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Vancouver – November 12, 2018 – The Keg Royalties Income Fund (the “Fund”) (TSX: KEG.UN) is pleased to announce its financial results for the three and nine months ended September 30, 2018.
The gross sales reported by the 103 Keg restaurants in the Royalty Pool were $157,910,000 for the quarter, an increase of $10,112,000 or 6.8% from the comparable quarter of the prior year. Year-to-date gross sales increased by $23,518,000 or 5.3% to $470,848,000. The increase in Royalty Pool sales during the quarter and year-to-date, reflect the sales of the new Keg restaurants added to the Royalty Pool on January 1, 2018, and same store sales increases of 3.0% for the quarter and 1.7% year-to-date.
The Keg’s same store sales (sales of restaurants that operated during the entire period of both the current and prior years) increased by 2.3% in Canada and by 6.3% in the United States (“U.S.”) for the 13-week period ended September 30, 2018. For the 39-week period ended September 30, 2018, same store sales increased by 1.6% in Canada and by 5.2% in the U.S. After translating the sales of the U.S. restaurants into their Canadian dollar equivalent, consolidated same store sales increased by 3.0% for the 13-week period and by 1.7% for the 39-week period. The average exchange rate increased from 1.2414 to 1.3098 in the comparable 13-week period, significantly increasing the Canadian dollar equivalent of the U.S. restaurant sales, and decreased from 1.3069 to 1.2876 in the comparable 39-week period, significantly reducing the Canadian dollar equivalent of the U.S. restaurant sales in the comparable periods.
Royalty income increased by $357,000 or 6.0% from $5,993,000 in the three months ended September 30, 2017 to $6,350,000 in the three months ended September 30, 2018. For the nine months ended September 30, 2018 royalty income increased by $805,000 or 4.5% from $18,068,000 to $18,873,000.
Distributable cash before SIFT tax decreased by $132,000 from $4,549,000 (40.1 cents/Fund unit) to $4,417,000 (38.9 cents/Fund unit) for the quarter but increased by $95,000 from $13,626,000 ($1.200/Fund unit) to $13,721,000 ($1.209/Fund unit) for the nine-month period. Distributable cash available to pay distributions to public unitholders decreased by $209,000 from $3,443,000 (30.3 cents/Fund unit) to $3,234,000 (28.5 cents/Fund unit) for the quarter and decreased by $94,000 from $10,269,000 (90.4 cents/Fund unit) to $10,175,000 (89.6 cents/Fund unit) year to date. The Fund’s payout ratio was 99.6% for the third quarter of 2018 and 95.0% year-to-date.
The Fund remains financially well-positioned with cash on hand of $2,627,000 and a positive working capital balance of $3,952,000 as at September 30, 2018.
“The Keg once again generated same store sales increases in both the comparable quarter and on a year-to-date basis,” said David Aisenstat, President and CEO of Keg Restaurants Ltd. “Despite some of the lingering challenges in the restaurant industry across many of the provinces, we remain pleased with our overall sales performance.”