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GRAND RAPIDS, Mich., April 16, 2019 (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 31, 2019.
First Quarter Financial Highlights
“We delivered a solid earnings performance in the first quarter through our restaurant operations and real estate development business model, despite challenging winter weather conditions and record school closings across many of our markets. Company restaurant operating teams stayed focused on the things they could control in adverse weather conditions, such as food inventory and labor costs. The Wendy’s marketing plan was beneficial to us in the first quarter driving profitable transactions, allowing us to head into the second quarter with a strong underlying business.
We plan to accelerate our capital investment spending in 2019 with 36 restaurants under development, including a record 20 new Wendy’s restaurant buildings scheduled for opening this year. Our new and newly renovated Wendy’s restaurants continue to perform well in the market place, positioning the Company for continued sales and earnings growth ahead,” stated Robert E. Schermer, Jr. the Company’s CEO.
Full-Year Outlook: Strong Sales & Earnings Growth Ahead
Meritage continues to distinguish itself as a leader and innovator in the quick service and casual restaurant segment, striving for best in class results through a performance-based culture committed to operational excellence, strategic acquisitions and real estate development.
Meritage Hospitality Group is one of the nation’s premier restaurant operators, with 318 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 10,000 employees. The Company has approximately 6.3 million (basic) 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.
New Accounting Principles
In 2019, the Company adopted the Financial Accounting Standards Board ASU 2016-02, Leases, which superseded the previous lease requirements in ASC 840. The new ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases are classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Previously, leases were classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the previous guidance.
The new lease standard has a significant effect on the Company’s financial statements as a result of the leases for various locations previously classified as operating leases. The balance sheet effect of applying the new lease guidance increased long-term assets, increased long-term liabilities, and impacted equity. The income statement effects on the results of sales and earnings from operations are not expected to be significant. The potential income statement effect on Net Income and Consolidated EBITDA will be limited to sale leaseback activity within our real estate portfolio.
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.
Robert E. Schermer, Jr., CEO
Meritage Hospitality Group Inc.
616/776-2600 ext. 1012