TSX Trading Symbol: "MTY"
MONTREAL, Nov. 14, 2017 /PRNewswire/ - MTY Food Group
Inc. ("MTY" or the "Company") (TSX: MTY) announced today that one
of its wholly-owned subsidiaries has signed an agreement to acquire
all of the limited liability company interests in CB Franchise
Systems, LLC ("The Counter") (www.TheCounter.com), Built Franchise
Systems, LLC ("Built") (www.BuiltCustomBurgers.com) and certain of
their affiliates.
Stanley Ma, Chairman of the Board
and Chief Executive Officer of MTY, said: "Since the acquisition of
Kahala Brands in July 2016, MTY has been seeking potential
additions to its strong portfolio of brands. The Counter and
Built fit that perfectly, offering trendy hamburgers and other
craveable foods to uncompromising customers, focusing on superior
quality and spot-on execution, creating memorable experiences for
its guests."
Transaction and rationale
The Counter and Built networks currently combine for 41
franchised locations and 3 corporate-owned locations. Of those 44
restaurants, 34 are located in the United
States, one is located in Canada and nine are located overseas. In the
last 12 months, the combined networks generated over US$81 million in system sales.
The acquisition of The Counter and Built represents another
major milestone for MTY as it solidifies its presence in
the United States and confirms
MTY's appetite for good quality acquisition opportunities.
Following the closing of the transaction, the head office of The
Counter and Built will be moved from its current location in
Culver City, California to MTY's
office in Scottsdale, Arizona.
Conditions and regulatory approvals
The agreement is binding but remains subject to multiple closing
conditions customary for a transaction of this nature.
Financing
Total consideration for the transaction will be financed using
MTY's cash on hand and existing credit facilities.
Closing of the transaction
The closing of the transaction is expected to occur in December
2017. However, there is no assurance the transaction will be
completed on such timeline, or at all.
Non‑IFRS Measures
This News Release makes reference to certain non‑IFRS measures.
These measures are not recognized measures under IFRS, do not have
a standardized meaning prescribed by IFRS and are therefore
unlikely to be comparable to similar measures presented by other
companies. Rather, these measures are provided as additional
information to complement those IFRS measures by providing further
understanding of the Company's results of operations from
management's perspective. Accordingly, they should not be
considered in isolation nor as a substitute for analysis of the
Company's financial information reported under IFRS. The Company
uses non-IFRS measures including "System Sales" to provide
investors with supplemental measures of its operating performance
and thus highlight trends in its core business that may not
otherwise be apparent when relying solely on IFRS financial
measures. The Company also believes that securities analysts,
investors and other interested parties frequently use non-IFRS
measures in the evaluation of issuers. The Company's management
also uses non-IFRS measures in order to facilitate operating
performance comparisons from period to period, to prepare annual
operating budgets, and to determine components of management
compensation.
"System Sales" represents the net sales received from restaurant
guests at both corporate and franchise restaurants including
take-out and delivery customer orders. System Sales includes sales
from both established restaurants as well as new restaurants.
Management believes System Sales provides meaningful information to
investors regarding the size of MTY's restaurant network, the total
market share of the Company's brands and the overall financial
performance of its brands and restaurant owner base, which
ultimately impacts MTY's consolidated financial performance.
Forward looking information
Certain information in this News Release constitutes
"forward-looking" information that involves known and unknown
risks, uncertainties, future expectations and other factors which
may cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking information. When used in this News Release,
this information may include words such as "anticipate",
"estimate", "may", "will", "expect", "believe", "plan" or
variations of such words and phrases, or by the use of words or
phrases which state that certain actions, events or results may,
could, would, or might occur or be achieved. In particular,
this News Release contains forward-looking information regarding:
the completion of the acquisition, the potential closing date of
the acquisition and the potential impact of the acquisition on the
Company's future operations; opportunities, growth and United States expansion; the suitability of
the acquisition by the Company; the effect of the acquisition on
The Counter and Built stakeholders; the location of MTY's
United States head office and
where MTY's United States
operations will be managed; the retention of The Counter's and
Built's management team; the expected EBITDA, revenue, system sales
and potential growth of the combined entity; potential future
acquisition opportunities; and the continuing payment of dividends
by the Company. This forward-looking information reflects current
expectations and assumptions regarding future events and operating
performance and speaks only as of the date of this News
Release. These assumptions include, but are not limited to:
currency exchange rates used to derive Canadian dollar
expectations; market acceptance of the acquisition; the
satisfactory fulfilment of all of the conditions precedent to the
acquisition; the receipt of all required approvals and consents
including regulatory, TSX, shareholder and any other approvals;
acceptable financing to complete the acquisition; future results of
The Counter's and The Built business and operations meeting or
exceeding historical results; the success of the integration of the
operations and management team with the Company's operations and
business; and market acceptance of potential future acquisitions by
the Company. Forward-looking information is subject to known and
unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or
implied by such forward-looking information. Such risks and
other factors may include, but are not limited to: currency
exchange rates, general business, economic, competitive, political,
capital market and social conditions and uncertainties; the
intensity of competitive activity, and the resulting impact on our
ability to attract customers' disposable income; our ability to
secure advantageous locations and renew our existing leases at
sustainable rates; the arrival of foreign concepts; our ability to
attract new franchisees; changes in customer tastes, demographic
trends and in the attractiveness of our concepts, traffic patterns,
occupancy cost and occupancy level of malls and office towers; the
level of consumer confidence and spending and the demand for, and
prices of, our products; our ability to implement our strategies
and plans in order to produce the expected benefits; events
affecting the ability of third-party suppliers to provide to us
essential products and services; labour availability and cost or
the loss of key individuals; stock market volatility; operational
constraints and the event of the occurrence of epidemics, pandemics
and other health risks; delay or failure to receive board or
regulatory approvals; changes in legislation affecting the Company.
Expected EBITDA, revenue, system sales and growth could
vary due to fluctuations in currency exchange rates.
A description of additional assumptions used to develop such
forward-looking information and a description of additional risk
factors that may cause actual results to differ materially from
forward-looking information can be found in the disclosure
documents on the SEDAR website at www.sedar.com. Readers are
further cautioned not to place undue reliance on forward-looking
information as there can be no assurance that the plans, intentions
or expectations upon which they are placed will occur.
Forward-looking information contained in this News Release is
expressly qualified by this cautionary statement. Except as
required by law, the Company assumes no obligation to update or
revise forward-looking information to reflect new events or
circumstances. Financial outlooks contained in this News
Release were approved by management of the Company on November 14, 2017. The purpose of this
information is to provide a potential financial outlook of the
combined entity and this information may not be appropriate for
other purposes. Additional information is available in the
Company's Management Discussion and Analysis, which can be found on
SEDAR at www.sedar.com.
On Behalf of the Board of Directors of
MTY Food
Group Inc.
_____________________________________
Stanley Ma, Chairman, President & CEO
SOURCE MTY Food Group Inc.