITDA to
Income (loss) before taxes on page 14 and 20.
Normalized adjusted
EBITDA
Represents revenue less operating expenses (excluding transaction costs related to
acquisitions and SAP project implementation costs). See reconciliation of normalized
adjusted EBITDA to Income (loss) before taxes on page 14 and 18.
Free cash flows net of
lease payments
Represents the net cash flows: provided by operating activities; used in additions to
property, plant and equipment and intangible assets; provided by proceeds on disposal
of property, plant and equipment; and net of lease payments.
Page 44
Definition of non-GAAP ratios
The following non-GAAP ratios can be found in the analysis of the MD&A:
Adjusted EBITDA as a %
of revenue
Represents adjusted EBITDA divided by revenue.
Normalized adjusted
EBITDA as a % of revenue
Represents normalized adjusted EBITDA divided by revenue.
Free cash flows net of
lease payments per
diluted share
Represents free cash flows net of lease payments divided by diluted shares.
Debt-to-EBITDA
Defined as current and long-term debt divided by EBITDA as defined in the credit
agreement.
Definition of supplementary financial measures
Management discloses the following supplementary financial measures as they have been identified as relevant
metrics to evaluate the performance of the Company.
The following supplementary financial measures can be found in the analysis of the MD&A:
Recurring revenue
streams
Comprised of royalties and other franchising revenues that are earned on a regular
basis in accordance with franchise agreements in place.
Non-controllable
expenses
Comprised of government subsidies that are not directly in control of management and
royalties paid to third parties.
Controllable expenses
Comprised of wages, professional and consulting services and other office expenses,
that are directly in the control of management.
Variance in recurring
revenue and expenses
Comprised of recurring revenue streams, controllable expenses, royalties paid to third
parties, rent (excluding impact of IFRS 16), corporate store revenue and expenses,
food processing, distribution and retail revenue and expenses, promotional fund
revenue and expenses.
Same-store sales
Comparative sales generated by stores that have been open for at least thirteen
months or that have been acquired more than thirteen months ago.
System sales
System sales are sales of all existing restaurants including those that have closed or
have opened during the period, as well as the sales of new concepts acquired from the
closing date of the transaction and forward.
Digital sales
Digital sales are sales made by customers through online ordering platforms.
Page 45
Free cash flows net of lease payments(1) loop to cash flows provided by operating activities
Three months ended
February
May
August
November
February
May
August
November
(In thousands $)
2023
2023
2023
2023
2024
2024
2024
2024
Cash flows provided by
operating activities
33,467
51,860
51,495
47,764
54,178
40,558
66,355
43,716
Additions to property,
plant and equipment
(7,897) (11,030)
(7,962)
(3,235)
(7,011)
(7,265)
(6,375)
(4,036)
Additions to intangible
assets
(120)
(393)
(696)
(836)
(298)
(356)
(808)
(1,577)
Proceeds on disposal of
intangible
—
—
—
—
—
—
—
314
Proceeds on disposal of
property, plant and
equipment
481
246
375
587
564
2,320
801
617
Net lease payments
(10,498) (11,136)
(11,082)
(10,923)
(10,511) (10,936)
(10,702)
(11,666)
Free cash flows net of
lease payments (1)
15,433 29,547
32,130
33,357
36,922 24,321
49,271
27,368
(1)
See section “Definition of non-GAAP measures” found in the Supplemental Information section for definition.
Page 46
System sales (1) to royalties
Sales for the twelve months ended
November 30, 2024
Canada
US & International
(millions of $)
Corporate
Franchised
Total
Corporate
Franchised
Total
TOTAL
System sales (1)
45.3 1,705.3
1,750.6
455.5 3,429.6
3,885.1
5,635.7
Franchise royalty income
as a % of franchise
sales
—
5.27%
—
—
5.10%
—
N/A
Royalties
—
89.8
—
—
174.8
—
264.6
Sales for the twelve months ended
November 30, 2023
Canada
US & International
(millions of $)
Corporate
Franchised
Total
Corporate
Franchised
Total
TOTAL
System sales (1)
32.0 1,752.2
1,784.2
462.0 3,395.0
3,857.0
5,641.2
Franchise royalty income
as a % of franchise
sales
—
5.35%
—
—
5.09%
—
N/A
Royalties
—
93.7
—
—
172.8
—
266.5
Sales for the three months ended
November 30, 2024
Canada
US & International
(millions of $)
Corporate
Franchised
Total
Corporate
Franchised
Total
TOTAL
System sales (1)
13.9
427.7
441.6
111.4
818.9
930.3
1,371.9
Franchise royalty income
as a % of franchise
sales
—
5.28%
—
—
4.95%
—
N/A
Royalties
—
22.6
—
—
40.5
—
63.1
Sales for the three months ended
November 30, 2023
Canada
US & International
(millions of $)
Corporate
Franchised
Total
Corporate
Franchised
Total
TOTAL
System sales (1)
7.6
429.4
437.0
111.4
793.2
904.6
1,341.6
Franchise royalty income
as a % of franchise
sales
—
5.40%
—
—
5.12%
—
N/A
Royalties
—
23.2
—
—
40.6
—
63.8
(1)
See section “Definition of supplementary financial measures” found in the Supplemental Information section for definition.
Page 47
Brands per category
Quick service restaurant
Fast casual
Casual
America’s Taco Shop
Baja Fresh Mexican Grill
Allô! Mon Coco
Blimpie
Big Smoke Burger
Bakers Square
Built Custom Burgers
Grabbagreen
Barrio Queen
Bubble Tea Shop
Küto Comptoir à Tartares
Baton Rouge
Cakes’N’Shakes by La Dip
La Salsa Fresh Mexican Grill
Ben & Florentine
Café Dépôt
Mucho Burrito
Casa Grecque
Chicken Strips and Dips
Pinkberry
Champps
Cold Stone Creamery
Real Urban Barbecue
COOP Wicked Chicken
Country Style
Samurai Sam’s Teriyaki Grill
Craft Republic
Cultures
South Street Burger
Famous Dave’s
Dagwoods Sandwiches and Salads
Sushi Go
Fox & Hound
Extreme Pita
Sushi Shop
Giorgio Ristorante
Frullati Café & Bakery
Sushi-Man
Granite City
Jugo Juice
Thaï Express
Johnnie’s New York Pizzeria
Kahala Coffee Traders
ThaïZone
Madisons New York Grill & Bar
Kim Chi
Timothy’s World Coffee
Pizza Delight
Koryo Korean Barbeque
Tosto Quickfire Pizza Pasta
Sauce Pizza & Wine
Koya Japan
Yuzu Sushi
Scores
La Crémière
Steak Frites St-Paul
La Diperie
Tahoe Joe’s Steakhouse
Manchu Wok
The Counter Custom Burgers
Maui Wowi
The Works Gourmet Burger Bistro
Mr. Souvlaki
Toujours Mikes
Mr. Sub
Turtle Jack’s Muskoka Grill
Muffin Plus
Tutti Frutti
NrGize Lifestyle Café
Village Inn
Papa Murphy’s
Planet Smoothie
Ranch One
Rocky Mountain Chocolate Factory
SenseAsian
Spice Bros
Sukiyaki
Surf City Squeeze
SweetFrog
Taco Time
Tasti D-Lite
TCBY
The Great Steak & Potato Company
Tiki Ming
Valentine
Van Houtte
Ms. Vanellis
Vie & Nam
Villa Madina
Wasabi Grill & Noodle
Wetzel's Pretzels
Page 48
Consolidated financial statements of
MTY Food Group Inc.
November 30, 2024 and 2023
PricewaterhouseCoopers LLP
1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1
T.: +1 514 205 5000, F.: +1 514 876 1502, Fax to mail: ca_montreal_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Independent auditor’s report
To the Shareholders of MTY Food Group Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of MTY Food Group Inc. and its subsidiaries (together, the Company) as at
November 30, 2024 and 2023, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standard Board (IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of income for the years ended November 30, 2024 and 2023;
the consolidated statements of comprehensive income for the years ended November 30, 2024 and
2023;
the consolidated statements of changes in shareholders’ equity for the years ended November 30,
2024 and 2023;
the consolidated statements of financial position as at November 30, 2024 and 2023;
the consolidated statements of cash flows for the years ended November 30, 2024 and 2023; and
the notes to the consolidated financial statements, which include material accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended November 30, 2024. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Impairment assessment of goodwill,
trademarks and franchise and master
franchise rights
Refer to note 3 – Material accounting policies,
note 4 – Critical accounting judgments and key
sources of estimation uncertainty, note 13 –
Intangible assets, note 14 – Goodwill and note 15
– Impairment charge
As at November 30, 2024, the Company had
goodwill, trademarks (intangible assets with
indefinite useful lives), franchise and master
franchise rights (intangible assets with definite
useful lives) balances totaling $693.8 million,
$891.9 million and $178.9 million, respectively.
For the purposes of impairment testing, goodwill
is allocated to the Cash Generating Unit (CGU)
or a group of CGUs (goodwill unit) that are
considered to represent the lowest level within
the group at which the goodwill is monitored for
internal management purposes. For the purpose
of the franchise and master franchise rights and
trademarks, the smallest group of CGUs for which
a reasonable and consistent allocation basis can
be identified is the brand level and constitutes the
lowest level at which an asset or group of assets
has the possibility of generating cash inflows.
Our approach to addressing the matter included
the following procedures, among others:
Evaluated how management determined the
recoverable amounts of the goodwill units and
certain CGUs:
Tested the mathematical accuracy of the
discounted cash flow models.
Tested the reasonableness of the
projected operating cash flows (EBITDA)
applied by management in the discounted
cash flow models considering the past
and current performance of the CGUs.
Professionals with specialized skill and
knowledge in the field of valuation
assisted in testing the appropriateness of
the models used and the reasonableness
of the discount rates applied by
management based on available data of
comparable companies.
Tested the underlying data used in the
discounted cash flow models.
Key audit matter
How our audit addressed the key audit matter
Goodwill and trademarks are tested for
impairment annually as at September 1, or more
frequently when there is an indicator of
impairment. Franchise and master franchise rights
are tested annually in connection with goodwill
and trademarks annual testing, or whenever there
is an indication that the asset may be impaired.
If the recoverable amount of a CGU or a goodwill
unit is estimated to be less than its carrying
amount, the carrying amount of the CGU or
goodwill unit is reduced to its recoverable amount.
An impairment loss is recognized immediately in
profit or loss.
The recoverable amounts of the CGUs or goodwill
unit are estimated based on value in use
calculations using a discounted cash flow model.
The key assumptions used were the projected
operating cash flows (Earnings before income tax,
depreciation and amortization “EBITDA”) as well
as the discount rates.
An impairment charge of $63.1 million, related to
franchise rights and trademarks and goodwill was
recorded during the year.
We considered this a key audit matter due to
(i) the significance of the goodwill, trademarks and
franchise and master franchise rights balances
and (ii) the significant judgment made by
management in determining the recoverable
amount of the goodwill units and CGUs, including
the use of key assumptions. This has resulted in a
high degree of subjectivity and audit effort in
performing audit procedures relating to the key
assumptions. Professionals with specialized skill
and knowledge in the field of valuation assisted us
in performing our procedures.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information,
other than the consolidated financial statements and our auditor’s report thereon, included in the annual
report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not
and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard. When we read the information, other
than the consolidated financial statements and our auditor’s report thereon, included in the annual report,
if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Andrew Popliger.
/s/PricewaterhouseCoopers LLP1
Montréal, Quebec
February 13, 2025
1 CPA auditor, public accountancy permit No. A125677
2024
2023
Notes
$
$
Revenue
26 & 32
1,159,604
1,169,334
Expenses
Operating expenses
27 & 32
896,567
898,588
Depreciation – property, plant and equipment and right-of-use assets
11 & 12
59,949
54,934
Amortization – intangible assets
13
31,870
34,559
Interest on long-term debt
46,515
52,142
Net interest expense on leases
11
11,205
11,402
Impairment charge – right-of-use assets
11
1,259
428
Impairment charge – property, plant and equipment, intangible assets and
goodwill
15
72,947
9,432
1,120,312
1,061,485
Other income (expenses)
Unrealized and realized foreign exchange loss
(21,763)
(2,632)
Interest income
627
1,048
Gain (loss) on de-recognition/lease modification of lease liabilities
407
(702)
Gain (loss) on disposal of property, plant and equipment
194
(1,448)
Revaluation of financial liabilities and derivatives recorded at fair value
24
(596)
3,676
Restructuring
30
(2,487)
—
Gain on extinguishment of debt
131
—
Gain on contingent consideration from a business acquisition
—
2,194
(23,487)
2,136
Income before taxes
15,805
109,985
Income tax (recovery) expense
31
Current
17,933
12,459
Deferred
(26,764)
(6,998)
(8,831)
5,461
Net income
24,636
104,524
Net income attributable to:
Owners
24,170
104,082
Non-controlling interests
466
442
Net income
24,636
104,524
Net income per share
23
Basic
1.01
4.26
Diluted
1.01
4.25
The accompanying notes are an integral part of the consolidated financial statements.
MTY Food Group Inc.
Consolidated statements of income
Years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts)
Page 1
2024
2023
Notes
$
$
Net income
24,636
104,524
Other comprehensive income
Items that may be reclassified subsequently to net income
Translation adjustments
Unrealized gain on translation of foreign operations
37,708
7,644
Cash flow hedges
Change in fair value of financial instruments
24
3,285
9,581
Gain realized on financial instruments transferred to earnings
24
(4,497)
(3,265)
Deferred tax expense on foreign currency translation adjustments
and cash flow hedges
(2,261)
(2,256)
34,235
11,704
Total comprehensive income
58,871
116,228
Total comprehensive income attributable to:
Owners
58,405
115,786
Non-controlling interests
466
442
58,871
116,228
The accompanying notes are an integral part of the consolidated financial statements.
MTY Food Group Inc.
Consolidated statements of comprehensive income
Years ended November 30, 2024 and 2023
(In thousands of Canadian dollars)
Page 2
Reserves
Capital
stock Other
Contributed
surplus
Accumulated
other
comprehensive
(loss) income
(Note 21)
Total
reserves
Retained
earnings
Equity
attributable
to owners
Equity
attributable
to non-
controlling
interests
Total
$
$
$
$
$
$
$
$
$
Adjusted balance as at November 30, 2022
302,781
(850)
4,857
13,766
17,773
402,854
723,408
1,218 724,626
Net income for the year ended November 30, 2023
—
—
—
—
—
104,082
104,082
442 104,524
Other comprehensive income
—
—
—
11,704
11,704
—
11,704
—
11,704
Total comprehensive income
115,786
442 116,228
Shares repurchased and cancelled (Note 20)
(1,002)
—
—
—
—
(3,165)
(4,167)
—
(4,167)
Dividends
—
—
—
—
—
(24,407)
(24,407)
(183) (24,590)
Share-based compensation (Note 22)
—
—
792
—
792
—
792
—
792
Balance as at November 30, 2023
301,779
(850)
5,649
25,470
30,269
479,364
811,412
1,477 812,889
Net income for the year ended November 30, 2024
—
—
—
—
—
24,170
24,170
466
24,636
Other comprehensive income
—
—
—
34,235
34,235
—
34,235
—
34,235
Total comprehensive income
58,405
466
58,871
Shares repurchased and cancelled (Note 20)
(11,186)
—
—
—
—
(30,629)
(41,815)
— (41,815)
Dividends
—
—
—
—
—
(26,811)
(26,811)
(330) (27,141)
Share-based compensation (Note 22)
—
—
646
—
646
—
646
—
646
Balance as at November 30, 2024
290,593
(850)
6,295
59,705
65,150
446,094
801,837
1,613 803,450
The following dividends were declared and paid by the Company:
2024
2023
$
$
$1.118 per common share (2023 – $1.000 per common share)
26,811
24,407
The accompanying notes are an integral part of the consolidated financial statements.
MTY Food Group Inc.
Consolidated statements of changes in shareholders’ equity
Years ended November 30, 2024 and 2023
(In thousands of Canadian dollars)
Page 3
Assets
Current assets
Cash
50,409
58,895
Accounts receivable
8
81,240
82,998
Inventories
9
20,002
20,731
Assets held for sale
10
4,365
2,266
Current portion of loans and other receivables
1,495
924
Current portion of finance lease receivables
11
76,152
80,154
Income taxes receivable
6,757
12,543
Current portion of derivative assets
24
3,674
4,647
Other assets
5,199
3,824
Prepaid expenses and deposits
13,855
14,077
263,148
281,059
Loans and other receivables
2,499
4,465
Finance lease receivables
11
231,652
253,552
Contract cost asset
7,949
7,324
Deferred income taxes
9,701
93
Derivative assets
24
177
3,242
Property, plant and equipment
12
103,916
112,801
Right-of-use assets
11
185,168
181,718
Intangible assets
13
1,088,314
1,116,577
Goodwill
14
693,835
719,187
2,586,359
2,680,018
Liabilities and Shareholders' equity
Liabilities
Current liabilities
Accounts payable and accrued liabilities
134,390
147,557
Provisions
17
3,866
4,656
Gift card and loyalty program liabilities
157,534
147,952
Income taxes payable
5,083
—
Current portion of deferred revenue and deposits
18
15,827
14,918
Current portion of long-term debt
19
2,464
10,428
Current portion of derivative liabilities
24
—
2,626
Current portion of lease liabilities
11
110,910
112,446
Liabilities held for sale
10
2,964
—
433,038
440,583
Long-term debt
19
704,141
756,936
Lease liabilities
11
404,228
422,751
Deferred revenue and deposits
18
57,660
53,025
Deferred income taxes
183,842
193,618
Other liabilities
—
216
1,782,909
1,867,129
2024
2023
Notes
$
$
MTY Food Group Inc.
Consolidated statements of financial position
As at November 30, 2024 and 2023
(In thousands of Canadian dollars)
Page 4
Shareholders' equity
Equity attributable to owners
Capital stock
20
290,593
301,779
Reserves
65,150
30,269
Retained earnings
446,094
479,364
801,837
811,412
Equity attributable to non-controlling interests
1,613
1,477
803,450
812,889
2,586,359
2,680,018
2024
2023
Notes
$
$
Approved by the Board on February 13, 2025
, Director
, Director
The accompanying notes are an integral part of the consolidated financial statements.
MTY Food Group Inc.
Consolidated statements of financial position (continued)
As at November 30, 2024 and 2023
(In thousands of Canadian dollars)
Page 5
Notes
$
$
Operating activities
Net income
24,636
104,524
Adjusting items:
Interest on long-term debt
46,515
52,142
Net interest expense on leases
11
11,205
11,402
Depreciation – property, plant and equipment and right-of-use assets
11 & 12
59,949
54,934
Amortization – intangible assets
13
31,870
34,559
Impairment charge – right-of-use assets
11
1,259
428
Impairment charge – property, plant and equipment, intangible assets and
goodwill
15
72,947
9,432
Unrealized foreign exchange loss
21,763
2,632
(Gain) loss on de-recognition/lease modification of lease liabilities
(407)
702
(Gain) loss on disposal of property, plant and equipment
(194)
1,448
Revaluation of financial liabilities and derivatives recorded at fair value
24
596
(3,676)
Gain on extinguishment of debt
(131)
–
Income tax (recovery) expense
(8,831)
5,461
Share-based compensation
646
792
261,823
274,780
Income taxes paid
(7,433)
(29,015)
Interest paid
(47,009)
(50,287)
Other
(974)
(3,184)
Changes in non-cash working capital items
33
(1,600)
(7,708)
Cash provided by operating activities
204,807
184,586
Investing activities
Considerations on acquisitions
7
—
(300,395)
Cash acquired through acquisitions
7
—
9,349
(Repayment) issuance of loans and other receivables
(427)
1,867
Additions to property, plant and equipment
12
(24,687)
(30,124)
Additions to intangible assets
13
(3,039)
(2,045)
Proceeds on disposal of property, plant and equipment
4,302
1,689
Proceeds on disposal on intangible
314
—
Cash used in investing activities
(23,537)
(319,659)
2024
2023
MTY Food Group Inc.
Consolidated statements of cash flows
Years ended November 30, 2024 and 2023
(In thousands of Canadian dollars)
Page 6
Notes
$
$
Financing activities
Issuance of long-term debt
33
22,785
318,884
Repayment of long-term debt
33
(102,306)
(110,388)
Net lease payments
11
(43,815)
(43,639)
Shares repurchased and cancelled
20
(41,815)
(4,167)
Capitalized financing costs
33
(1,052)
(157)
Proceed on disposal of SOFR fixed interest rate swap
24
6,562
—
Dividends paid to non-controlling shareholders of subsidiaries
(330)
(183)
Dividends paid
(26,811)
(24,407)
Cash (used in) provided by financing activities
(186,782)
135,943
Net (decrease) increase in cash
(5,512)
870
Effect of foreign exchange rate loss on cash
(2,974)
(1,454)
Cash, beginning of period
58,895
59,479
Cash, end of period
50,409
58,895
2024
2023
The accompanying notes are an integral part of the consolidated financial statements.
MTY Food Group Inc.
Consolidated statements of cash flows (continued)
Years ended November 30, 2024 and 2023
(In thousands of Canadian dollars)
Page 7
1.
Description of the business
9
2.
Basis of preparation
9
3.
Material accounting policies
11
4.
Critical accounting judgments and key sources of estimation uncertainty
20
5.
Changes in accounting policies
22
6.
Future accounting changes
22
7.
Business acquisitions
25
8.
Accounts receivable
29
9.
Inventories
30
10.
Assets and liabilities held for sale
30
11.
Leases
30
12.
Property, plant and equipment
34
13.
Intangible assets
35
14.
Goodwill
36
15.
Impairment charge
36
16.
Credit facility
39
17.
Provisions
39
18.
Deferred revenue and deposits
40
19.
Long-term debt
41
20.
Capital stock
41
21.
Accumulated other comprehensive income
42
22.
Stock options
43
23.
Net income per share
44
24.
Financial instruments
44
25.
Capital disclosures
49
26.
Revenue
50
27.
Operating expenses
51
28.
Guarantee
51
29.
Contingent liabilities
51
30.
Restructuring
51
31.
Income taxes
52
32.
Segmented information
55
33.
Statement of cash flows
56
34.
Subsequent event
58
MTY Food Group Inc.
Table of contents
Page 8
1.
Description of the business
MTY Food Group Inc. (the “Company”) is a franchisor in the quick service and casual dining food industry. Its
activities consist of franchising and operating corporate-owned locations as well as the sale of retail products under a
multitude of banners. The Company also operates two distribution centers and two food processing plants, all of
which are located in the province of Quebec.
The Company is incorporated under the Canada Business Corporations Act and is listed on the Toronto Stock
Exchange (“TSX”). The Company’s head office is located at 8210 Trans-Canada Highway, Ville Saint-Laurent,
Quebec.
2.
Basis of preparation
Measurement basis
The Company’s consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standard Board (“IFRS Accounting Standards”).
The financial statements were authorized for issue by the Board of Directors on February 13, 2025.
The material accounting policies set out below have been applied consistently to all periods presented in the
consolidated financial statements, with the exception of:
•
IAS 8 as disclosed in Note 5 to these financial statements; and
•
IAS 12 as disclosed in Note 5 to these financial statements.
The consolidated financial statements (“financial statements”) have been prepared on the historical cost basis except
for certain financial instruments that are measured at revalued amounts or fair values at the end of each reporting
period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes
into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these financial statements is determined on such a basis, except for:
•
leasing transactions, that are within the scope of IFRS 16, Leases; and
•
measurements that have some similarities to fair value but are not fair value, such as net realizable value in
International Accounting Standards (“IAS”) 2, Inventories, or value in use in IAS 36, Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on
the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
•
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset
or liability, either directly or indirectly; and
•
Level 3 inputs are unobservable inputs for the asset or liability.
The financial statements are presented in Canadian dollars, which is the functional currency of the Company, and
tabular amounts are rounded to the nearest thousand ($000) except when otherwise indicated.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including
special purpose entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:
•
has power over the investee;
•
is exposed, or has rights, to variable returns from its involvement with the investee; and
•
has the ability to use its power to affect its returns.
•
Principal subsidiaries are as follows:
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 9
2.
Basis of preparation (continued)
Basis of consolidation (continued)
Percentage of equity interest
Principal subsidiaries
2024
2023
Functional currency
%
%
MTY Franchising Inc.
100
100
Canadian dollar
MTY Franchising USA, Inc.
100
100
US dollar
Kahala Brands Inc.
100
100
US dollar
Papa Murphy’s Holdings Inc.
100
100
US dollar
BBQ Holdings, Inc.
100
100
US dollar
Wetzel’s Pretzels, LLC (Note 7)
100
100
US dollar
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when
the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.
The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting
rights in an investee are sufficient to give it power, including:
◦
the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other
vote-holders;
◦
potential voting rights held by the Company, other vote-holders or other parties;
◦
rights arising from other contractual arrangements; and
◦
any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at
previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the statements of income and other comprehensive income from the date the
Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and
to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into line with the Company's accounting policies.
All intercompany transactions, balances, revenue and expenses are eliminated in full on consolidation.
Functional and presentation currency
These financial statements are presented using the Company’s functional currency, which is the Canadian dollar.
Each entity of the Company determines its own functional currency, and the financial statement items of each entity
are measured using that functional currency. Functional currency is the currency of the primary economic
environment in which the entity operates.
The assets and liabilities of a foreign operation with a functional currency different from that of the Company are
translated into the presentation currency using the exchange rate in effect on the reporting date. Revenue and
expenses are translated into the presentation currency using the average exchange rate for the period. Exchange
differences arising from the translation of a foreign operation are recognized in reserves. Upon complete or partial
disposal of the investment in the foreign operation, the foreign currency translation reserve or a portion of it will be
recognized in the statement of income in other income (charges).
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 10
3.
Material accounting policies
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value. This is calculated as the sum, as of the acquisition date, of the fair
values of the assets transferred by the Company and liabilities incurred by the Company to the former owners of the
acquiree in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value,
except for deferred tax assets or liabilities, which are recognized and measured in accordance with IAS 12, Income
Taxes.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any)
over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the
fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in
profit or loss as a bargain purchase gain.
Non-controlling interest are present ownership interests and entitle their holders to a proportionate share of the
Company’s net assets in the event of liquidation. These may be initially measured either at fair value or at the non-
controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The
choice of measurement basis is made on a transaction-by-transaction basis.
When the consideration transferred by the Company in a business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair
value and included as part of the consideration transferred in a business combination. Changes in the fair value of
the contingent consideration that qualify as “measurement period” adjustments are adjusted retrospectively, with
corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from
additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition
date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is
remeasured at subsequent reporting dates in accordance with IFRS 9 or IAS 37, Provisions, Contingent Liabilities
and Contingent Assets, as appropriate, with the corresponding gain or loss being recognized in profit or loss.
When a business combination is achieved in stages, the Company’s previously held equity interest in the acquiree is
remeasured at fair value at the acquisition date (i.e. the date when the Company obtains control) and the resulting
gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or
loss where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted retrospectively during the measurement period (see above), or additional
assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at
the acquisition date that, if known, would have affected the amounts recognized at that date.Goodwill arising on an
acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated
impairment losses, if any.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 11
3.
Material accounting policies (continued)
Revenue recognition
The Company’s accounting policies are summarized below:
Revenue from franchise locations
i)
Royalties are based either on a percentage of gross sales as reported by the franchisees or on a fixed
monthly fee. They are recognized on an accrual basis in accordance with the substance of the relevant
agreement, as they are earned.
ii)
Initial franchise fees are recognized on a straight-line basis over the term of the franchise agreement as the
performance obligation relating to franchise rights is fulfilled. Amortization begins once the restaurant has
opened.
iii)
Upfront fees related to master license agreements are recognized over the term of the master license
agreements on a straight-line basis.
iv)
Renewal fees and transfer fees are recognized on a straight-line basis over the term of the related franchise
agreement.
v)
Restaurant construction and renovation revenue is recognized when the construction and renovation are
completed.
vi)
The Company earns rent revenue on certain leases it holds and sign rental revenue. Rental income that is
not included in the measurement of the finance lease receivable under IFRS 16 is recognized on a straight-
line basis over the term of the relevant lease.
vii) The Company recognizes breakage income proportionately as each gift card is redeemed, based on the
historical redemption pattern of the gift cards. The Company also charges various program fees to its
franchisees as gift cards are redeemed. Notably, this does not apply to gift card liabilities assumed in a
business acquisition, which are accounted for at fair value at the acquisition date.
viii) The Company receives considerations from certain suppliers. Fees are generally earned based on the
value of purchases during the year. Agreements that contain an initial upfront fee, in addition to ongoing
fees, are recognized on a straight-line basis over the term of the respective agreement. Supplier
contributions are recognized as revenue as they are earned and are recorded in other franchising revenue.
Revenue from food processing, distribution and retail
Food processing, distribution and retail revenue is recognized when the customer takes control of the product,
which usually occurs upon shipment or receipt of the goods by the customer, depending on the specific terms of
the agreement.
Revenue from promotional fund contributions
Promotional fund contributions are based on a percentage of gross sales as reported by the franchisees.
Corresponding promotional fund transfers to the promotional funds are reported separately and included in
accounts payable and accrued liabilities. The Company is not entitled to retain these promotional fund payments
received and is obligated to transfer these funds to be used solely for use in promotional and marketing-related
costs for specific restaurant banners. The Company sometimes charges a fee for the administration of the
promotional funds. The combined amount payable resulting from the promotional fund reserves amounts to a
surplus of $25,421 (November 30, 2023 – surplus of $31,166). These amounts are included in Accounts payable
and accrued liabilities.
Revenue from corporate-owned locations
Revenue from corporate-owned locations is recorded when goods are delivered to customers.
Leasing
The Company enters into leases for franchised and corporately-owned locations, offices, and equipment in the
normal course of business.
The Company as lessee
The Company recognizes lease liabilities with corresponding right-of-use assets, except for short-term leases and
leases of low value assets, which are expensed on a straight-line basis over the lease term. The Company
recognizes depreciation of right-of-use assets and interest on lease liabilities. Under IFRS 16, right-of-use assets
are tested for impairment in accordance with IAS 36.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 12
3.
Material accounting policies (continued)
Leasing (continued)
The Company as lessor
When the Company enters into a sublease arrangement as an intermediate lessor, the Company accounts for the
head lease and the sublease as two separate contracts. The Company is required to classify the sublease as a
finance or operating lease by reference to the right-of-use asset arising from the head lease. For finance
subleases, the Company derecognizes the right-of-use asset relating to the head lease that is transferred to the
sublessee and recognizes a finance lease receivable in the sublease. As the intermediate lessor, the Company
retains the lease liability on the head lease in its consolidated statement of financial position. During the term of
the sublease, the Company recognizes both finance income on the sublease and interest expense on the head
lease.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year and adjustments to prior year provisions. Taxable
profit differs from profit as reported in the consolidated statement of income because of items of income or
expense that are taxable or deductible in other years and items that are never taxable or deductible. The
Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted
by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally
recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilized. Such deferred tax assets and
liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit
nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises
from the initial recognition of goodwill.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only recognized to the
extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the
temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in
other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized
in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the
initial accounting for a business combination, the tax effect is included in the accounting for the business
combination.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 13
3.
Material accounting policies (continued)
Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are
stated in the consolidated statement of financial position at their historical costs less accumulated depreciation
(buildings) and accumulated impairment losses. Cost includes expenditures that are directly attributable to the
acquisition of the asset, including any costs directly attributable to bringing the asset to a working condition for its
intended use.
Equipment, leasehold improvements, rolling stock and computer hardware are stated at cost less accumulated
depreciation and accumulated impairment losses.
Depreciation is recognized so as to write off the cost or valuation of assets (other than land) less their residual values
over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation
methods are reviewed at the end of each year, with the effect of any changes in estimate accounted for on a
prospective basis.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognized in profit or loss.
Depreciation is based on the following terms:
Buildings
Straight-line
25 to 50 years
Equipment
Straight-line
3 to 10 years
Leasehold improvements
Straight-line
Lesser of the term of the lease or useful life
Rolling stock
Straight-line
5 to 7 years
Computer hardware
Straight-line
3 to 7 years
Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated
amortization and accumulated impairment losses, if applicable. Amortization is recognized on a straight-line basis
over their estimated useful lives. The estimated useful lives and amortization methods are reviewed at the end of
each year, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets
with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses, if
applicable.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognized separately from goodwill are initially
recognized at their fair value at the acquisition date.
Subsequent to initial recognition, intangible assets having a finite life acquired in a business combination are
reported at cost less accumulated amortization and accumulated impairment losses, if applicable, on the same
basis as intangible assets that are acquired separately. Intangible assets having an indefinite life are not
amortized and are therefore carried at cost less accumulated impairment losses, if applicable.
Derecognition of intangible assets
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is
derecognized.
The Company reviews each reporting period the amortization periods of its intangible assets with finite useful lives.
The Company also reviews each reporting period the useful lives of its intangible assets with indefinite useful lives to
determine whether events and circumstances continue to support an indefinite useful life assessment for those
assets.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 14
3.
Material accounting policies (continued)
Intangible assets (continued)
The Company currently carries the following intangible assets on its books:
Franchise rights and master franchise rights
The franchise rights and master franchise rights acquired through business combinations were recognized at fair
value, based on the excess earnings method using discounted cash flow models. In determining the fair value of
franchise rights and master franchise rights, the Company uses key assumptions such as projected operating cash
flows, average term life and pre-tax discount rates. The franchise rights and master franchise rights are generally
amortized on a straight-line basis over the terms of the agreements, which typically range between 10 to 20 years.
Trademarks
Trademarks acquired through business combinations were recognized at their fair value at the time of the acquisition,
based on the relief from royalty method using discounted cash flow models, and are not amortized. In determining
the fair value of trademarks, the Company uses key assumptions such as projected system sales, discount rates and
royalty rates. Trademarks were determined to have an indefinite useful life based on their strong brand recognition
and their ability to generate revenue through changing economic conditions with no foreseeable time limit.
Other
Included in other intangible assets is primarily purchased software and liquor licences, which are being amortized
over their expected useful life on a straight-line basis.
Impairment and reversal of impairment of long-lived assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets
to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash
generating unit (CGU) to which the asset belongs. Where a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual CGU, or otherwise they are allocated to the smallest
group of CGUs for which a reasonable and consistent allocation basis can be identified. A majority of the Company’s
intangible assets do not have cash inflows independent of those from other assets and as such are tested within their
respective CGU. For the purpose of the franchise and master franchise rights and trademarks, the smallest group of
CGUs for which a reasonable and consistent allocation basis can be identified is the brand level and constitutes the
lowest level at which an asset or group of assets has the possibility of generating cash inflows.
Intangible assets with indefinite useful lives are tested for impairment at least annually, and whenever there is an
indication that the asset may be impaired. Franchise rights and master franchise rights are tested annually in
connection with goodwill and trademarks annual testing or whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the
estimated projected operating cash flows are discounted to their present value using a post-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which the
estimates of projected operating cash flows (EBITDA) have not been adjusted.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount
of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or
loss. The Company does not reduce the carrying value of an asset below the highest of its fair value less cost of
disposal and its value in use.
At the end of each reporting period, the Company reviews whether there is any indication that the events and
circumstances which led to prior years’ impairment losses for its franchise rights, master franchise rights and
trademarks may no longer exist. If any such indication exists, the Company shall estimate the recoverable amount of
that asset.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior
years. A reversal of an impairment loss is recognized immediately in profit or loss.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 15
3.
Material accounting policies (continued)
Impairment of goodwill
For the purposes of impairment testing, goodwill is allocated to the CGU or a group of CGUs (“goodwill unit”) that are
considered to represent the lowest level within the group at which the goodwill is monitored for internal management
purposes. As of September 1, 2024, the Company reassessed the CGU’s based on a strategic realignment and
merger of business units in the US. With the change in management team and the overall change in decision making
and overall synergies brought from the merger of these units, it was determined that the US Goodwill Unit A and D
would be merged and that US Goodwill Unit B and C would be merged.
As at November 30, 2024, goodwill is allocated as follows:
Goodwill unit description
2024
2023
Canada Goodwill Unit
A group of CGUs comprised of acquired
brands in Canada’s operating segment
A group of CGUs comprised of acquired
brands in Canada’s operating segment
US Goodwill Unit A
A group of CGU units comprised of
acquired
brands
in
the
US
and
international
operating
segment,
excluding
Papa
Murphy’s
and
BBQ
Holdings, Inc. (“BBQ Holdings”)
A group of CGUs comprised of acquired
brands in the US & International operating
segment, excluding Papa Murphy’s, BBQ
Holdings, Inc. (“BBQ Holdings”) and
Wetzel’s Pretzels
US Goodwill Unit B
A group of CGU units comprised of the
BBQ Holdings brands and the Papa
Murphy’s
brand
in
the
US
and
international operating segment
One CGU comprised of Papa Murphy’s
brand in the US & International operating
segment
US Goodwill Unit C
A group of CGUs comprised of the BBQ
Holdings brands in the US & International
operating segment
US Goodwill Unit D
One CGU comprised of Wetzel’s Pretzels
brand in the US & International operating
segment
Goodwill and trademarks are tested for impairment annually as at September 1, or more frequently when there is an
indicator of impairment. If the recoverable amount of the goodwill unit is less than its carrying amount, the impairment
loss reduces the carrying amount of any goodwill allocated to the goodwill unit. Any impairment loss for goodwill is
recognized directly in profit or loss in the consolidated statement of income. An impairment loss recognized for
goodwill is not reversed in subsequent periods.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the
estimated projected operating cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which the
estimates of projected operating cash flows have not been adjusted.
Inventories
Inventories are measured at the lower of cost and net realizable value. Costs of inventories are determined on a first-
in-first-out basis and include acquisition costs, conversion costs and other costs incurred to bring inventories to their
present location and condition. The cost of finished goods includes a pro-rata share of production overhead based on
normal production capacity.
In the normal course of business, the Company enters into contracts for the construction and sale of franchise
locations. The related work in progress inventory includes all direct costs relating to the construction of these
locations and is recorded at the lower of cost and net realizable value.
Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and
costs necessary to make the sale.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 16
3.
Material accounting policies (continued)
Financial instruments
Classification of financial assets
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets (other than financial assets at fair value through profit or loss, or “FVTPL”) are added to or
deducted from the fair value of the financial assets, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets at FVTPL are recognized immediately in profit or loss.
On initial recognition, the Company classifies its financial assets as subsequently measured at either amortized cost,
fair value through other comprehensive income (“FVOCI”) or FVTPL, depending on its business model for managing
the financial assets and the contractual cash flow characteristics of the financial assets.
A financial asset is subsequently measured at amortized cost if the asset is held within a business model whose
objective is to hold assets in order to collect contractual cash flows and the contractual terms of the financial asset
give rise, on specified dates, to cash flows that are solely payments of principal and interest. Unless a financial asset
is designated at FVTPL, a financial asset is subsequently measured at FVOCI if the asset is held within a business
model in order to collect contractual cash flows and sell financial assets and the contractual terms of the instrument
give rise, on specified dates, to cash flows that are solely payments of principal and interest. Financial assets that do
not meet either the contractual cash flow characteristics of solely payments of principal and interest or the business
model of held to collect or held to collect and sell are measured at FVTPL. Financial assets measured at FVTPL and
any subsequent changes therein are recognized in net income.
The Company currently classifies its cash, accounts receivable and loans receivable as assets measured at
amortized cost.
Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified
as at FVTPL.
Impairment of financial assets
The Company uses the simplified expected credit-loss (“ECL”) model for its trade receivables, as permitted by IFRS
9. The simplified approach under IFRS 9 permits the use of the lifetime expected loss provision for all trade
receivables and also incorporates forward-looking information. Lifetime ECL represents the ECL that will result from
all probable default events over the expected life of a financial instrument.
For its loans receivable balance carried at amortized cost, the Company has applied the general ECL model. Unlike
the simplified approach, the general ECL model depends on whether there has been a significant increase in credit
risk. The Company considers the probability of default upon initial recognition of the financial asset and whether
there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess
whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the
asset as at the reporting date with the risk of default as at the date of initial recognition of the financial asset.
When credit risk is assessed as being low or when there has not been a significant increase in credit risk since initial
recognition, the ECL is based on a 12-month ECL which represents the portion of lifetime ECL expected to occur
from default events that are possible within 12 months after the reporting date. If a significant increase in credit risk
has occurred throughout a reporting period, impairment is based on lifetime ECL.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 17
3.
Material accounting policies (continued)
Derecognition of financial assets
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another entity. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized
in other comprehensive income and accumulated in equity is recognized in profit or loss.
Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged,
cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the
consideration paid and payable is recognized in profit or loss.
Classification of financial liabilities
Financial liabilities are initially recorded at fair value and subsequently measured at amortized cost using the
effective interest rate method with gains and losses recognized in net income in the period that the liability is
derecognized, except for financial liabilities classified as FVTPL. These financial liabilities, including derivative
liabilities and certain obligations, are subsequently measured at fair value with changes in fair value recorded in net
income in the period in which they arise. Financial liabilities designated as FVTPL are recorded at fair value with
changes in fair value attributable to changes in the Company’s own credit risk recorded in net income.
Financial liabilities classification:
Accounts payable and accrued liabilities
Amortized cost
Revolving credit facility
Amortized cost
Non-interest-bearing contract cancellation fees and
holdbacks
Amortized cost
Contingent consideration related to the acquisition
of Küto Comptoir à Tartares
FVTPL
Contingent consideration related to the 70% interest
in 11554891 Canada Inc.
FVTPL
Non-controlling interest buyback obligation in
9974644 Canada Inc.
FVTPL
Obligation to repurchase 11554891 Canada Inc.
partner
FVTPL
Derivative financial instruments
FVTPL
Derivative financial instruments designated as cash
flow hedges
FVTPL subject to hedge
accounting requirements
Hedging and derivative financial instruments
The Company applies general hedge accounting requirements of IFRS 9, Financial Instruments on the designated
financial instruments.
Fixed interest rate swaps
Periodically, the Company uses fixed interest rate swaps to manage the interest rate risk associated with its
borrowings from its credit facility. Where the general hedge accounting requirements are met, the Company
designates those fixed interest rate swaps as a cash flow hedge of the interest from its credit facility. Accordingly,
changes in the fair value of the derivative financial instruments, which are included in Current portion of derivative
assets and Derivative assets, are recognized in Other comprehensive income. Realized gains and losses in
Accumulated other comprehensive income are reclassified to Interest on long-term debt over the same periods as
the interest expense on the long-term debt is recognized in earnings.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 18
3.
Material accounting policies (continued)
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
The Company makes assumptions and estimations based on its current knowledge of future disbursements it will
have to make in connection with various events that have occurred in the past and for which the amount to be
disbursed and the timing of such disbursement are uncertain at the date of producing its financial statements. This
includes provisions for onerous contracts, litigations and disputes and contingencies. The amount recognized as a
provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting
period, taking into account the risks and uncertainties surrounding the obligation. Provisions are measured at
management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period,
and are discounted to present value when the effect is material. This is recorded in Cost of goods sold and rent (Note
27) on the consolidated statement of income.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third
party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
Litigation, disputes and closed stores
Provisions for the expected cost of litigation, disputes and the cost of settling leases for closed stores, with the
exception of lease liabilities already recorded pursuant to IFRS 16, are recognized when it becomes probable the
Company will be required to settle the obligation, at management’s best estimate of the expenditure required to settle
the Company’s obligation.
Contingent liabilities acquired in a business combination
Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At
the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that
would be recognized in accordance with IAS 37 and the amount initially recognized less cumulative amortization
recognized, if any.
Gift card and loyalty program liabilities
Gift card liability represents liabilities related to unused balances on reloadable payment cards. Loyalty program
liabilities represent the dollar value of the loyalty points earned and unused by customers.
The Company’s various franchised and corporate-owned locations, in addition to third-party companies, sell gift
cards to be redeemed at the Company’s corporate and franchised locations for food and beverages only. Proceeds
from the sale of gift cards are included in gift card liability until redeemed by the gift cardholder as a method of
payment for food and beverage purchases.
Due to the inherent nature of gift cards, it is not possible for the Company to determine what portion of the gift card
liability will be redeemed in the next 12 months and, therefore, the entire unredeemed gift card liability is considered
to be a current liability.
Management is required to make certain assumptions in both the prorated recognition based on redemption pattern
and remoteness recognition of gift card breakage. The significant estimates are breakage rate and the redemption
patterns.
Deferred revenue and deposits
The Company has deferred revenue and deposits for amounts received for which the service or sale of goods
associated with these revenues have not yet been rendered. These are comprised mainly of franchise fee deposits,
unearned rent, and supplier contributions. Revenues on these are recorded once the service or contract terms have
been met and the services or goods have been delivered. The Company recognizes certain supplier contribution
revenues based on estimated considerations to be received from suppliers. These estimates are based on historical
patterns of purchase and earned revenues.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 19
3.
Material accounting policies (continued)
Net income per share
Basic earnings per share is calculated by dividing:
•
the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary
shares, by
•
the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
•
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares, and
•
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
Operating segments
An operating segment is a distinguishable component of the Company that engages in business activities from which
it may earn revenue and incur expenses, including revenue and expenses that relate to transactions with any of the
Company’s other components, and for which separate financial information is available. Segment disclosures are
provided for the Company’s operating segments (Note 32). The operating segments are determined based on the
Company’s management and internal reporting structure. All operating segments’ operating results are regularly
reviewed by the Chief Operating Officers (“COOs”) to make decisions on resources to be allocated to the segment
and to assess its performance.
4.
Critical accounting judgments and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in Note 3, management is required to
make judgments and to make estimates and assumptions about the carrying amounts of assets and liabilities that
are not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
The following are the critical judgments, apart from those involving estimations, that management has made in the
process of applying the Company’s accounting policies and that have the most significant effect on the amounts
recognized in the financial statements.
Impairment of long-lived assets
The Company assesses whether there are any indicators of impairment for all long-lived assets at each reporting
period date. In addition, management is required to use judgment in determining the grouping of assets to identify
a CGU; the determination is done based on management’s best estimation of what constitutes the lowest level at
which an asset or group of assets has the possibility of generating cash inflows.
Impairment of property, plant and equipment and right-of-use assets
The Company performs an impairment test of its property, plant and equipment and right-of-use assets when
there is an indicator of impairment. The recoverable amounts of the Company’s corporate store assets are
generally estimated based on fair value less cost of disposal as this was determined to be higher than their value
in use. The fair value less cost of disposal of corporate stores is generally determined by estimating the
liquidation value of the restaurant equipment and any costs associated with exiting the lease.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 20
4.
Critical accounting judgments and key sources of estimation uncertainty (continued)
Impairment of long-lived assets (continued)
Impairment of property, plant and equipment and right-of-use assets (continued)
During the years ended November 30, 2024 and 2023 the Company recognized impairment charges on its
property, plant and equipment (Note 15). The total impairment on property, plant and equipment of $10,131 (2023
– $233) represents a write-down of the carrying value of the leasehold improvements, equipment, computer
hardware, and rolling stock to their fair value less cost of disposal, which was higher than their value in use.
During the years ended November 30, 2024 and 2023, the Company also recognized impairment charges on its
right-of-use assets (Note 11) of $1,259 and $428, respectively.
Business combinations
For business combinations, the Company must make assumptions and estimates to determine the purchase
price accounting of the business being acquired. To do so, the Company must determine, as of the acquisition
date, the fair value of the identifiable assets acquired, including such intangible assets as franchise rights and
master franchise rights, trademarks, step-in rights and liabilities assumed. Among other things, the determination
of these fair market values involves the use of key assumptions such as projected system sales, operating cash
flows, discount rates, royalty rates and average term life. Goodwill is measured as the excess of the fair value of
the consideration transferred including the recognized amount of any non-controlling interest in the acquiree over
the net recognized amount of the identifiable assets acquired and liabilities assumed, all measured at the
acquisition date. These assumptions and estimates have an impact on the asset and liability amounts recorded in
the statement of financial position on the acquisition date. In addition, the estimated useful lives of the acquired
amortizable assets, the identification of intangible assets and the determination of the indefinite or finite useful
lives of intangible assets acquired will have an impact on the Company’s future profit or loss.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the
end of the year ended November 30, 2024, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
Impairment of long-lived assets
The Company uses judgment in determining the grouping of assets to identify its CGUs for purposes of testing for
impairment of goodwill, trademarks and franchise rights.
In testing for impairment, goodwill acquired in a business combination is allocated to the CGUs that are expected
to benefit from the synergies of the business combination. In testing for impairment, trademarks and franchise
rights are allocated to the CGUs to which they relate. Furthermore, at each reporting period, judgment is used in
determining whether there has been an indication of impairment, which would require the completion of a
quarterly impairment test, in addition to the annual requirement.
Impairment of franchise rights and trademarks
The Company performs at least annually an impairment test of its trademarks. The recoverable amounts of the
Company’s assets are generally estimated based on value in use calculations using a discounted cash flow
model as this was determined to be higher than fair value less cost of disposal.
Discount rates are based on pre-tax rates that reflect the current market assessments, taking the time value of
money and the risks specific to the CGU into account.
During the year ended November 30, 2024 and 2023, the Company recognized impairment charges of $22,292
(2023 – $9,199) on its franchise rights, trademarks, and other intangibles (Note 15) representing a write-down of
the carrying value to the recoverable amount. The fair value was determined using key assumptions such as
discount rates, and projected operating cash flows (Earnings before income tax, depreciation and amortization
"EBITDA"). The fair value is classified as level 3 in the fair value hierarchy.
These calculations take into account the Company’s best estimate of projected operating cash flows. Projected
operating cash flows are estimated based on a multiyear extrapolation of the most recent historical actual results
or budgets and a terminal value calculated by discounting the final year in perpetuity.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 21
4.
Critical accounting judgments and key sources of estimation uncertainty (continued)
Key sources of estimation uncertainty (continued)
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the recoverable amount in use of the goodwill
unit to which goodwill has been allocated. The value in use calculation requires management to estimate the
projected operating cash flows expected to arise from the goodwill unit and a suitable discount rate in order to
calculate present value.
During the years ended November 30, 2024, the Company recognized impairment charges of $40,524 on its
goodwill (Note 15). During the year ended November 30, 2023, no impairment charge on goodwill was required.
5.
Changes in accounting policies
IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors
In February 2021, the International Accounting Standard Board (“IASB”) issued Definition of Accounting Estimates
(Amendments to IAS 8) with amendments that are intended to help entities to distinguish between accounting
policies and accounting estimates. The changes to IAS 8 focus entirely on accounting estimates and clarify that: the
definition of a change in accounting estimates is replaced with a new definition. Entities develop accounting
estimates if accounting policies require items in financial statements to be measured in a way that involves
measurement uncertainty. A change in accounting estimate that results from new information or new developments is
not the correction of an error; and a change in an accounting estimate may affect only the current period’s profit or
loss, or the profit or loss of both the current period and future periods.
The amendments to IAS 8 were adopted effective December 1, 2023 and resulted in no significant adjustment.
IAS 12, Income Taxes
In May 2021, the IASB published Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction
(Amendments to IAS 12) that clarifies how companies account for deferred tax on transactions such as leases and
decommissioning obligations. The main change is an exemption from the initial recognition exemption, which does
not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that
result in the recognition of equal deferred tax assets and liabilities.
The amendments to IAS 12 were adopted effective December 1, 2023 and resulted in no significant adjustment.
6.
Future accounting changes
A number of new standards, interpretations and amendments to existing standards were issued by the IASB that are
not yet effective for the year ended November 30, 2024 and have not been applied in preparing these financial
statements.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 22
6.
Future accounting changes (continued)
The following amendments may have a material impact on the financial statements of the Company:
Standard
Issue date
Effective date for
the Company
Impact
IAS 1
Presentation of Financial Statements
January 2020,
July 2020, February
2021 & October
2022
December 1, 2024
In assessment
IFRS 16
Leases
September 2022
December 1, 2024
In assessment
IAS 21
The Effects of Changes in Foreign
Exchange Rates
August 2023
December 1, 2025
In assessment
IFRS 18
Presentation and Disclosure of Financial
Statements
April 2024
December 1, 2028
In assessment
IFRS 9 &
IFRS 7
Financial Instruments &
Financial Instruments and Disclosures
May 2024
December 1, 2026
In assessment
IAS 1, Presentation of Financial Statements
In January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
providing a more general approach to the classification of liabilities under IAS 1 based on the contractual
arrangements in place at the reporting date. The amendments in Classification of Liabilities as Current or Non-
current (Amendments to IAS 1) affect only the presentation of liabilities in the statement of financial position, not the
amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose
about those items.
In July 2020, the IASB published Classification of Liabilities as Current or Non-current – Deferral of Effective Date
(Amendment to IAS 1) deferring the effective date of the January 2020 amendments to IAS 1 by one year.
In February 2021, the IASB issued Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2) with amendments that are intended to help preparers in deciding which accounting policies to disclose
in their financial statements. An entity is now required to disclose its material accounting policy information instead of
its significant accounting policies and several paragraphs are added to IAS 1 to explain how an entity can identify
material accounting policy information and to give examples of when accounting policy information is likely to be
material. The amendments also clarify that: accounting policy information may be material because of its nature,
even if the related amounts are immaterial; accounting policy information is material if users of an entity’s financial
statements would need it to understand other material information in the financial statements; and if an entity
discloses immaterial accounting policy information, such information shall not obscure material accounting policy
information.
In October 2022, the IASB published Non-current Liabilities with Covenants (Amendments to IAS 1) to clarify how
conditions with which an entity must comply within twelve months after the reporting period affect the classification of
a liability. The amendments modify the requirements introduced by Classification of Liabilities as Current or Non-
current on how an entity classifies debt and other financial liabilities as current or non-current in particular
circumstances: only covenants with which an entity is required to comply on or before the reporting date affect the
classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that
enables users of financial statements to understand the risk that non-current liabilities with covenants could become
repayable within twelve months. The amendments also defer the effective date of the 2020 amendments to January
1, 2024.
The amendments to IAS 1 are effective for annual reporting periods beginning on or after January 1, 2024. Earlier
application is permitted. The Company will adopt the amendments on December 1, 2024.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 23
6.
Future accounting changes (continued)
IFRS 16, Leases
In September 2022, the IASB issued Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) with
amendments that clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the
requirements in IFRS 15, Revenue from Contracts with Customers, to be accounted for as a sale. The amendments
require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not
recognize any amount of the gain or loss that relates to the right of use it retains. The new requirements do not
prevent a seller-lessee from recognizing in profit or loss any gain or loss relating to the partial or full termination of a
lease. The amendments to IFRS 16 are effective for annual reporting periods beginning on or after January 1, 2024.
Earlier application is permitted. The Company will adopt the amendments on December 1, 2024.
IAS 21, The Effects of Changes in Foreign Exchange Rates
In August 2023, the IASB published Lack of Exchangeability (Amendments to IAS 21). The amendments specify
when a currency is exchangeable into another currency and when it is not, specify how an entity determines the
exchange rate to apply when a currency is not exchangeable, and require the disclosure of additional information
when a currency is not exchangeable. The amendments to IAS 21 are effective for annual reporting periods
beginning on or after January 1, 2025. Earlier application is permitted. The Company will adopt the amendments on
December 1, 2025.
IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the IASB published a new standard: IFRS 18 Presentation and Disclosure in Financial Statements
which replaces IAS 1 Presentation of Financial Statements. New requirements have been introduced for presentation
in the statement of profit and loss, increased disclosure of management defined performance measures and defining
the way information is aggregated and disaggregated in the financial statements. The application of IFRS 18 is
effective for annual reporting beginning on or after January 1, 2027. Earlier application is permitted. The Company
will adopt the amendments on December 1, 2027.
IFRS 9 Financial Instruments and IFRS 7 Financial Instrument Disclosures
In May 2024, the IASB published Amendments to the Classification and Measurement of Financial Instruments
(Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures). The amendments to
IFRS 9 clarify de-recognition and classification of specific financial assets and liabilities respectively while the
amendments to IFRS 7 clarify the disclosure requirements for investments in equity instruments designated at fair
value through other comprehensive income and contractual terms that could change the timing or amount of
contractual cash flows on the occurrence or non-occurrence of a contingent event. The amendments to IFRS 9 and
IFRS 7 are effective for annual reporting beginning on or after January 1, 2026. Earlier application is permitted. The
Company will adopt the amendments on December 1, 2026.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 24
7.
Business acquisitions
I. Sauce Pizza and Wine (2023)
On December 15, 2022, one of the Company’s wholly owned subsidiaries completed the acquisition of the assets of
Sauce Pizza and Wine, an operator of fast casual restaurants operating in the state of Arizona in the US. As of the
date of the acquisition, Sauce Pizza and Wine was operating 13 corporate-owned restaurants. The purpose of the
transaction was to diversify the Company’s range of offerings in the US.
The transaction included a purchase price totaling $15,228 (US$11,165) and a holdback on acquisition of $1,089
(US$798), as detailed below. The resulting aggregate cash outflow in connection with the Sauce Pizza and Wine
acquisition was $13,539 (US$9,926).
2023
$
Consideration paid:
Purchase price
15,228
Working capital
(547)
Cash
31
Discount on non-interest-bearing holdback
(53)
Total consideration
14,659
Cash
(31)
Holdback
(1,089)
Net cash outflow
13,539
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 25
7.
Business acquisitions (continued)
I. Sauce Pizza and Wine (2023) (continued)
The final purchase price allocation is as follows:
2023
$
Net assets acquired:
Current assets
Cash
31
Inventories
250
Prepaid expenses and deposits
255
536
Property, plant and equipment
5,212
Right-of-use assets
9,913
Intangible assets – Trademark
5,647
Goodwill (1)
4,989
26,297
Current liabilities
Accounts payable and accrued liabilities
107
Gift card and loyalty program liabilities
1,481
Current portion of lease liabilities
1,661
3,249
Lease liabilities
8,389
11,638
Net purchase price
14,659
(1)
Goodwill is deductible for tax purposes.
Total expenses incurred related to acquisition costs amounted to $215.
From December 15, 2022 to November 30, 2023, the Company’s consolidated statement of income included revenue
of $32,927 and net income of $1,298 attributable to Sauce Pizza and Wine.
The acquisition of Sauce Pizza and Wine would not have had a significant impact on the Company’s revenue and net
income for the year ended November 30, 2023 if the acquisition had occurred on December 1, 2022.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 26
7.
Business acquisitions (continued)
II.
Wetzel’s Pretzels (2023)
On December 8, 2022, one of the Company’s wholly owned subsidiaries completed the acquisition of all of the
issued and outstanding shares of COP WP Parent, Inc. (“Wetzel’s Pretzels”), a franchisor and operator of quick
service restaurants operating in the snack category across 25 states in the US, as well as in Canada and Panama.
As of the date of the acquisition, Wetzel’s Pretzels was operating 328 franchised and 38 corporate-owned
restaurants. The purpose of the transaction was to diversify the Company’s range of offerings in the US.
The transaction included a purchase price totaling $285,478 (US$210,189), as detailed below. The resulting
aggregate cash outflow in connection with the Wetzel’s Pretzels acquisition was $276,160 (US$203,328). The
transaction consideration also includes US$3,000 held in escrow contingent on the execution of several lease
contracts within 12 months of the acquisition. As at December 8, 2023, only a portion of the contracts were
executed and therefore $2,194 (US$1,600) was released from escrow and recorded as a Gain on contingent
consideration from a business acquisition in the consolidated statement of income.
2023
$
Consideration paid:
Purchase price
285,478
Total consideration
285,478
Cash
(9,318)
Net cash outflow
276,160
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 27
7.
Business acquisitions (continued)
II.
Wetzel’s Pretzels (2023) (continued)
The final purchase price allocation is as follows:
2023
$
Net assets acquired:
Current assets
Cash
9,318
Accounts receivable
1,364
Inventories
360
Current portion of loans and other receivables
61
Current portion of finance lease receivables
824
Income taxes receivable
1,863
Prepaid expenses and deposits
1,028
14,818
Loans and other receivables
807
Finance lease receivables
10,389
Property, plant and equipment
6,903
Right-of-use assets
18,440
Intangible assets – Franchise rights
48,352
Intangible assets – Trademark
97,383
Goodwill (1)
161,142
358,234
Current liabilities
Accounts payable and accrued liabilities
8,721
Income taxes payable
743
Current portion of deferred revenue and deposits
91
Current portion of lease liabilities
1,271
10,826
Lease liabilities
28,515
Deferred revenue and deposits
1,275
Deferred income taxes
32,140
72,756
Net purchase price
285,478
(1)
Goodwill is partially deductible for tax purposes.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 28
7.
Business acquisitions (continued)
II.
Wetzel’s Pretzels (2023) (continued)
Total expenses incurred related to acquisition costs amounted to $433.
From December 8, 2022 to November 30, 2023, the Company’s consolidated statement of income included revenue
of $77,005 and net income of $15,488 attributable to Wetzel’s Pretzels.
The following pro forma information for the year ended November 30, 2023 represents the Company’s results of
operations as if the acquisition of Wetzel’s Pretzels had occurred on December 1, 2022. This pro forma information
does not purport to be indicative of the results that would have occurred for the period presented or that may be
expected in the future.
2023
$
Revenue
1,171,325
Net income
105,867
8.
Accounts receivable
The following table provides details on trade accounts receivable not past due, past due and the related credit loss
allowance.
2024
2023
$
$
Total accounts receivable
89,297
91,861
Less: Allowance for credit losses
8,057
8,863
Total accounts receivable, net
81,240
82,998
Of which:
Not past due
64,045
71,121
Past due for more than one day but no more than 30 days
4,439
2,118
Past due for more than 31 days but no more than 60 days
2,097
2,175
Past due for more than 61 days
10,659
7,584
Total accounts receivable, net
81,240
82,998
2024
2023
$
$
Allowance for credit losses, beginning of year
8,863
7,545
Increase to current year provision
230
3,399
Addition through business acquisition
—
54
Reversal of amounts previously written off
65
(9)
Write-offs
(1,375)
(1,999)
Impact of foreign exchange
274
(127)
Allowance for credit losses, end of year
8,057
8,863
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 29
9.
Inventories
2024
2023
$
$
Raw materials
2,257
3,262
Work in progress
1,661
1,761
Finished goods and supplies
7,740
8,248
Food and beverage
8,344
7,460
Total inventories
20,002
20,731
Inventories are presented net of a $26 allowance for obsolescence (November 30, 2023 – $26). All of the inventories
are expected to be sold within the next 12 months.
Inventories expensed during the year ended November 30, 2024 were $259,532 (2023 – $271,014).
10.
Assets and liabilities held for sale
During the reporting period, the Company designated certain assets and liabilities related to a casual dining brand
as held for sale. This decision reflects management's formal commitment to a plan to divest these assets, which
include both Company-owned stores and associated intangible assets. Consistent with applicable accounting
standards, the assets are measured at the lower of their carrying amount or fair value less costs to sell. No
depreciation or amortization has been recorded on these assets while classified as held for sale.
The assets reclassified as held for sale primarily consist of inventories, prepaid expenses, deposits, right-of-use
assets (Note 11), property plant, and equipment (Note 12) and intangible assets (Note 13). The liabilities included in
the carrying value are the gift card liability and the lease liability (Note 11). This reclassification on November 30,
2024 led to an impairment charge of $1,083 to right-of-use-asset, $689 to property, plant and equipment and $1,485
to trademarks in the US Goodwill Unit B CGU (Note 15). The total carrying amount reclassified as held for sale is
comprised of assets of $4,365 (2023 – $2,266) and liabilities of $2,964 (2023 – nil), resulting in a net amount of
$1,401 (2023 – nil).
In November 2023 assets held for sale comprised of one locations leasehold improvement, land and building that
were transferred from property, plant and equipment. They did not meet the definition of assets held for sale at the
acquisition date of BBQ Holdings.
11.
Leases
Leases as a lessee relate primarily to leases of premises in relation to the Company’s operations and its corporate
store locations. For many of the leases related to its franchised locations, the Company is on the head lease of the
premises and a corresponding sublease contract was entered into between the Company and its unrelated
franchisee. The sublease contract is substantially based on the same terms and conditions as the head lease.
Leases and subleases typically have terms ranging between five and 10 years at inception. The Company has
options to purchase the premises on some of its leases.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 30
11.
Leases (continued)
Right-of-use assets
The following table provides the net carrying amounts of the right-of-use assets by class of underlying asset and the
changes in the years ended November 30, 2024 and 2023:
Offices,
corporate and
dark stores
Store locations
subject to
operating
subleases
Other
Total
Balance as at November 30, 2022
146,817
11,677
1,321
159,815
Additions
17,317
—
219
17,536
Additions through business acquisitions (Note 7)
28,353
—
—
28,353
Depreciation expense
(34,477)
(1,526)
(655)
(36,658)
Impairment charge
(428)
—
—
(428)
De-recognition/lease modification of lease
liabilities
12,644
282
(5)
12,921
Foreign exchange
611
14
1
626
Other
(447)
—
—
(447)
Balance as at November 30, 2023
170,390
10,447
881
181,718
Additions
25,251
—
121
25,372
Reclassified as assets held for sale (Note 10)
(1,278)
—
—
(1,278)
Depreciation expense
(35,228)
(1,068)
(410)
(36,706)
Impairment charge
(1,259)
—
—
(1,259)
De-recognition/lease modification of lease
liabilities
15,260
(2,791)
(56)
12,413
Foreign exchange
4,826
72
10
4,908
Balance as at November 30, 2024
177,962
6,660
546
185,168
Finance lease receivables
The following table provides the carrying amount of the finance lease receivables and the changes in the years
ended November 30, 2024 and 2023:
2024
2023
$
$
Finance lease receivables, beginning of year
333,706
338,776
Additions
17,126
22,205
Additions through business acquisitions (Note 7)
—
11,213
Lease renewals and modifications
46,505
54,690
Lease terminations
(12,148)
(7,810)
Other adjustments
(255)
(76)
Interest income
12,646
11,438
Receipts
(92,972)
(97,236)
Foreign exchange
3,196
506
Finance lease receivables, end of year
307,804
333,706
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 31
11.
Leases (continued)
Finance lease receivables (continued)
Recorded in the consolidated statements of financial position as follows:
2024
2023
$
$
Current portion
76,152
80,154
Long-term portion
231,652
253,552
307,804
333,706
Lease liabilities
The following table provides the carrying amount of the lease liabilities and the changes in the years ended
November 30, 2024 and 2023:
2024
2023
$
$
Lease liabilities, beginning of year
535,197
514,923
Additions
27,572
25,221
Additions through business acquisitions (Note 7)
—
39,836
Reclassified as assets held for sale (Note 10)
(2,589)
—
Lease renewals and modifications
68,989
80,331
Lease terminations
(7,824)
(6,699)
Other adjustments
(1,770)
(1,547)
Interest expense
23,851
22,840
Payments
(136,787)
(140,875)
Foreign exchange
8,499
1,167
Lease liabilities, end of year
515,138
535,197
Recorded in the consolidated statements of financial position as follows:
2024
2023
$
$
Current portion
110,910
112,446
Long-term portion
404,228
422,751
515,138
535,197
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 32
11.
Leases (continued)
Maturity analysis
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be
paid or received after November 30, 2024:
Lease
liabilities
Finance lease
receivables
Operating
subleases
$
$
$
2025
134,383
88,521
1,184
2026
116,516
74,915
610
2027
97,341
59,886
402
2028
76,241
44,138
257
2029
54,994
28,915
235
Thereafter
118,221
50,498
—
Total undiscounted lease payments
597,696
346,873
2,688
Unguaranteed residual values
—
1,759
—
Gross investment in the lease
—
348,632
—
Less: Unearned finance income
—
(37,177)
—
Present value of minimum lease payment receivables
—
311,455
—
Allowance for credit losses
—
(3,651)
—
Current portion of finance lease receivables
—
(76,152)
—
Finance lease receivables
—
231,652
—
The Company has recognized net rent expense of $21,744 (2023 – $19,108) related to its short-term leases, leases
of low-value assets, and variable lease payments.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 33
12.
Property, plant and equipment
Cost
Land
Buildings
Leasehold
improve-
ments Equipment
Computer
hardware
Rolling
stock
Total
$
$
$
$
$
$
$
Balance as at November 30, 2022
7,323
9,884
45,537
40,060
9,138
639
112,581
Additions
—
93
13,476
14,984
1,534
37
30,124
Disposals
—
(515)
(1,442)
(2,487)
(408)
(185)
(5,037)
Impairment (Note 15)
—
—
(21)
(193)
(19)
—
(233)
Foreign exchange
13
6
354
216
33
—
622
Additions through business
acquisitions (Note 7)
—
—
7,535
4,771
(191)
—
12,115
Balance as at November 30, 2023
7,336
9,468
65,439
57,351
10,087
491
150,172
Additions
—
403
10,276
11,620
2,333
55
24,687
Reclassified as assets held for
sale (Note 10)
—
—
(463)
(673)
(32)
—
(1,168)
Disposals
—
(123)
(2,157)
(4,332)
(1,695)
(199)
(8,506)
Impairment (Note 15)
—
—
(6,257)
(3,524)
(340)
(10)
(10,131)
Foreign exchange
138
141
1,770
1,363
241
1
3,654
Balance as at November 30, 2024
7,474
9,889
68,608
61,805
10,594
338
158,708
Accumulated depreciation
Land
Buildings
Leasehold
improve-
ments Equipment
Computer
hardware
Rolling
stock
Total
$
$
$
$
$
$
$
Balance as at November 30, 2022
—
2,092
6,963
9,399
3,674
372
22,500
Eliminated on disposal of assets
—
(290)
(1,197)
(1,711)
(249)
(137)
(3,584)
Foreign exchange
—
2
85
70
22
—
179
Depreciation expense
—
337
8,618
7,066
2,168
87
18,276
Balance as at November 30, 2023
—
2,141
14,469
14,824
5,615
322
37,371
Eliminated on disposal of assets
—
(123)
(1,497)
(3,145)
(1,664)
(179)
(6,608)
Foreign exchange
—
14
692
356
79
—
1,141
Depreciation expense
—
463
13,365
8,061
1,298
56
23,243
Reclassified as assets held for
sale (Note 10)
—
—
(141)
(204)
(10)
—
(355)
Balance as at November 30, 2024
—
2,495
26,888
19,892
5,318
199
54,792
Carrying amounts
Land
Buildings
Leasehold
improve-
ments Equipment
Computer
hardware
Rolling
stock
Total
$
$
$
$
$
$
$
November 30, 2023
7,336
7,327
50,970
42,527
4,472
169
112,801
November 30, 2024
7,474
7,394
41,720
41,913
5,276
139
103,916
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 34
13.
Intangible assets
Cost
Franchise
and master
franchise
rights Trademarks
Customer
lists
Other (1)
Total
$
$
$
$
$
Balance as at November 30, 2022
386,463
794,636
13,698
15,823 1,210,620
Additions
—
—
—
2,045
2,045
Additions through business
acquisitions (Note 7)
48,352
103,030
—
—
151,382
Disposals
—
—
—
(303)
(303)
Foreign exchange
1,464
3,082
48
4,594
Impairment (Note 15)
(1,292)
(7,907)
—
—
(9,199)
Balance as at November 30, 2023
434,987
892,841
13,698
17,613 1,359,139
Additions
379
—
—
2,660
3,039
Reclassified as assets held for sale
(Note 10)
—
(1,751)
—
(245)
(1,996)
Disposals
—
—
—
(314)
(314)
Foreign exchange
9,149
20,608
—
285
30,042
Impairment (Note 15)
(2,284)
(19,747)
—
(261)
(22,292)
Balance as at November 30, 2024
442,231
891,951
13,698
19,738 1,367,618
Accumulated amortization
Franchise
and master
franchise
rights Trademarks
Customer
lists
Other (1)
Total
$
$
$
$
$
Balance as at November 30, 2022
197,127
—
3,422
6,773
207,322
Disposals
—
—
—
(61)
(61)
Foreign exchange
726
—
—
16
742
Amortization
31,516
—
966
2,077
34,559
Balance as at November 30, 2023
229,369
—
4,388
8,805
242,562
Foreign exchange
4,750
—
—
122
4,872
Amortization
29,174
—
968
1,728
31,870
Balance as at November 30, 2024
263,293
—
5,356
10,655
279,304
Carrying amounts
Franchise
and master
franchise
rights Trademarks
Customer
lists
Other (1)
Total
$
$
$
$
$
November 30, 2023
205,618
892,841
9,310
8,808 1,116,577
November 30, 2024
178,938
891,951
8,342
9,083 1,088,314
(1) Other items include $2,372 (November 30, 2023 - $2,372) of licenses with and indefinite term that are not amortized.
Indefinite life intangible assets consist of trademarks and perpetual licenses, where each brand represents a
separate CGU for impairment testing, for 68 CGUs (November 30, 2023 – 68 CGUs) totaling $894,323 (November
30, 2023 – $895,213).
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 35
14.
Goodwill
The changes in the carrying amount of goodwill are as follows:
2024
2023
$
$
Goodwill, beginning of year
785,268
613,477
Business acquisitions (Note 7)
—
167,579
Foreign exchange
18,318
4,212
Goodwill, end of year
803,586
785,268
Accumulated impairment, beginning of year
66,081
65,721
Impairment (Note 15)
40,524
—
Foreign exchange
3,146
360
Accumulated impairment, end of year
109,751
66,081
Carrying amount
693,835
719,187
As at November 30, 2024, goodwill was allocated to three (November 30, 2023 – five) goodwill units. As of
September 1, 2024, the Company reassessed the CGUs based on a strategic realignment and merger of business
units in the US. Prior to the strategic realignment, a triggering event occurred for the CGU, which includes the Papa
Murphy's brand. As a result, an impairment test was conducted, leading to a goodwill impairment of $40,524 (2023 –
nil). Goodwill units are as follows:
2024
2023
$
$
Canada Goodwill Unit
204,327
204,327
US Goodwill Unit A (1)
292,423
126,761
US Goodwill Unit B (2)
197,085
128,963
US Goodwill Unit C (2)
—
97,994
US Goodwill Unit D
(1)
—
161,142
693,835
719,187
(1)
Variance from prior year due to grouping of US Goodwill Unit A and Unit D in 2024 as well as foreign exchange conversion.
(2)
Variance from prior year due to grouping of US Goodwill Unit B and Unit C in 2024 as well as foreign exchange conversion.
15.
Impairment charge
The Company performed its annual impairment test as at September 1, 2024. For twelve (seven and five brands in
the Canada and US & International geographical segments, respectively) of its brands (2023 – six brands; two and
four brands in the Canada and US & International geographical segments, respectively), an impairment charge on
intangible assets was required in the amount of $22,292 (2023 – $9,199). Included in this amount is $1,485 (2023 –
nil) impairment due to the reclassification to assets held for sale (Note 10).
As of September 1, 2024, the Company reassessed the reporting unit based on a strategic realignment and merger
of business units in the US. The goodwill impairment for the reporting unit comprised of Papa Murphy’s brand was
subject to an impairment test prior to the strategic realignment and this resulted in an impairment of goodwill of
$40,524 (2023 – nil).
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 36
15.
Impairment charge (continued)
Additionally, the Company recorded $10,131 (2023 – $233) of impairment losses on its property, plant and
equipment, for a total of $72,947 (2023 – $9,432) of impairment charges on its property, plant and equipment,
intangible assets and goodwill for the year ended November 30, 2024, which have been recognized in the
consolidated statements of income. Included in the property, plant and equipment impairment of $10,131 is an
impairment of $689 (2023 – nil) due to the reclassification to assets held for sale (note 10)
Impairment charges were based on the amount by which the carrying values of the assets exceeded the recoverable
amounts, determined using expected discounted projected operating cash flows.
Impairment by geographical segment for the year ended November 30, 2024:
Intangible assets
Property,
plant and
equipment
Franchise
rights
Trademarks
Other
Goodwill
Total
$
$
$
$
$
$
Canada
1,439
386
11,295
—
—
13,120
US & International
8,692
1,898
8,452
261
40,524
59,827
Impairment charge
10,131
2,284
19,747
261
40,524
72,947
Impairment by geographical segment for the year ended November 30, 2023:
Intangible assets
Property,
plant and
equipment
Franchise
rights
Trademarks
Total
$
$
$
$
Canada
—
525
3,104
3,629
US & International
233
767
4,803
5,803
Impairment charge
233
1,292
7,907
9,432
The key assumptions used, where the recoverable amount was measured as a goodwill unit’s value in use, are those
related to projected operating cash flows (EBITDA), as well as the discount rates. The operating cash flows forecasts
for cash flows were based on the subsequent fiscal year’s budgeted operating results, which were prepared by
management and approved by the Board, and internal forecasts for the four subsequent years, which were prepared
by management and developed from the budgeted operating results.
The cash flows are based on expectations of market growth, industry reports and trends, and past performance.
Cash flows subsequent to the five-year period were extrapolated using a terminal value growth rate ranging from 0%
to 2%, which is consistent with forecasts included in industry reports specific to the industry and the inflation target
rate of Canada and United States, in which each CGU operates. The discount rates used to calculate the
recoverable amounts reflect each CGUs’ specific risks and market conditions, including the market view of risk for
each CGU, and range from 9.0% to 10%.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 37
15.
Impairment charge (continued)
The following table presents the key assumptions used in the Company’s impairment tests, as well as the
recoverable amounts measured at value in use as at September 1, 2024 and 2023:
2024
2023
($, except percentage
data)
Canada
Goodwill
Unit
US
Goodwill
Unit A
US
Goodwill
Unit B
Canada
Goodwill
Unit
US
Goodwill
Unit A
US
Goodwill
Unit B
US
Goodwill
Unit C
US
Goodwill
Unit D
Discount rates after tax
9.3%
10.0%
10.0%
9.5%
10.5%
10.5%
10.5%
10.5%
Discount rates pre-tax
11.9%
12.7%
13.0%
12.4%
13.4%
13.8%
13.7%
13.6%
Recoverable amounts
978,520 1,186,703 819,022 1,063,708 729,871 360,741 424,392 365,670
During the year ended November 30, 2024, the Company combined its US Goodwill Units, consolidating the four
units from 2023 into two. Specifically, US Goodwill Units A and D from 2023 were combined into US Goodwill Unit A
in 2024, while US Goodwill Units B and C were merged into US Goodwill Unit B. This combination was carried out in
accordance with IAS 36 to ensure that goodwill is allocated in a manner that more accurately reflects the Company’s
CGUs. The revised CGU structure enhances alignment with how the Company monitors and manages its operations,
providing a more faithful representation of its business activities and financial performance as of November 30, 2024.
Long-term growth rates ranging from 0% to 2% (2023 – 0% to 2%) were used in the impairment test for the Canada
Goodwill Unit. A change of 100 basis points in discount rates in the Canada Goodwill Unit would result in additional
impairment charges on intangible assets of four brands (2023 – four brands) representing 0.5% (2023 – 0.3%) of the
total carrying value of the franchise rights and trademarks in that goodwill unit. A change of 100 basis points in
discount rates in the Canada Goodwill Unit would not result in additional impairment charges on goodwill for the
years ended November 30, 2024 and 2023. For the Canada Goodwill Unit, an increase of 910 basis points (2023 –
1,080 basis points) in the discount rate would have resulted in its recoverable amount being equal to its carrying
value.
Long-term growth rates ranging from 0% to 2% (2023 – 0% to 2%) were used in the impairment test for US Goodwill
Unit A. A change of 100 basis points in discount rates in US Goodwill Unit A would result in additional impairment
charges on intangible assets of five brands (2023 – three brands) representing 0.5% (2023 – 0.7%) of the total
carrying value of the franchise rights and trademarks in that unit. A change of 100 basis points in discount rates in US
Goodwill Unit A would not result in additional impairment charges on goodwill for the years ended November 30,
2024 and 2023. For US Goodwill Unit A, an increase of 430 basis points in the discount rate would have resulted in
its recoverable amount being equal to its carrying value.
Long-term growth rates of 2.0% were used in the impairment test for US Goodwill Unit B. A change of 100 basis
points in discount rates in US Goodwill Unit B would result in additional impairment charges on intangible assets of
one brand (2023 – nil) representing 0.1% (2023 – nil) of the total carrying value of the franchise rights and
trademarks in that unit. A change of 100 basis points in discount rates in US Goodwill Unit B would not result in
additional impairment charges on goodwill for the years ended November 30, 2024 and 2023. For US Goodwill Unit
B, an increase of 130 basis points in the discount rate would have resulted in its recoverable amount being equal to
its carrying value.
Long-term growth rates of 2.0% (2023 – 1.5%) were used in the impairment test for US Goodwill Unit B before the
2024 consolidation of CGUs in accordance with IAS 36. A change of 100 basis points in discount rates in US
Goodwill Unit B before the 2024 consolidation of CGUs would result in additional impairment charges on goodwill
representing 9.4% (2023 – nil) of the total carrying value of goodwill in that goodwill unit. The recoverable amount for
US Goodwill Unit B before the 2024 consolidation of CGUs was $251,273 (2023 – $360,741).
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 38
16.
Credit facility
During the year ended November 30, 2024, the Company modified its existing credit facility payable to a syndicate of
lenders. The modification resulted in an extension of three years with a new maturity date of March 15, 2027. The
credit facility has an authorized amount of $900,000 (November 30, 2023 - $900,000) and an accordion feature
amounting to $300,000 (November 30, 2024 – $300,000). Transaction costs of $1,667 (2023 – $1,817) are deferred
over the life of the revolving credit facility. As at November 30, 2024, CAD$8,000 and US$497,200 was drawn from
the revolving credit facility (November 30, 2024 – US$558,023).
Under this facility, the Company is required to comply with certain financial covenants, including:
• a debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio that must be less than or
equal to 3.50:1.00;
• a debt to EBITDA ratio that must be less than or equal to 4.00:1.00 in the twelve months following acquisitions with
a consideration exceeding $150,000; and
• an interest and rent coverage ratio that must be at least 2.00:1.00 at all times.
As at November 30, 2024, the Company was in compliance with its financial covenants.
17.
Provisions
The provisions recorded on the Company’s consolidated statements of financial position are related to litigations,
disputes and other contingencies, representing management’s best estimate of the outcome of litigations and
disputes that are ongoing at the date of the statement of financial position, as well as self-insured liabilities related to
health and workers’ compensation and general liability claims. These provisions are made of multiple items; the
timing of the settlement of these provisions is unknown given their nature, as the Company does not control the
litigation timelines.
The provisions also varied in part due to foreign exchange fluctuations related to the US subsidiaries.
2024
2023
$
$
Provision for litigations, disputes and closed stores, beginning balance
4,656
1,490
Reversals
(1,267)
(574)
Amounts used
(12,693)
(12,188)
Additions
13,050
15,895
Impact of foreign exchange
120
33
Provision for litigations, disputes and closed stores, ending balance
3,866
4,656
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 39
18.
Deferred revenue and deposits
2024
2023
$
$
Franchise fee deposits
70,223
62,256
Unearned rent, advances for restaurant construction and renovation
1,506
1,949
Supplier contributions and other allowances
1,758
3,738
73,487
67,943
Less: Current portion
(15,827)
(14,918)
57,660
53,025
Deferred revenues consist mostly of initial, transfer and renewal franchise fees paid by franchisees, as well as
upfront fees paid by master franchisees, which are generally recognized on a straight-line basis over the term of the
related agreement. Deferred revenues also include amounts paid in advance for royalties, restaurant construction
and renovation, as well as upfront fees received from agreements with suppliers, which are amortized over the term
of the related agreement.
There were no significant changes to contract liabilities during the year.
$15,682 (2023 – $16,767) of revenue recognized in the current year was included in the deferred revenue balance at
the beginning of the year.
The following table provides estimated revenues expected to be recognized in future years related to performance
obligations that are unsatisfied as at November 30, 2024:
Estimate for fiscal year:
$
2025
15,827
2026
10,342
2027
8,390
2028
6,266
2029
5,167
Thereafter
27,495
73,487
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 40
19.
Long-term debt
2024
2023
$
$
Non-interest-bearing contract cancellation fees and holdbacks on acquisitions
1,552
1,375
Contingent considerations on Küto Comptoir à Tartares acquisition and 11554891
Canada Inc. (1)
—
600
Fair value of non-controlling interest buyback obligation in 9974644 Canada Inc. (2)
2,142
2,288
Fair value of obligation to repurchase 11554891 Canada Inc. partner (3)
—
7,179
Revolving credit facility payable to a syndicate of lenders (4)
704,578
757,759
Credit facility financing costs
(1,667)
(1,837)
706,605
767,364
Less: Current portion
(2,464)
(10,428)
704,141
756,936
(1)
The contingent considerations for the acquisition of Küto Comptoir à Tartares (payable November 2024) and 70% interest in
11554891 Canada Inc. (payable within the next 12 months) were subject to earn-out provisions and the calculations have now
been finalized.
(2)
Payable on demand.
(3)
The obligation to repurchase 11554891 Canada Inc, was finalized and paid in October 2024.
(4)
Under the revolving credit facility, the Company has the option to draw funds in Canadian or in US dollars, at its discretion
(Note 16). The facility was extended on March 15, 2024 for a period of 3 years with a new maturity date of March 15, 2027 and
must be repaid in full at that time. The revolving credit facility has an authorized amount of $900,000 (November 30, 2023 –
$900,000). As at November 30, 2024, the Company had drawn CAD$8,000 and US$497,200 (November 30, 2023 –
US$558,023) on the facility and has elected to pay interest based on the Canadian Overnight Repo Rate Average (“CORRA”)
and the Secured Overnight Financing Rate (“SOFR”) plus applicable margins. The credit facility bears interest at Canadian
prime rate, US prime rate, CORRA, and SOFR plus an applicable margin that will vary depending on the type of advances.
The Company pays a commitment fee on the available unused credit facility.
20.
Capital stock
Authorized,
unlimited
number
of
common
shares
without
nominal
or
par
value:
2024
2023
Number
Amount
Number
Amount
$
$
Balance, beginning of year
24,332,661
301,779
24,413,461
302,781
Shares repurchased and cancelled
(906,900)
(11,186)
(80,800)
(1,002)
Balance, end of year
23,425,761
290,593
24,332,661
301,779
On June 28, 2024, the Company announced the renewal of the normal course issuer bid (“NCIB”). The NCIB began
on July 3, 2024 and will end on July 2, 2025 or on such earlier date when the Company completes its purchases or
elects to terminate the NCIB. The renewed period allows the Company to purchase 1,196,513 of its common shares.
These purchases will be made on the open market plus brokerage fees through the facilities of the TSX and/or
alternative trading systems at the prevailing market price at the time of the transaction, in accordance with the TSX’s
applicable policies. All common shares purchased pursuant to the NCIB will be cancelled.
During the year ended November 30, 2024, the Company repurchased and cancelled a total of 906,900 common
shares (2023 – 80,800), under the current NCIB, at a weighted average price of $46.36 per common share (2023 –
$51.58), for a total consideration of $41,815 (2023 – $4,167) of the shares’ repurchase value over their carrying
amount was charged to retained earnings as share repurchase premiums. An excess of $30,629 (2023 – 3,165) of
the shares’ repurchase value over their carrying amount was charged to retained earnings as share repurchase
premiums.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 41
21.
Accumulated other comprehensive income
The following table provides the net carrying amounts of Accumulated other comprehensive (loss) income by
category and the changes in the years ended November 30, 2024 and 2023.
Translation
adjustments
Cash flow
hedges
Deferred tax
expense on
foreign currency
translation
adjustments and
cash flow hedges
Total
$
$
$
$
Balance as at November 30, 2022
13,443
—
323
13,766
Unrealized gain on
translation of foreign
operations
7,644
—
—
7,644
Change in fair value of
financial instruments
9,581
—
9,581
Gain realized on financial
instruments transferred
to earnings
—
(3,265)
—
(3,265)
Deferred tax expense on
foreign currency translation
adjustments and cash flow
hedges
—
—
(2,256)
(2,256)
Balance as at November 30, 2023
21,087
6,316
(1,933)
25,470
Unrealized gain on
translation of foreign
operations
37,708
—
—
37,708
Change in fair value of
financial instruments
—
3,285
—
3,285
Gain realized on financial
instruments transferred
to earnings
—
(4,497)
—
(4,497)
Deferred tax expense on
foreign currency translation
adjustments and cash flow
hedges
—
—
(2,261)
(2,261)
Balance as at November 30, 2024
58,795
5,104
(4,194)
59,705
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 42
22.
Stock options
The Company offered for the benefit of certain key members of management and directors a stock option plan. In
accordance with the terms of the plan the Company may grant stock options on the common shares at the discretion
of the Board of Directors. 100,000 shares are available for issuance under the stock option plan as at November 30,
2024 (November 30, 2023 – 60,000).
Under the stock option plan of the Company, the following options were granted and are outstanding as at November
30, 2024 and 2023:
2024
2023
Number of
options
Weighted
average
exercise
price
Number of
options
Weighted
average
exercise price
$
$
Outstanding, beginning of year
440,000
50.97
440,000
50.97
Cancelled
(40,000)
52.01
—
—
Outstanding, end of year
400,000
50.86
440,000
50.97
Vested, end of year
333,332
52.37
137,776
50.38
As at November 30, 2024, the range of exercise prices and the weighted average remaining contractual life of
options are as follows:
Range of
exercise
prices
Number
outstanding
Weighted average
remaining contractual life
$
(years)
48.36
200,000
2.4
52.01
160,000
4.9
58.78
40,000
0.1
400,000
3.1
As at November 30, 2023, the range of exercise prices and the weighted average remaining contractual life of
options were as follows:
Range of
exercise prices
Number
outstanding
Weighted average
remaining contractual life
$
(years)
48.36
200,000
3.3
52.01
200,000
5.8
58.78
40,000
1.1
440,000
4.3
No options were granted during the years ended November 30, 2024 and 2023.
A compensation expense of $646 was recorded for the year ended November 30, 2024 (2023 – $792). The expense
is presented in Wages and benefits in Operating expenses in the consolidated statements of income.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 43
23.
Net income per share
The following table provides the weighted average number of common shares used in the calculation of basic
income per share and used for the purpose of diluted income per share:
2024
2023
Weighted daily average number of common shares – basic
23,977,313
24,409,176
Assumed exercise of stock options (1)
—
68,987
Weighted daily average number of common shares – diluted
23,977,313
24,478,163
(1)
The calculation of the assumed exercise of stock options includes the effect of the average unrecognized future compensation
cost of dilutive options. The number of excluded options for the year ended November 30, 2024 was 400,000 (2023 – 13,334).
24.
Financial instruments
In the normal course of business, the Company uses various financial instruments, which by their nature involve risk,
including market risk and the credit risk of non-performance by counterparties. These financial instruments are
subject to normal credit standards, financial controls, risk management and monitoring procedures.
Fair value of recognized financial instruments
Contingent considerations on acquisitions
The Company issued as part of its consideration for the acquisition of Küto Comptoir à Tartares and 70% interest in
11554891 Canada Inc., contingent considerations to the vendors. These contingent considerations were subject to
earn-out provisions and the calculations have now been finalized; the contingent considerations for Küto Comptoir à
Tartares and 11554891 Canada Inc. were paid in November 2024 and October 2024, respectively.
A fair value remeasurement loss of $25 was recorded for the contingent considerations for the year ended November
30, 2024 (2023 – gain of $2,151).
On December 8, 2022, one of the Company’s wholly owned subsidiaries completed the acquisition of all of the
issued and outstanding shares of Wetzel’s Pretzels. The transaction consideration included US$3,000 held in escrow
contingent on the execution of several lease contracts within 12 months of the acquisition. As at December 8, 2023,
only a portion of the contracts were executed and therefore $2,194 (US$1,600) was released from escrow and
recorded as a gain on contingent consideration from a business acquisition in the consolidated statements of income
in 2023.
Non-controlling interest buyback obligation in 9974644 Canada Inc.
The Company has entered into an agreement to purchase the shares of a minority interest shareholder of 9974644
Canada Inc. at the option of the holder at any time after December 9, 2017. The consideration is based on a
multiplier of EBITDA, as prescribed by the terms of the shareholder agreement. The Company records a liability at
fair value (Note 19) which is remeasured at each reporting period.
A fair value remeasurement gain of $146 (2023 – loss of $435) was recorded for this non-controlling interest
obligation.
Obligation to repurchase 11554891 Canada Inc. partner
In conjunction with the acquisition of 11554891 Canada Inc., the Company had agreed to acquire the remaining 30%
interest by December 2024, contingent on future earnings. In October 2024, the contingent consideration was settled
for $7,179. This obligation was extinguished with a cash payment of $6,054 and the remaining $1,125 was
reclassified to a holdback (Note 19).
A fair value remeasurement gain of nil (2023 – gain of $688) was recorded for this obligation to repurchase the
11554891 Canada Inc. partner.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 44
24.
Financial instruments (continued)
Fair value of recognized financial instruments (continued)
Swaps
Cross currency interest rate swaps
On October 29, 2024, the Company entered into one floating to floating 3-month cross currency interest rate swap
(November 30, 2023 – one floating to floating 3-month cross currency interest rate swap and one floating to floating
2-month cross currency interest rate swap). A derivative asset at fair value of $3,071 was recorded as at November
30, 2024 (November 30, 2023 – derivative liability of $2,626) in the current portion of derivative assets in the
consolidated statements of financial position. The Company has classified this as level 2 in the fair value hierarchy.
2024
2023
3-month
3-month
2-month
Receive – Notional
US$190,000
US$51,114
US$142,909
Receive – Rate
6.51%
7.14%
7.14%
Pay – Notional
CA$262,000
CA$70,000
CA$196,000
Pay – Rate
5.43%
6.66%
6.59%
Fixed interest rate swaps
On March 24, 2023, the Company entered into a three-year SOFR fixed interest rate swap for a notional amount of
US$200,000. A fair value remeasurement gain of $246 was recorded in the Company’s consolidated statement of
comprehensive income for the year ended November 30, 2024 (2023 – fair value remeasurement gain $6,316).
On June 4, 2024, the Company sold the fixed interest rate swap, realizing proceeds of $6,562 from this transaction. A
derivative asset fair value of nil was recorded as at November 30, 2024 (November 30, 2023 - $6,617). The
Company had classified this as level 2 in the fair value hierarchy and had designated this as a cash flow hedge of the
Company’s interest rate risk from its credit facility. Under the terms of this swap. the interest rate was fixed at 3.32%.
The cumulative gain on the hedging instrument, which was previously recognized in other comprehensive income
during the effective hedging period, will continue to be recognized in equity and will be amortized to the consolidated
statement of income until the termination of the hedged item on April 10, 2026. During the year, the Company
recorded a gain of $1,690 in the consolidated statement of income related to this amortization.
On May 30, 2023, the Company entered into a two-year SOFR fixed interest rate swap for a notional amount of
US$100,000. The period of two years ends on May 30, 2025. Under the terms of this swap, the interest rate is fixed
at 3.64%, unless the 1-month term SOFR exceeds 5.50%; if the 1-month term SOFR exceeds 5.50%, the Company
will pay the 1-month term SOFR. A derivative asset fair value of $499 was recorded as at November 30, 2024
(November 30, 2023 – $1,272). The Company has classified this as level 2 in the fair value hierarchy. A fair value
remeasurement loss of $774 was recorded in the Company’s consolidated statement of income for the year ended
November 30, 2024 (2023 – fair value remeasurement gain of $1,272).
On January 22, 2024, the Company entered into a three-year SOFR fixed interest rate swap for a notional amount of
US$50,000. The period of three years ends on January 22, 2027. Under the terms of this swap, the Company will
receive 0.25% unless the 1-month term SOFR falls below 2.95% or exceeds 5.50%. If the term SOFR falls below
2.95%, the Company will pay the difference between the current rate and 2.95%. A derivative asset of $39 was
recorded as at November 30, 2024 (November 30, 2023 – nil). The Company has classified this as level 2 in the fair
value hierarchy. A fair value remeasurement gain of $32 was recorded in the Company’s consolidated statement of
income for the year ended November 30, 2024 (2023 – nil).
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 45
24.
Financial instruments (continued)
Fair value of recognized financial instruments (continued)
On September 19, 2024, the Company entered into a three-year CORRA fixed interest rate swap for a notional
amount of $100,000. The period of three years ends on September 17, 2027. Under the terms of this swap, the
interest rate is fixed at 2.79%. A derivative asset of $143 was recorded as at November 30, 2024 (November 30,
2023 – nil). The Company has classified this as level 2 in the fair value hierarchy. A fair value remeasurement gain of
$143 was recorded in the Company’s consolidated statement of comprehensive income for the year ended
November 30, 2024 (November 30, 2023 - nil).
On September 24, 2024, the Company entered into a three-year CORRA fixed interest rate swap for a notional
amount of $50,000. The period of three years ends on September 24, 2027. Under the terms of this swap, the
interest rate is fixed at 2.77%. A derivative asset of $99 was recorded as at November 30, 2024 (November 30, 2023
– nil). The Company has classified this as level 2 in the fair value hierarchy. A fair value remeasurement gain of $99
was recorded in the Company’s consolidated statement of comprehensive income for the year ended November 30,
2024 (November 30, 2023– nil).
The swaps were recorded in the consolidated statements of financial position as follows:
Cross
currency
interest rate
swaps
2-year
SOFR fixed
interest rate
swap
3-year
SOFR fixed
interest rate
swap
3-year
CORRA fixed
interest rate
swap
3-year
CORRA fixed
interest rate
swap
Total
$
$
$
$
$
$
Current portion of
derivative
3,071
499
18
51
35
3,674
Long-term portion of
derivative
—
—
21
92
64
177
November 30, 2024
3,071
499
39
143
99
3,851
Fair value hierarchy
The changes in the carrying amount of the financial liabilities classified as level 3 in the fair value hierarchy are as
follows:
2024
2023
$
$
Financial liabilities classified as level 3 as at the beginning of the year
10,067
13,346
Repayment of contingent consideration
(6,304)
(875)
Revaluation of financial liabilities recorded at fair value
(121)
(2,404)
Reclass to holdback
(1,500)
—
Financial liabilities classified as level 3 as at the end of the year
2,142
10,067
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 46
24.
Financial instruments (continued)
Fair value of recognized financial instruments (continued)
As at November 30, 2024 and November 30, 2023, the financial liabilities classified as level 3 in the fair value
hierarchy were comprised of the following:
2024
2023
$
$
Contingent considerations on Küto Comptoir à Tartares acquisition and 11554891
Canada Inc.
—
600
Fair value of non-controlling interest buyback obligation in 9974644 Canada Inc.
2,142
2,288
Obligation to repurchase 11554891 Canada Inc. partner
—
7,179
Financial liabilities classified as level 3
2,142
10,067
The Company has determined that the fair values of its financial assets and financial liabilities with short-term and
long-term maturities approximate their carrying value. These financial instruments include cash, accounts receivable,
accounts payable and accrued liabilities, deposits and other liabilities. The table below shows the fair value and the
carrying amount of other financial instruments as at November 30, 2024 and November 30, 2023.
2024
2023
Carrying
amount
Fair
value
Carrying
amount
Fair
value
$
$
$
$
Financial assets
Loans and other receivables
3,994
3,994
5,389
5,389
Finance lease receivables
307,804
307,804
333,706
333,706
Financial liabilities
Long-term debt (1)
706,130
706,130
759,134
759,134
(1)
Excludes credit facility financing costs and non-controlling interest option in 9974644 Canada Inc.
Determination of fair value
The following methods and assumptions were used to estimate the fair values of each class of financial instrument:
Loans and other receivables and Finance lease receivables – The carrying amount for these financial
instruments approximates fair value due to the short-term maturity of these instruments and/or the use of market
interest rates.
Long-term debt – The fair value of long-term debt is determined using the present value of future cash flows
under current financing agreements based on the Company’s current estimated borrowing rate for similar debt.
The Company, through its financial assets and liabilities, is exposed to various risks. The following analysis provides
a measurement of risks as at November 30, 2024.
Credit risk
The Company’s credit risk is primarily attributable to its trade receivables and finance lease receivables. The
amounts disclosed in the consolidated statement of financial position represent the maximum exposure to credit risk
for each respective financial asset as at the relevant dates. The Company believes that the credit risk of accounts
receivable and finance lease receivables is limited as other than receivables from international locations, the
Company’s broad client base is spread mostly across Canada and the US, which limits the concentration of credit
risk.
The credit risk of the Company’s loans and other receivables is similar to that of its accounts receivable and finance
lease receivables.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 47
24.
Financial instruments (continued)
Foreign exchange risk
Foreign exchange risk is the Company’s exposure to decreases or increases in financial instrument values cause by
fluctuations in exchange rates. The Company’s exposure to foreign exchange risk mainly comes from sales
denominated in foreign currencies. The Company’s US and foreign operations use the US dollar (“USD”) as
functional currency. The Company’s exposure to foreign exchange risk stems mainly from cash, accounts receivable,
long-term debt denominated in USD, other working capital items and financial obligations from its US operations. As
at November 30, 2024, US$497,200 (November 30, 2023 – US$558,023) was drawn from the revolving credit facility.
Of that amount, US$189,200.00 (November 30, 2023 – US$194,023) was not exposed to foreign exchange risk as a
result of one (November 30, 2023 - two) cross currency interest rate swaps, and US$308,000 (November 30, 2023 –
US$364,000) was exposed to foreign exchange risk.
Fluctuations in USD exchange rates are deemed to have minimal risk as they are mostly offset by the stand-alone
operations of the Company’s US entities.
As at November 30, 2024 and 2023, the Company has the following financial instruments denominated in foreign
currencies:
2024
2023
USD
CAD
USD
CAD
$
$
$
$
Financial assets
Cash
8,573
12,011
2,593
3,522
Accounts receivable
631
884
988
1,342
Financial liabilities
Accounts payable and deposits
(624)
(874)
(192)
(261)
Long-term debt
(308,000)
(431,508)
(364,000)
(494,385)
Net financial (liabilities) assets
(299,420)
(419,487)
(360,611)
(489,782)
All other factors being equal, a reasonable possible 5% rise in foreign currency exchange rates per Canadian dollar
would result in a loss of $15,000 (2023 – loss of $18,031) on the consolidated statements of income and
comprehensive income.
Interest rate risk
Interest rate risk is the Company’s exposure to increases and decreases in financial instrument values caused by the
fluctuation in interest rates. The Company is exposed to cash flow risk due to the interest rate fluctuation in its
floating-rate interest-bearing financial obligations. The Company from time to time may enter into fixed interest rate
derivatives to manage its cash flow risk exposure, with long-term commitments requiring Board approval to ensure
compliance with the Company’s risk management strategy. As at November 30, 2024, the Company holds floating-to-
fixed interest rate swaps in order to hedge a portion of the interest rate cash flow risk associated with floating interest
rate debt.
Furthermore, upon refinancing of a borrowing, depending on the availability of funds in the market and lender
perception of the Company’s risk, the margin that is added to the reference rate, such as SOFR, CORRA or prime
rates, could vary and thereby directly influence the interest rate payable by the Company.
Long-term debt stems mainly from acquisitions of long-term assets and business combinations. The Company is
exposed to interest rate risk with its revolving credit facility which is used to finance the Company’s acquisitions. The
facility bears interest at a variable rate and as such the interest burden could change materially. $704,578
(November 30, 2023 – $757,759) of the credit facility was used as at November 30, 2024. A 100 basis points
increase in the bank’s prime rate would result in additional interest of $7,046 per annum (2023 – $7,578) on the
outstanding credit facility.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 48
24.
Financial instruments (continued)
Liquidity risk
Liquidity risk refers to the possibility of the Company not being able to meet its financial obligations when they
become due. The Company has contractual and fiscal obligations as well as financial liabilities and is therefore
exposed to liquidity risk. Such risk can result, for example, from a market disruption or a lack of liquidity. The
Company actively maintains its credit facility to ensure it has sufficient available funds to meet current and
foreseeable financial requirements at a reasonable cost.
As at November 30, 2024, the Company had an authorized revolving credit facility for which the available amount
may not exceed $900,000 (November 30, 2023 – $900,000) and including an accordion feature amounting to
$300,000 (November 30, 2023 – $300,000) to ensure that sufficient funds are available to meet its financial
requirements. The terms and conditions related to this revolving credit facility are described in Note 16 and Note 19.
The following are the contractual maturities of financial liabilities as at November 30, 2024:
Carrying
amount
Contractual
cash flows
0 to 6
months
6 to 12
months
12 to 24
months
Thereafter
$
$
$
$
$
$
Accounts payable and accrued
liabilities
134,390
134,390
134,390
—
—
—
Long-term debt (Note 19) (1)
706,605
708,272
3,693
—
—
704,579
Interest on long-term debt (1)
n/a
100,765
20,688
20,956
41,840
17,281
Lease liabilities
515,138
597,696
67,191
67,192
116,516
346,797
1,356,133
1,541,123
225,962
88,148
158,356
1,068,657
(1)
When future interest cash flows are variable, they are calculated using the interest rates prevailing at the end of
the reporting period.
25.
Capital disclosures
The Company’s objectives when managing capital are:
a.
To safeguard its ability to obtain financing should the need arise;
b.
To provide an adequate return to its shareholders; and
c.
To maintain financial flexibility in order to have access to capital in the event of future acquisitions.
The Company defines its capital as follows:
a.
Shareholders’ equity;
b.
Long-term debt including the current portion;
c.
Deferred revenue including the current portion; and
d.
Cash
The Company’s financial strategy is designed and formulated to maintain a flexible capital structure consistent with
the objectives stated above and to respond to changes in economic conditions and the risk characteristics of the
underlying assets. The Company may invest in longer or shorter-term investments depending on eventual liquidity
requirements.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 49
25.
Capital disclosures (continued)
The Company monitors capital on the basis of the debt-to-equity ratio. The debt-to-equity ratios at November 30,
2024 and 2023 were as follows:
2024
2023
$
$
Debt
706,605
767,364
Equity
803,450
812,889
Debt-to-equity ratio
0.88
0.94
Maintaining a low debt-to-equity ratio is a priority in order to preserve the Company’s ability to secure financing at a
reasonable cost for future acquisitions. The Company expects to maintain a low ratio by continuously using the
expected cash flows from the newly acquired business in both the US and Canada to reduce the level of long-term
debt.
The Company’s credit facility imposes a maximum debt-to-proforma EBITDA ratio of 4.00:1.00 after an acquisition in
excess of $150,000 for a period of twelve months after acquisition; 3.50:1.00 anytime thereafter and until the maturity
date of March 15, 2027.
26.
Revenue
For the year ended
November 30, 2024
November 30, 2023
US &
US &
Canada International
TOTAL
Canada International
TOTAL
$
$
$
$
$
$
Royalties
89,770
174,784
264,554
93,703
172,834
266,537
Franchise and transfer fees
6,493
7,864
14,357
5,567
6,746
12,313
Retail, food processing and
distribution revenues
145,574
2,712
148,286
160,094
1,772
161,866
Sale of goods, including
construction revenue
50,847
455,094
505,941
39,514
462,653
502,167
Gift card breakage income
416
7,688
8,104
393
6,337
6,730
Promotional funds
43,592
78,050
121,642
44,981
76,503
121,484
Other franchising revenue
39,753
40,922
80,675
40,141
41,598
81,739
Other
1,990
14,055
16,045
3,515
12,983
16,498
378,435
781,169 1,159,604
387,908
781,426 1,169,334
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 50
27.
Operating expenses
For the year ended
November 30, 2024
November 30, 2023
Canada
US &
International
TOTAL
Canada
US &
International
TOTAL
$
$
$
$
$
$
Cost of goods sold and rent
23,551
143,587
167,138
17,666
146,094
163,760
Retail, food processing and
distribution costs
130,833
857
131,690
143,561
314
143,875
Wages and benefits
68,297
233,765
302,062
61,559
230,412
291,971
Other corporate store expenses
4,917
56,490
61,407
2,785
58,153
60,938
Consulting and professional fees
8,714
10,837
19,551
7,830
12,867
20,697
Insurance and taxes
1,718
7,936
9,654
1,591
6,545
8,136
Utilities, repairs and maintenance
2,018
23,020
25,038
1,990
23,567
25,557
Advertising, travel, meals and
entertainment
4,689
15,073
19,762
4,947
14,148
19,095
Gift cards – related costs
—
8,817
8,817
—
9,037
9,037
Royalties
147
8,925
9,072
72
8,665
8,737
Promotional funds (1)
43,592
78,050
121,642
44,981
76,503
121,484
Impairment (reversal of impairment)
for expected credit losses
1,134
(117)
1,017
2,289
904
3,193
Other (2)
8,956
10,761
19,717
10,267
11,841
22,108
298,566
598,001
896,567
299,538
599,050
898,588
(1)
Promotional fund expenses include wages and benefits.
(2)
Other operating expenses are comprised mainly of other office administration expenses.
28.
Guarantee
The Company has guaranteed leases on certain franchise stores in the event the franchisees are unable to meet
their remaining lease commitments. The maximum amount the Company may be required to pay under these
agreements was $12,457 as at November 30, 2024 (November 30, 2023 – $16,352). In addition, the Company could
be required to make payments for percentage rents, realty taxes and common area costs. As at November 30, 2024,
the Company has accrued $1,570 (November 30, 2023 – $1,570), included in Accounts payable and accrued
liabilities, with respect to these guarantees.
29.
Contingent liabilities
The Company is involved in legal claims associated with its current business activities. The Company’s estimate of
the outcome of these claims is disclosed in Note 17. The timing of the outflows, if any, is out of the control of the
Company and is as a result undetermined at the moment.
30.
Restructuring
During the year, the Company initiated a restructuring plan as part of a strategic realignment to streamline operations
and improve efficiency. The Company recognized restructuring costs of $1,792 primarily related to employee
severance costs and $695 in relation to the discontinuation of one of its brands. No additional expenses are
expected to be incurred.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 51
31.
Income taxes
Variations of income tax expense from the basic Canadian federal and provincial combined tax rates applicable to
income from operations before income taxes are as follows:
2024
2023
$
%
$
%
Combined income tax rate in Canada
4,188
26.5
29,145
26.5
Add effect of:
Difference between Canadian and foreign
statutory rate
(20,856)
(132.0)
(17,710)
(16.3)
Non-taxable portion of capital gains
397
2.5
397
0.4
Permanent differences
4,305
27.2
303
0.3
Non-deductible impairment of goodwill
10,739
68.0
—
—
Recognition of previously unrecognized
deferred tax assets
(3,622)
(22.9)
(3,197)
(2.9)
Losses in subsidiaries for which no deferred
income tax assets is recognized
544
3.4
370
0.3
Rate variation on deferred income tax
951
6.0
(10)
—
Adjustment to prior year provisions
(8,378)
(53.0)
(3,136)
(2.9)
Revision of estimates for tax exposures
—
—
(959)
(0.9)
Other – net
2,901
18.4
258
0.3
Provision for income taxes
(8,831)
(55.9)
5,461
4.8
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 52
31.
Income taxes (continued)
The variation in deferred income taxes during the years ended November 30, 2024 and 2023 were as follows:
November
30, 2023
Recognized
in profit or
loss
Recognized in
other
comprehensive
loss
Foreign
exchange
November
30, 2024
$
$
$
$
$
Net deferred tax assets (liabilities)
in relation to:
Property, plant and equipment
(16,836)
2,637
—
(412)
(14,611)
Finance lease receivables
(87,119)
7,791
—
(793)
(80,121)
Right-of-use assets
(46,309)
532
—
(1,219)
(46,996)
Accounts receivable
808
(535)
—
(4)
269
Deferred costs
(636)
136
—
(13)
(513)
Inventory
(359)
(90)
—
(16)
(465)
Provisions and gift cards
9,053
1,710
—
208
10,971
Long-term debt
(3,059)
1,959
(2,261)
(26)
(3,387)
Non-deductible interest and non-
capital losses carried forward
7,034
26,019
—
1,189
34,242
Capital losses
503
63
—
—
566
Intangible assets
(243,167)
5,345
—
(5,754)
(243,576)
Accrued expenses
45,591
(16,014)
—
623
30,200
Derivative assets
(1,777)
1,570
—
—
(207)
Deferred revenue
6,465
(58)
—
199
6,606
Lease liabilities
138,030
(7,153)
—
2,105
132,982
Other
(1,747)
2,852
—
(1,206)
(101)
(193,525)
26,764
(2,261)
(5,119)
(174,141)
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 53
31.
Income taxes (continued)
November
30, 2022
Recognized
in profit or
loss
Recognized in
other
comprehensive
loss
Acquisition
Foreign
exchange
November
30, 2023
$
$
$
$
$
$
Net deferred tax assets
(liabilities) in relation to:
Property, plant and equipment
(15,208)
1,157
—
(2,717)
(68)
(16,836)
Finance lease receivables
(88,159)
1,184
—
—
(144)
(87,119)
Right-of-use assets
(41,280)
(4,818)
—
—
(211)
(46,309)
Accounts receivable
308
476
—
14
10
808
Deferred costs
(1,359)
726
—
—
(3)
(636)
Inventory
56
(425)
—
17
(7)
(359)
Provisions and gift cards
24,808
(14,669)
—
(880)
(206)
9,053
Long-term debt
(2,214)
1,421
(2,256)
(7)
(3)
(3,059)
Non-capital losses
11,097
(11,270)
—
7,317
(110)
7,034
Capital losses
228
275
—
—
—
503
Intangible assets
(206,766)
6,135
—
(41,757)
(779)
(243,167)
Accrued expenses
8,994
30,470
—
5,533
594
45,591
Derivative assets
—
(1,777)
—
—
—
(1,777)
Deferred revenue
10,792
(4,692)
—
332
33
6,465
Lease liabilities
133,238
4,425
—
—
367
138,030
Other
(145)
(1,620)
—
—
18
(1,747)
(165,610)
6,998
(2,256)
(32,148)
(509)
(193,525)
As at November 30, 2024, there were approximately $5,497 (November 30, 2023 – $3,440) in non-capital losses
accumulated in one of the Company’s subsidiaries for which no deferred income tax asset was recognized. These
non-capital losses will expire between 2038 and 2044.
As at November 30, 2024 there were approximately $2,258 (2023 – nil) capital losses accumulated in one of the
Company's subsidiaries for which no deferred income tax asset was recognized. These capital losses do not expire.
The deductible temporary difference in relation to foreign exchange on intercompany loans for which a deferred tax
asset has not been recognized amounts to $3,204 (2023 – $1,313).
No deferred income tax liability is recognized on unremitted earnings of $98,974 (2023 – $105,739) related to the
investments in subsidiaries. Such unremitted earnings are reinvested in the subsidiaries and will not be repatriated in
the foreseeable future.
The Company has an uncertain tax risk related to pre-acquisition periods whereby tax returns were filed by previous
owners.
MTY Food Group Inc.
Notes to the consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts and stock options)
Page 54
32.
Segmented information
Management monitors and evaluates results of the Company based on geographical segments, these two segments being Canada and US & International. The
Company and its chief operating decision maker assess the performance of each operating segment based on its segment profit and loss, which is equal to
revenue less operating expenses. Within those geographical segments, the Company’s chief operating decision maker also assesses the performance of
subdivisions based on the type of product or service provided. These subdivisions include: franchising; corporate stores; processing, distribution and retail; and
promotional fund revenues and expenses. This information is disclosed below.
Below is a summary of each geographical and operating segment’s performance for the years ended November 30, 2024 and 2023.
November 30, 2024
CANADA
US & INTERNATIONAL
Franchising
Corporate
Processing,
distribution
and retail
Promotional
funds
Interco
Total
Canada
Franchising
Corporate
Processing,
distribution
and retail
Promotional
funds
Interco
Total US &
International
Total
consolidated
$
$
$
$
$
$
$
$
$
$
$
$
$
Revenue
147,504
45,307
146,660
43,592
(4,628)
378,435
245,371
455,518
2,712
78,050
(482)
781,169
1,159,604
Operating expenses
79,003
46,368
131,691
43,592
(2,088)
298,566
112,455
409,660
858
78,050
(3,022)
598,001
896,567
Segment profit (loss)
68,501
(1,061)
14,969
—
(2,540)
79,869
132,916
45,858
1,854
—
2,540
183,168
263,037
Total assets
1,348,784
22,748
80,286
8,839
—
1,460,657
713,072
393,953
2,096
16,581
—
1,125,702
2,586,359
Total liabilities
1,058,497
19,732
10,729
8,839
—
1,097,797
348,281
320,237
13
16,581
—
685,112
1,782,909
November 30, 2023
CANADA
US & INTERNATIONAL
Franchising
Corporate
Processing,
distribution
and retail
Promotional
funds
Interco
Total
Canada
Franchising
Corporate
Processing,
distribution
and retail
Promotional
funds
Interco
Total US &
International
Total
consolidated
$
$
$
$
$
$
$
$
$
$
$
$
$
Revenue
154,492
32,009
161,196
44,981
(4,770)
387,908
242,378
462,025
1,771
76,503
(1,251)
781,426
1,169,334
Operating expenses
79,303
32,901
144,387
44,981
(2,034)
299,538
117,380
408,840
314
76,503
(3,987)
599,050
898,588
Segment profit (loss)
75,189
(892)
16,809
—
(2,736)
88,370
124,998
53,185
1,457
—
2,736
182,376
270,746
Total assets
1,504,876
23,845
69,381
10,248
—
1,608,350
602,996
447,737
—
20,935
—
1,071,668
2,680,018
Total liabilities
1,146,662
20,779
13,795
10,248
—
1,191,484
360,675
294,035
—
20,935
—
675,645
1,867,129
MTY Food Group Inc.
Notes to the condensed interim consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts)
Page 55
33.
Statement of cash flows
Changes in liabilities and assets arising from financing activities for the years ended November 30, 2024 and 2023 were as follows:
Revolving
credit facility
Loan
financing
costs
Non-interest-
bearing
contracts and
holdbacks
Non-
controlling
interest
buyback
obligation in
9974644
Canada Inc.
Contingent
considerations
on Küto
Comptoir à
Tartares
acquisition and
11554891
Canada Inc.
Obligation to
repurchase
11554891
Canada Inc.
partner
Total
$
$
$
$
$
$
$
Balance as at November 30, 2023
757,759
(1,837)
1,375
2,288
600
7,179
767,364
Changes from financing activities:
Issuance of long-term debt
22,785
—
—
—
—
—
22,785
Repayment of long-term debt
(94,935)
—
(1,067)
—
(250)
(6,054)
(102,306)
Capitalized financing costs
—
(1,052)
—
—
—
—
(1,052)
Changes from non-cash transactions:
Amortization of transaction costs directly
attributable to a financing
—
1,222
—
—
—
—
1,222
Accretion of interest on non-interest-
bearing holdbacks
—
—
2
—
—
—
2
Revaluation of financial liabilities
recorded at fair value through profit
and loss (Note 24)
—
—
(25)
(146)
25
—
(146)
Reclass to holdback
1,398
(375)
(1,125)
(102)
Gain on extinguishment of debt
—
—
(131)
—
—
—
(131)
Foreign exchange
13,272
—
—
—
—
—
13,272
Fluctuation in derivative position
5,697
—
—
—
—
—
5,697
Balance as at November 30, 2024
704,578
(1,667)
1,552
2,142
—
—
706,605
MTY Food Group Inc.
Notes to the condensed interim consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts)
Page 56
33.
Statement of cash flows (continued)
Revolving
credit facility
Loan financing
costs
Non-interest-
bearing
contracts and
holdbacks
Non-
controlling
interest
buyback
obligation in
9974644
Canada Inc.
Contingent
considerations
on Küto
Comptoir à
Tartares
acquisition and
11554891
Canada Inc.
Obligation to
repurchase
11554891
Canada Inc.
partner
Total
$
$
$
$
$
$
$
Balance as at November 30, 2022
550,055
(2,584)
142
1,853
3,626
7,867
560,959
Changes from financing activities:
Issuance of long-term debt
318,884
—
—
—
—
—
318,884
Repayment of long-term debt
(109,511)
—
(2)
—
(875)
—
(110,388)
Payment of transaction costs
—
(157)
—
—
—
—
(157)
Changes from non-cash transactions:
Amortization of transaction costs directly
attributable to a financing arrangement
—
904
—
—
—
—
904
Accretion of interest on non-interest-bearing
holdbacks
—
—
47
—
—
—
47
Revaluation of financial liabilities recorded at
fair value through profit and loss (Note 24)
—
—
—
435
(2,151)
(688)
(2,404)
Foreign exchange
957
—
(2)
—
—
—
955
Derivative liability on cross currency interest
rate swaps
(2,626)
—
—
—
—
—
(2,626)
Changes from investing activities:
Issuance of holdbacks (Note 7)
—
—
1,190
—
—
—
1,190
Balance as at November 30, 2023
757,759
(1,837)
1,375
2,288
600
7,179
767,364
MTY Food Group Inc.
Notes to the condensed interim consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts)
Page 57
33.
Statement of cash flows (continued)
Changes in non-cash operating activities are as follows:
2024
2023
$
$
Accounts receivable
3,411
(3,393)
Inventories
825
(1,544)
Loans and other receivables
1,842
(1,789)
Other assets
(1,243)
(772)
Prepaid expenses and deposits
119
1,238
Accounts payable and accrued liabilities
(15,335)
(18,623)
Provisions
(643)
3,146
Gift card and loyalty program liabilities
5,414
12,560
Deferred revenue and deposits
4,010
1,469
(1,600)
(7,708)
For the twelve-month periods ended November 30, 2024, non-cash items amounting to $2,242 (2023 – $1,684) are
included in proceeds on disposal of property, plant and equipment, primarily related to commitments made as part of
the disposal of a portfolio of corporately-owned locations in the US segment.
34.
Subsequent event
Dividends
On January 22, 2025, the Company announced an increase to its quarterly dividend payment, from $0.28 per
common share to $0.33 per common share. The dividend of $0.33 per common share will be paid on February 14,
2025.
Grant of stock options
On January 16, 2025, the Company granted 40,000 stock options for an option price of $45.20 per share. The
options will vest and be exercisable as to one third of the grant on August 1, 2025, August 1, 2026 and August 1,
2027. The options will expire on February 28, 2028.
MTY Food Group Inc.
Notes to the condensed interim consolidated financial statements
For the years ended November 30, 2024 and 2023
(In thousands of Canadian dollars, except per share amounts)
Page 58
HEAD OFFICE
8210 Transcanada Highway
Saint-Laurent, Québec
H4S 1M5, Canada
T. : 514 336-8885
F. : 514 336-9222
www.mtygroup.com
AUDITORS
PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l.
TRANSFER AGENT & REGISTRAR
Computershare Trust
Company of Canada
SOLICITORS
Fasken Martineau DuMoulin LLP
DIRECTORS
Stanley Ma (1)
Claude St-Pierre
Eric Lefebvre
Dickie Orr (2)
Victor Mandel (2,3)
Murat Armutlu (2,3)
Suzan Zalter (3)
(1) Chairman of the Board
(2) Audit Committee
(3) Compensation, Nomination and Governance Committee
INVESTOR RELATIONS
Eric Lefebvre
T. : 514 336-8885
F. : 514 336-9222
ir@mtygroup.com
CORPORATE
INFORMATION
MTYGROUP.COM