The Guzman Y Gomez Ltd (ASX: GYG) share price is up 1.3% after being down as much as 8% in response to the FY24 result.
GYG is a Mexican fast food operator, with a large network in Australia and a small presence overseas. It has both company-operated outlets and franchises.
Guzman Y Gomez FY24 result
The business reported both how it performed year on year (YOY) against FY23 and also how it performed against the forecasts in its initial public offering (IPO) prospectus:
- Network sales of $959.7 million, up 26.4% YOY and 0.6% higher than prospectus
- Revenue of $342.2 million, up 32.1% YOY and 0.7% higher than prospectus
- Underlying/pro forma EBITDA rose 52.9% to $44.8 million and 4.1% better than prospectus
- Underlying/pro forma net profit after tax (NPAT) jumped 94.1% to $5.7 million and 71.2% better than prospectus
- Statutory loss after tax sank 506% to $13.7 million, but it was 15.1% better than the prospectus
Looking at the geographic breakdown, Australian network sales rose 27.3% to $894.6 million, Singapore network sales increased 7.5% to $46.4 million and Japan network sales grew 12.3% to $7.9 million.
GYG reported comparable sales growth of 8.1%, primarily driven by restaurants in Australia, including 18% comparable sales growth for breakfast. The comparable sales growth is essential for the GYG share price, in my opinion.
The corporate restaurant profit rose 59.5% to $48.6 million, while the restaurant margin improved from 14.4% to 17.4%.
Pleasingly, the median franchisee return on investment (ROI) for FY24 was 53%, an increase of 6 percentage points compared to FY23.
The number of corporate restaurants increased by nine over the year to 64 in Australia, the number of Australian franchised restaurants increased by 14 to 130, the number of Singapore and Japan franchised restaurants each increased by one to 17 and five, respectively.
Looking at the US, corporate restaurant sales increased by 81.8% to $10.8 million, while the corporate restaurant loss was $1 million and in margin terms improved from negative 12.8% to negative 9.2%. Pro forma segment underlying EBITDA was a loss of $6.5 million, which was 52.3% worse than FY23.
Outlook for the GYG share price
The Australian restaurant pipeline continues to “strengthen” according to the company, with 91 sites in the pipeline and 46 restaurants approved by the board.
In the first seven weeks of FY25, Australian segment comparable sales growth has been “above expectations” at 7.4%, reflecting the continued success of its latest campaign, delivery outperformance and guest demand for value menu items.
The company expects to meet its prospectus forecasts for new restaurant openings – it’s expecting to open 31 restaurants in FY25.
Overall, Guzman Y Gomez is expecting to achieve its prospectus forecasts for FY25.
GYG is clearly doing well and it beat its forecasts for FY24, which is great. However, the valuation is certainly taking into account that potential future success.
