Reservoir Media, Inc.. · NASDAQ:RSVR
Reservoir Media, Inc — Investor Presentation (November 2023)
35 slides from Reservoir Media, Inc's investor presentation, November 2023
Slide 1: Investor Presentation November 2023
I N V E S T O R P R E S E N TAT I O N November 2023
Slide 2: Disclaimer
Disclaimer Forward Looking Statements Financial Information; Non-GAAP Financial Measures This presentation contains “forward-looking statements” for purposes of the safe harbor provisions under the U.S. This presentation contains unaudited financial information of reservoir. The unaudited financial
Slide 3: Disclaimer
Disclaimer Industry and Market Data Trademarks, Service Marks and Trade Names The information in this presentation also includes information provided by third parties. None of Reservoir, its Reservoir and its affiliates own or have rights to various trademarks, service marks and trade names that the
Slide 4: First U.S.-Based Publicly Traded Independent Music Company
First U.S.-Based Publicly Traded KEY FACTS Independent Music Company • NASDAQ: RSVR • Market Cap: $371M (at 9/30/23) • Fiscal Year End: Mar 31st Leading, diversified music publishing and recorded music business • Shares Outstanding: 65M • Vast collection of iconic hits across genre, geography, and t
Slide 5: Compelling Investment Highlights
Compelling Investment Highlights Leading Independent Music Competitive Advantages & Growing Industry, Supported Company With Proven Platform Value Enhancement Capabilities By Powerful Secular Tailwinds • $920M of invested capital since inception1 • Value enhancement efforts lead to • Supported by ri
Slide 6: Music 101
Music 101 MUSIC PUBLISHING PERFORMING RIGHTS DIGITAL SERVICES THIRD PARTIES FOREIGN SUB-PUBLISHERS RECORD LABELS ORGANIZATIONS SONGWRITERS PUBLISHER ARTISTS • CATALOG • FUTURES RECORDED MUSIC CONSUMERS PLATFORMS RECORD LABEL ARTISTS 6
Slide 7: History of Growth
History of Growth fe 2014 | 2015 | 2016 2 oO = & 2 A ) ra & ir ie} JAMIE HARTMAN — JOEY BADAS$ ALI TAMPOS! 2 CHAINZ re 6 — = 2 wx (ro das, em REVERB = fe ay s g & P&P SONGS 4 rC) . 8s id 3 HANS ZIMMER — COMMODORES SS 5 PHILLY al pe MEDIA RECORDS 2 oO = z a 2 fo) rm ce) ir. i fo) wT LOS ANGELES JD AB
Slide 8: Music Publishing Segment Overview
Music Publishing Segment Overview Music Publishing represented Reservoir’s primary focus from its 2007 inception until its large-scale step towards building its Recorded Music business in 2019 with the acquisition of Chrysalis Records. 97% of Catalog has CATALOG EXAMPLES 150K+ No Musical Composition
Slide 9: Music Publishing Top Songs by NPS
Music Publishing Top 10 Songs by NPS1 1 “It’s Your Thing” The Isley Brothers 2 “Lady Marmalade” Labelle 1.2%, (1974) 3 “Take Me Home, Country Roads” John Denver 1.0%, (1971) 4 “Ring of Fire” Johnny Cash 0.9%, (1963) 1.7%, (1969) 5 6 7 8 “Shout” “Somebody To “Disco Inferno” “Yeah!” The Isley Love” Th
Slide 10: Recorded Music Segment Overview
Recorded Music Segment Overview Reservoir’s first foray into the recorded music business initially was in 2012 with the acquisition of Philly Groove. Reservoir expanded its recorded music segment through the acquisition of Blue Raincoat (incl. Chrysalis Records) in 2019 and Tommy Boy Records in 2021
Slide 11: Recorded Music Top Songs by NLS
Recorded Music Top 10 Songs by NLS1 1 2 3 4 “Gangsta’s “Jump Around” “Dancing With “What It’s Like” Paradise” House of Pain Myself Everlast Coolio 3.9%, (1992) Generation X 1.4%, (1998) 9.3%, (1995) 1.5%, (1980) 5 6 7 8 “Nothing “I’d Love to “Fantastic “Monster Mash” Compares 2 U” Change the Voyage”
Slide 12: Growth Drivers
Growth Drivers STRONG SECULAR VALUE ENHANCEMENT TAILWINDS INITIATIVES PROVEN M&A PLATFORM OPERATING LEVERAGE & & NEW SIGNINGS CASH FLOW GENERATION 12
Slide 13: Music Industry: Strong Secular Tailwinds
Music Industry: Strong Secular Tailwinds Rise of Digital & Growth Of Paid Growth Of Streaming Availability of Streaming Streaming Subscribers In Emerging Markets Digital Revenue CAGR: Paid Subs CAGR: EM paid subscribers to go from making 11% (2023-2030) 9% (2023-2030) up 43% of all paid subscribers
Slide 14: Music Industry: Strong Growth Forecasted
Music Industry: Strong Growth Forecasted 2023 2030 14% 14% 43% 48% 38% 43% CAGR INDUSTRY $65B $104B 7% Recorded Music $28B $50B 9% Live Music $28B $39B 5% Publishing $9B $15B 8% Paid Streaming Subs 663M 1.2B 9% RECORDED LIVE PUBLISHING 1 Wall Street Research (based on Net Revenue) 14
Slide 15: Value Enhancement Initiatives
Value Enhancement Initiatives VALUE ENHANCEMENT Organic growth outpaces industry growth Placement of musical compositions into television, film, SYNCHRONIZATION advertisements, gaming platforms, and toys RSVR 5-Year Digital licensing partnerships with emerging music Revenue CAGR1 DIGITAL LICENSING p
Slide 16: Value Enhancement Examples & Industry Advocacy
Value Enhancement Examples & Industry Advocacy Top Synch Highlights1 Industry Advocate & Leader ELECTED BOARD SEATS “Bring Me “Luna Mezzo “Jump Around” To Life” Mare” “The Best” “The Magic Number” $13M Totaling $1.3M IN LICENSING GENERATED IN SETTLEMENT PAYMENTS Over the Past Five Years (FY19-FY23)
Slide 17: Proven M&A Platform
Proven M&A Platform 232 New Deals Considered In FY2023 97 OFFERS MADE $757M 91% 12% CAPITAL of GROSS 42% DEPLOYED since inception1 PROFIT & COST SYNERGIES FLOW to EBITDA2 UNLEVERED IRR since 20073 60 DEALS INTO EXCLUSIVITY 26% 120+ M&A TARGETS IN CURRENT PIPELINE AS OF 09-30-23 55 DEALS CLOSED Total
Slide 18: Proven M&A Platform
Proven M&A Platform VALUE ENHANCEMENT LEADS TO BOUGHT-DOWN MULTIPLES NPS/NLS Multiple NPS/NLS Multiple Date Purchase Price (At Close) (At Close) (FY2023) (FY2023) 2021 2020 2020 $ 101.3 $ 61.4 $ 60.2 $ 5.5 $ 3.6 $ 3.2 18.3 x 17.0 x 18.8 x $ 9.0 $ 4.2 $ 2.9 11.2 x 14.8 x 20.7 x 15.7x WEIGHTED AVERAGE
Slide 19: New Roster Signings
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 $163M+ 3 YEAR • Ali Tamposi • Offset • Oak Felder • Jamie Hartman CAPITAL DEPLOYED1 TYPICAL TERM CONTRACT • 2 Chainz • A Boogi
Slide 20: New Roster Signings
New Roster Signings FUTURES BASED INVESTMENTS LEAD TO HIGH IRR Recouped NPS/NLS Multiple Date Advances IRR (FY2023) (FY2023) (FY2023) 2016 2017 2019 $ 14.2 $ 13.7 $ 9.0 50% 82% 71% $ 0.6 $ 0.6 $ 0.2 12.1 x 3.8 x 11.4 x 12.7% 33.6% 20.1% 9.8x EFFECTIVE CURRENT 2018 $ 8.9 35% $ 0.3 20.4 x 2.2% MULTIPL
Slide 21: Operating Leverage & Cash Flow Generation
Operating Leverage & Cash Flow Generation Core Infrastructure Provides Substantial Operating Leverage as the Business Grows > 91% OPERATING LEVERAGE of Acquired Gross Profit Should Fall to Adj. EBITDA1 REVENUE EXPENSES • Asset light model Today Future • Limited incremental expenses needed as new cat
Slide 22: Financials
Financials 22
Slide 23: Q2 Fiscal Year 2024 Results
Q2 Fiscal Year 2024 Results 15% total revenue Raised financial Adj. EBITDA year-over- Strengthened reputation as a well- growth year-over-year outlook for fiscal year year growth of 24% for respected caretaker of catalogs with • Music Publishing revenue 2024, including 10% the quarter proven record
Slide 24: Strong Growth Track Record & Forecast – Raised Fiscal Year 2024 Outlook
Strong Growth Track Record & Forecast – Raised Fiscal Year 2024 Outlook ($ in millions) Current Fiscal 2024 Outlook Growth (at mid-point) REVENUE $133 - $137 10% ADJUSTED EBITDA $50 - $52 10% REVENUE 15% CAGR: CORE DRIVERS $108 $122 $80 • Strength & Diversity of • Strong Execution in Catalog Futures
Slide 25: Improving Profitability
Improving Profitability GROSS PROFIT ADJUSTED EBITDA $MM $MM $64 $74 $41 $46 $47 $32 FY2021 FY2022 FY2023 FY2021 FY2022 FY2023 25 Note: Excludes the effect of any non-cash stock-based compensation expense related to the current stock incentive plan.
Slide 26: Solid Balance Sheet & Strong FCF Generator
Solid Balance Sheet & Strong FCF Generator ADJUSTED FREE CASH FLOW1 BALANCE SHEET METRICS as of 9-30-23 $MM TOTAL DEBT: $338M CASH: $21M $54 $312M $40 NET DEBT2: $35 AVAILABLE DEBT: $112M (after de-SPAC) FY2021 FY2022 FY2023 1 Adjusted Free Cash Flow excludes cash flow used for acquisitions and sign
Slide 27: Strong Growth Outlook & Operating Leverage
Strong Growth Outlook & Operating Leverage 10% Growth 10% Growth $135 $122 $46 $51 38% 38% Revenue Adjusted EBITDA Adj. EBITDA Margin FY 2023A FY 2024E 27
Slide 28: Appendix
Appendix 28
Slide 29: Music Publishing 101
Music Publishing 101 IP RIGHTS: • Songs owned by publisher or songwriter KEY CASH FLOW METRICS • Catalog = previously released songs Revenue / Gross Royalties • Futures = songwriters under active contract who are writing new songs (-) Writer Royalties = Net Publisher Share (NPS) PROTECTED ASPECT OF
Slide 30: Recorded Music 101
Recorded Music 101 IP RIGHTS: • Collection of master recordings owned by a record label or performing artist KEY CASH FLOW METRICS Revenue / Sales / Royalties PROTECTED ASPECT OF WORK: (-) Artist Royalties • Sound recording of a composition (-) Manufacturing & Distribution Costs = Net Label Share (N
Slide 31: RSVR Financial Model
RSVR Financial Model 101 MUSIC PUBLISHING RECORDED MUSIC REVENUE Revenue / Gross Royalties Revenue / Sales / Royalties LESS: Artist Royalties COST OF REVENUE LESS: Writer Royalties LESS: Manufacturing/Distribution Costs GROSS PROFIT Net Publisher Share (NPS) Net Label Share (NLS) OPERATING EXPENSES
Slide 32: Income Statement Highlights
Income Statement Highlights FISCAL YEAR END: March 31($ 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 $45 Net Labe
Slide 33: Cash Flow & Balance Sheet Highlights
Cash Flow & Balance Sheet Highlights FISCAL YEAR END: March 31 ($ 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 $54 Acquisitions (3
Slide 34: Consolidated EBITDA Reconciliation
Consolidated EBITDA Reconciliation FISCAL YEAR END: March 31 ($ 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
Slide 35: IR Contact / PR Contact
IR Contact PR Contact Jackie Marcus Suzanne Arrabito Alpha IR Group Reservoir RSVR@alpha-ir.com | 312-445-2870 sa@reservoir-media.com | 212-675-0541 35
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