Diversified Royalty Corp. · TSX:DIV
Diversified Royalty — Investor Presentation (September 2020)
19 slides from Diversified Royalty's investor presentation, Sep 14, 2020
Slide 1: Sep 14, 2020 Investor Presentation
SEP 14, 2020 INVESTOR PRESENTATION
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER Notice The contents of this presentation are for information purposes only. This presentation does not constitute an offer to sell securities of Diversified Royalty Corp. (“DIV”) or any other entity and it is not soliciting an offer to buy any such securities. This presentation is n
Slide 3: Non-IFRS Measures
NON-IFRS MEASURES This presentation makes reference to certain non-IFRS financial measures. These non-IFRS financial measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by oth
Slide 4: Overview
OVERVIEW Diversified Royalty Corp (“DIV”) is in the business of acquiring a diversified portfolio of trademarks and collecting top-line royalties from high quality businesses and franchisors in North America DIV’s objective is to acquire predictable, growing royalty streams from a diverse group of m
Slide 5: Target Royalty Partner Attributes
TARGET ROYALTY PARTNER ATTRIBUTES Multi-location business/franchisor – stable annuity-like revenue streams Robust store level economics Highly profitable – strong profit margin and EBITDA(1) History of positive SSSG(1) Strong new store growth prospects Amongst the market leaders in its category Long
Slide 6: Building a Diversified Royalty Pool
BUILDING A DIVERSIFIED ROYALTY POOL Pre-COVID Adjusted 10% 10% 40% 18% 12% 10% Revenue Run-Rate Adjusted 9% 11% 44% 18% 13% 5% Revenue Expanding across diverse and attractive industries 6 1) The percentages presented above are based on pre-COVID adjusted revenue and run-rate adjusted revenue, both o
Slide 7: Business Model
BUSINESS MODEL DIV’s business model is simple – we buy trademarks, collect royalties and payout distributable cash(1) in the form of dividends to shareholders Acquisitions High quality multi-location and franchisor businesses Dividend Growth SSSG(1) and accretive acquisitions Diversification Reduces
Slide 8: Historical Timeline
HISTORICAL TIMELINE $5.00 COVID-19 declared a Management pandemic $4.50 was hired to transform the business $4.00 $3.50 (sold) $3.00 $2.50 Share Price Increased $2.00 annual dividend to $0.23 $1.50 $1.00 Implemented Increased Increased Increased Decreased annual annual annual annual annual $0.50 div
Slide 9: Mr. Lube
MR. LUBE Overview Canada’s largest quick lube brand – 44 year operating history Market leader in the quick lube service industry in Canada 20th straight year of positive SSSG in 2019 8 new stores opened in 2019 and 3 stores opened in 2020 with more stores in the pipeline Tire business continues to g
Slide 10: AIR MILES
AIR MILES Overview AIR MILES has been operating in Canada since 1992: • The largest coalition loyalty program in Canada • ~11M members (67% of Canadian households) The AIR MILES program is operated by LoyaltyOne, a division of Alliance Data Systems Corp (NYSE: ADS); according to ADS, LoyaltyOne has
Slide 11: Nurse Next Door
NURSE NEXT DOOR Overview Nurse Next Door offers senior home care services such as companionship, home nursing care, and around-the-clock care NND has an award winning management team focused on building culture, brand and success Favourable demographic trends – in Canada, the number of seniors in th
Slide 12: Mr. Mikes
MR. MIKES Overview Mr. Mikes operates casual steakhouse restaurants primarily in Western Canadian communities Reinvigorated by one of Canada’s most experienced restaurant management teams in the past 14 years Opened 22 new locations over the past five years Mr. Mikes is required to pay DIV an annual
Slide 13: Sutton
SUTTON Overview Sutton Realty Corp is among the leading brands in the Canadian residential real estate marketplace and has been in business since 1983 100% of Sutton’s revenues are from franchise fees Strong EBITDA margin Negligible maintenance capital expenditures Sutton paid DIV an annual royalty
Slide 14: Oxford
OXFORD Overview Oxford Learning Centres Ltd (“Oxford”) is one of Canada’s leading franchise supplemental education businesses Oxford’s proprietary cognitive learning methodology improves educational outcomes by focusing on teaching students ‘how to think’ rather than ‘what to think’ Positive industr
Slide 15: Financial Metrics
FINANCIAL METRICS Pre-COVID(1) Q2 2020 Annualized(2) Run-Rate(3) Mr. Lube $16.6M $14.3M $16.5M AIR MILES $7.8M $6.1M $6.7M Nurse Next Door $4.9M $4.9M $4.9M Operating Sutton $4.0M $2.0M $4.1M Metrics Oxford $4.3M $2.7M $3.3M Mr. Mikes $4.0M $-M $2.0M Adjusted Revenue(4) $41.6M $30.0M $37.6M Normaliz
Slide 16: Summary
SUMMARY COVID-19 has been challenging for all of DIV’s royalty partners. However, as certain provinces have started easing restrictions put in place to fight COVID-19, we are starting to see encouraging trends in the performance of all our royalty partners. DIV’s run-rate payout ratio(1) is currentl
Slide 17: Corporate Profile
CORPORATE PROFILE Dividend (Monthly / Annually) $0.01667 / $0.20 Corporate Number of Employees 3 Summary Sean Morrison, CEO 604-235-3146 Contact Information Greg Gutmanis, CFO 604-235-3146 Ticker Symbol TSX: DIV Average Daily Volume 200,000 Market Shares Outstanding 120,868,436 Summary Share Price(1
Slide 18: Appendix A
APPENDIX A The following table reconciles Normalized EBITDA for the three months ended June 30, 2020 to Run-Rate Normalized EBITDA: (000s) Q2 2020 Annualized Revenues $ 6,294 $ 25,176 Operating expenses (1,117) (4,468) Finance costs, net (857) (3,428) Income before income taxes 4,320 17,280 Income t
Slide 19: Appendix B
APPENDIX B The following table reconciles Distributable Cash for the three months ended June 30, 2020 to Run-Rate Distributable Cash: (000s) Q2 2020 Annualized Normalized EBITDA(1) $ 6,767 $ 27,068 Less: interest expense on credit facilities (1,749) (6,996) Less: distributions on LP units - - Add: i
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