SIR Royalty Income Fund Announces Filing of SIR Corp. Fiscal 2025 Second Quarter Results

BURLINGTON, ON, March 25, 2025 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) (the "Fund") today announced that SIR Corp. ("SIR" or the "Company"), the operating entity from which the Fund's equity income is ultimately derived, has filed its financial results for the 12-week and 24-week periods ended February 9, 2025 ("Q2 2025" and "YTD 2025", respectively). SIR's unaudited interim consolidated financial statements and management's discussion & analysis ("MD&A") for Q2 2025 / YTD 2025 can be accessed via the Fund's profile on the SEDAR+ website at www.sedarplus.ca under "Other", or the SIR website at www.sircorp.com/sir-royalty-income-fund/financial-reports.

Q2 2025 Business Update

• Food and beverage revenue from corporate restaurant operations increased by 10.4% to $65.5 million, compared to $59.3 million for the 12-week period ended February 11, 2024 ("Q2 2024").
• Consolidated Same Store Sales ("SSS")⁽¹⁾ increased by 3.7%.
• On December 6, 2024, SIR entered into a Twelfth Amending Agreement (the "Twelfth Amendment") to its Credit Agreement with its Senior Lender. The Twelfth Amendment, among other things:
  • Increases the maximum Senior Leverage Ratio financial covenant from 2.5x to 3.0x for SIR's Fiscal 2025 first and second quarters. The Senior Leverage Ratio financial covenant returns to 2.5x for SIR's Fiscal 2025 third quarter,
  • Excludes the $6.25 million Export Development Canada facility principal repayment in July 2025 from the calculation of fixed charges in the Fixed Charge Coverage Ratio financial covenant,
  • Reverts Credit Facility 2 to a non-revolving facility, and
  • Increases the applicable interest rates by 0.5%, with the exception of the guaranteed facility with Business Development Bank of Canada, which remains fixed at 4.0% per annum.
• Effective January 1, 2025, four new restaurants were added to the Royalty Pooled Restaurants (the "Royalty Pool"), including three new Scaddabush Italian Kitchen & Bar® ("Scaddabush") locations (in London and Guelph, Ontario and the Don Mills neighbourhood of Toronto), as well as Edna + Vita^TM in downtown Toronto. In addition, the closed Jack Astor's location in North York, Ontario was removed from the Royalty Pool. The Royalty Pool currently consists of 52 restaurants, including: 36 Jack Astor's® restaurants, 13 Scaddabush locations, Reds Square One®, The Loose Moose Tap + Grill® and Edna + Vita.

Results of Operations Summary

SIR has advised the Fund that food and beverage revenue from corporate restaurant operations totaled $65.5 million in Q2 2025, an increase of 10.4% compared to $59.3 million in Q2 2024. The increase in Q2 2025 reflects higher SSS⁽¹⁾ and the impact of the six new restaurants opened in Fiscal 2024 (four new Scaddabush locations, a Duke's Refresher® + Bar and Edna + Vita), partially offset by the permanent closure of the Jack Astor's location in North York on September 4, 2024 in Q1 2025, and three additional stores closed in Fiscal 2024.

Same Store Sales^(1) ($000s)	12-Week Period Ended February 9, 2025	12-week Period Ended February 11, 2024	Variance	24-Week Period Ended February 9, 2025	24-Week Period Ended February 11, 2024	Variance
Jack Astor's	40,056	39,226	2.1 %	75,663	78,416	(3.5 %)
Scaddabush	14,177	12,975	9.3 %	26,685	25,473	4.8 %
Signature Restaurants	4,052	4,010	1.0 %	7,608	7,617	(0.1 %)
Same Store Sales^(1)	58,285	56,211	3.7 %	109,956	111,506	(1.4 %)

SSS⁽¹⁾ performance includes all SIR restaurants, except for those restaurants that were not open for the entire comparable periods in Fiscal 2025 and Fiscal 2024.  Accordingly, SSS⁽¹⁾ performance for Q2 2025 does not include the new Scaddabush restaurants in Whitby, Guelph and London, Ontario and in the Don Mills neighbourhood of Toronto, since these were not open for both comparable periods in Fiscal 2025 and Fiscal 2024. The new Signature Restaurants, Edna + Vita and Duke's Refresher, located in downtown Toronto are also not included, as well as Abbey's Bakehouse®, as it is not a SIR restaurant.

Net loss and comprehensive loss was $1.6 million for Q2 2025, compared to $2.3 million for Q2 2024. Net loss and comprehensive loss was $6.9 million for YTD 2025, compared to $7.9 million for the 24-week period ended February 11, 2024 ("YTD 2024"). The positive variance for Q2 2025 reflects a $1.3 million increase in earnings from corporate restaurant operations. The variances for Q2 2025 and YTD 2025 also reflect changes in the amortized cost of the Ordinary LP Units and Class A Units of the SIR Royalty Limited Partnership that SIR holds. This resulted in expenses of $3.3 million and $7.1 million in Q2 2025 and YTD 2025, respectively, compared to expenses of $2.9 million and $8.8 million in Q2 2024 and YTD 2024, respectively. These non-cash changes in Q2 2025 and YTD 2025 are due to changes to the estimated cash flows derived from the Fund and changes in the underlying unit price of the Fund compared to the end of the first quarter of Fiscal 2025 and Fiscal 2024, respectively.

Adjusted Net Earnings⁽²⁾ were $1.7 million in Q2 2025, compared to $0.6 million in Q2 2024. The increase was primarily attributable to a $1.3 million increase in earnings from corporate restaurant operations in Q2 2025 compared to Q2 2024.

Liquidity and Capital Resources

As at February 9, 2025, SIR had cash of $2.4 million ($6.5 million as at August 25, 2024), and had drawn approximately $36.8 million against the $39.0 million maximum principal borrowing amount under the Company's credit facility.

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 to its restaurants and to capitalize on the growth of take-out and delivery services in commercial foodservice.

SIR currently has commitments to lease two properties in Barrie and Oshawa, Ontario, upon which it plans to build two new Scaddabush restaurants. There can be no assurance at this time that these planned new Scaddabush restaurants will be opened or will become part of the Royalty Pooled Restaurants.

SIR has submitted a business interruption claim related to the cybersecurity incident that occurred on September 26, 2024 and is in the process of working with its insurance provider to assess the coverage details and determine the appropriate compensation for the disruption.

In consideration of the ongoing conditions noted above and the timing of new restaurant construction and renovations, the related opening schedules will be reviewed regularly by SIR and adjusted as necessary.

Reconciliation of Adjusted Net Earnings⁽²⁾

The following table reconciles net loss and comprehensive loss for the 12-week and 24-week periods ended February 9, 2025 and February 11, 2024, respectively, to Adjusted Net Earnings⁽²⁾:

	12-Week  Period Ended February 9, 2025	12-Week Period Ended February 11, 2024	24-Week Period Ended February 9, 2025	24-Week Period Ended February 11, 2024
	(in thousands of dollars) (unaudited)
Net loss and comprehensive loss for the period	(1,644)	(2,265)	(6,943)	(7,872)
Change in amortized cost of Ordinary LP Units and Class A LP Units of the Partnership	3,347	2,868	7,051	8,808
Adjusted Net Earnings^(2)	1,703	603	108	936

About SIR Corp.

SIR Corp. ("SIR") is a privately held Canadian corporation that owns a portfolio of 54 restaurants in Canada. SIR's Concept brands include Jack Astor's Bar and Grill® with 36 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.

(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, SIR believes that SSS and SSSG are useful measures and provide investors with an indication of the change in year-over-year sales. SIR'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. SSSG is the percentage increase in SSS over the prior comparable period. SSS includes revenue from all SIR restaurants except for those restaurants that were not open for the entire comparable period and Abbey's Bakehouse in Muskoka, Ontario as it is not a SIR restaurant. When a SIR Restaurant is closed, the revenue for the closed restaurant is excluded from the calculation of SSS for both the quarter in which the restaurant is closed and the current year-to-date.

(2) Adjusted Net Earnings (Loss) is calculated by removing the change in amortized cost of the Ordinary LP Units and Class A LP Units of the Partnership from the net income (loss) and comprehensive income (loss) for the period. Adjusted Net Earnings (Loss) is a non-GAAP financial measure and does not have a standardized meaning prescribed by IFRS. Management believes that in addition to net income (loss) and comprehensive income (loss), Adjusted Net Earnings (Loss) is a useful supplemental measure to evaluate SIR's performance. Changes in the amortized cost of the Ordinary LP Units and Class A LP Units of the Partnership is a non-cash transaction and varies with changes in the market price of the Fund units. The exclusion of the change in amortized cost of the Ordinary LP Units and Class A LP Units of the Partnership eliminates this non-cash impact. Management cautions investors that Adjusted Net Earnings (Loss) should not replace net income (loss) and comprehensive income (loss) or cash flows from operating, investing and financing activities (as determined in accordance with IFRS), as an indicator of SIR's performance. SIR's method of calculating Adjusted Net Earnings (Loss) may differ from the methods used by other issuers. Please refer to the reconciliation of net loss and comprehensive loss to Adjusted Net Earnings for Q2 2025 provided in this news release.

Caution concerning forward-looking information

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 SIR Royalty Limited Partnership (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; the impact of cybersecurity breaches; 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 risks and uncertainties, please refer to the 'Risk Factors' in the Fund's March 13, 2025 Annual Information Form, for the period ended December 31, 2024, and the Fund and SIR's most recent interim and / or annual filings, which are available under the Fund's profile at www.sedarplus.ca.

SOURCE SIR Royalty Income Fund

For further information, please contact: Jeff Good, Chief Financial Officer, Tel: [phone]; Bruce Wigle, Bay Street Communications, Tel: [phone]