– Third Quarter Net Revenue of
– Net Income was
– Adjusted EBITDA was
– Raising Full Year 2024 EBITDA Guidance Again on Continued Execution Strength –
– Repurchased
Third Quarter Highlights
- Net revenue was
$94.4 million , an increase of 60% compared to the prior year period. - Net income was
$3.4 million or$0.16 per diluted share compared to a net loss of$(3.6) million or$(0.21) net loss per diluted share in the prior year period. - Adjusted EBITDA was
$16.3 million , an improvement of$15.2 million compared to an Adjusted EBITDA of$1.0 million in the prior year period.
“We delivered another strong quarter of performance, showcasing the continued momentum in our business, and have made tremendous progress towards the integration of PDP following our transformative acquisition earlier this year. Our third quarter revenue grew 60% year-over-year to
“Our market position continues to strengthen, with notable share gains across key categories. The integration of PDP is exceeding our expectations, and we now anticipate achieving total annual synergies exceeding
“We’re excited about our upcoming product pipeline and the continued benefits from our increased scale and diversification. Our visibility regarding continued strong demand for our products ahead of the holiday season and our improved financial performance is reflected in our increased Adjusted EBITDA guidance for the year, as we detail below. We remain focused on driving innovation, operational excellence, and market leadership while delivering value to our shareholders and gaming customers worldwide.
“Further, our confidence in
Share Repurchase Update
During the third quarter ended
Balance Sheet and Cash Flow Summary
At
Given the required investment in inventory that the Company undertakes ahead of the holiday season, it is typical that the Company’s net debt temporarily increases at the end of the third quarter of each year due to these working capital requirements.
Outlook
The Company currently expects Adjusted EBITDA for the full year ending
Earnings Conference Call and Webcast Details
The conference call may be accessed by telephone by dialing 800-717-1738 (domestic) or 646-307-1865 (international).
A live audio webcast of the earnings conference call may be accessed on Turtle Beach’s website at www.corp.turtlebeach.com, along with a copy of this press release and an investor slide presentation. An audio replay of the call will be available on the Company’s investor relations website for a limited period of time.
About
Non-GAAP Financial Measures
In addition to its reported results, the Company has included in this earnings release certain financial metrics, including Adjusted EBITDA, that the
By providing full year 2024 Adjusted EBITDA guidance, the Company provided its expectation of a forward-looking non-GAAP financial measure. Information reconciling full year 2024 Adjusted EBITDA to its most directly comparable GAAP financial measure, net income (loss), is unavailable to the Company without unreasonable effort due to 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.
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 are only predictions and are not guarantees of performance. 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 logistic and supply chain challenges and costs, 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 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
CONTACTS
Investors:
hear@icrinc.com
(646) 277-1285
Public Relations & Media:
Sr. Director,
(858) 914-5093
maclean.marshall@turtlebeach.com
Condensed Consolidated Statements of Operations (in thousands, except per-share data) (unaudited) |
||||||||||||||||||||
| Table 1. |
||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||
| Net revenue | $ | 94,363 | $ | 59,158 | $ | 226,689 | $ | 158,584 | ||||||||||||
| Cost of revenue | 60,232 | 41,469 | 151,696 | 114,884 | ||||||||||||||||
| Gross profit | 34,131 | 17,689 | 74,993 | 43,700 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling and marketing | 13,535 | 10,583 | 36,289 | 30,457 | ||||||||||||||||
| Research and development | 4,311 | 4,380 | 12,802 | 12,670 | ||||||||||||||||
| General and administrative | 6,352 | 5,243 | 19,489 | 25,375 | ||||||||||||||||
| Acquisition-related cost | 3,510 | – | 9,814 | – | ||||||||||||||||
| Total operating expenses | 27,708 | 20,206 | 78,394 | 68,502 | ||||||||||||||||
| Operating income (loss) | 6,423 | (2,517 | ) | (3,401 | ) | (24,802 | ) | |||||||||||||
| Interest expense | 2,712 | 107 | 5,082 | 253 | ||||||||||||||||
| Other non-operating expense, net | 252 | 481 | 974 | 799 | ||||||||||||||||
| Income (loss) before income tax | 3,459 | (3,105 | ) | (9,457 | ) | (25,854 | ) | |||||||||||||
| Income tax expense (benefit) | 46 | 501 | (5,501 | ) | 377 | |||||||||||||||
| Net income (loss) | $ | 3,413 | $ | (3,606 | ) | $ | (3,956 | ) | $ | (26,231 | ) | |||||||||
| Net income (loss) per share | ||||||||||||||||||||
| Basic | $ | 0.17 | $ | (0.21 | ) | $ | (0.20 | ) | $ | (1.54 | ) | |||||||||
| Diluted | $ | 0.16 | $ | (0.21 | ) | $ | (0.20 | ) | $ | (1.54 | ) | |||||||||
| Weighted average number of shares: | ||||||||||||||||||||
| Basic | 20,553 | 17,345 | 20,050 | 17,029 | ||||||||||||||||
| Diluted | 21,501 | 17,345 | 20,050 | 17,029 | ||||||||||||||||
Condensed Consolidated Balance Sheets (in thousands, except par value and share amounts) |
||||||||||
| Table 2. |
||||||||||
| 2024 | 2023 | |||||||||
| (unaudited) | ||||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 13,803 | $ | 18,726 | ||||||
| Accounts receivable, net | 70,703 | 54,390 | ||||||||
| Inventories | 102,263 | 44,019 | ||||||||
| Prepaid expenses and other current assets | 9,686 | 7,720 | ||||||||
| Total Current Assets | 196,455 | 124,855 | ||||||||
| Property and equipment, net | 5,753 | 4,824 | ||||||||
| 56,700 | 10,686 | |||||||||
| Intangible assets, net | 44,544 | 1,734 | ||||||||
| Other assets | 9,749 | 7,868 | ||||||||
| Total Assets | $ | 313,201 | $ | 149,967 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Revolving credit facility | $ | 58,626 | $ | — | ||||||
| Accounts payable | 66,394 | 26,908 | ||||||||
| Other current liabilities | 30,689 | 29,424 | ||||||||
| Total Current Liabilities | 155,709 | 56,332 | ||||||||
| Debt, non-current | 45,696 | — | ||||||||
| Income tax payable | 1,489 | 1,546 | ||||||||
| Other liabilities | 8,488 | 7,012 | ||||||||
| Total Liabilities | 211,382 | 64,890 | ||||||||
| Commitments and Contingencies | ||||||||||
| Stockholders’ Equity | ||||||||||
| Common stock | 20 | 18 | ||||||||
| Additional paid-in capital | 239,345 | 220,185 | ||||||||
| Accumulated deficit | (138,233 | ) | (134,277 | ) | ||||||
| Accumulated other comprehensive loss | 687 | (849 | ) | |||||||
| Total Stockholders’ Equity | 101,819 | 85,077 | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | 313,201 | $ | 149,967 | ||||||
Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
||||||||
| Table 3. |
||||||||
| Nine Months Ended | ||||||||
2024 |
2023 |
|||||||
| (in thousands) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (3,956 | ) | $ | (26,231 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | ||||||||
| Depreciation and amortization | 3,261 | 2,912 | ||||||
| Costs recognized on sale of acquired inventory | 2,085 | — | ||||||
| Amortization of intangible assets | 4,843 | 761 | ||||||
| Amortization of debt financing costs | 625 | 108 | ||||||
| Stock-based compensation | 3,447 | 8,554 | ||||||
| Deferred income taxes | (6,739 | ) | (178 | ) | ||||
| Change in sales returns reserve | 1,369 | (2,473 | ) | |||||
| Provision for obsolete inventory | 4,690 | 200 | ||||||
| Loss on impairment of asset | 753 | — | ||||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||
| Accounts receivable | 4,344 | 12,563 | ||||||
| Inventories | (43,597 | ) | (4,986 | ) | ||||
| Accounts payable | 30,050 | 19,072 | ||||||
| Prepaid expenses and other assets | 127 | 385 | ||||||
| Income taxes payable | 485 | 126 | ||||||
| Other liabilities | (10,340 | ) | (2,869 | ) | ||||
| Net cash provided (used for) by operating activities | (8,553 | ) | 7,944 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | (3,392 | ) | (1,924 | ) | ||||
| Acquisition of a business, net of cash acquired | (77,294 | ) | — | |||||
| Net cash used for investing activities | (80,686 | ) | (1,924 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Borrowings on revolving credit facilities | 242,609 | 149,995 | ||||||
| Repayment of revolving credit facilities | (183,983 | ) | (155,787 | ) | ||||
| Proceeds of term loan | 50,000 | — | ||||||
| Repayment of term loan | (729 | ) | — | |||||
| Proceeds from exercise of stock options and warrants | 3,004 | 1,718 | ||||||
| Repurchase of common stock | (25,339 | ) | (974 | ) | ||||
| Debt issuance costs | (2,897 | ) | (80 | ) | ||||
| Net cash provided by (used for) financing activities | 82,665 | (5,128 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | 1,651 | 52 | ||||||
| Net increase (decrease) in cash and cash equivalents | (4,923 | ) | 944 | |||||
| Cash and cash equivalents – beginning of period | 18,726 | 11,396 | ||||||
| Cash and cash equivalents – end of period | $ | 13,803 | $ | 12,340 | ||||
GAAP to Adjusted EBITDA Reconciliation (in thousands) |
||||||||||||||||
| Table 4. |
||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net loss | $ | 3,413 | $ | (3,606 | ) | $ | (3,956 | ) | $ | (26,231 | ) | |||||
| Interest expense | 2,712 | 107 | 5,082 | 253 | ||||||||||||
| Depreciation and amortization | 3,322 | 1,212 | 8,104 | 3,673 | ||||||||||||
| Stock-based compensation | 1,496 | 1,625 | 3,447 | 8,554 | ||||||||||||
| Income tax benefit (1) | 46 | 501 | (5,501 | ) | 377 | |||||||||||
| Restructuring expense (2) | 910 | 1,104 | 1,657 | 1,104 | ||||||||||||
| CEO transition related costs (3) | — | — | — | 2,874 | ||||||||||||
| Business transaction expense (4) | 3,510 | — | 9,814 | — | ||||||||||||
| Incremental costs on acquired inventory (5) | 833 | — | 2,084 | — | ||||||||||||
| Proxy contest and other (6) | 26 | 94 | 30 | 1,936 | ||||||||||||
| Adjusted EBITDA | $ | 16,268 | $ | 1,037 | $ | 20,761 | $ | (7,460 | ) | |||||||
(1) An income tax benefit of
(2) Restructuring charges are expenses that are paid in connection with reorganization of our operations. These costs primarily include severance and related benefits.
(3) CEO transition related expense includes one-time costs associated with the separation of its former CEO. Such costs included severance, bonus, medical benefits and the tax impact of accelerated vesting of stock-based compensation.
(4) Business transaction expense includes one-time costs we incurred in connection with acquisitions including warehouse lease impairment, professional fees such as legal and accounting along with other certain integration related costs.
(5) Costs relate to the step up of acquired PDP finished goods inventory to fair market value as required under GAAP purchase accounting. This step up in value over original cost is recorded as a charge to cost of revenue as such inventory is sold.
(6) Proxy contest and other primarily includes one-time legal and other professional fees associated with proxy challenges presented by certain shareholder activists.
Source: Voyetra Turtle Beach, Inc.