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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 2, 2023
RESERVOIR MEDIA, INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
001-39795 |
|
83-3584204 |
(State or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(I.R.S. Employer
Identification No.) |
200 Varick Street
Suite 801A
New York, New York |
|
10014 |
(Address of principal executive offices) |
|
(Zip Code) |
(212) 675-0541
(Registrant’s telephone number, including
area code)
N/A
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which
registered |
Common stock, $0.0001 par value per share |
|
RSVR |
|
The Nasdaq Stock Market LLC |
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per share |
|
RSVRW |
|
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
| Item 2.02 | Results of Operations and Financial Condition. |
On August 2, 2023, Reservoir
Media, Inc., a Delaware corporation (the “Company”), issued a press release announcing the condensed consolidated
financial results of the Company for the quarter ended June 30, 2023. A copy of the press release is attached as Exhibit 99.1 to this
Current Report on Form 8-K and is incorporated herein by reference.
The information contained in
this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities
of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any filing by the Company with the U.S. Securities
and Exchange Commission under the Securities Act of 1933, as amended, or the Exchange Act, unless the Company expressly sets forth by
specific reference in such filing that such information is to be considered “filed” or incorporated by reference therein.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
|
RESERVOIR MEDIA, INC. |
|
|
|
|
Date: August 2, 2023 |
By: |
/s/ Golnar Khosrowshahi |
|
|
Name: |
Golnar Khosrowshahi |
|
|
Title: |
Chief Executive Officer |
Exhibit 99.1
RESERVOIR MEDIA ANNOUNCES FIRST QUARTER
FISCAL 2024 RESULTS
31% Top-Line Growth Driven by Strong Performance
in Digital Across
Recorded Music and Music Publishing
August 2, 2023, New York — Reservoir
Media, Inc. (NASDAQ: 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 |
| o | Music Publishing revenue rose 26% year-over-year |
| o | 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
Summary Financials | |
Q1 FY24 | | |
Q1 FY23 | | |
Change | |
Total Revenue | |
$ | 31.8 | | |
$ | 24.3 | | |
| 31 | % |
Music Publishing Revenue | |
$ | 20.8 | | |
$ | 16.4 | | |
| 26 | % |
Recorded Music Revenue | |
$ | 10.4 | | |
$ | 7.6 | | |
| 37 | % |
Operating Income | |
$ | 3.1 | | |
$ | 1.3 | | |
| 138 | % |
OIBDA | |
$ | 9.2 | | |
$ | 6.7 | | |
| 38 | % |
Net Income | |
$ | 0.2 | | |
$ | 0.0 | | |
| NM | |
Adjusted EBITDA | |
$ | 10.1 | | |
$ | 7.4 | | |
| 36 | % |
(Table Notes: $ in millions; Quarters ended June 30th; Unaudited; NM = Not meaningful)
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 | |
Q1 FY24 | | |
Q1 FY23 | | |
Change | |
Revenue by Type | |
| | | |
| | | |
| | |
Digital | |
$ | 11.9 | | |
$ | 8.5 | | |
| 41 | % |
Performance | |
$ | 4.5 | | |
$ | 3.5 | | |
| 28 | % |
Synchronization | |
$ | 3.0 | | |
$ | 3.3 | | |
| (8 | %) |
Mechanical | |
$ | 0.6 | | |
$ | 0.5 | | |
| 9 | % |
Other | |
$ | 0.8 | | |
$ | 0.6 | | |
| 24 | % |
Total Revenue | |
$ | 20.8 | | |
$ | 16.4 | | |
| 26 | % |
Operating Income (Loss) | |
$ | 1.4 | | |
$ | (0.3 | ) | |
| NM | |
OIBDA | |
$ | 5.7 | | |
$ | 3.7 | | |
| 54 | % |
(Table Notes: $ in millions; Quarters ended June 30th; Unaudited; NM = Not meaningful)
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 | |
Q1 FY24 | | |
Q1 FY23 | | |
Change | |
Revenue by Type | |
| | | |
| | | |
| | |
Digital | |
$ | 5.6 | | |
$ | 4.6 | | |
| 23 | % |
Physical | |
$ | 3.6 | | |
$ | 1.3 | | |
| 176 | % |
Neighboring Rights | |
$ | 0.9 | | |
$ | 0.7 | | |
| 25 | % |
Synchronization | |
$ | 0.3 | | |
$ | 1.0 | | |
| (68 | %) |
Total Revenue | |
$ | 10.4 | | |
$ | 7.6 | | |
| 37 | % |
Operating Income | |
$ | 1.8 | | |
$ | 1.6 | | |
| 12 | % |
OIBDA | |
$ | 3.5 | | |
$ | 3.0 | | |
| 18 | % |
(Table Notes: $ in millions; Quarters ended June 30th; Unaudited)
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:
Outlook | |
Guidance | |
Growth (at mid-point) |
Revenue | |
$127M - $132M | |
6% |
Adjusted EBITDA | |
$49M - $52M | |
9% |
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.
Reservoir Media, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended June 30, 2023 versus June 30, 2022
(Unaudited)
(Expressed in U.S. dollars)
| |
Three Months Ended June 30, | | |
| |
| |
2023 | | |
2022 | | |
% Change | |
Revenues | |
$ | 31,836,586 | | |
$ | 24,278,770 | | |
| 31 | % |
Costs and expenses: | |
| | | |
| | | |
| | |
Cost of revenue | |
| 13,471,597 | | |
| 9,975,131 | | |
| 35 | % |
Amortization and depreciation | |
| 6,055,568 | | |
| 5,361,503 | | |
| 13 | % |
Administration expenses | |
| 9,164,500 | | |
| 7,621,610 | | |
| 20 | % |
Total costs and expenses | |
| 28,691,665 | | |
| 22,958,244 | | |
| 25 | % |
| |
| | | |
| | | |
| | |
Operating income | |
| 3,144,921 | | |
| 1,320,526 | | |
| 138 | % |
| |
| | | |
| | | |
| | |
Interest expense | |
| (4,733,533 | ) | |
| (2,976,060 | ) | |
| | |
(Loss) gain on foreign exchange | |
| (29,936 | ) | |
| 107,343 | | |
| | |
Gain on fair value of swaps | |
| 1,845,387 | | |
| 1,570,337 | | |
| | |
Other income (expense), net | |
| 62 | | |
| 13 | | |
| | |
Income before income taxes | |
| 226,901 | | |
| 22,159 | | |
| | |
Income tax expense | |
| 62,348 | | |
| 5,338 | | |
| | |
Net income | |
| 164,553 | | |
| 16,821 | | |
| | |
Net loss attributable to noncontrolling interests | |
| 112,780 | | |
| 59,218 | | |
| | |
Net income attributable to Reservoir Media, Inc. | |
$ | 277,333 | | |
$ | 76,039 | | |
| | |
| |
| | | |
| | | |
| | |
Earnings per common share: | |
| | | |
| | | |
| | |
Basic | |
$ | - | | |
$ | - | | |
| | |
Diluted | |
$ | - | | |
$ | - | | |
| | |
| |
| | | |
| | | |
| | |
Weighted average common shares outstanding: | |
| | | |
| | | |
| | |
Basic | |
| 64,572,432 | | |
| 64,223,531 | | |
| | |
Diluted | |
| 64,998,544 | | |
| 64,781,739 | | |
| | |
Reservoir Media, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 30, 2023 versus March 31, 2023
(Unaudited)
(Expressed in U.S. dollars)
| |
June 30, 2023 | | |
March 31,
2023 | |
Assets | |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 12,250,096 | | |
$ | 14,902,076 | |
Accounts receivable | |
| 32,015,316 | | |
| 31,255,867 | |
Current portion of royalty advances | |
| 11,898,176 | | |
| 15,188,656 | |
Inventory and prepaid expenses | |
| 5,088,681 | | |
| 5,458,522 | |
Total current assets | |
| 61,252,269 | | |
| 66,805,121 | |
| |
| | | |
| | |
Intangible assets, net | |
| 628,198,922 | | |
| 617,404,741 | |
Equity method and other investments | |
| 2,344,598 | | |
| 2,305,719 | |
Royalty advances, net of current portion | |
| 57,988,584 | | |
| 51,737,844 | |
Property, plant and equipment, net | |
| 601,943 | | |
| 568,339 | |
Operating lease right of use assets, net | |
| 7,130,076 | | |
| 7,356,312 | |
Fair value of swap assets | |
| 8,602,271 | | |
| 6,756,884 | |
Other assets | |
| 1,139,842 | | |
| 1,147,969 | |
Total assets | |
$ | 767,258,505 | | |
$ | 754,082,929 | |
| |
| | | |
| | |
Liabilities | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 4,883,591 | | |
$ | 6,680,421 | |
Royalties payable | |
| 33,225,715 | | |
| 33,235,235 | |
Accrued payroll | |
| 389,159 | | |
| 1,689,310 | |
Deferred revenue | |
| 1,455,929 | | |
| 2,151,889 | |
Other current liabilities | |
| 11,371,295 | | |
| 10,583,794 | |
Income taxes payable | |
| 214,741 | | |
| 204,987 | |
Total current liabilities | |
| 51,540,430 | | |
| 54,545,636 | |
| |
| | | |
| | |
Secured line of credit | |
| 325,808,798 | | |
| 311,491,581 | |
Deferred income taxes | |
| 30,713,296 | | |
| 30,525,523 | |
Operating lease liabilities, net of current portion | |
| 6,845,787 | | |
| 7,072,553 | |
Other liabilities | |
| 694,828 | | |
| 785,113 | |
Total liabilities | |
| 415,603,139 | | |
| 404,420,406 | |
| |
| | | |
| | |
Contingencies and commitments | |
| | | |
| | |
| |
| | | |
| | |
Shareholders' Equity | |
| | | |
| | |
Preferred stock | |
| - | | |
| - | |
Common stock | |
| 6,465 | | |
| 6,444 | |
Additional paid-in capital | |
| 339,149,582 | | |
| 338,460,789 | |
Retained earnings | |
| 15,030,053 | | |
| 14,752,720 | |
Accumulated other comprehensive loss | |
| (3,715,853 | ) | |
| (4,855,329 | ) |
Total Reservoir Media, Inc. shareholders' equity | |
| 350,470,247 | | |
| 348,364,624 | |
Noncontrolling interest | |
| 1,185,119 | | |
| 1,297,899 | |
Total shareholders' equity | |
| 351,655,366 | | |
| 349,662,523 | |
Total liabilities and shareholders' equity | |
$ | 767,258,505 | | |
$ | 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 United
States generally accepted accounting principles (“GAAP”). Reservoir’s management uses these non-GAAP financial measures
to evaluate Reservoir’s operations, measure its performance and make strategic decisions. Reservoir believes that the use of these
non-GAAP financial measures provides useful information to investors and others in understanding Reservoir’s results of operations
and trends in the same manner as Reservoir’s management and in evaluating Reservoir’s financial measures as compared to the
financial measures of other similar companies, many of which present similar non-GAAP financial measures. However, these non-GAAP financial
measures are subject to inherent limitations as they reflect the exercise of judgments by Reservoir’s management about which items
are excluded or included in determining these non-GAAP financial measures and, therefore, should not be considered as a substitute for
net income, operating income or any other operating performance measures calculated in accordance with GAAP. Using such non-GAAP financial
measures in isolation to analyze Reservoir’s business would have material limitations because the calculations are based on the
subjective determination of Reservoir’s management regarding the nature and classification of events and circumstances. In addition,
although other companies in Reservoir’s industry may report measures titled OIBDA, OIBDA margin, Adjusted EBITDA, and Net Debt,
or similar measures, such non-GAAP financial measures may be calculated differently from how Reservoir calculates such non-GAAP financial
measures, which reduces their overall usefulness as comparative measures. Because of these limitations, such non-GAAP financial measures
should be considered alongside other financial performance measures and other financial results presented in accordance with GAAP. You
can find the reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures in the tables below.
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), (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.
Reservoir Media, Inc. and Subsidiaries
Reconciliation of Operating Income to OIBDA
Three Months Ended June 30, 2023 versus June 30,
2022
(Unaudited)
(Dollars in thousands)
| |
For the Three Months Ended
June 30, | |
| |
2023 | | |
2022 | |
Operating Income | |
$ | 3,145 | | |
$ | 1,321 | |
Amortization and Depreciation Expense | |
| 6,056 | | |
| 5,362 | |
OIBDA | |
$ | 9,201 | | |
$ | 6,683 | |
Reservoir Media, Inc. and Subsidiaries
Reconciliation of Music Publishing Segment Reporting
Operating Income to OIBDA
Three Months Ended June 30, 2023 versus June 30,
2022
(Unaudited)
(Dollars in thousands)
| |
For the Three Months Ended
June 30, | |
| |
2023 | | |
2022 | |
Operating Income (Loss) | |
$ | 1,396 | | |
$ | (261 | ) |
Amortization and Depreciation Expense | |
| 4,303 | | |
| 3,954 | |
OIBDA | |
$ | 5,699 | | |
$ | 3,693 | |
Reservoir Media, Inc. and Subsidiaries
Reconciliation of Recorded Music Segment Reporting
Operating Income to OIBDA
Three Months Ended June 30, 2023 versus June 30,
2022
(Unaudited)
(Dollars in thousands)
| |
For the Three Months Ended June 30, | |
| |
2023 | | |
2022 | |
Operating Income | |
$ | 1,764 | | |
$ | 1,581 | |
Amortization and Depreciation Expense | |
| 1,729 | | |
| 1,385 | |
OIBDA | |
$ | 3,493 | | |
$ | 2,966 | |
Reservoir Media, Inc. and Subsidiaries
Reconciliation of Net Income to Adjusted EBITDA
Three Months Ended June 30, 2023 versus June 30,
2022
(Unaudited)
(Dollars in thousands)
| |
For the Three Months Ended June 30, | |
| |
2023 | | |
2022 | |
Net Income | |
$ | 164 | | |
$ | 17 | |
Income Tax Expense | |
| 62 | | |
| 5 | |
Interest Expense | |
| 4,734 | | |
| 2,976 | |
Amortization and Depreciation | |
| 6,056 | | |
| 5,362 | |
EBITDA | |
| 11,016 | | |
| 8,360 | |
Loss (Gain) on Foreign Exchange(a) | |
| 30 | | |
| (107 | ) |
Gain on Fair Value of Swaps(b) | |
| (1,845 | ) | |
| (1,570 | ) |
Non-cash Share-based Compensation(c) | |
| 914 | | |
| 766 | |
Adjusted EBITDA | |
$ | 10,115 | | |
$ | 7,449 | |
| (a) | Reflects the loss or (gain) on foreign exchange fluctuations. |
| (b) | Reflects the non-cash gain on the mark-to-market of interest rate swaps. |
| (c) | Reflects non-cash share-based compensation expense related to the Reservoir Media, Inc. 2021 Omnibus Incentive Plan. |
Media Contact
Reservoir Media, Inc.
Suzy Arrabito
Vice President, Marketing & Communications
sa@reservoir-media.com
www.reservoir-media.com
Investor Contact
Alpha IR Group
Jackie Marcus or Alec Buchmelter
RSVR@alpha-ir.com
Source: Reservoir Media, Inc.
###
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