This article first appeared on GuruFocus .
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Same-Store Sales:Decreased by 2.2% in the US and 1.8% in Canada.
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Net Store Growth:Positive net growth of six locations in the quarter.
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Store Closures:Decision to close 68 underperforming corporate-owned stores.
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Normalized Adjusted EBITDA:$60.2 million, a decrease of $9.8 million from the previous year.
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Franchise Segment Profit:$50.6 million, a 5% decrease from the prior year.
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Franchise Revenues:$98.6 million, down from $102.8 million last year.
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Corporate Segment Profit:$5.7 million, down from $11.3 million last year.
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Corporate Segment Revenues:Decreased by 15% to $111.7 million.
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Food Processing, Distribution, and Retail Segment EBITDA:$3.6 million with revenues of $39.3 million.
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Digital Sales:$284.2 million, representing 21% of total sales.
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Net Income:$15.4 million or $0.67 per diluted share, compared to $57.3 million or $2.49 per diluted share last year.
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Free Cash Flows:$32.2 million, up from $17.8 million last year.
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Net Debt:Approximately $531 million, an improvement of $49 million over the prior year.
Release Date: July 10, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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MTY Food Group Inc ( MTYFF ) reported strong free cash flows despite challenging market conditions.
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The company achieved positive net store growth with six new locations added in the quarter.
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Sales trends improved in Canada in June, with most concepts showing positive same-store sales.
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The development pipeline remains robust, with expectations for accelerated store openings in the second half of the year.
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The asset-light, well-diversified portfolio continues to generate strong cash flows, providing flexibility in a complicated consumer environment.
Negative Points
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Same-store sales remained negative, with decreases of 2.2% in the US and 1.8% in Canada.
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Traffic was under pressure, contributing to lower same-store sales.
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The company decided to close 68 underperforming corporate-owned stores, which collectively lost over $10 million in the last 12 months.
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Normalized adjusted EBITDA decreased by $9.8 million from the same period last year, mainly due to reduced profitability in corporate operations.
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Franchise revenues decreased, impacted by lower turnkey projects in Canada and gift card program-related revenues in the US.
Q & A Highlights
Q: You mentioned that sales trends improved in June. Can you provide more details on what changed since Q2? Any shifts in consumer behavior or competition? A: It's difficult to draw conclusions after just a month, but early June showed improvement, especially in Canada, which turned positive. In the US, trends remained similar to Q2, with Papa Murphy's facing more competition in the pizza segment.
Q: Regarding the store closures, which banners are most affected? A: Papa Murphy's has a significant weight in the closures. We repossessed some stores two years ago, hoping for a turnaround, but concluded that certain markets are not suitable for Papa Murphy's. Other brands are also affected, but Papa Murphy's is a major contributor.
Q: Should we expect further portfolio optimization or store closures in the coming quarters? A: The closure process will take six to nine months, with updates provided along the way. While some stores may close, we are also selling some locations where it makes sense, aiming to reduce the corporate store portfolio gradually.
Q: Can you elaborate on the expected cadence of corporate store closures? Will any quarter have a disproportionate number of closures? A: The bulk of closures will occur in Q3, with the easier ones happening first. More challenging closures will be spread out over time, but Q3 will see the heaviest activity.
Q: How do you view the consumer environment in the US versus Canada? Is MTY's performance more about your restaurant banners or consumer sentiment differences? A: The pizza space is highly competitive in the US, affecting brands like Papa Murphy's. Consumers are more discerning, and while they are dining out, attracting them is challenging. Factors like US gas prices impact discretionary spending, but we hope for normalization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
