Diversified Royalty Corp. · TSX:DIV
Diversified Royalty — Merger or Acquisition (June 2025)
19 slides from Diversified Royalty's merger presentation, Jun 18, 2025
Slide 1: Cheba Hut Trademark Acquisition and Royalty, Dividend Increase, Acquisition Facility Expansion
Cheba Hut “Toasted” Subs Trademark Acquisition and Royalty Dividend Increase Acquisition Facility Expansion June 18, 2025
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 the “Corporation”) or any other entity and it is not soliciting an offer to buy any such securities. T
Slide 3: Non-IFRS Measures
Non-IFRS Measures Management believes that disclosing certain non-IFRS financial measures, non-IFRS ratios and supplementary financial measures provides readers with important information regarding the DIV’s financial performance and its ability to pay dividends and the performance of its royalty pa
Slide 4: Executive Summary
Executive Summary Cheba Hut, founded in 1998, is a 77-location fast casual toasted submarine sandwich franchise, with ~US$174M of run-rate system sales1 Cheba Hut is an excellent royalty partner for DIV: Proven business model: operating in 19 states, with strong historical growth, 11 newly ope
Slide 5: Cheba Hut – Store Level Economics
Cheba Hut – Store Level Economics The cost to build out a new Cheba Hut location, including initial franchise fee, is ~US$850,000 Cheba Hut’s average location generates revenue of ~US$2.4 million with an estimated 10% to 12% store level EBITDA1 margin (~US$275,000), resulting in a ~3- year payba
Slide 6: SSSG
SSSG Cheba Hut’s SSSG1 has been positive each of the past three fiscal years and its Q1 2025 SSSG1 was 4.1% SSSG over this period was a combination of increased foot traffic and menu price increases SSSG % 4.1% 5.0% Q1 2025 SSSG% 2024 18.2% 2023 2022 13.2% 0% 5% 10% 15% 20% 6 1) SSSG is a supple
Slide 7: System Sales Growth
System Sales Growth Cheba Hut’s system sales1 have grown from ~US$65 million in 2021 to ~US$149 million in 2024, representing a 32% CAGR: System Sales $160 Millions $140 $120 $100 $80 $60 $40 $20 $0 2021 2022 2023 2024 7 1) System sales is a supplementary financial measure. See “Non-IFRS Measures”
Slide 8: New Units Pipeline
New Units Pipeline Cheba Hut currently has 8 locations under construction, 20 franchisees are actively searching for real estate, and 53 franchise agreements have been signed Cheba Hut expects to open 11 new franchise locations in 2025 and 16-18 new locations per year in 2026 and 2027 Cheba Hut
Slide 9: Cheba Hut – Menu
Cheba Hut – Menu Cheba Hut showcases over 30 signature sub sandwiches highlighting the harmony between great tasting food and … well, a very specific counter-culture1 1 For clarity, no THC products are sold at any Cheba Hut location 9 (TSX: DIV)
Slide 10: Cheba Hut – Competitive Advantage
Cheba Hut – Competitive Advantage Cheba Hut management believes its competitive advantage is based on an overall business model focused on quality and authenticity: Unique cannabis-themed concept (unique in the space) Laid-back sandwich-shop chain that is family-friendly and known for niche, v
Slide 11: Cheba Hut – Management
Cheba Hut – Management Scott Jennings – Founder Opened the first Cheba Hut location in 1998 in Tempe, Arizona Marc Torres – Chief Executive Officer From 2014 to 2020, Marc was the Chief Operating Officer, overseeing the operations at Cheba Hut and from 2005 to 2014, was store manager and fra
Slide 12: Royalty Transaction
Royalty Transaction DIV is purchasing a US$4 million (C$5.6 million) royalty from Cheba Hut at a 9x royalty acquisition multiple1 for an initial purchase price of US$36 million (C$50.4 million) The following table outlines the approximate sources and uses of funds to finance the acquisition: Sou
Slide 13: Impact to DIV
Impact to DIV Current Run Rate Pro Forma $71.3M $76.9M Adjusted Adjusted Revenue1 Revenue1 $66.8M $72.4M Normalized EBITDA1 Normalized EBITDA1 $45.5M $48.6M Distributable Cash1 Distributable Cash1 $0.2714 $0.2897 Distributable Cash Per Share1 Distributable Cash Per Share1 1) Run-rate adjusted revenu
Slide 14: Pro Forma Adjusted Portfolio Revenue %
Pro Forma Adjusted Portfolio Revenue %1 4% 5% 7% 6% 5% 43% 12% 11% 7% 1) The percentages of adjusted revenues as presented are based on pro-forma adjusted revenue. Pro-forma adjusted 14 revenue is a non-IFRS financial measure. See “Non-IFRS Measures”. (TSX: DIV)
Slide 15: Summary
Summary History of Success. Cheba Hut, founded in 1998, is a high-quality franchisor with 77 locations across 19 US states Pure Franchisor: 75 of 77 Cheba Hut locations are franchise locations Strong Store Level Economics: Cheba Hut’s average location sales of ~US$2.4 million – store level EBITDA2 o
Slide 16: Dividend Increase – Acquisition Facility Expansion
Dividend Increase – Acquisition Facility Expansion DIV’s strong balance sheet (cash on hand, under-levered existing royalty LP’s, undrawn acquisition facility) will enable it to fully fund the Cheba Hut trademark acquisition without the need to raise equity This is a game-changer for DIV as all
Slide 17: Appendix A
Appendix A The following table reconciles net income for the three months ended December 31, 2024 and March 31, 2025 to normalized EBITDA, pro‐forma normalized EBITDA and run‐rate normalized EBITDA: A B =(A +B) x 2 (Cdn$000's) Q4 2024 Q1 2025 Annualized Revenues 17,032 15,639 65,342 Operating expens
Slide 18: Appendix B
Appendix B The following table reconciles net income for the three months ended December 31, 2024 and March 31, 2025 to run‐rate distributable cash and pro‐forma distributable cash and illustrates the calculation of run‐rate distributable cash per share, pro‐forma distributable cash per share, run‐r
Slide 19: Appendix C
Appendix C The following table reconciles Revenue for the three months ended December 31, 2024 and March 31, 2025 to adjusted revenue, run‐rate adjusted revenue and pro‐forma adjusted revenue: (a) (b) =(a+b) x 2 (Cdn$000's) Q4 2024 Q1 2025 Annualized Revenue 17,032 15,639 65,342 DIV Royalty Entitlem
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