REG - Franchise Brands PLC - Q3 Trading Update

Franchise BrandsAnnouncement

27/10/2022 07:01

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RNS Number : 2446E  Franchise Brands PLC  27 October 2022

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
 Andrew Mallows, Interim Chief Financial Officer
 Julia Choudhury, Corporate Development Director

 Allenby Capital Limited (Nominated Adviser and Joint Broker)   +44 (0) 20 3328 5656
 Jeremy Porter / George Payne (Corporate Finance)

 Amrit Nahal (Sales & Corporate Broking)

 Dowgate Capital Limited (Joint Broker)                         +44 (0) 20 3903 7715
 James Serjeant / Russell Cook / Nicholas Chambers

 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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