Q2 2022 Highlights
- Revenue of
$11.1 million in Q2 2022 (DIV’s strongest revenue quarter since adopting its multi-royalty strategy in 2013) and$20.8 million for the six months endedJune 30, 2022 , up 20.8% compared to the three months endedJune 30, 2021 (“Q2 2021”) and 24.1% compared to the six months endedJune 30, 2021 . - Adjusted revenue1 of
$12.3 million in Q2 2022 and$23.3 million for the six months endedJune 30, 2022 , up 18.6% and 21.3%, respectively, compared to the same periods in 2021. - Distributable cash1 of
$7.9 million in Q2 2022 and$15.1 million for the six months endedJune 30, 2022 , up 16.7% and 19.3%, respectively, compared to the same periods in 2021. - Payout ratio1 of 86.1% in Q2 2022 and 89.7% for the six months ended
June 30, 2022 , based on dividends of$0.22 per share on an annualized basis, an improvement compared to 89.9% and 96.0%, respectively, compared to the same periods in 2021, based on dividends of$0.20 per share on an annualized basis2.
Second Quarter and Year-to-Date Results
Three months ended | Six months ended | |||||||||||
(000’s) | 2022 | 2021 | 2022 | 2021 | ||||||||
$ | 6,165 | $ | 4,753 | $ | 10,974 | $ | 8,383 | |||||
AIR MILES® | 1,791 | 1,623 | 3,321 | 3,148 | ||||||||
1,053 | 1,033 | 2,106 | 2,066 | |||||||||
Oxford1 | 1,135 | 923 | 2,165 | 1,829 | ||||||||
916 | 823 | 2,216 | 1,320 | |||||||||
Nurse Next Door | 1,273 | 1,246 | 2,545 | 2,492 | ||||||||
Adjusted revenue2 | $ | 12,333 | $ | 10,401 | $ | 23,327 | $ | 19,238 |
1) For the six months ended
2) Adjusted revenue is a non-IFRS financial measure and as such, does not have a standardized meaning under IFRS. For additional information, refer to “Non-IFRS Financial Measures” in this news release.
In Q2 2022, DIV generated
- Adjusted revenue, distributable cash and DIV Royalty Entitlement are non-IFRS financial measures and payout ratio is a non-IFRS ratio, and as such, do not have a standardized meaning under IFRS. For additional information, refer to “Non-IFRS Measures” in this news release.
- On a pro forma basis, if the dividends for the three and six months ended
June 30, 2021 were paid out on an annualized basis of$0.22 per share, the payout ratio would have been 98.8% and 105.6%, respectively.
For the six months ended
Royalty Partner Business Updates
3. Same-store-sales growth or SSSG is a non-IFRS financial measure – see “Non-IFRS Measures” below.
AIR MILES®: Loyalty Ventures Inc. (“Loyalty Ventures”), the parent company of
Loyalty Ventures also announced that during the second quarter of 2022, AIR MILES® sponsor
Oxford: Oxford locations in the Oxford royalty pool generated SSSG (on a constant currency basis) of 21.4% in Q2 2022 and 17.8% for the six months ended
4. Systems sales is a supplementary financial measure – see “Non-IFRS Measures” below.
For the three and six months ended
Nurse Next Door: The royalty entitlement to DIV (the “DIV Royalty Entitlement5”) from Nurse Next Door was
5. DIV Royalty Entitlement is a non-IFRS measure – see “Non-IFRS Financial Measures” below.
Second Quarter Commentary
Distributable Cash and Dividends Declared
In Q2 2022 and for the six months ended
In Q2 2022 and for the six months ended
6. Distributable cash per share is a non-IFRS ratio and as such, does not have a standardized meaning under IFRS. For additional information, refer to “Non-IFRS Financial Measures” in this news release.
Net Income
Net income for Q2 2022 and the six months ended
About
DIV is a multi-royalty corporation, engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in
DIV currently owns the Mr. Lube, AIR MILES®,
DIV’s objective is to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. 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” 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. 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, although not all forward-looking information contains these identifying words. Specifically, forward-looking information in this news release includes, but is not limited to, statements made in relation to: the ability of AIR MILES® to expand AIR MILES® issuances into adjacent verticals, including mass merchants, convenience stores, dollar stores and other retailers that were previously precluded by the terms of the Sobeys’ contract; 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. DIV believes that the expectations reflected in the forward-looking information 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; DIV’s royalty partners may request further royalty relief; Loyalty Ventures may not be able to replace the
In formulating the forward-looking information contained herein, management has assumed that DIV will generate sufficient cash flows from its royalties 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; the impacts of COVID-19 on DIV and its royalty partners (including their respective franchisees) will be consistent with DIV’s expectations and the expectations of management of each of its
All of the forward-looking information 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 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 provides readers with important information regarding the Corporation’s financial performance and its ability to pay dividends and the performance of its royalty partners. 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 and its royalty partners 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 cash flows from operating activities as determined in accordance with IFRS.
“Adjusted revenue”, “DIV Royalty Entitlement” and “distributable cash” are used as non-IFRS financial measures in this news release.
Adjusted revenue is calculated as royalty income plus DIV Royalty Entitlement and management fees. The following table reconciles adjusted revenue to royalty income, the most directly comparable IFRS measure disclosed in the financial statements:
Three months ended | Six months ended | |||||||||||
(000's) | 2022 | 2021 | 2022 | 2021 | ||||||||
$ | 6,109 | $ | 4,698 | $ | 10,862 | $ | 8,273 | |||||
AIR MILES® | 1,791 | 1,623 | 3,321 | 3,148 | ||||||||
1,026 | 1,006 | 2,052 | 2,012 | |||||||||
Oxford | 1,125 | 913 | 2,145 | 1,809 | ||||||||
912 | 823 | 2,191 | 1,320 | |||||||||
Royalty income | $ | 10,963 | $ | 9,063 | $ | 20,571 | $ | 16,562 | ||||
DIV Royalty Entitlement | 1,253 | 1,227 | 2,505 | 2,454 | ||||||||
Adjusted royalty income | $ | 12,216 | $ | 10,290 | $ | 23,076 | $ | 19,016 | ||||
Management fees | 117 | 111 | 251 | 222 | ||||||||
Adjusted revenue | $ | 12,333 | $ | 10,401 | $ | 23,327 | $ | 19,238 |
1) 2022 figure includes a one-time
For further details, refer to the section on Non-IFRS Financial Measures entitled “DIV Royalty Entitlement, Adjusted Royalty Income and Adjusted Revenue” in the Corporation’s management’s discussion and analysis for the three and six months ended
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
Three months ended | Six months ended | |||||||||||
(000's) | 2022 | 2021 | 2022 | 2021 | ||||||||
Distributions received from | $ | 1,240 | $ | 1,222 | $ | 2,486 | $ | 2,444 | ||||
Add: | 13 | 5 | 19 | 10 | ||||||||
DIV Royalty Entitlement | 1,253 | 1,227 | 2,505 | 2,454 | ||||||||
Less: | (13 | ) | (5 | ) | (19 | ) | (10 | ) | ||||
DIV Royalty Entitlement, net of | $ | 1,240 | $ | 1,222 | $ | 2,486 | $ | 2,444 |
For further details, refer to the section on Non-IFRS Financial Measures entitled “DIV Royalty Entitlement net of NND Royalties LP Expenses” in the Corporation’s management’s discussion and analysis for the three and six months ended
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 | Six months ended | ||||||||||||
(000's) | 2022 | 2021 | 2022 | 2021 | |||||||||
Cash flows generated from operating activities | $ | 4,620 | $ | 4,770 | $ | 10,965 | $ | 10,866 | |||||
Changes in working capital | 1,864 | 1,512 | 2,671 | 1,609 | |||||||||
Current tax expense | (1,433 | ) | (892 | ) | (2,554 | ) | (1,567 | ) | |||||
Taxes paid | 1,949 | 530 | 3,910 | 1,657 | |||||||||
Interest on | 168 | - | 168 | - | |||||||||
Accrued interest on convertible debentures | 763 | 755 | - | - | |||||||||
Foreign exchange loss | (3 | ) | 6 | (2 | ) | 3 | |||||||
Transaction costs | - | 96 | - | 96 | |||||||||
Payment of lease obligations | (26 | ) | (8 | ) | (52 | ) | (8 | ) | |||||
Accrued DIV Royalty Entitlement, net of distributions | 13 | 10 | 19 | 14 | |||||||||
(13 | ) | (5 | ) | (19 | ) | (10 | ) | ||||||
Distributable cash | $ | 7,902 | $ | 6,774 | $ | 15,106 | $ | 12,660 |
For further details, refer to the section on Non-IFRS Financial Measures entitled “Distributable cash” in the Corporation’s management’s discussion and analysis for the three and six months ended
“Distributable cash per share” and “payout ratio” are non-IFRS ratios that do not have a standardized meaning 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. 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. 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 six months ended
“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. 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 six months ended
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. 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
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 six months ended
Additional information relating to the Corporation and other public filings, is available on SEDAR at www.sedar.com.
Contact:
(236) 521-8470
(236) 521-8471
Source:
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