SOURCE: Meritage Hospitality Group Inc.

Meritage Hospitality Group Inc.

September 25, 2009 09:55 ET

Meritage Reports Third Quarter 2009 Results; Strong Sales & Net Income Growth

GRAND RAPIDS, MI--(Marketwire - September 25, 2009) - Meritage Hospitality Group Inc. (OTCQX: MHGU), the nation's premier franchise operator, today reported financial results for the quarter ended August 30, 2009. Company filings can be viewed at www.otcqx.com.

Third Quarter 2009 Highlights

-- Sales increased 33.8% to $20.4 million from $15.3 million in the third
   quarter of 2008.
-- Income from operations improved $774,000 to $1,105,000 from $361,000.
-- Net income increased to $502,000 from a third quarter 2008 loss
   of $3,600.
-- Consolidated EBITDA (a non-GAAP measure) increased 55.1% to $1.4 million
   from $925,000.
-- The Company included its first full operating quarter of 20 Wendy's
   restaurants acquired in Jacksonville, Florida.
-- The Company continued to generate strong operating cash flows,
   increasing cash on hand to $3.3 million.

"Meritage continued its financial improvement in the third quarter of 2009 driven by cost containment, store growth, easing commodity costs, and a successful new Wendy's product launch. We continue to experience improved margins and profit flow-through from our Wendy's operations," stated Meritage CEO, Robert E. Schermer, Jr.

Nine Month 2009 Highlights

-- Sales increased 15.1% to $50.0 million from $43.5 million.
-- Income from operations was $1,766,000 compared to a net loss
   of $236,000 in 2008.
-- Net income was $689,000 compared to a net loss of $605,000 for the
   same period last year, even though the nine months of 2008 included a
   $717,000 one-time gain from the sale of real estate.
-- Consolidated EBITDA increased 40.8% to $2,974,000 compared
   to $2,113,000 in 2008.

Business Outlook

The new management team at Wendy's International is delivering on its initial promises to the Wendy's franchise system beginning with a successful new product launch of boneless chicken wings in June 2009. Looking ahead, we believe that Wendy's has a strong new product pipe line and is focused on margin growth at the Wendy's unit level. Returning Wendy's restaurants back to historical 16%-17% margins has profound positive implications on the Company's business model.

"We continue to focus on driving operational excellence and margin improvement in our Wendy's portfolio. Additionally, we see potential future growth opportunities for Meritage in the Wendy's system which could substantially enhance shareholder value," added Mr. Schermer.

About Meritage

Operating 73 quick service and casual dining restaurants, Meritage is one of the nation's premier franchise operators, specializing in the development and operation of restaurant and leisure properties. The company is headquartered in Grand Rapids, Michigan and employs a workforce of approximately 2,100. The company seeks unique opportunities to capitalize on its substantial development and operating expertise.

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.

Contact Information

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