Diversified Royalty Corp. Reports Q3 2023 Financial Results
Diversified Royalty Corp. (DIV) is pleased to announce its financial results for the third quarter of fiscal year 2023, ending September 30, 2023. The highlights of the results include a 16.9% increase in revenue to $13.6 million compared to the same period in 2022. Adjusted revenue also saw a 15.5% growth to $14.9 million. The weighted average organic royalty growth was 6.8% for the quarter, and distributable cash increased by 14.8% to $9.1 million. DIV closed a trademark acquisition and royalty agreement with BarBurrito Restaurants Inc. and amended the terms of the Acquisition Facility, providing more financial flexibility.
In terms of royalty partner business updates, Mr. Lube + Tires experienced strong double-digit growth with a same-store-sales growth (SSSG) of 16.4% for the quarter. Oxford Learning Centres saw a transition back to in-person tutoring, resulting in a flat SSSG after two quarters of growth. Mr. Mikes Restaurants Corporation generated positive SSSG of 3.6%. Royalty income from AIR MILES® Licenses decreased by 38% due to the completion of the AIR MILES Acquisition by BMO's affiliate Loyalty Inc. and the winddown of Sobey's exit from the AIR MILES® Rewards Program.
DIV's distributable cash increased to $9.1 million for the quarter, and the payout ratio was 94.4%. Net income for the quarter was $6.8 million. DIV remains focused on increasing cash flow per share, making accretive royalty purchases, and paying predictable monthly dividends to shareholders.
These financial results demonstrate the continued growth and success of Diversified Royalty Corp. in its diversified portfolio of royalty partners.
Implications of Diversified Royalty Corp.'s Q3 2023 Financial Results on New Businesses
The Q3 2023 financial results of Diversified Royalty Corp. (DIV) offer a promising outlook for new businesses considering a royalty-based model. The 16.9% increase in revenue and 15.5% growth in adjusted revenue reflect a strong performance, indicating the potential for substantial financial growth in royalty-based businesses.
Key Takeaways for New Businesses
The successful trademark acquisition and royalty agreement with BarBurrito Restaurants Inc. and the amendment of the Acquisition Facility terms demonstrate the strategic moves that can provide more financial flexibility. This is an essential lesson for new businesses, showcasing the importance of strategic partnerships and financial agility.
Impact of Royalty Partner Business Updates
The strong double-digit growth of Mr. Lube + Tires and the positive SSSG of Mr. Mikes Restaurants Corporation highlight the potential for success in the royalty-based model. However, the decrease in royalty income from AIR MILES® Licenses serves as a cautionary tale, emphasizing the need for diversification and adaptability in business strategies.
In conclusion, DIV's Q3 2023 results offer valuable insights for new businesses, illustrating the potential benefits and challenges of a royalty-based model. By learning from DIV's strategic moves and diversified portfolio, new businesses can better position themselves for success.