SOURCE: Meritage Hospitality Group Inc.

Meritage Hospitality Group Inc.

July 18, 2014 09:00 ET

Meritage Reports Second Quarter 2014 Results

Continued Restaurant Sales and Earnings Growth

GRAND RAPIDS, MI--(Marketwired - Jul 18, 2014) -  Meritage Hospitality Group, Inc. (OTCQX: MHGU), one of the nation's premier restaurant operators, today reported financial results for the second quarter ended June 29, 2014. 

Second Quarter Highlights

  • Sales increased 15.4% to $40.5 million from $35.1 million for the same period last year.
  • Earnings from Operations increased 5.4% to $2,218,000 from 2,103,000 for the same period last year.
  • Net Earnings were $1,210,000 compared to $1,712,000 for the same period last year, (which included a non-recurring gain of $617,000).
  • Consolidated EBITDA (a non-GAAP measure) was $2.9 million compared to $3.3 million for the same period last year.
  • The Company paid its 47th consecutive quarterly dividend on its Series B Cumulative Convertible Preferred Stock of $0.20 per share, on July 1, 2014 to shareholders of record as of June 15, 2014. 
  • The Company paid a special common stock dividend of $0.015 per share on July 1, 2014, to shareholders of record as of June 15, 2014, representing a 50% dividend increase over the same period last year.

"We are pleased with our operating results for the quarter and the performance of our renovated and newly constructed Wendy's restaurants. The Company has allocated substantial resources toward Wendy's restaurant growth initiatives, including the restaurant re-imaging program termed 'Image Activation,' as well as construction in new retail trade areas. 

"Our proprietary casual dining restaurants continued to perform well in the second quarter with net earnings growth of 560% over the same period last year. We have an exciting project pipeline for both Wendy's and our casual dining restaurants in 2015 and 2016, which we believe will accelerate our sales, EBITDA and earnings growth rates going forward," stated Meritage CEO, Robert E. Schermer, Jr. 

Six Months Highlights

  • Sales for the six months increased 13.3% to $75.7 million compared to sales of $66.8 million for the same period last year.
  • Earnings from Operations increased 7.7% to $2,984,000 compared to $2,772,000 last year.
  • Net Income $1,408,000 compared to $2,134,000 for the same period last year, (which included a non-recurring gain of $849,000).
  • Consolidated EBITDA (a non-GAAP measure) was $4.4 million compared to $4.8 million in 2013.

The Company affirmed its 2014 operating guidance:

  • Sales growth of 10% to 15%
  • Net Income growth of 50% to 55%
  • EBITDA growth (a non-GAAP measure) of 30% to 35%
  • Special Dividend growth of 50%

Meritage is one of the nation's leading franchise operators, currently operating 121 quick-service and casual dining restaurants in six states. The Company specializes in the acquisition, development and operation of restaurants, utilizing its scalable web-based back-of-house operating platform. The Company is headquartered in Grand Rapids, Michigan, and employs a growing workforce of approximately 3,500. The Company's public filings can be viewed at www.otcqx.com, under the common stock symbol MHGU and the company's website at www.meritagehospitality.com.

SAFE HARBOR STATEMENT

Certain information in this news 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