The Keg Royalties Income Fund Announces Second Quarter 2020 Results

Not for distribution to U.S. News wire services or dissemination in the U.S.
VANCOUVER, British Columbia, Aug. 13, 2020 (GLOBE NEWSWIRE) — The Keg Royalties Income Fund (the “Fund”) (TSX: KEG.UN) is pleased to announce its financial results for the three months ended June 30, 2020 (the “quarter”) and for the six months ended June 30, 2020 (“YTD”).HIGHLIGHTSRoyalty Pool sales down 87.9% to $18.2M for the quarter and down 49.2% to $160.9M YTDKRL system sales down 87.9% to $18.8M for the quarter and down 49.7% to $162.9M YTDDistributable cash down 71.2% to 8.1 cents/Fund unit for the quarter and 28.2% to 44.7 cents/Fund unit YTDPayout ratio was 128.9% for the quarter and 86.9% YTDRoyalty Pool Sales reported by the 105 Keg restaurants in the Royalty Pool were $18,194,000 for the quarter, a decrease of $132,537,000 or 87.9% from the comparable quarter of the prior year. Year-to-date Royalty Pool sales decreased by $155,659,000 or 49.2% to $160,847,000. The decrease in Royalty Pool sales during the quarter and year-to-date, was directly attributable to the closure of all restaurants included in the Royalty Pool on March 17, 2020 due to the Covid-19 pandemic.Royalty income decreased by $5,384,000 or 87.7% from $6,136,000 in the three months ended June 30, 2019 to $752,000 in the three months ended June 30, 2020. For the six months ended June 30, 2020 royalty income decreased by $6,364,000 or 49.6% from $12,822,000 to $6,458,000.Distributable cash available to pay distributions to public unitholders decreased by $2,282,000 from $3,207,000 (28.2 cents/Fund unit) to $925,000 (8.1 cents/Fund unit) for the quarter and by $1,996,000 from $7,074,000 (62.3 cents/Fund unit) to $5,078,000 (44.7 cents/Fund unit) year-to-date. The Fund’s payout ratio was 128.9% for the second quarter of 2020 and 86.9% year-to-date.The Fund remains financially well-positioned with cash on hand of $2,452,000 and a positive working capital balance of $2,559,000 as at June 30, 2020.“Our results for the quarter are of course unfortunate, but with the COVID-19 pandemic forcing the temporary closure of all Keg restaurants in both Canada and the United States in mid-March, those results are not surprising” said David Aisenstat, The Keg’s CEO. “The better news is that The Keg locations have now all reopened as government regulations allowed over the past couple of months on a jurisdiction by jurisdiction basis. Each jurisdiction has mandated thorough rules and regulations for health and safety and all Kegs are very focused on diligently following all of those directions. The Keg has also developed some additional procedures of our own to ensure The Kegs will remain both highly safe and highly enjoyable.”  Aisenstat continued, “The really great news is that we have been able to welcome back our Keg team of experienced and talented employees, and to welcome back our loyal guests across the country. The happiness and enthusiasm of both our Keggers and our guests is beyond any expectations; we feel that is a significant indication that the road back to the levels of business we have enjoyed for decades is likely to be less difficult than many have predicted.”   FINANCIAL HIGHLIGHTSNotes:The Fund (TSX: KEG.UN) is a limited purpose, open-ended trust established under the laws of the Province of Ontario that, through The Keg Rights Limited Partnership, 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% of gross sales of Keg restaurants included in the royalty pool.
Vancouver-based KRL is the leading operator and franchisor of steakhouse 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 steakhouses. KRL has been named one of the “50 Best Employers in Canada” for the past seventeen years by Aon Hewitt. For more information on our brand, visit www.kegsteakhouse.com.This press release may contain certain “forward looking” statements reflecting The Keg Royalties Income Fund’s current expectations in the casual dining segment of the restaurant food industry. Investors are cautioned that all forward looking statements involve risks and uncertainties, including those relating to the Keg’s ability to continue to realize historical same store sales growth, changes in market and existing competition, new competitive developments, and potential downturns in economic conditions generally. Additional information on these and other potential factors that could affect the Fund’s financial results are detailed in documents filed from time to time with the provincial securities commissions in Canada.This press release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of the prospectus, nor shall there be any sale of the Fund units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state, province or jurisdiction. The Keg Royalties Income Fund units have not been, and will not be registered under the U.S. Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an application for exemption from the registration requirement under U.S. securities laws.The Trustees of the Fund have approved the contents of this press release.For further information:
Ryan Bullock, Chief Marketing Officer
Tel: (416) 646-4517
www.kegincomefund.com