Raises Full Year Outlook
First Quarter Summary vs.
-
Net revenue was
$51.4 million , an increase of 10% compared to$46.7 million a year ago; -
Net loss was
$6.7 million , or$0.40 per diluted share, compared to net loss of$6.5 million , or$0.40 per diluted share, a year ago; -
Adjusted net loss was
$4.4 million , or$0.27 per diluted share, compared to adjusted net loss of$6.3 million or$0.39 per diluted share, a year ago; -
Adjusted EBITDA loss improved to
$2.3 million compared to adjusted EBITDA loss of$5.7 million a year ago.
Management Commentary
“Our solid first quarter results reflect a healthier console gaming headset market compared to a year ago and good business execution, as revenue and adjusted EBITDA were slightly above expectations and well on-track to our increased full year 2023 targets of 10 to 12% revenue growth and a return to positive adjusted EBITDA,” said
“The operating environment, gaming market dynamics and macroeconomic conditions have improved compared to a year ago. Increased supply and strong sales performance of console hardware has contributed to market growth, and per Circana (formerly NPD), the console gaming headset market had a 7.7% revenue increase year-over-year. Our category-leading
“Our strategy to continue our leadership in console headsets, while diversifying into additional categories and platforms, is progressing well, as we gained share in nearly every category this quarter. This strategy enables us to best leverage the positive long-term trends underlying the gaming market and positions us well to capitalize on the additional opportunities created as the gaming market continues its recovery.”
First Quarter 2023 Financial Results
Net revenue in the first quarter of 2023 was
Gross margin in the first quarter of 2023 was 27.5% compared to 30.1% a year ago, resulting from higher promotional spend in light of continued competitive discounting, partially offset by lower freight and logistics costs.
Operating expenses in the first quarter of 2023 were
Net loss in the first quarter of 2023 was
Adjusted EBITDA loss (as defined below in “Non-GAAP Financial Measures”) in the first quarter of 2023 improved to
Balance Sheet and Cash Flow Summary
At
Increased 2023 Outlook
In light of the aforementioned market and operational conditions, the Company now expects net revenues for fiscal year 2023 to be in the range of
The Company is maintaining its long-term goals of 10 to 20% annual growth and 10+% EBITDA margins.
With respect to the Company’s adjusted EBITDA outlook for the full year 2023, 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
In conjunction with this announcement,
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
Important Additional Information
The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company’s shareholders in connection with the Annual Meeting. The Company intends to file a definitive proxy statement and a WHITE proxy card with 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. The inclusion of such information should not be regarded as a representation by the Company, or any person, that the objectives of the Company will be achieved. Forward-looking statements are based on management’s current beliefs 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 inflationary pressures, logistic and supply chain challenges, 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, general business and economic conditions, risks associated with the future direction or governance of the Company, risks associated with the expansion of our business, including the integration of any businesses we acquire and the integration of such businesses within our internal control over financial reporting and operations, our indebtedness, 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 filed with the
All trademarks are the property of their respective owners.
|
|
||||||||
|
Condensed Consolidated Statements of Operations |
||||||||
|
(in thousands, except per-share data) |
||||||||
|
(unaudited) |
||||||||
|
Table 1. |
||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
|
|
|
||||
|
|
|
2023 |
|
2022 |
||||
|
Net revenue |
|
$ |
51,444 |
|
|
$ |
46,662 |
|
|
Cost of revenue |
|
|
37,305 |
|
|
|
32,633 |
|
|
Gross profit |
|
|
14,139 |
|
|
|
14,029 |
|
|
Operating expenses: |
|
|
|
|
||||
|
Selling and marketing |
|
|
9,523 |
|
|
|
10,829 |
|
|
Research and development |
|
|
4,101 |
|
|
|
5,252 |
|
|
General and administrative |
|
|
7,007 |
|
|
|
6,235 |
|
|
Total operating expenses |
|
|
20,631 |
|
|
|
22,316 |
|
|
Operating income (loss) |
|
|
(6,492 |
) |
|
|
(8,287 |
) |
|
Interest expense |
|
|
163 |
|
|
|
109 |
|
|
Other non-operating expense, net |
|
|
120 |
|
|
|
719 |
|
|
Income (loss) before income tax |
|
|
(6,775 |
) |
|
|
(9,115 |
) |
|
Income tax expense benefit |
|
|
(70 |
) |
|
|
(2,639 |
) |
|
Net income (loss) |
|
$ |
(6,705 |
) |
|
$ |
(6,476 |
) |
|
|
|
|
|
|
||||
|
Net income (loss) per share |
|
|
|
|
||||
|
Basic |
|
$ |
(0.40 |
) |
|
$ |
(0.40 |
) |
|
Diluted |
|
$ |
(0.40 |
) |
|
$ |
(0.40 |
) |
|
Weighted average number of shares: |
|
|
|
|
||||
|
Basic |
|
|
16,578 |
|
|
|
16,194 |
|
|
Diluted |
|
|
16,578 |
|
|
|
16,194 |
|
|
|
||||||||
|
Condensed Consolidated Balance Sheets |
||||||||
|
(in thousands, except par value and share amounts) |
||||||||
|
Table 2. |
||||||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
|
|
2023 |
|
2022 |
||||
|
|
|
(unaudited) |
|
|
||||
|
ASSETS |
|
(in thousands, except par value and share amounts) |
||||||
|
Current Assets: |
|
|
|
|
||||
|
Cash |
|
$ |
20,573 |
|
|
$ |
11,396 |
|
|
Accounts receivable, net |
|
|
23,955 |
|
|
|
43,336 |
|
|
Inventories |
|
|
65,214 |
|
|
|
71,252 |
|
|
Prepaid expenses and other current assets |
|
|
9,108 |
|
|
|
9,196 |
|
|
Total Current Assets |
|
|
118,850 |
|
|
|
135,180 |
|
|
Property and equipment, net |
|
|
6,144 |
|
|
|
6,362 |
|
|
|
|
|
10,686 |
|
|
|
10,686 |
|
|
Intangible assets, net |
|
|
2,471 |
|
|
|
2,612 |
|
|
Other assets |
|
|
8,361 |
|
|
|
8,547 |
|
|
Total Assets |
|
$ |
146,512 |
|
|
$ |
163,387 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
|
Current Liabilities: |
|
|
|
|
||||
|
Revolving credit facility |
|
$ |
— |
|
|
$ |
19,053 |
|
|
Accounts payable |
|
|
21,887 |
|
|
|
19,846 |
|
|
Other current liabilities |
|
|
30,023 |
|
|
|
25,433 |
|
|
Total Current Liabilities |
|
|
51,910 |
|
|
|
64,332 |
|
|
Income tax payable |
|
|
2,135 |
|
|
|
2,076 |
|
|
Other liabilities |
|
|
7,703 |
|
|
|
8,038 |
|
|
Total Liabilities |
|
|
61,748 |
|
|
|
74,446 |
|
|
Commitments and Contingencies |
|
|
|
|
||||
|
Stockholders’ Equity |
|
|
|
|
||||
|
Additional paid-in capital |
|
|
17 |
|
|
|
17 |
|
|
Additional paid-in capital |
|
|
208,999 |
|
|
|
206,916 |
|
|
Accumulated deficit |
|
|
(123,303 |
) |
|
|
(116,598 |
) |
|
Accumulated other comprehensive income (loss) |
|
|
(949 |
) |
|
|
(1,394 |
) |
|
Total Stockholders’ Equity |
|
|
84,764 |
|
|
|
88,941 |
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
146,512 |
|
|
$ |
163,387 |
|
|
|
||||||||
|
Condensed Consolidated Statements of Cash Flows |
||||||||
|
(in thousands) |
||||||||
|
(unaudited) |
||||||||
|
Table 3. |
||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
$ |
28,989 |
|
|
$ |
(13,348 |
) |
|
|
|
|
|
|
||||
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
(887 |
) |
|
|
(611 |
) |
|
|
|
|
|
|
||||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||||
|
Borrowings on revolving credit facilities |
|
|
53,892 |
|
|
|
– |
|
|
Repayment of revolving credit facilities |
|
|
(72,945 |
) |
|
|
– |
|
|
Proceeds from exercise of stock options and warrants |
|
|
125 |
|
|
|
361 |
|
|
Debt Issuance Costs |
|
|
(80 |
) |
|
|
– |
|
|
Net cash provided by (used for) financing activities |
|
|
(19,008 |
) |
|
|
361 |
|
|
Effect of exchange rate changes on cash |
|
|
83 |
|
|
|
(422 |
) |
|
Net decrease in cash |
|
|
9,177 |
|
|
|
(14,020 |
) |
|
Cash – beginning of period |
|
|
11,396 |
|
|
|
37,720 |
|
|
Cash – end of period |
|
$ |
20,573 |
|
|
$ |
23,700 |
|
|
|
||||||||
|
Reconciliation of GAAP and Non-GAAP Measures |
||||||||
|
(in thousands, except per-share data) |
||||||||
|
(unaudited) |
||||||||
|
Table 4. |
||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
|
|
|
||||
|
Net Income (Loss) |
|
|
|
|
||||
|
GAAP Net Income (Loss) |
|
$ |
(6,705 |
) |
|
$ |
(6,476 |
) |
|
|
|
|
|
|
||||
|
Adjustments, net of tax: |
|
|
|
|
||||
|
Non-recurring business costs |
|
|
1,048 |
|
|
|
173 |
|
|
Valuation allowance |
|
|
1,244 |
|
|
|
— |
|
|
Non-GAAP Earnings |
|
$ |
(4,413 |
) |
|
$ |
(6,303 |
) |
|
|
|
|
|
|
||||
|
Diluted Earnings Per Share |
|
|
|
|
||||
|
GAAP- Diluted |
|
$ |
(0.40 |
) |
|
$ |
(0.40 |
) |
|
|
|
|
|
|
||||
|
Non-recurring business costs |
|
|
0.06 |
|
|
|
0.01 |
|
|
Valuation allowance |
|
|
0.08 |
|
|
|
— |
|
|
Non-GAAP- Diluted |
|
$ |
(0.27 |
) |
|
$ |
(0.39 |
) |
|
|
||||||||||||||||||||||||
|
GAAP to Adjusted EBITDA Reconciliation |
||||||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||
|
Table 5. |
||||||||||||||||||||||||
|
|
|
Three Months Ended |
||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
Adj |
|
|
|||||||||||||||||
|
|
|
As |
Adj |
Adj |
Stock |
|
Adj |
|||||||||||||||||
|
|
|
Reported |
Depreciation |
Amortization |
Compensation |
Other(1) |
EBITDA |
|||||||||||||||||
|
Net revenue |
|
$ |
51,444 |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
51,444 |
|
|||||
|
Cost of revenue |
|
|
37,305 |
|
|
(517 |
) |
|
– |
|
|
(175 |
) |
|
– |
|
|
36,613 |
|
|||||
|
Gross Profit |
|
|
14,139 |
|
|
517 |
|
|
– |
|
|
175 |
|
|
– |
|
|
14,831 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Operating expenses |
|
|
20,631 |
|
|
(461 |
) |
|
(264 |
) |
|
(1,784 |
) |
|
(1,086 |
) |
|
17,036 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Operating income (loss) |
|
|
(6,492 |
) |
|
978 |
|
|
264 |
|
|
1,959 |
|
|
1,086 |
|
|
(2,205 |
) |
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Interest expense |
|
|
163 |
|
|
|
|
|
|
|||||||||||||||
|
Other non-operating expense, net |
|
|
120 |
|
|
|
|
|
|
120 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Income (loss) before income tax |
|
|
(6,775 |
) |
|
|
|
|
|
|||||||||||||||
|
Income tax benefit |
|
|
(70 |
) |
|
|
|
|
|
|||||||||||||||
|
Net loss |
|
$ |
(6,705 |
) |
|
|
Adjusted EBITDA |
$ |
(2,325 |
) |
||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
(1) Other includes certain non-recurring business costs. |
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||
|
GAAP to Adjusted EBITDA Reconciliation |
||||||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||
|
Table 5. (continued) |
||||||||||||||||||||||||
|
|
|
Three Months Ended |
||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
Adj |
|
|
|||||||||||||||||
|
|
|
As |
Adj |
Adj |
Stock |
|
Adj |
|||||||||||||||||
|
|
|
Reported |
Depreciation |
Amortization |
Compensation |
Other(1) |
EBITDA |
|||||||||||||||||
|
Net revenue |
|
$ |
46,662 |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
– |
|
$ |
46,662 |
|
|||||
|
Cost of revenue |
|
|
32,633 |
|
|
(585 |
) |
|
– |
|
|
(26 |
) |
|
– |
|
|
32,022 |
|
|||||
|
Gross Profit |
|
|
14,029 |
|
|
585 |
|
|
– |
|
|
26 |
|
|
– |
|
|
14,640 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Operating expenses |
|
|
22,316 |
|
|
(607 |
) |
|
(312 |
) |
|
(1,511 |
) |
|
(232 |
) |
|
19,654 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Operating income (loss) |
|
|
(8,287 |
) |
|
1,192 |
|
|
312 |
|
|
1,537 |
|
|
232 |
|
|
(5,014 |
) |
|||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Interest expense |
|
|
109 |
|
|
|
|
|
|
|||||||||||||||
|
Other non-operating expense, net |
|
|
719 |
|
|
|
|
|
|
719 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Income (loss) before income tax |
|
|
(9,115 |
) |
|
|
|
|
|
|||||||||||||||
|
Income tax benefit |
|
|
(2,639 |
) |
|
|
|
|
|
|||||||||||||||
|
Net loss |
|
$ |
(6,476 |
) |
|
|
Adjusted EBITDA |
$ |
(5,733 |
) |
||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
(1) Other includes certain non-recurring business costs. |
||||||||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005972/en/
Sr. Director, Public Relations &
858.914.5093
maclean.marshall@turtlebeach.com
Investor Information:
Gateway Investor Relations
949.574.3860
hear@gatewayir.com
Source: