Q: Please comment on earning report. Why big drop ? Thanks a million.
5i Research Answer:
MTY reported EPS of $0.67, missing expectations of $0.9725 and revenues of $280.03M missing expectations of $283.54M. This was a tough earnings result for the company and shares are down this morning. Its interest expenses rose in the quarter and Adjusted EBITDA and system sales both increased, but management noted same-store sales dropped 0.9% year-over-year as consumers reined in discretionary spending. Its debt levels are high and rising, and it now has a net debt/EBITDA ratio of 5.1X. We believe most investors are concerned about the rise in interest expenses and its impact on the bottom line. We continue to like the name long-term, but it may see some challenges in the near-term.