SIR Royalty Income Fund · TSX:SRV.UN
SIR Royalty Income Fund — Investor Presentation (April 2019)
22 slides from SIR Royalty Income Fund's investor presentation, April 2019
Slide 1: SIR Royalty Income Fund Investor Presentation April 2019
SIR Royalty Income Fund Investor Presentation –April 2019 1
Slide 2: Forward-Looking Information / Non-IFRS Measures
Forward-Looking Information / Non-IFRS Measures Statements in this presentation, 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 m
Slide 3: Investment Highlights
Investment Highlights • Diversified portfolio of well-known restaurant brands • Experienced management team with strong alignment of interests with unitholders • Corporate ownership model provides greater control and flexibility for performance-enhancement initiatives • Consistent track record of in
Slide 4: Overview
Overview SIR Corp. SIR Royalty Income Fund • SIR: ‘Service Inspired Restaurants’ • IPO: October 2004 (TSX: SRV.UN) • A leading Canadian operator of casual and fine dining • Market Cap: ~ $135 million restaurants • Recent close: $16.12 (March 28, 2019) • Founded in 1990 by Fowler family • Units outst
Slide 5: Fund Structure
Fund Unitholders Fund Structure Monthly Distributions Interest Income SIR Royalty from SIR Loan Income Fund Distribution Income Restaurant Operations 6% Royalty on SIR Royalty Pooled Revenue Limited Partnership1 The above illustration is for descriptive purposes only and is qualified in its entirety
Slide 6: SIR Corporate Ownership Model
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 • Ability to change restaurant design with m
Slide 7: Experienced Management Team with Strong Alignment of Interests
Experienced Management Team with Strong Alignment of Interests Management Team 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
Slide 8: 58 Royalty Pooled Restaurants
58 Royalty Pooled Restaurants¹ Alberta 32 1 6 1 8 3 Locations in Ontario Calgary Greater Quebec Montreal 4 Nova Scotia Ottawa Ontario Halifax 2 Kingston Barrie Newfoundland Greater Toronto 1 St. John’s London 1. Includes 57 operating restaurants and one closed restaurant. SIR Corp. is obligated to i
Slide 9: Royalty Pooled Revenue and Same Store Sales (72.0% of 2018 revenue)
72.0% of Royalty Pooled Revenue in 2018 Pooled Revenue 45 # of restaurants in Royalty Pool 40 40 40 $200,000 37 38 40 $211,513 $216,014 35 $199,709 $206,312 $150,000 $194,723 30 ($000s) 25 $100,000 20 15 $50,000 10 5 $- 0 2014 2015 2016 2017 2018 2.5% Same Store Sales 2.1% 1.7% 2014 2015 2016 2017 2
Slide 10: Investing in Existing Restaurants
Investing in Existing Restaurants 21 locations renovated since start of program in 2016 The initial “Evolution” generated average same store sales increases of more than 10% in year one after completion 10
Slide 11: Royalty Pooled Revenue and Same Store Sales (13.9% of 2018 revenue)
13.9% of Royalty Pooled Revenue in 2018 Pooled Revenue $45,000 8 # of restaurants in Royalty Pool 7 $40,000 6 7 $35,000 6 5 $41,760 ($000s) 5 $30,000 5 $25,000 4 4 $20,000 $25,021 $20,888 3 $15,000 $18,540 2 $10,000 $13,773 $5,000 1 $- 0 2014 2015 2016 2017 2018 Same Store Sales 12.7% 13.1% 1.2% 1.9
Slide 12: Investing in Existing Restaurants
Investing in Existing Restaurants +3 added to Royalty Pool on January 1, 2018 Front St., Toronto | Oakville, ON | Vaughan, ON +1 added to Royalty Pool on January 1, 2019 Etobicoke, ON 12
Slide 13: Conversions and New Locations
Conversions and New Locations Project Location Completion Conversion Mississauga Opened (July 2013) Conversion Richmond Hill Opened (Sept. 2015) Downtown Toronto New restaurant Opened (Feb. 2014) (Yonge & Gerrard) New restaurant Scarborough Opened (July 2016) Added to Royalty Pool in Jan 2017 Downto
Slide 14: Royalty Pooled Revenue and Same Store Sales (7.7% of 2018 revenue)
7.7% of Royalty Pooled Revenue in 2018 Pooled Revenue $35,000 9 8 8 8 8 # of restaurants in Royalty Pool 8 $30,000 7 7 $25,000 $27,490 $27,256 $27,321 6 $26,605 $20,000 $000s 5 $23,098 $15,000 4 3 $10,000 2 $5,000 1 $- 0 2014 2015 2016 2017 2018 Same Store Sales 1.7% 1.8% 0.6% 0.2% 2014 2015 2016 20
Slide 15: Royalty Pooled Revenue and Same Store Sales (6.4% of 2018 revenue)
6.4% of Royalty Pooled Revenue in 2018 Pooled Revenue1 4 4 4 $25,000 4 # of restaurants in Royalty Pool $20,000 $23,345 3 3 $22,126 $22,031 3 $19,895 $19,242 $15,000 ($000s) 2 $10,000 1 $5,000 $- 0 2014 2015 2016 2017 2018 Same Store Sales 11.7%3 6.1% 1.0% 1. Pooled revenue includes contributions fr
Slide 16: Strategic Advantage Brand Diversification
Strategic Advantage Brand Diversification Square One, Mississauga Front Street, Toronto Scarborough Town Centre +1 Opened Dec. 2017 | Added to Royalty Pool on Jan. 1, 2019 Diverse portfolio of restaurant brands enables SIR to position more than one restaurant brand at prime, high-traffic locations 1
Slide 17: Royalty Pooled Restaurants - Steady Revenue Growth
Royalty Pooled Restaurants - Steady Revenue Growth Pooled Revenue Number of Royalty (in $ millions) Pooled Restaurants 57 57 57 60 55 300 53 50 250 $300.1 $278.0 $283.0 $257.9 $267.6 40 200 30 150 100 20 50 10 0 0 2014 2015 2016 2017 2018 Pooled Revenue Restaurants in Royalty Pool Strong track recor
Slide 18: Royalty Pooled Restaurants – Same Store Sales Growth
Royalty Pooled Restaurants – Same Store Sales Growth 3.0% 2.0% 1.6% 1.2% 2014 2015 2016 2017 2018 -0.8% Improved sales performance resulting from Jack Astor’s renovation program drove same store sales growth in 2018 18
Slide 19: Historical Cash Distributions & Payout Ratio
Historical Cash Distributions & Payout Ratio ($ millions) SIFT Tax¹ 12 103.6% 104.9% 100.1% 99.9% 100.5% 100.5% 99.1% 98.4% 97.7% 10 95.1% 10.33 10.09 9.87 9.72 9.06 8.98 8.69 8.65 8 8.28 8.24 7.62 7.39 7.39 7.38 7.27 7.14 6 5.91 5.62 5.51 5.51 4 2 0 2 3 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 20: Q4 2018 Financial Review
Q4 2018 Financial Review Pooled Revenue ($ millions) Adjusted Net Earnings ($ millions) 1 80 2.5 2.32 2.18 72.9 70 69.5 2.0 1.5 1.0 60 57 57 0.5 50 0.0 Q4 2017 Q4 2018 40 Cash Distributions ($ millions) 3.0 30 2.56 2.64 2.5 2.33 2.19 2.0 20 1.5 120.5% 109.6% 10 1.0 Payout ratio2 0.5 Payout ratio 0 0
Slide 21: Q4 2018 Same Store Sales
Q4 2018 Same Store Sales (3-month period ended December 31, 2018) 5.0% 4.2%2 0.0% -1.2% -1.0% -1.6%1 -3.5% -5.0% Overall SSS 1. Scaddabush same store sales for Q4 2018 includes four Scaddabush locations (Richmond Hill, Mississauga, and Scarborough, Ontario and Yonge and Gerrard in downtown Toronto).
Slide 22: Outlook
Ongoing Jack Astor’s renovation program to drive same store Outlook sales growth • Renovations of 21 locations completed since start of program in 2016 • Evaluating future options for site of closed Jack Astor’s location near St. Lawrence Market in downtown Toronto New Scaddabush opened at Sherway G
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