SOURCE: Meritage Hospitality Group Inc.

Meritage Hospitality Group Inc.

April 21, 2010 15:56 ET

Meritage Reports First Quarter 2010 Results; Continued Strong Sales & Earnings Growth

GRAND RAPIDS, MI--(Marketwire - April 21, 2010) - Meritage Hospitality Group Inc. (OTCQX: MHGU), the nation's premier franchise operator, today reported financial results for the first quarter ended April 4, 2010.

First Quarter Financial Highlights

--  Sales increased 42.8% to $18.9 million from $13.2 million for the same
    reported period last year.

--  Income from Operations increased to $431,000 compared to a loss of
    $129,000 for the same reported period last year.

--  Net Income was $550,000 compared to a net loss of $420,000 for the same
    reported period last year.

--  Consolidated EBITDA (a non GAAP measure) increased 141.7% to $841,000
    from $348,000 for the same reported period last year.

"We continued to deliver significant earnings improvements in the first quarter of 2010, despite continued historically high unemployment in our markets. We remain optimistic about the Wendy's brand revitalization under its new leadership, and the 2010 launch of a new supply chain for the Wendy's system. Wendy's is testing a new high quality breakfast and initiating a major international expansion as future growth drivers for the system. Our focus remains on driving operational excellence and margin improvements in our franchised restaurant portfolio. We are aggressively seeking growth opportunities where we can add value through our disciplined operating practices and back-of-house operating systems," stated Robert E. Schermer, Jr., the company's CEO. "Today more than ever, we believe scale and diversification are essential ingredients in the franchise business model," added Mr. Schermer.

About Meritage

Meritage is one of the nation's premier franchise operators, currently operating 73 quick service and casual dining restaurants. The company specializes in the development and operation of restaurant and leisure properties. The company is headquartered in Grand Rapids and employs a workforce of approximately 2,100. The company seeks unique opportunities to capitalize on its substantial development and operating expertise. The company's public filings can be viewed at www.otcqx.com, under the stock symbol MHGU, or the company's website www.meritagehospitality.com.

SAFE HARBOR STATEMENT

Certain information in this new release, particularly information regarding future economic performance and finances, and plans, expectations and objectives of management, constitutes forward-looking statements. Factors set forth in our Safe Harbor Statement, in addition to other possible factors not listed, could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. Please review the Company's Safe Harbor Statement at http://www.meritagehospitality.com.

Meritage Hospitality Group Inc. and Subsidiaries
                                      Consolidated Statement of Operations


                                                    Three Months Ended
                                                --------------------------
                                                  April 4,      March 1,
                                                    2010          2009
                                                ------------  ------------

Food and Beverage Revenue                       $ 18,873,188  $ 13,212,971

Costs and Expenses
   Cost of food and beverages                      5,002,666     3,850,987
   Labor and related expenses                      6,301,433     4,457,744
   Advertising expenses                              737,584       520,308
   Other operating expenses                        5,355,638     3,590,572
                                                ------------  ------------

     Total Operating Expenses                     17,397,321    12,419,611

   General and administrative expenses (Note
    10)                                              682,671       486,970
   Depreciation and amortization                     362,225       435,727
                                                ------------  ------------

     Total Costs and Expenses                     18,442,217    13,342,308
                                                ------------  ------------

Income (Loss) from Operations                        430,971      (129,337)

Other Income (Expense)
   Interest expense                                 (195,537)     (218,260)
   Debt extinguishment charges (Note 8)                    -       (13,254)
   Interest income                                     1,804        20,063
   Other expense                                     (10,649)       (1,041)
   Other income                                       78,783        29,093
   Gain (loss) on disposal of assets                 (20,479)        5,746
   Stock option expense (Note 15)                    (38,468)      (15,791)
                                                ------------  ------------

     Total Other Expense                            (184,546)     (193,445)
                                                ------------  ------------

Income (Loss) Before Income Taxes                    246,425      (322,782)

Income Tax Expense (Credit)                         (303,129)       96,911
                                                ------------  ------------

Net Income (Loss)                               $    549,554  $   (419,693)
                                                ============  ============


Contact Information

  • CONTACT:
    Robert E. Schermer, Jr.
    CEO
    Meritage Hospitality Group Inc.
    616/776-2600

    MERITAGE HOSPITALITY GROUP INC.
    3310 Eagle Run Drive, N.E., Suite 205
    Grand Rapids, Michigan 49525

    Telephone: (616) 776-2600
    Facsimile: (616) 776-2776
    www.meritagehospitality.com