A&W FOOD SERVICES OF CANADA INC. ANNOUNCES SECOND QUARTER RESULTS FOR FISCAL 2025

Executive Summary

• A&W Food Services of Canada Inc. reported strong financial results for the second quarter of fiscal 2025, with net income rising to $12.5 million from $8.8 million in the prior year period, driven by the cessation of royalty expenses following a major acquisition transaction.
• The company achieved 3.4% System Sales Growth and 1.6% Same Store Sales Growth, supported by the opening of four new restaurants and successful marketing campaigns, including a "Teen Burger" promotion and the launch of the A&W Rewards loyalty program.
• Full-year guidance remains unchanged, with Adjusted EBITDA expected between $96 million and $101 million, and total A&W restaurants projected to reach between 1,085 and 1,100 by the end of fiscal 2025.

Key Details

• Q2 2025 Financial Performance:
  • Net Income: $12.5 million (up from $8.8 million in Q2 2024).
  • Net Income per Diluted Share: $0.50 (adjusted for comparability vs $0.58 in Q2 2024).
  • Revenue: $68.8 million (up 7% from $64.3 million).
  • Income Before Income Taxes: $17.2 million (up 63% from $10.6 million).
  • Adjusted EBITDA: $25.5 million (up 18% from $21.5 million).
  • Adjusted EBITDA Margin: 37.1% (up from 33.4%).
• Operational Metrics:
  • System Sales: $452.3 million (up 3.4%).
  • Same Store Sales Growth: 1.6% (up from 0.3%).
  • New Restaurants Opened: 4.
  • Net Annual Restaurant Unit Growth: 1.9%.
• YTD 2025 Performance:
  • Net Income: $21.8 million (up from $16.3 million).
  • Net Income per Diluted Share: $0.88 (adjusted for comparability vs $1.08).
  • Revenue: $130.0 million (up from $123.1 million).
  • Adjusted EBITDA: $44.9 million (up from $40.9 million).
  • Adjusted EBITDA Margin: 34.6% (up from 33.2%).
• Dividends:
  • Cash dividend of $0.480 per share declared on June 2, 2025, and paid on June 30, 2025.
• Strategic Context:
  • On October 17, 2024, A&W completed a transaction acquiring the trademarks used in the A&W business in Canada via the acquisition of units of A&W Revenue Royalties Income Fund it did not already own.
  • This transaction resulted in the cessation of royalty expense and income from associates, which significantly impacts comparability with prior periods.
• 2025 Outlook:
  • Adjusted EBITDA: $96 million – $101 million.
  • Total A&W Restaurants: 1,085 – 1,100.
  • Annual System Sales Growth: 1.5% – 4.5%.
  • Annual Same Store Sales Growth: 0.0% – 3.0%.

Notable Quotes

• "We are pleased to report a stronger second quarter for A&W... We successfully opened 4 new restaurants and achieved 3.4% System Sales Growth and Same Store Sales Growth of 1.6%." — Susan Senecal, Chief Executive Officer.
• "A significant highlight of the quarter was the launch of A&W Rewards, our new loyalty program, on April 22nd. A&W Rewards provides guests with access to offers, discounts and free rewards, only available on the mobile app, giving them even more reasons to visit A&W." — Susan Senecal, Chief Executive Officer.
• "We continue to be pleased with the performance of our value offerings and marketing initiatives, which have effectively appealed to the needs of our guests today." — Susan Senecal, Chief Executive Officer.