BURLINGTON, ON, March 31 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) ("the Fund") today announced that SIR Corp. ("SIR"), the operating entity from which the Fund derives distribution income and interest income, has filed its financial results for the 12-week and 24-week periods ended February 14, 2010 ("second quarter").
SIR has advised the Fund that revenue for the second quarter of fiscal 2010 increased 2.2% to $46.2 million compared to $45.2 million for the same period a year ago. For the 24-week period ended February 14, 2010 ("YTD"), revenue increased 0.6% to $90.8 million compared to $90.3 million for the same period a year ago.
Same store sales(1) ("SSS") increased by 1.6% for the second quarter of fiscal 2010 compared to the comparable period a year ago. Canyon Creek(R) and the downtown Toronto Signature Restaurants (including reds(R), Loose Moose Tap & Grill(R), Far Niente(R)/FOUR(TM)/Petit Four(TM)) reported SSS(1) declines of 2.7% and 3.0% respectively during the quarter ended February 14, 2010 compared to the same period a year ago. However, Jack Astor's(R), SIR's flagship Concept Restaurant, which represents approximately 67% of year-to-date Pooled Revenue and Alice Fazooli's(R) restaurants reported same store sales growth(1) ("SSSG") of 3.2% and 2.5% respectively in the second quarter ended February 14, 2010 compared to the same period a year ago. For the 24-week period ended February 14, 2010, SSS(1) totaled $85.5 million compared to $86.5 million for the comparable period a year ago. Although overall SSS(1) declined 1.1% YTD, Jack Astor's reported SSSG(1) of 0.3%.
Management believes that the economic conditions are the primary driver of SSS(1) declines and reduced SSSG(1) in the quarter and YTD. Management also believes that Jack Astor's may have been affected to a lesser extent than the other concepts due to its somewhat lower average cheque.
12-week period ended 24-week period ended
February 14, 2010 February 14, 2010
SSS(1) (unaudited) (unaudited)
Jack Astor's 3.2% 0.3%
Canyon Creek (2.7%) (4.2%)
Alice Fazooli's 2.5% (1.2%)
Signature Restaurants (3.0%) (5.4%)
Overall SSS(1) 1.6% (1.1%)
SIR reported net earnings from operations of $0.5 million in the second quarter of fiscal 2010 compared to $0.1 million for the comparable period in fiscal 2009. The YTD net loss of $0.2 million compares to net loss of $2.0 million for the same period in fiscal 2009. Improved net earnings in fiscal 2010 were primarily attributable to:
- $0.4 million decrease in YTD corporate costs;
- A decrease in restaurant costs as a percentage of sales of 0.8%;
- Recovery of impairment of loans and advances of $0.2 million in both
second quarter and YTD;
- Increase in other income of $0.1 million and $0.2 million in second
quarter and YTD respectively;
- $0.1 million YTD unrealized foreign exchange gain compared to an
unrealized foreign exchange loss of $0.4 million in the prior year;
- The prior year had $0.2 million in restructuring costs that were not
repeated in fiscal 2010
Cash provided by operations totaled $0.7 million in the second quarter ended February 14, 2010 compared to $2.3 million for the 12-week period ended February 15, 2009. SIR used cash in investing activities of $0.2 million and $1.8 million for the second quarter of fiscal 2010 and fiscal 2009, respectively. The cash used in investing activities in fiscal 2010 was lower than that in 2009 as a result of SIR's decision to slow its new restaurant development plans in light of the weak economic environment. In the first quarter of fiscal 2009, two new Jack Astor's were opened and renovations took place at Alice Fazooli's near the Square One shopping mall in Mississauga, Ontario, compared to no new restaurants and no major renovations completed during the first two quarters of fiscal 2010.
SIR Corporate Development
SIR has secured sites for three additional new restaurants. Two sites are located at the corners of Yonge and Gerrard Streets in downtown Toronto, with estimated openings in calendar year 2011, and the third site is located in Boisbriand, Quebec, where SIR plans to construct a Jack Astor's restaurant with an estimated opening in calendar year 2010. Management will continue to monitor economic conditions and consumer confidence. Based on its assessment of these conditions, the timing of restaurant construction and opening schedules will be reviewed regularly and adjusted as necessary.
SIR currently has 45 restaurants open in Canada, all but two of which have either been newly constructed or renovated within the past six years. Management is committed to maximizing the performance of all of its restaurants and providing guests with exciting and memorable dining experiences backed by excellence in service, quality, and innovative menu choices. The goal is to provide investors with stable and growing sales and earnings over the longer term.
Liquidity and Capital Resources
As at February 14, 2010, SIR had cash and cash equivalents of $6.1 million compared to $2.7 million as at February 15, 2009. On November 13, 2009, SIR entered into a new $26.0 million credit facility with a new senior lender to refinance and replace its current revolving line of credit and construction facility, and to facilitate the repurchase of certain of its common shares.
SIR's 2010 second quarter filings, which include its unaudited consolidated financial statements and management's discussion & analysis, can be accessed via the Fund's profile on the SEDAR web site at www.sedar.com under "Other".
About SIR Corp.
SIR is a privately held Canadian corporation that owns and operates a portfolio of 45 restaurants in Canada. SIR's concept brands include: Jack Astor's Bar and Grill(R), with 29 locations; Alice Fazooli's(R), with five locations; and Canyon Creek Chop House(R), with eight locations. SIR also operates one-of-a-kind "signature" brands in downtown Toronto, which comprise the upscale reds(R), Far Niente(R)/FOUR(TM)/Petit Four(TM), and the Loose Moose Tap & Grill(R). All trademarks related to the concept and signature brands noted above are used by SIR under a license agreement with SIR Royalty Limited Partnership in consideration for a Royalty, payable by SIR to the Partnership, equal to six percent of the revenue of the 45 Royalty Pooled Restaurants. For more information on SIR Corp. 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
Statements in this release, 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 securities laws. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, the Trust, the Partnership, SIR, the SIR Restaurants, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this document, such statements may include, among other language, such words as "may", "will", "expect", "believe", "plan", "anticipate", "intend", "estimate" and other similar terminology. 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. These forward-looking statements involve a number of risks and uncertainties. The following are some of the factors that could cause actual results to differ materially from those expressed in or underlying such forward-looking statements: competition; changes in demographic trends; changing consumer preferences and discretionary spending patterns; changes in consumer confidence; changes in national and local business and economic conditions; 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; accounting policies and practices; 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. 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 release any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations, estimates and projections with regard thereto or any changes in events, conditions or circumstances on which any statement is based, except as expressly required by law.
In formulating the forward-looking statements contained herein, Management has assumed that business economic conditions affecting SIR's restaurants and the Fund will continue substantially in the ordinary course, including without limitation with respect to general industry conditions, general levels of economic activity (including in downtown Toronto), regulations (including those regarding employees, food safety, tobacco and alcohol), weather, taxes, foreign exchange rates and interest rates, that there will be no pandemics or other material outbreaks of disease or safety issues affecting humans or animals or food products, and that there will be no unplanned material changes in its facilities, equipment, customer and employee relations, or credit arrangements. These assumptions, although considered reasonable by Management at the time of preparation, may prove to be incorrect. For more information concerning the Fund's risks and uncertainties, please refer to the October 2004 final prospectus, and/or its March 31, 2010 Annual Information Form, all of which are available under the Fund's profile at www.sedar.com.
(1) Same store sales and same store sales growth exclude revenue from restaurants which are not included in the Royalty pool, and exclude revenue from restaurants opened or closed during the current or prior fiscal year and therefore not open for the full period in both years. Same store sales growth is the percentage increase in SSS over the prior comparable period. SSS and SSSG are non-GAAP measures that do not have standardized meanings prescribed by GAAP. However, SIR believes that SSS and SSSG are useful measures and provide investors with an indication of the change in year-over-year sales. SIR'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.
SOURCE SIR Royalty Income Fund
For further information: For further information: Jeff Good, Chief Financial Officer, SIR Corp., Tel: (905) 681-2997; Alice Dunning, Investor Relations, Tel: (416) 815-0700 ext. 255, Email: email@example.com