Meritage Reports First Quarter 2020 Results

Company confirms it chose not to accept loans or participate in CARES Act Payroll Protection Program

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.