First Quarter Summary vs.
- Net revenue was
$93.1 million , an increase of 166% compared to$35.0 million ; - Net income of
$8.8 million , or$0.49 per diluted share, compared to net loss of$(3.6) million , or$(0.25) per diluted share; - Adjusted EBITDA was
$15.3 million , an increase of$18.0 million compared to$(2.7) million ; and - Cash flow from operations was
$21.1 million , an increase of 20% compared to$17.5 million .
Management Commentary
“We turned in another stellar performance in the first quarter, with sales, gross margin, net income and adjusted EBITDA all reaching record high levels for the first quarter,” said
“The strong secular trends that make gaming such a great category continue. According to NPD,
“We believe these results continue to underscore the strength of our brand, the innovation of our products and the superiority of our execution. Although a number of factors will drive a different phasing of our revenue this year, we believe the combination of our strong market share in console headsets, greatly expanded offering of PC gaming accessories and new product launches in several new categories will allow us to increase our annual sales and top a record 2020. In fact, we are raising our full year revenue and profit outlook to reflect the degree to which our first quarter results exceeded our prior outlook.
“As previously announced, we have multiple new product initiatives planned for 2021, including the continued significant expansion of our PC gaming accessories line, the launch of several new Neat Microphone products, and the entry into other new product categories. We are making the necessary investments to fuel these product launches, and believe they will contribute meaningfully to our growth this year and well beyond.
First Quarter 2021 Financial Results
Net revenue in the first quarter of 2021 was
Gross margin in the first quarter of 2021 was 37.5% of net sales, a record for the first quarter, compared to 30.8% in the first quarter of 2020. The increase in gross margin was driven by lower than normal promotional spending and fixed cost leverage on higher revenues.
Operating expenses in the first quarter of 2021 were
Net income in the first quarter of 2021 was
Adjusted EBITDA (as defined below in “Non-GAAP Financial Measures”) in the first quarter of 2021 was
Balance Sheet and Cash Flow Highlights
At
Revised 2021 Outlook
For the full year 2021, the Company now expects revenue to be approximately
For the second quarter of 2021, the Company expects revenue to be approximately
1Source:
With respect to the Company’s adjusted EBITDA outlook for the second quarter and full year 2021, a reconciliation to its net income (loss) outlook for the same periods has not been provided because of the variability, complexity, and lack of visibility with respect to certain reconciling items between adjusted EBITDA and net income (loss), including other income (expense), provision for income taxes and stock-based compensation. These items cannot be reasonably and accurately predicted without the investment of undue time, cost and other resources and, accordingly, a reconciliation of the Company’s adjusted EBITDA outlook to its net income (loss) outlook for such periods is not provided. These reconciling items could be material to the Company’s actual results for such periods.
Conference Call Details
Chairman and CEO
Conference Call Details:
Date: Wednesday, May 5, 2021
Time: 5:00 p.m. ET /
International Dial-in Number: (408) 337-0154
Conference ID: 7795124
For the conference call, please dial-in 5-10 minutes prior to the start time and an operator will register your name and organization. If you have any difficulty with the conference call, please contact Gateway Investor Relations at (949) 574-3860.
The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.turtlebeachcorp.com.
A replay of the conference call will be available after
Toll-Free Replay Number: (855) 859-2056
International Replay Number: (404) 537-3406
Replay ID: 7795124
Non-GAAP Financial Measures
In addition to its reported results, the Company has included in this earnings release certain financial results, including adjusted EBITDA, and adjusted net income that the
About
Cautionary Note on Forward-Looking Statements
This press release includes forward-looking information and statements within the meaning of the federal securities laws. Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding assumptions, projections, expectations, targets, intentions or beliefs about future events. Statements containing the words “may”, “could”, “would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”, “target”, “goal”, “project”, “intend” and similar expressions, or the negatives thereof, constitute forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Forward-looking statements are based on management’s current belief and expectations, as well as assumptions made by, and information currently available to, management.
While the Company believes that its expectations are based upon reasonable assumptions, there can be no assurances that its goals and strategy will be realized. Numerous factors, including risks and uncertainties, may affect actual results and may cause results to differ materially from those expressed in forward-looking statements made by the Company or on its behalf. Some of these factors include, but are not limited to, risks related to capital markets activities, the substantial uncertainties inherent in the acceptance of existing and future products, the difficulty of commercializing and protecting new technology, the impact of competitive products and pricing, the impact of the coronavirus (COVID-19) pandemic on consumer demands and manufacturing capabilities; delays or disruptions in the supply of components for our products; risks relating to, and uncertainty caused by or resulting from, the COVID-19 pandemic, general business and economic conditions, risks associated with the expansion of our business including acquisitions, the integration of any businesses we acquire and the integration of such businesses within our internal control over financial reporting and operations, our indebtedness, the Company’s liquidity, and other factors discussed in our public filings, including the risk factors included in the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and the Company’s other periodic reports. Except as required by applicable law, including the securities laws of
All trademarks are the property of their respective owners.
|
||||||||
Table 1. |
||||||||
Three Months Ended |
||||||||
March 31, |
March 31, |
|||||||
2021 |
2020 |
|||||||
Net revenue |
$ |
93,053 |
$ |
35,007 |
||||
Cost of revenue |
58,198 |
24,222 |
||||||
Gross profit |
34,855 |
10,785 |
||||||
Operating expenses: |
||||||||
Selling and marketing |
11,545 |
7,648 |
||||||
Research and development |
3,993 |
2,427 |
||||||
General and administrative |
7,037 |
5,723 |
||||||
Total operating expenses |
22,575 |
15,798 |
||||||
Operating income (loss) |
12,280 |
(5,013) |
||||||
Interest expense |
97 |
169 |
||||||
Other non-operating expense, net |
579 |
197 |
||||||
Income (loss) before income tax |
11,604 |
(5,379) |
||||||
Income tax expense (benefit) |
2,766 |
(1,824) |
||||||
Net income (loss) |
$ |
8,838 |
$ |
(3,555) |
||||
Net income (loss) per share |
||||||||
Basic |
$ |
0.57 |
$ |
(0.25) |
||||
Diluted |
$ |
0.49 |
$ |
(0.25) |
||||
Weighted average number of shares: |
||||||||
Basic |
15,551 |
14,495 |
||||||
Diluted |
18,076 |
14,495 |
|
||||||||
Table 2. |
||||||||
March 31, |
December 31, |
|||||||
2021 |
2020 |
|||||||
(unaudited) |
||||||||
ASSETS |
(in thousands, except par value and share amounts) |
|||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ |
62,965 |
$ |
46,681 |
||||
Accounts receivable, net |
32,370 |
43,867 |
||||||
Inventories |
59,136 |
71,301 |
||||||
Prepaid expenses and other current assets |
14,685 |
8,127 |
||||||
Total Current Assets |
169,156 |
169,976 |
||||||
Property and equipment, net |
7,089 |
6,575 |
||||||
Deferred income taxes |
7,334 |
6,946 |
||||||
|
10,686 |
8,178 |
||||||
Intangible assets, net |
6,760 |
5,138 |
||||||
Other assets |
6,380 |
6,640 |
||||||
Total Assets |
$ |
207,405 |
$ |
203,453 |
||||
LIABILITIES AND STOCKHOLDERS‘ EQUITY |
||||||||
Current Liabilities: |
||||||||
Revolving credit facility |
$ |
— |
$ |
— |
||||
Accounts payable |
27,761 |
42,529 |
||||||
Other current liabilities |
44,011 |
36,122 |
||||||
Total Current Liabilities |
71,772 |
78,651 |
||||||
Income tax payable |
3,432 |
3,146 |
||||||
Other liabilities |
5,079 |
5,257 |
||||||
Total Liabilities |
80,283 |
87,054 |
||||||
Commitments and Contingencies |
||||||||
Stockholders’ Equity |
||||||||
Common stock, |
16 |
15 |
||||||
Additional paid-in capital |
193,163 |
190,568 |
||||||
Accumulated deficit |
(65,935) |
(74,773) |
||||||
Accumulated other comprehensive income (loss) |
(122) |
589 |
||||||
Total Stockholders’ Equity |
127,122 |
116,399 |
||||||
Total Liabilities and Stockholders’ Equity |
$ |
207,405 |
$ |
203,453 |
|
||||||||
Table 3. |
||||||||
Three Months Ended |
||||||||
March 31, 2021 |
March 31, 2020 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
$ |
21,087 |
$ |
17,526 |
||||
CASH FLOWS FROM INVESTING ACTIVITIES |
(4,780) |
(890) |
||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Borrowings on revolving credit facilities |
97,032 |
48,426 |
||||||
Repayment of revolving credit facilities |
(97,032) |
(63,780) |
||||||
Proceeds from exercise of stock options and warrants |
911 |
18 |
||||||
Repurchase of common stock to satisfy employee tax withholding obligations |
(215) |
(48) |
||||||
Net cash provided by (used for) financing activities |
696 |
(15,384) |
||||||
Effect of exchange rate changes on cash and cash equivalents |
(719) |
(768) |
||||||
Net increase in cash and cash equivalents |
16,284 |
484 |
||||||
Cash and cash equivalents – beginning of period |
46,681 |
8,249 |
||||||
Cash and cash equivalents – end of period |
$ |
62,965 |
$ |
8,733 |
|
||||||||
Table 4. |
||||||||
Three Months Ended |
||||||||
March 31, 2021 |
March 31, 2020 |
|||||||
Net Income (Loss) |
||||||||
GAAP Net Income (Loss) |
$ |
8,838 |
$ |
(3,555) |
||||
Adjustments, net of tax: |
||||||||
Non-recurring business costs |
465 |
— |
||||||
Acquisition integration costs |
118 |
182 |
||||||
Non-GAAP Earnings |
$ |
9,421 |
$ |
(3,373) |
||||
Diluted Earnings Per Share |
||||||||
GAAP- Diluted |
$ |
0.49 |
$ |
(0.25) |
||||
Non-recurring business costs |
0.03 |
— |
||||||
Acquisition integration costs |
0.01 |
0.02 |
||||||
Non-GAAP- Diluted |
$ |
0.52 |
$ |
(0.23) |
|
|||||||||||||||||||
Table 5. |
|||||||||||||||||||
Three Months Ended |
|||||||||||||||||||
March 31, 2021 |
|||||||||||||||||||
Adj |
|||||||||||||||||||
As |
Adj |
Adj |
Stock |
Adj |
|||||||||||||||
Reported |
Depreciation |
Amortization |
Compensation |
Other (1) |
EBITDA |
||||||||||||||
Net revenue |
$ |
93,053 |
$ |
– |
$ |
– |
$ |
– |
$ |
– |
$ |
93,053 |
|||||||
Cost of revenue |
58,198 |
(237) |
– |
(397) |
– |
57,564 |
|||||||||||||
Gross Profit |
34,855 |
237 |
– |
397 |
– |
35,489 |
|||||||||||||
Operating expenses |
22,575 |
(502) |
(303) |
(1,389) |
(801) |
19,580 |
|||||||||||||
Operating income |
12,280 |
739 |
303 |
1,786 |
801 |
15,909 |
|||||||||||||
Interest expense |
97 |
||||||||||||||||||
Other non-operating expense |
579 |
– |
579 |
||||||||||||||||
Income before income tax |
11,604 |
||||||||||||||||||
Income tax expense |
2,766 |
||||||||||||||||||
Net income |
$ |
8,838 |
Adjusted EBITDA |
$ |
15,330 |
||||||||||||||
(1) Other includes certain non-recurring business costs. |
|
|||||||||||||||||||
Table 5. (continued) |
|||||||||||||||||||
Three Months Ended |
|||||||||||||||||||
March 31, 2020 |
|||||||||||||||||||
Adj |
|||||||||||||||||||
As |
Adj |
Adj |
Stock |
Adj |
|||||||||||||||
Reported |
Depreciation |
Amortization |
Compensation |
Other (2) |
EBITDA |
||||||||||||||
Net revenue |
$ |
35,007 |
$ |
– |
$ |
– |
$ |
– |
$ |
– |
$ |
35,007 |
|||||||
Cost of revenue |
24,222 |
(590) |
– |
(58) |
– |
23,574 |
|||||||||||||
Gross Profit |
10,784 |
590 |
– |
58 |
– |
11,433 |
|||||||||||||
Operating expenses |
15,798 |
(443) |
(222) |
(941) |
(281) |
13,911 |
|||||||||||||
Operating income (loss) |
(5,013) |
1,033 |
222 |
999 |
281 |
(2,478) |
|||||||||||||
Interest expense |
169 |
||||||||||||||||||
Other non-operating expense |
197 |
(21) |
176 |
||||||||||||||||
Income (loss) before income tax |
(5,377) |
||||||||||||||||||
Income tax benefit |
(1,824) |
||||||||||||||||||
Net loss |
$ |
(3,554) |
Adjusted EBITDA |
$ |
(2,654) |
||||||||||||||
(2) Other includes certain business acquisition costs and change in fair value of contingent consideration. |
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SOURCE
For Investor Information, Cody Slach or Sean McGowan, Gateway Investor Relations On Behalf of Turtle Beach, 949.574.3860, HEAR@gatewayir.com; For Media Information, MacLean Marshall, Sr. Director -PR/Communications, Turtle Beach Corp., 858.914.5093, maclean.marshall@turtlebeach.com