Robust Demand Across Both Segments Drove 14% Top-Line Organic Revenue Growth
Raises Fiscal 2024 Full-Year Top-Line and Profitability Outlook
Recent Highlights:
- Revenue of
$35.5 million , increased 14% organically, or 19% including acquisitions year-over-year- Music Publishing revenue rose 15% year-over-year
- Recorded Music revenue increased by 32% year-over-year
- Operating Income of
$6.5 million , increased by$1.9 million year-over-year - OIBDA (“Operating Income Before Depreciation & Amortization”) of
$12.9 million , an increase of 27% year-over-year - Net Loss of
($2.9) million , or ($0.05 ) per share, versus($4.1) million , or ($0.07 ) per share in the prior year period - Adjusted EBITDA of
$13.7 million , up 25% year-over-year - Announced publishing deals including a deal with songwriter, producer, singer, and multi-instrumentalist
Theo Katzman and the co-signing of Australian singer-songwriter grentperez with Mushroom Music - Expanded
Middle East presence through a joint publishing deal with PopArabia for the catalog and future works of Lebanese star and “Queen of Arab Pop”Nancy Ajram
Management Commentary:
“Our third quarter results highlight the strength of our business model and our ability to deploy capital to further grow our portfolio. We posted double digit revenue growth across both our Recorded and Publishing segments, notably driven by record-setting Digital consumption across genres,” said
Third Quarter Fiscal 2024 Financial Results
Summary Financials | Q3 FY24 | Q3 FY23 | Change |
Total Revenue | 19% | ||
Music Publishing Revenue | 15% | ||
Recorded Music Revenue | 32% | ||
Operating Income | 42% | ||
OIBDA | 27% | ||
Net Loss | ( | ( | (30%) |
Adjusted EBITDA | 25% | ||
(Table Notes: $ in millions; Quarters ended |
Total revenue in the third quarter of fiscal 2024 increased 19% to
Operating income in the third quarter of fiscal 2024 was
Net loss attributable to common stockholders in the third quarter of fiscal 2024 was
Third Quarter Fiscal 2024 Segment Review
Music Publishing | Q3 FY24 | Q3 FY23 | Change | ||
Revenue by Type | |||||
Digital | 30% | ||||
Performance | (3%) | ||||
Synchronization | 9% | ||||
Mechanical | (34%) | ||||
Other | (31%) | ||||
Total Revenue | 15% | ||||
Operating Income | 71% | ||||
OIBDA | 33% | ||||
(Table Notes: $ in millions; Quarters ended |
Music Publishing revenue in the third quarter of fiscal 2024 was
In the third quarter of fiscal 2024, Music Publishing OIBDA increased 33% to
Recorded Music | Q3 FY24 | Q3 FY23 | Change | ||
Revenue by Type | |||||
Digital | 26% | ||||
Physical | 51% | ||||
Neighboring Rights | 16% | ||||
Synchronization | 101% | ||||
Total Revenue | 32% | ||||
Operating Income | 43% | ||||
OIBDA | 28% | ||||
(Table Notes: $ in millions; Quarters ended |
Recorded Music revenue in the third quarter of fiscal 2024 was
In the third quarter of fiscal 2024, Recorded Music OIBDA increased 28% to
Balance Sheet and Liquidity
For the nine months ended
The decrease was primarily related to the timing of payments of accounts payable and accrued liabilities, partially offset by the timing of collections from accounts receivable.
As of
Fiscal 2024 Outlook
Reservoir raised its financial outlook range for fiscal year 2024, and expects the financial results for the year ending
Outlook | Guidance | Growth (at mid-point) | |
Revenue | 15 | % | |
Adjusted EBITDA | 17 | % |
Conference Call Information
Reservoir is hosting a conference call for analysts and investors to discuss its financial results for the third quarter for fiscal year ended
Interested parties may also participate in the call using the following registration Link. Once registered, participants will receive a dial-in number as well as a PIN to enter the event. Participants may re-register for the conference call in the event of a lost dial-in number or PIN. Shortly after the conclusion of the conference call, a replay of the audio webcast will be available in the investor relations section of Reservoir’s website for 30 days after the event.
Reservoir is an independent music company based in
Reservoir also represents a multitude of recorded music through Chrysalis Records,
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, including statements with respect to the financial condition, results of operations, earnings outlook and prospects of Reservoir. Forward-looking statements are based on the current expectations and beliefs of the management of Reservoir and are inherently subject to a number of risks, uncertainties and assumptions and their potential effects. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual financial condition, results of operations, earnings and/or prospects to be materially different from those expressed or implied by these forward-looking statements. Any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In addition, forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements in this press release may include, among others:
- expectations regarding Reservoir’s strategies and future financial performance, including its future business plans or objectives, prospective performance and opportunities and competitors, revenues, products, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures;
- Reservoir’s ability to invest in growth initiatives and pursue acquisition opportunities;
- the ability to achieve the anticipated benefits of the business combination, which may be affected by, among other things, competition and the ability of Reservoir to grow and manage growth profitably and retain its key employees;
- the inability to maintain the listing of Reservoir’s common stock on the
Nasdaq Stock Market LLC and limited liquidity and trading of Reservoir’s securities; - geopolitical risk and changes in applicable laws or regulations;
- the possibility that Reservoir may be adversely affected by other economic, business and/or competitive factors;
- risks related to the organic and inorganic growth of Reservoir’s business and the timing of expected business milestones;
- risk that the COVID-19 pandemic or other natural or human-made disasters, and local, state and federal responses to addressing the COVID-19 pandemic or other natural or human-made disasters, may have an adverse effect on Reservoir’s business operations, as well as its financial condition and results of operations; and
- litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Reservoir’s resources.
Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of Reservoir prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
Except to the extent required by applicable law or regulation, Reservoir undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events. For a more detailed discussion of risks and other factors that might impact forward-looking statements, see Reservoir’s filings with the
Condensed Consolidated Statements of Income Three and Nine Months Ended (Unaudited) (Expressed in | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||
Revenues | $ | 35,476,172 | $ | 29,931,413 | 19 | % | $ | 105,710,058 | $ | 87,475,894 | 21 | % | ||||||||||
Costs and expenses: | ||||||||||||||||||||||
Cost of revenue | 13,221,974 | 11,750,296 | 13 | % | 41,136,237 | 35,665,462 | 15 | % | ||||||||||||||
Amortization and depreciation | 6,342,918 | 5,546,301 | 14 | % | 18,613,026 | 16,292,145 | 14 | % | ||||||||||||||
Administration expenses | 9,389,344 | 8,035,758 | 17 | % | 30,148,848 | 23,031,248 | 31 | % | ||||||||||||||
Total costs and expenses | 28,954,236 | 25,332,355 | 14 | % | 89,898,111 | 74,988,855 | 20 | % | ||||||||||||||
Operating income | 6,521,936 | 4,599,058 | 42 | % | 15,811,947 | 12,487,039 | 27 | % | ||||||||||||||
Interest expense | (5,372,285 | ) | (4,098,910 | ) | (15,865,324 | ) | (10,579,788 | ) | ||||||||||||||
Loss on early extinguishment of debt | - | (914,040 | ) | - | (914,040 | ) | ||||||||||||||||
Gain (loss) on foreign exchange | 264 | 56,973 | (69,828 | ) | 337,659 | |||||||||||||||||
(Loss) gain on fair value of swaps | (4,247,523 | ) | (179,573 | ) | (1,774,045 | ) | 4,323,207 | |||||||||||||||
Other income (expense), net | (990,488 | ) | 43 | (989,952 | ) | 90 | ||||||||||||||||
(Loss) income before income taxes | (4,088,096 | ) | (536,449 | ) | (2,887,202 | ) | 5,654,167 | |||||||||||||||
Income tax (benefit) expense | (1,226,649 | ) | 3,529,984 | (872,663 | ) | 5,217,691 | ||||||||||||||||
Net (loss) income | (2,861,447 | ) | (4,066,433 | ) | (2,014,539 | ) | 436,476 | |||||||||||||||
Net income attributable to noncontrolling interests | (101,612 | ) | (340,190 | ) | (135,797 | ) | (230,127 | ) | ||||||||||||||
Net (loss) income attributable to | $ | (2,963,059 | ) | $ | (4,406,623 | ) | $ | (2,150,336 | ) | $ | 206,349 | |||||||||||
(Loss) earnings per common share: | ||||||||||||||||||||||
Basic | $ | (0.05 | ) | $ | (0.07 | ) | $ | (0.03 | ) | $ | - | |||||||||||
Diluted | $ | (0.05 | ) | $ | (0.07 | ) | $ | (0.03 | ) | $ | - | |||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||
Basic | 64,826,026 | 64,379,536 | 64,731,569 | 64,316,532 | ||||||||||||||||||
Diluted | 64,826,026 | 64,379,536 | 64,731,569 | 64,765,381 | ||||||||||||||||||
Condensed Consolidated Balance Sheets (Unaudited) (Expressed in | ||||||||
2023 | 2023 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 19,514,381 | $ | 14,902,076 | ||||
Accounts receivable | 30,583,910 | 31,255,867 | ||||||
Current portion of royalty advances | 13,726,825 | 15,188,656 | ||||||
Inventory and prepaid expenses | 6,796,410 | 5,458,522 | ||||||
Total current assets | 70,621,526 | 66,805,121 | ||||||
Intangible assets, net | 644,525,473 | 617,404,741 | ||||||
Equity method and other investments | 1,567,663 | 2,305,719 | ||||||
Royalty advances, net of current portion | 56,462,194 | 51,737,844 | ||||||
Property, plant and equipment, net | 604,449 | 568,339 | ||||||
Operating lease right of use assets, net | 7,239,846 | 7,356,312 | ||||||
Fair value of swap assets | 4,982,839 | 6,756,884 | ||||||
Other assets | 1,339,652 | 1,147,969 | ||||||
Total assets | $ | 787,343,642 | $ | 754,082,929 | ||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 7,376,882 | $ | 6,680,421 | ||||
Royalties payable | 37,403,181 | 33,235,235 | ||||||
Accrued payroll | 1,386,230 | 1,689,310 | ||||||
Deferred revenue | 1,937,650 | 2,151,889 | ||||||
Other current liabilities | 8,077,446 | 10,583,794 | ||||||
Income taxes payable | - | 204,987 | ||||||
Total current liabilities | 56,181,389 | 54,545,636 | ||||||
Secured line of credit | 342,455,820 | 311,491,581 | ||||||
Deferred income taxes | 29,878,778 | 30,525,523 | ||||||
Operating lease liabilities, net of current portion | 6,983,373 | 7,072,553 | ||||||
Other liabilities | 588,745 | 785,113 | ||||||
Total liabilities | 436,088,105 | 404,420,406 | ||||||
Contingencies and commitments | ||||||||
Shareholders' Equity | ||||||||
Preferred stock | - | - | ||||||
Common stock | 6,481 | 6,444 | ||||||
Additional paid-in capital | 340,742,579 | 338,460,789 | ||||||
Retained earnings | 12,602,384 | 14,752,720 | ||||||
Accumulated other comprehensive loss | (3,529,603 | ) | (4,855,329 | ) | ||||
349,821,841 | 348,364,624 | |||||||
Noncontrolling interest | 1,433,696 | 1,297,899 | ||||||
Total shareholders' equity | 351,255,537 | 349,662,523 | ||||||
Total liabilities and shareholders' equity | $ | 787,343,642 | $ | 754,082,929 | ||||
Supplemental Disclosures Regarding Non-GAAP Financial Measures
This press release includes certain financial information, such as OIBDA, OIBDA margin, EBITDA, Adjusted EBITDA, and Net Debt, which has not been prepared in accordance with
OIBDA
Reservoir evaluates operating performance based on several factors, including its primary financial measure of operating income before non-cash depreciation of tangible assets and non-cash amortization of intangible assets (“OIBDA”). Reservoir considers OIBDA to be an important indicator of the operational strengths and performance of its businesses and believes this non-GAAP financial measure provides useful information to investors because it removes the significant impact of amortization from Reservoir’s results of operations. However, a limitation of the use of OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in Reservoir’s businesses and other non-operating income (loss). Accordingly, OIBDA should be considered in addition to, not as a substitute for, operating income, net income attributable to us and other measures of financial performance reported in accordance with GAAP. In addition, our definition of OIBDA may differ from similarly titled measures used by other companies. OIBDA Margin is defined as OIBDA as a percentage of revenue.
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings (net income or loss) before net interest expense, income tax (benefit) expense, non-cash depreciation of tangible assets and non-cash amortization of intangible assets and is used by management to measure operating performance of the business. Adjusted EBITDA, in addition to adjusting net income to exclude income tax expense, interest expense and depreciation and amortization, further adjusts net income by excluding items or expenses such as, among others, (1) any non-cash charges (including any impairment charges and loss on early extinguishment of debt and to write-down an equity investment to its estimated fair value), (2) any net gain or loss on foreign exchange, (3) any net gain or loss resulting from interest rate swaps, (4) equity-based compensation expense and (5) certain unusual or non-recurring items.
Adjusted EBITDA is a key measure used by Reservoir’s management to understand and evaluate operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. However, certain limitations on the use of Adjusted EBITDA include, among others, (1) it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue for Reservoir’s business, (2) it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on Reservoir’s indebtedness and (3) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments. In particular, Adjusted EBITDA measure adds back certain non-cash, unusual or non-recurring charges that are deducted in calculating net income; however, these are expenses that may recur, vary greatly and are difficult to predict. In addition, Adjusted EBITDA is not the same as net income or cash flow provided by operating activities as those terms are defined by GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs.
Net Debt
Reservoir defines Net Debt as total debt, less cash and equivalents and deferred financing costs.
Reconciliation of Operating Income to OIBDA Three and Nine Months Ended (Unaudited) (Dollars in thousands) | ||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Operating Income | $ | 6,522 | $ | 4,599 | $ | 15,812 | $ | 12,487 | ||||
Amortization and Depreciation Expense | 6,343 | 5,546 | 18,613 | 16,292 | ||||||||
OIBDA | $ | 12,865 | $ | 10,145 | $ | 34,425 | $ | 28,779 | ||||
Reconciliation of Music Publishing Segment Reporting Operating Income to OIBDA Three and Nine Months Ended (Unaudited) (Dollars in thousands) | ||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Operating Income | $ | 2,834 | $ | 1,659 | $ | 5,641 | $ | 4,473 | ||||
Amortization and Depreciation Expense | 4,926 | 4,165 | 14,020 | 12,130 | ||||||||
OIBDA | $ | 7,760 | $ | 5,824 | $ | 19,661 | $ | 16,603 | ||||
Reconciliation of Recorded Music Segment Reporting Operating Income to OIBDA Three and Nine Months Ended (Unaudited) (Dollars in thousands) | ||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Operating Income | $ | 3,259 | $ | 2,278 | $ | 9,153 | $ | 7,336 | ||||
Amortization and Depreciation Expense | 1,394 | 1,359 | 4,522 | 4,096 | ||||||||
OIBDA | $ | 4,653 | $ | 3,637 | $ | 13,675 | $ | 11,432 | ||||
Reconciliation of Net Income to Adjusted EBITDA Three and Nine Months Ended (Unaudited) (Dollars in thousands) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net (Loss) Income | $ | (2,861 | ) | $ | (4,066 | ) | $ | (2,015 | ) | $ | 436 | |||||
Income Tax (Benefit) Expense | (1,227 | ) | 3,530 | (873 | ) | 5,218 | ||||||||||
Interest Expense | 5,372 | 4,099 | 15,865 | 10,580 | ||||||||||||
Amortization and Depreciation | 6,343 | 5,546 | 18,613 | 16,292 | ||||||||||||
EBITDA | 7,627 | 9,109 | 31,591 | 32,526 | ||||||||||||
Loss on Early Extinguishment of Debt(a) | - | 914 | - | 914 | ||||||||||||
(Gain) Loss on Foreign Exchange(b) | - | (57 | ) | 70 | (338 | ) | ||||||||||
Loss (Gain) on Fair Value of Swaps(c) | 4,248 | 180 | 1,774 | (4,323 | ) | |||||||||||
Non-cash Share-based Compensation(d) | 813 | 792 | 2,540 | 2,409 | ||||||||||||
Recoupable Legal Fee Write-off(e) | - | - | 2,695 | - | ||||||||||||
Other (Income) Expense, Net(f) | 990 | - | 990 | - | ||||||||||||
Adjusted EBITDA | $ | 13,678 | $ | 10,938 | $ | 39,660 | $ | 31,188 | ||||||||
- Reflects the loss on a portion of unamortized debt issuance costs in connection with the Second Amendment to the RMM Credit Agreement.
- Reflects the (gain) or loss on foreign exchange fluctuations.
- Reflects the non-cash loss or (gain) on the mark-to-market of interest rate swaps.
- Reflects non-cash share-based compensation expense related to the
Reservoir Media, Inc. 2021 Omnibus Incentive Plan. - Reflects the write-off of recoupable legal expenses and attorneys’ fees. This non-recurring item relates to the resolution of a matter, which began in 2017, that was settled through mediation requiring Reservoir to expense legal fees from prior years that the Company had previously expected to recoup, resulting in a one-time write-off of
$2,695 thousand . - Reflects non-cash impairment expense to write-down an equity investment to its estimated fair value.
Source:
Media ContactReservoir Media, Inc. Suzy Arrabito Vice President,Marketing & Communications sa@reservoir-media.com www.reservoir-media.com Investor ContactAlpha IR Group Jackie Marcus orMargaret Jones RSVR@alpha-ir.com
Source:
2024 GlobeNewswire, Inc., source