SIR Royalty Income Fund Reports 2025 First Quarter Financial Results

Cision Canada

08-05-2025

BURLINGTON, ON, May 8, 2025 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) (the "Fund") today reported its financial results for the first quarter ended March 31, 2025 ("Q1 2025").
"We generated 7% growth in Pooled Revenue in the first quarter compared to Q1 last year, driven by the four new restaurants we added to the Royalty Pool in January 2025, including three new Scaddabush locations and Edna + Vita, our exciting, new fine-dining concept in downtown Toronto. Scaddabush continues to generate solid same store sales growth, and we are currently developing two new locations which will bring the total number of Scaddabush restaurants to 15," said Peter Fowler, CEO of SIR Corp. "We are maintaining our focus on continuous innovation and providing immersive new product and guest service offerings to further strengthen our restaurant brands. We look forward to a busy patio season ahead."
Q1 2025 Summary
Pooled Revenue totaled $64.7 million, an increase of 7.0% compared to $60.5 million for the three months ended March 31, 2024 ("Q1 2024").
Royalty income in the SIR Royalty Limited Partnership (the "Partnership") increased to $3.9 million, from $3.6 million in Q1 2024.
Equity income from the Partnership, which represents the Fund's pro rata share of the residual distributions of the Partnership, was $2.5 million, similar to Q1 2024.
The Royalty Pooled Restaurants (the "Royalty Pool") had a consolidated same store sales ("SSS") (1) decline of 1.3%.
Net earnings were $1.0 million, compared to $2.3 million in Q1 2024.
Distributable cash (2) totaled $2.3 million, or $0.27 (basic and diluted) per Fund Unit, and cash distributed to unitholders totaled $2.4 million, representing a payout ratio (2) of 104.1%. The payout ratio (2) since the Fund's inception in 2004, up to and including Q1 2025, is 100.0%, in line with the Fund's target payout ratio (2) of 100% per annum.
Effective January 1, 2025, four new restaurants were added to the Royalty Pooled Restaurants, including three Scaddabush Italian Kitchen & Bar® ("Scaddabush") locations (in London and Guelph, Ontario and the Don Mills neighbourhood of Toronto), and Edna + Vita TM, and the closed Jack Astor's® location in North York, Ontario was removed from the Royalty Pool.
Subsequent Event
SIR Corp. ("SIR") permanently closed the Jack Astor's location in the Greenfield Park neighbourhood of Longueuil, Quebec effective April 27, 2025. This restaurant will cease to be a Royalty Pooled Restaurant effective January 1, 2026.
Q1 2025 Financial Results Summary
Pooled Revenue in Q1 2025 increased by 7.0% to $64.7 million, compared to $60.5 million in Q1 2024. The increase reflects additional revenue from the four new restaurants that were added to the Royalty Pool effective January 1, 2025 (three Scaddabush locations and Edna + Vita), partially offset by the closed Jack Astor's restaurant that was removed from the Royalty Pool effective January 1, 2025 and the 1.3% decline in consolidated SSS (1) for the quarter.
Net earnings for Q1 2025 were $1.0 million, or $0.12 (basic and diluted) per Fund Unit, compared to net earnings of $2.3 million, or $0.27 (basic and diluted) per Fund Unit, for Q1 2024. The reduction in net earnings was primarily attributable to a decrease of $0.5 million in the estimated fair value of the SIR Loan in Q1 2025, compared to an increase of $0.8 million in Q1 2024. Changes to the SIR Loan's valuation are related to IFRS 9, which requires the Fund to recognize the SIR Loan at fair value, with changes in the fair value being recorded in the statement of earnings.
Same Store Sales ("SSS") (1)
Change in SSS (1) for Royalty Pooled Restaurants
Three-month
period ended
Mar. 31, 2025
Three-month
period ended
Mar. 31, 2024
Jack Astor's®
(2.4 %)
(4.1 %)
Scaddabush®
2.6 %
5.2 %
Signature Restaurants
(5.0 %)
19.2 %
Overall Change in SSS (1)
(1.3 %)
(1.1 %)
Jack Astor's SSS (1) performance for Q1 2025 includes all 36 locations that were in operation during the quarter. Jack Astor's accounted for approximately 62.5% of Pooled Revenue in Q1 2025 and had a SSS (1) decline of 2.4%. The decline primarily reflected reduced dine-in guest traffic at certain locations and lower take-out and delivery sales, partially offset by price increases.
Scaddabush SSS (1) performance for Q1 2025 includes 10 out of the 13 locations. Scaddabush had SSS (1) growth of 2.6% in Q1 2025, reflecting price increases and the continued popularity of this brand.
The Signature Restaurants SSS (1) performance for Q1 2025 includes two restaurants (Reds® Square One and The Loose Moose Tap + Grill®). The Signature Restaurants had a SSS (1) decline of 5.0% in Q1 2025, which was primarily attributable to lower dine-in guest traffic, partially offset by price increases.
Distributable Cash (2)
The following table reconciles the relationship between cash provided by operating activities and distributable cash (2):
Distributable cash (2) for Q1 2025 totaled $2.3 million, or $0.27 per Fund Unit (basic and diluted), and distributions to Unitholders totaled $2.4 million, representing a payout ratio (2) of 104.1%. The payout ratio (2) since the Fund's inception in 2004, up to and including Q1 2025, is 100.0%, in line with the Fund's target payout ratio (2) of 100% per annum.
Outlook
SIR continues to monitor consumer spending behavior in light of current evolving macroeconomic factors, including inflation, interest rates, and the impact of new cross-border tariffs between Canada and the United States, and their potential impact on the Canadian economy and consumer confidence. Ongoing business impacts due to changes in the minimum wage, rising commodity costs and supply shortages have all been influential in the bar and restaurant industry's changes in pricing overall.
SIR continues to innovate and provide immersive new product and service offerings to increase dine-in guest visits and to capitalize on the rapid growth of take-out and delivery services in commercial foodservice.
SIR has leased properties in Barrie and Oshawa, Ontario, upon which it plans to develop two new Scaddabush locations. There can be no assurance at this time that these planned new restaurants will be opened or will become part of the Royalty Pooled Restaurants.
In consideration of the ongoing conditions mentioned above and the timing of new restaurant construction and renovations, the related restaurant opening schedules will be reviewed regularly by SIR and adjusted as necessary.
Non-IFRS Financial Measures
(1) Same store sales ("SSS") and same store sales growth ("SSSG") are non-GAAP financial measures and do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS"). However, the Fund believes that SSS and SSSG are useful measures and provide investors with an indication of the change in year-over-year sales. The Fund's method of calculating SSS and SSSG may differ from those of other issuers and, accordingly, SSS and SSSG may not be comparable to measures used by other issuers. SSS includes revenue from all SIR Restaurants included in Pooled Revenue except for those locations that were not open for the entire comparable periods in 2025 and 2024. SSSG is the percentage increase in SSS over the prior year comparable period.
(2) Distributable cash and payout ratio are non-GAAP financial measures and do not have standardized meanings prescribed by IFRS. However, the Fund believes that distributable cash and the payout ratio are useful measures as they provide investors with an indication of cash available for distribution. The Fund's method of calculating distributable cash and the payout ratio may differ from that of other issuers and, accordingly, distributable cash and the payout ratio may not be comparable to measures used by other issuers. Investors are cautioned that distributable cash and the payout ratio should not be construed as an alternative to the statement of cash flows as a measure of liquidity and cash flows of the Fund. The payout ratio is calculated as cash distributed for the period as a percentage of the distributable cash for the period. Distributable cash represents the amount of money which the Fund expects to have available for distribution to Unitholders of the Fund, and is calculated as cash provided by operating activities of the Fund, adjusted for the net change in non-cash working capital items including a reserve for income taxes payable and the net change in the distribution receivable from the SIR Royalty Limited Partnership. For a detailed explanation of how the Fund's distributable cash is calculated, please refer to the Fund's Q1 2025 MD&A, which can be accessed via the SEDAR+ website (www.sedarplus.ca).
Q1 2025 Filings
The Fund's unaudited interim consolidated Financial Statements and Management Discussion & Analysis ("MD&A"), and the Partnership's Financial Statements, for Q1 2025 are available via the SEDAR+ website at www.sedarplus.ca and SIR's website at www.sircorp.com.
About SIR Corp.
SIR Corp. ("SIR") is a privately held Canadian corporation that owns a portfolio of 53 restaurants in Canada. SIR's Concept brands include Jack Astor's Bar and Grill® with 35 locations, and Scaddabush Italian Kitchen & Bar® with 13 locations. SIR also operates one-of-a-kind "Signature" brands including The Loose Moose®, Reds® Square One and Edna + Vita TM. All trademarks related to the Concept and Signature brands noted above are used by SIR under a License and Royalty Agreement with SIR Royalty Limited Partnership. SIR also owns two Duke's Refresher® + Bar locations, which are currently not part of the Royalty Pool. For more information on SIR or the SIR Royalty Income Fund, please visit www.sircorp.com.
About SIR Royalty Income Fund
The Fund is a trust governed by the laws of the province of Ontario that receives distribution income from its investment in the SIR Royalty Limited Partnership and interest income from the SIR Loan. The Fund intends to pay distributions to unitholders on a monthly basis.
Caution concerning forward-looking statements
Certain statements contained in this report, or incorporated herein by reference, including the information set forth as to the future financial or operating performance of the Fund or SIR, that are not current or historical factual statements may constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning the objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of the Fund, the SIR Holdings Trust (the "Trust"), the Partnership, SIR, the SIR Restaurants or industry results, are forward-looking statements. The words "may", "will", "should", "would", 'could", "expect", "believe", "plan", "anticipate", "intend", "estimate" and other similar terminology and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Fund, the Trust, the Partnership, SIR, the SIR Restaurants or industry results, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. These statements reflect Management's current expectations, estimates and projections regarding future events and operating performance and speak only as of the date of this document. Readers should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. Risks related to forward-looking statements include, among other things, challenges presented by a number of factors, including; market conditions at the time of this filing; competition; changes in demographic trends; weather; changing consumer preferences and discretionary spending patterns; changes in consumer confidence; changes in national and local business and economic conditions; pandemics or other material outbreaks of disease or safety issues affecting humans or animals or food products; the ability to maintain staffing levels; the impact of inflation, including on input prices and wages; the impact of the war in the Ukraine; changes in tariffs and international trade; changes in foreign exchange and interest rates; changes in availability of credit; legal proceedings and challenges to intellectual property rights; dependence of the Fund on the financial condition of SIR; legislation and governmental regulation, including the cost and/or availability of labour as it relates to changes in minimum wage rates or other changes to labour legislation and forced closures of or other limits placed on restaurants and bars; laws affecting the sale and use of alcohol (including availability and enforcement); changes in cannabis laws; changes in environmental laws; privacy matters; accounting policies and practices; changes in tax laws; and the results of operations and financial condition of SIR. The foregoing list of factors is not exhaustive. Many of these issues can affect the Fund's or SIR's actual results and could cause their actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Fund or SIR. There can be no assurance that SIR will remain compliant in the future with all of its financial covenants under the Credit Agreement and imposed by the lender. Given these uncertainties, readers are cautioned that forward-looking statements are not guarantees of future performance and should not place undue reliance on them. The Fund and SIR expressly disclaim any obligation or undertaking to publicly disclose or release any updates or revisions to any forward-looking statements. Forward-looking statements are based on Management's current plans, estimates, projections, beliefs and opinions, and the Fund and SIR do not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change, except as expressly required by applicable securities laws.
All of the forward-looking statements made herein are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Fund or SIR.
For more information concerning the Fund's risks and uncertainties, please refer to the March 13, 2025 Annual Information Form, for the period ended December 31, 2024, and the Fund's Q1 2025 MD&A, which are available under the Fund's profile at www.sedarplus.ca.