10:24:49 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Keg Royalties Income Fund (The)
Symbol KEG
Shares Issued 11,353,500
Close 2018-11-12 C$ 17.15
Market Cap C$ 194,712,525
Recent Sedar Documents

Keg Royalties earns $2.88-million in Q3 2018

2018-11-12 16:13 ET - News Release

Mr. David Aisenstat reports

THE KEG ROYALTIES INCOME FUND ANNOUNCES THIRD QUARTER 2018 RESULTS

The Keg Royalties Income Fund has released its financial results for the three and nine months ended Sept. 30, 2018.

The gross sales reported by the 103 Keg restaurants in the royalty pool were $157.91-million for the quarter, an increase of $10,112,000, or 6.8 per cent, from the comparable quarter of the prior year. Year-to-date gross sales increased by $23,518,000, or 5.3 per cent, to $470,848,000. The increase in royalty pool sales during the quarter and year to date reflect the sales of the new Keg restaurants added to the royalty pool on Jan. 1, 2018, and same-store sales increases of 3 per cent for the quarter and 1.7 per cent year to date.

The Keg's same-store sales (sales of restaurants that operated during the entire period of both the current and prior years) increased by 2.3 per cent in Canada and by 6.3 per cent in the United States for the 13-week period ended Sept. 30, 2018. For the 39-week period ended Sept. 30, 2018, same-store sales increased by 1.6 per cent in Canada and by 5.2 per cent in the United States. After translating the sales of the U.S. restaurants into their Canadian-dollar equivalent, consolidated same-store sales increased by 3 per cent for the 13-week period and by 1.7 per cent for the 39-week period. The average exchange rate increased from 1.2414 to 1.3098 in the comparable 13-week period, significantly increasing the Canadian-dollar equivalent of the U.S. restaurant sales, and decreased from 1.3069 to 1.2876 in the comparable 39-week period, significantly reducing the Canadian-dollar equivalent of the U.S. restaurant sales in the comparable periods.

Royalty income increased by $357,000, or 6 per cent, from $5,993,000 in the three months ended Sept. 30, 2017, to $6.35-million in the three months ended Sept. 30, 2018. For the nine months ended Sept. 30, 2018, royalty income increased by $805,000, or 4.5 per cent, from $18,068,000 to $18,873,000.

Distributable cash before SIFT (specified investment flow-through tax) decreased by $132,000 from $4,549,000 (40.1 cents per fund unit) to $4,417,000 (38.9 cents per fund unit) for the quarter but increased by $95,000 from $13,626,000 ($1.20 per fund unit) to $13,721,000 ($1.209 per fund unit) for the nine-month period. Distributable cash available to pay distributions to public unitholders decreased by $209,000 from $3,443,000 (30.3 cents per fund unit) to $3,234,000 (28.5 cents per fund unit) for the quarter and decreased by $94,000 from $10,269,000 (90.4 cents per fund unit) to $10,175,000 (89.6 cents per fund unit) year to date. The fund's payout ratio was 99.6 per cent for the third quarter of 2018 and 95.0 per cent year to date.

The fund remains financially well positioned with cash on hand of $2,627,000 and a positive working capital balance of $3,952,000 as at Sept. 30, 2018.

"The Keg once again generated same-store sales increases in both the comparable quarter and on a year-to-date basis," said David Aisenstat, president and chief executive officer of Keg Restaurants Ltd. "Despite some of the lingering challenges in the restaurant industry across many of the provinces, we remain pleased with our overall sales performance."

                                          FINANCIAL HIGHLIGHTS      
                           (in thousands of dollars, except per-unit amounts)   
                                                                                                                       
                                                        July 1 to     July 1 to     Jan. 1 to     Jan. 1 to        
                                                         Sept. 30,     Sept. 30,     Sept. 30,     Sept. 30,  
                                                             2018          2017          2018          2017

Restaurants in the royalty pool                               103           100           103           100
Royalty pool sales                                       $157,910      $147,798      $470,848      $447,330
Royalty income                                             $6,350        $5,993       $18,873       $18,068
Interest income                                             1,084         1,080         3,214         3,201
Total income                                               $7,434        $7,073       $22,087       $21,269
Administrative expenses                                      (105)          (96)         (312)         (283)
Interest and financing expenses                              (148)         (124)         (414)         (337)
Operating income                                           $7,181        $6,853       $21,361       $20,649
Distributions to KRL                                       (2,735)       (2,514)       (8,011)       (7,452)
Profit before fair-value gain 
(loss) and income taxes                                    $4,446        $4,339       $13,350       $13,197
Fair-value gain (loss)                                       (363)        6,696         9,182         1,979
Income taxes                                               (1,198)       (1,115)       (3,547)       (3,416)
Profit (loss) and comprehensive income (loss)              $2,885        $9,920       $18,985       $11,760
Distributable cash before SIFT                             $4,417        $4,549       $13,721       $13,626
Distributable cash                                         $3,234        $3,443       $10,175       $10,269
Distributions to fund unitholders                          $3,222        $3,127        $9,666        $9,380
Payout ratio                                                99.6%         90.8%         95.0%         91.3%
Per-fund-unit information
Profit before fair-value gain (loss)
and income taxes                                           $0.392        $0.382        $1.176        $1.162
Profit (loss) and comprehensive income (loss)              $0.254        $0.874        $1.672        $1.036
Distributable cash before SIFT                             $0.389        $0.401        $1.209        $1.200
Distributable cash                                         $0.285        $0.303        $0.896        $0.904
Distributions to fund unitholders                          $0.284        $0.275        $0.851        $0.826

The fund is a limited-purpose, open-ended trust established under the laws of the Province of Ontario that, through The Keg Rights Limited Partnership, owns certain trademarks and other related intellectual property used by Keg Restaurants Ltd. (KRL). In exchange for use of those trademarks, KRL pays the fund a royalty of 4 per cent of gross sales of Keg restaurants included in the royalty pool.

Vancouver-based KRL is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States.

We seek Safe Harbor.

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