Imvescor Restaurant Group reports 2011 year end results

MONCTON, N.B., Jan. 26, 2012 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), reported financial results today for the 13 weeks ended October 30, 2011 (or "fourth quarter"), and for the 52 weeks ended October 30, 2011 (or "year to date"). The 2010 results are for the 13 and 53 weeks ended October 31, 2010.

Highlights

Seven new restaurants were opened during the year: 4 Pizza Delights, 1 Mikes, 1 Scores and 1 Baton Rouge restaurant, while renovating 6 Pizza Delights and 7 Mikes.

Same store sales ("SSS") in the fourth quarter were positive 0.6% as compared to negative 2.0% in 2010.  SSS was positive in three of the four brands with Scores showing the most significant improvement.  The improvements in sales are attributed to more focused marketing resulting in new creative direction and focus.

Restructuring of Operations

The Company has made substantial progress in restructuring its operations and exiting certain underperforming locations and unfavorable lease terms. Through these measures, the Company has reduced expenses by approximately $2.0 million on an annual basis.  The Company intends to use some of these savings to support additional marketing efforts and other initiatives in future periods to increase system sales and improve franchisee profitability.  The Company is in particular deploying management efforts to negotiate with authorized suppliers with the objective of reducing the cost at which food is sold to franchisees.  This effort and associated investments are expected to result in the long-term health and future development of the Company's franchise system.

For the 52 weeks ended October 30, 2011, general, administrative and franchise support costs were $19.0 million as compared to $19.4 million for the 53 weeks ended October 31, 2010.  Overall administrative and overhead cost reductions as well as significant savings in franchise support expenses are a result of exiting underperforming locations and unfavorable lease terms.

Earnings before interest, depreciation, lease exit costs, impairment, income tax expense and discontinued operations for the 52 weeks ended October 30, 2011 were $13.1 million as compared to $13.0 million for the 53 weeks ended October 31, 2010.  The 2011 results were positively impacted by higher retail revenues, a reduction in advertising expenditures and a reduction in general, administrative and franchise support expenses partially offset by lower supply chain revenues.

Earnings from continuing operations for the 52 weeks ended October 30, 2011 were $3.3 million as compared to a loss of $18.1 million for the 53 weeks ended October 31, 2010.  Included in earnings from continuing operations were lease exit costs of $1.2 million and reorganization costs of $800 thousand described above.  In 2010, there were impairment charges of Imvescor rights, other assets and goodwill totaling $22.9 million.

Fourth Quarter 2011 Financial and Operating Results

The following table provides selected financial information for the 13 week and 52 week periods ending October 30, 2011, along with results for the comparative periods of the prior year, which were calculated for the 13 weeks and 53 weeks ended October 31, 2010.

(in thousands of dollars except per share items) 13 weeks ended
October 30, 2011
13 weeks ended
October 31, 2010
52 weeks ended
October 30, 2011
53 weeks ended
October 31, 2010
System sales 102,151 101,465 405,048 413,176
Royalties and other revenue 9,587 10,008 39,228 39,992
Advertising and administrative expenses 7,826 7,356 29,589 30,904
EBITDA (note 1) 2,726 3,550 13,127 12,954
Adjusted EBITDA (note 2) 3,451 3,978 14,227 13,654
Net earnings (loss) from continuing operations 584 (20,441) 3,329 (18,077)
Net earnings (loss) from discontinued operations (90) 22 (1,291) (566)
Net earnings (loss) 494 (20,419) 2,038 (18,643)
EPS (loss) from continuing operations 0.062 (2.164) 0.352 (1.914)
EPS (loss) from discontinued operations (0.009) 0.000 (0.136) (0.060)
Total basic EPS 0.053 (2.164) 0.216 (1.974)
Total diluted EPS (note 3) 0.017 (2.164) (0.021) (1.974)

Note 1: EBITDA includes earnings before interest income, interest on long-term debt and convertible debentures, depreciation and amortization, lease exit costs, gains, impairments, loss from discontinued operations and income taxes.

Note 2:  Adjusted EBITDA excludes extraordinary legal fees of $300 thousand related to refinancing options and legal settlement costs of $425 thousand in the fourth quarter of 2011 and $428 thousand related to reorganization costs in the fourth quarter of 2010.  For the 52 weeks ended October 30, 2011, adjusted EBITDA excludes the extraordinary legal fees of $300 thousand and $800 thousand in reorganization costs and excludes $700 thousand in reorganization costs for the 53 weeks ended October 31, 2010.

Note 3: Diluted EPS for the 13 and 52 weeks ended October 30, 2011 have included the potential dilutive impact of the convertible debentures and have been calculated at 95% of the closing share price of $0.62 at October 30, 2011.

IRG derives its revenues primarily from royalties based on system sales from each of its four brands: Pizza Delight™, Mikes™, Scores™ and Bâton Rouge™.

Same Store Sales

  13 weeks ended
October 30,
2011
13 weeks ended
October 31,
2010
52 weeks ended
October 30,
2011
53 weeks ended
October 31,
2010
Pizza Delight™ -2.7% +0.9% -1.2% +0.2%
Mikes™ +0.8% -1.2% -1.3% -2.8%
Scores™ +2.4% -8.2% -2.9% -7.1%
Bâton Rouge™ +0.8% +2.4% -0.7% +1.5%
IRG +0.6% -2.0% -1.5% -2.5%

Total system sales for the fourth quarter were $102.2 million as compared to $101.5 million in 2010, an increase of 0.7%.  Total system sales for the 52 weeks ended October 30, 2011 were $405.0 million as compared to $413.2 million for the 53 week period in 2010.

Royalties, advertising fees and other revenue for the fourth quarter were $9.6 million and $39.2 million for the 52 weeks ended October 30, 2011 as compared to $10.0 million and $40.0 million in 2010.  The Company recorded growth in retail revenues of branded products in grocery and other retail outlets. The Company experienced decreases in supply chain revenues as a result of providing food cost reductions to franchisees with the objective of increasing purchasing compliance and franchisee profitability.

General, administrative and franchise support costs for the fourth quarter were $5.2 million as compared to $4.8 million in 2011.  The increase in the fourth quarter is related to legal settlements recorded as well as additional legal costs related to evaluating refinancing options.  General, administrative and franchise support costs were $19.0 million for the 52 weeks ended October 30, 2011 as compared to $19.4 million for the 53 weeks ended October 31, 2010.  The overall reduction is attributed to administrative and overhead cost reductions as well as significant savings in franchise support expenses due to the exiting of underperforming locations and unfavorable lease terms.

EBITDA in the fourth quarter was $2.7 million as compared to $3.6 million in 2010.  The decrease is related to a decrease in supply chain revenues of approximately $400 thousand, additional legal costs of $300 thousand related to evaluating refinancing options, $425 thousand related to legal settlement costs and $300 thousand related to higher bonus compensation recorded in the fourth quarter as compared to 2010.  In the fourth quarter of 2010, the Company recorded reorganization costs of $428 thousand which was not incurred in the fourth quarter of 2011.

The Company recorded net income for the fourth quarter of $494 thousand or $0.053 per share compared to a net loss of $20.4 million or $(2.164) per share for the 13 weeks ended October 31, 2010.

Net income for the year was $2.0 million ($0.216 per share) as compared to a loss of $18.6 million (-$1.974 per share) in 2010.  Included in net income are restructuring costs of $800 thousand, lease exit costs of $1.2 million and costs related to the closure of the two Company-owned Scores restaurants of $1.3 million consisting of operating losses, write down on assets and estimated costs to exit leases.

Total long-term debt at October 30, 2011 decreased to $39.8 million as compared to $43.7 million at October 31, 2010, a result of principal payments. Debt repayment remains a priority of the Company.

About Imvescor Restaurant Group

Headquartered in Moncton, New Brunswick, Imvescor Restaurant Group owns franchised and corporate stores throughout Canada, under four brands:  Pizza Delight® operates primarily in Atlantic Canada, where it dominates the family/mid-scale segment.  Mikes® and Scores® restaurants operate primarily in Quebec in the family and casual dining segments and the take-out and delivery segments.  Bâton Rouge® operates in Quebec, Ontario, Alberta and Nova Scotia in the casual dining segment.

Cautionary Note Regarding Forward-Looking Statements

Certain information in this press release regarding the Company, including, but not limited to, the Company's business objectives, strategies and priorities, the generation of cash flows, the refinancing of the Convertible Debentures, the growth of the same store sales, and other statements that are not historical facts, are "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Forward-looking statements can generally be identified by words such as "may", "should", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "outlook" and similar expressions. All such forward-looking statements are made pursuant to the "safe harbour" provisions of applicable securities laws. These statements are based on information currently available to the Company's management and on the current assumptions, intentions, plans, expectations and estimates of the management regarding the Company's future growth, results of operations, performance and opportunities as well as the economic environment in which it operates. Forward-looking statements involve known and unknown risks, uncertainties and other factors outside the Company's control. A number of factors could cause actual results of the Company to differ materially from the results discussed in the forward-looking statements, including, but not limited to: market conditions for financing, competitive conditions, whether related to new competitors or current competitors; change in the Company's or its competitors current pricing strategies; changes in demographic trends; changes in consumer preferences and discretionary spending patterns; changes in national and local business and economic conditions; risks associated with the closure of restaurants, costs associated with strategically exiting locations, the ability of the Company to pay dividends, the Company successfully offers new and innovative products and executes its strategies as planned; legislation and governmental regulation; changes in accounting policies, practices and standards; and the results of operations and financial condition of the Company and other factors referenced in the Company's continuous disclosure filings which are available on SEDAR at www.sedar.com. Although the forward-looking statements contained herein are based upon what the Company believes to be reasonable assumptions on the date of this press release, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. Certain assumptions underlying the forward-looking statements contained herein include assumptions related to the Company's ability to obtain financing on conditions favorable to the Company, future cash flows, market conditions, sales estimates, estimates relating to the Company's ability to settle and exit leases. Readers should not place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this press release and, accordingly, are subject to change after such date. Forward-looking statements are provided herein for the purpose of giving information about the Company's current strategic priorities, expectations and plans, allowing investors and others to get a better understanding of the Company's business outlook and operating environment. Readers are cautioned, however, that such information may not be appropriate for other purposes. The Company assumes no obligation to update such forward-looking statements to reflect new information, future events or otherwise, except as required by applicable securities laws. Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any transactions that may be announced or that may occur after the date of this press release. The financial impact of these transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. The Company therefore cannot describe the expected impact in a meaningful way or in the same way it presents known risks affecting the business. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. 

 

SOURCE IMVESCOR RESTAURANT GROUP

For further information:

Denis Richard
President & CEO
Imvescor Restaurant Group Inc.
http://www.imvescor.ca
514-341-5544
For more information about our brands:
Pizza Delight®:  http://www.pizzadelight.com
Mikes®:  http://www.mikes.ca
Scores®:  http://www.scores.ca
Bâton Rouge®:  http://www.batonrougerestaurants.com

Profil de l'entreprise

IMVESCOR RESTAURANT GROUP

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