Guzman y Gomez beats prospectus forecasts but US operations continue to struggle

GYG has reported a statutory net loss of $13.7 million for FY24, down from a prospectus forecast of $14.2 million, with the result impacted by costs from the company’s $2.2 billion ASX listing earlier this year.

The pro forma result, which GYG says better reflects the performance of the business, saw net profit after tax rise 94 per cent to $5.7 million, which was also 71 per cent higher than the prospectus forecast.

The earnings performance is heavily weighted towards the Australian market, which performed strongly over the year.

Global network sales from GYG's 220 restaurants in Australia, Singapore, Japan and the US surged 26.4 per cent to $959.7 million, aided by the opening of 25 new stores. This delivered revenue of $342.2 million for GYG, an increase of 32.1 per cent on the prior year.

GYG has 64 corporate-owned stores and 130 franchised in Australia, along with 17 restaurants in Singapore, five in Japan and four in the US.

Network sales in Australia grew more than 27 per cent to $894.6 million, driven by new store openings and solid growth in the breakfast offering which saw an 18 per cent increase in comparable sales for the year. Sales in Singapore were up 7.5 per cent to $46.4 million while Japan was up 12.3 per cent to $7.9 million.

GYG currently has a pipeline of 91 sites for Australia with 46 restaurants approved by the board.

GYG founder and co-CEO Steven Marks says the FY24 result reflects “strong operation execution” along with consumer demand for the Guzman y Gomez offering.

“GYG delivered network sales growth of 26 per cent for the year, ahead of prospectus forecasts,” says Marks.

“This result was underpinned by strong comparable sales growth and the continued delivery of restaurant network expansion across Australia.

“Strong sales growth and ongoing margin expansion resulted in significant growth in earnings, exceeding prospectus forecasts.

“We could not have achieved these results without the relentless efforts of our franchisees and crew, who have continued to deliver clean, fresh, made-to-order, Mexican-inspired food to guests at high speeds.”

GYG delivered pro forma EBITDA of $44.8 million for the year, up 52.9 per cent from a year earlier. But statutory EBITDA of $27.3 million was down 7.9 per cent year on year – still 7.2 per cent ahead of prospectus forecasts.

In the US, where GYG operates four stores in the Chicago area, the group achieved network sales of $10.8 million, up 81.8 per cent.

But the US delivered a pro forma underlying EBITDA loss of $6.5 million reflecting “the nascency of the US segment and ongoing investment above restaurant”.

“We remain focused on demonstrating proof of concept in the US,” says Marks.

GYG is planning to announce a local partnership with a Chicago-based operator “to support the ongoing growth of its Naperville restaurant”.

“The partnership is not expected to have a significant impact on GYG’s earnings in FY25,” says the company.

GYG has made a solid start to FY25, reporting comparable sales growth of 7.4 per cent in Australia over the first seven weeks of this financial year.

The company expects to open 31 stores in FY25 and continue to meet its prospectus forecasts which include EBITDA of $59.9 million and group revenue of $428.2 million.

Investors will be regularly updated on the group’s progress with the company planning to release quarterly results. The September-quarter performance is due for release in early October.