Meritage Hospitality Group Inc. (OTCQX: MHGU) reported preliminary financial results for the 2012 fiscal year ended December 30, 2012.
2012 Consolidated Summary
- Company Sales increased 7.6% to a record $99.0 million compared to $91.9 million in 2011.
- Income Before Taxes increased 80.9% to $2.3 million compared to $1.3 million last year.
- Net Income increased 28.2% to $2.9 million compared to $2.3 million last year.
- Consolidated EBITDA (a non-GAAP measure) increased 11.7% to $5.5 million, compared to $5.0 million last year.
- The Company declared its 37th consecutive quarterly dividend on its Series B Cumulative Convertible Preferred stock of $.20 per share, which was payable on January 1, 2013 to shareholders of record as of December 15, 2012.
- Meritage opened or acquired 24 restaurants during 2012, to finish the year with 111 restaurants operating in six states.
Fourth Quarter 2012 Highlights
- Sales increased 4.4% to $25.0 million compared to $24.0 million in 2011.
- Net Income was $707,000 compared to $1,251,000 in the fourth quarter of 2011.
- Consolidated EBITDA (a non-GAAP measure) was $1.2 million compared to $1.8 million in the same period last year.
- The Company opened one new Wendy's restaurant and acquired 22 Wendy's restaurants during the quarter.
- Commodity cost pressures (primarily beef) remained historically high in 2012, and we anticipate continued margin pressure due to unusually high beef prices. Reduced cattle herds and price volatility remains complicated by required U.S. Government subsidies for corn-based ethanol consuming an estimated 40% of the U.S. corn crop.
The Company's 2013 operating targets include the following financial expectations:
- Consolidated Sales growth of 30% to 35%
- Earnings Before Taxes growth of 110% to 120%
- Net Earnings growth of 15% to 20% (prior fiscal year included certain non-recurring deferred tax asset benefits)
- EBITDA (a non-GAAP measure) growth of 65% to 70%
In our Wendy's restaurant system, we remain focused on extensive brand revitalization and the image activation of our portfolio. The Company's remodeling efforts are a key ingredient in the over-all strategy to contemporize the entire customer experience including restaurant design, new food products and higher customer service standards. The goal is to grow profitable sales with an experience that is relevant to both new and existing consumers.
Meritage's planned unit growth for its Twisted Rooster-style restaurants, a wholly owned casual dining brand, is expected to generate accelerating sales and positive earnings contributions in 2013. The plan begins with the late spring 2013 opening of "Freighters." Freighters is the restaurant and catering centerpiece of a new $24.0 million St. Clair County Convention Center & Hilton Double Tree Hotel, located on the St. Clair River at the base of the Blue Water Bridge Port Huron, MI.
The focus of our growth strategy continues to be investment in Wendy's and casual dining restaurant opportunities where we can leverage our web-based operating platform for efficiencies and profitable growth, providing the opportunity for cash distributions to shareholders.
Meritage is one of the nation's premier restaurant operators, currently managing 111 quick service and casual dining restaurants. The Company specializes in the acquisition, development and operation of quick service and casual dining restaurant properties. The Company is headquartered in Grand Rapids and employs a growing workforce of approximately 3,500. The Company seeks new restaurant acquisition and development opportunities to capitalize on its unique web-based operating platform and substantial restaurant operating expertise.
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