• Revenue: $40.7 million, up 6% year-over-year.
• Adjusted EBITDA: $17.6 million, up 11% year-over-year.
• OIBDA: $16.6 million, up 34% year-over-year.
• Net Income: Approximately $200,000, down from $700,000 in the prior year.
• Earnings Per Share: Breakeven, compared to $0.01 in the prior year.
• Music Publishing Revenue: $28.6 million, up 10% year-over-year.
• Recorded Music Revenue: $10.7 million, down 1% year-over-year.
• Interest Expense: $5 million, decreased by $800,000 year-over-year.
• Cash Provided by Operating Activities: $21.9 million, up $3 million year-over-year.
• Total Liquidity: $142.3 million, including $21.1 million cash on hand.
• Total Debt: $324.5 million, net of $4.4 million deferred financing costs.
• Guidance Range for Revenue: Increased to $150 million to $153 million.
• Guidance Range for Adjusted EBITDA: Increased to $59 million to $62 million.

• Warning! GuruFocus has detected 5 Warning Signs with RSVR.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Reservoir Media Inc (NASDAQ:RSVR) reported a 6% increase in revenue to $40.7 million and an 11% rise in adjusted EBITDA to $17.6 million compared to the previous year.
• The company achieved significant milestones by signing deals with high-profile artists such as Snoop Dogg and k.d. lang, enhancing its reputation and portfolio.
• Reservoir Media Inc (NASDAQ:RSVR) successfully acquired the producer rights of Jack Douglas and the publishing rights to Billy Strange's catalog, diversifying its portfolio.
• The company reported strong organic growth driven by investments in country music songwriters and producers, contributing to its overall success.
• Reservoir Media Inc (NASDAQ:RSVR) raised its revenue guidance range to $150 million to $153 million and adjusted EBITDA guidance to $59 million to $62 million, indicating confidence in future performance.

Negative Points

• Recorded music revenue declined by 1% due to the previous year's release of De La Soul's catalog, impacting overall revenue growth.
• Net income decreased to approximately $200,000 from $700,000 in the previous year, partly due to a loss on the fair value of swaps.
• The company experienced a decrease in mechanical and performance revenue due to the timing of chart-topping releases and broadcasts.
• Digital revenue in the recorded music segment was down slightly, affected by a spike in streaming following the death of Sinead O'Connor.
• The Synch revenue, while strong, is subject to timing fluctuations and is not necessarily indicative of a consistent run rate.

Q & A Highlights

Q: Can you elaborate on the sustainability of the margin improvements in your publishing segment? A: Jim Heindlmeyer, CFO: The margins will vary slightly based on revenue mix from quarter to quarter. It's also influenced by the types of deals we close, such as acquiring writer shares, which can positively impact margins. However, there will be some fluctuations based on revenue types and deals closed.

Q: How does the pipeline look for publishing deals for the rest of the fiscal year? A: Golnar Khosrowshahi, CEO: The pipeline is very strong, and we have good visibility into our plans for the rest of the fiscal year. It includes attractive opportunities with satisfactory return potential and value enhancement, and we are excited about what lies ahead.

Q: Are catalog acquisition multiples trending in any particular direction? A: Golnar Khosrowshahi, CEO: We are seeing opportunities to execute at better multiples, but many transactions still trade at high-teen multiples. We focus on off-market opportunities to create more upside, benefiting from better multiples.

Q: What factors contributed to winning high-profile deals like those with Snoop Dogg and k.d. lang? A: Golnar Khosrowshahi, CEO: Our high-quality creative team attracts top-tier talent. We focus on building a high-touch, creative service team, which is crucial for maintaining valuable relationships and attracting high-quality talent.

Q: How does sourcing deals in international markets differ from domestic markets? A: Golnar Khosrowshahi, CEO: We have a team on the ground in international markets who are local and familiar with the region. This relationship-driven approach is similar to domestic markets, emphasizing the importance of being present and nurturing relationships.

Q: Can you explain the impact of swaps on your financials and what to expect going forward? A: Jim Heindlmeyer, CFO: We mark-to-market our swaps, and some favorable swaps expired, affecting their fair value. We continue to have $150 million hedged, and expect less volatility in swap values, depending on interest rates.

Q: How quickly do streaming price increases impact your revenue? A: Jim Heindlmeyer, CFO: Price increases are reflected quickly. Streaming services account for them a month later, and cash reaches us three months after. We factor these increases into our accrual process, though international markets may experience delays.

Q: Can you provide insights into the Synch revenue performance and demand trends? A: Jim Heindlmeyer, CFO: Synch revenue is robust, driven by advertising licenses and trailers. While film and TV licensing is recovering post-strike, advertising remains a significant driver of performance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.