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27 Oct 2022 07:00
27 October 2022
FRANCHISE BRANDS PLC
("Franchise Brands", the "Group" or the "Company")
Q3 Trading Update
Strong contributions by Filta North America and Metro Rod
Board confident of exceeding current consensus market expectations for the full year
Franchise Brands plc (AIM: FRAN), an international multi-brand franchise business, provides the following trading update for the three months to 30 September 2022 ("Q3").
The Group has continued to perform robustly during Q3, driven by strong contributions by the two largest businesses, Filta in North America and Metro Rod in the UK.
Filta's North American business benefited from strong activity across all key customer sectors, which has partly resulted from the elevated price of cooking oil, as the Filta Fry process can double the useful life of such oil. The strong market price of used cooking oil, which franchisees collect and sell for recycling, has also generated additional income, which many franchisees have re-invested in expanding their businesses. Finally, the movement in exchange rates over the period has enhanced the sterling value of the dollar earnings of the Group.
Metro Rod experienced continued strong momentum in system sales as a result of the continuing initiatives to widen and deepen the services offered by franchisees, particularly in the area of pump service and maintenance. The development of Metro Plumb is also accelerating with the recruitment of more independent franchisees.
Across the B2B Division, which now includes the Filta direct labour business in the UK, good progress is being made in integrating and streamlining operational delivery and developing sales opportunities across the enlarged customer base for the benefit of both franchisees and corporate operations.
The B2C Division continues to experience headwinds in franchise recruitment and retention as a result of the unusual conditions in the labour market in the UK.
Overall, the Board expects the Group's revenue, adjusted EBITDA, and adjusted EPS for the year ending 31 December 2022 to be ahead of current consensus market expectations*.
Stephen Hemsley, Executive Chairman, commented:
"I am very pleased with our performance in Q3 and year-to-date which gives us confidence in exceeding current market expectations for the full year. This performance has been driven by an excellent performance from the transformational acquisition of Filta and the continued strong momentum at Metro Rod. It demonstrates the strength of our growth strategy and quality of our franchise networks.
"I am particularly pleased that the acquisition of Filta has given us a significant international presence in the large franchise-friendly North American market. This will considerably enhance our scope for both organic development and accretive B2B acquisitions.
"Our technology-enabled business is highly profitable and cash generative, with a strong ungeared £100m balance sheet. The Group is in a robust financial position to weather more challenging economic conditions and take advantage of future growth opportunities both in the UK and in the US. I, therefore, look forward to the future with considerable confidence".
* Consensus market expectations for the financial year ending 31 December 2022 are revenue of £92.9m, adjusted EBITDA of £14.3m and adjusted EPS of 7.31p.
Enquiries:
Franchise Brands plc | + 44 (0) 1625 813231 |
Stephen Hemsley, Executive Chairman |
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Andrew Mallows, Interim Chief Financial Officer |
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Julia Choudhury, Corporate Development Director |
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Allenby Capital Limited (Nominated Adviser and Joint Broker) | +44 (0) 20 3328 5656 |
Jeremy Porter / George Payne (Corporate Finance) Amrit Nahal (Sales & Corporate Broking) |
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Dowgate Capital Limited (Joint Broker) | +44 (0) 20 3903 7715 |
James Serjeant / Russell Cook / Nicholas Chambers |
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MHP Communications (Financial PR) | +44 (0) 20 3128 8100 |
Katie Hunt/Catherine Chapman | +44 (0) 7884 494112 |
| franchisebrands@mhpc.com |
About Franchise Brands plc
Franchise Brands is focused on building market-leading businesses primarily via a franchise model. The Group currently has a combined network of 600 franchisees across six principal franchise brands in the UK, North America and Europe. Our focus is on established brands which can benefit from our shared support services, specialist sector expertise, management experience and group resources.
Our B2B brands are Metro Rod, Metro Plumb, Filta, Willow Pumps and Azura, and our principle B2C brands are ChipsAway, Ovenclean and Barking Mad. Each of our brands are leaders in their respective markets. The combined trading history of all the Group's brands is over 190 years. Franchise Brands employs over 430 people from 5 principal offices in the UK as well as Orlando, Florida and the Netherlands.
For further information, visit www.franchisebrands.co.uk
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