– Second Quarter Net Revenue of
– Raising Full Year 2024 Guidance on Continued Execution Strength –
– Repurchased
– Highlight Intention to Continue Share Repurchases at Attractive Price Levels –
Second Quarter Highlights
- Net revenue was
$76.5 million , an increase of 59% compared to the prior year period. - Net loss was
$(7.5) million or ($0.35 ) per share compared to a net loss of($15.9) million or ($0.93 ) net loss per share in the prior year period. - Adjusted EBITDA was
$3.0 million , an improvement of$8.7 million compared to an Adjusted EBITDA loss of($5.7) million in the prior year period.
“We’re proud to report another quarter of strong performance for
“Our second quarter results reflect the team’s unwavering commitment to execution, as we have married the rapid integration of a significant acquisition with our ongoing focus on proactive cost management, all the while providing best-in-class and innovative products to our customers. In the quarter,
“Revenue for the quarter reached
“The integration of PDP is already yielding synergies and expanding our market opportunities. Our unyielding focus on margin expansion is evident in our results, driven by optimized cost structures and operational efficiencies. We’re particularly pleased with our ability to generate strong cash flow from operations, which has allowed us to repurchase approximately
“Looking ahead, we’re excited about what we are seeing in our product pipeline, the strategic advantages gained from the PDP acquisition, and our ongoing efforts to enhance profitability while driving growth. As a result, we’re raising our full-year guidance for Adjusted EBITDA, reflecting our optimism for the remainder of 2024.”
Share Repurchase Update and Implementation of Rule 10b5-1 Plan
During the second quarter ended
In our ongoing commitment to return capital to shareholders, the Company will continue to repurchase shares opportunisitically in the market through open market purchases or privately negotiated transactions. Additionally, the Board of Directors is pleased to announce that it has successfully negotiated amendments to the Company’s credit agreements, providing additional flexibility for share repurchases, which will allow for the implementation of an ongoing formulaic share repurchase program, commonly referred to as a Rule 10b5-1 plan. The Company will provide regular updates to shareholders on the results of its ongoing share repurchase program at the end of each quarter.
Balance Sheet and Cash Flow Summary
At
Outlook
The Company currently expects Adjusted EBITDA for the full year ending
The aforementioned 2024 guidance ranges include operations of PDP beginning
Earnings Conference Call and Webcast Details
The conference call may be accessed by telephone by going to the following link (registration link) where dial-in details will be provided.
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.
Register for Conference Call: https://register.vevent.com/register/BI6698c29d4144408abf21507ab161bb56
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 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, 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 | Six Months Ended | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net revenue | $ | 76,478 | $ | 47,982 | $ | 132,326 | $ | 99,426 | ||||||||
| Cost of revenue | 53,402 | 36,110 | 91,464 | 73,415 | ||||||||||||
| Gross profit | 23,076 | 11,872 | 40,862 | 26,011 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and marketing | 13,741 | 10,351 | 22,754 | 19,874 | ||||||||||||
| Research and development | 4,589 | 4,189 | 8,491 | 8,290 | ||||||||||||
| General and administrative | 7,463 | 13,125 | 13,137 | 20,132 | ||||||||||||
| Acquisition-related cost | 1,394 | — | 6,304 | — | ||||||||||||
| Total operating expenses | 27,187 | 27,665 | 50,686 | 48,296 | ||||||||||||
| Operating loss | (4,111 | ) | (15,793 | ) | (9,824 | ) | (22,285 | ) | ||||||||
| Interest expense | 2,220 | (17 | ) | 2,370 | 146 | |||||||||||
| Other non-operating expense, net | 352 | 198 | 722 | 318 | ||||||||||||
| Loss before income tax | (6,683 | ) | (15,974 | ) | (12,916 | ) | (22,749 | ) | ||||||||
| Income tax expense (benefit) | 841 | (54 | ) | (5,547 | ) | (124 | ) | |||||||||
| Net loss | $ | (7,524 | ) | $ | (15,920 | ) | $ | (7,369 | ) | $ | (22,625 | ) | ||||
| Net loss per share | ||||||||||||||||
| Basic | $ | (0.35 | ) | $ | (0.93 | ) | $ | (0.37 | ) | $ | (1.34 | ) | ||||
| Diluted | $ | (0.35 | ) | $ | (0.93 | ) | $ | (0.37 | ) | $ | (1.34 | ) | ||||
| Weighted average number of shares: | ||||||||||||||||
| Basic | 21,252 | 17,156 | 19,795 | 16,869 | ||||||||||||
| Diluted | 21,252 | 17,156 | 19,795 | 16,869 | ||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (in thousands, except par value and share amounts) | ||||||||
| Table 2. | ||||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 12,462 | $ | 18,726 | ||||
| Accounts receivable, net | 46,474 | 54,390 | ||||||
| Inventories | 73,347 | 44,019 | ||||||
| Prepaid expenses and other current assets | 11,380 | 7,720 | ||||||
| Total Current Assets | 143,663 | 124,855 | ||||||
| Property and equipment, net | 6,295 | 4,824 | ||||||
| 56,762 | 10,686 | |||||||
| Intangible assets, net | 46,683 | 1,734 | ||||||
| Other assets | 10,985 | 7,868 | ||||||
| Total Assets | $ | 264,388 | $ | 149,967 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Revolving credit facility | $ | 24,029 | $ | — | ||||
| Accounts payable | 48,380 | 26,908 | ||||||
| Other current liabilities | 30,827 | 29,424 | ||||||
| Total Current Liabilities | 103,236 | 56,332 | ||||||
| Debt, non-current | 45,772 | — | ||||||
| Income tax payable | 1,508 | 1,546 | ||||||
| Other liabilities | 8,611 | 7,012 | ||||||
| Total Liabilities | 159,127 | 64,890 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock | 21 | 18 | ||||||
| Additional paid-in capital | 247,917 | 220,185 | ||||||
| Accumulated deficit | (141,646 | ) | (134,277 | ) | ||||
| Accumulated other comprehensive loss | (1,031 | ) | (849 | ) | ||||
| Total Stockholders’ Equity | 105,261 | 85,077 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 264,388 | $ | 149,967 | ||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Table 3. | ||||||||
| Six Months Ended | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | $ | 14,613 | $ | 24,210 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | (79,261 | ) | (1,252 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Borrowings on revolving credit facilities | 80,288 | 99,785 | ||||||
| Repayment of revolving credit facilities | (56,259 | ) | (118,838 | ) | ||||
| Proceeds of term loan | 50,000 | — | ||||||
| Repayment of term loan | (417 | ) | — | |||||
| Proceeds from exercise of stock options and warrants | 2,941 | 1,358 | ||||||
| Repurchase of common stock | (15,207 | ) | (974 | ) | ||||
| Debt Issuance Costs | (3,170 | ) | (80 | ) | ||||
| Net cash provided by (used for) financing activities | 58,176 | (18,749 | ) | |||||
| Effect of exchange rate changes on cash | 208 | 182 | ||||||
| Net decrease in cash | (6,264 | ) | 4,391 | |||||
| Cash – beginning of period | 18,726 | 11,396 | ||||||
| Cash – end of period | $ | 12,462 | $ | 15,787 | ||||
| GAAP to Adjusted EBITDA Reconciliation | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Table 4. | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net loss | $ | (7,524 | ) | $ | (15,920 | ) | $ | (7,369 | ) | $ | (22,625 | ) | ||||
| Interest expense | 2,220 | (17 | ) | 2,370 | 146 | |||||||||||
| Depreciation and amortization | 3,306 | 1,219 | 4,782 | 2,461 | ||||||||||||
| Stock-based compensation | 846 | 4,970 | 1,951 | 6,929 | ||||||||||||
| Income tax benefit (1) | 841 | (54 | ) | (5,547 | ) | (124 | ) | |||||||||
| Restructuring expense (2) | 706 | — | 747 | — | ||||||||||||
| CEO transition related costs (3) | — | 2,874 | — | 2,874 | ||||||||||||
| Business transaction expense (4) | 1,394 | — | 6,304 | — | ||||||||||||
| Incremental costs on acquired inventory (5) | 1,251 | — | 1,251 | — | ||||||||||||
| Proxy contest and other (6) | 4 | 1,273 | 4 | 1,842 | ||||||||||||
| Adjusted EBITDA | $ | 3,044 | $ | (5,655 | ) | $ | 4,493 | $ | (8,497 | ) | ||||||
(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 professional fees such as legal and accounting along with other certain integration related costs of the acquisition. (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.