A&W Revenue Royalties Income Fund (OTCPK:AWRRF)
$ 26.7582 0 (0%) Market Cap: 390.81 Mil Enterprise Value: 422.70 Mil PE Ratio: 40.81 PB Ratio: 2.40 GF Score: 53/100
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Q2 2024 A and W Revenue Royalties Income Fund Earnings Call Transcript

Jul 22, 2024 / 02:30PM GMT
Release Date Price: $25.51 (+20.05%)

Key Points

Positve
  • A&W Revenue Royalties Income Fund (AWRRF) reported positive growth in the first half of the year with same-store sales growth of 0.3% in Q2 and 0.5% year-to-date.
  • The proposed strategic combination with A&W Food Services of Canada offers unit holders a 30% premium to the current unit price.
  • Unit holders who exchange units for shares of NewCo will maintain the existing level of distributions in the form of quarterly dividends.
  • The new structure (NewCo) is expected to provide greater liquidity and attract institutional investment and research analyst coverage.
  • The combined entity (NewCo) is projected to have a higher cumulative average growth rate (11.5%) compared to the current fund (8.1%).
Negative
  • The current economic environment, including increased interest rates and inflation, has pressured consumer discretionary spending.
  • The proposed transaction involves a complex proration mechanism for cash exchange, which may be confusing for some unit holders.
  • The legacy trust structure of the fund has limited ability to raise capital or pursue other strategic initiatives.
  • The trading value of units has been largely driven by the spread between interest rates and bond yields, rather than business results.
  • The fund's payout ratio remains high, with a year-to-date payout ratio of 100% in 2024 compared to 99.4% in 2023, indicating limited room for distribution increases.
Operator

Everyone, and welcome to today's A&W's strategic combination and A&W RRIF Q2 results (Operator Instructions) Please note that this call is being recorded (Operator Instructions)

It is now my pleasure to turn the conference over to Susan Senecal, President and CEO, A&W Food Services of Canada. Please go ahead.

Susan Senecal
A and W Revenue Royalties Income Fund - President, Chief Executive Officer

Thanks. Savannah and good morning, everyone. Thank you for taking the time to attend our call today I'm Susan Senecal, President and CEO of A&W Food Services of Canada and the A&W Revenue Royalties Income Fund. And I'm joined by Kelly Blankstein, who's the Chief Financial Officer of A&W Food Services and the fund.

This morning, we issued two press releases, one announcing the quarter end results and one announcing a strategic combination between A&W Food Services and the fund.

Let me begin by sharing a presentation on the proposed transaction to combine A&W Food Services of Canada and the A&W Revenue

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