VANCOUVER, British Columbia, Aug. 06, 2025 (GLOBE NEWSWIRE) — Diversified Royalty Corp. (TSX: DIV and DIV.DB.A) (the “Corporation” or “DIV”) is pleased to announce its financial results for three months ended June 30, 2025 (“Q2 2025”) and six months ended June 30, 2025.
Highlights
- The weighted average organic royalty growth1 of DIV’s diversified royalty portfolio was 5.5% in Q2 2025 and 4.6% for the six months ended June 30, 2025, compared to 4.2% for the three months ended June 30, 2024 (“Q2 2024”) and 4.7% for the six months ended June 30, 2024. The weighted average organic royalty growth1 on a consistent currency basis was 4.7% in Q2 2025 and 4.1% for the six months ended June 30, 2025, compared to 3.9% in Q2 2024 and 4.6% for the six months ended June 30, 2024.
- Revenue was $17.8 million in Q2 2025 and $33.5 million for the six months ended June 30, 2025, up 6.4% and 5.1%, respectively, compared to the same periods in 2024.
- Adjusted revenue1 was $19.2 million in Q2 2025 and $36.1 million for the six months ended June 30, 2025, up 6.0% and 4.9%, respectively, compared to the same periods in 2024.
- Distributable cash1 was $12.7 million in Q2 2025 and $23.8 million for the six months ended June 30, 2025, up 9.3% and 12.5%, respectively, compared to the same periods in 2024.
- Payout ratio1 was 83.0% in Q2 2025 based on dividends of $0.0625 per share for the quarter ($0.2500 per share annualized), compared to 88.6% in Q2 2024 based on dividends of $0.0625 per share for the comparable quarter ($0.2500 per share annualized), and 88.0% for the six months ended June 30, 2025 based on dividends of $0.1250 per share for the period ($0.2500 per share annualized), compared to 92.5% based on dividends of $0.1237 per share for the comparable period ($0.2474 per share annualized).
- Effective May 1, 2025, 5 net new locations were added to the Mr. Lube + Tires royalty pool.
- On June 17, 2025, DIV closed a trademark acquisition and royalty agreement with Cheba Hut Franchising, Inc. (“Cheba Hut”) of Fort Collins, Colorado, adding a ninth royalty stream (and the second based in the United States) to DIV’s portfolio (the “Cheba Hut Acquisition”).
Second Quarter Commentary
Sean Morrison, Chief Executive Officer of DIV stated, “We are pleased to announce that DIV achieved our best quarter ever in terms of adjusted revenues in Q2 2025. The second quarter of 2025 once again saw strong performances across most of our royalty partners. Mr. Lube + Tires produced strong double-digit growth across its system, generating SSSG1 of 11.3%. Oxford generated positive SSSG1 of 6.5%, while Mr. Mikes was flat. DIV’s fixed royalty partners, Nurse Next Door, Stratus and BarBurrito made their fixed royalty payments and the deferral of 20% of Sutton’s royalties will continue until the end of 2025. DIV continued to see a decrease in royalty income from AIR MILES®.
DIV’s Q2 2025 weighted average organic royalty growth was 5.5%, once again demonstrating the overall strength of DIV’s diversified portfolio. With the addition of Cheba Hut as our ninth royalty partner in June, we have built further diversification into our portfolio and expanded our visibility in the US.
Finally, I would like to congratulate Mr. Mikes for opening its 50th location in Kitchener, Ontario, marking a significant achievement for the brand. We look forward to supporting Mr. Mikes to their next milestone.”
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.
Second Quarter Results
| Three months ended June 30, |
Six months ended June 30, |
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| (000’s) | 2025 | 2024 | 2025 | 2024 | ||||||||
| Mr. Lube + Tires | $ | 9,060 | $ | 8,180 | $ | 16,241 | $ | 14,824 | ||||
| Stratusa | 2,293 | 2,162 | 4,674 | 4,291 | ||||||||
| BarBurrito | 2,184 | 2,101 | 4,313 | 4,201 | ||||||||
| Nurse Next Doorb | 1,350 | 1,323 | 2,699 | 2,646 | ||||||||
| Oxford | 1,283 | 1,213 | 2,532 | 2,395 | ||||||||
| Mr. Mikes | 1,076 | 1,083 | 2,101 | 2,099 | ||||||||
| Sutton | 899 | 1,094 | 1,797 | 2,190 | ||||||||
| AIR MILES® | 818 | 928 | 1,574 | 1,820 | ||||||||
| Cheba Hutc | 214 | – | 214 | – | ||||||||
| Adjusted revenued | $ | 19,177 | $ | 18,084 | $ | 36,145 | $ | 34,466 | ||||
a) Stratus adjusted revenue for the three and six months ended June 30, 2025 was US$1.7 million and US$3.3 million, respectively, translated at an average foreign exchange rate of $1.3839 and $1.4091 to US$1, respectively. (Three and six months ended June 30, 2024 – US$1.6 million and US$3.2 million, respectively, translated at an average foreign exchange rate of $1.3682 to US$1 and $1.3583 to US$1, respectively).
b) Represents the DIV Royalty Entitlement plus management fees received from Nurse Next Door.
c) Cheba Hut adjusted revenue for both the three and six months ended June 30, 2025 was US$156 thousand (three and six months ended June 30, 2024 – US$nil), translated at an average foreign exchange rate of $1.3694 to US$1 for the period from closing of the Cheba Hut Acquisition (defined below) to the end of the quarter.
d) 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 Q2 2025, DIV generated $17.8 million of revenue compared to $16.8 million in Q2 2024. 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 $19.2 million in Q2 2025, compared to $18.1 million in Q2 2024. Adjusted revenue increased primarily due to positive SSSG2 (defined below) at Mr. Lube + Tires and Oxford, the annual contractual increases at Stratus, Nurse Next Door and BarBurrito, incremental royalty revenue from the five net Mr. Lube + Tires locations added to the Mr. Lube + Tires royalty pool on May 1, 2025 and the incremental contractual royalty from Cheba Hut, partially offset by lower royalty income from AIR MILES® and Sutton’s 20% royalty deferral, 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 11.3% for the Mr. Lube + Tires stores in the royalty pool for Q2 2025, compared to SSSG of 8.4% in Q2 2024. SSSG in the current period is primarily due to the sustained growth across the Mr. Lube + Tires system.
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 $2.3 million (US$1.7 million translated at an average foreign exchange rate of $1.3839 to US$1.00) for Q2 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, 2024.
Nurse Next Door: The royalty entitlement to DIV (the “DIV Royalty Entitlement4“) from Nurse Next Door Professional Homecare Services Inc. (“Nurse Next Door”) was $1.3 million in Q2 2025. 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, 2024.
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 -0.5% in Q2 2025, compared to SSSG of -0.8% in Q2 2024. Overall, the results were relatively flat for both the three and six month periods.
Royalty income and management fees of $1.1 million were generated from Mr. Mikes for Q2 2025 and 2024, respectively.
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 6.5% in Q2 2025, compared to SSSG of -2.3% in Q2 2024. 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 Q2 2025, royalty income of $0.8 million was generated from the AIR MILES® Licenses compared to $0.9 million generated in Q2 2024, a decrease of 11.8% from the comparable quarter. The decrease is largely due to continued softness in the AIR MILES® Rewards Program.
Sutton: In Q2 2025, royalty income of $0.9 million was generated from Sutton, which includes a 20% royalty deferral for Q2, 2025, compared to $1.1 million for Q2 2024. The deferred royalties do not accrue interest and are due in full on December 31, 2027. 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 $2.2 million for Q2 2025. The royalty payable by BarBurrito initially grows at a fixed rate of 4% per annum each March from and including March 2025 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.
Cheba Hut: Royalty income from Cheba Hut was $0.2 million (US$0.16 million translated at an average foreign exchange rate of $1.3694 to US$1.00 for the period since the Cheba Hut Acquisition to the end of the quarter). The fixed royalty payable by Cheba Hut increases on April 1st of each year at a fixed rate equal to the greater of 3.5% and the U.S. Consumer Price Index plus 1.5% per year.
Distributable Cash and Dividends Declared
In Q2 2025, distributable cash7 increased to $12.7 million ($0.0760 per share), compared to $11.6 million ($0.0705 per share), in Q2 2024. 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 Q2 2025, the payout ratio7 was 83.0% on dividends of $0.0625 per share, compared to the payout ratio of 88.6% on dividends of $0.0625 per share for the same respective period in 2024. The decrease to the payout ratio was primarily due to higher distributable cash per share7.
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 Q2 2025 was $9.0 million compared to net income of $8.2 million for Q2, 2024. The increase in net income in Q2 2025, was primarily due to the higher adjusted revenues8, lower interest expenses, salaries and benefits, general and administrative expenses, and professional fees, partially offset by higher share-based compensation expenses, income tax expenses, fair value adjustments and other finance costs.
8. Adjusted revenue is a non-IFRS financial measure – see “Non-IFRS Measures” below.
About Diversified Royalty Corp.
DIV is a multi-royalty corporation, engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in North America. DIV’s objective is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors.
DIV currently owns the Mr. Lube + Tires, AIR MILES®, Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus Building Solutions, BarBurrito and Cheba Hut trademarks. Mr. Lube + Tires is the leading quick lube service business in Canada, with locations across Canada. AIR MILES® is Canada’s largest coalition loyalty program. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada. Mr. Mikes operates casual steakhouse restaurants primarily in western Canadian communities. Nurse Next Door is a home care provider with locations across Canada and the United States as well as in Australia. Oxford Learning Centres is one of Canada’s leading franchisee supplemental education services. Stratus Building Solutions is a leading commercial cleaning service franchise company providing comprehensive janitorial, building cleaning, and office cleaning services primarily in the United States. BarBurrito is the largest quick service Mexican restaurant food chain in Canada. Cheba Hut is a fast casual toasted sub sandwich franchise with locations in the United States.
DIV’s objective is to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. DIV intends to continue to pay a predictable and stable monthly dividend to shareholders and increase the dividend over time, in each case as cash flow per share allows.
Forward-Looking Statements
Certain statements contained in this news release may constitute “forward-looking information” within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be …