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  5. KEG.UN: Can you comment on KEG's latest earnings? [Keg Royalties Income Fund (The)]
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Q: Can you comment on KEG's latest earnings? Is this still a HOLD for income? Bob
Asked by Robert on November 16, 2023
5i Research Answer:

In Q3, KEG reported revenue of $8.1M, down -1.14% year-over-year. Royalty pool sales were also down -1.5% to $176.1M for the quarter. KEG attributed the decrease in royalty pool sales to temporarily closing some stores for renovations to capitalize on anticipated guest demand in Q4. Same store sales increased by +0.2% year-over-year and are up +9.7% year-to-date. Distributable cash was down -2.8% to $0.286 per fun unit for the quarter from $0.294. Payout ratio was 99.3% in the quarter and 92.5% YTD, while KEG continues to pay their usual distirbution. Yield remains solid at 8.28%. Free cash flows remain unchanged from the previous quarter at $6.8M. An OK quarter from KEG, which continues to produce enough cash flows to pay distributions and we continue to be comfortable with it as an income option. KEG remains sensitive to economic conditions but provided a positive outlook regarding Q4 consumer behaviour.