Meritage Homes (MTH) Sidoti Micro-Cap Virtual Investor Conference summary

Business overview and recent challenges

• Operates 359 Wendy's restaurants in 15 states with about 11,000 employees.

• Faced a 'black swan' year in 2025 with severe weather, high beef tariffs, and leadership turnover at Wendy's.

• Entered loan forbearance with primary lenders due to cash flow issues.

• EBITDA dropped from a normal $42M to -$6.8M in 2025.

• Started 2026 with $11M cash, below the desired $20M working capital.

Operational and financial adjustments

• Closed 20 underperforming stores in Q4 2025, with more closures expected in 2026.

• Store closures led to 10-15% sales lifts in nearby locations, improving overall performance.

• Cut $7.5M in G&A expenses and expect $4.4M annual savings from closures.

• Breakfast opt-out policy change allowed exit from 51 unprofitable breakfast locations.

• Digital discounting reversed, restoring margins.

Brand and industry dynamics

• Wendy's has had four CEOs in 18 months, causing instability.

• New President/COO Pete Suerken is focused on franchisee financial health and policy changes.

• Shifted away from one-for-one store closure policy, now allowing closure of money-losing stores without new builds.

• Wendy's protein mix is 80% beef, 20% chicken, limiting flexibility during beef price spikes.

• Project Fresh aims to improve customer experience and operational discipline.