Market Overview

SIR Royalty Income Fund Reports 2019 Second Quarter Results

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BURLINGTON, ON, Aug. 12, 2019 /CNW/ - SIR Royalty Income Fund (TSX:SRV) (the "Fund") today reported its financial results for the three-month ("Q2 2019") and six-month ("YTD 2019") periods ended June 30, 2019. Percentage calculations are based on the numbers in the financial statements and may not correspond to rounded figures presented in this release.

Q2 2019 Summary

  • Pooled Revenue was $77.7 million, a decline of 1.8% compared to $79.1 million for the three-month period ended June 30, 2018 ("Q2 2018").
  • Royalty income in the SIR Royalty Limited Partnership (the "Partnership") was $4.7 million, a decrease of 1.8% from Q2 2018.
  • Equity income from the Partnership, which represents the Fund's pro rata share of the residual distributions of the Partnership, was $3.0 million in Q2 2019, compared to $3.1 million in Q2 2018.
  • Net earnings for the Fund were $4.6 million, or $0.50 per Fund unit (diluted), compared to $1.9 million, or $0.23 per Fund unit (diluted) in Q2 2018. Net earnings were impacted by IFRS 9, which resulted in an increase in net earnings of $2.0 million for Q2 2019, and a decrease in net earnings of $0.9 million for Q2 2018.
  • Adjusted net earnings(1) were $2.6 million, or $0.31 per Fund unit, in Q2 2019, compared to $2.8 million, or $0.34 per Fund unit, in Q2 2018.
  • The Royalty Pooled Restaurants had a same store sales ("SSS") (3) decline of 2.2%, primarily reflecting the impact of unfavourable weather conditions on patio sales in the spring and early summer, compared to Q2 2018.
  • Distributable cash(2) totaled $2.6 million, or $0.32 per unit (basic and diluted), and cash distributed to unitholders totaled $2.6 million, representing a payout ratio(2) of 99.7%. The Fund's target payout ratio(2) is 100% per annum. IFRS 9 did not impact Distributable cash(2) and the Fund's payout ratio(2).
  • SIR opened a new Scaddabush® restaurant in the Mimico neighbourhood of Etobicoke, Ontario, representing its ninth Scaddabush location. This restaurant is expected to be added to the Royalty Pooled Restaurants on January 1, 2020.

"Our overall same store sales performance in the quarter was impacted by unfavourable weather conditions in the spring and early summer, as patio sales were down significantly, particularly at Jack Astor's," said Peter Fowler, CEO of SIR Corp.  "Scaddabush continues to perform well with positive same store sales growth, and we are pleased to report the opening of our ninth location during the quarter. Our Signature Group also had a strong quarter with same store sales growth of more than ten percent, reflecting the positive impact of the major renovation to the Loose Moose completed last quarter, as well as operational enhancements for our downtown Toronto Reds locations."   

"Looking ahead, SIR will continue to invest in the Royalty Pool Restaurants to drive growth. We are pleased with the positive guest reception to our enhanced décor and refined pizza and pasta offerings that were implemented at Scaddabush Mississauga last quarter and we look forward to rolling out these enhancements to the remainder of the Scaddabush locations throughout 2019. We will also continue to advance our system-wide Jack Astor's renovation program." 

Financial Results

($000s except restaurants

and per Unit amounts)

(unaudited)

Three-month

 period ended

June 30, 2019

Three-month

 period ended

June 30, 2018

Six-month
period ended

June 30, 2019

Six-month
period ended
June 30, 2018






Royalty Pooled Restaurants

58

57

58

57

Pooled Revenue generated by
SIR Corp.

77,708

79,093

 

144,724

 

147,901






Royalty income to Partnership –
6% of Pooled Revenue

4,662

4,746

8,683

8,874

Make-Whole Payment

-

-

203

-

Total Royalty income to
Partnership

4,662

4,746

8,886

8,874

Partnership other income

6

6

12

12

Partnership expenses

(22)

(20)

(45)

(41)

Partnership earnings

4,646

4,732

8,853

8,845

SIR Corp.'s interest
(Class A, B, and C GP Units)

(1,694)

(1,645)

(3,298)

(3,171)






Partnership income allocated
to Fund

2,952

3,087

5,555

5,674

Interest income in SIR Loan

-

-

-

-

Change in estimated fair value
of the SIR Loan

5,000

(250)

13,250

(1,750)

Total income (loss) of the
Fund

7,952

2,837

18,805

3,924

General & administrative
expenses

(133)

(118)

(252)

(234)






Net earnings (loss) before
income taxes of the Fund

7,819

2,719

18,553

3,690

Income tax expense

(3,211)

(774)

(6,024)

(346)

Net earnings (loss) for the
period

4,608

1,945

12,529

3,344

Diluted Earnings per Fund
Unit

$0.50

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