Diversified Royalty Corp. Announces First Quarter Results

VANCOUVER, British Columbia, May 14, 2020 (GLOBE NEWSWIRE) -- Diversified Royalty Corp. (TSX: DIV and DIV.DB) (the “Corporation” or “DIV”) is pleased to announce its financial results for the three months ended March 31, 2020 (“Q1 2020”).

Highlights

• Revenues of $7.3 million and adjusted revenues of $8.5 million for Q1 2020.
  
  
• Acquired the trademarks and certain other intellectual property rights (collectively, the “Oxford Rights”) related to franchised supplemental education business of Oxford Learning Centres, Inc. (“Oxford”) on February 20, 2020.
  
  
• Completed bought-deal public offering of 10,810,000 common shares at $3.20 per share on March 5, 2020 for gross proceeds of $34.6 million.

First Quarter Results

In Q1 2020, DIV generated $7.3 million of revenue compared to $6.4 million in the three months ended March 31, 2019 (“Q1 2019”). The increase in revenue between periods was primarily driven by the acquisition of the trademarks and certain other intellectual property rights (collectively, the “MRM Rights”) used in the business of Mr. Mikes Restaurants Corporation (“Mr. Mikes”) in May 2019, the acquisition of the Oxford Rights in February 2020, and the increase in royalty income from the AIR MILES licenses. These items were partially offset by the impact of the COVID-19 pandemic and related government restrictions, which included negative same-store-sales-growth (“SSSG”) at Mr. Lube Canada Limited Partnership (“Mr. Lube”) as well as royalty and management fee waivers for Sutton Group Realty Services Ltd. (“Sutton”) and Mr. Mikes for certain portions of Q1 2020.

After taking into account the DIV Royalty Entitlement (defined below) of $1.2 million related to DIV’s royalty arrangements with Nurse Next Door Homecare Professional Services Inc. (“Nurse Next Door”), DIV’s adjusted revenue (defined below) was $8.5 million for Q1 2020.

Royalty Partner Business Updates

Mr. Lube: SSSG for the Mr. Lube stores in the royalty pool was -7.2% in Q1 2020, and was negatively impacted by the COVID-19 pandemic, which resulted in a slow-down in consumer activity across the country and recommendations from all levels of government for people to work from home and self-isolate. SSSG for the 133 Mr. Lube flagship locations (122 of which are in the Mr. Lube royalty pool) was -26% in April 2020 year-over-year and has begun to trend positively in recent weeks.