Reservoir Media, Inc.. · NASDAQ:RSVR
Reservoir Media, Inc — Investor Presentation (March 2022)
36 slides from Reservoir Media, Inc's investor presentation, Mar 11, 2022
Slide 1: Reservoir March 2022 Investor Presentation
RESERVOIR MARCH 2022 INVESTOR PRESENTATION
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,”
Slide 3: Industry and Market Data
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, completeness, tim
Slide 4: Leading, diversified music publishing and recorded music business
• Leading, diversified music publishing and recorded music business Vast collection of iconic hits across genre, geography, and time period Focused on acquiring catalogs with hit songs and building portfolio diversification Investing in frontline songwriters and artists with potential for succ
Slide 5: Compelling Investment Highlights
5 COMPELLING INVESTMENT HIGHLIGHTS • $600m+ of invested capital since inception • $100m+ of that in futures spend with enhanced risk/return profile vs. traditional recorded music Leading Independent Music Company with Proven Platform • 140K+ copyrights and 36K+ masters • 130+ active songwriters and
Slide 6: Music 101: Where RSVR Fits in the Industry
6 MUSIC 101: WHERE RSVR FITS IN THE INDUSTRY
Slide 7: REVERB MUSIC
REVERB MUSIC & P&P SONGS PHILLY MUSIC GROOVE "2 REcorps VT N FS MEDIA of. CHAINZ JAMIE HARTMAN 2016 2017 2018 2019 2020 2021 Vir. =o TOMMY BOY RECORDS JOEY BADAS$ ALI TAMPOS! | SHAPIRO ISLEY BROTHERS HANS ZIMMER Sk BOB CREWE rs OL. sete ee p79 a apy ¥ mam i a1) RECORDS a BERNSTEIN — ALABAMA
Slide 8: Music Publishing Segment Overview
Digital 53% Performance 24% Synch 15% Other 4% Mechanical 4% 8 MUSIC PUBLISHING SEGMENT OVERVIEW Legacy: • Joni Mitchell • The Isley Brothers • John Denver • Billy Strayhorn • Commodores Active Songwriters: • Offset/Takeoff (Migos) • Ben Harper • 2 Chainz • Ali Tamposi • Jamie Hartman Music Publishi
Slide 9: Music Publishing Top Songs by NPS
9 MUSIC PUBLISHING TOP 10 SONGS BY NPS 1 1 LTM Net Publisher Share (NPS) as of 12 - 31 - 21 1,167 Songs Account For 80% of LTM NPS with No Song Accounting For More Than 2% of LTM NPS 1 “It’s Your Thing” The Isley Brothers 2.0% (1969) “Lady Marmalade” Labelle 1.0% (1974) “Yeah!” Usher 0.7% (2004) “In
Slide 10: Recorded Music Segment Overview
000 10 RECORDED MUSIC SEGMENT OVERVIEW Legacy: • De La Soul • Sinéad O’Connor • Naughty by Nature • Generation X (Billy Idol) • The Delfonics Active Recording Artists: • Laura Marling • Liz Phair • Emeli Sandé • William The Conqueror • Lump Reservoir’s first foray into the recorded music business in
Slide 11: Recorded Music Top Songs by NLS
11 RECORDED MUSIC TOP 10 SONGS BY NLS 1 1 LTM Net Label Share (NLS) as of 12 - 31 - 21, pro - forma for acquisition of Tommy Boy 170 Recordings Account For 80% of LTM NLS and 100% are Owned for the Life of the Copyright 4 “Jump Around” House of Pain 3.1% (1992) 3 7 8 “Nothing Compares 2 U” Sinéad O’
Slide 12: Growth Drivers
12 GROWTH DRIVERS Strong Secular Tailwinds 1 2 Proven M&A Platform & New Signings 3 Operating Leverage & Cash Flow Generation 4 Value Enhancement Initiatives
Slide 13: Music Industry: Strong Secular Tailwinds
13 1. MUSIC INDUSTRY: STRONG SECULAR TAILWINDS Rise of Digital & Availability of Streaming Digital CAGR: 14% (2010 - 20) 10% (2020 - 30) Growth Of Paid Streaming Subscribers Paid Subs CAGR: 48% (2010 - 20) 11% (2020 - 30) Growth Of Streaming In Emerging Markets EM to contribute 30% of subs by 2030 v
Slide 14: Music Industry: Strong Growth Forecasted
1. MUSIC INDUSTRY: STRONG GROWTH FORECASTED 1 Wall Street Research Industry Publishing Recorded Music Paid Streaming Subs 14
Slide 15: Value Enhancement Initiatives
15 2. 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 • Repr
Slide 16: Value Enhancement Examples & Industry Advocacy
16 2. VALUE ENHANCEMENT EXAMPLES & INDUSTRY ADVOCACY Top Synch Highlights (click to watch) Industry Advocate & Leader Elected Board Seats $13M Generated in Settlement Payments Over the Past Four Years “Back In Baby’s Arms” “Lean On” “Non, Je Ne Regrette Rien ” “Take Me Home, Country Roads” “Day - O”
Slide 17: Proven M&A Platform
17 3. PROVEN M&A PLATFORM $5 00M+ Capital Deployed Over Past 14 Years 90% of Gross Profit & Cost Synergies Flow to EBITDA 12% Unlevered IRR since 2007 2 1 Based on total offers made, deals into exclusivity, and deals closed as a percentage of new deals considered in FY2020, respe ct ively 2 IRR repr
Slide 18: Proven M&A Platform: Bought-down Multiples
18 3. PROVEN M&A PLATFORM Value Enhancement Leads To Bought - down Multiples Date Purchase Price NPS/NLS (At Close) Multiple (At Close) NPS/NLS (FY2021) Multiple (FY2021) Unlevered IRR 2020 $61.4 $3.6 17.0x $3.8 16.3x 8.1% 2019 $50.1 $3.5 14.5x $6.9 7.2x 17.7% 2018 $30.7 $2.5 12.4x $3.5 8.9x 17.7% 2
Slide 19: New Roster Signings
19 3. NEW ROSTER SIGNINGS Advance money to established songwriters who are then under exclusive contract to Reservoir to create music in which Reservoir will have long - term ownership . Notable Signings : • Ben Harper • Migos • 2 Chainz • Just Blaze • Ali Tamposi • Jamie Hartman • A Boogie Wit Da H
Slide 20: New Roster Signings: Futures Spend and IRR
20 100M+ Total Futures Spend to Date 24.3% IRR On Significant Writer Signings ( 9.6x ) 1 FY2021 figures as of 3 - 31 - 21, writer signings greater than two years old, and greater than $2M invested 2 Based on actual performance to date and projected performance over the next 10 years, including a ter
Slide 21: Operating Leverage & Cash Flow Generation
21 4. 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 Today Future > 90% of A
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Slide 23: Q3 Fiscal Year 2022 Results Highlights
23 Q3 FISCAL YEAR 2022 RESULTS HIGHLIGHTS • 26 % total revenue growth year - over - year Music Publishing revenue rose 4 % year - over - year, and 22 % adjusting for a one - time settlement in the prior quarter Recorded music revenue increased by 147 % year - over - year • Increased financial ou
Slide 24: Strong Growth Track Record
24 STRONG GROWTH TRACK RECORD $43 $54 $67 $2 $9 $15 2019 2020 2021 Publishing Recorded Music & Other $45 $64 $82 Revenue Core Drivers Fiscal 2022 Outlook Revised Guidance Prior Guidance Growth (at mid - point) ($ in millions) Revenue $103 - $105 $100 - $104 27% Adjusted EBITDA $40 - $41 $37 - $40 19
Slide 25: Improving Profitability & Leverage
25 IMPROVING PROFITABILITY & LEVERAGE Note: Excludes the effect of any non - cash stock - based compensation expense related to the current option plan. 1 Includes public company costs of ~$4M on a pro forma basis for prior historical years $26 $36 $49 2019 2020 2021 Gross Profit $15 $21 $30 2019 20
Slide 26: Solid Balance Sheet & Strong FCF Generator
26 SOLID BALANCE SHEET & STRONG FCF GENERATOR - $6 $7 $17 FY2019 FY2020 FY2021 Adjusted Free Cash Flow 1 1 Adjusted Free Cash Flow excludes cash flow used for acquisitions Balance Sheet Metrics as of 12 - 31 - 21 Total Debt: $225M Cash: $15M Net Debt: $211M Capacity: $118M
Slide 27: Strong Growth Outlook & Operating Leverage
27 STRONG GROWTH OUTLOOK & OPERATING LEVERAGE $82 $30 37% $160 $68 43% Revenue Adjusted EBITDA Adj. EBITDA Margin FY 2021A FY 2025E 18% CAGR 23% CAGR • Assumes $100M annual reinvestments in the business (except FY2022, where a total of $200M is expected to be deployed) • Assumes reinvestments split
Slide 28: Compelling Investment Highlights
28 COMPELLING INVESTMENT HIGHLIGHTS • $600m+ of invested capital since inception • $100m+ of that in futures spend with enhanced risk/return profile vs. traditional recorded music Leading Independent Music Company with Proven Platform • 140K+ copyrights and 36K+ masters • 130+ active songwriters and
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Slide 30: Music Publishing 101
IP RIGHTS: • Songs owned by publisher or songwriter • Catalog = previously released songs • Futures = songwriters under active contract who are writing new songs PROTECTED ASPECT OF WORK: • Notes & lyrics RESPONSIBILITY OF PUBLISHER: Monetization & Exploitation • Catalog : identify high - quality le
Slide 31: Recorded Music 101
RECORDED MUSIC 101 IP RIGHTS: • Collection of master recordings owned by a record label or performing artist PROTECTED ASPECT OF WORK: • Sound recording of a composition RESPONSIBILITY OF RECORD LABEL: Monetization & exploitation • Identify songs and work with producers and artists to create, market
Slide 32: RSVR Financial Model
RSVR FINANCIAL MODEL 101 Revenue Cost of Revenue Gross Profit Operating Expenses EBITDA Music Publishing Recorded Music Revenue / Gross Royalties LESS: Writer Royalties Net Publisher Share (NPS) LESS: OpEx (A&R, Licensing, G&A, Talent Expense) EBITDA 30 INFRASTRUCTURE PROVIDES SUBSTANTIAL OPERATING
Slide 33: Income Statement Highlights
FISCAL YEAR END: March 31 ($ in M) 2019A 2020A 2021A Publishing Revenue $43 $54 $67 Recorded & Other Revenue $2 $9 $15 Total Revenue $45 $64 $82 Percentage Growth YoY 40% 41% 28% Net Publisher Share $25 $29 $38 Net Label Share & Other $2 $7 $11 Gross Profit $26 $36 $49 Gross Margin 58% 57% 60% Adj.
Slide 34: Cash Flow & Balance Sheet Highlights
FISCAL YEAR END: March 31 ($ in M) 2019A 2020A 2021A Cash Flow Highlights Adj. EBITDA $15 $21 $30 Recoupments 10 14 14 Interest, W/C Changes & Other (13) (6) (9) Cash From Operations $12 $29 $34 Acquisitions (32) (108) (120) Advances & Other (18) (22) (17) Cash From Investing ($50) ($130) ($137) Fre
Slide 35: Consolidated EBITDA Reconciliation
FISCAL YEAR END: March 31 ($ in M) FY2019 FY2020 FY2021 Net Income $ 3.8 $ 11.5 $ 10.3 Adjustments Depreciation & Amortization 5.9 9.1 14.1 Income Tax Expense / (Benefit) 0.5 2.8 2.5 Interest Expense 6.2 5.8 9.0 EBITDA $ 16.4 $ 29.1 $ 35.9 Operating Adjustments Gain on Debt Extinguishment 0.0 (10.6)
Slide 36: IR Contacts
IR Contacts Jackie Marcus or Mike Dwyer Alpha IR Group RSVR@alpha - ir.com 312 - 445 - 2870 36