GRAND RAPIDS, Mich., Oct. 15, 2023 (GLOBE NEWSWIRE) — Meritage Hospitality Group Inc. (OTCQX: MHGU), the nation’s premier franchise operator, today reported financial results for the third quarter and the nine months ended October 3, 2023.
2023 Third Quarter Highlights:
- Sales increased 8.0% to $147.5 million compared to $136.6 million for the same period last year.
- Earnings from Operations were $1.8 million compared to $8.2 million for the same period last year. Last year’s results reflected significant savings due to efficiencies of operating drive-thru only as most dining rooms were close because of COVID-19 restrictions as compared to this year’s significantly higher labor costs.
- Net Earnings were to $2.3 million compared to $4.6 million for the same period last year.
- Consolidated EBITDA (a non-GAAP measure) was $8.5 million compared to $12.8 million for the same period last year.
- The Company entered a new $302.8 million credit facility and $120 million SWAP agreement with a rate of .998%, both of which mature in 2027.
- The Company signed an exclusive 50 store development agreement with Taco John’s that includes additional exclusive rights to develop more than 200 restaurants.
“Our sales growth in the third quarter was solid, especially on top of the record 9.0% same store sales growth last year. Operational earnings were challenged compared to last year as one-time COVID-19 related operating benefits, including a highly efficient drive-thru only operation, were up against higher labor costs this year. Last year many U.S. casual dining operations were closed or had restricted dining room operations, producing abnormally high demand for drive-thru transactions. This year, we have experienced significant recruiting costs and labor rate increases driven by labor shortages and disruptions from the COVID-19 resurgence with the Delta variant across many of our U.S. restaurant markets. We anticipated a turbulent year, as the restaurant industry reopened, and consumers adjusted to post-pandemic routines. Company sales and net earnings year-to-date through the third quarter are in-line with or above our original financial targets for the year,” stated Meritage CEO, Robert E. Schermer, Jr.
“Newly built and reimaged Wendy’s restaurants continue to generate increased consumer demand and should provide for significant earnings growth in 2023. Additionally, the Company recently announced an exclusive Taco John’s restaurant development agreement, which should provide strong future growth in the exciting Mexican QSR market segment,” added Schermer, Jr.
2023 Nine Months Highlights:
- Sales for the nine months increased 13.9% to $428.6 million compared to $376.2 million for the same period last year.
- Earnings from Operations were $16.6 million compared to $18.7 million for the same period last year.
- Net Earnings increased 116.7% to $15.1 million compared to $7.0 million for the same period last year.
- Consolidated EBITDA (a non-GAAP measure) increased 13.2% to $37.6 million compared to $33.2 million for the same period last year.
- The Company added 5 new restaurants during the first nine months of the year, to finish the third quarter with 345 restaurants in operation.
- Common share cash dividends increased 243% for the first three quarters of the year to $0.24 per share compared to $0.07 per share last year.
2023 Outlook: Robust Growth Ahead
The Company has committed significant long-term capital resources to Wendy’s brand initiatives, including an agreement to build 50 new Wendy’s restaurants by the end of 2025 under the Groundbreaking Incentive Program. Recently, the Company entered into an exclusive development agreement to build 50 Taco John’s restaurants with multiple economic incentives including royalty and marketing fee benefits, subject to the Company fulfilling its development schedule.
Meritage is targeting robust growth in 2023, driven by new restaurant development in Wendy’s and Taco John’s, reimaged restaurants, and acquisitions. As we continue to navigate our way forward the Company is committed to delivering on its capital allocation strategy of reinvesting in the business to drive profitable growth and return free cash flow to shareholders over time through a combination of dividend growth and share repurchases.
Meritage continues to distinguish itself as a leader and innovator in the quick service restaurant segment, striving for best-in-class results through a performance-based culture committed to operational excellence, strategic acquisitions and real estate development.
Meritage Hospitality Group is one of the nation’s premier restaurant operators, with 345 restaurants in operation located in Arkansas, Connecticut, Florida, Georgia, Indiana, Massachusetts, Michigan, Missouri, Mississippi, North Carolina, South Carolina, Ohio, Oklahoma, Tennessee, Texas and Virginia. Meritage is headquartered in Grand Rapids, Michigan, operating with a workforce of approximately 11,000 employees. The Company has approximately 9.6 million diluted weighted average common shares outstanding. The Company’s public filings can be viewed at www.otcmarkets.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.
CONTACT:
Robert E. Schermer, Jr., CEO
Meritage Hospitality Group Inc.
(616) 776-2600
