(Sharecast News) - In a third-quarter update on Wednesday, multi-brand franchise operator Franchise Brands said that the B2B businesses, which focus on essential reactive services, including Metro Rod and Metro Plumb in the UK and Pirtek in eight European countries, all achieved record trading levels.
The AIM-traded firm said that despite a slight softening in demand during the summer, the services showed resilience, with the third quarter performing slightly softer than the first half but showing an uptick in activity at the start of the fourth quarter.
It noted that since its acquisition of Pirtek Europe in April, it now operates seven franchise brands in 10 countries across the UK, continental Europe and North America.
Pirtek, post-acquisition, had been successfully integrated into the group and was meeting expectations.
The company said it was actively working on broadening its service offerings and expanding its customer base through cross-selling opportunities within the group.
With substantial growth potential, the board said the integration process had been accelerated, including optimising management structures and incorporating technology, finance, and marketing into central functions.
Franchise Brands said Metro Rod had maintained strong momentum, expanding its system sales by offering a more comprehensive range of services, particularly pump and maintenance services.
Metro Plumb was also experiencing growth, driven by recruiting new independent franchisees and improvements in service offerings.
Willow Pumps' special project department was gaining momentum, while Filta Environmental was transitioning to a franchise model, which the firm said was strengthening the franchise's long-term sustainability.
In the North American market, Filta's business saw robust activity across several customer sectors, with growth in used oil volumes and revenues.
Additional services, such as bulk oil sales and steam cleaning, were introduced to drive income further.
The B2C division meanwhile faced ongoing challenges in a challenging environment, but profitability remained in line with expectations.
Looking at the balance sheet, the group said net debt excluding leases narrowed to £76m on 30 September, compared to £79.1m on 30 June.
The group's interest charge averaged 8% on its gross debt, reflecting changes in the sterling overnight interest average (SONIA).
Regarding management, the group said it had strengthened its senior team with new appointments, including Mark Fryer as chief financial officer and Rob Bellhouse as company secretary.
Its corporate governance was reorganised to align with the group's expansion, with a smaller plc board and a management board comprising divisional CEOs and support function heads.
Despite challenging macroeconomic conditions, the group said its resilient services positioned it well for continued growth.
The board expected the group's adjusted EBITDA for the year ending 31 December to align with current market consensus expectations.
"The integration of Pirtek is progressing well, and the new senior leadership appointments are allowing us to accelerate the process of integrating this business into the group and achieve more cross-functional and cross-geographic co-operation, particularly where we can leverage our shared resources," said executive chairman Stephen Hemsley.
"We see significant potential for growth across our principal franchise brands, which have a small share of large markets, by broadening the range of services offered, increasing the geographical penetration and cross-selling to the larger customer base."
Hemsley said that scale and the firm's continued investment in IT infrastructure would accelerate its operational gearing in future years and be a further driver of adjusted EBITDA.
"Whilst the trading environment has become more challenging as the year has progressed, the resilient nature of the business services we provide gives us confidence in delivering adjusted EBITDA for the full year in line with consensus market expectations."
At 1110 BST, shares in Franchise Brands were down 6.6% at 147.1p.
Reporting by Josh White for Sharecast.com.
Franchise Brands (FRAN)