Franchise Brands PLC (AIM:FRAN) has said its sales and profits for 2022 are likely to be even higher than recently increased City expectations, thanks to strong performances from both its main divisions.
The AIM-listed drain cleaning and kitchen oil filtration franchise group said revenue, underlying earnings (EBITDA) and adjusted earnings per share were all expected to be ahead of market predictions.
Analysts on average forecast sales of £98.75mln, adjusted EBITDA of £14.73mln and adjusted EPS of 7.7p, following a bullish update in October.
Following the acquisition of Filta Group, which was completed in March, the company said the Filta North America division increased system sales by 51% to US$92mln for the year, with an exit run-rate of US$100mln as its key commercial customer sectors of hospitality, education and sporting venues in North America made a full recovery from the coronavirus pandemic.
System sales were also boosted as demand for the FiltaFry oil filtration service was driven by the elevated price of virgin cooking oil, which has in turn driven the value of used cooking oil, which is collected from customers, and sold for reprocessing into biofuel.
Additional income generated from these sales has been used by many franchisees to expand their businesses by investing in new equipment, which the group expects to further drive both sales and income in the coming years.
In the UK business-to-business (B2B) division, system sales in Metro Rod and Metro Plumb grew 19% to £60mln, the company said, including 31% growth at Metro Plumb.
Among the 42 Metro Rod franchisees, one exceeded £3mln in sales for the first time, another five exceeded £2mln in sales – up from one in 2019 - and 27 exceeded £1mln in sales – up from 18 before the pandemic.
Willow Pumps was said to have made an increased contribution, helped by a recovery in its supply and installation work. The acquisition of Filta resulted in the addition of a “significant, if somewhat underperforming”, UK direct labour organisation into the Willow Pumps division, with this group of businesses said to be now “beginning to make a valuable contribution to divisional profits”.
Franchise Brands executive chairman Stephen Hemsley noted that this was accompanied by “significant growth in profitability”.
He said the Filta businesses were integrated “faster than expected and have made an excellent contribution in the year, with many more opportunities identified for development in the future”.
Franchise Brands said its consumer-facing (B2C) division, comprising ChipsAway, Ovenclean and Barking Mad, saw reduced levels of franchise recruitment and retention amid the healthy job market. A strategic review of the B2C operations is being undertaken.
Looking forward, Helmsley said the B2B businesses “offer a significant opportunity to capture an increasing share of their large, fragmented markets where scale and our ability to serve customers through our one-stop range of services is becoming more of a competitive advantage."
"We look forward to 2023 and beyond with considerable confidence," he concluded.