Company Announcements

BURLINGTON, ON , Aug. 7, 2025 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) (the "Fund") today reported its financial results for the second quarter ("Q2 2025") and six months ("YTD 2025") ended June 30, 2025.

"We generated Pooled Revenue growth of 8.1% in the quarter, supported by the four new restaurants that were added to the Royalty Pool in January 2025, and consolidated same store sales increased by 1.1%, driven by the continued strong performance of Scaddabush, which generated same store sales growth of 7.0%," said Peter Fowler, CEO of SIR Corp. ("SIR"). "During the quarter, SIR entered into a credit agreement with new senior lenders that provides it with greater financial capacity and flexibility to advance its growth objectives. We also opened a new Scaddabush location in Barrie, Ontario, bringing the current number of Scaddabush restaurants to 14, positioning us to further benefit from the popularity of this brand."

Q2 2025 Summary

• Pooled Revenue totaled $72.9 million, an increase of 8.1% compared to $67.5 million for the three months ended June 30, 2024 ("Q2 2024").
• Royalty income in the SIR Royalty Limited Partnership (the "Partnership") increased to $4.4 million, from $4.0 million in Q2 2024.
• Equity income from the Partnership, which represents the Fund's pro rata share of the residual distributions of the Partnership, increased to $2.9 million, from $2.8 million in Q2 2024.
• The Royalty Pooled Restaurants (the "Royalty Pool") had consolidated same store sales ("SSS")⁽¹⁾ growth of 1.1%.
• Net earnings were $3.5 million, compared to $3.8 million in Q2 2024.
• Distributable cash⁽²⁾ totaled $2.5 million, or $0.30 (basic and diluted) per Fund Unit, and cash distributed to unitholders totaled $2.4 million, representing a payout ratio⁽²⁾ of 94.5%. The payout ratio⁽²⁾ since the Fund's inception in 2004, up to and including Q2 2025, is 99.9%, in line with the Fund's target payout ratio⁽²⁾ of 100% per annum.
• 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.
• On May 15, 2025, SIR entered into a new credit agreement ("New Credit Agreement") with a syndicate of two Schedule 1 Canadian chartered banks (the "Lenders") to refinance the previous credit facility. The New Credit Agreement provides for a three-year facility for a maximum principal amount of $68.0 million consisting of: i) a $5.0 million revolving term credit facility, ii) a $38.0 million revolving term loan and iii) a $25.0 million non-revolving term loan. SIR and the Lenders also entered into a purchase card agreement providing credit of up to an additional $1.5 million. The revolving term loan was fully drawn at closing and was used to extinguish SIR's existing senior debt. The New Credit Agreement replaces the previous Credit Agreement which, prior to the May 15, 2025 closing of the New Credit Agreement, provided SIR with a maximum principal amount of $38.7 million of senior debt.
• On June 25, 2025, SIR opened a new Scaddabush Italian Kitchen & Bar® ("Scaddabush") restaurant in Barrie, Ontario. This new restaurant is expected to be added to the Royalty Pooled Restaurants effective January 1, 2026. Management is encouraged by the positive guest response to this new restaurant.

Subsequent Events

• On July 9, 2025, the Fund announced that its Trustees approved a $0.005 increase to the monthly cash distribution, resulting in an increase in the Fund's monthly cash distribution from $0.095 per Fund unit to $0.10 per Fund unit, effective for the distribution paid on July 31, 2025 to unitholders of record as at July 18, 2025.
• Following the previously disclosed cybersecurity incident on September 26, 2024, SIR submitted a business interruption claim and worked with its insurance provider to determine the appropriate compensation for the disruption. Subsequent to June 30, 2025, SIR received the maximum payout for first party losses of $2.0 million under the cyber insurance policy. The approved proceeds paid to SIR were comprised of a $0.2 million reimbursement of costs directly attributable to the cybersecurity incident and $1.8 million toward the business interruption portion of the claim. The insurer had also previously paid directly to vendors $0.4 million of the $0.5 million maximum for breach response costs. The Fund is not a party to SIR's cyber insurance policy. As such, none of the approved proceeds will flow to the Fund.

Q2 2025 Financial Results Summary

Pooled Revenue in Q2 2025 increased by 8.1% to $72.9 million, compared to $67.5 million in Q2 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^TM) and consolidated SSS⁽¹⁾ growth for the quarter, partially offset by the closed Jack Astor's restaurant that was removed from the Royalty Pool effective January 1, 2025.

Net earnings for Q2 2025 were $3.5 million, or $0.42 (basic) and $0.40 (diluted) per Fund Unit, compared to net earnings of $3.8 million, or $0.46 (basic) and $0.44 (diluted) per Fund Unit, for Q2 2024. The reduction in net earnings was primarily attributable to a smaller increase in the estimated fair value of the SIR Loan in Q2 2025 compared to Q2 2024 and higher income tax expense, partially offset by growth in Pooled Revenue. The estimated fair value of the SIR Loan increased by $1.8 million in Q2 2025, compared to $2.0 million in Q2 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⁾

Jack Astor's SSS⁽¹⁾ performance for Q2 2025 includes all 35 open locations. Jack Astor's accounted for approximately 63.1% of Pooled Revenue in Q2 2025 and had a SSS⁽¹⁾ decline of 0.8%. The decline primarily reflected reduced dine-in guest traffic and lower delivery sales.

Scaddabush SSS⁽¹⁾ performance for Q2 2025 includes 10 out of the 14 locations. Scaddabush had SSS⁽¹⁾ growth of 7.0% in Q2 2025 due to higher dine-in guest traffic and take-out and delivery sales, reflecting the continued popularity of this brand.

The Signature Restaurants SSS⁽¹⁾ performance for Q2 2025 includes two restaurants (Reds® Square One and The Loose Moose Tap + Grill®). The Signature Restaurants had a SSS⁽¹⁾ decline of 0.5% in Q2 2025.

Distributable Cash⁽²⁾

The following table reconciles the relationship between cash provided by operating activities and distributable cash⁽²⁾:

Distributable cash⁽²⁾ for Q2 2025 totaled $2.5 million, or $0.30 per Fund Unit (basic and diluted), and distributions to Unitholders totaled $2.4 million, representing a payout ratio⁽²⁾ of 94.5%. The payout ratio⁽²⁾ since the Fund's inception in 2004, up to and including Q2 2025, is 99.9%, 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 a property in Oshawa, Ontario, upon which is developing a new Jack Astor's restaurant. There can be no assurance at this time that this planned new restaurant will be opened or will become part of the Royalty Pooled Restaurants.

With new financing in place, in addition to the one Jack Astor's restaurant currently under development, SIR is pursuing additional sites to continue the successful growth of Scaddabush. SIR will also continue its practice of investing in existing restaurants to drive improved sales and earnings. In consideration of the ongoing economic and market conditions mentioned above, opening and renovation plans will be reviewed regularly 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 Q2 2025 MD&A, which can be accessed via the SEDAR+ website (www.sedarplus.ca).

Q2 2025 Filings

The Fund's unaudited interim consolidated Financial Statements and Management Discussion & Analysis ("MD&A"), and the Partnership's Financial Statements, for the three and six-month periods ended June 30, 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 54 restaurants in Canada. SIR's Concept brands include Jack Astor's Bar and Grill® with 35 locations, and Scaddabush Italian Kitchen & Bar® with 14 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 Q2 2025 MD&A, which are available under the Fund's profile at www.sedarplus.ca .

SOURCE SIR Royalty Income Fund