Mr. Kip Woodward reports

THE KEG ROYALTIES INCOME FUND ANNOUNCES FIRST QUARTER 2023 RESULTS

The Keg Royalties Income Fund has released its financial results for the three months ended March 31, 2023.

Highlights

• Royalty pool sales up 35.4 per cent to $191.9-million for the quarter;
• KRL average sales per operating week up 15.3 per cent to $140,000 per operating week;
• Distributable cash up 53.7 per cent to 34.0 cents/fund unit for the quarter;
• Payout patio was 83.4 per cent for the quarter.

Royalty pool sales reported by the 107 Keg restaurants in the royalty pool were $191,874,000 for the quarter, an increase of $50,169,000 or 35.4 per cent from the comparable quarter of the prior year. The increase in royalty pool sales during the first quarter of 2023 was primarily due to the combination of 197 more operating weeks in the first quarter of the current year, and 15.3 per cent growth in average weekly restaurant sales. During the first quarter of the prior year, restaurants were closed for 218 operating weeks because of temporary government-mandated restaurant closures related to the COVID-19 pandemic, whereas in the current year there were no such closures.

Royalty income increased by $2,007,000 or 35.4 per cent from $5,668,000 in the three months ended March 31, 2022, to $7,675,000 in the three months ended March 31, 2023.

Distributable cash available to pay distributions to public unitholders increased by $1.35-million from $2,515,000 (22.2 cents/fund unit) to $3,865,000 (34.0 cents/fund unit) for the quarter. During the first quarter of 2023 and 2022, distributions of $3,222,000 (28.4 cents/fund unit) were paid to fund unitholders. The payout ratio was 83.4 per cent for the first quarter of 2023.

The fund remains financially well positioned with cash on hand of $2,241,000 and a positive working capital balance of $3,657,000 as at March 31, 2023.

"We are very pleased with the sales results of KRL thus far in 2023," said Kip Woodward, chairman of the fund. "We are even more pleased that with the growth in royalty income during the current quarter, the payout ratio has returned to more traditional norms."

"We are pleased with KRL's financial performance during the first quarter of 2023. Our business continues to show a strong rebound since the pandemic related closures enforced during the same quarter in 2022," said Nick Dean, president of KRL. "Recently, KRL was ranked the No. 1 restaurant company to work for in Canada in the latest edition of Forbes 'Canada's best employers' survey, securing third place in the overall ranking across all industries in the country. This award is a testament to our incredible team of Keggers, and we firmly believe a strong culture directly correlates with a heightened guest experience in our restaurants," he concluded.

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, a subsidiary of the fund, 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.

With approximately 10,000 employees, over 100 restaurants and annual system sales approaching $700-million, Vancouver-based KRL is the leading operator and franchisor of steak house restaurants in Canada and has a substantial presence in select regional markets in the United States. KRL continues to operate The Keg restaurant system and expand that system through the addition of both corporate and franchised Keg steak houses. KRL has been named the No. 1 restaurant company to work for in Canada in the latest edition of Forbes Canada's best employers 2023 survey, securing third place in the overall ranking across all industries in the country.

We seek Safe Harbor.