Diversified Royalty (DIV) Q3 2024 earnings summary

Executive summary

• Revenue grew 18.3% year-over-year to $16.1 million in Q3 2024, with adjusted revenue up 16.9% to $17.4 million, driven by new royalty streams and positive same-store sales growth (SSSG) at key partners.

• Distributable cash increased 20.5% year-over-year to $11.0 million in Q3 2024, with a payout ratio of 94.1% on dividends of $0.0625 per share.

• Net income for Q3 2024 was $6.9 million, up slightly from $6.8 million in Q3 2023, reflecting higher adjusted revenue and lower expenses, partially offset by increased interest and tax expenses.

• Celebrated the 10-year anniversary of its first royalty transaction, with cumulative dividends paid totaling over $2.21 per share and an annualized IRR of approximately 15.9% since December 2013.

Financial highlights

• Weighted average organic royalty growth was 4.3% in Q3 2024, down from 6.8% in Q3 2023; on a constant currency basis, growth was 4.0%.

• Adjusted revenue for the nine months ended September 30, 2024, was $51.9 million, up 18.1% year-over-year.

• Distributable cash for the nine months was $32.2 million, up 16.1% year-over-year.

• Payout ratio for the nine months was 93.0%, compared to 92.5% in the prior year period.

Outlook and guidance

• Management remains optimistic about future growth, supported by a diversified portfolio and ongoing investments by royalty partners.

• AIR MILES® is expected to benefit from continued investment under new ownership, though current royalty income remains soft.

• Mr. Mikes management is optimistic about future opportunities, including incremental location growth.