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Enter Symbol
or Name
USA
CA



A&W Revenue Royalties Income Fund
Symbol AW
Shares Issued 12,131,373
Close 2015-10-09 C$ 25.49
Market Cap C$ 309,228,698
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A&W increases monthly distribution to 12.5 cents

2015-10-13 12:30 ET - News Release

Mr. Don Leslie reports

A&W REVENUE ROYALTIES INCOME FUND REPORTS STRONG THIRD QUARTER 2015 RESULTS AND ANNOUNCES DISTRIBUTION INCREASE

A&W Revenue Royalties Income Fund and A&W Food Services of Canada Inc. have released results for the third quarter ended Sept. 6, 2015. The fund will hold a conference call to discuss the results on Tuesday, Oct. 13, 2015, at 1 p.m. Pacific Time (4 p.m. Eastern Time). The call can be accessed by dialling toll-free 1-866-530-1553 or 416-847-6330, passcode 9763518. A replay will be available until Oct. 21, 2015, by dialling toll-free 1-888-203-1112 or 647-436-0148, passcode 9763518.

Highlights

  • A&W enjoys another strong quarter;
  • Double-digit sales growth of 11.4 per cent for the quarter and 11.6 per cent year to date;
  • Same-store sales growth up 8.3 per cent for the quarter;
  • Distributions increased by 3.3 per cent -- second increase of the year.

Sales reported by the 814 A&W restaurants in the royalty pool were $261,177,000 for the quarter, an increase of 11.4 per cent from the same quarter of the prior year. Year-to-date sales increased by 11.6 per cent to $712,735,000. The increase in royalty pool sales during the quarter and year to date reflect the same-store sales increases of 8.3 per cent for the quarter and 8.8 per cent year to date, and the sales of the 24 net new restaurants added to the fund's royalty pool in January, 2015.

As a result of the strong performance of the fund and the underlying A&W restaurants, the fund is pleased to announce that it is increasing monthly cash distributions by 3.3 per cent, from 12.1 cents per unit to 12.5 cents per unit, beginning with the October, 2015, distribution. On an annualized basis, this represents a distribution rate of $1.50 per unit. The October distribution of 12.5 cents per unit will be payable to unitholders of record on Nov. 15, 2015, and will be paid on Nov. 30, 2015.

"We are very pleased with A&W's continued strong sales growth, both for the quarter and year to date," said Paul Hollands, chairman and chief executive officer of A&W Food Services. "Our relentless focus on bringing better ingredients to our guests, like our beef raised without the use of hormones or steroids; eggs from hens raised without the use of antibiotics and fed an all-vegetarian diet; chicken raised without the use of antibiotics; and organic and fair-trade coffee, is having a powerful impact. Our strong restaurant expansion program is also fuelling growth. I am delighted that our strong results have allowed the fund to increase distributions for the second time this year."

Royalty income increased by $804,000, or 11.4 per cent, from $7,031,000 in the third quarter of 2014 to $7,835,000 in the third quarter of 2015. Year to date, royalty income increased by $2,217,000, or 11.6 per cent, from $19,165,000 in 2014 to $21,382,000 in 2015 year to date.

Distributable cash available to pay distributions to unitholders and dividends to A&W Food Services increased by $634,000, or 12.4 per cent, from $5,133,000 (35.8 cents per unit) to $5,767,000 (39 cents per unit) for the quarter, and by $1,681,000, or 12.2 per cent, from $13,746,000 (96 cents per unit) to $15,427,000 ($1.044 per unit) year to date. The surplus of distributable cash on hand is $3,486,000. The fund's payout ratio was 86.9 per cent for the third quarter of 2015 and 93.3 per cent year to date. The trailing four-quarter payout ratio is 92.1 per cent.

                                    FINANCIAL HIGHLIGHTS
                  (in thousands of dollars, except per-unit amounts) 
 
                                          Period from        Period from        Period from        Period from
                                    June 15, 2015, to  June 14, 2014, to   Jan. 1, 2015, to   Jan. 1, 2014, to
                                        Sept. 6, 2015      Sept. 7, 2014      Sept. 6, 2015      Sept. 7, 2014

Same-store sales growth (1)                     +8.3%              +5.7%              +8.8%              +5.8%
Number of restaurants
in the royalty pool                               814                790                814                790
Sales reported by the
restaurants in the royalty pool              $261,177           $234,378           $712,735           $638,829
Royalty income                                 $7,835             $7,031            $21,382            $19,165
General and administrative
expenses                                          100                 99                441                442
Net third party interest expense                  557                559              1,646              1,661
Current income taxes                            1,411              1,240              3,868              3,316
Total distributable cash
generated for distributions
and dividends (2)                              $5,767             $5,133            $15,427            $13,746
Distributable cash
per equivalent unit
(2015: 14,781,656 units;
2014: 14,319,708 units) (2)(3)                 $0.390             $0.358             $1.044             $0.960
Distributions and dividends
declared per equivalent unit                   $0.359             $0.351             $0.944             $0.936
Net income (4)                                 $4,386             $4,550            $13,613            $11,143
Net income, excluding
non-cash items (4)                             $5,767             $5,133            $15,427            $13,746

(1) Same-store sales growth is not an earnings measure recognized by IFRS (international financial 
    reporting standards) and therefore may not be comparable with similar measures presented by 
    other issuers. This information is provided as it is a key driver of growth in the fund. 
(2) Distributable cash is not an earnings measure recognized by IFRS and therefore may not be 
    comparable with similar measures presented by other issuers. This information is provided as 
    it identifies the amount of actual cash available to pay distributions to unitholders 
    and dividends to A&W Food Services.    
(3) The number of equivalent units and distributable cash per equivalent unit in 2015 includes the 
    92,390 LP units exchangeable for 184,780 common shares of Trade Marks, representing the remaining 
    20 per cent of the consideration for the Jan. 5, 2015, adjustment to the royalty pool, which is 
    held back until December, 2015, when the actual annual sales are reported by the new restaurants. 
    The number of equivalent units and distributable cash per equivalent unit in 2014 includes the 
    210,490 LP units exchanged for 420,980 common shares of Trade Marks, representing the final 
    consideration paid in December, 2014, for the Jan. 5, 2014, adjustment to the royalty pool.
(4) Net income in 2015 and 2014 includes non-cash losses on interest-rate swaps, amortization of 
    deferred financing fees and deferred income taxes. These non-cash items have no impact on the 
    fund's ability to pay distributions to unitholders. The fund's net income excluding these 
    non-cash items is presented for information purposes only. 

The fund's net income for the third quarter of 2015 was $4,386,000, compared with $4.55-million for the third quarter of 2014. Year-to-date net income was $13,613,000 compared with $11,143,000 for the prior year. Net income in both years includes non-cash losses on interest-rate swaps, amortization of deferred financing fees and deferred income taxes. These non-cash items have no impact on the fund's ability to pay distributions to unitholders. Of more interest to unitholders is the distributable cash calculation, which identifies the amount of actual cash available to pay distributions to unitholders and dividends to A&W Food Services. As noted above, distributable cash increased by 12.4 per cent for the quarter and 12.2 per cent year to date, and the fund has a cumulative surplus of distributable cash on hand of $3,486,000.

We seek Safe Harbor.

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