Highlights
The weighted average organic royalty growth1 of DIV's diversified royalty portfolio was 5.0% in Q3 2025 and 4.5% for the nine months ended September 30, 2025, compared to 3.7% for the three months ended September 30, 2024 ("Q3 2024") and 5.0% for the nine months ended September 30, 2024. The weighted average organic royalty growth1 on a constant currency basis was 4.3% in Q3 2025 and 4.1% for the nine months ended September 30, 2025, compared to 3.5% in Q3 2024 and 4.9% for the nine months ended September 30, 2024.
Revenue was $18.3 million in Q3 2025 and $51.7 million for the nine months ended September 30, 2025, up 13.4% and 7.9%, respectively, compared to the same periods in 2024.
Adjusted revenue1 was $19.6 million in Q3 2025 and $55.7 million for the nine months ended September 30, 2025, up 12.6% and 7.5%, respectively, compared to the same periods in 2024.
Distributable cash1 was $13.1 million in Q3 2025 and $36.9 million for the nine months ended September 30, 2025, up 18.8% and 14.6%, respectively, compared to the same periods in 2024.
Payout ratio1 was 89.3% in Q3 2025 based on dividends of $0.0688 per share for the quarter ($0.2750 per share annualized), compared to 94.1% in Q3 2024 based on dividends of $0.0625 per share for the comparable quarter ($0.2500 per share annualized), and 88.5% for the nine months ended September 30, 2025 based on dividends of $0.1938 per share for the period ($0.2750 per share annualized), compared to 93.0% based on dividends of $0.1862 per share for the comparable period ($0.2500 per share annualized).
On July 1, 2025, DIV increased its annualized dividend from $0.2500 to $0.2750.
DIV's board of directors has approved an increase in DIV's dividend policy to increase its annualized dividend from 27.5 cents per share to 28.5 cents per share effective December 1, 2025, an increase of 1¢ or 3.6%.
Third Quarter Commentary
Sean Morrison, Chief Executive Officer of DIV stated, "We are pleased to announce continued strong weighted average organic royalty growth of 5.0% in the third quarter of 2025. DIV had strong performances across most of our royalty partners. Mr. Lube + Tires once gain led the way with another quarter of double-digit growth, generating SSSG1 of 10.3% in Q3. Oxford continues to build on its recent strong results, generating SSSG1 of 4.4% in Q3. Mr. Mikes' results were also positive with SSSG1 of 1.0% in Q3. The AIR MILES® royalty continues to erode, decreasing 10.7%. DIV's fixed royalty partners, Nurse Next Door, Stratus and BarBurrito made their fixed royalty payments whereas Sutton's royalty deferral of 20% will continue until the end of 2025. With the addition of Cheba Hut in June, the third quarter saw the first full quarter of incremental royalties from Cheba Hut. Overall, DIV's portfolio continues to generate strong positive organic growth in a challenging economic environment which supports the increase in our dividend."
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.
Third Quarter Results
Three months ended September 30,
Nine months ended September 30,
(000's)
2025
2024
2025
2024
Mr. Lube + Tires
$
8,594
$
7,763
$
24,835
$
22,587
Stratusa
2,284
2,154
6,959
6,445
BarBurrito
2,184
2,101
6,497
6,302
Nurse Next Doorb
1,350
1,323
4,048
3,969
Oxford
970
930
3,502
3,325
Mr. Mikes
1,088
1,088
3,188
3,187
Sutton
919
1,117
2,716
3,307
AIR MILES®
825
924
2,399
2,744
Cheba Hutc
1,375
-
1,589
-
Adjusted revenued
$
19,590
$
17,400
$
55,733
$
51,866
a) Stratus adjusted revenue for the three and nine months ended September 30, 2025 was US$1.7 million and US$5.0 million, respectively, translated at an average foreign exchange rate of $1.3773 and $1.3985 to US$1, respectively (three and nine months ended September 30, 2024 - US$1.6 million and US$4.7 million, respectively, translated at an average foreign exchange rate of $1.3634 to US$1 and $1.3600 to US$1, respectively).b) Represents the DIV Royalty Entitlement plus management fees received from Nurse Next Door.c) Cheba Hut adjusted revenue for the three and nine months ended September 30, 2025 was US$1.0 million and US 1.2 million, respectively (three and nine months ended September 30, 2024, US$nil), translated at an average foreign exchange rate of $1.3773 and $1.3762 to US$1, respectively.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 Q3 2025, DIV generated $18.3 million of revenue compared to $16.1 million in Q3 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 $19.6 million in Q3 2025, compared to $17.4 million in Q3 2024. Adjusted revenue increased primarily due to positive SSSG2 (defined below) at Mr. Lube + Tires, Oxford, and Mr. Mikes, the annual contractual increases at Stratus, Nurse Next Door and BarBurrito, 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 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 10.3% for the Mr. Lube + Tires stores in the royalty pool for Q3 2025, compared to SSSG of 7.7% in Q3 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 $1.3773 to US$1.00) for Q3 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 Q3 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, 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 1.0% in Q3 2025, compared to SSSG of -3.1% in Q3 2024. Royalty income and management fees of $1.1 million were generated from Mr. Mikes for Q3 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 4.4% in Q3 2025, compared to SSSG of 1.8% in Q3 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 Q3 2025, royalty income of $0.8 million was generated from the AIR MILES® Licenses compared to $0.9 million generated in Q3 2024, a decrease of 10.7% from the comparable quarter. The decrease is largely due to continued softness in the AIR MILES® Rewards Program.
Sutton: In Q3 2025, royalty income of $0.9 million was generated from Sutton, which includes a 20% royalty deferral for Q3, 2025, compared to $1.1 million for Q3 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 Q3 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 $1.4 million (US$1.0 million translated at an average foreign exchange rate of $1.3773 to US$1.00) for Q3 2025. 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 Q3 2025, distributable cash7 increased to $13.1 million ($0.0770 per share), compared to $11.0 million ($0.0665 per share), in Q3 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 Q3 2025, the payout ratio7 was 89.3% on dividends of $0.0688 per share, compared to the payout ratio of 94.1% 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, partially offset by higher dividends declared per share.
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 Q3 2025 was $8.7 million compared to net income of $6.9 million for Q3, 2024. The increase in net income in Q3 2025, was primarily due to the higher adjusted revenues8, lower salaries and benefits, and fair value adjustments, partially offset by higher general and administrative expenses, professional fees, share-based compensation expenses, income tax expenses, 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 materially different from any future results, performance or achievements expressed or implied by such forward-looking information. The use of any of the words "anticipate", "continue", "estimate", "expect", "intend", "may", "will", "project", "should", "believe", "confident", "plan" and "intend" and similar expressions are intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Specifically, forward-looking information in this news release includes, but is not limited to, statements made in relation to: the increase in DIV's annual dividend; the deferral of Sutton Royalties continuing until the end of 2025; the terms on which the deferred royalties are required to be paid by Sutton; DIV's intention to pay monthly dividends to shareholders; and DIV's corporate objectives. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events, performance, or achievements of DIV to differ materially from those anticipated or implied by such forward-looking information. DIV believes that the expectations reflected in the forward-looking information included in this news release are reasonable but no assurance can be given that these expectations will prove to be correct. In particular, risks and uncertainties include: DIV's royalty partners may not make their respective royalty payments to DIV, in whole or in part; the decline in royalties received under the AIR MILES® licenses could cause AM Royalties Limited Partnership ("AM LP") to be required to make partial or full repayment of the outstanding principal amount under its credit agreement, or cause AM LP to be in default under its credit agreement; current positive trends being experienced by certain of DIV's royalty partners (and their respective franchisees) may not continue and may regress; negative trends experienced by certain of DIV's Royalty Partners (including their respective franchisees) may continue and may regress; DIV may not increase its dividend in accordance with the currently expected timing or amount; Sutton may not pay all deferred royalties in accordance with the timing required or at all; Sutton's investment of the deferred royalties may not achieve their intended effects; Sutton may require further deferrals of royalties beyond those contemplated by the current deferral agreement; DIV and its royalty partners' performance in the remainder of 2025 may not meet management's expectations; DIV may not be able to make monthly dividend payments to the holders of its common shares; dividends ...
