Reservoir Media, Inc.. · NASDAQ:RSVR
Reservoir Media, Inc — Investor Presentation (August 2023)
35 slides from Reservoir Media, Inc's investor presentation, Aug 9, 2023
Slide 1: Investor Presentation August 2023
I N V E S TO R P R E S E N TAT I O N AU G U S T 2 0 2 3
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains “forward-looking statements” for purposes of the safe harbor provisions under the U.S. Private securities litigation reform act of 1995, as amended. These forward-looking statements are generally identified by words such as “anticipate,” “believe
Slide 3: Disclaimer
Disclaimer 3 Industry and Market Data The information in this presentation also includes information provided by third parties. None of Reservoir, its affiliates or any third parties that provide information to Reservoir or its affiliates, such as market research firms, guarantee the accuracy, compl
Slide 4: First U.S.-Based Publicly Traded Independent Music Company
First U.S.-Based Publicly Traded Independent Music Company Music Publishing1 70% Recorded Music & Other1 30% • NASDAQ: RSVR • Market Cap: $389M (at 06/30/23) • Fiscal Year End: Mar 31st • Shares Outstanding: 65M • 150K+ Copyrights • 36K+ master recordings • Offices in NYC (HQ), LA, Nashville, London
Slide 5: Compelling Investment Highlights
1 As of 06-30-23 2 Wall Street Research 3 Based on 80% of LTM as of 03/31/23 Net Publisher Share (NPS) and Net Label Share (NLS) Compelling Investment Highlights Leading Independent Music Company With Proven Platform • $901M of invested capital since inception1 • $742M of that amount in acquisitions
Slide 6: Music industry ecosystem: publishing and recorded music
Music 101 MUSIC PUBLISHING SONGWRITERS PUBLISHER ARTISTS PERFORMING RIGHTS FOREIGN SUB-PUBLISHERS RECORD LABELS ORGANIZATIONS DIGITAL SERVICES THIRD PARTIES • CATALOG • FUTURES RECORDED MUSIC CONSUMERS PLATFORMS RECORD LABEL ARTISTS 6
Slide 7: History of Growth
History of Growth ROSTER SIGNINGS CATALOG ACQUISITIONS 2007 2014 20 2017 2018 2020 2021 2022 2023 tel JAMIE HARTMAN. “JOEY BADASSALITAMPOSi a" ‘ABOOGE BENHARPER JONIMITCHELL OAK FELDER 2.CHAINZ WIT DA HOODIE NICK LEE r) 999 hs im MUSIC 2 48. ‘ Tommy BOY FY«L) <= Lg RECORD wT ieee Music Pq: 4 f mi ‘&
Slide 8: Music Publishing Overview
Digital 54% Performance 20% Synch 17% Other 4% Mechanical 5% Legacy: • Joni Mitchell • The Isley Brothers • John Denver • Billy Strayhorn • Commodores Active Songwriters: • Offset (Migos) • Ali Tamposi • 2 Chainz • Oak Felder • Jamie Hartman CATALOG EXAMPLES Music Publishing represented Reservoir’s
Slide 9: Music Publishing Top 10 Songs by NPS
1 LTM Net Publisher Share (NPS) as of 12-31-22 1,114 Songs Account For 80%of LTM NPS with No Song Accounting For More Than 3% of LTM NPS 1 5 9 2 6 10 3 7 4 8 “It’s Your Thing” The Isley Brothers 2.2%, (1969) “Bring Me To Life” Evanescence 0.62%, (2003) “Gimme More” Britney Spears 0.6%, (2007) “Georg
Slide 10: Recorded Music Segment Overview
Legacy: • De La Soul • Sinéad O’Connor • Naughty by Nature • Generation X (Billy Idol) • The Delfonics Active Recording Artists: • Ben Harper • Laura Marling • Liz Phair • Emeli Sandé • William The Conqueror Reservoir’s first foray into the recorded music business initially was in 2012 with the acqu
Slide 11: Recorded Music Top 10 Songs by NLS
234 Recordings Account For 80%of LTM NLS and 100% are Owned for the Life of the Copyright Recorded Music Top 10 Songs by NLS1 1 LTM Net Label Share (NLS) as of 12-31-22 1 5 9 2 6 10 3 7 4 8 “Gangsta’s Paradise” Coolio 13.3%, (1995) “The Humpty Dance” Digital Underground 1.4%, (1989) “The Whole of th
Slide 12: Growth Drivers
Growth Drivers 12 STRONG SECULAR TAILWINDS VALUE ENHANCEMENT INITIATIVES PROVEN M&A PLATFORM & NEW SIGNINGS OPERATING LEVERAGE & CASH FLOW GENERATION
Slide 13: Music Industry: Strong Secular Tailwinds
Rise of Digital & Availability of Streaming Digital Revenue CAGR: 13% (2010-20) 12% (2020-30) Growth Of Paid Streaming Subscribers Paid Subs CAGR: 49% (2010-20) 11% (2020-30) Growth Of Streaming In Emerging Markets EM to contribute 43% of streaming revenue by 2030 Increased Government Intervention T
Slide 14: Music Industry: Strong Growth Forecasted
1 Wall Street Research Music Industry: Strong Growth Forecasted DIGITAL PERFORMANCE SYNCH PHYSICAL & OTHER 14 INDUSTRY Publishing Recorded Music Paid Streaming Subs $32B $8B $24B 8M 2010 25% 15% 5% 55% $48B $13B $35B 434M CAGR 4% 5% 4% 49% 2020 17% 59% 5% 19% $115B $23B $92B 1.3B CAGR 9% 6% 10% 11%
Slide 15: Value Enhancement Initiatives
VALUE ENHANCEMENT SYNCHRONIZATION Placement of musical compositions into television, film, advertisements, gaming platforms, and toys DIGITAL LICENSING Digital licensing partnerships with emerging music platforms and in-home fitness brands SETTLEMENTS Representation on industry boards advocating for
Slide 16: Value Enhancement Examples & Industry Advocacy
“The Best” “The Magic Number” “Bring Me “Jump Around” To Life” “Luna Mezzo Mare” Top Synch Highlights1 Industry Advocate & Leader $13M GENERATED IN SETTLEMENT PAYMENTS Over the Past Five Years (FY19-FY23) Value Enhancement Examples & Industry Advocacy Totaling $1.3M IN LICENSING 16 ELECTED BOARD SEA
Slide 17: Proven M&A Platform
$742M CAPITAL DEPLOYED since inception1 91% of GROSS PROFIT & COST SYNERGIES FLOW to EBITDA2 12% UNLEVERED IRR since 20073 1 As of 06-30-23 2 For the period FY18-FY23 3 IRR represents a net return on invested capital since inception (2007) by the majority shareholder marking the investment to market
Slide 18: Proven M&A Platform: Bought-Down Multiples
Note: Reflects transactions of +$6M in value that are at least 12 months old as of 03-31-23 and did not contain young assets expected to decay at closing Proven M&A Platform 15.7x WEIGHTED AVERAGE ENTRY MULTIPLE 3.2x WEIGHTED AVERAGE REDUCTION IN MULTIPLE VALUE ENHANCEMENT LEADS TO BOUGHT-DOWN MULTI
Slide 19: New Roster Signings
Advance funds to established songwriters who are then under exclusive contract to create music with the benefit of long-term ownership. NOTABLE SIGNINGS • Ali Tamposi • James Fauntleroy • Migos • Jamie Hartman • 2 Chainz • A Boogie Wit Da Hoodie • Danja • Joyner Lucas PARTNERED WITH SONGWRITERS BEHI
Slide 20: New Roster Signings: Futures-Based Investments
As of 03-31-23, writer and artist signings with more than $2.5M invested IRRs based on actual performance to date and projected performance through end of deal 2011 deal for $6.5m recouped and futures created during deal were purchased 2018 deal for $8.9m includes reverting NPS, added pro-forma abov
Slide 21: Operating Leverage & Cash Flow Generation
• Asset light model • Limited incremental expenses needed as new catalogs are added • Tommy Boy acquisition expanded platform in U.S. for Recorded Music Core Infrastructure Provides Substantial Operating Leverage as the Business Grows > 91% of Acquired Gross Profit Should Fall to Adj. EBITDA1 THREE
Slide 22: Financials
Financials 22
Slide 23: Q1 Fiscal Year 2024 Results
Q1 Fiscal Year 2024 Results 31% total revenue growth year-over-year • Music Publishing revenue rose 26% year-over-year • Recorded Music revenue increased 37% year-over-year $16 $21 $8 $11 Q1'FY23 Q1'FY24 Publishing Recorded Music & Other REVENUE ($M) $7 $10 Q1'FY23 Q1'FY24 ADJUSTED EBITDA ($M) Reite
Slide 24: Strong Growth Track Record & Forecast – Reiterated Fiscal Year 2024 Outlook
Strong Growth Track Record & Forecast – Reiterated Fiscal Year 2024 Outlook ($ in millions) Current Fiscal 2024 Outlook Growth (at mid-point) REVENUE $127 - $132 6% ADJUSTED EBITDA $49 - $52 9% $80 $108 $122 $66 $77 $84 $14 $31 $38 FY2021 FY2022 FY2023 Publishing Recorded Music & Other REVENUE • Str
Slide 25: Improving Profitability
25 Note: Excludes the effect of any non-cash stock-based compensation expense related to the current stock incentive plan. $47 $64 $74 FY2021 FY2022 FY2023 GROSS PROFIT $32 $41 $46 FY2021 FY2022 FY2023 ADJUSTED EBITDA Improving Profitability $MM $MM
Slide 26: Solid Balance Sheet & Strong FCF Generator
$35 $40 $54 FY2021 FY2022 FY2023 $MM ADJUSTED FREE CASH FLOW1 1 Adjusted Free Cash Flow excludes cash flow used for acquisitions and signings (after de-SPAC) BALANCE SHEET METRICS as of 6-30-23 TOTAL DEBT: $326M CASH: $12M NET DEBT: $314M CAPACITY: $118M Solid Balance Sheet & Strong FCF Generator 26
Slide 27: Strong Growth Outlook & Operating Leverage
$122 $46 38% $129 $50 39% Revenue Adjusted EBITDA Adj. EBITDA Margin FY 2023A FY 2024E 6% Growth • Assumes $28M of reinvestments into new deals for Fiscal 2024 • Assumes a mix of publishing and recorded catalog acquisitions, as well as futures Strong Growth Outlook & Operating Leverage 27 9% Growth
Slide 28: Appendix
Appendix 28
Slide 29: Music Publishing
Music Publishing 101 IP RIGHTS: • Songs owned by publisher or songwriter • Catalog = previously released songs • Futures = songwriters under active contract who are writing new songs PROTECTED ASPECT OF WORK: • Notes & lyrics RESPONSIBILITY OF PUBLISHER: Monetization & Exploitation • Catalog: identi
Slide 30: Recorded Music
Recorded Music 101 IP RIGHTS: • Collection of master recordings owned by a record label or performing artist PROTECTED ASPECT OF WORK: • Sound recording of a composition RESPONSIBILITY OF RECORD LABEL: Monetization & exploitation • Identify songs and work with producers and artists to create, market
Slide 31: RSVR Financial Model
RSVR Financial Model 101 INFRASTRUCTURE PROVIDES SUBSTANTIAL OPERATING LEVERAGE, ALLOWING US TO ACQUIRE THE GROSS PROFIT CONTRIBUTION OF ADDITIONAL CATALOGS WITHOUT INCREMENTAL EXPENSE 31 REVENUE MUSIC PUBLISHING RECORDED MUSIC Revenue / Gross Royalties LESS: Writer Royalties Net Publisher Share (NP
Slide 32: Income Statement Highlights
FISCAL YEAR END: March 31($ in M) 2019A 2020A 2021A 2022A 2023A Publishing Revenue $43 $53 $66 $77 $84 Recorded & Other Revenue $2 $9 $14 $31 $38 Total Revenue $45 $62 $80 $108 $122 Percentage Growth YoY 40% 38% 29% 35% 13% Net Publisher Share $24 $28 $37 $42 $45 Net Label Share & Other $2 $7 $10 $2
Slide 33: Cash Flow & Balance Sheet Highlights
FISCAL YEAR END: March 31 ($ in M) 2019A 2020A 2021A 2022A 2023A Cash Flow Highlights Adj. EBITDA $15 $23 $32 $41 $46 Recoupments 10 14 13 13 13 Interest, W/C Changes & Other (13) (5) (9) (14) (5) Cash From Operating (Adj. FCF) $12 $32 $35 $40 $54 Acquisitions (32) (108) (119) (197) (72) Advances &
Slide 34: Consolidated EBITDA Reconciliation
FISCAL YEAR END: March 31 ($ in M) 2019A 2020A 2021A 2022A 2023A Net Income $ 3.8 $ 9.4 $ 9.3 $13.1 $2.8 Adjustments Depreciation & Amortization 5.9 9.1 14.1 19.0 22.1 Income Tax Expense / (Benefit) 0.5 4.0 2.1 4.3 5.6 Interest Expense 6.2 5.8 9.0 10.9 14.8 EBITDA $ 16.4 $ 28.3 $ 34.5 $47.3 $45.2 Op
Slide 35: IR Contacts
IR Contacts Jackie Marcus Alpha IR Group RSVR@alpha-ir.com | 312-445-2870 35
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