SIR Royalty Income Fund Reports 2022 First Quarter Results – Press Release

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— Strong growth in Pooled Revenue and Same Store Sales reflects gradual return to full operating capacity during the quarter —    

BURLINGTON, ON, May 12, 2022 /CNW/ – SIR Royalty Income Fund (TSX:SRV) (the "Fund") today reported its financial results for the first quarter ended March 31, 2022 ("Q1 2022").

"During March 2022, all of the remaining government restrictions impacting our restaurant operations were lifted. We are now at full operating capacity at all locations, and we are pleased that guest volume is increasing as we all collectively learn to live with COVID-19," said Peter Fowler, CEO of SIR Corp. "Our first quarter performance was impacted by the Omicron variant, which resulted in a temporary increase in restrictions that affected us early in the quarter. However, our business gained momentum over the course of the period as restrictions were eased. We welcome the return to a more normalized operating environment and look forward to a busy patio season in the months ahead."

Q1 2022 Summary

• Pooled Revenue increased 152.0% to $39.1 million, compared to $15.5 million in the three months ended March 31, 2021 ("Q1 2021").
• Royalty income in the SIR Royalty Limited Partnership (the "Partnership") increased to $2.3 million, from $0.9 million in Q1 2021.
• Equity income (loss) from the Partnership, which represents the Fund's pro rata share of the residual distributions of the Partnership, was $1.9 million, compared to $(0.1) million in Q1 2021.
• The Royalty Pooled Restaurants generated same store sales growth ("SSSG")⁽¹⁾ of 154.1%.
• Distributable cash⁽²⁾ totaled $3.0 million, or $0.36 (basic) and $0.34 (diluted) per Fund Unit, and cash distributed to unitholders totaled $2.3 million, representing a payout ratio⁽²⁾ of 76.0%. The Fund's target payout ratio⁽²⁾ is 100% per annum.
• Five closed restaurants were removed from the Royalty Pooled Restaurants (the "Royalty Pool") effective January 1, 2022.
• On January 28, 2022, the Fund announced that its independent Trustees provided approval to SIR Corp. ("SIR") to operate Renegade Chicken take-out and delivery services on a trial basis out of certain Jack Astor's locations in Ontario. SIR intends to extend the current trial until August 28, 2022, in exchange for continuing to pay 6% of the revenues arising therefrom to the Partnership.
• On February 9, 2022, the Fund announced that SIR is converting its Canyon Creek® location at the Fallsview Casino Resort in Niagara Falls, Ontario, into a new Reds®. The new Reds Kitchen + Wine Bar Fallsview opened on March 31, 2022. This former Canyon Creek location was a Royalty Pooled Restaurant, but it has not been in operation since the onset of the pandemic in mid-March 2020. In accordance with the License and Royalty Agreement between SIR and the Partnership, this former Canyon Creek location is treated as a permanently closed restaurant, and the new Reds will become a Royalty Pooled Restaurant effective January 1, 2023.

Subsequent Event

• SIR advised the Fund that the last remaining Canyon Creek restaurant, located in Etobicoke, Ontario near Toronto Pearson International Airport, will permanently close effective May 23, 2022. SIR plans to open a new Scaddabush® restaurant at this location in August 2022.

Q1 2022 Financial Results Summary 

Pooled Revenue in Q1 2022 increased 152.0% to $39.1 million, compared to $15.5 million in Q1 2021. The higher Pooled Revenue in Q1 2022 reflects a 154.1% increase in Same Store Sales ("SSS")⁽¹⁾, which was attributable to the easing of pandemic-related operating restrictions during Q1 2022 in the markets in which SIR restaurants are located.

Net earnings were $1.1 million, or $0.13 (basic and diluted) per Fund Unit, for Q1 2022 compared to a net loss of $0.8 million, or $0.10 (basic and diluted) per Fund Unit, …

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