Reservoir Media Announces First Quarter Fiscal 2024 Results

NEW YORK, Aug. 02, 2023 (GLOBE NEWSWIRE) -- Reservoir Media, Inc. ( RSVR) (“Reservoir” or the “Company”), an award-winning independent music company, today announced financial results for the first fiscal quarter of 2024 ended June 30, 2023.

Recent Highlights:

• Revenue of $31.8 million, increased 21% organically, or 31% including acquisitions year-over-year
  • Music Publishing revenue rose 26% year-over-year
  • Recorded Music revenue increased by 37% year-over-year
• Operating Income of $3.1 million, increased by $1.8 million year-over-year
• OIBDA (“Operating Income Before Depreciation & Amortization”) of $9.2 million, an increase of 38% year-over-year
• Net Income of $0.2 million, or $0.00 per share, flat compared to year-over-year
• Adjusted EBITDA of $10.1 million, up 36% year-over-year
• Expanded emerging markets portfolio with the addition of Saudi Arabian hip-hop label Mashrex
• Diversified the catalog with the additions of legendary R&B and pop vocal group The Spinners, multi-platinum writer-producer Willy Will Yanez, and rock artist and songwriter Greg Kihn
• Signed publishing deals with Paul Cauthen and Jonah Summerfield

Management Commentary:

“We had a very strong first quarter of fiscal 2024, which demonstrates the strength of our business model and reflects the momentum we are seeing in both Music Publishing and Recorded Music. The power of consuming music through streaming platforms globally continues to grow in size and value, and our roster of artists and creators are well-positioned to benefit from these trends,” said Golnar Khosrowshahi, Founder and Chief Executive Officer of Reservoir Media. “We continue to take a disciplined approach to capital deployment to support growth while our value enhancement teams ensure that our artists’ work is broadly consumed and successfully monetized across the music ecosystem. Looking ahead, we remain steadfast in our approach of identifying and executing on deals that provide top-line growth and margin accretion to create value for all stakeholders.”

First Quarter Fiscal 2024 Financial Results

Total revenue in the first quarter of fiscal 2024 increased 31% to $31.8 million, compared to $24.3 million in the first quarter of fiscal 2023. The increase was primarily driven by strong growth in both segments, highlighted by 37% growth in the Recorded Music segment, inclusive of the acquisitions of various catalogs.

Operating income in the first quarter of fiscal 2024 was $3.1 million compared to operating income of $1.3 million in the first quarter of fiscal 2023. OIBDA in the first quarter of fiscal 2024 increased 38% to $9.2 million, compared to $6.7 million in the prior year quarter. Adjusted EBITDA in the first quarter of fiscal 2024 increased 36% to $10.1 million, compared to $7.4 million last year. Increases in Operating Income, OIBDA and Adjusted EBITDA were primarily driven by strong revenue growth and improved operating leverage. See below for calculations and reconciliations of OIBDA and Adjusted EBITDA to operating income and net income, respectively.

Net income attributable to common stockholders in the first quarter of fiscal 2024 was $0.2 million, or $0.00 per share, compared to net income attributable to common stockholders of $0.0 million, or $0.00 per share, in the year-ago quarter. The increase in net income was primarily driven by strong top-line performance and was partially offset by higher operating expenses and interest expense.

First Quarter Fiscal 2024 Segment Review

Music Publishing revenue in the first quarter of fiscal 2024 was $20.8 million, an increase of 26% compared to $16.4 million in last year’s first quarter. Growth was driven by strong performance in Digital and Performance revenues. Strong growth in Digital revenue was largely driven by the increase in rates as the most recent period was subject to CRB IV rates, while the first quarter of fiscal 2023 was subject to CRB II rates.

In the first quarter of fiscal 2024, Music Publishing OIBDA increased 54% to $5.7 million, compared to $3.7 million in the first quarter of fiscal 2023. Music Publishing OIBDA margin in the first quarter increased from 23% to 27%. The increase in Music Publishing OIBDA margin reflects higher revenue and improved operating leverage in the segment.

Recorded Music revenue in the first quarter of fiscal 2024 was $10.4 million, an increase of 37% compared to $7.6 million in last year’s first quarter. This improvement was largely driven by strong Digital, Physical, and Neighboring Rights revenue, partially offset by Synchronization revenue declines.

In the first quarter of fiscal 2024, Recorded Music OIBDA increased 18%, to $3.5 million, compared to $3.0 million in the first quarter of fiscal 2023. Recorded Music OIBDA margin in the first quarter decreased from 39% to 34%. The decrease in Recorded Music OIBDA margin was driven by higher Physical revenues which carry higher costs partially offset by improved operating leverage in the segment.

Balance Sheet and Liquidity

For the three months ended June 30, 2023, cash used in operating activities was $0.9 million, a decrease of $2.7 million compared to the same period last year. The decreased cash provided by operating activities was primarily attributable to an increase in cash used for working capital, including royalty advances (net of recoupments) and the timing of payments of accounts payable, partially offset by higher earnings.

As of June 30, 2023, Reservoir had cash and cash equivalents of $12.3 million and $118.2 million available for borrowing under its revolving credit facility, for total available liquidity of $130.5 million. Total debt was $325.8 million (net of $6.0 million of deferred financing costs) and Net Debt was $313.5 million (defined as total debt, less cash and equivalents and deferred financing costs). This compares to cash and cash equivalents of $14.9 million and $132.2 million available for borrowing under its revolving credit facility, for total available liquidity of $147.1 million. Total debt was $311.5 million (net of $6.3 million of deferred financing costs) and Net Debt was $296.6 million as of March 31, 2023.

Fiscal 2024 Outlook

Reservoir maintains its previously provided financial outlook range for fiscal year 2024, and expects the financial results for the year ending March 31, 2024, to be as follows:

Jim Heindlmeyer, Chief Financial Officer of Reservoir, concluded, “We are pleased with the top-line growth of our business during the quarter and are encouraged by the durability of our financial profile. Our OIBDA and Adjusted EBITDA margin expansion during the quarter is a testament to the operating leverage embedded in our business. As a result of our strong first quarter performance, we are maintaining Revenue and Adjusted EBITDA guidance for fiscal 2024.”

Conference Call Information

Reservoir is hosting a conference call for analysts and investors to discuss its financial results for the first quarter for fiscal year ended March 31, 2024, and its business outlook at 10:00 a.m. ET today, August 2, 2023. The conference call can be accessed via webcast in the investor relations section of the Company’s website at https://investors.reservoir-media.com/news-and-events/events-and-presentations.

Interested parties may also participate in the call using the following registration link: 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.

About Reservoir Media, Inc.

Reservoir is an independent music company based in New York City and with offices in Los Angeles, Nashville, Toronto, London, and Abu Dhabi. Reservoir is the first female-founded and led publicly traded independent music company in the U.S. Founded as a family-owned music publisher in 2007, Reservoir has grown to represent over 150,000 copyrights and 36,000 master recordings with titles dating as far back as 1900 and hundreds of #1 releases worldwide. Reservoir frequently holds a Top 10 U.S. Market Share according to Billboard’s Publishers Quarterly, was twice named Publisher of the Year by Music Business Worldwide’s The A&R Awards, and won Independent Publisher of the Year at the 2020 and 2022 Music Week Awards.

Reservoir also represents a multitude of recorded music through Chrysalis Records, Tommy Boy Records, and Philly Groove Records and manages artists through its ventures with Blue Raincoat Music and Big Life Management.

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 SEC available on the SEC’s website at www.sec.gov or Reservoir’s website at www.reservoir-media.com.