A&W REVENUE ROYALTIES INCOME FUND ANNOUNCES SECOND QUARTER 2024 RESULTS

TRADING SYMBOL: TSX: AW.UN

VANCOUVER, BC, July 22, 2024

• Royalty income increased by 1.5% in Q2 2024 and 1.3% year to date, as compared to the comparable periods in 2023.
• Royalty Pool Same Store Sales Growth(i) was +0.3% for Q2 2024 and +0.5% year to date.
• The Fund and A&W Food Services agreed to a strategic combination that will create a new publicly-traded company combining the Fund, A&W Food Services and certain holding companies, subject to customary closing conditions, including approval of the Fund's unitholders.

SECOND QUARTER 2024 RESULTS

A&W Revenue Royalties Income Fund (the "Fund") and A&W Food Services of Canada Inc. ("A&W Food Services or "A&W") today reported the Fund's results for the second quarter ended June 16, 2024.

"We are pleased to report that the Fund has achieved positive growth for the first half of 2024," said Susan Senecal, President and CEO of A&W Food Services. "A&W is energized by the nine new A&W restaurants opened in the first two quarters and excited by the traction it is gaining from the marketing campaigns and promotions it is running. This is an industry leading pace of restaurant growth across the country and builds on our momentum as the fastest growing large-scale quick service burger brand in Canada."

Royalty income for the second quarter of 2024 was $12,965,000 based on Gross sales reported by restaurants in the Royalty Pool(i) of $432,173,000, compared to royalty income of $12,773,000 and Gross sales reported by A&W restaurants in the Royalty Pool(i) of $425,768,000 for the second quarter of 2023. Year to date royalty income was $24,518,000 based on gross sales reported by restaurants in the Royalty Pool(i) of $817,270,000, compared to royalty income of $24,212,000 and gross sales reported by restaurants in the Royalty Pool(i) of $807,066,000 for the comparable period in 2023.

The increase in royalty income is driven by the Royalty Pool Same Store Sales Growth and the gross sales from the 10 net new restaurants added to the Royalty Pool on January 5, 2024. The increase in the year to date period was partially offset by there being one less day in Q1 2024 than in Q1 2023. Royalty Pool Same Store Sales Growth is based on an equal number of days in the quarter and year.

Royalty Pool Same Store Sales Growth is a function of changes in guest counts and check size, which are impacted by party size, menu prices and menu mix and changes in consumers discretionary spending. The Royalty Pool Same Store Sales Growth(i) of +0.3% for the second quarter and +0.5% for the year to date period was a product of an increase in average check size due in part to industry-wide inflation on goods, services, and labour, partially offset by a decline in guest traffic which A&W Food Services believes is attributable to increased interest rates and inflation, along with market uncertainty, which have impacted consumer discretionary spending. In response to these economic conditions, A&W Food Services continues to seek new and innovative ways to offer A&W's guests a delicious and affordable experience and in turn increase guest traffic.

Full quarterly results are expected to be filed today on SEDAR+ at www.sedarplus.ca.

Strategic Combination of the Fund and A&W Food Services

The Fund also today announced that it has agreed to combine with A&W Food Services to create a new publicly traded corporation. Under the terms of the proposed transaction, the Fund's unitholders can elect to exchange each unit of the Fund for $37.00 in cash or one common share in the new company, subject to proration in the event that unitholders elect, in the aggregate, to receive more or less than approximately $175.6 million in cash consideration, such that in all cases, the existing common shares of Food Services will represent approximately 59% of the common shares of the new public company. The proposed transaction is expected to close in October and is subject to customary closing conditions, including court approval, the approval of the Fund's unitholders, approval of the Toronto Stock Exchange and regulatory approval under the Competition Act (Canada).

Details of this combination are included in a news release issued today by the Fund and A&W Food Services, and in presentations available on the Fund's website at www.awincomefund.ca.

Conference Call

The Fund will hold a conference call to discuss the results and the combination with A&W Food Services on Monday, July 22, 2024 at 7:30 a.m. Pacific Time (10:30 a.m. Eastern Time).

The call will be webcast live and may be accessed at https://events.q4inc.com/attendee/905085111. Participants who wish to ask questions or are unable to join via webcast may dial-in by calling toll-free 1-800-225-9448 or 1-203-518-9708 and by quoting the conference ID "AWRRIF" 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/905085111.

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 second quarter of both 2024 and 2023. Five monthly distributions totaling 80.0¢ per Unit were declared in both the 2024 and 2023 year to date periods.

The Payout ratio(iv) for the second quarter of 2024 was 89.1% compared to 88.9% for the second quarter of 2023. The year to date Payout ratio(iv) for 2024 was 100.0% compared to 99.4% for the comparable period in 2023. The Fund's long-term objective is to maintain an annual Payout ratio at or below 100%; however, as the Fund strives to provide unitholders with regular monthly distributions, and as a result of fluctuations in sales and the timing of current income taxes, the Fund can experience fluctuations in its Payout ratio. The Payout ratio(iv) for the year to date period in 2024 of 100.0% is higher than the trailing four quarter Payout ratio(iv) of 91.9% due mainly to the timing impact of current income taxes.

NON-IFRS MEASURES

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 second quarter ended June 16, 2024, 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 today.

ABOUT THE FUND

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 22nd annual adjustment to the Royalty Pool took place on January 5, 2024 at which time the number of restaurants in the Royalty Pool increased from 1,037 to 1,047.

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.

ABOUT A&W FOOD SERVICES

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®.

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

FORWARD-LOOKING INFORMATION

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: expectations relating to the timing and completion of the proposed strategic combination of Food Services and the Fund; timing for filing the Fund's results for the second quarter ended June 16, 2024 on SEDAR+; the replay of the call being made available; the timing for holding the conference call and; the traction it is gaining from the marketing campaigns and promotions it is running. The forward-looking information is based on assumptions that management considered reasonable at the time it was prepared, which assumptions include: the Fund's ability to obtain unitholder approval and consummate the proposed transaction with A&W Food Services on the terms and conditions and timing currently contemplated; 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: the completion of the proposed combination with A&W Food Services which may not occur on the anticipated terms and timing or at all; failure to complete the proposed combination with A&W Food Services could negatively impact the market price of the units of the Fund; 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 is 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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