- Mr. Lube Canada Limited Partnership generated same-store-sales growth of 16.3 per cent for the Mr. Lube stores in the royalty pool for Q1 2022
- DIV expects to report royalty income of $1.5 million from AIR MILES® in Q1 2022
- DIV expects to report royalty income and management fees of $1.1 million were generated from Sutton Group Realty Services Ltd. in Q1 2022
- DIV expects to report that royalty income and management fees of $1.0 million were generated from Oxford Learning Centres, Inc. in Q1 2022
- Same-store-sales growth in Q1 2022 for the Mr. Mikes restaurants in the royalty pool was 24.6 per cent
- DIV expects to report that the royalty entitlement to DIV from Nurse Next Door Professional Homecare Services Inc. was $1.3 million in Q1 2022
- Diversified Royalty Corp. (DIV) is up 1.4 per cent on the day, trading at C$2.92 per share at 12:15 pm ET
Diversified Royalty Corp. (DIV) has provided preliminary results for its royalty partners for the three months ended March 31, 2022 (Q1 2022).
Mr. Lube first quarter results
Mr. Lube Canada Limited Partnership (“Mr. Lube”) generated same-store-sales growth of 16.3 per cent for the Mr. Lube stores in the royalty pool for Q1 2022, compared to 3.9 per cent for the three months ended March 31, 2021 (“Q1 2021”).
DIV expects to report that aggregate royalty income and management fees of $4.8 million were generated from Mr. Lube in Q1 2022, an increase of 32 per cent compared to Q1 2021. The increase was due to a variety of factors including continued growth in Mr. Lube’s maintenance services, tire services and sales carried over from the fourth quarter of 2021, the effectiveness of Mr. Lube’s targeted multimedia marketing campaigns, the addition of 13 new stores to the Mr. Lube royalty pool and the 0.5% increase to the Mr. Lube royalty rate on May 1, 2021.
AIR MILES® first quarter results
DIV expects to report royalty income of $1.5 million from AIR MILES® in Q1 2022, which is flat compared to Q1 2021. DIV’s royalty payment is derived from several AIR MILES® metrics, with AIR MILES® reward miles issued being the primary metric, and other metrics including AIR MILES® reward miles redeemed, service revenue, commissions and promotional items, all of which affect quarterly variability.
Loyalty Ventures Inc., the parent company of LoyaltyOne Co., announced that: AIR MILES® reward miles issued decreased by 4.2 per cent in Q1 2022, and AIR MILES® reward miles redeemed increased by 43.0 per cent in Q1 2022, primarily reflecting pent-up demand for travel as COVID-related restrictions abated.
Sutton first quarter results
DIV expects to report royalty income and management fees of $1.1 million were generated from Sutton Group Realty Services Ltd. in Q1 2022, compared to $1.0 million in Q1 2021. The fixed royalty payable by Sutton increases at a rate of 2.0 per cent per year, with the most recent increase effective July 1, 2021.
Oxford Learning Centres first quarter results
DIV expects to report that royalty income and management fees of $1.0 million were generated from Oxford Learning Centres, Inc. in Q1 2022, compared to $0.9 million in Q1 2021.
Oxford locations in the Oxford royalty pool generated same-store-sales growth of 14.2 per cent in Q1 2022, compared to SSSG of -19 per cent in Q1 2021. In March 2022, most Ontario government mandated COVID-19 restrictions were lifted (with Ontario being Oxford’s largest market), including most mandatory vaccination, masking requirements and distance restrictions. During the quarter, Oxford saw a transition back to in-person tutoring for many locations. March 2022 was the strongest March in Oxford’s history and is the third strongest month ever on the basis of system sales.
Mr. Mikes first quarter results
Same-store-sales growth in Q1 2022 for the Mr. Mikes restaurants in the royalty pool was 24.6 per cent compared to the prior period Q1 2021, which included stores that were temporarily closed due to the COVID-19 pandemic.
DIV expects to report that royalty income and management fees of $0.7 million were generated from Mr. Mikes in Q1 2022, compared to $0.5 million in Q1 2021. In March 2022, Mr. Mikes made a one-time payment of approximately $0.55 million to DIV and its subsidiary MRM Royalties LP representing partial payment of deferred contractual royalty fees and accrued management fees. DIV expects to record the one-time payment as revenue in the quarter.
Most Mr. Mikes locations are in BC and Alberta. In March 2022, some BC government-mandated COVID restrictions were lifted, including masking requirements in public indoor settings; however, the proof of vaccination requirements for restaurants remained in place until early April 2022. In Alberta, the proof of vaccination program ended earlier in 2022,
and the mask mandate was lifted on March 1, 2022 as part of the government’s easing of COVID-19 restrictions. As such, the management team at Mr. Mikes expects a measured return of system sales towards pre-pandemic levels.
Nurse Next Door first quarter results
DIV expects to report that the royalty entitlement to DIV (the DIV Royalty Entitlement) from Nurse Next Door Professional Homecare Services Inc. was $1.3 million in Q1 2022. The DIV Royalty Entitlement from Nurse Next Door grows at a fixed rate of 2.0 per cent per annum during the term of the license, with the most recent increase effective October 1, 2021. In Q1, 2022, Nurse Next Door signed 16 (Q1 2021 – 17) new franchises primarily in major metropolitan markets (3 in Canada, 11 in the US and 2 in Australia).
Sean Morrison, President and Chief Executive Officer of DIV commented on the results.
“We are very encouraged with the strong start to 2022. Mr. Lube, our largest royalty partner, produced continued robust results, generating SSSG of 16.3 per cent for the period ended March 31, 2022. The outlook for Mr. Lube remains strong with tire and minor maintenance services continuing to drive growth. Oxford Learning had its third-best month in its history (based on system sales), in March 2022, while dealing with COVID-19 spacing restrictions in Ontario up to March 21st. These strong results are indicative of the pent-up demand for tutoring services and Oxford’s strong outlook now that core COVID-19 restrictions in Ontario have been removed. With the recent removal of COVID-19 vaccine passports mandates in Alberta (February 2022) and in BC (early April 2022), Mr. Mikes is positioned to continue its recovery towards pre-COVID sales levels. Air Miles has stabilized, and Sutton and Nurse Next Door continue to make their fixed-growth royalty payments.”
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 currently owns the Mr. Lube, AIR MILES, Sutton, Mr. Mikes, Nurse Next Door and Oxford Learning Centres trademarks. Mr. Lube is the leading quick lube service business in Canada, with locations across Canada.
Diversified Royalty Corp. (DIV) is up 1.4 per cent on the day, trading at C$2.92 per share at 12:15 pm ET.
