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Reservoir Media (RSVR)

Participants
Jackie Marcus Alpha IR Group
Golnar Khosrowshahi Founder & CEO
Jim Heindlmeyer CFO
Richard Baldry ROTH Capital
Alex Furman Craig-Hallum
Chris McGinnis Sidoti & Company
Call transcript
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Operator

00:04 Good morning, everyone, and thank you for participating in today's conference call to discuss Reservoir Media's Financial Results for the Third Quarter of Fiscal 2022 ended December 31, 2021. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. 00:29 I'd now like to turn the call over to Ms. Alpha the who company's the agenda review with and today forward-looking Marcus IR will Group, our Jackie statement. Jackie?

Jackie Marcus

Media earnings XX:XX everyone, Thank for December call. its today's XXXX quarter the morning. XX, and morning, earnings Reservoir conference ended thank you third release you, for participating results operator. with issued an Good XXXX of this press fiscal in earlier

of release our a and you not Jim at Golnar you receive copy Investor of of Officer Relations earnings are the did Media. Chief Heindlmeyer, me section access may Chief With press website it investors.Reservoir-media.com. and call on from If our Financial Reservoir Executive today's Officer; Founder Khosrowshahi,

performance Investor this As I'd of website. as uncertainties. and being current like about our our be today's the Relations reflects to note that X:XX financial the call future will contain Before webcast I the that over simultaneously Jim, risks section Reservoir is and and Media a to involve Golnar statements turn certain of and recorded reminder, forward-looking will call events. views on discussion business, and such, archived And

a expressed basis expectations, there and believe faith, for is Our and beliefs, them. we good in are projections reasonable

call they do our press of we update projection Accepted statements as obligation financial we with discussion. undertake presented forward-looking future events, XX:XX in In if Exchange these extent investors to other projections non-GAAP to uncertainties, no law. for will as Generally comparable our GAAP required materially call our Accounting track. risks, assurance to actual U.S. and differ nearest press plan However, that are in certain could refer there today they understand better during conform result described can more belief, be new or from to earnings are GAAP specific believe expectations, this business in will beliefs, on information except no to measures earnings the that of the our these and financial be applicable information would present today's Principles, our measures press Commission addition to are that Reconciliations with a results this turn in and cause measures believe help release the over Securities filings the and XX:XX earnings to result investors not we on Golnar? and the to or call Please that results achieved. of expectation, statements factors our release to performance release. like make to our we useful and now Any if our or to we accordance I Golnar. to or by included financial or

Golnar Khosrowshahi

to our XX:XX I'm us excited discuss Thank you, fiscal Good everyone, joining extremely for here and quarter. to today. third today you Jackie. thank morning, be

industry sales industry. CFO, excitement progress significant and is start Jim deeper we a quarter significant During the streaming strategy gaming been in new strong building us a third strong prior new proliferation emerging by I points, vibrancy industry company. ongoing a have access of strong helped album over media, especially vinyl from portfolio in turn second XX:XX the these music made let's the year. build strength Heindlmeyer a of call video to This consumption The growth benefit into This to will our various driven a where of in catalogs fold. as digital quarter XX:XX deliver to and discuss impressive the broader financial bringing music of ongoing We and size in XX:XX continued period, the off diversity. to continued both setting we our music, growth song on to to public demand artists on year and of resurgence our results, the and trends, XXXX, through over global platforms. dive XX% the compared and continue a of like building our execute record the songwriters, momentum streams markets, up as normal performance overall on quarter has as well across XXXX financial in streaming award-winning in were our grow, and the for our continues and social Before as the around portfolio music

allowed detail guidance based EBITDA. can we of some have high on growth by platform grow even has As are team, operating Since coupled industries our X-time investments of his our the also Jim instrumental we we value XX:XX last bring a we portfolio attractive League, performance revenue And we uniqueness Grammy represents for market. the opportunities component backdrop we believe are the amidst we and growing announced strong exceed with of challenged high creators. important our very But which to Michael organic call, differentiation As The have a with GroundUP XX:XX roster earnings to built. and represents seeing the see his XX:XX musical collaborators. band company eras the made strategic enhancement. assets more publishing healthy the significant to to catalog a deal believe opportunities our healthy example, genres our industry sales. Puppy and honored Music, For we his we several price potential both winner greater philosophy mid-December of across list increase artists, on we have diversification business the and will an Snarky we with in of cover execution adjusted said us momentum ahead in our and previously, profile, that in work and

Demi this Reservoir [Oak of the Publishing year years our talent We and credits foothold the the driving and brings earlier quarter, Fred the high Hall accretive Parris, David ago company, metrics. quality artists music Reservoir. his welcome posted well platinum We by Fred of Hop, Rister, with Music producer hit year steadfast Buddy of and the Tritt’s Let's catalogs, and music Peas. United Travis to Recorded XX% the our of in organic star leverage. Cannon, Do Sorry DJ founder objective Satins, key collaborations (ph) the our we Black and songwriter Guetta time include We performance. across the total producer creative through of included the remain scale lead Feeling alongside period to Lastly, RMB, also John also while songs which Hall VMI the genres, Eyed all saw the most to continues in winning quarterly our all XX $XX.X of whose including in contributed States Selder] announced songwriter welcoming Dallas partner Kenny pop growth. Lovato’s exceed including our and Lovato, turn expanded gain songs variety Legend and the addition Grammy a over XX:XX we We Fame Chesney third across Famer downloaded to as represented into a the as Sorry. operating which of and family. songwriter acquisition with XX% Gotta I of Hip in his producer catalog commitment these our And the growth the Nashville country fiscal to award who performance to late of and all XX:XX EDM M&A winning Nashville X-time with Not In Five of song revenue, Grammy as expectations of late singer the the Up, business by presence Austin, million long-time

to from annual Music vinyl sales music trends flow are I Within to recorded to detail. XX:XX will the and due during over costs. managing improvement financial from sources. physical continuing to to came also segments, We XXX% broader Consistent in Publishing, I in X% EBITDA. saw actions increased the while revenue that our adjusted with prudently quarter acquisitions, noted we Jim? XX% These demand the XX:XX our our from manage growth With performance revenue. support digital for Jim more turn in XX% XX% additional from annual call our recorded discuss other a X% growth earlier, resulted our cash and of from industry

Jim Heindlmeyer

everyone. accomplished a company prouder holds. not the Golnar. our public what in books, could And you, morning and be more as of With we've Reservoir for the excited Thank XX:XX second of quarter I future good what

to in execute against a both drove our continue strategy, quarter. the double-digit We basis growth at line which and bottom top

of quarter third $XX.X otherwise, out. fiscal the see references will from third our fiscal fiscal make, QX percentage fiscal represented fiscal Let's a that increase quarter the talk XX% playing a reminder, about XX:XX in QX rest the stated offer and comparisons XXXX. financial all results greater year the XXXX. for how detail Revenue and was for between third unless change XXXX As which million, quarter explicitly I we of

our The Music largely was the platform assets Adjusting was which Publishing attributed for driver from the our while Our Music team revenue increase Publishing last primary line continues Music the segment music settlement year million primarily of segment XX:XX to portfolio XX:XX a year, pandemic. year quarter. through $XX.X a which the Recorded increase and grew was $X.X improvement for of $X.X within XX% third XX:XX million, a to is delivered Middle within continued XX:XX the by quarter, totaled services. impacts prior increase growth another Music All publishing grow results, X% which, to this types unlicensed the growth in music side XXX% led year-over-year. recovery consumption quarter. the $X.X film which utilize to year. value third opportunities segment Boy due previously for due creators, publishing let's revenue and year-over-year. segment results, television million mentioned, revenue continues the in into deeper our quarter in as acquisition the publishing in the last the the strong top $X.X for our our one-time digital of of by the rights acquisition in as other a XXX% industry earlier was and recorded sync of time year. to quarter. segment the from driven our for by The largely overall increase at Recorded the expenses increase performer Digging quarter. Looking delivered business in segments, XX% and impact top streaming increase up Our our quarter a at Synchronization on from strategy. Our and our to in revenue streams. had X,XXX% driven by revenue subsidiary look of the quarter generated saw also third million. revenue increase Recorded with in within publishing enhancing the it Music generating of third revenue our Recorded operating prior Synchronization the Music within segment from solid that was year-over-year digital a XXX% East. was the was the the XXX% showed million a quarter, the posted in management Other This launch also a revenue, COVID-XX to Tommy the revenue representing

cost by was driven quarter overall growth Our an of increase margin XXXX. some the of XX% third from type. increase of given revenue with saw our the fiscal by mix revenue expansion, revenues This

our a the time, As and listing related that last Company Over from of on compensation based I We believe saw last due EBITDA. to results. margins continued noted the the acquisitions. these costs improve we QX business, of leverage operating depreciation to the expect year-over-year both quarter, company from due operating have public on year. our XX:XX operating in our and we XX% quarter, As prior XX:XX an as of not these a business. view increase catalog performance metrics, year, clearest being increase we non-cash impact public of in ongoing amortization saw cost amortization OIBDA expenses inherent based did we our to give stock-based the and administration will our evaluate mentioned the operating X metrics our last adjusted to progress

Music to stock-based which the was reflect third of was were Publishing a from increased generating Adjusted million in same year. from expense in for per This of For interest share driven used and XX% primarily the as comp. of million, grew being XXXX tangible million periodic in for in quarter last partially million XX:XX Net the non-cash same income XX:XX assets for Our year. do XXXX. million, of diluted and non-recurring expenses costs Recorded quarter by revenues the per of increases of essentially intangible metrics and these earnings or other the reminder, increase fiscal which XX% $X.X removes year-over-year the certain administration So, costs as improvements $X.X in compared not capitalized an OIBDA to such third across EBITDA the impact EBITDA to while to at quarter by the $X.XX public $X quarter These were both related and resulted $X.XX to adjusted was company. $XX.X transactional the period last a came of third the quarter, $X.X fiscal compared fiscal period share flat in XXXX. quarter XX% revenues.

count Lastly, Let's our move our outstanding weighted XX:XX is $XX.X balance on share sheet. billion. average diluted to

$XXX.X gives closed the debt. which their That of to We financing support fiscal $XX.X capacity million In hand costs. of of quarter under strong million. our debt objectives. capital net liquidity total compares credit raise million relationship of thus cash and of million $XXX the $XXX.X to During to terms net the the comprised as $XXX.X the with is lenders million was continued to our have and to at year-end. available last of net maintain our million quarter overall $X.X And revolver, the nearly $XXX.X we our which us quarter we million, total facility of of of a strategic we expanded we that on business. fund $XXX deferred ended testament XX:XX debt, million with This our of

which X.X I with for pro the close EBITDA to XX call to Before fiscal pro thoughts Our agreement. XX, million, our forma leverage recent $XX.X using of ratio year Golnar, credit trailing and XX:XX at measurement the some XXXX impact our adjusted the includes December forma guidance. on acquisitions of I'd full the was reflects like month back turn

momentum we which to reminder, financial XX, the fiscal performance the For revised and March better ends a our reflect past XXXX X guidance as on strong full over year, our quarters.

$XXX raising revenue million to guidance As between be our a million. result, $XXX are we and

also are million full the EBITDA $XX raising between for our We million. to $XX guidance adjusted be year and

With believe I'll acquisitions being on our I roster both I solid flexibility have controlling balance guidance. that revenue with potential costs, our evaluate the is year our to And our growing invest pass mentioned, call back in of portfolio considered costs. XX:XX now diligent continuing to to operating and and talent. are assets, us about As a We sheet expand our which of full we're in provides XX:XX we business Golnar. that, the to overall

Golnar Khosrowshahi

you, XX:XX Thank Jim.

in position a As have competitive I on mentioned the we our opening executed and our strong in vastly industry. of this remains call, growing strategy

team been We the work and as have shown our enhancement able sales organic value through growth initiatives the innovative through to hard across of our globe. drive

of process. our drive business. and the led For expect our our down our sing segment leverage into XX% don't this to XX:XX With growth this operating we efforts can example, generating revenue we total slow as integrate are ultimately of the we acquired there growth assets recently

eras proud M&A global While assets. entrusted believe work. deals. proud be that like portfolio that on stages ensure And proud deals their more of incredibly we in $X creators We're fiscal actively stewards by I'm to are into us promises are We life's and early strength pipeline track constantly we are this talented and of exceptional evaluating a the I'd of potential artists are achieving. commentary these billion year the our Today what are to and of returning geographies on opportunities million of have XX:XX capable award-winning diversified over activities. that opportunity to be have the close unique, to M&A exploring. and and to still we our deploy across say delivering building to an we are genres, my of to $XXX musical we even we

look pipeline of power We will our cash that M&A to business helps power radar leverage As relationship targeting, of also our high believe XX:XX will which the forward, and to long-term the continue deals we success generating off opportunities. the operating high these our growth, us driven robust identify organization. fuel bring remains shows value

or coupled drive steady music for taking greater strategy roster of works I manage growth. line consumption to secular And of The roster about will We our the at of our working bring new team music be in overall broader Reservoir our work of are a focus expenses for now XX:XX around the audiences execution. we're XX:XX future. tirelessly favor. our of on open executing through The in drive an prouder platforms the the across and life's value platforms trends are artists and operating intense and cost We're of quarter cadence third improve talent our We the of to couldn't more advantage their on trends to new revenue. acquisitions, with organic efforts our questions. industry in excited to finally, to

Operator

question XX:XX first Thank with from Our comes Capital. you. Richard [Operator Instructions] Baldry ROTH

open. line Your is

Richard Baldry

XX:XX Thanks. a more Can sort in how by down business -- quantitatively qualitatively much bit talk maybe about internal that. is own end platforms the it driven strength streaming growth, or break maybe organic of you your market, things available versus like development

Jim Heindlmeyer

XX:XX Thanks, Jim. It's Rich.

team benefiting those it, we operational of and performance fold, value. I over we combination that XX really once assets. enhancement really you bring on improving assets the benefit we at a those look also of think to it's driving and and We're that put real both We in acquire industry, the from improving value course XX the of the the into here assets the focus when those the of but from execution things. months obviously of tailwinds the a

Richard Baldry

the that of some more it business you development sense areas? Do is earnings, of you've more in those how [indiscernible] areas? feel XX:XX cycles? feel to do profitability prioritized Maybe synchronization fully staffed those that upside faster of makes upside terms you back in like you're it Or much in sort the had do M&A

Golnar Khosrowshahi

Rich. staffed well Golnar. we're think Hi, Sorry. I XX:XX It’s –

had we're part we enhancement is in That that of continue copyrights And digital grow cetera. will that as number stable administration, sort standpoint warrants from I initiatives the that Again et we licensing, well arises. staffed as a area addition. think insofar the the headcount -- that. organically we go, to of do business securitization our value a as the of that side, need to

Richard Baldry

maybe different getting of pipeline, to be may of the does you thought the And your change new like a kind couple is seeming changing But a whatever talk or M&A table used can to COVID one, do of XX:XX processes. ease people side normal M&A about bit feel in the you harder, that with is, how or backdrop ways. easy the

Golnar Khosrowshahi

I XX:XX a And And I'm I so that have used to is the about to deal not sure just just most these X. music that see continue, say valuable than are that the being expect more the -- to music maybe positive on XX on I assets XX And would backdrop the right flow past be. that seeing between industry the generally. robust outlook are more months. the I now. been that our correlation for fact we doing they

Richard Baldry

assets growth we come much is I ways what sort to XX:XX when better internally you look when are be, or potential there me of that them large. And can that you available, their do after? it potential are mean, others prioritize assets pipeline, or pretty sequence? that is others obviously, sync certain take from organic in than to it's How the down you of would different understand go last very than good is into opportunistic

Golnar Khosrowshahi

opportunistic. very is It XX:XX

will level, reflect do portfolio looking high unable is are as and assumptions we predict on deal enhancement a When quality comes And price we general. we within to are we always additive diligence those due be look will purchases what always accretive flow models. do a that our the could At are like. and forecast our that at play that the and would to in so in our far music our how general pipeline into obviously to able future how perhaps value front we what that

Richard Baldry

one Maybe last one. XX:XX

of If be you deals look of pipeline, are Publishing into that you'd side. in the versus in sort distinct that Music Music Recorded differences there the look the would number either at any side

Golnar Khosrowshahi

business. certainly think tying flow. we sides and in ebbs say back heavily right seeing I predict either flows. can't flow really that on but deal XX:XX it's And I to would skewing That flow we very happens ebb that both But does way, what not the and the are healthy now deal idea of

Richard Baldry

Great. Congrats XX:XX the quarter. on

Golnar Khosrowshahi

you Thank much. so XX:XX

Operator

XX:XX Thank you.

from question Alex Craig-Hallum. with Our next comes Furman

Your line is open.

Alex Furman

you Thanks you is related to much the about taking guys I do ahead Great. a targets hitting about of sense increase the on of the now? your so talked to for to music how industry are to benefiting of give guidance, us schedule ask being tailwinds right track higher my all XX:XX compared or can the to M&A guidance that wanted of just question. other that that

Jim Heindlmeyer

Yeah. XX:XX

our think to I that a increased a testament guidance is things. of couple really

number Certainly on that and assets the hit able we've higher, execution And our positivity continued the year. that been that are then at year, we First, on to expect industry, throughout potentially slightly from Reservoir. comes the you from as timing the we on managing to for really expected, relatedly, assumptions that that great also but touched there our well. team about is in down it but the have benefited the like we to here track the factors with drive -- M&A execution in value front our we've we on, obviously

both really it. it's things those that factor into So, of

Alex Furman

at of suggest Great, like EBITDA been kind you or margins your XX:XX expenses more little very can or that your in your that? a mean bit that talk expected? have guidance, you terms to bit a able quite are about little Is than control a percentage more. than it high bit then incremental just raised least better I that's And helpful. was looks revenue guidance

Jim Heindlmeyer

acquire always and assets. that it XX:XX the mean, the associated with I those assets margins are Yeah, down we comes to of that mix

with will respect that to recently the the probably that -- that margin factors into that going closed here. this those into closing, contribute. we've that's certainly that that's be will of I or the factor And revenue So part think what's deals driving

a Of mix revenue focus controlling it's in that of contributing coming margin but always and on target staying sure course, have that costs making to really that's on the we're we our expansion. there,

Alex Furman

Jim. me, live performances lastly is then guys going evolve just expect to the talk from be a kind the a recover streaming tailwinds there big tailwind on continues XX:XX imagine year? maybe Are the can the for year economy offsets going that of the And the bit any business of of how you kind helpful, industry. moves you'd COVID. little Or that Okay, from growth return see that's as is about of are I and there to any the signs course down? to slow over reopening to the could to

Golnar Khosrowshahi

don't think so. XX:XX I

certainly you live lockdowns and any lay as helpful. mentioned going to think is I performances be over

this seeing cetera, think that we're will in we're continue, I trend online vinyl continue. gaming, those et social seeing, will media trends

trends the as its we are far a high as at looking at that think that level. I So

social ones within overall lies themes devices, general online are cars, emerging cetera. WiFi gaming, et the the being the We markets focused to ahead. on smart And within media, enabled of growth that proliferation

Alex Furman

thank much, great, very That's Golnar. you

Golnar Khosrowshahi

you. Thank XX:XX

Jim Heindlmeyer

XX:XX Thanks Alex.

Operator

McGinnis Our Thank you. Sidoti with [Operator question comes next Company. from & XX:XX Instructions] Chris

Your is open. line

Chris McGinnis

my for the questions and good nice Hi, morning. Thanks taking on quarter. congratulations

coming newer you growth you the -- what's you realm guess, higher growth seeing format? about that you're the versus gaming, look talked Are of -- on follow-up rates the seeing legacy a when from at more the where media maybe that, I and rate? Just of --maybe the some newer versus formats traditional, the in growth

Jim Heindlmeyer

at the Well, newer seeing higher XX:XX of -- the percentage developing when of be overall but an think platforms, are may services a in I we revenue the perspective, the because the lion those traditional dollar platforms those share the newness growth, driving a still newer nature streams. percentage just look that that basis, from of on it's we obviously of

Chris McGinnis

the call. increase? music more And -- last Are X.X% thanks. XX:XX businesses? $X offer from last what about huge just in then one mentioned one potential Can coming what's billion on up Is you out M&A just or so that it from their there opportunities. has That's and Okay, to changed you the dramatically? people talk driving

Golnar Khosrowshahi

hard and as are does flow I And people's and catalogs in deal consider said, XX:XX a just it's interest certainly in in ebb currently of you deals it and Again, assets predict flow. what volume monetizing before and always this our us us that as noted, for clause. it's happens to to

Chris McGinnis

maybe the And landscape assets. about talk just for XX:XX competitive those

Golnar Khosrowshahi

XX:XX our Sure. XX I mean big of of past, lot lot this market over sort great. And execute months. a that the and we XX say, we and sourcing relationship to to are landscape able see on deal strategy in a in lot off consistent financing competitive of pretty The driven names based been business. face on has of competition of the a closing

Chris McGinnis

XX:XX Great. Thanks for taking my questions. Good luck for QX.

Golnar Khosrowshahi

XX:XX very much. Thank you

Operator

it closing turn that's Golnar see. go and for remarks. back to I'll I all Khosrowshahi ahead And the Thank you. questions XX:XX

Golnar Khosrowshahi

XX:XX Thank operator. you so much,

for I updating you look quarter great the progress indicative to this and joining you have team the is our morning. in Reservoir And our strength performance Have both the later and we Our thank quality of forward of of assets assembled. third Jim a much I that this spring. us on at day. so

Operator

Thank for participating. concludes you This conference today's XX:XX call.

You may have Everyone now great disconnect. a day.