Sphera Franchise Group (SFG) Q3 2024 earnings summary

Executive summary

• Achieved record sales and profitability in 9M 2024, with normalized net profit up 66.3% year-over-year to RON 71.4 million, nearly matching full-year 2023 profit.

• Opened new restaurants, including KFCs in Romania and Moldova, and Taco Bell in Bucharest, supporting network expansion.

• Acquired franchise rights for Cioccolatitaliani, entering a new consumer segment and diversifying the brand portfolio.

• Sphera shares outperformed the market, appreciating 53.7% in 9M 2024, with total return including dividends at 57.8%.

• Maintains a 100% dividend payout strategy, with yields of 8.9% in 2023 and 5.6% in 2024.

Financial highlights

• 9M 2024 consolidated sales reached RON 1,143.4 million, up 6.4% year-over-year; Q3 2024 sales hit RON 403.4 million.

• Restaurant operating profit rose 41% to nearly RON 142 million; normalized EBITDA up 36.2% to RON 129 million in 9M 2024.

• Net profit for 9M 2024 nearly doubled year-over-year to RON 71.4 million; net debt/EBITDA ratio at a historic low of 0.24.

• Restaurant expenses as a share of sales fell to 87.7% in 9M 2024, down nearly 3pp year-over-year.

• 2023 consolidated sales reached RON 1,469.2 million, up 11% year-over-year; normalized EBITDA rose 44.1% to RON 147.9 million.

Outlook and guidance

• Plans to open 1–3 new Taco Bell units in 2025, and expand Cioccolatitaliani in Italy with up to four new units per year.

• 2024 budget projects restaurant sales of RON 1,648.9 million (+12% vs. 2023), normalized net profit of RON 95.7 million (+20%).

• Management expects further EBITDA margin expansion in 2025, driven by Pizza Hut turnaround and maturation of new units.

• Estimated 2024 year-end cash position of RON 60 million and net bank debt of RON 100 million.

• Assumptions include 6% average inflation and a minimum wage increase; food and material costs expected to rise below sales growth.