Company Continues Targeting Roughly
Maintains 2022 Financial Outlook
First Quarter Summary vs
-
Net revenue was
$46.7 million , compared to$93.1 million ; -
Net loss was
$(6.5) million , or$(0.40) per diluted share, compared to net income of$8.8 million , or$0.49 per diluted share; -
Adjusted EBITDA loss was
$(5.7) million compared to adjusted EBITDA of$15.3 million ; and - All three metrics met or exceeded expectations against the year ago quarter, in which the Company’s 166% revenue growth far exceeded market and peer performance.
Management Commentary
“During the quarter we unveiled a variety of innovative new gaming accessories – including new additions to our best-selling Stealth wireless headset series, maintained our clear leadership position in the console gaming headset market, and continued our strong progress across non-console headset categories, all while executing in-line with expectations,” said
“While the gaming market continues to benefit from excellent long-term secular trends, as we previously stated in our guidance, we expect growth to be concentrated in the second half of 2022. This is due to the lack of stimulus spending that benefited the first half of 2021, as well as consumer caution on discretionary spending considering inflationary and other macroeconomic concerns.
“We continue to target roughly
First Quarter 2022 Financial Results
Net revenue in the first quarter of 2022 was slightly above expectations at
Gross margin in the first quarter of 2022 was 30.1% versus 37.5% in the year-ago quarter, due to significantly higher freight costs, fixed cost de-leveraging, and more normalized promotional credits partially offset by business mix.
Operating expenses in the first quarter of 2022 were
Net loss in the first quarter of 2022 was
Adjusted EBITDA loss (as defined below in “Non-GAAP Financial Measures”) in the first quarter of 2022 was modestly above expectations, totaling
Balance Sheet and Cash Flow Highlights
At
Maintaining 2022 Outlook
The Company is maintaining its full year 2022 outlook and expects revenue to be approximately flat, plus or minus 5%, from its record 2021 revenues. The Company expects second quarter 2022 revenues to be approximately flat to first quarter 2022 and anticipates stronger growth in the second half of 2022 driven by the launch of new triple A games in advance of the holiday season, lesser constraints on console supplies, pent-up demand created by short-term consumer caution, and the impact from new product launches.
Gross margins are expected to be roughly 2-3% below our mid 30’s target range, reflecting the impact of 3-4% in higher freight and component costs which we anticipate will abate somewhat over time, as well as the expected return to normal promotional levels, partially offset by factoring higher costs into new product pricing.
Given the impact of higher costs on gross margin this year, we expect our adjusted EBITDA margin to be within the range of approximately 9% to 11%, as compared to our 10+% target, due to the factors stated above. Net income per diluted share is expected to be within the range of
With respect to the Company’s adjusted EBITDA outlook for the full year 2022, 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:
Time:
International Dial-in Number: / PIN (404) 400-0571 / 84197153#
For the conference call, please dial-in 5-10 minutes prior to the start. If you have any difficulty with the conference call, please contact Gateway Investor Relations at (949) 574-3860 or press “0” to be connected with an operator.
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.
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 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, 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, 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 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 |
|
|||||
|
|
|
|
|
|
|
|
||
|
|
|
2022 |
|
|
2021 |
|
||
|
Net revenue |
|
$ |
46,662 |
|
|
$ |
93,053 |
|
|
Cost of revenue |
|
|
32,633 |
|
|
|
58,198 |
|
|
Gross profit |
|
|
14,029 |
|
|
|
34,855 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
10,829 |
|
|
|
11,545 |
|
|
Research and development |
|
|
5,252 |
|
|
|
3,993 |
|
|
General and administrative |
|
|
6,235 |
|
|
|
7,037 |
|
|
Total operating expenses |
|
|
22,316 |
|
|
|
22,575 |
|
|
Operating income (loss) |
|
|
(8,287 |
) |
|
|
12,280 |
|
|
Interest expense |
|
|
109 |
|
|
|
97 |
|
|
Other non-operating expense (income), net |
|
|
719 |
|
|
|
579 |
|
|
Income (loss) before income tax |
|
|
(9,115 |
) |
|
|
11,604 |
|
|
Income tax expense (benefit) |
|
|
(2,639 |
) |
|
|
2,766 |
|
|
Net income (loss) |
|
$ |
(6,476 |
) |
|
$ |
8,838 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.40 |
) |
|
$ |
0.57 |
|
|
Diluted |
|
$ |
(0.40 |
) |
|
$ |
0.49 |
|
|
Weighted average number of shares: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
16,194 |
|
|
|
15,551 |
|
|
Diluted |
|
|
16,194 |
|
|
|
18,076 |
|
|
Condensed Consolidated Balance Sheets (in thousands, except par value and share amounts) |
||||||||
|
Table 2. |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
2022 |
|
|
2021 |
|
||
|
|
|
(unaudited) |
|
|
|
|
|
|
|
ASSETS |
|
(in thousands, except par value and share amounts) |
|
|||||
|
Current Assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
23,700 |
|
|
$ |
37,720 |
|
|
Accounts receivable, net |
|
|
11,814 |
|
|
|
35,953 |
|
|
Inventories |
|
|
117,422 |
|
|
|
101,933 |
|
|
Prepaid expenses and other current assets |
|
|
15,773 |
|
|
|
17,506 |
|
|
Total Current Assets |
|
|
168,709 |
|
|
|
193,112 |
|
|
Property and equipment, net |
|
|
6,293 |
|
|
|
6,955 |
|
|
Deferred income taxes |
|
|
8,229 |
|
|
|
5,899 |
|
|
|
|
|
10,686 |
|
|
|
10,686 |
|
|
Intangible assets, net |
|
|
5,464 |
|
|
|
5,788 |
|
|
Other assets |
|
|
8,669 |
|
|
|
8,065 |
|
|
Total Assets |
|
$ |
208,050 |
|
|
$ |
230,505 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
Revolving credit facility |
|
$ |
— |
|
|
$ |
— |
|
|
Accounts payable |
|
|
32,899 |
|
|
|
40,475 |
|
|
Other current liabilities |
|
|
27,385 |
|
|
|
37,693 |
|
|
Total Current Liabilities |
|
|
60,284 |
|
|
|
78,168 |
|
|
Income tax payable |
|
|
3,774 |
|
|
|
3,774 |
|
|
Other liabilities |
|
|
7,630 |
|
|
|
7,194 |
|
|
Total Liabilities |
|
|
71,688 |
|
|
|
89,136 |
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Common stock, |
|
|
16 |
|
|
|
16 |
|
|
Additional paid-in capital |
|
|
200,176 |
|
|
|
198,278 |
|
|
Accumulated deficit |
|
|
(63,528 |
) |
|
|
(57,052 |
) |
|
Accumulated other comprehensive income (loss) |
|
|
(302 |
) |
|
|
127 |
|
|
Total Stockholders’ Equity |
|
|
136,362 |
|
|
|
141,369 |
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
208,050 |
|
|
$ |
230,505 |
|
|
Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
||||||||
|
Table 3. |
||||||||
|
|
|
Three Months Ended |
|
|||||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
$ |
(13,348 |
) |
|
$ |
21,087 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
(611 |
) |
|
|
(4,780 |
) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Borrowings on revolving credit facilities |
|
|
– |
|
|
|
97,032 |
|
|
Repayment of revolving credit facilities |
|
|
– |
|
|
|
(97,032 |
) |
|
Proceeds from exercise of stock options and warrants |
|
|
361 |
|
|
|
911 |
|
|
Repurchase of common stock to satisfy employee tax withholding obligations |
|
|
– |
|
|
|
(215 |
) |
|
Net cash provided by (used for) financing activities |
|
|
361 |
|
|
|
696 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(422 |
) |
|
|
(719 |
) |
|
Net increase in cash and cash equivalents |
|
|
(14,020 |
) |
|
|
16,284 |
|
|
Cash and cash equivalents – beginning of period |
|
|
37,720 |
|
|
|
46,681 |
|
|
Cash and cash equivalents – end of period |
|
$ |
23,700 |
|
|
$ |
62,965 |
|
|
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) |
|
$ |
(6,476 |
) |
|
$ |
8,838 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments, net of tax: |
|
|
|
|
|
|
|
|
|
Non-recurring business costs |
|
|
173 |
|
|
|
465 |
|
|
Acquisition integration costs |
|
|
— |
|
|
|
118 |
|
|
Non-GAAP Earnings |
|
$ |
(6,303 |
) |
|
$ |
9,421 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share |
|
|
|
|
|
|
|
|
|
GAAP- Diluted |
|
$ |
(0.40 |
) |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring business costs |
|
|
0.01 |
|
|
|
0.03 |
|
|
Acquisition integration costs |
|
|
– |
|
|
|
0.01 |
|
|
Non-GAAP- Diluted |
|
$ |
(0.39 |
) |
|
$ |
0.52 |
|
|
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 |
|
$ |
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 (income), net |
|
|
719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax |
|
|
(9,115 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
(2,639 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(6,476 |
) |
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
(5,733 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Other includes certain business acquisition costs and 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 |
|
$ |
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 (income), net |
|
|
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 business acquisition costs and non-recurring business costs.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220504006086/en/
Sr. Director, Public Relations &
858.914.5093
maclean.marshall@turtlebeach.com
Investor Information:
Gateway Investor Relations
949.574.3860
hear@gatewayir.com
Source: