Imvescor Restaurant Group Inc. Reports Fourth Quarter and Annual Financial Results

MONTREAL, Jan. 20, 2015 /CNW Telbec/ - Imvescor Restaurant Group Inc. ("Imvescor" or the "Company") (TSX: IRG), a leading franchiser of restaurants operating in Eastern Canada under the Pizza Delight^®, Mikes^®, Scores^® and Bâton Rouge^® banners, reported financial results today for the 13 weeks ended October 26, 2014 (or "fourth quarter") and 52 weeks ended October 26, 2014 (or "year end"). The 2013 results are for the 13 and 52 weeks ended October 27, 2013.

 

Financial Results
(in thousands of dollars)	Q4 2014 13 weeks ended October 26, 2014		Q4 2013 13 weeks ended October 27, 2013		Fiscal 2014 52 weeks ended October 26, 2014		Fiscal 2013 52 weeks ended October 27, 2013
Total revenues	$	10,991	$	11,126	$	47,242	$	45,136
Net earnings (loss)		(840)		868		5,876		2,570
Interest on long-term debt		627		620		2,336		3,002
Interest income		(24)		(19)		(73)		(89)
Income tax expense		116		333		2,643		2,796
Depreciation and amortization		359		211		1,124		864
EBITDA ^(*)	$	238	$	2,013	$	11,906	$	9,143
Impairment of long-lived assets	$		$	-	$	500	$	-
Impairment of Imvescor rights		4,000		-		4,000		-
Costs of special committee		139		-		603		-
Reorganization costs		117		731		217		2,506
Bargain purchase gain		(1,137)		-		(1,137)		(216)
Loss on redemption of debentures		-		-		-		3,163
Adjusted EBITDA ^(*)	$	3,357	$	2,744	$	16,089	$	14,596
Franchised restaurants	$	3,820	$	4,404	$	17,566	$	18,955
Company-owned restaurants		(290)		(940)		(1,133)		(1,981)
Manufacturing and retail		1,200		615		6,082		3,942
Corporate		(1,373)		(1,335)		(6,426)		(6,320)
Adjusted EBITDA ^(*)	$	3,357	$	2,744	$	16,089	$	14,596

* EBITDA and adjusted EBITDA are non-GAAP measures. Please refer to the "Non-GAAP Measures and Financial Metrics" section of this press release

 

The Company's total revenues of $11.0 million for the fourth quarter of 2014 were consistent with those of the fourth quarter of 2013, while fiscal 2014 revenues of $47.2 million increased from fiscal 2013 due to higher retail royalties and the sales generated from the acquisition of Commensal. Sales of manufactured goods increased by $1.5 million and $5.9 million, respectively, for the fourth quarter and fiscal 2014 compared to the same periods of 2013, driven primarily by the acquisition of Commensal in the first quarter of fiscal 2014. Retail royalties increased $0.5 million for the fourth quarter, primarily from the launch of Scores branded products, and $2.2 million for fiscal 2014, with sales of Bâton Rouge ribs driving results. Corporate restaurant sales for the fourth quarter and fiscal 2014 were $1.6 million and $4.8 million lower, respectively, than the comparable periods of 2013 due to a decrease in the number of company-owned restaurants. The Company's adjusted EBITDA for the fourth quarter and fiscal 2014 was $3.4 million and $16.1 million, respectively, representing increases of $0.6 million for the fourth quarter and $1.5 million for the fiscal year. The increases are primarily attributable to improved adjusted EBITDA for manufacturing and retail and company-owned restaurants, partially offset by a lower adjusted EBITDA from the franchised restaurants.

Strategic Direction

The Company has undertaken significant change in the fourth quarter of 2014; having completed a review of strategic alternatives, appointing a new President and CEO with long-term experience in the restaurant industry, and announcing a new dividend policy.

In November, the Company appointed three new members to the board of directors (the "Board of Directors") and declared an initial dividend of $0.02 per common share that was paid on December 18, 2014. The Company has also made several changes to strengthen its leadership team, hiring a new Vice President of Purchasing, a new Brand Leader for Scores and a new Senior Director Restaurant Development.

In January 2015, the Company made the decision to consolidate its two corporate offices into its Montreal head office location to unite management, improve operational efficiency and reduce occupancy and administrative costs. As part of this initiative, the corporate finance department, currently located in Moncton, will be moved to the Montreal head office before the end of November 2015.

Also, effective before the end of January 2015, a new Chief Financial Officer will succeed the current Chief Financial Officer of the Company who will resign from his position and will leave the Company after a short transition period. All costs related to this decision, including severance and lease termination fees, will be incurred and recognized during fiscal 2015.

The Board of Directors and the management team will focus on working together to improve performance on all levels, to finalize Imvescor's vision and develop its strategic plan that will be presented at the next annual meeting of shareholders.

 

Same Store Sales ("SSS") ^*
(in thousands of dollars)	Q4 2014 13 weeks ended October 26, 2014	Fiscal 2014 52 weeks ended October 26, 2014
Pizza Delight	-0.1%	-1.0%
Mikes	-1.2%	0.0%
Scores	-8.3%	-6.6%
Bâton Rouge	1.3%	-2.4%
Same store sales	-2.5%	-2.7%

* Same store sales is not a performance measure consistent with IFRS. Please refer to the "Non-GAAP Measures and Financial Metrics" section of this press release

 

Same store sales for the fourth quarter and fiscal 2014 were 2.5% and 2.7% lower, respectively, than those of 2013. Same store sales at Scores continued to be challenged by competitive new store openings and aggressive competitor promotional offers. The Company took a $4.0 million non-cash impairment charge on its Imvescor rights related to the Scores brand due in part to the brand's same store sales performance. Pizza Delight same store sales were comparable to last year for the fourth quarter and slightly lower for the fiscal year. Mikes fourth quarter same store sales were down 1.2% after posting positive same store sales in six of the past seven quarters. Bâton Rouge's same store sales for the fourth quarter were 1.3% higher than the fourth quarter of 2013, as the impact of revised strategies began to take effect, while same store sales for fiscal 2014 were 2.4% lower than fiscal 2013 as a result of competitive entry in several of its locations.

Dividend Declaration

Pursuant to its previously announced dividend policy, the Board of Directors has declared a dividend of $0.02 per common share. The dividend will be paid on February 13, 2015 to shareholders of record as at the close of business on February 3, 2015 and is designated as an "eligible dividend" for Canadian tax purposes.

The declaration and payment of any future dividend remains at the discretion of the Board of Directors and will depend on the Company's current and anticipated cash requirements and surplus, capital expenditures requirements, regulatory restrictions, financial results, future prospects, current and future contractual restrictions such as restrictions under credit or other arrangements, the satisfaction of solvency tests imposed by the CBCA for the declaration of dividends and other factors deemed relevant by the Board of Directors. Any dividend policy established by the Board of Directors, including the Company's current dividend policy, can be changed at any time and is not binding on the Company. There can be no guarantee that the Company will maintain its current dividend policy or any dividend policy or that any dividend will be declared or paid.

About Imvescor Restaurant Group Inc.

Imvescor Restaurant Group Inc. is a dynamic and innovative organisation in the family and casual dining restaurant industry. The Company is a franchise and licensing business that operates restaurants in Eastern Canada under four banners: Pizza Delight^®, operating primarily in Atlantic Canada, in the family/mid-scale segment, Mikes^® and Scores^®, operating primarily in Québec in the family and casual dining segments and the take-out and delivery segments, and Bâton Rouge^®, operating in Québec, Ontario and Nova Scotia in the casual dining segment. The Company also licenses to third parties the right to manufacture and sell prepared food products under the Pizza Delight^®, Mikes^®, Scores^® and Bâton Rouge^® brands and manufactures and sells vegetarian branded food products in grocery stores and retail outlets under the Commensal^® brand.

Non-GAAP Measures and Financial Metrics

The information contained in this press release includes some figures that are not performance measures consistent with International Financial Reporting Standards "IFRS". Because they do not have a standardized meaning prescribed by IFRS, they may not be comparable with similar measures presented by other issuers. 

EBITDA is defined as earnings or loss before interest income, interest on long-term debt, depreciation and amortization and income tax expense. Adjusted EBITDA is defined as EBITDA adjusted for the following items: gain or loss on redemption of debentures, impairment or impairment reversal of long-lived assets, impairment or impairment reversal of Imvescor rights, costs of special committee, goodwill, bargain purchase gains, reorganization costs, gain or loss on derivative financial liability and earnings or loss from discontinued operations. The definition of adjusted EBITDA can change from time to time to account for unusual items or items not considered to be consistent with the Company's normal operations. For fiscal 2014, the definition was changed to include the costs of the special committee.

The Company uses EBITDA and 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. EBITDA and adjusted EBITDA 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. Additional details and a reconciliation of EBITDA and adjusted EBITDA to the most directly comparable measure under IFRS are available in the Company's MD&A for the 13 weeks and 52 weeks ended October 26, 2014, available on SEDAR at www.sedar.com.

In addition, same store sales is not a performance measure consistent with IFRS. Same store sales, which are defined as sales generated by stores that have been open for at least one year compared to the sales from the same group of restaurants in the comparable period. The Company believes this is a meaningful measure of operating performance. 

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, estimates, outlook, strategies and priorities, the generation of cash flows, the growth of the same store sales, and all other statements other than statements of 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; risk associated with ownership of restaurants by the Company; 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; the Company's relationships with its franchisees and litigation; 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 Annual Information Form and the Company's other 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.

Stéphane LeBlanc, Chief Financial Officer, 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.batonrouge.ca