Meritage Reports First Quarter 2023 Results; Strong Sales Growth Ahead

Rhea-AI Summary

Meritage Hospitality Group Inc. (OTCQX: MHGU) reported its financial results for Q1 2023, showing sales up 8.7% to $157.7 million, compared to $145.1 million last year. However, earnings from operations fell to $0.9 million from $2.5 million, and the company recorded a net loss of $1.5 million compared to a net income of $2.0 million in the same period last year. Consolidated EBITDA declined to $5.4 million from $8.4 million. The company has entered into an agreement to acquire 25 Wendy’s restaurants, expected to close in Q2 2023. For 2023, the outlook remains optimistic, projecting sales growth of 10% to 20% and a potential EBITDA increase of 25% to 35%.

Positive

• Sales increased 8.7% to $157.7 million.
• Definitive agreement to acquire 25 Wendy’s restaurants.
• Outlook forecast for 2023 shows strong growth potentials, including 10%-20% sales increase and 25%-35% EBITDA growth.

Negative

• Earnings from operations decreased to $0.9 million from $2.5 million.
• Net loss of $1.5 million compared to a net profit of $2.0 million last year.
• Consolidated EBITDA declined from $8.4 million to $5.4 million.

GRAND RAPIDS, Michigan, April 14, 2023 (GLOBE NEWSWIRE) -- Meritage Hospitality Group Inc. (OTCQX: MHGU), the nation’s premier franchise operator, today reported financial results for the first quarter ended April 2, 2023.

First Quarter Highlights

• Sales increased 8.7% to $157.7 million compared to $145.1 million for the same period last year.
• Earnings from Operations were $0.9 million compared to $2.5 million for the same period last year.
• Net Earnings (Loss) were $(1.5) million compared to $2.0 million for the same period last year.
• Consolidated EBITDA (a non-GAAP measure) was $5.4 million compared to $8.4 million for the same period last year.
• The Company entered into a definitive agreement to acquire 25 Wendy’s restaurants, scheduled to close in the second quarter, subject to standard due diligence.
  

“Our sales increased $12.6 million in the first quarter and continue to experience strong momentum into the second quarter. We believe margins are starting to improve as inflation stabilizes.”, stated Meritage CEO, Robert E. Schermer, Jr.

“The Company is under a definitive agreement to acquire 25 Wendy’s restaurants. Acquisitions, renovations, and new restaurant development are integral parts of our restaurant business model, as we grow into new, expandable market areas. Newly built Wendy’s restaurants continue to provide the Company with a strong return on investment, as guests reward us for contemporary restaurant designs and digital enhancements,” added Schermer.

2023 Outlook: Strong Growth Ahead:

• Sales +10% to +20%
• Earnings from Operations. +90% to +100%
• Net Income +35% to +45%
• EBITDA +25% to + 35%

The Company’s has opened three Taco John’s restaurants to date and is planning to open an additional 10-12 locations this year. The Company holds exclusive development rights in seven states as part of a 55 store development agreement with additional rights to develop more than 200 Taco John’s restaurants. The Company continues to leverage its strategic operating platform, unique in-house restaurant development expertise and investments in digital technology to build the best-of-class QSR brands focused on quality, convenience, and affordability.

The Company’s 5-year, 500 restaurant growth plan includes expanding its Wendy’s operations to the franchise system limit of 400 restaurants, the development of Taco John’s and Morning Belle, a breakfast-brunch brand owned by the Company.

About the Company

Meritage Hospitality Group is the nation’s premier restaurant operators, currently with approximately 356 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’s current and publicly available information pursuant to amended SEC Rule 15c2-11 and FINRA Rule 6432 can be found at www.otcmarkets.com, under the stock symbol MHGU/Disclosures 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.
Meritage Hospitality Group Inc.
(616) 776-2600 ext. 1012 

FAQ

What is the sales growth of Meritage Hospitality Group in Q1 2023?

Sales grew by 8.7% to $157.7 million compared to $145.1 million in Q1 2022.

What was the net earnings for Meritage Hospitality Group in Q1 2023?

The company reported a net loss of $1.5 million for Q1 2023.

What are the 2023 financial projections for MHGU?

The company projects sales growth of 10% to 20%, earnings from operations growth of 90% to 100%, and EBITDA growth of 25% to 35%.

How many restaurants is Meritage Hospitality Group acquiring?

Meritage is acquiring 25 Wendy’s restaurants.

What was the EBITDA for Meritage Hospitality Group in Q1 2023?

Consolidated EBITDA for Q1 2023 was $5.4 million, down from $8.4 million last year.