MTY - MTY Food Group

[Liberty]

I'm sorry, this is off-topic, but this associate portfolio manager is named Jesse Gamble? Talk about a name that probably doesn't project "conservative asset allocation" to the LPs :)

[mranski]

My guess is that Cold Stone Creamery itself is a struggling brand. They forced it into Tim Hortons a few years ago and then abandoned the concept.

[Guest notorious546]

My guess is that Cold Stone Creamery itself is a struggling brand. They forced it into Tim Hortons a few years ago and then abandoned the concept.

 

why do you say forced? do you have any numbers that imply profitability for this chain?

[mranski]

By forced, I meant they physically squeezed them into the existing Tim Hortons layout. I don't have any numbers on the Stone Cold franchise.

[mranski]

 

Article below about Serruyas and acquired company Kahala brands in Forbes

 

http://www.forbes.com/sites/amyfeldman/2016/06/19/how-canadas-serruya-family-made-some-300-million-off-a-bunch-of-faded-food-service-brands/#34b772685513

[mranski]

Strange lawsuit I believe regarding kahala family owners.  Not sure what their involvement will be with MTY going forward.

 

http://business.financialpost.com/news/fp-street/yogen-fruzs-serruya-family-sued-by-co-founders-brother-in-law-for-insider-trading

[Guest notorious546]

Strange lawsuit I believe regarding kahala family owners.  Not sure what their involvement will be with MTY going forward.

 

http://business.financialpost.com/news/fp-street/yogen-fruzs-serruya-family-sued-by-co-founders-brother-in-law-for-insider-trading

 

thanks mranski

[Guest notorious546]

SCOTTSDALE, Ariz., July 21, 2016 /PRNewswire/ -- Kahala Brands, Ltd.™ ("Kahala Brands") (OTC:KAHL) (www.KahalaBrands.com) announced that the proposed merger with a wholly-owned subsidiary of MTY Food Group, Inc., was approved by the company's shareholders during a special shareholder meeting today.

 

 

[gary17]

Does anyone know why the stock has gone up 5% today? I can't find any associated news -  if this is market volatility then great lol

[Guest notorious546]

MTY enters into an agreement to acquire Baja Fresh Mexican Grill and La Salsa Fresh Mexican Grill

Friday, September 09, 2016 10:30:00 AM (GMT)

 

TSX Trading Symbol: "MTY"

 

MONTREAL, Sept. 9, 2016 /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 equity interest of BF Acquisition Holdings, LLC. ("BFAH") (www.bajafresh.com and www.lasalsa.com).

 

Stanley Ma, Chairman of the Board and Chief Executive Officer of MTY, said: "Following the addition of Kahala last month, MTY intends to continue and accelerate its growth throughout North America, leveraging both its US platforms and Canadian platforms to acquire profitable restaurant concepts.  The acquisition of Baja Fresh Mexican Grill and La Salsa Fresh Mexican Grill perfectly aligns with our growth strategy and is one more step towards building a bigger and better organization for the future."

 

Transaction and rationale

 

BFAH currently franchises and operates 162 Baja Fresh Mexican Grill ("Baja") and 23 La Salsa Fresh Mexican Grill ("La Salsa") restaurants in the USA, Dubai and Singapore. Of those 185 restaurants, 16 are corporately-owned and 169 are franchised. During 2015, the BFAH network generated over US$145 million in system sales.

 

The acquisition of Baja and La Salsa 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 regardless of the geographical location of their restaurants.

 

Following the transaction, BFAH's head office will be moved in MTY's office in Scottsdale, Arizona. The transition is expected to happen before the end of MTY's 2016 fiscal period.

 

Conditions and regulatory approvals

 

The agreement is binding but remains subject to multiple conditions, including standard regulatory approvals, financing and other conditions customary for a transaction of this nature.

 

Financing

 

Total consideration for the transaction is estimated at US$27 million in cash, to be financed using MTY's existing credit facilities. The final purchase price remains subject to customary working capital adjustments.

 

Closing of the transaction

 

The closing of the transaction is expected to happen within the next 30 days. There is no assurance the transaction will be completed as described above or at all, or that the anticipated closing date will materialize.

 

Non‑IFRS Measures

[Guest notorious546]

http://www.theglobeandmail.com/globe-investor/inside-the-market/restaurant-stocks-still-high-despite-the-fact-that-less-people-are-dining-out/article31806394/

[Guest notorious546]

Was doing a bit of work into la salsa. not entirely sure how this compares to other franchises but the investment to open one doesnt seem too high.

 

Qualifications

$200,000 liquid cash per restaurant, $500,000 net worth per restaurant

Restaurant experience or an operating partner with at least 10% ownership, who has restaurant experience

Franchise Fee: $50,000 per restaurant

Royalty Fee: 5%

Franchise Agreement: 10 years

 

http://lasalsa.com/franchise/

[Guest notorious546]

MTY announced acquisition of Kahala Brands

 

http://mtygroup.com/wp-content/uploads/2015/06/20160525-MTY-enters-into-an-agreement-to-acquire-the-shares-of-Kahala-Brands-v7.pdf

 

During the 12 months following the acquisition, the combined entity is expected to generate over C$90 million in EBITDA,

C$250 million in revenues and C$2 billion in system sales. The transaction is expected to be immediately accretive. The

combined entity will have a portfolio of approximately 5,500 stores under 57 brands

 

Total consideration for the transaction is estimated at US$300 million, satisfied by the issuance of 2,253,930 shares of MTY and

the payment of US$240 million in cash. The final purchase price remains subject to customary working capital adjustments. The

cash component of the consideration will be financed by MTY’s cash on hand and by the new credit facility that is presently being

arranged. TD Securities will act as the sole Lead Arranger and Bookrunner for a syndicate of lenders. The new credit facility is

expected to provide enough flexibility for MTY to complete additional acquisitions in respect of future opportunities that might

become available to MTY and continue to pay and adjust its dividend in accordance with its dividend policy.

 

On July 25th, 2016, the Company completed the acquisition of Kahala Brands Ltd. for an estimated total consideration of $389 million.

- i think this number is quoted higher cause the shares moved up in value or working capital adjustments. Can anyone confirm?

-

[KCLarkin]

On July 25th, 2016, the Company completed the acquisition of Kahala Brands Ltd. for an estimated total consideration of $389 million.

- i think this number is quoted higher cause the shares moved up in value or working capital adjustments. Can anyone confirm?

-

 

Mostly currency translation, I assume. Acquisition was in USD. I assume the $389 million is CAD.

http://mtygroup.com/wp-content/uploads/2016/07/20160726-MTY-Acquisition-of-Kahala-Brands-EN-corrected.pdf

 

[Guest notorious546]

http://business.financialpost.com/investing/trading-desk/mty-food-group-ready-to-serve-up-growth-in-the-u-s-says-national-bank-analyst?__lsa=bb64-17bf

[finetrader]

I recently initiated a significant position (>5%) in  MTY.

 

I believe the actual P/E, sitting between 15-20, pretty interesting for a company of this quality.

 

[finetrader]

2018 Q2 released. Stock up 10%

 

 

https://mtygroup.com/wp-content/uploads/2018/07/20180711-MTY-reports-results-second-quarter-of-2018-ENG.pdf

 

N.B. This position is now 20% of my portfolio

 

[finetrader]

2018 Q3 released. Stock up 6%

 

https://www.newswire.ca/news-releases/mty-reports-2018-third-quarter-results-696540091.html

 

This position is now 26% of my portfolio

 

My P/FCF estimates is now about 16-17

[longlake95]

Nicely done Fine. I’ve watched MTY for a longtime and I am very fond of Stanley Ma. I missed the boat for now. What do you think MTY is worth?

 

LL

[finetrader]

Thanks longlake95,

 

Sorry for the late reply, I just saw your post.

 

I estimate FCF at about 100M$/year.

 

Market Cap is 1.8B$.

 

So at 18 times I consider this fairly valued.

 

I think someone buying now can expect to make between 10-15% return long term.

 

Not bad on an investment knowing that you will sleep well having money in this.

[finetrader]

Stock declined from 70$ to 58$ this past month.

 

What I think contributed to this decline is this:

-Same store sales were slightly negative

- Management warned about same store sales being affected by competition in the future.

 

1) I am not too worried about it as it is not the first time same store sales were declining for MTY.

2) They have so many brands

3) MTY has always been about growth by acquisition.

 

Market Cap = 1.46B$

FCF was 96-99M$ in 2018 and will probably be around 105-110M$ in 2019.

 

P/FCF= 1.46B$/110M$= 13.2-13.9

 

Buying opportunity ?  I'll let you decide

 

 

 

[longlake95]

Hi Fine,

 

you must have telepathic powers - I recently noticed the decline in MTY, and just downloaded the recent docs to get back up to speed. Give me a couple of days and I'd love to PM you on MTY.  On a cursory basis, seems cheap, and I like the move away from food courts.

 

LL

[NorteCapital]

https://www.vancourier.com/mty-food-group-buying-papa-murphy-s-holdings-in-deal-valued-at-253-2-million-1.23788226

[longlake95]

The market doesn't like the deal...so far...

[DTEJD1997]

The market doesn't like the deal...so far...

 

I am surprised at the merger.  Papa Murphy's was having TREMENDOUS difficulties.  They had disgruntled franchisees.  I looked at it a couple/few years ago and it did not look good.