Company Announcements

BURLINGTON, ON , May 7, 2026 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) (the "Fund") today reported its financial results for the three-month period ended March 31, 2026 ("Q1 2026").

"We continue to advance initiatives to strengthen our restaurant portfolio and build value for Fund unitholders. During the first quarter, our new Scaddabush in Barrie, Ontario was added to the Royalty Pool, representing our 14th Scaddabush location now contributing to the Royalty Pool. Subsequent to quarter end, we opened our newest Scaddabush in Windsor, Ontario, which we expect to be added to the Royalty Pool in January next year. Further, we have leased three additional properties upon which we plan to develop additional Scaddabush locations," said Peter Fowler, CEO of SIR Corp. "During 2025, we introduced our new Freida's Beverage Kitchen concept to our existing Jack Astor's in Barrie, Ontario, following an extensive renovation, and subsequently added our complementary Freida's concept to our newest Jack Astor's in Oshawa, Ontario. Our newest Jack Astor's + Freida's in Oshawa is expected to be added to the Royalty Pool next January and we are currently evaluating further roll out opportunities for the Jack Astor's + Freida's concept."  

"These initiatives to further strengthen our brands combined with our strong sales performance last year, supported the Fund Trustees' approval of a 5% increase to unitholder distributions in January this year. The Fund's marginal growth in Pooled Revenue and same store sales for Q1 this year reflects the GST / HST holiday that was in place during the first quarter last year, as well as the more severe winter weather we experienced in Q1 this year, particularly in the Greater Toronto Area, where the majority of our restaurants are located," continued Mr. Fowler. "Looking ahead, SIR will remain focused on continuing to elevate its brands to drive stronger financial and operating performance."  

Q1 2026 Summary

• Pooled Revenue totaled $66.0 million, an increase of 1.9% compared to $64.7 million for the three months ended March 31, 2025 ("Q1 2025").
• Royalty income in the SIR Royalty Limited Partnership (the "Partnership") increased to $4.0 million from $3.9 million in Q1 2025.
• Equity income from the Partnership, which represents the Fund's pro rata share of the residual distributions of the Partnership, increased to $2.6 million from $2.5 million in Q1 2025.
• The Royalty Pooled Restaurants (the "Royalty Pool") consolidated same store sales ("SSS")⁽¹⁾ was essentially flat compared to Q1 2025.
• Net earnings were $1.4 million, or $0.16 per Fund unit (basic and diluted), compared to $1.0 million, or $0.12 per Fund unit (basic and diluted), in Q1 2025.
• Distributable cash⁽²⁾ totaled $2.4 million, or $0.28 per Fund unit (basic and diluted), and cash distributed to unitholders totaled $2.6 million, representing a payout ratio⁽²⁾ of 111.7%. The payout ratio⁽²⁾ since the Fund's inception in 2004, up to and including Q1 2026, is 100.2%, in line with the Fund's target payout ratio⁽²⁾ of 100% per annum.
• Effective January 1, 2026, the new Scaddabush Bar + Grill® ("Scaddabush") in Barrie, Ontario was added to the Royalty Pooled Restaurants, and the closed Jack Astor's Bar & Grill® ("Jack Astor's") in Longueuil, Quebec was removed. The Royalty Pool currently consists of 52 restaurants, including: 35 Jack Astor's restaurants, 14 Scaddabush locations, REDS Square One®, The Loose Moose Tap + Grill® (the "Loose Moose") and Edna + Vita®.
• On January 7, 2026, the Fund announced that its Board of Trustees approved a 5% increase to monthly unitholder cash distributions, resulting in an increase in the Fund's monthly cash distribution from $0.10 per Fund unit to $0.105 per Fund unit. The increase was effective for the distribution paid on January 30, 2026.

Subsequent Event

• On April 1, 2026, SIR Corp., ("SIR" or the "Company") opened a new Scaddabush in Windsor, Ontario. This new restaurant is expected to be added to the Royalty Pooled Restaurants effective January 1, 2027.

Q1 2026 Financial Results Summary

Pooled Revenue in Q1 2026 totaled $66.0 million, an increase of 1.9% compared to $64.7 million in Q1 2025. The increase was primarily attributable to the additional revenue from the new Scaddabush that was added to the Royalty Pool effective January 1, 2026, partially offset by the closed Jack Astor's restaurant that was removed from the Royalty Pool effective January 1, 2026.  

Net earnings for Q1 2026 were $1.4 million, or $0.16 per Fund unit (basic and diluted), compared to $1.0 million, or $0.12 per Fund unit (basic and diluted) in Q1 2025. The increase was primarily attributable to higher Pooled Revenue and changes in the estimated fair value of the SIR Loan in Q1 2026 compared to Q1 2025. The estimated fair value of the SIR Loan decreased by $0.3 million in Q1 2026, compared to a decrease of $0.5 million in Q1 2025. 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.

The flat consolidated SSS⁽¹⁾ in Q1 2026 compared to Q1 2025 partially reflects the positive impact of the federal GST/HST holiday in Canada during Q1 2025. The GST/HST holiday was in place from December 14, 2024 to February 15, 2025, and resulted in higher guest counts during that period compared to the corresponding period in 2026 due to lower consumer costs for commercial food and beverage services. SIR management believes that sales in Q1 2026 were also negatively impacted by more severe winter weather in the Greater Toronto Area ("GTA") where the majority of SIR's restaurants are located. This more severe winter weather in the GTA included a record single-day snowfall on January 25, 2026, and one of the largest cumulative winter snowfalls on record.

Jack Astor's SSS⁽¹⁾ performance for Q1 2026 includes 35 of the 36 locations currently in operation. Jack Astor's accounted for approximately 59.4% of Pooled Revenue in Q1 2026 and had a SSS⁽¹⁾ decline of 1.5% in the quarter. SIR believes the slight decline reflects the factors discussed above.

Scaddabush SSS⁽¹⁾ performance for Q1 2026 includes 13 out of the 15 locations currently in operation. Scaddabush had SSS⁽¹⁾ growth of 2.3% in Q1 2026, reflecting increased pricing.

The Signature Restaurants SSS⁽¹⁾ performance for Q1 2026 includes three restaurants (REDS Square One, the Loose Moose and Edna + Vita). The Signature Restaurants had SSS⁽¹⁾ growth of 3.6% in Q1 2026 reflecting increased pricing. 

Distributable Cash⁽²⁾

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

Distributable cash⁽²⁾ for Q1 2026 totaled $2.4 million, or $0.28 per Fund unit (basic and diluted), and cash distributed to unitholders totaled $2.6 million, representing a payout ratio⁽²⁾ of 111.7%. The payout ratio⁽²⁾ since the Fund's inception in 2004, up to and including Q1 2026, is 100.2%, 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 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 and rising commodity costs have 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 increased popularity of take-out and delivery services.

The new Jack Astor's + Freida's location in Oshawa, Ontario (opened in December 2025) is expected to be added to the Royalty Pooled Restaurants effective January 1, 2027.

The new Scaddabush location in Windsor, Ontario (opened in April 2026) is expected to be added to the Royalty Pooled Restaurants effective January 1, 2027.

With its new Credit Agreement in place (effective May 15, 2025), SIR is pursuing additional sites to continue the successful growth of Scaddabush and the expansion of the Jack Astor's + Freida's concept. 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.

SIR has leased four properties – in Aurora, Kanata, and London, Ontario and Dartmouth, Nova Scotia – upon which it plans to develop four 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.

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 2026 and 2025. 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 2026 Management Discussion & Analysis, which can be accessed via the SEDAR+ website (www.sedarplus.ca).

Q1 2026 Filings

The Fund's unaudited interim consolidated Financial Statements and Management Discussion & Analysis ("MD&A"), and the Partnership's Financial Statements, for Q1 2026 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 55 restaurants in Canada. SIR's Concept brands include Jack Astor's Bar and Grill® with 36 locations and Scaddabush Italian Kitchen & Bar® with 15 locations. SIR also operates one-of-a-kind Signature brands including The Loose Moose®, Reds® Square One and Edna + Vita®. 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 one Duke's Refresher® + Bar location, which is 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. These may include, without limitation, statements relating to anticipated investments in technology, digital platforms, and the potential use of artificial intelligence ("AI") or other data – driven tools to support operational decision – making, guest experience initiatives, labour management, marketing, or supply chain processes. 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; the increased adoption of GLP-1 medications; 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 and/or the Middle East; 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 results of operations and financial condition of SIR; and risks associated with the adoption, integration, reliability, regulatory oversight and ethical use of AI or other emerging technologies, including potential impacts on data governance, cybersecurity, operational decision – making, and customer – facing digital platforms. 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 12, 2026 Annual Information Form, for the period ended December 31, 2025, and the Fund's Q1 2026 MD&A, which are available under the Fund's profile at www.sedarplus.ca .

SOURCE SIR Royalty Income Fund