RE:Q2 2020 Results to be Announced this Friday before openEventHorizon wrote: 10 JUL 2020 @ 08:30 eastern time should be the conference call (dial 647-788-4922).
What are your expectations? Do you anticipate a kitchen sink quarter?
In the Q1 MD&A, there is quite extensive discussion of anticipated impairment charges to receivable, earnings, as well as goodwill/trademarks etc. (pages 16-17). I anticipate this will result in a collosal loss for the quarter (the intangibles are about 1.5 billion so even small change to the discount rate will be tens of millions of impairment). In this extent, I was wondering whether this non-cash charges could help offset at least the cash taxes they have to pay. In last set of financial statements, MTY paid 21% of income in taxes (or 5M+ per quarter) and had about 18M more in taxes payable in the liabilities. Preserving cash expenses could help minimize the 10M+ expected cash burn for the quarter. However, I am not sure how it works across the border and how sales taxes (these I assume would be the 18M?) vs income taxes (5M?) are being treated.
Also, do any of you know about whether the debt covernants have been relaxed? They were 4:1 (3.5:1) debt to EBITDA and 2:1 cash to rent+interest at all times. I am pretty sure they will breach the covenants for both TTM Q2 and Q3. They were already at over 3.1x at Pappa Murphy's pro-forma and will lose 1/4 to 1/2 of EBITDA this year due to temporary closures. Moreover, they have provided ~40% discount to their franchisees if they paid their fees on time/early for this time, which will take an additional large cut beyound just the overall slowed system-wide sales.
What things will you be looking for in the call?
Are any of you selling/buying before the call?
Honestly if you are long i would buy a small position now and after. This stock is very volatile and could go down alot further before the end of the week. So far insiders have bought very few at these levels and there has been no buybacks yet