Reservoir Media Inc
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
RSVR$10.21-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-07.
0001410578-24-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001410578-24-001135
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 144 previous paragraphs and 118 current paragraphs.
82 unchanged; 31 reworded; 5 added; 26 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 31 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Loss on Foreign Exchange
Current report
Income tax benefit was $294 thousand during the three months ended June 30, 2024 compared to income tax expense of $62 thousand during the three months ended June 30, 2023. The effective income tax rate during the three months ended June 30, 2024 was 39.3% compared to 27.5% during the three months ended June 30, 2023. During the three months ended June 30, 2024, the Company recorded an incremental tax benefit of approximately $103,000 to its deferred tax liabilities related to certain international intangible assets. Additionally, the change in the effective income tax rate reflect changes in the mix of income from multiple tax jurisdictions.
Current report
Net loss was $453 thousand during the three months ended June 30, 2024 compared to the net income of $164 thousand during the three months ended June 30, 2023. The decrease in net income was driven primarily by the loss on fair value of swaps during the three months ended June 30, 2024 compared to gain on fair value of swaps during the three months ended June 30, 2023 and an increase in interest expense. These factors were partially offset by an increase in operating income, which reflects revenue growth and improved margins, and an income tax benefit in the three months ended June 30, 2024 compared to income tax expense in the three months ended June 30, 2023.
Current report
NM - Not meaningful
Current report
RMM is party to a credit agreement (as amended or supplemented from time to time, the “RMM Credit Agreement”) governing RMM’s $450,000 thousand senior secured revolving credit facility (the “Senior Credit Facility”). The Senior Credit Facility also includes an “accordion feature” that permits RMM to seek additional commitments in an amount not to exceed $150,000 thousand. The maturity date of the loans advanced under the Senior Credit Facility is December 16, 2027.
Removed paragraphs (26)
Previous report
On a geographic basis, U.S. Music Publishing revenues represented 61% of total Music Publishing revenues for the three months ended December 31, 2023 compared to 56% for the three months ended December 31, 2022. International Music Publishing revenues represented 39% of total Music Publishing revenues for the three months ended December 31, 2023 compared to 44% for the three months ended December 31, 2022. The increase in the U.S. percentage for the three months ended December 31, 2023 was driven primarily by higher royalty rates and price increases at multiple music streaming services.
Previous report
Total revenues increased by $18,234 thousand, or 21%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, driven by a 30% increase in Recorded Music revenue and a 15% increase in Music Publishing revenue. Music Publishing revenues represented 66% and 69% of total revenues for the nine months ended December 31, 2023 and the nine months ended December 31, 2022, respectively. Recorded Music revenues represented 30% and 27% of total revenues for the nine months ended December 31, 2023 and the nine months ended December 31, 2022, respectively. U.S. and international revenues represented 59% and 41%, respectively of total revenues for both the nine months ended December 31, 2023 and the nine months ended December 31, 2022. The shift in mix between Music Publishing and Recorded Music was driven primarily by the significant physical sales in the Recorded Music segment for the nine months ended December 31, 2023.
Previous report
Total digital revenues increased by $9,520 thousand, or 20%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, primarily due to the higher publishing royalty rates in effect for 2023 as well as price increases at multiple music streaming services, partially offset by the nonrecurrence of $2,100 thousand recognized during the nine months ended December 31, 2022 for estimated retroactive U.S. royalties related to the 2022 CRB ruling. Total digital revenues represented 55% and 56% of consolidated revenues for the nine months ended December 31, 2023 and the nine months ended December 31, 2022, respectively.
Previous report
Music Publishing revenues increased by $9,178 thousand, or 15%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. This increase in Music Publishing revenue was mainly driven by acquisitions of catalogs and revenue from the existing catalog, which benefitted from higher royalty rates and price increases at multiple music streaming services, and led to increases in digital revenue and performance revenue. The increase in digital revenue reflects higher royalty rates in effect for 2023 as well as price increases at multiple music streaming services, which were partially offset by the nonrecurrence of $2,100 thousand recognized during the nine months ended December 31, 2022 for estimated retroactive U.S. royalties related to the 2022 CRB ruling.
Previous report
Recorded Music revenues increased by $7,186 thousand, or 30%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. The increase in Recorded Music revenue was driven by an increase in physical revenue and the continued growth at music streaming services. The $3,885 thousand increase in physical revenue was primarily due to De La Soul releases for Tommy Boy and the timing of the Chrysalis’ release schedule. The $424 thousand decrease in synchronization revenue was primarily due to timing of synchronization licenses, as well as the writers’ and actors’ strikes in Hollywood.
Previous report
On a geographic basis, U.S. Recorded Music revenues represented 54% of total Recorded Music revenues for the nine months ended December 31, 2023 and the nine months ended December 31, 2022. International Recorded Music revenues represented 46% of total Recorded Music revenues for the nine months ended December 31, 2023 and the nine months ended December 31, 2022.
Previous report
Cost of revenues increased by $5,471 thousand, or 15%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. Cost of revenues as a percentage of revenues decreased to 39% for the nine months ended December 31, 2023 from 41% for the nine months ended December 31, 2022.
Previous report
Amortization and depreciation expense increased by $2,321 thousand, or 14%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, driven by increases in both the Music Publishing and Recorded Music segments. Music Publishing amortization and depreciation expense increased by $1,890 thousand, or 16%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, primarily due to the acquisition of additional music catalogs. Recorded Music amortization and depreciation increased by $426 thousand, or 10%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, primarily due to the acquisition of additional music catalogs.
Previous report
Other administration expenses increased by $351 thousand, or 23%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily due to selling expenses associated with our artist management business, consisting mostly of manager compensation.
Previous report
Total administration expenses increased by $7,118 thousand, or 31%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, reflecting increases in both the Music Publishing and Recorded Music segments, as well as an increase in Other administration expenses. Approximately $2,700 thousand of the increase relates to the write-off of recoupable legal expenses and attorneys’ fees incurred in connection with the Royalty Dispute described in Note 15 to the accompanying condensed consolidated financial statements (the “Recoupable legal fee write-off”). Expressed as a percentage of revenues, administration expenses increased to 29% for the nine months ended December 31, 2023 from 26% for the nine months ended December 31, 2022, primarily as a result of the Recoupable legal fee write-off.
Previous report
Music Publishing administration expenses increased by $4,412 thousand, or 30%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. Expressed as a percentage of revenues, Music Publishing administration expenses increased to 28% for the nine months ended December 31, 2023 from 24% for the nine months ended December 31, 2022, primarily as a result of the Recoupable legal fee write-off.
Previous report
Recorded Music administration expenses increased by $1,179 thousand, or 19%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. Expressed as a percentage of revenue, Recorded Music administration expenses decreased to 23% for the nine months ended December 31, 2023 from 26% for the nine months ended December 31, 2022, primarily due to taking advantage of operating leverage on the Recorded Music platform.
Previous report
Other administration expenses increased by $1,527 thousand, or 75%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, primarily due to selling expenses associated with our artist management business, consisting mostly of manager compensation.
Previous report
Interest expense increased by $5,286 thousand, or 50%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. Approximately $620 thousand of this increase was incurred in connection with settlement of the Royalty Dispute described in Note 15 to the accompanying condensed consolidated financial statements. The remaining increase was primarily driven by increased debt balances due to use of funds in acquisitions of music catalogs and writer signings, as well as an increase in SOFR.
Previous report
Gain (Loss) on Foreign Exchange
Previous report
Other Income (Expense), Net
Previous report
Three and Nine Months Ended December 31, 2023 vs. Three and Nine Months Ended December 31, 2022
Previous report
Other income (expense), net during the three and nine months ended December 31, 2023 consists primarily of a $991 thousand impairment charge to write-down an equity investment to its estimated fair value, as further described in Note 14 to the accompanying condensed consolidated financial statements.
Previous report
Income tax benefit was $1,227 thousand during the three months ended December 31, 2023 compared to income tax expense of $3,530 thousand during the three months ended December 31, 2022. The change in income tax (benefit) from income tax expense was driven by the loss before income taxes during the three months ended December 31, 2023. Additionally, the three months ended December 31, 2022 included incremental tax expense of $3,659 thousand due to the increase in the value of deferred tax liabilities arising from a change in estimate of the applicable tax rate used to measure international deferred tax liabilities in the United Kingdom.
Previous report
Income tax benefit was $873 thousand during the nine months ended December 31, 2023 compared to income tax expense of $5,218 thousand during the nine months ended December 31, 2022. The change in income tax (benefit) from income tax expense was driven by the loss before income taxes during the nine months ended December 31, 2023. Additionally, the nine months ended December 31, 2022 included incremental tax expense of $3,659 thousand due to the increase in the value of deferred tax liabilities arising from a change in estimate of the applicable tax rate used to measure international deferred tax liabilities in the United Kingdom.
Previous report
Net loss decreased by $1,205 thousand during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The decrease in net loss was driven primarily by a $4,757 thousand decrease in income tax expense, a $1,923 thousand increase in operating income, and a $914 thousand decrease in loss on early extinguishment of debt. These factors were partially offset by a $4,068 increase in loss on fair value of swaps, $1,273 thousand increase in interest expense and $990 thousand increase in other expense due to the impairment of a cost method investment.
Previous report
Net loss was $2,015 thousand during the nine months ended December 31, 2023 compared to net income of $436 thousand during the nine months ended December 31, 2022. The $2,451 thousand decrease in net income was driven primarily by a $6,097 thousand increase in loss on fair value of swaps, $5,286 thousand increase in interest expense and $990 thousand increase in other expense due to the impairment of a cost method investment. These factors were partially offset by a $6,090 thousand decrease in income tax expense, a $3,325 thousand increase in operating income and a $914 thousand decrease in loss on early extinguishment of debt.
Previous report
Consolidated OIBDA increased by $5,646 thousand, or 20%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, driven by a $3,058 thousand increase in Music Publishing OIBDA, a $2,243 thousand increase in Recorded Music OIBDA and a $344 thousand increase in Other OIBDA. Expressed as a percentage of revenue, OIBDA Margin was 33% for the nine months ended December 31, 2023 and the nine months ended December 31, 2022.
Previous report
Music Publishing OIBDA increased by $3,058 thousand, or 18%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. Expressed as a percentage of revenue, Music Publishing OIBDA Margin increased to 28% for the nine months ended December 31, 2023 from 27% for the nine months ended December 31, 2022. The increases in Music Publishing OIBDA and OIBDA margin reflect revenue growth and improved margins, partially offset by the Recoupable legal fee write-off.
Previous report
Recorded Music OIBDA increased by $2,243 thousand, or 20% during the nine months ended December 31, 2023 compared to the* nine months ended December 31, 2022. Expressed as a percentage of revenue, Recorded Music OIBDA Margin decreased to 44% during the nine months ended December 31, 2023 from 48% in the nine months ended December 31, 2022. This decrease is primarily driven by the change in the mix of sales by type to a higher percentage of physical sales, partially offset by improved operating leverage *on the Recorded Music platform.
Previous report
Adjusted EBITDA increased by $8,472 thousand, or 27%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022, primarily as a result of revenue growth. Adjusted EBITDA Margin increased to 38% during the nine months ended December 31, 2023 compared to 36% during the nine months ended December 31, 2022, primarily due to improved margins and operating leverage.
Reworded paragraphs (31)
Previous wording
Our Current Artist and Catalog recorded music businesses are both primarily handled by our Chrysalis Records label based in London and our Tommy Boy record label based in New York City. In the United States, we also manage some select Catalog recorded music under our Philly Groove Records and Reservoir Records labels. We also own income participation interests in recordings by The Isley Brothers, The Commodores, Wisin and Yandel, Alabama and Travis Tritt, and an interest in the Loud Records catalog containing recordings by the Wu-Tang Clan. Our core Catalog includes recordings under the Chrysalis Records label by artists such as Sinéad O’Connor, The Specials, Generation X, The Waterboys and De La Soul, as well as recordings under the Tommy Boy record label by artists such as House of Pain, Naughty By Nature, and Queen Latifah.
Current wording
Our Current Artist and Catalog recorded music businesses are both primarily handled by our Chrysalis Records label based in London and our Tommy Boy record label based in New York City. We also manage some select Catalog recorded music under our Philly Groove Records and Reservoir Records labels. We also own income participation interests in recordings by The Isley Brothers, The Commodores, Wisin and Yandel, Alabama and Travis Tritt, and an interest in the Loud Records catalog containing recordings by the Wu-Tang Clan. Our core Catalog includes recordings under the Chrysalis Records label by artists such as Sinéad O’Connor, The Specials, Generation X and The Waterboys, and De La Soul, as well as recordings under the Tommy Boy record label by artists such as House of Pain, Naughty By Nature, and Queen Latifah.
Previous wording
Our Current Artist and Catalog recorded music distribution is handled by a network of distribution partners. Chrysalis Records current frontline releases are distributed through Secretly Distribution, with prior frontline releases distributed through PIAS. Chrysalis Records and Tommy Boy catalogs are distributed via our agreements with MERLIN, AMPED, Proper and other partners.
Current wording
Our Current Artist and Catalog recorded music distribution is handled by a network of distribution partners. Chrysalis Records current frontline releases are distributed through Secretly Distribution, with prior frontline releases distributed via PIAS. Chrysalis Records and Tommy Boy catalogs are distributed via our agreements with MERLIN, AMPED, Proper and other partners.
Previous wording
Through our distribution network, our music is being sold in physical retail outlets as well as in physical form to online physical retailers, such as amazon.com, and distributed in digital form to an expanding universe of digital partners, including streaming services such as Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music Entertainment Group, Tidal and YouTube, radio services such as iHeart Radio and SiriusXM, and download services. We also license music digitally to fitness platforms such as Apple Fitness+, Equinox, Hydrow and Peloton and social media outlets, such as Facebook, Instagram, TikTok and Snap.
Current wording
Through our distribution network, our music is being sold in physical retail outlets as well as in physical form to online physical retailers, such as amazon.com, and distributed in digital form to an expanding universe of digital partners, including streaming services such as Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music Entertainment Group and YouTube, radio services such as iHeart Radio and SiriusXM, and download services. We also license music digitally to fitness platforms such as Apple Fitness+, Equinox, Hydrow and Peloton and social media outlets, such as Facebook, Instagram, TikTok and Snap.
Previous wording
Total revenues increased by $5,545 thousand, or 19%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, driven by a 32% increase in Recorded Music revenue and a 15% increase in Music Publishing revenue. Music Publishing revenues represented 65% and 67% of total revenues for the three months ended December 31, 2023 and the three months ended December 31, 2022, respectively. Recorded Music revenues represented 28% and 25% of total revenues for the three months ended December 31, 2023 and the three months ended December 31, 2022, respectively. U.S. and international revenues represented 61% and 39%, respectively of total revenues for the three months ended December 31, 2023. U.S. and international revenues represented 59% and 41%, respectively of total revenues for the three months ended December 31, 2022.
Current wording
Total revenues increased by $2,480 thousand, or 8%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven by a 15% increase in Music Publishing revenue, partially offset by a 7% decrease in Recorded Music revenue. Music Publishing revenues represented 70% and 65% of total revenues for the three months ended June 30, 2024 and the three months ended June 30, 2023, respectively. Recorded Music revenues represented 28% and 33% of total revenues for the three months ended June 30, 2024 and the three months ended June 30, 2023, respectively. U.S. and international revenues represented 59% and 41%, respectively, of total revenues for the three months ended June 30, 2024. U.S. and international revenues represented 60% and 40%, respectively, of total revenues for the three months ended June 30, 2023.
Previous wording
Total digital revenues increased by $4,563 thousand, or 29%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily due to the higher publishing royalty rates in effect for 2023 as well as price increases at multiple music streaming services. Total digital revenues represented 58% and 53% of consolidated revenues for the three months ended December 31, 2023 and the three months ended December 31, 2022, respectively.
Current wording
Total digital revenues increased by $3,670 thousand, or 21%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to price increases at multiple music streaming services, as well as the impact of catalog acquisitions. Total digital revenues represented 62% and 55% of consolidated revenues for the three months ended June 30, 2024 and the three months ended June 30, 2023, respectively.
Previous wording
Music Publishing revenues increased by $2,988 thousand, or 15%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. This increase in Music Publishing revenue was mainly driven by acquisitions of catalogs and revenue from the existing catalog, which benefitted from higher royalty rates and price increases at multiple music streaming services, and led to increases in digital revenue and synchronization revenue, partially offset by decreases in mechanical, performance and other revenue.
Current wording
Music Publishing revenues increased by $3,209 thousand, or 15%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase in Music Publishing revenue was mainly driven by acquisitions of catalogs and revenue from the existing catalog, which benefitted from price increases at multiple music streaming services, and led to increases in digital revenue, performance revenue and mechanical revenue, partially offset by decreases in synchronization revenue and other revenue.
Previous wording
On a geographic basis, U.S. Music Publishing revenues represented 59% of total Music Publishing revenues for the nine months ended December 31, 2023 and the nine months ended December 31, 2022. International Music Publishing revenues represented 41% of total Music Publishing revenues for the nine months ended December 31, 2023 and the nine months ended December 31, 2022.
Current wording
On a geographic basis, U.S. Music Publishing revenues represented 57% of total Music Publishing revenues for the three months ended June 30, 2024 compared to 63% for the three months ended June 30, 2023. International Music Publishing revenues represented 43% of total Music Publishing revenues for the three months ended June 30, 2024 compared to 37% for the three months ended June 30, 2023.
Previous wording
Recorded Music revenues increased by $2,438 thousand, or 32%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase in Recorded Music revenue was driven by continued growth at music streaming services and price increases at multiple music streaming services, as well as increases in physical revenue and synchronization revenue. The $567 thousand increase in physical revenue was primarily due to De La Soul releases for Tommy Boy and the timing of Chrysalis’ release schedule. The $394 thousand increase in synchronization revenue was primarily due to timing of synchronization licenses.
Current wording
Recorded Music revenues decreased by $754 thousand, or 7%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease in Recorded Music revenue was driven by a $2,222 thousand decrease in physical revenue, primarily due to 2023 De La Soul releases. The decrease in physical revenue was partially offset by continued growth at music streaming services and price increases at multiple music streaming services, as well as increases in neighboring rights revenue and synchronization revenue.
Previous wording
On a geographic basis, U.S. Recorded Music revenues represented 53% of total Recorded Music revenues for the three months ended December 31, 2023 compared to 55% for the three months ended December 31, 2022. International Recorded Music revenues represented 47% of total Recorded Music revenues for the three months ended December 31, 2023 compared to 45% for the three months ended December 31, 2022.
Current wording
On a geographic basis, U.S. Recorded Music revenues represented 59% of total Recorded Music revenues for the three months ended June 30, 2024 compared to 53% for the three months ended June 30, 2023. International Recorded Music revenues represented 41% of total Recorded Music revenues for the three months ended June 30, 2024 compared to 47% for the three months ended June 30, 2023.
Previous wording
Cost of revenues increased by $1,472 thousand, or 13%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Cost of revenues as a percentage of revenues decreased to 37% for the three months ended December 31, 2023 from 39% for the three months ended December 31, 2022.
Current wording
Cost of revenues decreased by $191 thousand, or 1%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Cost of revenues as a percentage of revenues decreased to 39% for the three months ended June 30, 2024 from 42% for the three months ended June 30, 2023.
Previous wording
Writer royalties and other publishing costs for the Music Publishing segment increased by $540 thousand, or 6%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Writer royalties and other publishing costs as a percentage of Music Publishing revenues decreased to 44% for the three months ended December 31, 2023 from 48% for the three months ended December 31, 2022. The increase in margins was due to the change in the mix of revenue by type and songwriting clients with their specific contractual royalty rates being applied to the revenues.
Current wording
Writer royalties and other publishing costs for the Music Publishing segment increased by $1,130 thousand, or 12%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Writer royalties and other publishing costs as a percentage of Music Publishing revenues decreased to 44% for the three months ended June 30, 2024 from 46% for the three months ended June 30, 2023. The increase in margins was due to the change in the mix of revenue by type and songwriting clients with their specific contractual royalty rates being applied to the revenues.
Previous wording
Artist royalties and other recorded music costs for the Recorded Music segment increased by $932 thousand, or 43%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Artist royalties and other recorded music costs as a percentage of recorded music revenues increased to 31% for the three months ended December 31, 2023 from 28% for the three months ended December 31, 2022. The increase in artist royalties and other recorded music costs and decrease in margins were due primarily to the change in the mix of sales by type to a higher percentage of physical sales, which carry higher costs than other types of revenue.
Current wording
Artist royalties and other recorded music costs for the Recorded Music segment decreased by $1,321 thousand, or 33%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Artist royalties and other recorded music costs as a percentage of recorded music revenues decreased to 27% for the three months ended June 30, 2024 from 38% for the three months ended June 30, 2023. The decrease in artist royalties and other recorded music costs and increase in margins were due primarily to the decrease in physical sales and change in the mix of sales by type to a lower percentage of physical sales, which carry higher costs than other types of revenue.
Previous wording
Amortization and depreciation expense increased by $797 thousand, or 14%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, driven by increases in both the Music Publishing and Recorded Music segments. Music Publishing amortization and depreciation expense increased by $760 thousand, or 18%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily due to the acquisition of additional music catalogs. Recorded Music amortization and depreciation increased by $35 thousand, or 3%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily due to the acquisition of additional music catalogs.
Current wording
Amortization and depreciation expense increased by $329 thousand, or 5%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven primarily by an increase in the Music Publishing segment. Music Publishing amortization and depreciation expense increased by $298 thousand, or 7%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to the acquisition of additional music catalogs.
Previous wording
Total administration expenses increased by $1,353 thousand, or 17%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, reflecting increases in both the Music Publishing and Recorded Music segments, as well as an increase in Other administration expenses. Expressed as a percentage of revenues, administration expenses decreased to 26% for the three months ended December 31, 2023 from 27% for the three months ended December 31, 2022.
Current wording
Total administration expenses increased by $524 thousand, or 6%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven by an increase in the Music Publishing segment, partially offset by a decrease in the Recorded Music segment. Expressed as a percentage of revenues, administration expenses decreased to 28% for the three months ended June 30, 2024 from 29% for the three months ended June 30, 2023.
Previous wording
Music Publishing administration expenses increased by $513 thousand, or 11%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Expressed as a percentage of revenues, Music Publishing administration expenses were 23% for the three months ended December 31, 2023 and the three months ended December 31, 2022.
Current wording
Music Publishing administration expenses increased by $994 thousand, or 18%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Expressed as a percentage of revenues, Music Publishing administration expenses were 27% for the three months ended June 30, 2024 and the three months ended June 30, 2023.
Previous wording
Recorded Music administration expenses increased by $489 thousand, or 28%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Expressed as a percentage of revenue, Recorded Music administration expenses were 23% for the three months ended December 31, 2023 and the three months ended December 31, 2022.
Current wording
Recorded Music administration expenses decreased by $391 thousand, or 13%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Expressed as a percentage of revenue, Recorded Music administration expenses decreased to 26% for the three months ended June 30, 2024 from 28% for the three months ended June 30, 2023, primarily due to the non-recurrence of legal fees related to a matter incurred during the three months ended June 30, 2023.
Previous wording
Interest expense increased by $1,273 thousand, or 31%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, driven primarily by increased debt balances due to use of funds in acquisitions of music catalogs and writer signings, as well as an increase in SOFR.
Current wording
Interest expense increased by $326 thousand, or 7%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven primarily by increased debt balances due to use of funds in acquisitions of music catalogs and writer signings, as well as an increase in SOFR. The Company expects its interest expense will increase on the portions of its borrowings that are hedged beginning in October 2024, as existing swaps mature, and new swap contracts become effective.
Previous wording
Gain on foreign exchange decreased by $57 thousand for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely British pound sterling and euro.
Current wording
Loss on foreign exchange increased by $30 thousand for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely British pound sterling and euro.
Previous wording
Loss on fair value of swaps was $1,774 thousand during the nine months ended December 31, 2023 compared to a $4,323 thousand gain on fair value of swaps for the nine months ended December 31, 2022. This change was due to marking to market our interest rate swap hedges.
Current wording
Loss on fair value of swaps was $490 thousand for the three months ended June 30, 2024. Gain on the fair value of swaps for the three months ended June 30, 2023 was $1,845 thousand. This change was due to marking to market our interest rate swap hedges.
Previous wording
Consolidated OIBDA increased by $2,720 thousand, or 27%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, driven by a $1,935 thousand increase in Music Publishing OIBDA and a $1,016 increase in Recorded Music OIBDA, partially offset by a $232 thousand decrease in Other OIBDA. Expressed as a percentage of revenue, OIBDA Margin increased to 36% for the three months ended December 31, 2023 from 34% for the three months ended December 31, 2022.
Current wording
Consolidated OIBDA increased by $2,145 thousand, or 23%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven by a $1,085 thousand increase in Music Publishing OIBDA and a $958 thousand increase in Recorded Music OIBDA. Expressed as a percentage of revenue, OIBDA Margin increased to 33% for the three months ended June 30, 2024 from 29% for the three months ended June 30, 2023.
Previous wording
Music Publishing OIBDA increased by $1,935 thousand, or 33%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Expressed as a percentage of revenue, Music Publishing OIBDA Margin increased to 34% in the three months ended December 31, 2023 from 29% in the three months ended December 31, 2022. The increases in Music Publishing OIBDA and OIBDA Margin reflect revenue growth and improved margins.
Current wording
Music Publishing OIBDA increased by $1,085 thousand, or 19%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Expressed as a percentage of revenue, Music Publishing OIBDA Margin increased to 28% in the three months ended June 30, 2024 from 27% in the three months ended June 30, 2023. The increases in Music Publishing OIBDA and OIBDA Margin reflect revenue growth and improved margins.
Previous wording
Recorded Music OIBDA increased by $1,016 thousand, or 28% during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Expressed as a percentage of revenue, Recorded Music OIBDA Margin decreased to 47% during the three months ended December 31, 2023 from 48% in the three months ended December 31, 2022, driven primarily by the change in the mix of sales by type to a higher percentage of physical sales.
Current wording
Recorded Music OIBDA increased by $958 thousand, or 27% during the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Expressed as a percentage of revenue, Recorded Music OIBDA Margin increased to 46% during the three months ended June 30, 2024 from 34% in the three months ended June 30, 2023, driven primarily by the* *change in the mix of revenue by type to a lower percentage of physical sales.
Previous wording
Adjusted EBITDA increased by $2,740 thousand, or 25%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily as a result of revenue growth. Adjusted EBITDA Margin increased to 39% during the three months ended December 31, 2023 compared to 37% during the three months ended December 31, 2022, primarily due to improved margins and operating leverage.
Current wording
Adjusted EBITDA increased by $2,505 thousand, or 25%, during the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily as a result of revenue growth and improved margins. Adjusted EBITDA Margin increased to 37% during the three months ended June 30, 2024 compared to 32% during the three months ended June 30, 2023, primarily due to revenue growth, improved gross margins driven by a lower percentage of physical revenue, and effective cost management.
Previous wording
As of December 31, 2023, we had $342,456 thousand of debt (net of $5,373 thousand of deferred financing costs) and $19,514 thousand of cash and cash equivalents.
Current wording
As of June 30, 2024, we had $324,127 thousand of debt (net of $4,701 thousand of deferred financing costs) and $16,359 thousand of cash and cash equivalents.
Previous wording
Cash provided by operating activities was $22,407 thousand for the nine months ended December 31, 2023 compared to $26,203 thousand for the nine months ended December 31, 2022. The primary driver of the $3,796 thousand decrease in cash provided by operating activities during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022 was a decrease in cash provided by working capital, primarily related to the timing of payments of accounts payable and accrued liabilities, partially offset by the timing of collections from accounts receivable.
Current wording
Cash provided by operating activities was $8,556 thousand for the three months ended June 30, 2024 compared to cash used for operating activities of $861 thousand for the three months ended June 30, 2023. The primary driver of the $9,417 thousand increase in cash provided by operating activities during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was an increase in royalty advance recoupments and the timing of collection of accounts receivable, partially offset by the timing of payments for royalties payable and accounts payable and accrued expenses.
Previous wording
Cash used in investing activities was $47,182 thousand for the nine months ended December 31, 2023 compared to $45,410 thousand for the nine months ended December 31, 2022. The increase in cash used in investing activities was primarily due to increased acquisitions of music catalogs.
Current wording
Cash used for investing activities was $1,899 thousand for the three months ended June 30. 2024 compared to $15,227 thousand for the three months ended June 30, 2023. The decrease in cash used in investing activities was primarily due to a decrease in acquisitions of music catalogs.
Previous wording
Cash provided by financing activities was $29,560 thousand for the nine months ended December 31, 2023 compared to $19,231 thousand for the nine months ended December 31, 2022. The increase in cash provided by financing activities in the nine months ended December 31, 2023 primarily reflects an increase in borrowings used for investing activities and a decrease in deferred financing costs paid, partially offset by an increase in secured line of credit repayments.
Current wording
Cash (used for) provided by financing activities was $(8,415) thousand for the three months ended June 30, 2024 compared to $13,294 thousand for the three months ended June 30, 2023. The change in cash (used for) provided by financing activities in the three months ended June 30, 2024 primarily reflects an $11,000 thousand decrease in borrowings used for investing activities and a $10,000 thousand repayment towards the secured line of credit.
Previous wording
As of December 31, 2023, our outstanding debt consisted of $347,828 thousand borrowed under the Senior Credit Facility. As of December 31, 2023, remaining borrowing availability under the Senior Credit Facility was $102,172 thousand.
Current wording
As of June 30, 2024, our outstanding debt consisted of $328,828 thousand borrowed under the Senior Credit Facility. As of June 30. 2024, remaining borrowing availability under the Senior Credit Facility was $121,172 thousand.
Previous wording
On December 16, 2022, RMM entered into an amendment (the “Second Amendment”) to the RMM Credit Agreement. The Second Amendment amended the RMM Credit Agreement governing RMM’s secured revolving credit facility (the “Senior Credit Facility”). The Second Amendment amended the RMM Credit Agreement to (i) increase RMM’s senior secured revolving credit facility from $350,000 thousand to $450,000 thousand, (ii) increase the incremental borrowing available under the facility’s accordion feature from $50,000 thousand to $150,000 thousand, (iii) extend the maturity date of the loans advanced under the RMM Credit Agreement from October 16, 2024 to December 16, 2027, (iv) modify the interest rate to be equal to either the sum of a base rate plus a margin of 1.00% or the sum of a SOFR rate plus a margin of 2.00%, in each case subject to a 0.25% increase based on a consolidated net senior debt to library value ratio, (v) remove the existing total leverage ratio financial covenant of no greater than 7.50:1.00 (net of up to $20,000 thousand of certain cash balances) as of the end of each fiscal quarter, (vi) reduce the minimum required fixed charge coverage ratio financial covenant to 1.10:1.00 and (vii) modify the consolidated senior debt to library value ratio financial covenant to 0.450, subject to certain adjustments. RMM is also required to pay an unused fee in respect of unused commitments under the Senior Credit Facility, if any, at a rate of 0.25% per annum.
Current wording
The interest rate on borrowings under the Senior Credit Facility is equal to, at our option, either (i) the sum of a base rate plus a margin of 1.00% or (ii) the sum of a SOFR rate plus a margin of 2.00%, in each case subject to a 0.25% increase based on a consolidated net senior debt to library value ratio. RMM is also required to pay an unused fee in respect of unused commitments under the Senior Credit Facility, if any, at a rate of 0.25% per annum.
Previous wording
Our ability to pay dividends is restricted by covenants in the Senior Credit Facility. We did not pay any dividends to stockholders during the three and nine months ended December 31, 2023.
Current wording
Our ability to pay dividends is restricted by covenants in the Senior Credit Facility. We did not pay any dividends to stockholders during the three months ended June 30, 2024.
Previous wording
Management believes that funds generated from our operations, borrowings under the Senior Credit Facility and available cash and equivalents will be sufficient to fund our debt service requirements, working capital requirements and capital expenditure requirements for the foreseeable future. However, our ability to continue to fund these items and to reduce debt may be affected by general economic, financial, competitive, legislative and regulatory factors, as well as other industry-specific factors such as the ability to control music piracy and the continued transition from physical to digital formats in the recorded music and music publishing industries. It could also be affected by the severity and duration of natural or human-made disasters, including pandemics such as the COVID-19 pandemic. We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire our outstanding debt. The amounts involved in any such transactions, individually or in the aggregate, may be material and may be funded
Current wording
Management believes that funds generated from our operations, borrowings under the Senior Credit Facility and available cash and equivalents will be sufficient to fund our debt service requirements, working capital requirements and capital expenditure requirements for the foreseeable future. However, our ability to continue to fund these items and to reduce debt may be affected by general economic, financial, competitive, legislative and regulatory factors, as well as other industry-specific factors such as the ability to control music piracy and the continued transition from physical to digital formats in the recorded music and music publishing industries. It could also be affected by the severity and duration of natural or human-made disasters, including pandemics. We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire our outstanding debt. The amounts involved in any such transactions, individually or in the aggregate, may be material and may be funded from available cash or from additional borrowings or equity raises. In addition, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity, and other factors, we may seek to refinance the Senior Credit Facility with existing cash and/or with funds provided from additional borrowings.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Writer royalties and other publishing costs for the Music Publishing segment increased by $1,708 thousand, or 6%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. Writer royalties and other publishing costs as a percentage of Music Publishing revenues decreased to 44% for the nine months ended December 31, 2023 from 48% for the nine months ended December 31, 2022. The increase in margins was due to the change in the mix of revenue by type and songwriting clients with their specific contractual royalty rates being applied to the revenues.
Previous report — wording carried elsewhere
Artist royalties and other recorded music costs for the Recorded Music segment increased by $3,763 thousand, or 58%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. Artist royalties and other recorded music costs as a percentage of recorded music revenues increased to 33% for the nine months ended December 31, 2023 from 27% for the nine months ended December 31, 2022. The increase in artist royalties and other recorded music costs and decrease in margins were due primarily to the change in the mix of sales by type to a higher percentage of physical sales, which carry higher costs than other types of revenue.
Previous report — wording carried elsewhere
Loss on foreign exchange was $70 thousand for the nine months ended December 31, 2023 compared to a gain on foreign exchange of $338 thousand for the nine months ended December 31, 2022. This change was due to fluctuations in the two foreign currencies we are directly exposed to, namely British pound sterling and euro.
Previous report — wording carried elsewhere
Loss on fair value of swaps increased by $4,068 thousand for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. This change was due to marking to market our interest rate swap hedges.
Previous report — wording carried elsewhere
from available cash or from additional borrowings or equity raises. In addition, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity, and other factors, we may seek to refinance the Senior Credit Facility with existing cash and/or with funds provided from additional borrowings.