Diversified Royalty (DIV) Q2 2024 earnings summary

Executive summary

• Achieved record adjusted revenue of $18.1 million in Q2 2024, the highest in company history, and $34.5 million for the six months ended June 30, 2024.

• Weighted average organic royalty growth was 4.4% in Q2 2024 and 5.0% for the six months, down from 10.3% and 10.5% in the prior year periods.

• Distributable cash rose to $11.6 million in Q2 2024, up 19.0% year-over-year, and $21.2 million for the six months, up 13.9%.

• Net income for Q2 2024 was $8.2 million, down from $9.1 million in Q2 2023, mainly due to higher expenses despite higher revenues.

• Sherry McNeil was elected to the Board of Directors, expanding the board to six members.

Financial highlights

• Q2 2024 revenue was $16.8 million, up 18.6% year-over-year; six-month revenue was $31.9 million, up 20.3%.

• Adjusted revenue grew 17.2% in Q2 2024 and 18.7% for the six months compared to 2023.

• Payout ratio was 88.6% in Q2 2024 (dividends of $0.0625/share), up from 87.5% in Q2 2023.

• Distributable cash per share increased to $0.0705 in Q2 2024 from $0.0686 in Q2 2023.

Outlook and guidance

• Management remains optimistic about growth opportunities for Mr. Mikes and Oxford, despite recent declines.

• AIR MILES® program enhancements are expected to improve rewards for BMO AIR MILES® credit card holders.

• The company intends to continue stable monthly dividends and pursue accretive royalty acquisitions.