Imvescor Restaurant Group Inc. Reports First Quarter Financial Results

MONCTON, NB, March 13, 2013 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG) financial results today for the 13 weeks ended January 27, 2013 ("first quarter" or "the period").

Improved Financial Results

(in thousands of dollars)	13 weeks ended January 27, 2013	13 weeks ended January 29, 2012
Pizza Delight	$ 1,126	$ 853
Mikes	1,067	1,086
Scores	715	290
Bâton Rouge	944	(34)
Total results from operating activities^(1)	$ 3,852	$ 2,195

(1)	Results from operating activities includes earnings before interest income, interest on long-term debt, loss on redemption of debentures, loss on derivative financial liability, net loss from discontinued operations, and income tax expense.

For the first quarter of 2013, three of the Company's four brands showed improved results from operating activities over the comparable period of the prior year.  The improvement in Pizza Delight is mainly attributable to a decrease in advertising expenses.  This decrease in advertising expenses relates to a timing difference in the marketing as compared to the prior year.  The overall decrease in Mikes is related to the costs incurred to take-over and operate formerly franchised restaurants as company-owned restaurants.  The increase in company-owned restaurants forms part of the Company's strategic plan to turn around underperforming locations with the goal of refranchising these restaurants.  Scores' improvements resulted from a reduction in overhead and administrative expenses.  The improvements in Bâton Rouge are mainly attributed to the significant increase in retail royalties from the launch of Bâton Rouge branded ribs in grocery stores, as well as a decrease in general and administrative expenses. In 2012, Bâton Rouge recorded an expense of $700 thousand related to legal settlements from the closure of a restaurant.

(in thousands of dollars)	13 weeks ended January 27, 2013	13 weeks ended January 29, 2012
Net earnings	$ 1,011	$ 3
Loss on redemption of debentures	1,000	---
Loss on derivative financial liability	---	414
Loss from discontinued operations	---	38
Adjusted net earnings	$ 2,011	$ 455

Adjusted net earnings for the 13 weeks ended January 27, 2013 were $2.0 million as compared to $455 thousand for the comparative period in 2012.  The increase in adjusted net earnings is related to the improvement in operating results described above as well as a decrease in interest on long-term debt.  Interest on long-term debt decreased from $1.6 million in the first quarter of 2012 to $968 thousand for the first quarter of 2013, a decrease of $623 thousand resulting from the restructuring and reduction of total debt.  The Company has excluded, in the calculation of adjusted net earnings, the $1.0 million non-cash loss on redemption of debentures, the $414 thousand non-cash loss on derivative financial liability and the loss from discontinued operations of $38 thousand as management believes these expenses are not indicative of the Company's operations and thus adjusted net earnings is a better reflection of the Company's results from its normal business activities.

First Quarter Financial and Operating Results

The following table provides selected financial information for the 13 weeks ended January 27, 2013, along with results for the comparative period of the prior year, which are calculated for the 13 weeks ended January 29, 2012.

(in thousands of dollars)	13 weeks ended January 27, 2013	13 weeks ended January 29, 2012
Total revenues	$ 12,630	$ 11,225
Advertising, retail and other expenses	7,932	8,481
Adjusted EBITDA (note 1)	4,039	2,315
Net finance costs (note 2)	1,944	1,971
Net earnings (note 3)	1,011	3
Adjusted net earnings (notes 2 & 3)	2,011	455

Note 1: Adjusted EBITDA includes earnings before interest income, interest on long-term debt, loss on redemption of debentures, loss (gain) on derivative financial liability, depreciation and amortization, impairment of long-lived assets, net (earnings) loss from discontinued operations, and income tax expense.
Note 2: Finance costs include a non-cash loss on redemption of debentures of $1.0 million for the 13 weeks ended January 27, 2013 as compared to nil in 2012 and a non-cash loss on derivative financial liability of nil as compared to $414 thousand for the 13 weeks ended January 29, 2012.  These non-cash losses have been excluded in the calculation of adjusted net earnings.
Note 3: Net earnings include a loss from discontinued operations of $38 thousand for the 13 weeks ended January 29, 2012 as compared to nil in 2013.  This has been excluded in the calculation of adjusted net earnings.

Total system sales for the 13 weeks ended January 27, 2013 were $95.6 million as compared to $98.3 million for the 13 weeks ended January 29, 2012. Both Pizza Delight and Scores experienced increased total system sales, mostly as a result of new restaurant openings in the previous fiscal year. The decrease in total sales for the Mikes brand is mostly attributable to the closure of two non-performing restaurants during 2012. Bâton Rouge's total sales for the first quarter of 2013 were negatively impacted by the delayed start of the NHL season and the temporary closure of three restaurants.

(in thousands of dollars)	13 weeks ended January 27, 2013	13 weeks ended January 29, 2012
Pizza Delight	+0.3%	-2.5%
Mikes	+1.6%	-0.4%
Scores	-2.5%	+0.2%
Bâton Rouge	-4.3%	+2.0%
Total SSS	-1.5%	+0.1%

Pizza Delight and Mikes have shown improved same store sales ("SSS") during the quarter at positive 0.3% and 1.6% growth respectively while Scores and Bâton Rouge have declines of 2.5% and 4.3% respectively, for an overall total decline of 1.5% for IRG. A number of the Scores and Bâton Rouge restaurants are located in NHL market areas and the delayed start of the NHL season has had an adverse effect on restaurant sales in these areas.

Debt Reduction

(in thousands of dollars)	As at January 27, 2013	As at October 28, 2012
Long-term debt, net of financing charges *	$ 37,339	$ 38,789
Financing charges on loan payable	1,015	1,180
Financing charges on debentures payable	2,250	3,348
Total long-term debt outstanding *	$ 40,604	$ 43,317

* includes current portion

On January 25, 2013, the Company repaid $2.0 million of principal debentures. This payment, along with the Company's regular payments of $711 thousand on its loan payable, reduced the total long-term debt outstanding from $43.3 million at year end to $40.6 million at the end of the first quarter.

The combination of the refinancing transactions completed in 2012 and the Company's continued focus on reducing its debt has resulted in significant interest expense savings for the Company. Interest on long-term debt incurred during the first quarter of 2013 were $968 thousand, a decrease of $623 thousand, or 39%, as compared to the first quarter of 2012.

Retail Ribs

In November 2012, the Company introduced Bâton Rouge branded ribs in grocery stores in Quebec.  The launch of the Bâton Rouge ribs represents the first of the new retail products to be introduced, and retail sales significantly exceeded management's expectations. Retail sales for the Bâton Rouge ribs for the 13 weeks ended January 27, 2013 were $1.7 million, which generated retail royalties to the Company of $384 thousand as compared to nil in 2012.

About Imvescor Restaurant Group Inc.

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

Non-GAAP Measures

The information contained in this MD&A includes some figures that are not performance measures consistent with IFRS.  Because they do not have a standardized meaning prescribed by IFRS, they may not be compatible with similar measures presented by other issuers.

For instance, the Company uses earnings before interest income, interest on long-term debt, loss (gain) on derivative financial liability, depreciation and amortization and income tax expense ("EBITDA") and earnings before interest income, interest on long-term debt, loss (gain) on derivative financial liability, loss on redemption of debentures, depreciation and amortization, net loss (earnings) from discontinued operations and income tax expense ("adjusted EBITDA") because those measures enable management to assess the Company's operational performance.  Those measures are a financial indicator of the Company's ability to service and incur debt.  The Company also uses net earnings excluding loss on redemption of debentures, loss (gain) on derivative financial liability and loss from discontinued operations, ("adjusted net earnings") as a measurement of performance since management is of the opinion that the expenses mentioned are not indicative of the Company's operations.  EBITDA, adjusted EBITDA and adjusted net earnings should not be considered by an investor as an alternative to earnings, an indicator of operating performance or cash flows, or as a measure of liquidity.

In addition, the following elements are not performance measures consistent with IFRS.  Total system sales are the aggregate sales achieved by all "Pizza Delight", "Mikes", "Scores" and "Bâton Rouge" restaurants, whether they are corporate units or franchises.  This performance measure indicates the Company's overall growth and reflects the direct impact of the restaurant openings and closures.  The Company also discloses same store sales, which are defined as sales generated by stores that have been open for at least one year.  The Company believes this is a meaningful measure of operating performance.

The retail sales information is not a performance measure consistent with IFRS.  The Company licenses the right to manufacture and sell branded food products in grocery stores and retail outlets and earns a royalty for items sold.  This performance measure demonstrates the volumes and margins associated with the sale of branded food products which enables the Company to monitor growth of existing as well as new product lines introduced.

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 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 offering new and innovative products and executing 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 Inc.

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