Reservoir Media Announces First Quarter Fiscal 2023 Results

NEW YORK, Aug. 05, 2022 (GLOBE NEWSWIRE) — Reservoir Media, Inc. (NASDAQ: RSVR) , an award-winning independent music company, today announced financial results for the first fiscal quarter of 2023 ended June 30, 2022.

Recent Highlights:

  • Revenue of $24.3 million, increased 14% organically, or 46% including acquisitions year-over-year
    • Music Publishing revenue rose 35% year-over-year
    • Recorded Music revenue increased by 80% year-over-year
  • Operating Income of $1.3 million, increased by $1.1 million year-over-year
  • OIBDA (“Operating Income Before Depreciation & Amortization”) of $6.7 million, an increase of 56%
  • Net Income of $0.0 million, or $0.00 per share, 5 cents above the prior year period
  • Adjusted EBITDA of $7.4 million, up 73% year-over-year
  • Closed multiple catalog deals and acquisitions including Marley Marl and Matt Sorum, the latter of which also includes future works
  • Signed multiple publishing and future deals including Margo Price, Adia Victoria, Dan The Automator, and Conway The Machine
  • Expanded frontline recorded music roster with Ben Harper

Management Commentary:

“We are off to a strong start for the fiscal year, exceeding our internal expectations for the first quarter and putting us on track to achieve our goals for the year. Our impressive year-over-year top-line growth of 46% was driven by continued execution of our strategic growth initiatives, as well as the benefits of increasing scale,” said Golnar Khosrowshahi, Founder and Chief Executive Officer of Reservoir. “Our results also demonstrate our durable business model and ability to deliver consistent financial results as we continue to capitalize on the steady secular growth of the music industry. We remain focused on generating significant long-term value through our strategy of building and optimizing a robust, curated, and diversified portfolio of award-winning songwriters’ and artists’ bodies of work.”

First Quarter Fiscal 2023 Financial Results

Summary Financials Q1 FY23 Q1 FY22 Change
Total Revenue $24.3 $16.6 46%
Music Publishing Revenue $16.4 $12.2 35%
Recorded Music Revenue $7.6 $4.2 80%
Operating Income $1.3 $0.2 NM
OIBDA $6.7 $4.3 56%
Net Income (Loss) $0.0 $(1.5) NM
Adjusted EBITDA $7.4 $4.3 73%
(Table Notes: $ in millions; Quarters ended June 30th; Unaudited; NM = Not meaningful)

Total revenue in the first quarter of fiscal 2023 increased 46% to $24.3 million, compared to $16.6 million in the first quarter of fiscal 2022. The increase was primarily driven by strong growth in both segments, highlighted by 80% growth in the Recorded Music segment, inclusive of the acquisitions of various catalogs, including Tommy Boy.

Operating income in the first quarter of fiscal 2023 was $1.3 million compared to operating income of $0.2 million in the first quarter of fiscal 2022. OIBDA in the first quarter of fiscal 2023 increased 56% to $6.7 million, compared to $4.3 million in the prior year quarter. Adjusted EBITDA in the first quarter of fiscal 2023 increased 73% to $7.4 million, compared to $4.3 million last year. The increases in operating income, OIBDA, and Adjusted EBITDA were all primarily driven by strong double-digit revenue growth from both segments and were partially offset by expenses related to being a public company that did not exist in the prior year period. 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 2023 was breakeven, or $0.00 per share, compared to a net loss attributable to common stockholders of $(1.5) million, or $(0.05) per share, in the year-ago quarter. The improvement in net income (loss) was driven by revenue growth from both segments, which was offset by higher administration expenses associated with being a public company, as well as higher amortization and income tax expenses.

First Quarter Fiscal 2023 Segment Review

Music Publishing Q1 FY23 Q1 FY22 Change
Revenue by Type
Digital $8.5 $6.6 28%
Performance $3.5 $2.7 33%
Synchronization $3.3 $1.9 70%
Mechanical $0.5 $0.4 26%
Other $0.6 $0.6 7%
Total Revenue $16.4 $12.2 35%
Operating (Loss) Income $(0.3) $0.2 NM
OIBDA $3.7 $3.4 9%
(Table Notes: $ in millions; Quarters ended June 30th; Unaudited; NM = Not meaningful)

Music Publishing revenue in the first quarter of fiscal 2023 was $16.4 million, an increase of 35% compared to $12.2 million in last year’s first quarter. Growth was driven by strong performance within the Digital and Synchronization streams.

In the first quarter of fiscal 2023, Music Publishing OIBDA increased 9% to $3.7 million, compared to $3.4 million in the first quarter of fiscal 2022. Music Publishing OIBDA margin in the first quarter decreased from 28% to 22%. The decline in Music Publishing OIBDA margin was primarily driven by higher administration expenses associated with being a public company that did not exist in the prior year period.

Recorded Music Q1 FY23 Q1 FY22 Change
Revenue by Type
Digital $4.6 $2.8 62%
Physical $1.3 $1.0 34%
Neighboring Rights $0.7 $0.3 109%
Synchronization $1.0 $0.1 NM
Total Revenue $7.6 $4.2 80%
Operating (Loss) Income $1.6 $(0.1) NM
OIBDA $3.0 $0.8 274%
(Table Notes: $ in millions; Quarters ended June 30th; Unaudited; NM = Not meaningful)

Recorded Music revenue in the first quarter of fiscal 2023 was $7.6 million, an increase of 80% compared to $4.2 million in last year’s first quarter. This improvement was largely driven by the acquisition of Tommy Boy, strong Digital revenue growth, and smaller growth in other revenue types.

In the first quarter of fiscal 2023, Recorded Music OIBDA increased 274%, to $3.0 million, compared to $0.8 million in the first quarter of fiscal 2022. Recorded Music OIBDA margin in the first quarter increased from 19% to 39%. The increase in Recorded Music OIBDA margins was driven by a shift towards Digital and Synchronization revenues which carry lower costs. Additionally, the Company was able to leverage the existing infrastructure while ingesting the acquired Tommy Boy catalog.

Balance Sheet and Liquidity

For the three months ended June 30, 2022, cash provided by operating activities was $1.8 million, a decrease of $1.9 million compared to the same period last year. The decreased cash provided by operating activities was primarily attributable to increases in cash used for working capital, including royalty advances (net of recoupments), partially offset by higher earnings.

As of June 30, 2022, Reservoir had cash and cash equivalents of $12.6 million and $67.4 million available for borrowing under its revolving credit facility, for total available liquidity of $80.0 million. Total debt was $277.4 million (net of $5.2 million of deferred financing costs) and Net Debt was $264.9 million (defined as total debt, less cash and equivalents and deferred financing costs). This compares to cash and cash equivalents of $17.8 million and $74.4 million available for borrowing on the revolving credit facility, for total available liquidity of $92.2 million, total debt of $269.9 million (net of $5.8 million of deferred financing costs), and Net Debt of $252.0 million as of March 31, 2022. The Company’s leverage ratio at June 30, 2022 was 5.7x using the trailing twelve month pro forma adjusted EBITDA of $48.6 million which reflects the measurement per its credit agreement.

Fiscal 2023 Outlook

Reservoir reaffirmed its previously provided financial outlook range for fiscal year 2023, and expects the financial results for the year ending March 31, 2023, to be as follows:

Outlook Guidance Growth
(at mid-point)
Revenue $116 million – $121 million 10 %
Adjusted EBITDA $44 million – $47 million 10 %

Jim Heindlmeyer, Chief Financial Officer of Reservoir, concluded, “We continue to execute against our strategic initiatives, and we are pleased with the financial performance in our first fiscal quarter results. We achieved double digit growth during the quarter on Revenue and Adjusted EBITDA, and we remain focused on our capital deployment target of $100 million in strategic M&A for the fiscal year. We are proud to deliver on our promises to deploy capital toward accretive deals that will bring long-term value to our organization and shareholders.”

Accounting Note

The Q1 fiscal 2022 results included in this release reflect the revisions described in Note 19 of the fiscal 2022 financial statements filed on Form 10-K.

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 140,000 copyrights and 36,000 master recordings with titles dating as far back as 1900 and hundreds of #1 releases worldwide. Reservoir holds a regular 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 both 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.