VANCOUVER, British Columbia, May 14, 2026 (GLOBE NEWSWIRE) — Diversified Royalty Corp. (TSX: DIV, DIV.DB.A and DIV.DB.B) (the “Corporation” or “DIV”) is pleased to announce its financial results for the three months ended March 31, 2026 (“Q1 2026”).
Highlights
- The weighted average organic royalty growth1 of DIV’s diversified royalty portfolio was 2.6% in Q1 2026, compared to 4.4% for the three months ended March 31, 2025 (“Q1 2025”). The weighted average organic royalty growth1 on a consistent currency basis was 3.3% for both Q1 2026 and 2025, respectively.
- Revenue was $17.5 million in Q1 2026, up 11.8%, compared to $15.6 million in Q1 2025.
- Adjusted revenue1 was $18.8 million in Q1 2026, up 11.0%, compared to $17.0 million in Q1 2025.
- Distributable cash1 was $12.0 million in Q1 2026, up 10.4%, compared to $10.9 million in Q1 2025.
- Payout ratio1 was 101.1% in Q1 2026 on dividends of $0.0712 per share ($0.2850 per share annualized), compared to 95.8% in Q1 2025 on dividends of $0.0625 per share ($0.2500 per share annualized).
- On January 26, 2026, the Corporation entered into an amendment agreement (the “AIR MILES Amendment”) with AIR MILES and the Bank of Montreal (“BMO”) to amend the terms of the AIR MILES® Licences pursuant to which the AIR MILES® Rights are licensed to AIR MILES (the “Licences”). The terms of the Licences have been amended to provide a 10-year, fixed annual royalty payment of $3.9 million, paid quarterly, which grows at a rate of 2.42% per annum commencing February 1, 2027 and each February 1st thereafter during the 10-year term. The fixed royalty was effective February 1, 2026 and payments are guaranteed by BMO.
- On March 1, 2026, the BarBurrito Restaurants Inc. royalty pool was adjusted to add nine eligible restaurants to the royalty pool.
Subsequent Events
- On April 1, 2026, DIV purchased a US$0.9 million annualized incremental royalty from Cheba Hut for US$7.2 million.
- On April 21, 2026, the Canadian Franchise Association (“CFA”) announced that the Grand Prize winner of the 2026 CFA Awards of Excellence in Franchising (in the traditional brick-and-mortar category) was Oxford Learning Centres Inc.- a proud royalty partner of DIV.
- On May 14, 2026, Cheeb LP amended the terms of its credit agreement to increase its credit facility by US$7.5 million from US$5.0 million to US$12.5 million.
- Cheba Hut transaction (DIV’s 9th royalty partner in June 2025) awarded Dealmakers of the Year 2026 award by Franchise Times, which recognizes the best in franchise M&A.
- DIV announces agreement to acquire Mr. Lube + Tires franchisor business. Please refer to the DIV May 14, 2026 news release.
First Quarter Commentary
Sean Morrison, Chief Executive Officer of DIV stated, “The first quarter of 2026 saw an overall positive performance. Our top royalty partner, Mr. Lube + Tires, continues to produce positive growth, generating SSSG6 of 3.0%, albeit at a reduced level compared to the comparable quarter. Oxford also produced positive SSSG of 4.4% while Mr. Mikes results were flat. DIV’s fixed royalty partners, Nurse Next Door, Stratus, BarBurrito and Cheba Hut made their fixed royalty payments. As previously announced, the 33.3% Sutton royalty relief that began in the fourth quarter of 2025 will continue throughout 2026. In addition, AIR MILES’s new 10-year fixed royalty payment began effective February 1, 2026.
We are excited to have completed incremental royalty transactions with BarBurrito and Cheba Hut effective March 1, 2026 and April 1, 2026, respectively. I would also like to congratulate Oxford on its impressive win at the recent CFA awards and congratulations to Cheba Hut as well for being awarded Dealmakers of the Year 2026!”
1. Adjusted revenue and distributable cash are non-IFRS financial measures, payout ratio is a non-IFRS ratio and weighted average organic royalty growth and Same-store-sales growth or SSSG are supplementary financial measures – see “Non-IFRS Measures” below.
First Quarter Results
| Three months ended March 31, | |||||||
| (000’s) | 2026 | 2025 | |||||
| Mr. Lube + Tires | $ | 7,478 | $ | 7,180 | |||
| Stratusa | 2,389 | 2,380 | |||||
| BarBurrito | 2,247 | 2,129 | |||||
| Nurse Next Doorb | 1,376 | 1,349 | |||||
| Cheba Hutc | 1,370 | – | |||||
| Oxford | 1,269 | 1,249 | |||||
| Mr. Mikes | 1,015 | 1,026 | |||||
| AIR MILES® | 922 | 756 | |||||
| Suttond | 771 | 899 | |||||
| Adjusted revenuee | $ | 18,837 | $ | 16,968 | |||
| a) | Stratus adjusted revenue for the three months ended March 31, 2026 was US$1.7 million translated at an average foreign exchange rate of $1.3716 to US$1 (three months ended March 31, 2025 – US$1.7 million, translated at an average foreign exchange rate of $1.4344 to US$1). |
| b) | Represents the DIV Royalty Entitlement plus management fees received from Nurse Next Door. |
| c) | Cheba Hut adjusted revenue for the three months ended March 31, 2026 was US$1.0 million, translated at an average foreign exchange rate of $1.3716 to US$1 (three months ended March 31, 2025 – US$nil). |
| d) | Sutton royalty income for the three months ended March 31, 2026 is net of a 33.3% royalty relief. Sutton royalty income for the three months ended March 31, 2025 is net of a 20% royalty deferral. Management fees from Sutton are not subject to royalty relief or deferral. |
| e) | DIV Royalty Entitlement and adjusted revenue are non-IFRS financial measures and as such, do not have standardized meanings under IFRS. For additional information, refer to “Non-IFRS Measures” in this news release. |
In Q1 2026, DIV generated $17.5 million of revenue compared to $15.6 million in Q1 2025. After taking into account the DIV Royalty Entitlement2 (defined below) related to DIV’s royalty arrangements with Nurse Next Door, DIV’s adjusted revenue2 was $18.8 million in Q1 2026, compared to $17.0 million in Q1 2025. Adjusted revenue increased primarily due to Mr. Lube + Tires’ and Oxford’s positive SSSG2 (defined below), the annual contractual increases at Stratus, Nurse Next Door and BarBurrito, the new fixed higher AIR MILES® royalty effective February 1, 2026, incremental royalty revenue from the 9 new BarBurrito locations added to the BarBurrito royalty pool on March 1, 2026, incremental royalty revenue from the five net new Mr. Lube + Tires locations added to the Mr. Lube + Tires royalty pool on May 1, 2025 and the contractual royalty from Cheba Hut, partially offset by lower royalty income from Mr. Mikes and the 33.3% Sutton royalty relief, all as discussed in further detail below.
2. Adjusted revenue and DIV Royalty Entitlement are non-IFRS financial measures and SSSG is a supplementary financial measure – see “Non-IFRS Measures” below.
Royalty Partner Business Updates
Mr. Lube + Tires: Mr. Lube + Tires generated SSSG3 of 3.0% for the Mr. Lube + Tires stores in the royalty pool for Q1 2026, compared to SSSG of 9.5% in Q1 2025. SSSG remained positive, albeit at a reduced level compared to the same prior period due in large part to unseasonal weather patterns that impacted consumer behaviour.
3. Same-store-sales growth or SSSG is a supplementary financial measure – see “Non-IFRS Measures” below.
Stratus: Royalty income from SBS Franchising LLC (“Stratus”) was $2.4 million (US$1.7 million translated at an average foreign exchange rate of $1.3716 to US$1.00) for Q1 2025. The fixed royalty payable by Stratus increases each November at a rate of 5% until and including November 2026 and 4% each November thereafter during the term of the license, with the most recent increase effective November 15, 2025.
Nurse Next Door: The royalty entitlement to DIV (the “DIV Royalty Entitlement4“) from Nurse Next Door Professional Homecare Services Inc. (“Nurse Next Door”) was $1.4 million in Q1 2026. The DIV Royalty Entitlement from Nurse Next Door grows at a fixed rate of 2.0% per annum during the term of the license, with the most recent increase effective October 1, 2025.
4. DIV Royalty Entitlement is a non-IFRS measure – see “Non-IFRS Measures” below.
Mr. Mikes: SSSG5 for the Mr. Mikes Restaurants Corporation (“Mr. Mikes”) restaurants in the Mr. Mikes royalty pool was 1.8% in Q1 2026, compared to SSSG of 1.5% in Q1 2025. Royalty income and management fees of $1.0 million were generated from Mr. Mikes for both Q1 2026 and 2025, respectively. The Q1 2026 results were flat due to the positive SSSG being offset by lower royalty income as a result of recent store closures.
5. Same-store-sales growth or SSSG is a supplementary financial measure – see “Non-IFRS Measures” below.
Oxford: The Oxford Learning Centres, Inc. (“Oxford”) locations in the Oxford royalty pool generated SSSG6 (on a constant currency basis) of 4.4% in Q1 2026 (after the impact of foreign currency translation, SSSG was 3.8%), compared to SSSG 5.5% in Q1 2025 (after the impact of foreign currency translation, SSSG was 6.4%). Oxford’s positive SSSG for the quarter is due to the solid performance of the Oxford system during the quarter.
6. Same-store-sales growth or SSSG is a supplementary financial measure – see “Non-IFRS Measures” below.
AIR MILES®: In Q1 2026, royalty income of $0.9 million was generated from the AIR MILES® Licenses compared to $0.8 million generated in the first quarter of 2025, an increase of 22.0%. The increase is largely due to the AIR MILES Amendment effective February 1, 2026, compared to royalty income based on gross billings for the three months ended March 31, 2025.
Sutton: In Q1 2026, royalty income of $0.7 million was generated from Sutton, which includes a 33.3% royalty relief for Q1, 2026, compared to $0.9 million for Q1, 2025, which included a 20% royalty deferral. The fixed royalty payable by Sutton increases at a rate of 2% per year, with the most recent increase effective July 1, 2025.
BarBurrito: Royalty income from BarBurrito Restaurants Inc. (“BarBurrito”) was $2.1 million for Q1 2026. The royalty payable by BarBurrito initially grows at a fixed rate of 4% per annum each March up to and including March 2030 and, commencing on January 1, 2031, will fluctuate based on the gross sales of the BarBurrito locations in the royalty pool.
On March 1, 2026, the BarBurrito royalty pool was adjusted to add nine eligible BarBurrito restaurants to the BarBurrito royalty pool, which will result in an increase of $32,708 ($392,496 annualized) to the monthly royalty payment payable by BarBurrito to DIV commencing with the royalty payment in respect of the month of March 2026. The consideration paid to BarBurrito for the incremental royalty revenue was $3.3 million.
Cheba Hut: Royalty income from Cheba Hut Franchising, Inc. (“Cheba Hut”) was $1.4 million for Q1 2026 (US$1.0 million translated at an average foreign exchange rate of 1.3716 to US$1.00). The fixed royalty payable by Cheba Hut increases each April at a rate equal to the greater of 3.5% and the U.S. Consumer Price Index (“U.S. CPI”) plus 1.5%.
On April 1, 2026, DIV purchased a US$0.9 million annualized incremental royalty from Cheba Hut for US$7.2 million. The incremental royalty acquired from Cheba Hut of US$75,000 per month is effective April 1, 2026.
Distributable Cash and Dividends Declared
In Q1 2026, distributable cash7 increased to $12.0 million ($0.0705 per share), compared to $10.9 million ($0.0652 per share), in Q1 2025. The increase in distributable cash per share7 for the quarter was primarily due to an increase in distributable cash, partially offset by a higher weighted average number of common shares outstanding7.
In Q1 2026, the payout ratio7 was 101.1% on dividends of $0.0712 per share, compared to the payout ratio of 95.8% on dividends of $0.0625 per share for the same respective period in 2025. The decrease to the payout ratio was primarily due to higher distributable cash per share7, partially offset by higher dividends declared per share. Historically, first quarters have a higher payout ratio due to seasonality in certain of our royalty partners’ businesses, predominantly driven by seasonally lower Mr. Lube + Tires sales in the first quarter of the year.
7. Distributable cash is a non-IFRS financial measure and distributable cash per share and payout ratio are non-IFRS ratios – see “Non-IFRS Measures” below.
Net Income
Net income for Q1 2026 was $7.6 million compared to net income of $8.0 million for the three months ended March 31, 2025. The decrease in net income in Q1 2026, was primarily due to the higher general and administrative expenses, interest expenses, share-based compensation expenses, other finance costs and impairment loss due to the 10-year, fixed royalty payment period of the AIR MILES Amendment compared to the prior perpetual royalty structure, which is paid quarterly, partially offset by higher adjusted revenues8 and fair value adjustments on financial instruments.
8. Adjusted revenue is a non-IFRS financial measure – see “Non-IFRS Measures” below.
Availability of Annual General and Special Meeting Materials
The proxy-related materials for DIV’s upcoming Annual General and Special meeting of shareholders (the …