Imvescor Restaurant Group reports first quarter results

MONCTON, NB, April 13, 2012 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG), reported financial results today for the 13 weeks ended January 29, 2012 (or "first quarter").  The 2011 results are for the 13 weeks ended January 30, 2011.

Highlights

Refinancing of Convertible Debentures (the "Debentures")

On December 29, 2011, the Company completed a series of transactions (the "Refinancing Transactions") between the Company and Fairfax Financial Holdings Limited ("Fairfax") to refinance and recapitalize the Company by repaying its 7.75% convertible extendible unsecured subordinated debentures maturing on December 31, 2011. On December 29, 2011 the convertible debentures were repaid.

The Refinancing Transactions were comprised of:

• a $10.0 million private placement of debentures with Fairfax;
  
  
• an issue to Fairfax of warrants to purchase 16,334,000 common shares at a price of $0.65 per common share;
  
  
• a rights offering, resulting in the issue of 26,837,243 common shares at $0.44 per share for gross proceeds of $11.8 million; and
  
  
• a private placement of common shares with Fairfax at a price of approximately $0.56 per common share for the difference between $15.0 million and the gross proceeds of the rights offering, resulting in the issue 5,699,309 common shares for gross proceeds of $3.2 million.

Sales Improvements

Same store sales ("SSS") in the first quarter were positive 0.1% as compared to negative 3.4% in 2011.  The improvement in the sales trend is attributed to a number of initiatives including significant menu engineering projects and more creative and focused marketing.

	13 weeks ended January 29, 2012	13 weeks ended January 30, 2011
Pizza Delight™	-2.5%	+0.1%
Mikes™	-0.4%	-2.5%
Scores™	+0.2%	-6.5%
Bâton Rouge™	+2.0%	-3.5%
IRG	+0.1%	-3.4%

First Quarter 2012 Financial and Operating Results

The following table provides selected financial information for the 13 weeks ending January 29, 2012, along with results for the comparative periods of the prior year, which are calculated for the 13 weeks ended January 30, 2011.

(in thousands of dollars except per share items)	13 weeks ended January 29, 2012	13 weeks ended January 30, 2011
System sales	$ 98,279	$ 99,158
Revenues	11,225	11,206
Advertising and administrative expenses	9,030	9,237
EBITDA (note 1)	2,315	2,095
Net earnings (loss)	3	(1)
Total basic and diluted EPS	0.000	(0.000)

Note 1: EBITDA includes earnings before interest income, interest on long-term debt and convertible debentures, loss on derivative financial liability, depreciation and amortization, loss from discontinued operations and income taxes.

IRG derives its revenues primarily from royalties based on system sales from each of its four brands: Pizza Delight™, Mikes™, Scores™ and Bâton Rouge™.  Total system sales for the first quarter were $98.3 million as compared to $99.2 million in 2011, a decrease of 0.9%.  The decrease is attributed to the restaurant closures in fiscal 2011.

Revenues for the first quarter were $11.2 million, consistent with 2011.  The Company experienced decreases in franchise fees related to new restaurant openings and franchise renewals.  In addition, retail revenues generated from frozen pizza sales decreased as a result of the Company's authorized manufacturer's failure to deliver required volumes to the grocery stores because of temporary problems experienced at its manufacturing plant which have since been resolved.  These decreases were offset by the increase in corporate restaurant sales, a result of operating two additional restaurants during the period.

General, administrative and franchise support costs for the first quarter were $5.6 million as compared to $5.7 million in 2011.  The decrease is attributed to administrative and overhead cost reductions as well as savings in franchise support expenses due to the exiting of underperforming locations and unfavorable lease terms in fiscal 2011.

EBITDA in the first quarter was $2.3 million as compared to $2.1 million in 2011.  The increase is related to the overall reductions in advertising, administrative and overhead costs as well as reductions in franchise support expenses.  These reductions were partially offset by decreases in retail revenues and franchise fees.  Included in general, administrative and franchise support expenses were $900 thousand in provisions related to legal claims likely to result in settlement.  General, administrative and franchise support expenses for the 13 weeks ended January 30, 2011 also included $611 thousand in lease exit costs related to exiting non-performing locations as compared to nil in the current period.

The Company recorded net income for the first quarter of $3 thousand as compared to a net loss of $1 thousand for the 13 weeks ended January 30, 2011.

Total long-term debt and convertible debentures at January 29, 2012 decreased to $43.2 million as compared to $62.3 million at October 30, 2011, a result of principal payments and the refinancing transactions. 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, 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.

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