A&W Revenue Royalties Income Fund (AW-UN) Q3 2024 earnings summary

Executive summary

• Unitholders approved the strategic combination of the Fund and Food Services, forming a new public company, with 99.2% voting in favor; final court approval was granted and the transaction will close after October 17, 2024.

• Food Services shares will begin trading on the TSX under the symbol AW on October 18, 2024.

• Royalty income rose 0.3% in Q3 2024 and 0.9% year to date compared to 2023, driven by 10 net new restaurants added to the Royalty Pool in January 2024.

• 19 new restaurants opened in the first three quarters of 2024, with 20 more under construction, signaling expansion momentum.

Financial highlights

• Q3 2024 royalty income was CAD 13.74 million on gross sales of CAD 458.1 million, up from CAD 13.71 million and CAD 456.8 million in Q3 2023.

• Year-to-date royalty income reached CAD 38.26 million on gross sales of CAD 1.28 billion, compared to CAD 37.92 million and CAD 1.26 billion in 2023.

• Q3 2024 net income was CAD 9.53 million, down from CAD 10.64 million in Q3 2023; year-to-date net income was CAD 28.18 million versus CAD 29.50 million.

• Distributable cash in Q3 2024 was CAD 9 million, down from CAD 11.1 million in Q3 2023, due to CAD 2.5 million in non-recurring transaction costs.

• Distributable cash per equivalent unit was CAD 0.435 in Q3 2024 versus CAD 0.544 in Q3 2023; year-to-date CAD 1.317 in 2024 versus CAD 1.437 in 2023.

Outlook and guidance

• Focus is shifting to value and affordability to address consumer demand and economic pressures, with renewed emphasis for Q4.

• Continued product innovation is planned, with successful launches like the Masala Veggie Burger and Piri-Piri lineup.

• Nationwide marketing campaigns are expected to support new initiatives.

• Pret A Manger rollout strategy details will be shared soon, with franchisee interest and standalone concept testing underway.

• Food Services expects to exceed the annual number of new restaurant openings compared to post-pandemic years.