Core Insights - MTY Food Group reported a normalized adjusted EBITDA of CAD 87.7 million for Q4, a 48% increase year-over-year, primarily due to a one-time CAD 29.5 million increase in gift card breakage income from unredeemed balances [1][6] - The company ended fiscal 2025 with positive net unit growth for the first time since 2013, adding 19 locations in Q4 [4][5] - Free cash flow per share reached CAD 5.68, marking the strongest cash generation in the company's history [12][13] Financial Performance - Same-store sales declined by 1.7% in Q4, with Canada flat and the U.S. down 2.8% [2] - Net income attributable to owners was CAD 32.1 million, or CAD 1.40 per diluted share, improved due to a prior year's impairment loss and current year's gift card breakage [11] - Cash flow from operations was CAD 46.2 million, up from CAD 43.7 million year-over-year, while free cash flow increased by 38% to CAD 37.6 million [13] Operational Highlights - Franchise operations in Canada saw a 1% revenue increase, while U.S. operations experienced a decline, aligning with same-store sales trends [7] - Corporate store segment profit was CAD 7.9 million, a 23% year-over-year increase, with margins improving from 5% to 7% [9] - The food processing, distribution, and retail segment achieved a revenue growth of 27%, driven by a shift in the retail model [10] Strategic Focus - Management is prioritizing long-term investments to enhance guest and franchisee experiences [2] - The company is undergoing a strategic review, which is ongoing but does not have a defined timeline [15] - MTY expects franchisee EBITDA growth to outpace same-store sales growth as it adds higher-quality stores [8]

Markets have a habit of getting bored with compounders right before they get interesting. MTY Food Group ( MTY:CA ) ( MTYFF ) has been a serial acquirer for decades, rolling up everything from Cold StoneI'm a fundamental investor who targets situations where the market has pushed a company’s valuation far out of line with its underlying economics. My professional background in corporate financial analysis has deeply shaped my investment perspective, leading me to focus intensely on cash flow durability, bal ...