Diversified Royalty Corp. Announces Preliminary Q2 2018 Results for Mr. Lube, AIR MILES and Sutton

For Immediate Release – not for distribution to US news wire services or for US dissemination.

Vancouver, BC, July 19, 2018 – Diversified Royalty Corp. (TSX:DIV) (TSX:DIV.DB) (the “Corporation” or “DIV”) is pleased to announce preliminary results for Mr. Lube, AIR MILES® and Sutton for the three months ended June 30, 2018 (“Q2 2018”).

Mr. Lube Second Quarter Results

Mr. Lube Canada Limited Partnership (“Mr. Lube”) generated same-store-sales-growth (“SSSG”) of 3.2% for the Mr. Lube stores in the royalty pool for Q2 2018, compared to SSSG of 5.5% for the three months ended June 30, 2017 (“Q2 2017”). Mr. Lube generated SSSG of 3.8% for the six months ended June 30, 2018 compared to SSSG of 3.5% for the six months ended June 30, 2017. Mr. Lube’s SSSG was driven by continued strong store-level execution and expansion of the tire business.

DIV expects to report that aggregate royalty income and management fees of $3.8 million were generated from Mr. Lube in Q2 2018, an increase of $0.3 million from Q2 2017.

AIR MILES® Second Quarter Results

Alliance Data Systems Inc. (“ADS”) issued a news release earlier today announcing that AIR MILES® reward miles issued increased by 2% in Q2 2018, the first quarter of growth after six quarters of declines. In addition, ADS is forecasting that AIR MILES® reward miles issued will move solidly into growth mode for the remainder of 2018, with 3% growth forecasted for the third quarter of 2018 and 4% for the fourth quarter of 2018.

ADS has made two major announcements regarding the AIR MILES® program in the last six weeks. ADS announced in its news release dated June 5, 2018 that sponsor visits per collector and active collector-sponsor engagement have shown improvement. Recent AIR MILES® promotional activities include Sobey’s BLUE FRIDAY Bonus Miles offers and AIR MILES national MEGA MILES® promotion. In addition, Bank of Montreal (“BMO”) has introduced an accelerated earn out offer to holders of BMO’s most popular Mastercard – the BMO® AIR MILES® Mastercard® with no annual fee. The new benefit gives cardholders twice the AIR MILES for every $20 spent at participating AIR MILES® sponsors across Canada. ADS also announced in its news release dated July 11, 2018 that TELUS Corporation (“TELUS”) has entered into an agreement to issue AIR MILES® reward miles to consumer and business customers at its corporate stores throughout Canada. TELUS is one of Canada’s most recognized telecommunications brands and is an exciting addition to the coalition of more than 200 brand names in the AIR MILES program.

DIV expects to report that royalty income of $2.0 million was generated from the AIR MILES® licenses in Q2 2018.

Sutton Second Quarter Results

The unaudited Q2 2018 results for Sutton Group Realty Services Ltd. (“Sutton”) were in line with expectations.

DIV expects to report that royalty income and management fees of $1.0 million were generated from Sutton in Q2 2018, representing a 2% increase over Q2 2017.

Second Quarter Commentary

Sean Morrison, President and Chief Executive Officer of DIV stated, “Mr. Lube continues to deliver strong operating results, while Sutton is performing as expected. We are encouraged by the positive trends in the engagement of sponsors and collectors in the AIR MILES® program, the increased engagement by the program’s two largest customers Sobey’s and BMO and the addition of TELUS, one of Canada’s largest companies, which further validates AIR MILES® as the leading loyalty program in Canada.”

The financial information contained in this news release is preliminary, is based upon the estimates and assumptions of the respective management of DIV, Mr. Lube and Sutton, as applicable, has not yet been approved by their respective Audit Committees or Boards of Directors, and has not been subject to a review by their respective auditors. The final Q2 2018 financial results could differ materially from the above preliminary financial information. As previously announced, DIV expects to release its financial statements for Q2 2018 on August 9, 2018 at which time DIV also expects to file the financial statements of Mr. Lube for the three and six months ended June 30, 2018.

About Diversified Royalty Corp.

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’s objective is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors.

DIV currently owns the Sutton, Mr. Lube and AIR MILES® trademarks in Canada. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada with over 200 offices across Canada. Mr. Lube is the leading quick lube service business in Canada with 172 locations across Canada and over $225 million of annual system sales. AIR MILES® is Canada’s largest coalition loyalty program with over 200 leading brand-name sponsors; approximately two-thirds of Canadian households actively participate in the AIR MILES® Program.

DIV expects to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. DIV expects to pay a predictable and stable dividend to shareholders and increase the dividend as cash flow per share increases allow.

Forward Looking Statements

Certain statements contained in this news release may constitute forward-looking statements which 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 statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “intend”, “may”, “will”, ”project”, “should”, “believe”, “confident”, “plan” and “intends” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Specifically, forward-looking statements in this news release include, but are not limited to, statements made in relation to: the amount and timing of the March 2018 dividend to be paid to DIV’s shareholders; DIV’s ability to pay a predictable and stable dividend 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 in such forward-looking statements. DIV believes that the expectations reflected in these forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct. In particular there can be no assurance that: DIV will be able to make monthly dividend payments to the holders of its common shares; or DIV will achieve any of its corporate objectives. Given these uncertainties, readers are cautioned that forward-looking statements included in this news release are not guarantees of future performance, and such forward-looking statements should not be unduly relied upon. More information about the risks and uncertainties affecting DIV’s business and the businesses of its royalty partners can be found in the “Risk Factors” section of its Annual Information Form dated March 28, 2017 and the “Risk Factors” section of its Final Short Form Prospectus dated October 30, 2017, which are available under DIV’s profile on SEDAR at www.sedar.com.

In formulating the forward-looking statements contained herein, management has assumed that business and economic conditions affecting DIV and its royalty partners will continue substantially in the ordinary course, including without limitation with respect to general industry conditions, general levels of economic activity and regulations. These assumptions, although considered reasonable by management at the time of preparation, may prove to be incorrect.

All of the forward-looking statements made in this news release are 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 they will have the expected consequences to, or effects on, DIV. The forward-looking statements are 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.


Additional Information

Additional information relating to the Corporation and other public filings, is available on SEDAR at www.sedar.com.

Sean Morrison, President and Chief Executive Officer
Diversified Royalty Corp.
(604) 235-3146

Greg Gutmanis, Chief Financial Officer and VP Acquisitions
Diversified Royalty Corp.
(604) 235-3146