Reservoir Media, Inc..

Good morning, everyone, and thank you for participating in today's earnings conference call. Reservoir Media issued a press release with results for its second quarter of fiscal 2025 and did September 30th, 2024, earlier this morning. If you did not receive a copy of our earnings press release, you may access it from the investor relations section of our website at investors.reservoir-media.com. With me on today's call are Golnar Kozrashahi, founder and chief executive officer, and Jim Heindelmeyer, chief financial officer. As a reminder, this call is being simultaneously webcast and will be recorded and archived on the investor relations section of our website. Before I turn the call over to Golnar and Jim, I'd like to note that today's discussion will contain forward-looking statements that reflect the current views of Reservoir Media about our business, financial performance, and future events, and as such, involve certain risks and uncertainties. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will result or be achieved. Please refer to our earnings press release and our filings with the Securities and Exchange Commission for more information on the specific risks, uncertainties and other factors that could cause our actual results to differ materially from our expectations, beliefs and projections described in today's discussion. Any forward-looking statements that we make on this call or in our earnings press release are as of today, and we undertake no obligation to update these statements as a result of new information or future events, except to the extent required by applicable law. In addition to financial results presented in accordance with generally accepted accounting principles, we plan to present during this call certain financial measures that do not conform to U.S. GAAP if we believe they are useful to investors or if we believe they will help investors to better understand our performance or business trends. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures are included in our earnings press release. I would now like to turn the call over to Gulnar.

Thank you, Jackie. Good morning, everyone, and thank you for joining us today to discuss our results for the second quarter of fiscal year 2025. In a quarter marked by multiple headline investments to expand our roster, we posted revenue of $40.7 million, up 6%, compared to the year-ago period, and adjusted EBITDA of $17.6 million, up 11%, compared to the year-ago period. Our financial results were driven by strength in our music publishing business, with our margin expansion and good cost discipline supporting our overall growth in profitability. Jim will discuss our financial results in greater detail. This past quarter, Reservoir achieved several important milestones, including ushering in deals with talent who have defined popular culture for decades. In late September, we signed a deal with rap superstar and cultural icon Snoop Dogg and his record label, Death Row Records. Reservoir now publishes Snoop's entire catalog of works and future releases domestically in addition to the catalog of Snoop-owned Death Row Records, the storied label founded over 30 years ago and home to hits by Snoop, Dr. Dre, and more. With Snoop coming off an eventful summer as a featured commentator for NBC's Paris Olympics, transitioning into his current position as judge on NBC's The Voice, and announcing new music on the way, this is an exciting time to be on Team Snoop. Grammy and Juno Award-winning singer-songwriter Katie Lang is now also a Reservoir songwriter. She has been inducted into multiple halls of fame, and was called the best singer of her generation by the late Tony Bennett. KD was also awarded Canada's highest civilian honor, the Order of Canada, for her contributions to the music industry and inspiring generations of young musicians. We also recently announced the acquisition of the producer rights of celebrated record producer Jack Douglas, whose works with Aerosmith and Cheap Trick, among others, are of the highest quality and caliber rock songs of the past 50 years. The addition of these legends to our roster reinforces our reputation as the partner of choice for some of the world's greatest musical talents. Further diversifying our portfolio, we acquired publishing rights to the catalog of the late songwriter and composer Billy Strange, which includes Elvis Presley's A Little Less Conversation, Memories, and clean up your own backyard. As evidenced by listenership trends and the increasing number of crossover hits moving up the charts, Reservoir's investment in country music songwriters and producers has been an important driver of our organic growth. We recently welcomed writer-producer Travis Heidelman to the Reservoir family. Travis's collaboration, Austin, Bootstop Working by Dasha, was at the heart of a viral line dance trend on TikTok, generating over a million view creations on the platform with over 10 billion views. In September, in-demand country songwriter John Decious signed a publishing deal with us for his past and future works, which includes cuts with Miranda Lambert and three crow rights, on Laney Wilson's hit album Whirlwind, which debuted in the top ten on the Billboard 200 and at number three on top country albums. Outside of country music, we signed a publishing deal with producer and songwriter Kez Camara. Kez developed his craft under the guidance of the Black Eyed Peas and has worked with Timbaland, Skrillex, Tiesto, and Diplo, among others. We also announced the signing of producer, songwriter, and multi-instrumentalist Ben Stanko. Ben's co-writes span genres from rock artists like Avril Lavigne's to pop's 5 Seconds of Summer to dance's Jonas Blue and rap's NLE Choppa. We are proud of the icons and rising talent who call Reservoir their home and are confident our high-quality assets will continue bolstering our organic growth in the coming years. Our strategy of investing in legendary and evergreen catalogs remains a critical component of our value enhancement and long-term growth strategy. These songs are uniquely poised for sync placement. For example, Harry Belafonte's Deo, the Banana Boat song, is known by many for its featured use in the original film, Beetlejuice. and the song was used in Tim Burton's sequel, Beetlejuice, Beetlejuice. Plus the film's trailers and an ad campaign with CarMax was generated a 530% increase in Spotify streams of Deo following the film's opening weekend. Our catalog also includes iconic holiday-specific tracks that enjoy cyclical and fairly predictable success such as Bobby Pickett and the Crip Kickers' Monster Mash. In addition to the reliable streams we see of this Halloween classic each October, Reservoir has brought value to the track as well, tripling its revenue since 2019. The song notably lends itself to user-generated content, and we have seen a steady increase on both YouTube and TikTok. The latter boasts 48 million creations using the song with over 136 billion views. These records transcend generations, demonstrating the ongoing value enhancement proposition and longevity of our classic catalog cuts. Our roster also continues to rack up accolades with chart climbing successes, Sabrina Carpenter's hit, Espresso, co-written by Steph Jones, was recently dubbed the most streamed new release of 2024 on Spotify and the third fastest song to enter the platform's billions club. The song's ongoing success also contributed to Reservoir's appearance in the top 10 market share for the Hot 100 evaluation, according to Billboard's Publishers Quarterly for the second quarter 2024. These achievements are a testament to the strength of our portfolio and the ability to identify hit-making talent. As we look forward to the second half of fiscal 2025, our pipeline continues to remain strong with over $1 billion in transactions under consideration at attractive entry multiples. Our team has a proven methodology for not only attracting top talent, but also for identifying the potential ROI of an asset in both the near and long term. Having a portfolio that spans genres, eras, and geographies is both critical to our long-term success and puts us in a position of strength compared to trending listenership data. Notably, the RIAA recently published data acknowledging that the number of paying subscribers in the U.S. is rapidly reaching a saturation point. This is yet another important metric that proves our early and continued investment in emerging markets, such as the Middle East and North Africa. And it is invaluable to our organic growth opportunities. With that, I'd like to turn the call over to Jim to discuss our second quarter financial performance in greater detail. Jim?

Thank you, Dolmar. And good morning, everyone. Our second quarter results built on a strong first quarter, taking us above our previous expectations for fiscal year 2025 and giving us confidence in raising our guidance range. The cash flows and financial strength of ResMar are derived from the impressive roster of talent we boast, while we also remain disciplined on costs and our ability to expand profitability on higher revenues. Revenue for the second fiscal quarter was $40.7 million, a 5% year-over-year improvement on an organic basis, and a 6% increase when including acquisitions. This was led by a 10% increase in music publishing revenue, partially offset by a 1% decrease in recorded music revenue that was largely attributable to the release of De La Soul's catalog in physical and digital formats last year. Total cost decreased 5% compared to the prior year quarter due to a 20% decrease in administration expenses partially offset by a 3% increase in costs of revenue, which represents expanding gross margins given the 6% revenue growth, and a 3% increase in amortization and depreciation expenses. Turning to operating performance for the second quarter, AWBDA was $16.6 million, an increase of 34% year-over-year, and adjusted EBITDA was up 11%, to $17.6 million compared to our Q2 in fiscal 2024. The increase in AWBDA benefited from the non-recurrence of the write-off of recoupable legal fees in the prior year quarter, while both metrics benefited from revenue growth and improved gross margins. Interest expense was $5 million for the quarter, a decrease of $800,000 from the prior year. As a reminder, our interest expense in Q2 of fiscal 2024 included a one-time charge incurred in connection with the settlement of a royalty dispute. Net income for the second quarter was approximately $200,000 compared to net income of $700,000 in the second quarter of fiscal 2024. The decrease was due to a loss on the fair value of swaps during the quarter compared to a gain on fair value of swaps in the year-ago period, while being offset by improved gross margin, lower interest expense, the non-recurrence of the write-off of recoupable legal fees from the prior period, and an income tax benefit in the current period. Earnings per share for the quarter were breakeven compared to one cent in the year-ago quarter. Our weighted average diluted outstanding share count during the quarter was 65.8 million. Diving into our segment review for the quarter, music publishing had a 10% increase in revenue versus the prior year quarter at 28.6 million and was mainly driven by acquisitions of catalogs and revenue from the existing catalog, which benefited from price increases at multiple music streaming services and boosted digital revenue. Synchronization revenue also contributed to revenue growth in the quarter due to the timing of licenses. These factors were slightly offset by lower mechanical revenue and performance revenue as a result of the timing of chart-topping releases and broadcasts featuring our catalog. In our recorded music segment, we had a 1% decline in revenue compared to the year-ago period to $10.7 million due to a decrease in physical revenue related to the successful release of multiple De La Soul albums in the prior year quarter. Digital revenue was also down slightly from the prior year, primarily because of a spike in streaming following the death of Sinead O'Connor last July. The decrease in physical revenue and digital revenue was partially offset by an increase in neighboring rights revenue, which is an area where we have invested in more direct deals globally. Turning to our balance sheet. As of September 30, 2024, cash provided by operating activities was $21.9 million, which was an improvement of $3 million compared to the prior year. We had total liquidity of $142.3 million, consisting of $21.1 million of cash on hand and $121.2 million available under our revolver. We ended the quarter with total debt of $324.5 million, which was net of $4.4 million of deferred financing costs, and thus we maintained $303.4 million of net debt. That compares to net debt of $312.7 million as of March 31, 2024. Relating to our guidance range, we are increasing and narrowing our revenue guidance range of $148 million to $152 million to now reflect $150 million to $153 million, which at the midpoint implies growth of almost 5% versus fiscal 2024. Similarly, we are raising our adjusted EBITDA guidance range of $58 million to $61 million to now be $59 million to $62 million, which signals growth of almost 9% over the prior year at the midpoint of the range. We will continue to monitor our forecast for the second half of the year and will provide any refinements to our guidance when it's prudent to do so. Following a strong first half, we remain focused on maintaining our successful strategy of talent acquisition, value creation, and financial excellence, which includes our continued cost controls and facilitating growth of the consistent operating cash flows that we believe will enable us to achieve our updated guidance for fiscal year 2025. We will now open the line for questions.