SIR Royalty Income Fund · TSX:SRV.UN
SIR Royalty Income Fund — Investor Presentation (September 2024)
22 slides from SIR Royalty Income Fund's investor presentation, September 2024
Slide 1: SIR Royalty Income Fund Investor Presentation – September 2024
SIR Royalty Income Fund Investor Presentation – September 2024 1
Slide 2: Forward-Looking Information / Non-IFRS Measures
Forward-Looking Information / Non-IFRS Measures 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 cons
Slide 3: Overview
Overview SIR Royalty Income Fund (TSX: SRV.UN) • SIR is a leading Canadian operator of casual and fine • IPO: October 2004 dining restaurants • Market capitalization: ~ $102 million • 55 restaurants, primarily in Ontario • Recent close: $12.15 (September 11, 2024) • 7 brands / 4 brands currently inc
Slide 4: Sources of Fund Income
Sources of Fund Income Fund Unitholders Monthly Distributions Interest Income SIR Royalty from SIR Loan Income Fund Distribution Income Restaurant Operations 6% Royalty on SIR Royalty Pooled Revenue Limited Partnership The above illustration is for descriptive purposes only and is qualified in its e
Slide 5: Board of Trustees
Board of Trustees Name & Domicile Principal Occupation Stephen Dewis ¹ ³ Corporate Director / Former Partner at Ernst & Young LLP Ontario, Canada Michael Fisher ¹ ³ Corporate Director / Former Global Head of Trading for Fixed Income, Ontario, Canada Currencies and Commodities, BMO Capital Markets Le
Slide 6: Experienced Management Team with Strong Alignment of Interests
Experienced Management Team with Strong Alignment of Interests Peter Fowler, CEO Paul Bognar, President & COO • Director of SIR Corp. since 1992 • Joined SIR Corp. in 2012 • CEO since 2004 and the largest shareholder of SIR Corp. • Head of Marketing, Human Resources, Finance, IT and – Helped create
Slide 7: Benefits of SIR Corporate Ownership Model
Benefits of SIR Corporate Ownership Model • Ability to implement consistent, best practices across restaurant network Control • Coordination of roll-out of new restaurant locations and food & beverage offerings • Leverage supplier relationships and delivery logistics • Unlike franchises, business ch
Slide 8: Strategic Advantage: Brand Diversification
Strategic Advantage: Brand Diversification Square One, Mississauga Scarborough Town Centre Front Street, Toronto Sherway Gardens Vaughan Richmond Hill Diverse portfolio of restaurant brands enables SIR to locate more than one restaurant brand at prime, high-traffic locations 8
Slide 9: 49 Royalty Pooled Restaurants (effective Jan. 1, 2024)
49 Royalty Pooled Restaurants (effective Jan. 1, 2024) Locations in Ontario: 30 1 10 1 Greater Quebec Montreal 4 Nova Scotia Ottawa Ontario Halifax 2 Kingston Barrie Newfoundland Greater Toronto 1 St. John’s London 9
Slide 10: Investing in Existing Restaurants
Investing in Existing Restaurants Renovation program implements a refreshing, more contemporary and immersive guest-facing experience 18 locations renovated since pandemic eased in March 2022 10
Slide 11: Investing in New Restaurants
Investing in New Restaurants • The new Scaddabush in Whitby, ON (opened in Sept. 2023) was added to Royalty Pooled Restaurants in January 2024 • The new Scaddabush restaurants in the Don Mills neighbourhood of Toronto (opened in Feb. 2024), London, ON (opened in April 2024), and Guelph, ON (opened i
Slide 12: Pre-Pandemic Cash Distributions & Payout Ratio
Pre-Pandemic Cash Distributions & Payout Ratio ($ millions) SIFT Tax¹ 12 104.9% 105.9% 100.1% 99.9% 100.5% 100.5% 99.1% 98.4% 97.7% 10 95.1% 10.33 10.26 10.09 9.87 9.72 9.69 9.06 8.98 8.69 8.65 8 8.28 8.24 7.62 7.39 7.38 7.27 6 5.91 5.62 5.51 5.51 4 2 0 3 2 2010 2011 2012 2013 2014 2015 2016 2017 20
Slide 13: COVID-19 Pandemic
COVID-19 Pandemic • Dine-in operations at all SIR restaurants suspended beginning on March 16, 2020 • Cash distributions to Fund unitholders were suspended effective April 2020 • SIR Limited Partnership deferred the collection of restaurant royalties and the Fund deferred interest on the SIR Loan •
Slide 14: Recovering from COVID-19 Pandemic
Recovering from COVID-19 Pandemic • Increased vaccinations and easing of operating restrictions drove significant increases in Royalty Pooled Revenue and Same Store Sales in 2021-2022 • Most remaining operating restrictions related to COVID-19 lifted in March 2022, including all capacity limits • Ro
Slide 15: Amended Credit Agreement and Resumption of Distributions
Amended Credit Agreement and Resumption of Distributions • Amendments to SIR’s Credit Agreement with its senior lender in 2021 enabled SIR to restart the payment of royalties and interest to the Fund and the SIR Royalty Limited Partnership • Final payments of deferred royalties and interest made in
Slide 16: Historical Pooled Revenue
Historical Pooled Revenue 300,000 300,114 284,333 283,034 278,035 267,601 266,014 250,000 257,878 240,679 234,667 ($ millions) 215,822 200,000 209,187 199,647 194,143 175,030 163,353 150,000 149,529 136,937 130,246 120,013 100,000 50,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 17: Q2 2024 Financial Review (Three months ended June 30)
Q2 2024 Financial Review (Three months ended June 30) Pooled Revenue ($ millions) Net Earnings ($ millions) 1 Same Store Sales 80 6.0 4.6 70 71.1 67.5 5.0 4.0 3.0 3.8 5.1% 2.0 60 1.0 0.0 50 Q2 2023 Q2 2024 40 Cash Distributions ($ millions) 3.0 2.57 2.39 30 2.56 2.39 2.5 The Fund’s payout ratio sinc
Slide 18: First Half 2024 Financial Review (Six months ended June 30)
First Half 2024 Financial Review (Six months ended June 30) Pooled Revenue ($ millions) Net Earnings ($ millions) 1 Same Store Sales 8.0 6.1 140 120 132.5 128.0 6.0 4.0 4.9 3.3% 2.0 100 0.0 H1 2023 H1 2024 80 Cash Distributions ($ millions) 6.0 60 4.90 4.77 4.88 5.0 4.77 4.0 The Fund’s payout ratio
Slide 19: 70.2% of Royalty Pooled Revenue in H1 2024
70.2% of Royalty Pooled Revenue in H1 2024 Pooled Revenue 38 37 37 37 37 40 # of restaurants in Royalty Pool 200,000 35 30 $189,497 150,000 $179,747 25 ($000s) 20 100,000 15 $104,713 89,328 $89,850 50,000 10 5 0 0 2020 2021 2022 2023 H1 2024 Same Store Sales 71.6% 17.9% -53.8% 5.4% -5.7% 2020 2021 2
Slide 20: 24.4% of Royalty Pooled Revenue in H1 2024
24.4% of Royalty Pooled Revenue in H1 2024 Pooled Revenue 70,000 10 10 11 # of restaurants in Royalty Pool 9 9 9 10 60,000 9 8 ($000s) 50,000 $57,400 7 40,000 6 $45,580 30,000 5 4 20,000 $31,212 $26,966 3 10,000 $21,639 2 1 0 0 2020 2021 2022 2023 H1 2024 Same Store Sales 69.5% 23.7% 18.4% -55.2% 1.
Slide 21: 5.4% of Royalty Pooled Revenue in H1 2024
5.4% of Royalty Pooled Revenue in H1 2024 Pooled Revenue 4 4 4 25,000 4 # of restaurants in Royalty Pool 20,000 3 3 $19,117 15,000 2 ($000s) $14,693 2 10,000 1 5,000 $6,944 $6,097 $4,229 0 0 2020 2021 2022 2023 H1 2024 Same Store Sales 251.3% -73.9% -12.8% 16.4% 15.8% 2020 2021 2022 2023 H1 2024 21
Slide 22: Outlook
Outlook • SIR remains focused on quality and innovation, as well as service training and excellence • SIR’s corporate ownership model enables rapid implementation of performance-enhancing initiatives • “Service-Inspired Rewards” has become a popular loyalty program that further enhances guests’ expe
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