Meritage Reports Second Quarter 2021 Results; Strong Sales And Earnings Growth

Rhea-AI Summary

Meritage Hospitality Group (OTCQX: MHGU) reported significant financial growth for Q2 2021. Sales rose 21% to $147.3 million, while net earnings increased 31.9% to $8.0 million. Earnings from operations were $8.5 million, reflecting a year-over-year decrease due to prior COVID-related benefits. For the first half, sales reached $281.1 million, up 17.4%. The company anticipates sales growth of 10% to 15% and net earnings growth of 20% to 30% for the full year, amidst ongoing expansion plans, including 15 new Wendy’s locations.

Positive

• Sales increased 21% to $147.3 million for Q2.
• Net earnings grew 31.9% to $8.0 million for Q2.
• Consolidated EBITDA increased 5.8% to $16.9 million for Q2.
• Six-month sales rose 17.4% to $281.1 million.
• Full-year guidance projects 10% to 15% sales growth.

Negative

• Earnings from Operations decreased to $8.5 million from $10.7 million in Q2, due to prior year's one-time benefits.

GRAND RAPIDS, Mich., July 16, 2021 (GLOBE NEWSWIRE) -- Meritage Hospitality Group Inc. (OTCQX: MHGU), the nation’s premier franchise operator, today reported financial results for the second quarter ended July 4, 2021.

Second Quarter Highlights

• Sales increased 21% to $147.3 million compared to $121.7 million for the same period last year.
• Earnings from Operations were $8.5 million compared to $10.7 million for the same period last year. The prior year contains one-time prime cost benefits associated with the COVID pandemic operating environment.
• Net Earnings increased 31.9% to $8.0 million compared to $6.1 million for the same period last year.
• Consolidated EBITDA (a non-GAAP measure) increased 5.8% to $16.9 million compared to $15.9 million for the same period last year.

“Our earnings growth was driven by strong same restaurant sales, restaurant renovations, new store openings as well as real estate sales and development. Company restaurant management teams have done a commendable job of managing operations in a tight labor market as U.S. consumers return to pre-covid activity levels. We have re-opened all of our Wendy’s dining rooms in 16 states, along with six of our independent brand restaurants located in Michigan. Looking ahead, our operating and development outlook remains very strong as we plan to complete 33 renovations and open 15 new Wendy’s locations this year. We have set the stage for future growth, as we build toward our goal of 400 Wendy’s and 600 total restaurants in operation by 2025,” stated Robert E. Schermer, Jr., the Company’s CEO.

Six-Month Highlights

• Sales for the six months increased 17.4% to $281.1 million compared to sales of $239.5 million for the same period last year.
• Earnings from Operations increased 41.3% to $14.8 million compared to $10.5 million for the same period last year.
• Net Earnings increased 440.3% to $12.9 million compared to $2.4 million for the same period last year.  
• Consolidated EBITDA (a non-GAAP measure) increased 43.2% to $29.2 million compared to $20.4 million for the same period last year.
• Common stock dividends issued increased 128.5% to $0.16 per share compared to $0.7 for the same period last year.
  

The Company has committed significant long-term capital resources to support Wendy’s brand initiatives, including a newly expanded agreement to build 50 new Wendy’s restaurants by the end of 2025 under the Groundbreaking Incentive Program. Newly built and re-imaged restaurants continue to deliver strong sales and earnings results as guests continue to reward us for upgraded restaurant facilities and improved overall customer experience.

Company 2021 Full-Year Outlook: Strong Growth Ahead

• Sales growth of +10% to 15%
• Earnings from Operations growth of +20% to 30%
• Net Earnings growth of +20% to 30%
• EBITDA growth of +15% to 20%
• Dividend growth +100% to 125%
  

Meritage continues to distinguish itself as a national leader and innovator in the quick service and new restaurant segments, striving for best-in-class results through a performance-based culture committed to operational excellence, strategic acquisitions and real estate development.

About the Company

Meritage Hospitality Group is the nation’s premier franchise operator, with 342 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 news 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 ext. 1012

FAQ

What are the Q2 2021 earnings results for MHGU?

For Q2 2021, Meritage Hospitality Group reported sales of $147.3 million, net earnings of $8.0 million, and earnings from operations of $8.5 million.

How did Meritage's sales perform in the first half of 2021?

Sales for the first half of 2021 increased by 17.4% to $281.1 million compared to the same period last year.

What is the full-year outlook for Meritage Hospitality Group?

For 2021, MHGU expects sales growth of 10% to 15% and net earnings growth of 20% to 30%.

What is the significance of Meritage’s new store openings?

Meritage plans to open 15 new Wendy's locations as part of a strategy to achieve its goal of operating 400 Wendy's by 2025.