Diversified Royalty Corp. (TSX: DIV, DIV.DB.A and DIV.DB.B) reported financial results for the three and nine months ended Sept. 30, 2026, with revenue, combined contribution and distributable cash all higher than in the comparable 2025 periods.

The Vancouver-based company reported Q3 2026 revenue of $31.5 million, up 72.7% from $18.3 million in Q3 2025. The quarter was DIV’s first full three-month period of ownership of the Mr. Lube + Tires franchisor business, acquired June 16, 2026. Revenue for the first nine months of 2026 was $70.7 million, an increase of 36.6% from the same period in 2025.

Combined contribution was $24.9 million in Q3 2026, up 27.2% from $19.6 million, and $65.5 million for the nine months, up 17.5%. Distributable cash rose 21.9% year over year to $15.5 million in Q3 and increased 12.5% to $40.6 million for the nine-month period.

Mr. Lube + Tires system sales were $126.4 million in Q3 2026, down 1.7% from $128.5 million in Q3 2025. For the nine months, system sales were $380.5 million, up 2.9% from $369.9 million. The nine-month figure includes system sales reported by Mr. Lube Canada Limited Partnership from Jan. 1 through June 15, 2026, and system sales for Mr. Lube + Tires from June 16 through Sept. 30, 2026. The royalty arrangements with Mr. Lube LP ended on June 16 following DIV’s acquisition of the franchisor business.

Weighted average organic royalty growth across DIV’s diversified royalty portfolio was 3.6% in Q3 and 3.1% for the nine months, compared with 0.6% and 1.0%, respectively, in the prior-year periods. On a consistent-currency basis, growth was 3.0% in Q3 and 3.2% for the nine months, compared with 0.3% and 0.2% in 2025.

DIV’s Q3 payout ratio — dividends expressed as a percentage of distributable cash — was 86.9%, based on dividends of $0.0716 per share, or $0.2850 annualized, compared with 91.9% based on $0.0688 per share, or $0.2750 annualized, in Q3 2025. For the nine months, the payout ratio was 93.3% based on dividends of $0.2139 per share, compared with 90.6% based on $0.1938 per share in the comparable 2025 period.

On July 6, 2026, DIV closed a bought-deal offering of 12,339,500 common shares, including 1,609,500 shares issued through the full exercise of the over-allotment option, at $4.66 per share. Gross proceeds were approximately $57.5 million. On July 7, DIV used part of the net proceeds to repay the full $38.5 million principal balance on its Acquisition Facility.

Sean Morrison, DIV’s chief executive officer, said the acquisition made Mr. Lube + Tires the company’s first controlled operating franchisor business and shifted DIV’s primary exposure from same-store sales growth, which directly affects royalties, to system sales, which primarily affect adjusted EBITDA.

Morrison said the 1.7% decline in Q3 system sales reflected a challenging automotive environment. Inflation in fuel and other vehicle operating costs has reduced kilometres driven and demand for oil changes and maintenance services. Mr. Lube + Tires remained on track, according to the company, to open 18 locations in 2026 and achieve the previously disclosed estimate of $58.7 million in adjusted EBITDA contribution during the 12 months following the acquisition. The business budgeted 16 new locations for 2027 and was considering bolt-on acquisitions.

DIV completed the acquisition on June 16. During the first nine months of 2026, the Mr. Lube + Tires franchisor business contributed $15.1 million in royalty income and management fees before the acquisition and $15.6 million in adjusted EBITDA after the acquisition, for a total contribution of $30.7 million. That compared with $24.84 million of royalty income and management fees under the prior arrangements with Mr. Lube LP, an increase of 23.7%.

Mr. Lube + Tires reported negative same-store-sales growth of 5.1% in Q3 2026, compared with growth of 11.2% in Q3 2025. System sales growth from new locations partially offset the decline. The company said gasoline prices had increased by more than 20% year over year during the prior six months, contributing to lower gasoline volumes, fewer kilometres driven and longer service intervals. A 50th-anniversary promotion from July 10 to July 12 offering 50% off basic oil changes generated significant volume, but locations focused on those services and turned away other work, reducing average ticket prices. Mr. Lube + Tires contributed $13.4 million of adjusted EBITDA to DIV in Q3. The business is seasonal, with Q4 typically its strongest quarter.

DIV’s royalty partners also contributed to the quarter. Royalty income from SBS Franchising LLC, or Stratus, a commercial-cleaning franchise, was $2.4 million, including US$1.7 million translated at an average exchange rate of $1.3995 to US$1.00. The fixed royalty increases 5% each November through and including November 2026, then 4% each November thereafter; the latest increase took effect Nov. 15, 2025, leaving one more 5% increase scheduled for November 2026 before the annual step moves to 4%.

The royalty entitlement from Nurse Next Door Professional Homecare Services Inc. was $1.4 million. That entitlement increases 2% annually, with the latest increase effective Oct. 1, 2025.

Mr. Mikes steakhouse restaurants in the royalty pool reported same-store-sales growth of 4.7%, compared with 1.0% in Q3 2025. Royalty income was $1.1 million in both periods, with the benefit of higher same-store sales partly offset by two store closures during the nine months.

Locations in the Oxford Learning Centres supplemental-education franchise reported constant-currency same-store-sales growth of 1.5%, or 1.7% after foreign-currency translation, compared with 4.4% on a constant-currency basis in Q3 2025. Royalty income was $1.1 million in both quarters.

Royalty income from AIR MILES®, a Canadian consumer loyalty program, increased to $1.0 million from $0.8 million, primarily because of the AIR MILES Amendment effective Feb. 1, 2026.

On Sept. 1, DIV and SGRS LP amended the royalty arrangement with Sutton, a Canadian real-estate brokerage franchise network, retroactively to May 1, replacing fixed payments based on the number of agents in the royalty pool with variable payments. Under the Sutton Variable Royalty, monthly payments are based on a baseline amount that changes according to the amounts Sutton collects from franchisees in the preceding month.

Weakness in the Canadian housing market reduced Sutton royalty payments and affected the timing of certain receipts. DIV recorded an additional $4.7 million impairment of intangible assets related to SGRS Rights for the quarter. SGRS LP made principal payments of $1.3 million on Sept. 1 and $0.5 million on Sept. 23 on its term loan. Sutton royalty income was $0.5 million in Q3, compared with $0.8 million in Q3 2025, which reflected the former fixed royalty net of 33% royalty relief.

BarBurrito, a quick-service Mexican restaurant chain, generated royalty income of $2.3 million. Nine eligible restaurants were added to the royalty pool on March 1, increasing the monthly royalty payment by $32,708, or $392,496 annualized. The royalty initially increases 4% annually each March through March 2030 and will fluctuate with gross sales beginning Jan. 1, 2031.

Cheba Hut, a U.S.-based toasted-sandwich franchise, generated royalty income of $1.8 million, including US$1.3 million translated at an average exchange rate of 1.3995 to US$1.00. On April 1, DIV purchased a US$0.9 million annualized incremental royalty from Cheba Hut for US$7.2 million. The fixed royalty otherwise increases each April by the greater of 3.5% and the U.S. Consumer Price Index plus 1.5%.

Net income was $5.5 million in Q3 2026, compared with $8.7 million in the prior-year quarter. The decrease primarily reflected higher general and administrative, interest and salaries expenses, impairment losses on SGRS Rights and AIR MILES Rights, and the 10-year fixed royalty payment period under the AIR MILES Amendment. These factors were partly offset by higher adjusted combined contribution, fair-value adjustments on financial instruments and lower other finance costs.

DIV said its non-IFRS measures, including adjusted royalty income, adjusted royalty partner revenue, combined contribution, Mr. Lube + Tires adjusted EBITDA, DIV Royalty Entitlement and distributable cash, do not have standardized meanings under IFRS and may not be comparable with similar measures reported by other issuers. Distributable cash was revised from the previous calculation method. Under the former method, Q3 2025 distributable cash was reported as $13,065, compared with $12,699 under the current method; nine-month 2025 distributable cash was $39,606 under the former method, compared with $36,051 under the current method. The corresponding distributable cash per share was $0.0770 versus $0.0748 for Q3 2025 and $0.2190 versus $0.2139 for the nine-month period. The payout ratio was 89.3% versus 91.9% for Q3 and 88.5% versus 90.6% for the nine months.

DIV is a multi-royalty corporation that acquires top-line royalties from multi-location businesses and franchisors in North America. Through its subsidiary, Mr. Lube Canada Ltd., it also operates the Mr. Lube + Tires franchisor business in Canada. DIV owns the Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus Building Solutions, BarBurrito, Cheba Hut and AIR MILES® trademarks.

The company’s forward-looking information includes plans for 18 Mr. Lube + Tires openings in 2026, 16 openings budgeted for 2027, the previously disclosed $58.7 million adjusted EBITDA estimate, possible bolt-on acquisitions, expected royalty revenue from the BarBurrito and Cheba Hut arrangements, monthly dividends and DIV’s corporate objectives. DIV cautioned that these statements involve risks and uncertainties, including royalty-payment defaults, changes in partner performance, weakness in the Canadian housing market, further Sutton royalty relief, collection-rate declines, franchise concentration, the performance and timing of Mr. Lube + Tires expansion, unsuccessful acquisitions, and the possibility that dividends may be reduced, suspended or terminated.

The company said its assumptions include continued Sutton royalty collections, successful execution of Mr. Lube + Tires’ strategies and growth plans, store openings consistent with budgets, accretive bolt-on acquisitions, sufficient cash flow to service debt and pay dividends, required lender waivers, no material adverse changes in competition or regulation, and generally ordinary business and economic conditions. These assumptions may prove incorrect. Additional information is available in DIV’s Annual Information Form dated March 19, 2026 and its management’s discussion and analysis for the three and nine months ended Sept. 30, 2026, under DIV’s profile on SEDAR+ at www.sedarplus.ca.

DIV stated that third-party information in the release came from company filings, public sources, financial statements and reports supplied by royalty partners and Mr. Lube LP. The company has not independently verified that information or its underlying assumptions. The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the release.

Source: Diversified Royalty Corp. news release, GlobeNewswire: https://www.globenewswire.com/news-release/2026/11/07/3397929/0/en/diversified-royalty-corp-announces-third-quarter-2026-results.html