Reservoir Media(US:RSVR)2024-10-30 20:05Financial Performance - Revenues for the three months ended September 30, 2024, were $40,667,000, representing a 6% increase from $38,397,000 in the same period of 2023[76]. - Operating income increased by 65% to $10,122,000 for the three months ended September 30, 2024, compared to $6,145,000 in the prior year[76]. - Net income attributable to Reservoir Media, Inc. was $185,000 for the three months ended September 30, 2024, down 65% from $535,000 in the same period of 2023[76]. - Total revenues increased by $2,270 thousand, or 6%, during the three months ended September 30, 2024, compared to the same period in 2023, driven by a 10% increase in Music Publishing revenue[79]. - Total revenues increased by $4,750 thousand, or 7%, during the six months ended September 30, 2024, driven by a 13% increase in Music Publishing revenue[84]. - Net income was $152 thousand during the three months ended September 30, 2024, compared to $682 thousand during the same period in 2023, primarily due to the loss on fair value of swaps[109]. - Net loss was $301 thousand during the six months ended September 30, 2024, compared to net income of $847 thousand during the same period in 2023, driven by the loss on fair value of swaps[110]. Revenue Breakdown - The Music Publishing segment represents over 150,000 copyrights, while the Recorded Music segment includes over 36,000 master recordings[62]. - Recorded Music revenues are derived from digital, physical, neighboring rights, and synchronization sources[71]. - The company has over 5,000 clients across diverse genres in its Music Publishing catalog[64]. - The Recorded Music business is primarily managed through Chrysalis Records and Tommy Boy record labels[68]. - Digital revenues increased by $2,779 thousand, or 14%, during the three months ended September 30, 2024, representing 56% of total revenues[80]. - Music Publishing revenues increased by $2,688 thousand, or 10%, during the three months ended September 30, 2024, primarily due to catalog acquisitions and price increases at streaming services[81]. - Recorded Music revenues decreased by $135 thousand, or 1%, during the three months ended September 30, 2024, reflecting a decline in physical revenue[83]. - Total digital revenues increased by $6,449 thousand, or 17%, during the six months ended September 30, 2024, representing 59% of consolidated revenues[85]. - Music Publishing revenues increased by $5,897 thousand, or 13%, during the six months ended September 30, 2024, mainly driven by catalog acquisitions and price increases[86]. - Recorded Music revenues decreased by $889 thousand, or 4%, during the six months ended September 30, 2024, despite growth in streaming services[88]. Cost and Expenses - Total costs and expenses decreased by 5% to $30,545,000 for the three months ended September 30, 2024, compared to $32,252,000 in 2023[76]. - The principal costs associated with the Recorded Music business include artist royalties and other recorded costs, as well as administration expenses[72]. - Cost of revenues increased by $389 thousand, or 3%, during the three months ended September 30, 2024, with a decrease in cost of revenues as a percentage of revenues to 36%[90]. - Writer royalties and other publishing costs increased by $514 thousand, or 5%, during the three months ended September 30, 2024, with a decrease in percentage of Music Publishing revenues to 41%[91]. - Artist royalties and other recorded music costs decreased by $1,446 thousand, or 20%, for the six months ended September 30, 2024, compared to the same period in 2023, with costs as a percentage of recorded music revenues decreasing to 28% from 34%[94]. - Writer royalties and other publishing costs increased by $1,645 thousand, or 8%, during the six months ended September 30, 2024, with costs as a percentage of Music Publishing revenues decreasing to 43% from 44%[93]. - Total administration expenses decreased by $2,311 thousand, or 20%, during the three months ended September 30, 2024, reflecting the nonrecurrence of a $2,700 thousand write-off related to legal expenses[97]. OIBDA and EBITDA - Consolidated OIBDA increased by $4,192 thousand, or 34%, for the three months ended September 30, 2024, compared to the same period in 2023, with an OIBDA Margin increase to 41% from 32%[119]. - Music Publishing OIBDA rose by $4,759 thousand, or 77%, for the three months ended September 30, 2024, with the OIBDA Margin increasing to 38% from 24%[120]. - Recorded Music OIBDA decreased by $124 thousand, or 2%, for the three months ended September 30, 2024, maintaining an OIBDA Margin of 51%[121]. - For the six months ended September 30, 2024, consolidated OIBDA increased by $6,338 thousand, or 29%, with an OIBDA Margin increase to 37% from 31%[121]. - Music Publishing OIBDA increased by $5,842 thousand, or 49%, for the six months ended September 30, 2024, with the OIBDA Margin rising to 34% from 25%[122]. - Recorded Music OIBDA increased by $834 thousand, or 9%, for the six months ended September 30, 2024, with an OIBDA Margin increase to 48% from 43%[123]. - OIBDA is considered an important indicator of operational strengths and performance, excluding non-cash depreciation and amortization[113]. - Adjusted EBITDA is a key measure for understanding operating performance, but has limitations regarding capital expenditures and cash flow sufficiency[114]. - OIBDA Margin is defined as OIBDA as a percentage of revenue, providing insight into profitability relative to sales[113]. - Adjusted EBITDA for the three months ended September 30, 2024, increased by $1,736 thousand, or 11%, reaching $17,605 thousand compared to $15,869 thousand in 2023[126]. - Adjusted EBITDA margin improved to 43% for the three months ended September 30, 2024, up from 41% in the same period of 2023[126]. Cash Flow and Debt - Cash provided by operating activities was $21,872 thousand for the six months ended September 30, 2024, an increase of $3,015 thousand or 16% compared to $18,857 thousand in 2023[131]. - Cash used for investing activities decreased to $10,702 thousand for the six months ended September 30, 2024, down from $32,516 thousand in 2023, primarily due to fewer acquisitions of music catalogs[132]. - Cash used in financing activities was $(8,338) thousand for the six months ended September 30, 2024, compared to cash provided of $19,573 thousand in 2023, reflecting a $27,911 thousand change[133]. - As of September 30, 2024, total debt was $328,828 thousand, with $121,172 thousand available for borrowing under the Senior Credit Facility[135]. - The company maintained compliance with financial covenants under the Senior Credit Facility, including a fixed charge coverage ratio of not less than 1.10:1.00[143]. - The interest rate on borrowings under the Senior Credit Facility is either a base rate plus a margin of 1.00% or a SOFR rate plus a margin of 2.00%[138]. - The company did not pay any dividends to stockholders during the three months ended September 30, 2024, due to restrictions from the Senior Credit Facility[145]. Internal Controls and Compliance - The company identified material weaknesses in internal controls over financial reporting, concluding that disclosure controls and procedures were not effective as of September 30, 2024[151]. - The company is actively working on a remediation plan to address material weaknesses, including hiring additional accounting personnel and improving risk assessment activities[152]. - The company has not experienced any changes in internal control over financial reporting that materially affected its operations during the three months ended September 30, 2024[155]. - The company emphasizes that its control systems can only provide reasonable assurance, not absolute assurance, against errors and fraud[156]. - The certifications of the Chief Executive Officer and Chief Financial Officer were filed pursuant to the Sarbanes-Oxley Act of 2002, ensuring compliance with securities regulations[31.1][31.2]. - The Inline XBRL Instance Document and related taxonomy extension documents were submitted, indicating the use of interactive data formats for financial reporting[101.INS][101.SCH][101.CAL][101.DEF][101.LAB][101.PRE]. - The report was signed by Golnar Khosrowshahi as the Chief Executive Officer and Jim Heindlmeyer as the Chief Financial Officer, confirming the authenticity of the financial statements[168]. Legal and Risk Factors - There are no ongoing legal proceedings that could have a material adverse effect on the company's business or financial condition as of the date of the report[159]. - The company has not identified any material changes in risk factors from those disclosed in the Annual Report for the year ended March 31, 2024[160].