Reservoir Media(US:RSVR)2025-02-05 21:05Financial Performance - Revenues for the three months ended December 31, 2024, increased by $6,828,000, or 19%, to $42,304,000 compared to $35,476,000 for the same period in 2023[75]. - Operating income for the three months ended December 31, 2024, rose by $3,036,000, or 47%, to $9,558,000 compared to $6,522,000 for the same period in 2023[75]. - Net income attributable to Reservoir Media, Inc. for the three months ended December 31, 2024, was $5,244,000, an increase of $8,207,000 compared to a net loss of $2,963,000 for the same period in 2023[75]. - Total revenues increased by $6,828 thousand, or 19%, for the three months ended December 31, 2024, compared to the same period in 2023, driven by a 16% increase in Music Publishing revenue and a 20% increase in Recorded Music revenue[76][77]. - Digital revenues rose by $4,277 thousand, or 21%, during the three months ended December 31, 2024, representing 59% of total revenues[78]. - Music Publishing revenues increased by $3,749 thousand, or 16%, during the three months ended December 31, 2024, primarily due to price increases at music streaming services and acquisitions of new catalogs[80]. - Recorded Music revenues grew by $1,965 thousand, or 20%, during the three months ended December 31, 2024, aided by a royalty recovery related to underreported usage[82]. - Total revenues for the nine months ended December 31, 2024, increased by $11,578 thousand, or 11%, with Music Publishing revenues representing 68% of total revenues[84]. - Total digital revenues for the nine months ended December 31, 2024, increased by $10,726 thousand, or 18%, accounting for 59% of consolidated revenues[85]. - Net income for the three months ended December 31, 2024, was $5,312 thousand, a significant improvement from a net loss of $2,861 thousand for the same period in 2023[120]. - For the nine months ended December 31, 2024, net income was $5,010 thousand compared to a net loss of $2,015 thousand during the same period in 2023, driven by improved gross margin and the nonrecurrence of legal fee write-offs[121]. Costs and Expenses - Total costs and expenses for the three months ended December 31, 2024, increased by $3,792,000, or 13%, to $32,746,000 compared to $28,954,000 for the same period in 2023[75]. - Administration expenses for the three months ended December 31, 2024, increased by $1,575,000, or 17%, to $10,964,000 compared to $9,389,000 for the same period in 2023[75]. - Cost of revenues increased by $1,846 thousand, or 14%, during the three months ended December 31, 2024, while the cost of revenues as a percentage of revenues decreased to 36%[91]. - Writer royalties and other publishing costs increased by $1,592 thousand, or 16%, during the three months ended December 31, 2024, maintaining a percentage of 44% of Music Publishing revenues[92]. - Artist royalties and other recorded music costs increased by $254 thousand, or 8%, during the three months ended December 31, 2024, with a decrease in percentage to 28% of recorded music revenues[93]. - Cost of revenues increased by $2,045 thousand, or 5%, for the nine months ended December 31, 2024, while the percentage of revenues decreased to 37% from 39%[94]. - Writer royalties and other publishing costs increased by $3,237 thousand, or 10%, for the nine months ended December 31, 2024, with costs as a percentage of Music Publishing revenues decreasing to 43% from 44%[95]. - Artist royalties and other recorded music costs decreased by $1,192 thousand, or 12%, for the nine months ended December 31, 2024, with costs as a percentage of recorded music revenues decreasing to 28% from 33%[96]. - Total administration expenses decreased by $211 thousand, or 1%, for the nine months ended December 31, 2024, with expenses as a percentage of revenues decreasing to 26% from 29%[105]. - Music Publishing administration expenses decreased by $821 thousand, or 4%, for the nine months ended December 31, 2024, with expenses as a percentage of revenues decreasing to 23% from 28%[106]. - Recorded Music administration expenses decreased by $310 thousand, or 4%, for the nine months ended December 31, 2024, with expenses as a percentage of revenues decreasing to 22% from 23%[107]. OIBDA and Margins - OIBDA increased by $3,407 thousand, or 26%, for the three months ended December 31, 2024, with an OIBDA Margin rising to 38% from 36% in the same period of 2023[127]. - Recorded Music OIBDA rose by $1,744 thousand, or 37%, for the three months ended December 31, 2024, with the OIBDA Margin increasing to 53% from 47%[129]. - Music Publishing OIBDA increased by $1,388 thousand, or 18%, for the three months ended December 31, 2024, maintaining an OIBDA Margin of 34%[128]. - OIBDA for the nine months ended December 31, 2024, increased by $9,745 thousand, or 28%, with the OIBDA Margin improving to 38% from 33% in the same period of 2023[130]. - Music Publishing OIBDA for the nine months ended December 31, 2024, increased by $7,231 thousand, or 37%, with the OIBDA Margin rising to 34% from 28%[131]. - Recorded Music OIBDA for the nine months ended December 31, 2024, increased by $2,579 thousand, or 19%, with the OIBDA Margin increasing to 50% from 44%[132]. - The company emphasizes the importance of non-GAAP financial measures like OIBDA and Adjusted EBITDA for evaluating operational performance and making strategic decisions[122]. - The increase in net income and OIBDA is attributed to improved gross margins and the absence of prior legal fee write-offs, indicating a positive trend in operational efficiency[121]. - Adjusted EBITDA for the three months ended December 31, 2024, increased by $3,599 thousand, or 26%, with an Adjusted EBITDA Margin of 41%, up from 39% in the same period of 2023[135]. Cash Flow and Debt - Cash provided by operating activities was $33,105 thousand for the nine months ended December 31, 2024, a 48% increase from $22,407 thousand in the same period of 2023[142]. - Cash used for investing activities increased to $71,930 thousand for the nine months ended December 31, 2024, compared to $47,182 thousand in the same period of 2023, primarily due to acquisitions of music catalogs[143]. - Cash provided by financing activities was $38,516 thousand for the nine months ended December 31, 2024, reflecting a 30% increase from $29,560 thousand in the same period of 2023[144]. - As of December 31, 2024, the company had $371,799 thousand in debt and $17,760 thousand in cash and cash equivalents[139]. - The company’s outstanding debt under the Senior Credit Facility was $375,828 thousand as of December 31, 2024, with remaining borrowing availability of $74,172 thousand[147]. - The Senior Credit Facility has a maturity date of December 16, 2027, and includes an accordion feature allowing for additional commitments up to $150,000 thousand[150]. - The company maintained compliance with financial covenants, including a fixed charge coverage ratio of not less than 1.10:1.00 and a consolidated senior debt to library value ratio of no greater than 0.45:1.00 as of December 31, 2024[158]. - The company did not pay any dividends to stockholders during the three months ended December 31, 2024, due to restrictions from covenants in the Senior Credit Facility[160]. Internal Controls and Governance - The company reported material weaknesses in internal controls over financial reporting, concluding that disclosure controls were not effective as of December 31, 2024[168]. - The company is actively working on a remediation plan to address material weaknesses, including hiring additional accounting personnel and improving risk assessment activities[169]. - No off-balance sheet arrangements were reported as of December 31, 2024, reflecting a straightforward financial position[165]. - The company is committed to ensuring that improved processes and controls are effectively designed and implemented in future periods[170]. - Management does not expect that disclosure controls will prevent all errors and fraud, highlighting inherent limitations in control systems[173]. - The evaluation of the effectiveness of new and redesigned controls is ongoing, with management monitoring remediation plans[171]. - The company has retained third-party experts to assist with complex technical accounting issues, indicating a proactive approach to financial governance[169]. - There have been no changes in internal control over financial reporting that materially affected the company during the three months ended December 31, 2024[172]. - As of December 31, 2024, there have been no material changes in contractual obligations since March 31, 2024[162]. - There have been no material changes to critical accounting policies since March 31, 2024, indicating stability in financial reporting practices[163].