Reservoir Media, Inc.. · NASDAQ:RSVR
Reservoir Media, Inc — Investor Presentation (March 2023)
35 slides from Reservoir Media, Inc's investor presentation, Mar 1, 2023
Slide 1: Investor Presentation March 2023
INVESTOR PRESENTATION MARCH 2023
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 72% Recorded Music & Other1 28% • NASDAQ: RSVR • Market Cap: $384M (at 12/31/22) • Fiscal Year End: Mar 31st • Shares Outstanding: 64M • 140K+ Copyrights • 36K+ master recordings • Offices in NYC (HQ), LA, Nashville, London
Slide 5: Compelling Investment Highlights
1 As of 12-31-22 2 Wall Street Research 3 Based on 80% of LTM as of 12/31/22 Net Publisher Share (NPS) and Net Label Share (NLS) Compelling Investment Highlights Leading Independent Music Company With Proven Platform • $844M of invested capital since inception1 • $695M of that amount in acquisitions
Slide 6: Music industry ecosystem
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 CATALOG ACQUISITIONS ROSTER SIGNINGS OFFICE OPENINGS. 2010 Ma DANJA f 2CHAINZ 2014 im 22 VLARS JAMIE HARTMAN resins REVERB MUSIC & P&P SONGS MUSIC Ws “= B® 40. PHILLY GROOVE RECORDS LONDON 2015 JOEY BADASS HANS ZIMMER 2016 ‘ALI TAMPOS! gee, RAY! COMMODORES © MANAGEMENT ROLLY WOOD!
Slide 8: Music Publishing catalog overview
Digital 50% Performance 20% Synch 19% Other 4% Mechanical 7% Legacy: • Joni Mitchell • The Isley Brothers • John Denver • Billy Strayhorn • Commodores Active Songwriters: • Offset (Migos) • Ben Harper • 2 Chainz • Ali Tamposi • 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 2.18%, (1969) “Bring Me To Life” Evanescence 0.62%, (2003) “Gimme More (It’s Britney Bitch)” Britney Spea
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: • Laura Marling • Liz Phair • Emeli Sandé • William The Conqueror • Lump Reservoir’s first foray into the recorded music business initially was in 2012 with the acquisitio
Slide 11: Recorded Music Top 10 Songs by NLS
204 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 06-30-22 1 5 9 2 6 10 3 7 4 8 “Gangsta’s Paradise” Coolio 9.0%, (1995) “Vienna” Ultravox 1.6%, (1980) “Between the Sheets” The Isley Brother
Slide 12: Growth Drivers
Growth Drivers 4 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 vs. 13% today Increased Government
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: Top Synch Highlights and Industry Advocacy
Top Synch Highlights “The Best” “Non, Je Ne Regrette Rien” “Lean On” “Take Me Home, “Day-O” Country Roads” Industry Advocate & Leader $18M GENERATED IN SETTLEMENT PAYMENTS Over the Past Five Years (FY19-FY23) Value Enhancement Examples & Industry Advocacy Totaling $3M IN LICENSING 16 ELECTED BOARD S
Slide 17: Proven M&A Platform
$695M CAPITAL DEPLOYED since inception2 88% of GROSS PROFIT & COST SYNERGIES FLOW to EBITDA3 12% UNLEVERED IRR since 20074 1 Based on total offers made, deals into exclusivity, and deals closed as a percentage of new deals considered in FY2022, respectively 2 As of 12-31-22 3 For the period FY18-FY2
Slide 18: Proven M&A Platform: Bought-Down Multiples
Note: Reflects transactions of +$5M in value that are at least 12 months old as of 03-31-21 (two 2021 transactions included that have 12 months of earnings or pro-forma earnings) Proven M&A Platform 14.7x WEIGHTED AVERAGE ENTRY MULTIPLE 2.3x WEIGHTED AVERAGE REDUCTION IN MULTIPLE VALUE ENHANCEMENT L
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: IRR by Writer
1 FY2021 figures as of 03-31-22, writer signings greater than two years old, and greater than $2M invested 2 IRRs based on actual performance to date and projected performance through New Roster Signings 149M TOTAL FUTURES SPEND TO DATE 23.3% IRR ON SIGNIFICANT WRITER SIGNINGS 20 American 2x Grammy
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 > 88% of Acquired Gross Profit Should Fall to Adj. EBITDA1 THREE
Slide 22: Financials
Financials 22
Slide 23: Q3 Fiscal Year 2023 Results
Q3 Fiscal Year 2023 Results 16% total revenue growth year-over-year • Music Publishing revenue rose 14% year-over-year • Recorded Music revenue increased 1% year-over-year • Other revenue increased 260% year-over-year $18 $20 $8 $8 $1 $2 Q3'FY22 Q3'FY23 Publishing Recorded Music & Other Other Revenu
Slide 24: Strong Growth Track Record & Forecast
Strong Growth Track Record & Forecast – Raised Midpoint of Fiscal Year Outlook ($ in millions) Prior Fiscal 2023 Outlook Current Fiscal 2023 Outlook Growth (at mid-point) REVENUE $118 - $122 $120 - $122 12% ADJUSTED EBITDA $45 - $47 $46 - $47 13% $63 $80 $108 $54 $66 $77 $9 $14 $31 FY2020 FY2021 FY2
Slide 25: Improving Profitability
25 Note: Excludes the effect of any non-cash stock-based compensation expense related to the current option plan. $35 $47 $64 FY2020 FY2021 FY2022 GROSS PROFIT $23 $32 $41 FY2020 FY2021 FY2022 ADJUSTED EBITDA Improving Profitability $MM $MM
Slide 26: Solid Balance Sheet & Strong FCF Generator
$32 $35 $40 FY2020 FY2021 FY2022 $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 12-31-22 TOTAL DEBT: $292M CASH: $17M NET DEBT: $275M CAPACITY: $151M Solid Balance Sheet & Strong FCF Generator
Slide 27: Strong Growth Outlook & Operating Leverage
$108 $41 38% $160 $68 43% Revenue Adjusted EBITDA Adj. EBITDA Margin FY 2022A FY 2025E 14% CAGR • Assumes $100M annual reinvestments in the business (except FY2022, where a total of $224M was deployed) • Assumes reinvestments split into 75% M&A and 25% futures Strong Growth Outlook & Operating Lever
Slide 28: Appendix
Appendix 28
Slide 29: Music Publishing
Music Publishing 101 IP RIGHTS: • Songs owned by publisher or songwriter • Catalog = previously released songs • Futures = songwriters under active contract who are writing new songs PROTECTED ASPECT OF WORK: • Notes & lyrics RESPONSIBILITY OF PUBLISHER: Monetization & Exploitation • Catalog: identi
Slide 30: Recorded Music
Recorded Music 101 IP RIGHTS: • Collection of master recordings owned by a record label or performing artist PROTECTED ASPECT OF WORK: • Sound recording of a composition RESPONSIBILITY OF RECORD LABEL: Monetization & exploitation • Identify songs and work with producers and artists to create, market
Slide 31: RSVR Financial Model
RSVR Financial Model 101 INFRASTRUCTURE PROVIDES SUBSTANTIAL OPERATING LEVERAGE, ALLOWING US TO ACQUIRE THE GROSS PROFIT CONTRIBUTION OF ADDITIONAL CATALOGS WITHOUT INCREMENTAL EXPENSE 31 REVENUE MUSIC PUBLISHING RECORDED MUSIC Revenue / Gross Royalties LESS: Writer Royalties Net Publisher Share (NP
Slide 32: Income Statement Highlights
FISCAL YEAR END: March 31($ in M) 2019A 2020A 2021A 2022A Publishing Revenue $43 $53 $66 $77 Recorded & Other Revenue $2 $9 $14 $31 Total Revenue $45 $62 $80 $108 Percentage Growth YoY 40% 38% 29% 35% Net Publisher Share $24 $28 $37 $42 Net Label Share & Other $2 $7 $10 $22 Gross Profit $26 $35 $47
Slide 33: Cash Flow & Balance Sheet Highlights
FISCAL YEAR END: March 31 ($ in M) 2019A 2020A 2021A 2022A Cash Flow Highlights Adj. EBITDA $15 $23 $32 $41 Recoupments 10 14 13 13 Interest, W/C Changes & Other (13) (5) (9) (14) Cash From Operating (Adj. FCF) $12 $32 $35 $40 Acquisitions (32) (108) (119) (197) Advances & Other (18) (22) (17) (28)
Slide 34: Consolidated EBITDA Reconciliation
FISCAL YEAR END: March 31 ($ in M) 2019A 2020A 2021A 2022A Net Income $ 3.8 $ 9.4 $ 9.3 $13.1 Adjustments Depreciation & Amortization 5.9 9.1 14.1 19.0 Income Tax Expense / (Benefit) 0.5 4.0 2.1 4.3 Interest Expense 6.2 5.8 9.0 10.9 EBITDA $ 16.4 $ 28.3 $ 34.5 $47.3 Operating Adjustments Gain on Deb
Slide 35: IR Contacts
IR Contacts Jackie Marcus or Alec Buchmelter Alpha IR Group RSVR@alpha-ir.com | 312-445-2870 35