A&W REVENUE ROYALTIES INCOME FUND ANNOUNCES THIRD QUARTER 2023 RESULTS

TRADING SYMBOL: TSX: AW.UN

• Royalty income increased by 3.8% in Q3 2023 and 5.4% year to date, as compared to the comparable periods in 2022.
• Royalty Pool Same Store Sales Growth(i) was +1.1% for Q3 2023 and + 3.0% year to date.

VANCOUVER, Oct. 18, 2023 /CNW/ -

THIRD QUARTER 2023 RESULTS
A&W Revenue Royalties Income Fund (the "Fund") and A&W Food Services of Canada Inc. ("A&W Food Services") today reported the Fund's results for the third quarter ended September 10, 2023 which are expected to be filed today on SEDAR+ at www.sedarplus.ca. The Fund will hold a conference call to discuss the results today, Wednesday, October 18, 2023 at 1:00 p.m. Pacific Time (4:00 p.m. Eastern Time).

The call will be webcast live and may be accessed at https://events.q4inc.com/attendee/234719982. Participants who wish to ask questions or are unable to join via webcast may dial-in by calling toll-free 1-888-259-6580 or 1-416-764-8624 and by using the conference ID 02286643 or quoting "A&W Revenue Royalties" when prompted by the operator. For those unable to participate in the live call, a replay will be made available for one year at https://events.q4inc.com/attendee/234719982.

"We are pleased with the year to date Royalty Pool Same Store Sales Growth(i) of 3.0% and our results for the first three quarters of 2023, particularly in comparison to very strong quarterly performance in 2022", said Susan Senecal, President and CEO of A&W Food Services.

Royalty income for the third quarter of 2023 increased by 3.8% in Q3 2023 and 5.4% year to date, as compared to comparable periods in 2022. The royalty income for Q3 2023 was $13,705,000 and is based on gross sales reported by A&W restaurants in the Royalty Pool(i) of $456,842,000, compared to royalty income of $13,198,000 and gross sales reported by A&W restaurants in the Royalty Pool(i) of $439,950,000 for the third quarter of 2022. Year to date royalty income was $37,917,000 based on gross sales reported by A&W restaurants in the Royalty Pool(i) of $1,263,908,000, compared to royalty income of $35,963,000 and gross sales reported by A&W restaurants in the Royalty Pool(i) of $1,198,779,000 for the comparable period in 2022.

The increase in royalty income for the quarter and year to date period was driven by Royalty Pool Same Store Sales Growth(i), which was +1.1% for the quarter and +3.0% year to date, and the gross sales from the 22 net new restaurants added to the Royalty Pool on January 5, 2023. The increase for the year to date period was partially offset by there being one less day in the year to date period of 2023 as compared to the year to date period of 2022. Royalty Pool Same Store Sales Growth is based on an equal number of days in the quarter and year.

The Royalty Pool Same Store Sales Growth in both the quarter and year to date period was primarily driven by growth in average check size which was mainly attributable modest increases in response to industry-wide inflation on goods, services, and labour.

FINANCIAL RESULTS

The following table provides a reconciliation of "Distributable cash generated" to "Net cash generated from operating activities", the most comparable IFRS measure, for the periods indicated.

Three monthly distributions totaling 48.0¢ per Unit were declared in the third quarter of 2023 compared to three monthly distributions totaling 46.5¢ per Unit in the third quarter of 2022. Eight monthly distributions totaling $1.280 per Unit were declared in the 2023 year to date period compared to eight monthly distributions totaling $1.240 per Unit for the comparable period in 2022. Total distributions declared and accrued per equivalent unit year to date were $1.331 for 2023 compared to $1.294 for the comparable period in 2022.

The quarterly Payout ratio reported by the Fund is impacted by seasonality of sales of the A&W restaurants and the timing of current income taxes, which can vary by quarter, and the distribution rate in effect at the time. The Payout ratio(iv) for the third quarter of 2023 was 81.3% compared to 80.3% for the third quarter of 2022. The Payout ratio of 92.6% for the year to date period in 2023 is higher than the trailing four quarter Payout ratio of 91.9%, due to both the seasonality of sales and the timing impact of current income taxes.

This news release references the following non-IFRS measures: "Gross sales reported by A&W restaurants in the Royalty Pool", "Royalty Pool Same Store Sales Growth", "Distributable cash generated", "Distributable cash per equivalent unit", "Distributions and dividends declared per equivalent unit" and "Payout ratio". The Fund believes that disclosing these non-IFRS measures provides readers of this news release with important information regarding the Fund's financial performance and its ability to pay distributions to unitholders. By considering these measures in combination with IFRS measures, the Fund believes that readers are provided with additional and more useful information about the Fund than readers would have if they simply considered IFRS measures alone. The non-IFRS measures reported by the Fund do not have a standardized meaning prescribed by IFRS and the Fund's method of calculating these measures may differ from those of other issuers or companies and may not be comparable to similar measures used by other issuers or companies.

Refer to the "Financial Results" section of this news release for a reconciliation of Distributable cash generated to Net cash generated from operating activities, the most comparable IFRS measure and the "Non-IFRS Measures" section of the Fund's management discussion and analysis ("MD&A") for the third quarter ended September 10, 2023, for further details on how these measures are calculated and used to assess the Fund's performance which are expected to be filed on SEDAR+ at www.sedarplus.ca on October 18, 2023.

The Fund is a limited purpose trust established to invest in Trade Marks, which through its interest in the A&W Trade Marks Limited Partnership (the "Partnership"), owns the A&W trade-marks used in the A&W quick service restaurant business in Canada. The A&W trade-marks comprise some of the best-known brand names in the Canadian foodservice industry. In return for licensing A&W Food Services to use its trade-marks, Trade Marks (through the Partnership) is entitled to royalties equal to 3% of the gross sales reported by A&W restaurants in the Royalty Pool.

The Royalty Pool is adjusted annually to reflect gross sales from new A&W restaurants, net of the gross sales of any A&W restaurants that have permanently closed. Additional LP units are issued to A&W Food Services to reflect the annual adjustment. A&W Food Services' additional LP units are exchanged for additional common shares of Trade Marks which are exchangeable for Trust Units. The 21st annual adjustment to the Royalty Pool took place on January 5, 2023 at which time the number of restaurants in the Royalty Pool increased from 1,015 to 1,037.

Trade Marks' dividends to A&W Food Services and the Fund, and the Fund's distributions to unitholders are based on top-line revenues of the A&W restaurants in the Royalty Pool, less interest, general and administrative expenses and current income taxes of Trade Marks.

A&W is the second largest quick-service hamburger restaurant chain in Canada. Operating coast-to-coast, A&W restaurants feature famous trade-marked menu items such as The Burger Family®, Chubby Chicken® and A&W Root Beer®.

® trademark of A&W Trade Marks Limited Partnership, used under license.

Follow A&W on Facebook (www.facebook.com/AWCanada) and Twitter @AWCanada or visit www.awincomefund.ca.

Certain statements in this press release may contain forward-looking information within the meaning of applicable securities laws in Canada ("forward-looking information"). The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Specific forward-looking statements include statements with respect to: timing for filing the Fund's results for the third quarter ended September 10, 2023 on SEDAR+; the replay of the call being made available; and timing for holding the conference call. The forward-looking information is based on assumptions that management considered reasonable at the time it was prepared, which assumptions include: restaurant performance will continue to improve; the Fund will receive sufficient revenue in the future (in the form of royalty payments from A&W Food Services) to maintain monthly distributions; the projections for the A&W business and the Fund provided by A&W Food Services are accurate; no material changes will occur in the quick service restaurant burger market including as a result of changes in consumer taste, changes in economic conditions or unemployment, or a disease outbreak. The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by the forward-looking information. Those risks and uncertainties include, among other things, risks related to: A&W Food Services may become liable for the lease obligations of certain of its franchisees, if such franchisees default on their leases, and such obligations may be significant and A&W Food Services may be unsuccessful in seeking recovery from such franchisees, all of which may adversely affect A&W Food Services' investments, results of operations and financial condition; A&W Food Services' projections may be inaccurate, and do not represent a financial forecast and actual results may differ materially from those anticipated by the projections; monthly distributions are not guaranteed and may be reduced, suspended or terminated at any time; the current sales improvement trends of the A&W restaurants in the Royalty Pool may not continue and may slow or regress; supply interruptions or staff shortages; and changes in economic conditions, including economic recession or changes in the rate of inflation or deflation, employment rates and household debt, seasonality of sales, political uncertainty, interest rates, currency exchange rates or derivative and commodity prices. Additional factors which could cause results to differ from current expectations are described in the Fund's most recent MD&A under the heading "Risks and Uncertainties" and the Fund's Annual Information Form under the heading "Risk Factors", available on SEDAR+ at www.sedarplus.ca. The forward-looking information contained in this news release represents the Fund's expectations as of the date of this news release, and are subject to change after this date. The Fund assumes no obligation to update or revise any forward-looking information, except as required by applicable law.

SOURCE A&W Revenue Royalties Income Fund

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