REG - Franchise Brands PLC - Q3 Trading Update

Franchise BrandsAnnouncement

12/11/2024 07:00

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RNS Number : 7840L  Franchise Brands PLC  12 November 2024

12 November 2024

FRANCHISE BRANDS PLC

("Franchise Brands", the "Group" or the "Company")

 

Q3 Trading Update

Franchise Brands plc (AIM: FRAN), an international multi-brand franchise
business, provides the following trading update for the three months to 30
September 2024 ("Q3").

Trading in Q3, and Q4 to date has continued the trend of H1 with resilient
underlying demand for the Group's essential reactive and planned services. We
continue to progress well with the integration of the Group's businesses and
driving groupwide efficiencies. However, the anticipated recovery in project
work is now not expected until next year due to continued macroeconomic
uncertainty and challenging conditions in some markets. This supports the
Board's expectation that Group Adjusted EBITDA(1) for the year ending 31
December 2024 will be within the range of market expectations, albeit at the
lower end(2).

Divisional performance

At Pirtek, demand for essential reactive service has continued to be resilient
in most sectors. Project work and other discretionary spending has remained
subdued, particularly in the construction and plant hire sectors. The early
signs of improving macroeconomic sentiment detected over the summer have not
yet led to a sustained improvement in demand.  This was particularly evident
in the UK, which was compounded by uncertainty in relation to the Autumn
Budget, and in Germany which continues to be held back by the significant
slowdown in the manufacturing sector. However, a growing pipeline of required
maintenance work remains available when customers have the confidence to
re-start discretionary spending.

In the Water & Waste Services division, demand for essential reactive
services has also remained robust. Filta UK continued to successfully
transition from a direct labour organisation to a franchise model. Willow
Pumps is expanding its customer base to support Filta UK customers and drive
efficiency within the core pump service.

Filta North America's core franchise business (excluding used cooking oil)
experienced strong growth in system sales, building on the progress made in
H1. The used cooking oil price has remained stable all year albeit
significantly below the average for 2023 and we continue to focus on driving
volume. Franchisees continue to expand the range of services offered, which
will reduce reliance on this source of income and help drive our
percentage-based management service fee.

The B2C Division continues to trade creditably despite a challenging franchise
recruitment environment.

Corporate development

Following recent acquisitions, the Group's strategic focus is on integrating
these businesses into the Group and repaying the acquisition
debt facilities.

The Group continues with the implementation of a common IT platform that will
be managed centrally, and this will be instrumental in driving our operational
gearing.

 

Stephen Hemsley, Executive Chairman, commented:

"Demand for our essential reactive services continues to drive a resilient
performance despite softer demand for non-essential work.  We expect this
deferred work will be required, albeit the exact timing is uncertain and so we
are cautiously assuming a recovery beyond the current year.

"All our integration and de-gearing initiatives remain on track, which will
enhance our operational gearing and EPS growth, respectively, in future years.
Our principal franchise brands have significant growth potential as they grow
their small shares of large, fragmented markets, expand their range of
services and geographical penetration, and cross-sell to our large customer
base. I, therefore, remain confident that our resilient reactive service
business will continue to prosper, and that overall system sales growth will
accelerate once the macroeconomic environment improves and support the
strategic ambitions set out at the Capital Markets Day held earlier this
year."

(1)Adjusted EBITDA is earnings before interest, tax, depreciation,
amortisation, impairment losses, exchange differences, share-based payment
expense and non-recurring items.

(2)Current market expectations of Adjusted EBITDA for the financial year
ending  31 December 2024 are £35.7m to £37.0m.

 

Enquiries:

 Franchise Brands plc                                                 + 44 (0) 1625 813231
 Stephen Hemsley, Executive Chairman

 Peter Molloy, Group Chief Executive Officer
 Andrew Mallows, Interim Chief Financial Officer
 Julia Choudhury, Corporate Development Director

 Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker)  +44 (0) 20 7710 7600
 Matthew Blawat
 Nick Harland

 Allenby Capital Limited (Joint Broker)                               +44 (0) 20 3328 5656
 Jeremy Porter / Liz Kirchner (Corporate Finance)
 Amrit Nahal / Joscelin Pinnington (Sales & Corporate Broking)

 Dowgate Capital Limited (Joint Broker)                               +44 (0) 20 3903 7715
 James Serjeant (Corporate Broking)
 Malar Velaigam / Colin Climie (Sales)

 MHP Group (Financial PR)                                             +44 (0) 20 3128 8100
 Katie Hunt / Hugo Harris                                             +44 (0) 7884 494112
                                                                      franchisebrands@mhpgroup.com

About Franchise Brands plc

Franchise Brands is an international, multi-brand franchisor focused on B2B
van-based service with seven franchise brands and a presence in 10 countries
across the UK, North America and Europe. The Group is focused on building
market-leading businesses primarily via a franchise model and has a combined
network of over 625 franchisees.

The Company owns several market-leading brands with long trading histories,
including Pirtek in Europe, Filta, Metro Rod and Metro Plumb, all of which
benefit from the Group's central support services, particularly technology,
marketing, and finance. At the heart of Franchise Brands' business-building
strategy is helping its franchisees grow their businesses: "as they grow, we
grow".

Franchise Brands employs over 700 people across the Group.

For further information, visit www.franchisebrands.co.uk

 

 

 

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