MONCTON, N.B. — Imvescor Restaurant Group Inc., formerly PDM Royalties Income Fund, has reported financial results for the three months ending Jan. 31, 2010, but readers are asked to take the information with a grain of salt as the results are for the first full quarter that IRG operated as a publicly traded corporation. In other words, the results are not comparable with results for PDM for the same period the previous year.
“Imvescor Restaurant Group has completed the transition from a royalty income fund to a publicly traded corporation,” said Ron Magruder, president and CEO. “Management’s attention is now exclusively focused on operating and growing the business, profitably. Compared to the previous year, sales showed steady improvement from November to January. While our net earnings of $0.018 per share reflect the seasonality of our business, they also include several non-recurring expenses, such as restructuring charges and a write-down on the value of one restaurant. Excluding these one-time expenses, our underlying business met our expectations for the quarter. Consumer confidence is slowly improving.”
Under the Plan of Arrangement approved by unit holders of PDM on Sept. 4, 2009, PDM absorbed (by way of amalgamation) 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 Inc. and began operations as a corporation on Oct. 10, 2009.
The new corporation, IRG, is a publicly traded company and therefore required to compare financial results with its predecessor entity, PDM. 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 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 provide the normal comparisons that would enable readers to easily understand the year-over-year business activities.
This situation won’t change until IRG completes a full fiscal year. Normal year-over-year comparisons begin in the first quarter of 2011, when there will be a historical basis of comparison. 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.
First Quarter 2010 Financial Results
IRG’s revenues comes from royalties based on system sales from each of its four brands: Pizza Delight, Mikes, Scores and Baton Rouge as well as from franchise fees and the operation of company-owned restaurants.
Total system sales for the restaurants in the royalty pool for the first quarter ended Jan. 31, 2010 were $106.8 million, a 5.1 per cent increase over system sales for the same three months the previous year. The increase is mainly attributable to one additional week in the quarter (14 weeks versus 13 weeks for the same period last year), as well as the stronger performance of two new stores opened during the quarter, compared to three underperforming stores that were closed.
IRG recorded total revenues of $11.9 million during the quarter, including $10.4 million from royalties, advertising fees and other related revenue and $1.5 million (net of cost of goods sold) from corporate store sales. There is no meaningful comparison for the previous year, as PDM was structured as a royalty income fund during that period.
Same-store sales were down 2.4 per cent during the quarter but grew at Pizza Delight by 0.1 per cent.
For the complete report, click here.