SOURCE: Meritage Hospitality Group Inc.

Meritage Hospitality Group Inc.

October 17, 2014 08:37 ET

Meritage Reports Third Quarter 2014 Results; Accelerating Sales and Earnings Growth

GRAND RAPIDS, MI--(Marketwired - Oct 17, 2014) - Meritage Hospitality Group Inc. (OTCQX: MHGU), one of the nation's premier restaurant operators, today reported financial results for the third quarter and the nine months ending September 28, 2014.

2014 Third Quarter Highlights:

  • Sales increased 13.5% to $40.7 million compared to $35.8 million for the same period last year.

  • Earnings before income taxes increased 27.3% to $1.0 million compared to $811,000 for the same period last year.

  • Net Income increased 69.2% to $512,000 compared to $303,000 last year.

  • Consolidated EBITDA (a non-GAAP measure) increased 13.6% to $2.3 million compared to $2.0 million for the same period last year.

  • The Company completed the acquisition of nineteen (19) Wendy's restaurants located in the Atlanta, Georgia market area and commenced construction on two new Wendy's restaurants in Jacksonville, Florida.

  • The Company signed an exclusive agreement to develop a 210 seat casual dining restaurant located in the entertainment district in downtown Grand Rapids, Michigan adjacent to the VanAndel Arena.

Chief Executive Officer Robert Schermer, Jr., stated: "We continue to grow the business in the highly charged quick service and casual dining restaurant environments. On the negative side, beef costs are at an all-time high with little relief in sight until 2016 and we are experiencing increasing labor costs due to state and federal minimum wage increases and Obamacare. On the positive side, gasoline prices are at a multi-year low and the job market is improving, creating a positive for restaurant guests."

The Company remains highly confident that with its demonstrated history of operational integration and commitment to the Wendy's restaurant reimaging program, that it will generate accelerating sales and greater guest satisfaction in its Wendy's restaurants.

"In our full-service restaurants, our made from scratch American style cuisine, served in an upbeat environment, continues to resonate well with guests. Sales for the third quarter increased 30.4% over the same period last year.

"We have a pipeline of high quality new restaurant development opportunities. New development opportunities combined with accelerated traffic drivers including new menu items, catering, and a continued high food quality/value proposition should allow us to continue our growth pace," added Mr. Schermer.

2014 First Nine Months Highlights:

  • Sales for the nine months ended September 28, increased 13.4% to $116.4 million compared to sales of $102.6 million for the same period last year.

  • Earnings before income taxes were $2.8 million compared to $3.4 million for the same period last year, which included certain non-recurring real estate benefits.

  • Net Income was $1.9 million compared to $2.4 million for the same period last year, which included certain non-recurring real estate benefits.

  • Consolidated EBITDA (a non-GAAP measure) was $6.7 million compared to $6.9 million last year.

Meritage Hospitality Group is one of the nation's premier restaurant operators, with 141 restaurants located in Florida, Georgia, Michigan, North Carolina, South Carolina and Virginia. Meritage is headquartered in Grand Rapids, Michigan, operating with approximately 3,900 employees. 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.