GRAND RAPIDS, Mich., May 12, 2020 (GLOBE NEWSWIRE) -- Meritage Hospitality Group Inc. (OTCQX: MHGU), one of the nation’s premier restaurant operators, today reported financial results for the first quarter ended March 29, 2020.
First Quarter Highlights
- Sales increased 7.3% to $117.8 million compared to $109.8 million for the same period last year.
- Loss from Operations was $0.2 million compared to Income from Operations of $5.4 million for the same period last year.
- Net Loss was $3.7 million compared to Net Income of $4.1 million for the same period last year. (The change in earnings includes a negative year over year non-cash GAAP change of $1.0 million resulting from the Company’s interest rate swap agreements, which are measured at fair value based on mark-to-market.)
- Consolidated EBITDA (a non-GAAP measure) was $4.5 million compared to $12.5 million for the same period last year. (Last year included a $3.6 million real estate gain)
- The Company owned 335 restaurants compared to 318 for the same period last year.
“The first quarter for the Company’s restaurant business was a tale of two extremes. Early in the quarter, we hired 1,400 additional team members across our Wendy’s restaurant system, preparing for the national breakfast roll-out. We experienced record same store sales growth from breakfast, which continues to perform well in the social distancing environment. The pandemic arrived mid-March, with Government ordered closure of restaurant dining rooms and state shelter-in-place mandates. We closed 335 dining rooms, including 8 restaurants entirely, on a temporary basis,” stated Robert E. Schermer, Jr.
In response, the Company enacted many proactive measures to combat the negative near-term financial impact caused by the COVID-19 mandates, including but not limited to; suspended all non-essential cap-ex and new restaurant development, suspended dividends, requested landlord rent relief and interest only loan payments for 90 days. On April 6, 2020, the Company was approved for loans through its various subsidiary entities under the CARES Act Payroll Protection Program. As a result of shifting rules, unclear guidance and stabilized restaurant sales, the Company chose not to accept loans or participate in the Program but elected to participate in other tax benefits provided for under the CARES Act.
The Company’s path to full operations will consist of a phased approach taking numerous elements into consideration such as consumer and employee safety, business readiness, state and local guidance, and the new “normalized” safety protocols among QSR, family dining and other retail peers within the communities that it serves.
Looking Forward: Recovery & Rehiring
Our Wendy’s weekly sales continue to improve, as many states and communities we serve move toward re-opening. The Company is planning to hire restaurant employees once the closure mandates are lifted and normal dining room occupancy is restored. We believe the quick service restaurant segment and the Company have distinct advantages in a future recovery.
- As in past times of economic stress, speed, convenience and affordability have been favorable differentiators in quick service restaurant operations.
- Wendy’s restaurants are built for off premise sales, with restaurant drive-thru windows at each location.
- The Wendy’s system is expanding digital and delivery options for additional off-premise sales.
- Lower gas prices increase consumer disposable income and decrease supply delivery costs.
Meritage continues to distinguish itself as a leader and innovator in the quick service restaurant segment, striving for best in class results through a culture committed to safety, operational excellence and continued growth.
About Meritage
The Company is one of the nation’s premier restaurant operators, with 335 restaurants 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 consolidated workforce of approximately 10,600 employees.
The Company makes information available pursuant to the Alternative Reporting Standard on the OTCQX. The Company’s filings can be viewed at www.otcqx.com, under the symbol MHGU, or the Company’s website www.meritagehospitality.com.
SAFE HARBOR STATEMENT
Certain information in this press release, particularly information regarding future economic performance and finances, plans, expectations and objectives of management, and the impacts that the novel coronavirus COVID-19 pandemic may have on our business operations and financial condition, 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.
Robert E. Schermer, Jr
Meritage Hospitality Group Inc.
616/776-2600 ext. 1012