VANCOUVER, British Columbia, Nov. 06, 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 September 30, 2026 (“Q3 2026”) and nine months ended September 30, 2026.
Highlights
- Mr. Lube + Tires system sales1 were $126.4 million in Q3, 2026, a 1.7% decrease from $128.5 million in Q3, 2025 (as reported by Mr. Lube Canada LP). Mr. Lube + Tires system sales were $380.5 million* for the nine months ended September 30, 2026, a 2.9% increase from $369.9 million for the nine months ended September 30, 2025 (as reported by Mr. Lube Canada LP).
- The weighted average organic royalty growth1 of DIV’s diversified royalty portfolio was 3.6% in Q3 2026 and 3.1% for the nine months ended September 30, 2026, compared to 0.6% for the three months ended September 30, 2025 (“Q3 2025”) and 1.0% for the nine months ended September 30, 2025. The weighted average organic royalty growth1 on a consistent currency basis was 3.0% in Q3 2026 and 3.2% for the nine months ended September 30, 2026, compared to 0.3% in Q3 2025 and 0.2% for the nine months ended September 30, 2025.
- Revenue was $31.5 million in Q3 2026 and $70.7 million for the nine months ended September 30, 2026, up 72.7% and 36.6%, respectively, compared to the same periods in 2025.
- Combined contribution1 was $24.9 million in Q3 2026 and $65.5 million for the nine months ended September 30, 2026, up 27.2% and 17.5%, respectively, compared to the same periods in 2025.
- Distributable cash1 was $15.5 million in Q3 2026 and $40.6 million for the nine months ended September 30, 2026, up 21.9% and 12.5%, respectively, compared to the same periods in 2025.
- Payout ratio1 was 86.9% in Q3 2026 based on dividends of $0.0716 per share for the quarter ($0.2850 per share annualized), compared to 91.9% in Q3 2025 based on dividends of $0.0688 per share for the comparable quarter ($0.2750 per share annualized), and 93.3% for the nine months ended September 30, 2026 based on dividends of $0.2139 per share for the period ($0.2850 per share annualized), compared to 90.6% based on dividends of $0.1938 per share for the comparable 2025 period ($0.2750 per share annualized).
- On July 6, 2026, DIV closed its previously announced bought deal public offering of 12,339,500 common shares, including 1,609,500 common shares issued pursuant to the full exercise of the over-allotment option, at a price of $4.66 per common share for total gross proceeds of approximately $57.5 million (the “Equity Offering”).
- On July 7, 2026, DIV used partial net proceeds from the Equity Offering to make a full $38.5 million principal paydown on its Acquisition Facility, reducing the principal balance to nil. DIV had previously drawn on the Acquisition Facility to partially fund the acquisition of the Mr. Lube + Tires franchisor business (the “Acquisition”).
Third Quarter Commentary
Sean Morrison, Chief Executive Officer of DIV, commented: “We are excited to have Mr. Lube + Tires as our first controlled operating franchisor business. This changes DIV’s primary exposure to Mr. Lube + Tires from SSSG, directly impacting the royalty received, to system sales which most impacts adjusted EBITDA. Mr. Lube + Tires’ 1.7% year-over-year decline in system sales for Q3 2026 largely reflects a challenging automotive environment. Inflation in fuel and other vehicle operating costs is leading people to drive fewer kilometres, which has reduced demand for oil changes and maintenance services. Mr. Lube + Tires remains on track to open 18 new locations in 2026 and meet the previously disclosed estimate of $58.7 million in adjusted EBITDA contribution for the twelve months following DIV’s acquisition. Mr. Lube + Tires is budgeting 16 new locations for 2027 and is considering bolt-on acquisition opportunities. Additionally, DIV’s payout ratio has decreased since the acquisition of Mr. Lube + Tires, and we are using our excess cash flow to de-lever Mr. Lube + Tires.”
*System sales reported to DIV by Mr. Lube Canada Limited Partnership (“Mr. Lube LP”) for the period January 1 to June 15, 2026 plus system sales for Mr. Lube + Tires for the period June 16 to September 30, 2026. The royalty arrangements with Mr. Lube LP ceased June 16, 2026 pursuant to the Acquisition. See “Third Party Information” below.
1. Adjusted royalty partner revenue, adjusted royalty income, adjusted royalty partner revenue, combined contribution, Mr. Lube + tires adjusted EBITDA and distributable cash are non-IFRS financial measures, payout ratio is a non-IFRS ratio and weighted average organic royalty growth, Mr. Lube + Tires system sales 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) | 2026 | 2025 | 2026 | 2025 | |||||
| Stratusa | $ | 2,438 | $ | 2,285 | $ | 7,237 | $ | 6,959 | |
| BarBurrito | 2,369 | 2,184 | 6,985 | 6,498 | |||||
| Nurse Next Doorb | 1,376 | 1,350 | 4,129 | 4,048 | |||||
| Cheba Hutc | 1,773 | 1,375 | 4,897 | 1,589 | |||||
| Oxford | 975 | 970 | 3,546 | 3,502 | |||||
| Mr. Mikes | 1,103 | 1,088 | 3,131 | 3,188 | |||||
| AIR MILES® | 981 | 825 | 2,885 | 2,399 | |||||
| Suttond | 503 | 919 | 1,941 | 2,716 | |||||
| Mr. Lube LPf | – | 8,594 | 15,093 | 24,835 | |||||
| Adjusted royalty partner revenuee | $ | 11,518 | $ | 19,590 | $ | 49,844 | $ | 55,734 | |
| Add: Mr. Lube + Tires Adjusted EBITDAe | 13,400 | – | 15,628 | – | |||||
| Combined contributione | $ | 24,918 | $ | 19,590 | $ | 65,472 | $ | 55,734 | |
| a) | Stratus adjusted revenue for the three and nine months ended September 30, 2026 was US$1.7 million and US$5.2 million, respectively, translated at an average foreign exchange rate of $1.3995 and $1.3851 to US$1, respectively (three and nine months ended September 30, 2025 – US$1.7 million and US$5.0 million, respectively, translated at an average foreign exchange rate of $1.3773 to US$1 and $1.3985 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, 2026 was US$1.3 million and US$3.5 million, respectively, translated at an average foreign exchange rate of $1.3995 and $1.3851 to US$1, respectively ((three and nine months ended September 30, 2025 – US$1.0 million and US$1.2 million, respectively, translated at an average foreign exchange rate of $1.3773 to US$1 and $1.3762 to US$1, respectively). |
| d) | Refer to the section “Sutton” below. Management fees from Sutton are not subject to royalty relief or deferral. |
| e) | DIV Royalty Entitlement, adjusted royalty partner revenue, Mr. Lube + Tires adjusted EBITDA and combined contribution 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. |
| f) | Mr. Lube LP royalty ceased June 16, 2026 in connection with the closing of the Acquisition. |
In Q3 2026, DIV generated $31.5 million of revenue compared to $18.3 million in Q3 2025. After taking into account the DIV Royalty Entitlement2 (defined below) related to DIV’s royalty arrangements with Nurse Next Door, DIV management fees, and Mr. Lube + Tires adjusted EBITDA2, DIV’s combined contribution2 was $24.9 million in Q3 2026, compared to $19.6 million in Q3 2025. Combined contribution2 increased primarily due to the incremental Mr. Lube + Tires adjusted EBITDA2, Mr. Mikes and Oxford’s positive SSSG2, 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, and the contractual royalty increase from Cheba Hut plus the Incremental Cheba Hut Royalty (defined below), both effective April 1, 2026, partially offset by lower royalty income from Sutton, all as discussed in further detail below.
2. Combined contribution, Mr. Lube + tires adjusted EBITDA and DIV Royalty Entitlement are non-IFRS financial measures and SSSG is a supplementary financial measure – see “Non-IFRS Measures” below.
Franchisor Business Update
Mr. Lube + Tires:
On June 16, 2026, DIV completed the Acquisition of the Mr. Lube + Tires franchisor business. For periods prior to the Acquisition, the contribution of the Mr. Lube + Tires franchisor business to DIV’s combined contribution was generated solely through royalty income and management fees, and following the Acquisition the contribution is generated solely through Mr. Lube + Tires adjusted EBITDA. More specifically, for the 9 months ended September 30, 2026 the Mr. Lube + Tires franchisor business contributed $15.1 million of royalty income and management fees prior to the Acquisition and $15.6 million of adjusted EBITDA3 after the Acquisition for an aggregate of $30.7 million to DIV’s combined contribution3. This compares to $24.84 million of royalty income and management fees in same prior period under the prior royalty arrangements with Mr. Lube LP, an increase of 23.7%.
After the Acquisition, DIV believes that the system sales of Mr. Lube + Tires is a key measure of the business’ contribution, which captures importantly new location growth, of which 9 new locations were added to date, as well as SSSG. This is a change from pre-Acquisition, where SSSG was the key measure of the previous royalty partner performance.
Mr. Lube + Tires franchisor business system sales for Q3, 2026 declined by 1.7% (compared to 16.1% growth in the comparative period in 2025) primarily due to negative 5.1% SSSG3 for Q3 2026, (compared to SSSG3 of 11.2% in the comparative period in 2025), partially offset by system sales growth due to new location openings. The industry is seeing ongoing economic uncertainty, combined with inflationary pressures on gas and other inputs to operate a vehicle. Gasoline prices are up over 20% year-over-year for the past 6 months, impacting share of wallet and overhead to operate a vehicle, which is resulting in fewer kilometers driven (total gasoline volumes have declined year-over-year over this timeframe). These reduced driving patterns are extending service intervals and deferrals. In addition, Mr. Lube + Tires celebrated its 50th anniversary milestone between July 10th and 12th by offering 50% off basic oil changes – although this event was a success from an awareness and celebration point of view, given the incredible volume that weekend, locations focused on basic oil changes and turned away many other services, reducing the average ticket price. Mr. Lube + Tires adjusted EBITDA3 contribution to DIV is $13.4 million in Q3 2026. There are no comparative period results given the Acquisition closed June 16, 2026. Mr. Lube + Tires business experiences seasonality where Q4 is typically the strongest quarter.
3. Same-store-sales growth or SSSG is a supplementary financial measures and combined contribution and Mr. Lube + tires adjusted EBITDA are non-IFRS financial measures – see “Non-IFRS Measures” below.
Royalty Partner Business Updates
Stratus: Royalty income from SBS Franchising LLC (“Stratus”) was $2.4 million (US$1.7 million translated at an average foreign exchange rate of $1.3995 to US$1.00) for Q3 2026. 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 Q3 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 Mr. Mikes Restaurants Corporation (“Mr. Mikes”) restaurants in the Mr. Mikes royalty pool was 4.7% in Q3 2026, compared to SSSG of 1.0% in Q3 2025. The royalty income from Mr. Mikes was $1.1 million for both Q3 2026 and Q3 2025, respectively. The Q3 2026 results were slightly higher due to increased SSSG, partially offset by the two store closures in the nine-month period ended September 30, 2026.
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 1.5% in Q3 2026 (after the impact of foreign currency translation, SSSG was 1.7%), compared to SSSG of 4.4% in Q3 2025 (on a constant currency basis). The royalty income from Oxford was $1.1 million for both Q3 2026 and Q3 2025, respectively.
6. Same-store-sales growth or SSSG is a supplementary financial measure – see “Non-IFRS Measures” below.
AIR MILES®: In Q3 2026, royalty income of $1.0 million was generated from the AIR MILES® Licenses compared to $0.8 million generated in Q3 2025, an increase of 20%. 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 September 30, 2025.
Sutton: On September 1, 2026, the Company and SGRS LP amended the royalty arrangement with Sutton to replace the prior fixed royalty payments based on the number of agents in a royalty pool with variable royalty payments retroactively effective to May 1, 2026. Under the variable royalty arrangements, Sutton now pays SGRS LP a variable royalty based on a baseline amount per month, which baseline amount increases or decreases each month depending on amounts collected by Sutton from its franchisees in the prior month (the “Sutton Variable Royalty”).
The continued weakness in the Canadian housing market has resulted in a further reduction in royalty payments from Sutton in accordance with the terms of the Sutton Variable Royalty and impacted the timing of the receipt of certain royalty payments from Sutton. As a result, DIV recorded a further $4.7 million impairment for the three months ended September 30, 2026 to intangible assets related to SGRS Rights. In addition, on September 1, 2026 and September 23, 2026, respectively, SGRS LP made $1.3 million and $0.5 million principal payments, respectively, on the SGRS LP term loan.
In Q3 2026, royalty income was $0.5 million which reflects the Sutton Variable Royalty effective May 1, 2026, compared to $0.8 million in Q3 2025, which reflects the prior contractual fixed royalty net of 33% royalty relief in the comparable period.
BarBurrito: Royalty income from BarBurrito Restaurants Inc. (“BarBurrito”) was $2.3 million for Q3 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 resulted in an increase of $32,708 ($392,496 annualized) to the monthly royalty payment payable by BarBurrito to DIV effective March 1, 2026.
Cheba Hut: Royalty income from Cheba Hut Franchising, Inc. (“Cheba Hut”) was $1.8 million for Q3 2026 (US$1.3 million translated at an average foreign exchange rate of 1.3995 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 Cheba Hut Royalty”). The Incremental Cheba Hut Royalty is effective April 1, 2026.
Distributable Cash and Dividends Declared
In Q3 2026, distributable cash7 increased to $15.5 million ($0.0824 per share), compared to $12.7 million ($0.0748 per share), in Q3 2025. The increase in increase 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 outstanding. The increase in distributable cash was primarily due to incremental Mr. Lube + Tires adjusted EBITDA7, partially offset by higher interest expense, professional fees, general and administrative expenses, and salaries and benefits.
In Q3 2026, the payout ratio7 was 86.9% on dividends of $0.0716 per share, compared to the payout ratio of 91.9% on dividends of $0.0688 per share for the same respective period in 2025. The lower payout ratio was primarily due to higher distributable cash per share partially offset by higher dividends declared per share.
7. Distributable cash and Mr. Lube + Tires adjusted EBITDA are non-IFRS financial measures and distributable cash per share and payout ratio are non-IFRS ratios – see “Non-IFRS Measures” below.
Net Income
Net income for Q3 2026 was $5.5 million compared to net income of $8.7 million for the three months ended September 30, 2025. The decrease in net income in Q3 2026 was primarily due to the higher general and administrative expenses, interest expenses, salaries expense, impairment loss on the SGRS Rights (summarized above) and AIR MILES Rights due to the 10-year, fixed royalty payment period of the AIR MILES Amendment, partially offset by the higher adjusted combined contribution8, fair value adjustments on financial instruments and lower other finance costs.
8. Combined contribution 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, through its subsidiary, Mr. Lube Canada Ltd., also operates the Mr. Lube + Tires franchisor business in Canada. Mr. Lube + Tires is the leading Canadian automotive service chain specializing in fast, drive-in and drive-through, no-appointment-needed vehicle maintenance.
DIV currently owns the Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus Building Solutions, BarBurrito, Cheba Hut and AIR MILES® trademarks. 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. AIR MILES® was a Canadian loyalty program.
DIV’s objective is to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties and the Mr. Lube + Tires franchisor business. 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” or “financial outlook” 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 and financial outlook. 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 and financial outlook, although not all forward-looking information and financial outlook contain these identifying words. Specifically, forward-looking information and financial outlook in this news release includes, but is not limited to, statements made in relation to: Mr. Lube + Tires remaining on track to open 18 locations in 2026 and meet the previously disclosed estimate of $58.7 million in adjusted EBITDA contribution to DIV over the twelve months post-close of the Acquisition; Mr. Lube + Tires budgeting 16 new locations for 2027 and considering bolt-on acquisition opportunities; the expected incremental royalty revenue from the addition of nine BarBurrito locations to the BarBurrito royalty pool on March 1, 2026; the expected incremental royalty revenue from the Incremental Cheba Hut Royalty; 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 and financial outlook. DIV believes that the expectations reflected in the forward-looking information and financial outlook 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; current positive trends being experienced by certain of DIV’s royalty partners (and their respective franchisees) may not continue and may regress, and current negative trends experienced by certain of DIV’s royalty partners (including their respective franchisees) may continue and may regress; DIV’s, its royalty partners’ and Mr. Lube + Tires’ performance may not meet management’s expectations; DIV may not be able to make monthly dividend payments to the holders of its common shares; Sutton may require further royalty relief beyond the Sutton Variable Royalty; the Sutton Variable Royalty may decrease due to both reduced royalties earned by Sutton from its franchisees and reduced collection rates; given the Sutton Variable Royalty is dependent on collection rates, it is particularly at risk to missed, late or partial payments from large franchises, which increases the franchise concentration risk (Sutton has two particularly large franchisees, with one in B.C. and one in Quebec); the continued weakness in the Canadian housing market has impacted one of Sutton’s largest franchisees negatively, resulting in reduced royalty revenue under the Sutton Variable Royalty and has impacted the timing of the receipt of certain royalty payments from Sutton; in addition, if royalty income declines under the Sutton Variable Royalty, SGRS LP may be required to make partial or full repayment of the outstanding principal amount under its credit agreement, or cause SGRS LP to be in default under its credit agreement; the anticipated benefits of the Acquisition to DIV may be less than anticipated, may not occur on a timely basis or at all; Mr. Lube + Tires may not be successful in executing its business strategies and pursing its growth opportunities; Mr. Lube + Tires new store openings may not be consistent with budgets and projections; Mr. Lube + Tires’ franchisees may not generate positive SSSG at estimated levels or at all; Mr. Lube + Tires may not generate adjusted EBITDA consistent with DIV’s estimates; Mr. Lube + Tires may not complete any bolt-on acquisitions, and if any acquisitions are completed, such acquisitions may not be accretive; dividends are not guaranteed and may be reduced, suspended or terminated at any time; and DIV may not achieve any of its corporate objectives. Given these uncertainties, readers are cautioned that forward-looking information and financial outlook included in this news release are not guarantees of future performance, and such forward-looking information and financial outlook should not be unduly relied upon. More information about the risks and uncertainties affecting DIV’s business and the businesses of its royalty partners can be found in the “Risk Factors” section of its Annual Information Form dated March 19, 2026 and in DIV’s management’s discussion and analysis for the three and nine months ended September 30, 2026, copies of which are available under DIV’s profile on SEDAR+ at www.sedarplus.ca.
In formulating the forward-looking information and financial outlook contained herein, management has assumed that: Sutton Royalty will continue to collect royalty payments from its franchisees and will continue as a going concern; Mr. Lube + Tires will be successful in executing its business strategies and pursing its growth opportunities; Mr. Lube + Tires new store openings will be consistent with budgets and projections; Mr. Lube + Tires will complete bolt-on acquisitions, and such acquisitions will be accretive; there are no material changes in competition or regulation impacting the Mr. Lube + Tires franchisor business; DIV will generate sufficient cash flows from its royalties and Mr. Lube + Tires to service its debt and pay dividends to shareholders; lenders will provide any necessary waivers required in order to allow DIV to continue to pay dividends; lenders will provide any other necessary covenant waivers to DIV, its royalty partners and Mr. Lube + Tires; the performance of Mr. Lube + Tires and DIV’s royalty partners will be consistent with DIV’s and its royalty partners’ respective expectations; recent positive trends for certain of DIV’s royalty partners (including their respective franchisees) will continue and not regress; current negative trends experienced by certain of DIV’s royalty partners (including their respective franchisees) will not materially regress; Sutton will not require further royalty relief; DIV’s, Mr. Lube + Tires’ and DIV’s royalty partners’ respective businesses will not suffer any material adverse effect; and the business and economic conditions affecting DIV, Mr. Lube + Tires and DIV’s royalty partners will continue substantially in the ordinary course, including without limitation with respect to general industry conditions, general levels of economic activity and regulations. These assumptions, although considered reasonable by management at the time of preparation, may prove to be incorrect.
To the extent any forward-looking information in this news release constitutes a “financial outlook” within the meaning of applicable securities laws, such information is being disclosed to provide investors with additional information with respect to: the estimated financial impact to DIV of the Acquisition; and the estimated incremental royalty revenue from the adjustment to the BarBurrito royalty pool; the estimated incremental royalty revenue from the Incremental Cheba Hut Royalty;. Management of DIV approved the financial outlook as of the date of this news release.
All of the forward-looking information and financial outlook in this news release is qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that it will have the expected consequences to, or effects on, DIV. The forward-looking information and financial outlook in this news release is made as of the date of this news release and DIV assumes no obligation to publicly update or revise such information to reflect new events or circumstances, except as may be required by applicable law.
Non-IFRS Measures
Management believes that disclosing certain non-IFRS financial measures, non-IFRS ratios and supplementary financial measures provides readers with important information regarding the Corporation’s financial performance and its ability to pay dividends and the performance of its royalty partners and of Mr. Lube + Tires. By considering these measures in combination with the most closely comparable IFRS measure, management believes that investors are provided with additional and more useful information about the Corporation, its royalty partners and Mr. Lube + Tires than investors would have if they simply considered IFRS measures alone. The non-IFRS financial measures, non-IFRS ratios and supplementary financial measures do not have standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers. Investors are cautioned that non-IFRS measures should not be construed as a substitute or an alternative to net income or cash flows from operating activities as determined in accordance with IFRS.
“Adjusted royalty income”, “adjusted royalty partner revenue”, “combined contribution”, “Mr. Lube + Tires adjusted EBITDA”, “DIV Royalty Entitlement” and “distributable cash” are used as non-IFRS financial measures in this news release.
Adjusted royalty income is calculated as royalty income from DIV’s royalty partners, plus the DIV Royalty Entitlement received by NND Royalties LP from Nurse Next Door. Adjusted royalty partner revenue is calculated as adjusted royalty income plus management fees received from Royalty Partners. Combined contribution is calculated as adjusted royalty partner revenue plus adjusted Mr. Lube + Tires EBITDA. The following table reconciles combined contribution, adjusted royalty income and adjusted royalty partner revenue to royalty income, the most directly comparable IFRS measure disclosed in the financial statements:
| Three months ended September 30, | Nine months ended September 30, | |||||||
| (000’s) | 2026 | 2025 | 2026 | 2025 | ||||
| Stratus | $ | 2,438 | $ | 2,285 | $ | 7,237 | $ | 6,959 |
| BarBurrito | 2,347 | 2,163 | 6,920 | 6,434 | ||||
| Cheeba Hut | 1,773 | 1,375 | 4,897 | 1,589 | ||||
| Oxford | 964 | 959 | 3,512 | 3,468 | ||||
| Mr. Mikes | 1,092 | 1,076 | 3,098 | 3,156 | ||||
| AIR MILES® | 981 | 825 | 2,885 | 2,399 | ||||
| Sutton | 473 | 889 | 1,850 | 2,631 | ||||
| Mr. Lube LP | – | 8,534 | 14,982 | 24,655 | ||||
| Royalty income | $ | 10,068 | $ | 18,106 | $ | 45,381 | $ | 51,291 |
| DIV Royalty Entitlement | 1,355 | 1,329 | 4,066 | 3,986 | ||||
| Adjusted royalty income | $ | 11,423 | $ | 19,435 | $ | 49,447 | $ | 55,277 |
| Add: DIV Management fees | 95 | 155 | 397 | 457 | ||||
| Adjusted royalty partner revenue | $ | 11,518 | $ | 19,590 | $ | 49,844 | $ | 55,734 |
| Add: Mr. Lube + Tires Adjusted EBITDA | 13,400 | – | 15,628 | – | ||||
| Combined contribution | $ | 24,918 | $ | 19,590 | $ | 65,472 | $ | 55,734 |
For further details with respect to adjusted royalty partner revenue, adjusted royalty income, combined contribution and Mr. Lube + Tires adjusted EBITDA refer to the subsection “Non-IFRS Financial Measures” under “Description of Non-IFRS Financial Measures, Non-IFRS Ratios and Supplementary Financial Measures” in the Corporation’s management’s discussion and analysis for the three and nine months ended September 30, 2026, a copy of which is available on SEDAR+ at www.sedarplus.ca.
The most closely comparable IFRS measure to DIV Royalty Entitlement is “distributions received from NND LP”. DIV Royalty Entitlement is calculated as distributions received from NND LP, before any deduction for expenses incurred by NND Holdings Limited Partnership (“NND LP”), which expenses include legal, audit, tax and advisory services. Note that distributions received from NND LP is derived from the royalty paid by Nurse Next Door to NND LP. The following table reconciles DIV Royalty Entitlement to distributions received from NND LP in the financial statements:
| Three months ended September 30, | Nine months ended September 30, |
||||||||||||
| (000’s) | 2026 | 2025 | 2026 | 2025 | |||||||||
| Distributions received from NND LP | $ | 1,350 | $ | 1,314 | $ | 4,040 | $ | 3,960 | |||||
| Add: NND Royalties LP expenses | 5 | 8 | 26 | 27 | |||||||||
| DIV Royalty Entitlement | 1,355 | 1,322 | 4,066 | 3,987 | |||||||||
| Less: NND Royalties LP expenses | (5 | ) | (8 | ) | (26 | ) | (27 | ) | |||||
| DIV Royalty Entitlement, net of NND Royalties LP expenses | $ | 1,350 | $ | 1,314 | $ | 4,040 | $ | 3,960 | |||||
For further details with respect to DIV Royalty Entitlement, refer to the subsection “Non-IFRS Financial Measures” under “Description of Non-IFRS Financial Measures, Non-IFRS Ratios and Supplementary Financial Measures” in the Corporation’s management’s discussion and analysis for the three and nine months ended September 30, 2026, a copy of which is available on SEDAR+ at www.sedarplus.ca.
The following table reconciles distributable cash to cash flows generated from operating activities, the most directly comparable IFRS measure disclosed in the financial statements:
| Three months ended September 30, |
Nine months ended September 30, |
||||||||||||
| (000’s) | 2026 | 2025 | 2026 | 2025 | |||||||||
| Cash flows generated from operating activities | $ | 9,484 | $ | 13,372 | $ | 22,569 | $ | 32,996 | |||||
| Current tax expense1 | (902 | ) | (2,172 | ) | (5,284 | ) | (6,541 | ) | |||||
| Accrued interest on convertible debentures | 807 | (788 | ) | (747 | ) | (788 | ) | ||||||
| Accrued interest on bank loans | 106 | 100 | (229 | ) | (339 | ) | |||||||
| Distributions on MRM units earned in current periods | (35 | ) | (77 | ) | (101 | ) | (161 | ) | |||||
| Payment of lease obligations | (136 | ) | (28 | ) | (201 | ) | (84 | ) | |||||
| Net marketing fund expense | (168 | ) | – | (233 | ) | – | |||||||
| Transaction costs | – | – | 2,599 | – | |||||||||
| Other non-recurring costs | – | – | 36 | – | |||||||||
| Foreign exchange and other | (1 | ) | 77 | 65 | 161 | ||||||||
| Changes in working capital | 4,358 | 151 | 11,516 | 3,758 | |||||||||
| Taxes paid | 2,340 | 2,064 | 7,740 | 7,049 | |||||||||
| Payment of contingent consideration | – | – | 3,280 | – | |||||||||
| Mr. Lube + Tires distributable cash attributable to NCI | (370 | ) | – | (438 | ) | – | |||||||
| Distributable cash | $ | 15,483 | $ | 12,699 | $ | 40,573 | $ | 36,051 | |||||
| 1) Gross income tax before foreign tax credit and excluding US withholding taxes paid. | |||||||||||||
The following table reconciles the estimated Mr. Lube + Tires Adjusted EBITDA for fiscal year 2025 (“FY2025”) to the estimated adjusted EBITDA contribution to DIV, post closing of the Acquisition:
| (000’s) | FY 2025 |
| Mr. Lube + Tires FY2025 Adjusted EBITDA2 | 45,872 |
| Pro-forma Adjustments3 | 12,828 |
| Estimated Adjusted EBITDA1 | 58,700 |
| 1) | Adjusted EBITDA is a non-IFRS measure. See “Non-IFRS Measures”. |
| 2) | For further details with respect to Mr. Lube + Tires adjusted EBITDA for FY2025, refer to the Mr. Lube Canada Limited Partnership Management’s Discussion and Analysis (“MD&A”) for the three and twelve months ended December 31, 2025 filed under DIV’s profile on SEDAR+ atwww.sedarplus.ca. |
| 3) | Mr. Lube + Tires pro-forma adjustments include estimated adjustments to reflect the assumptions with respect to the future performance of the business. These adjustments and assumptions include estimated synergies and operating leverage from increased system sales, primarily driven by new store growth. |
For further details with respect to distributable cash, refer to the subsection “Non-IFRS Financial Measures” under “Description of Non-IFRS Financial Measures, Non-IFRS Ratios and Supplementary Financial Measures” in the Corporation’s management’s discussion and analysis for the three and nine months ended September 30, 2026, a copy of which is available on SEDAR+ at www.sedarplus.ca.
“Mr. Lube + Tires distributable cash” is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS, and therefore may not be comparable to similar measures presented by other issuers. Mr. Lube + Tires distributable cash is defined as Mr. Lube + Tires adjusted EBITDA less interest expense on the credit facilities and current income tax expense. Management believes that Mr. Lube + Tires distributable cash provides investors with useful information about the amount of cash Mr. Lube + Tires has generated to cover dividend distributions to DIV, its parent company. Readers should be cautioned, however, that Mr. Lube + Tires distributable cash should not be construed as an alternative to the statement of cash flows as a measure of liquidity and cash flows of Mr. Lube + Tires or the Corporation. The Corporation’s method of calculating distributable cash may differ from that of other issuers and companies and, accordingly, distributable cash may not be comparable to similar measures used by other issuers or companies.
“Distributable cash” is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS, and therefore may not be comparable to similar measures presented by other issuers. Distributable cash is defined as Normalized EBITDA less interest expense on the credit facilities, less distributions on exchangeable partnership units, less gross current income tax expense (before foreign tax credit and excluding US withholding taxes paid), less the portion of Mr. Lube + Tires distributable cash attributable to NCI, plus interest income. Management believes that distributable cash provides investors with useful information about the amount of cash the Corporation has generated to cover dividends on its common shares during the applicable period. Readers should be cautioned, however, that distributable cash should not be construed as an alternative to the statement of cash flows as a measure of liquidity and cash flows of the Corporation. The Corporation’s method of calculating distributable cash may differ from that of other issuers and companies and, accordingly, distributable cash may not be comparable to similar measures used by other issuers or companies. Distributable cash was previously calculated in Q3 2025 as Normalized EBITDA less interest expense on the credit facilities, less distributions on exchangeable partnership units, less net current income tax expense (after foreign tax credit on US withholding taxes paid), plus interest income. The calculation has been revised as management believes the updated calculation provides a more representative view of the distributable cash generated by DIV. Under the previous calculation method, distributable cash was previously reported by DIV in Q3 2025 as $13,065 compared to $12,699 for Q3 2025 under the current form of the calculation and $39,606 for the nine months ended September 30, 2025, compared to $36,051 under the current from of the calculation.
“Distributable cash per share” and “payout ratio” are non-IFRS ratios that do not have standardized meanings prescribed by IFRS, and therefore may not be comparable to similar ratios presented by other issuers. Distributable cash per share is defined as distributable cash, a non-IFRS measure, divided by the weighted average number of common shares outstanding during the period. Under the previous calculation method for distributable cash, distributable cash per share was previously reported by DIV in Q3 2025 as $0.0770, compared to $0.0748 per share under the current form of the calculation and $0.2190 for the nine months ended September 30, 2025, compared to $0.2139 per share under the current form of the calculation. The Corporation’s method of calculating distributable cash per share may differ from that of other issuers and companies and, accordingly, distributable cash per share may not be comparable to similar measures used by other issuers or companies. The payout ratio is calculated by dividing the dividends per share during the period by the distributable cash per share, a non-IFRS measure, generated in that period. Under the previous calculation method for distributable cash, payout ratio was previously reported DIV in Q3 2025 as 89.3% compared to 91.9% under the current form of the calculation and 88.5% for the nine months ended September 30, 2025 compared to 90.6% under the current form of the calculation. The Corporation’s method of calculating the payout ratio may differ from that of other issuers and companies and, accordingly, the payout ratio may not be comparable to similar measures used by other issuers or companies. For further details, refer to the subsection entitled “Non-IFRS Ratios” under “Description of Non-IFRS Financial Measures, Non-IFRS Ratios and Supplementary Financial Measures” in the Corporation’s management’s discussion and analysis for the three and nine months ended September 30, 2026, a copy of which is available on SEDAR+ at www.sedarplus.ca.
“Weighted average organic royalty growth” is the same store sales growth percentage related to Oxford and Mr. Mikes plus the average increase in adjusted royalty income from AIR MILES®, Sutton (refer to section “Sutton” above), Nurse Next Door, BarBurrito, Stratus, and Cheba Hut over the prior comparable period taking into account the percentage weighting of each royalty partner’s adjusted royalty income in proportion of the total adjusted royalty income for the period. Weighted average organic royalty growth is a supplementary financial measure and does not have a standardized meaning prescribed by IFRS. However, the Corporation believes that weighted average organic royalty growth is a useful measure as it provides investors with an indication of the change in year-over-year growth of each royalty partner, taking into account the percentage weighting of royalty partner’s growth in proportion of total growth, as applicable. The Corporation’s method of calculating weighted average organic royalty growth may differ from those of other issuers or companies and, accordingly, weighted average organic royalty growth may not be comparable to similar measures used by other issuers or companies.
“Same store sales growth” or “SSSG” and “system sales” are supplementary financial measures and do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Prior to the acquisition of the Mr. Lube + Tires franchisor business, DIV reported SSSG solely in respect of the Mr. Lube + Tires franchise locations included in the Mr. Lube + Tires royalty pool. Current and prior period SSSG figures included in this news release are for the entire Mr. Lube + Tires franchisor business; accordingly, such figures will not be directly comparable DIV’s previously reported SSSG figures for prior periods. SSSG and system sales figures are reported to DIV by its Royalty Partners and Mr. Lube LP – see “Third Party Information”. For further details, refer to the subsection entitled “Supplementary Financial Measures” under “Description of Non-IFRS Financial Measures, Non-IFRS Ratios and Supplementary Financial Measures” in the Corporation’s management’s discussion and analysis for the three and nine months ended September 30, 2026, a copy of which is available on SEDAR+ at www.sedarplus.ca.
Third Party Information
This news release includes information obtained from third party company filings and reports and other publicly available sources as well as financial statements and other reports provided to DIV by its royalty partners and Mr. Lube LP. Although DIV believes these sources to be generally reliable, such information cannot be verified with complete certainty. Accordingly, the accuracy and completeness of this information is not guaranteed. DIV has not independently verified any of the information from third party sources referred to in this news release nor ascertained the underlying assumptions relied upon by such sources.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.
Additional Information
The information in this news release should be read in conjunction with DIV’s consolidated financial statements and management’s discussion and analysis (“MD&A”) for the three and nine months ended September 30, 2026, which are available on SEDAR+ at www.sedarplus.ca.
Additional information relating to the Corporation and other public filings, is available on SEDAR+ at www.sedarplus.ca.
Contact:
Sean Morrison, Chief Executive Officer and Director
Diversified Royalty Corp.
(236) 521-8470
Greg Gutmanis, President and Chief Financial Officer
Diversified Royalty Corp.
(236) 521-8471
