Max’s Group reports Full Year 2015 Financial Results

Max’s Group Inc. (MGI, PSE: MAXS) posted a net income of P501.4 million in 2015 coming from a reported loss of P66.2 million in 2014. On a pro-forma basis, topline growth was at 6% to P10.4 billion from P9.8 billion despite deliberate closures to rationalize store network and improve overall profitability. Restaurant sales increased 6% to P8.6 billion from P8.1 billion driven by additional company-owned and franchised outlets in 2015. As a result, commissary sales and franchise income rose 2% to P1.3 billion and 37% to P497.5 million, correspondingly.

Excluding one-time gains and non-recurring charges, core net income stood at P555.0 million.

“The results validate a complete turnaround of our business. From a transformative period in 2014, we have successfully transitioned to the growth phase. We are confident with our strategies to sustain this trajectory in the coming years,” said Robert F. Trota, President and CEO of Max’s Group, Inc.

In 2015, Max’s Group opened 84 stores primarily across winning brands Max’s Restaurant, Pancake House, Yellow Cab Pizza and Krispy Kreme. This includes pioneering its first multi-brand shared space dining concept Burgos Eats and Eco Eats, located in Bonifacio Global City and Makati, respectively. While bulk of the stores were built in the last quarter, these new stores are seen to significantly contribute to revenues in 2016. As of end-2015, MGI operates a network of 588 stores including 35 abroad.

“There were certain delays encountered in our rollout schedule beyond our control. Nevertheless, full revenue impact of our new stores is expected to be realized this year,” added Mr. Trota.

Moreover, MGI was able to sign 5 development agreements in 2015. A total of more than 50 outlets overseas have been earmarked to open in the coming years. These are 15 Yellow Cab Pizza stores in Saudi Arabia, 10 Yellow Cab Pizza stores and 8 Pancake House stores in United Arab Emirates, 10 Sizzlin’ Steak stores in Vietnam and 3 Max’s Restaurants in San Diego. Early this year, MGI inked a deal to establish 15 Yellow Cab Pizza stores in China and a minimum of 5 Pancake House stores in Qatar.

“We are excited about the prospects of our brands in the global stage. Our international expansion program continues to garner interest from several foreign groups. We are aiming to seal additional offshore markets in 2016,” stated Mr. Peter H. King, Chief Executive Officer of Max’s Group International.

Max’s Group continued to invest in 2015 in support operations to generate synergies and efficiencies. MGI adopted category management in the sourcing of raw materials to leverage on negotiated prices and terms with suppliers. Commissary equipment was modernized to further enhance production capabilities. The Company embarked on a migration to an upgraded enterprise resource-planning platform at record pace to streamline processes. Furthermore, MGI has boosted its ancillary revenue channels with the introduction of mobile ordering applications specifically for Krispy Kreme and Yellow Cab Pizza.

“We recognize the need to reinforce our support system to carry us forward. We also want to seize opportunities on the prevailing mobile and delivery trend among consumers. Other brands such as Max’s, Pancake House and Teriyaki Boy will soon follow suit with their own,” remarked Mr. Trota

As part of its on-going rationalization program, MGI winded down retail operations of its Le Coeur De France coffee shop and boulangerie.

“There will be no physical operations for Le Coeur De France for now but the brand will remain and continue to serve its institutional clientele. We may revisit its business model and may consider re-launching in the future,” said Mr. Trota

“For 2016, we stay upbeat that consumption will continue to stir the local economy with some lift from election spending. We plan to put up another 60-70 stores including 15-20 international with minimal churn. By and large, we believe Max’s Group is headed towards steady sustainable growth in the long-term, ” concluded Mr. Trota.