Max’s Group, Inc. (“MGI,” the “Company,” or the “Group”), the largest casual dining restaurant group in the Philippines, is reporting its operating results for both the third quarter and year-to-date September 2022.
The Group’s strategic pivots over the course of the pandemic running on a re-engineered economic model have set an all-time high organic net income for the nine months of 2022 surpassing pre-pandemic levels despite lockdowns and headwinds faced throughout the year. In just three quarters, MGI has already surpassed full-year organic 2019 net income.
“We have achieved in successive quarters our promise to deliver agility regardless of market volatility and global conditions. Our results have proven time and again that we can reach greater heights despite challenged conditions to serve our stakeholders and consumers,” stated MGI Chief Executive Officer Robert F. Trota.
MGI’s system wide sales (“SWS”) generated by both company-owned and franchised stores for the nine months amounted to P12.56 billion, growing 46% from the same period last year and already beating full-year 2021 sales of P12.52 billion. Consolidated revenues of the Group for the first nine months of the year amounted to P7.77 billion, a 46% growth from P5.32 billion in the same period last year. Topline is recovering supported by continued relaxed restrictions despite challenges from the first quarter effect of Omicron, and inclement weather conditions during the third quarter.
Year-to-date organic net income for MGI totaled P427 million, growing by 28% versus pre-pandemic 2019 and 5x as compared to the same period last year. In 2021, the Group’s statutory net income was at P234 million, which included a one-off gain of P377 million from the sale of a subsidiary whose primary asset is land.
“We are cautiously pleased with the results of the Group throughout 2022 thus far,” noted MGI President Ariel P. Fermin. “Despite the headwinds, the business revolution we orchestrated throughout the pandemic continues to bear fruit in how our organization runs, how our brands perform, and how our economic model delivers profit. At an organic level, we are particularly proud of how our margins outperform 2019 levels making it an attractive, reliable choice for our shareholders, our business partners, and our employees.”
For the third quarter, SWS reached P4.47 billion, a 55% increase versus 3Q 2021 levels of P2.87 billion. Revenues likewise grew by 64% for the period, up by over one billion pesos to P2.79 billion from just P1.70 billion in the same quarter of the prior year.
Local market sales jumped 72% in 3Q 2022 versus the same period last year as consumer confidence, mobility, and economics continue to revive. Meanwhile, the international business reported a solid 15% growth despite labor challenges in the North America market, with new agreements in place to further expand global reach in other markets.
Net income posted for the third quarter is 3x higher than the same period last year and 5x higher than organic net income in 2019.
“The more efficient economic model is designed to accelerate profit recovery even under ongoing market constraints. Higher margins prove its viability and sustainability as it has shown in various market conditions.” noted MGI Chief Finance Officer Maria Rochelle S. Diaz. “The Group managed to achieve higher organic results, outpacing ourselves from where MGI was pre- pandemic despite a tempered topline.”
Margins for year-to-date September and the quarter reflect historic highs as compared to pre- COVID benchmarks. Year-to-date margins are up, with record-high earnings before interest, taxes, depreciation, and amortization (EBITDA) and NIAT margins at 18.9% and 5.5% as compared to the organic 2019’s 15.3% and 3.2% margins, respectively.
For the third quarter, the Group EBITDA margin of 17.4% and net income margin of 5.2% are up by 454 and 433 basis points respectively versus organic margins in the comparable period in 2019.
Core brands are healthy with dine-in brands Max’s Restaurant and Pancake House securing a significant boost in sales as restrictions continue to relax, while off-premise brands Yellow Cab Pizza Co. and Krispy Kreme sustaining their pandemic-proofed resilience.
The Group proactively and strategically continues to achieve supply chain efficiencies with its state-of-the-art manufacturing capabilities through its commissary operations and have leveraged on scale and procurement strategies, converting into financial gains.
As of 30 September 2022, the Company’s store network totaled 14 territories, with 600 Philippine sites and 63 stores situated across various locations in North America, the Middle East, and Asia.