MONCTON, NB, June 10 /CNW Telbec/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), formerly PDM Royalties Income Fund ("PDM"), reported financial results today for the 13 weeks ending May 2, 2010 (or "second quarter"), and for the 27 weeks ending May 2, 2010. IRG has operated as a public company since October 10, 2009 and therefore the results for the periods ending May 2, 2010 and are not directly comparable with the results for PDM in the same quarter and six-month periods last year. The Board of Directors has approved a dividend of $0.075 per share payable to shareholders on August 31, 2010 to shareholders of record August 13, 2010.
"Imvescor Restaurant Group continues making progress in building new restaurants and working closely with its franchisees to provide great food and service to its customers," said Ron Magruder, President and Chief Executive Officer. "Market conditions continue to be challenging and the consumer remains cautious. However, we have continued to make progress on many fronts, including a regular and predictable quarterly dividend, repayment of a portion of our long-term debt, the opening of new restaurants and the renovation of existing restaurants."
Year to date Highlights
- The Company has repaid $1.6 million in long-term debt;
- The Company has declared its third consecutive quarterly dividend of
$0.075 per share;
- Four new restaurants were opened and 12 locations renovated; and
- Total sales increased by 1.8% for the 27 weeks ended May 2, 2010.
Second Quarter 2010 Financial and Operating Results
(Please see "Information on Basis of Comparison" following the Outlook
section of this release)
Year to date, to May 2, 2010, the Company opened 1 new Pizza Delight, 1 new Mikes, 2 new Scores, and closed 1 Pizza Delight and 2 Mikes while renovating 5 Pizza Delights and 7 Mikes. In fiscal 2009, the Company opened 1 new Scores, and renovated 4 Pizza Delights, 5 Mikes, 1 Scores and closed 6 Pizza Delights, 2 Mikes and 1 Scores.
The following table provides selected financial information for the 13 week and 27 week periods ending May 2, 2010, along with results for the prior year, which were calculated for the three-month and six-month period ended March 31, 2009.
(in thousands of dollars 2010 2009 2010 2009
except per share / (13-weeks (3-months (27-weeks (6-months
fund unit items) ended ended ended ended
May 2) March 31) May 2, March 31,
System sales 99,771 101,423 206,620 203,050
Royalties, franchise fees
and other related revenue 9,581 - 20,019 -
Gross profit on sales 1,403 - 2,886 -
administrative expenses 7,986 119 17,873 161
Net earnings 533 3,111 700 4,355
Basic earnings per share /
fund unit 0.056 0.397 0.074 0.563
Diluted earnings per
share / fund unit 0.056 0.366 0.074 0.534
IRG derives its revenues primarily from royalties based on system sales from each of its four brands: Pizza Delight(TM), Mikes(TM), Scores(TM) and Baton Rouge(TM).
The year to date total system sales for 2010 were $206.6 million, an increase of 1.8% over the $203.1 million of total system sales for the comparable six months in 2009. Total system sales for the second quarter were $99.8 million, a 1.6% decrease over system sales for the comparable three months of the previous year. This reduction in sales is primarily related to more difficult economic conditions compared to previous periods.
Royalties, advertising fees and other related revenue for the second quarter were $9.6 million and $20.0 million for the 27 weeks ended May 2, 2010. There is no meaningful comparison with the previous year. The change is a result of the new corporate structure.
Gross profit on sales was $1.4 million for the second quarter and $2.9 million for the 27 weeks ended May 2, 2010.
Same store sales ("SSS") were -2.9% during the second quarter. SSS at Pizza Delight grew +1.3%; Mikes SSS were -1.4%; Scores SSS were -8.4%; and Baton Rouge SSS were -0.7% for the second quarter. Management considers this performance better than the average in the full service restaurant sector.
When calculating the SSS for the various periods it should be noted that the current quarter ended May 2, 2010 includes 13 weeks sales compared to 13 weeks in the previous year and the 13 week period ended in March 31, 2009 is compared to the same 13 week period in 2008. Similarly the year to date figures includes 27 weeks sales compared to the same 27 weeks in the previous year and the 26 week period ending in March 2009 is compared to the same 26 week period in 2008. The above comparable periods may not cover the same dates as reflected in the financial statements as they are provided in an effort to give the reader more meaningful comparisons of actual performance.
Net earnings for the Company for the second quarter ending May 2, 2010 were $533 thousand or $0.056 per fully diluted share compared to $3.1 million or $0.366 per fund unit for the same period last year. The basis for comparison with 2009 is not directly comparable.
Total long-term debt at May 2, 2010 declined to $45.5 million from $47.0 million at October 25, 2009. The decrease is the result of principal repayments.
The Company believes that three of its four restaurant brands are well positioned in the market as the general economic conditions continue to be a challenge. It is management's belief that as disposable income decreases, consumers will trade down to more value-driven dining occasions which Pizza Delight, Mikes and Scores offer. Baton Rouge has a higher average check adding an extra challenge in this economy and management has taken steps such as maintaining a high level of customer service plus introducing some new and modified products at lower prices.
Management expects same store sales growth from renovations to the Mikes and Pizza Delight restaurants in its current markets while the new concept will provide a solid platform in the new markets where the Company plans to expand. Year to date the Company renovated five Pizza Delights and seven Mikes. Management plans on aggressively renovating its existing restaurants to these new concepts in the next three fiscal years. The Company will continue to open new restaurants with plans to open ten in fiscal 2010.
Information on Basis of Comparison
Under the Plan of Arrangement approved by shareholders on September 4, 2009, PDM Royalty Income Trust acquired (by way of merger) the privately held Imvescor Inc. and other private entities. The surviving entity is now a corporation rather than an income trust. The name was changed to Imvescor Restaurant Group and began operations as a corporation on October 10, 2009.
The new corporation, Imvescor Restaurant Group, is a publicly traded company and is therefore required to compare its financial results with its predecessor, PDM Royalty Income Trust. However, PDM had a completely different legal and operating structure from IRG today. As an income trust, PDM was structured to receive and distribute royalties. It had virtually none of the overhead expenses that are typical of an operating company like IRG. As an operating company, the financial results of IRG are therefore not directly comparable with PDM and the presentation of results as required for proper disclosure does not in this case provide the normal comparisons that would enable readers to easily understand the year-over-year business activities.
This situation will endure until IRG has cycled a full fiscal year. Normal year-over-year comparisons will begin in the first quarter of 2011, at which time there will be an historical basis of comparison. In the interim IRG will focus on key elements of its business, which include system sales, same store sales, number of restaurants, cash flow, debt repayment, earnings per share and dividends.
About Imvescor Restaurant Group
Headquartered in Moncton, New Brunswick, Imvescor Restaurant Group owns franchised and corporate stores throughout Canada, under four brands: Pizza Delight(R) operates primarily in Atlantic Canada, where it dominates the family/mid-scale segment. Mikes(R) and Scores(R) restaurants operate primarily in Quebec in the family and casual dining segments and the take-out and delivery segments. Baton Rouge(R) operates in the Province of Quebec and Ontario in the casual dining segment.
Certain information regarding Imvescor Restaurant Group contained herein may constitute 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. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. The Company assumes no obligation to update such forward-looking statements, except as required by applicable securities laws. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.
SOURCE Imvescor Restaurant Group Inc.
For further information: For further information: Brigitte Viel, Cohn & Wolfe Public Relations, 514-845-2257 ext 243; William R. Lane, CMA, Executive Vice-President & Chief Financial Officer, Imvescor Restaurant Group, 506-853-8412, http://www.imvescor.ca; For more information about our brands: Mikes(R): http://www.mikes.ca; Pizza Delight(R): http://www.pizzadelight.com; Bâton Rouge(R): http://www.batonrougerestaurants.com; Scores(R): http://www.scores.ca