hear-8k_20201105.htm
false 0001493761 0001493761 2020-11-05 2020-11-05 0001493761 dei:FormerAddressMember 2020-11-05 2020-11-05

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report: November 5, 2020

(Date of earliest event reported)

 

Turtle Beach Corporation

(Exact name of registrant as specified in its charter)

 

001-35465

(Commission File Number)

 

 

 

 

Nevada

27-2767540

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

 

44 South Broadway, 4th Floor

White Plains, New York

10601

(Address of principal executive offices)

(Zip Code)

 

(888) 496-8001

(Registrant’s telephone number, including area code)

 

11011 Via Frontera, Suite A/B, San Diego, CA 92127

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Stock, par value $0.001

HEAR

Nasdaq

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02 - Results of Operations and Financial Condition.

On November 5, 2020, Turtle Beach Corporation (the “Company”) issued a press release announcing its financial results for its quarter ended September 30, 2020. A copy of that press release and the attached financial schedules are attached as Exhibit 99.1 to this report and incorporated herein by reference.

The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01 — Financial Statements and Exhibits

(d) Exhibits

 

 

 

 

 

Exhibit

No.

Description

99.1

104

Press Release of the Company, dated November 5, 2020

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

 

 

TURTLE BEACH CORPORATION

 

 

 

Date:

November 5, 2020

By:

/s/ JOHN T. HANSON

 

 

 

John T. Hanson

Chief Financial Officer, Treasurer and Secretary

 

 

 

 

hear-ex991_6.htm

Exhibit 99.1

 

TURTLE BEACH REPORTS RECORD THIRD QUARTER 2020 RESULTS

AND RAISES FULL-YEAR OUTLOOK

 

 

White Plains, NY – November 5, 2020 Turtle Beach Corporation (Nasdaq: HEAR), a leading gaming audio and accessory provider, reported record financial results for the third quarter ended September 30, 2020.

 

Third Quarter Summary vs. Year-Ago Quarter:

 

Net revenue increased 141% to $112.5 million ($111.5 million in constant currency);

 

 

Gross margin increased 880 basis points to 41.0%;

 

 

Net income increased significantly to $17.8 million, or $1.04 per diluted share, compared to a net loss of $3.1 million, or $(0.22) per diluted share; and

 

 

Adjusted EBITDA increased to $27.6 million compared to $0.3 million.

 

 

Management Commentary

“Our blistering sales momentum continued in the third quarter, as a combination of strong consumer demand for headsets, further market share gains driven by our leading products and brand, superior execution, and our ability to leverage operating expenses drove results that were by far the best third quarter results we have ever achieved,” said Juergen Stark, CEO of Turtle Beach. “We are extremely proud of what our team has accomplished in recent months under challenging conditions. What is most encouraging is that we believe the strong underlying demand continues to be driven by greater overall engagement of existing gamers as well as new and lapsed gamers joining the market as new gaming headset users. In addition, non-gamers continue to buy headsets for at-home work, school and socializing. All of this sets us up nicely for the holiday season and for 2021.”

 

Stark added, “The increase in demand is not limited to console gaming, as we saw strong increases in our award-winning ROCCAT line of PC mice, keyboards and headsets in the quarter, which we expect will continue, especially with the investments we are making in our PC portfolio as evidenced by the new products we’ve launched the past few months.

 

“As a result of the performance in the third quarter and our belief that demand will remain at elevated levels through the end of the year, with the launch of the next generation Xbox and PlayStation consoles later this month, we are confident that our results this year will exceed our previous forecasts for both revenue and EBITDA. We’ve stepped-up our investments to capitalize


Turtle Beach Reports Third Quarter Financial Results

 

on new opportunities and, with the integration of the ROCCAT acquisition going well, the excellent team we have here, and our strong continued execution, we will continue to take actions to enable and drive further expansion and growth.”

 

Third Quarter 2020 Financial Results

Net revenue in the third quarter of 2020 increased 140.8% to $112.5 million compared to $46.7 million in the year-ago quarter. The Company’s strong performance in the third quarter was due to increased demand from a continued surge in gaming activity, resulting from stay-at-home orders which increased gaming among existing gamers and caused an influx of new and lapsed gamers. In addition, the Company’s ability to significantly increase its production and delivery capacity and execute well at retail allowed the Company to gain further market share and achieve the significantly higher revenues. On a constant currency basis, revenue in the third quarter of 2020 was $111.5 million.

 

Gross margin in the third quarter of 2020 increased 880 basis points to 41.0% compared to 32.2% in the third quarter of 2019. This significant increase was due to volume-driven fixed cost leverage, lower than normal promotional spending given increased demand, and favorable business mix, partially offset by $2.0 million in incremental air freight to enable retail supply.  

 

Operating expenses in the third quarter of 2020 were $21.9 million compared to $17.6 million in the 2019 period, with the increase driven primarily by higher volume-related selling costs and additional investments to expand the PC gaming product portfolio and ROCCAT brand.

 

Net income in the third quarter of 2020 improved significantly to $17.8 million compared to a net loss of $3.1 million in the year-ago quarter. The increase was due to the strong revenue performance, higher gross margin as described above and operating expense leverage.

 

Net income per share in the third quarter of 2020 was $1.04 on 17.2 million weighted average diluted shares outstanding, compared to a net loss per share of $0.22 on 14.5 million weighted average diluted shares outstanding in the year-ago quarter. (Note: per accounting rules, in periods when the Company reports positive net income, the diluted share count is higher than in periods when there is a net loss.)

 

Adjusted EBITDA (as defined below in “Non-GAAP Financial Measures”) in the third quarter of 2020 increased significantly to $27.6 million, compared to $0.3 million in the year ago quarter. This is the highest level of adjusted EBITDA of any quarter in the Company’s history.

 


Turtle Beach Reports Third Quarter Financial Results

 

Balance Sheet & Cash Flow Highlights

At September 30, 2020, the Company had $27.3 million of cash and cash equivalents with no debt, including no outstanding debt under its revolving line of credit. This compares to $7.0 million of cash and cash equivalents with $26.6 million of outstanding debt under its revolving line of credit at September 30, 2019. Cash flows from operating activities were $32.6 million for the nine months ended September 30, 2020 compared to $27.3 million in the corresponding period in 2019.  

 

Increased 2020 Outlook

For the full year 2020, the Company now expects revenue to be approximately $330 million, which is 10% higher than its previous guidance of approximately $300 million. The annual revenue forecast reflects continued strong consumer demand for gaming accessories driven by new and existing gamers, as well as increased use of headsets for non-gaming uses, followed by an anticipated further increase in demand spurred by next generation console launches around the holiday season.

 

Adjusted EBITDA is now expected to be approximately $50 million, or more than 50% above the prior guidance of approximately $30 million, reflecting the higher expected revenue for the year, higher gross margin, partially offset by expected air freight of approximately $10.0 million to enable supply and increased revenue, and planned marketing and new product-related investments of approximately $12.0 million to expand the Company’s position in the PC accessories market and drive future growth.

 

Net income per diluted share is now expected to approximate $1.80 compared to prior guidance of approximately $0.85, and adjusted net income per diluted share is expected to be approximately $1.75 compared to prior guidance of approximately $0.80, both reflecting the aforementioned revenue and EBITDA forecasts. Per share figures for the full year 2020 assume approximately 16.3 million diluted shares outstanding.

 

Second Half Outlook

For the second half of 2020, the Company expects revenue to be approximately $215 million, 16% higher than its previous guidance of approximately $185 million. The updated revenue forecast reflects a shift in the timing of shipments into the third quarter as many retailers have started holiday purchasing earlier than normal this year.

 

Adjusted EBITDA for the second half is now expected to be approximately $40 million, or double  the prior guidance of approximately $20 million. The updated guidance reflects a shift of some expenses expected in the third quarter to the fourth quarter. Net income per diluted share and


Turtle Beach Reports Third Quarter Financial Results

 

adjusted net income per diluted share in the second half are now both expected to approximate $1.45 compared to prior guidance of approximately $0.50.

 

With respect to the Company's adjusted EBITDA outlook for the full year 2020, 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

Turtle Beach Corporation will hold a conference call today, November 5, 2020, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its third quarter 2020 results.

 

CEO Juergen Stark and CFO John Hanson will host the call, followed by a question and answer session.

 

Conference Call Details:

Date: Thursday, November 5, 2020

Time: 5:00 p.m. ET / 2:00 p.m. PT

Toll-Free Dial-in Number: (877) 303-9855

International Dial-in Number: (408) 337-0154

Conference ID: 8798099

 

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 corp.turtlebeach.com.

 

A replay of the conference call will be available after 8:00 p.m. ET on the same day through November 12, 2020.

 

Toll-Free Replay Number: (855) 859-2056

International Replay Number: (404) 537-3406


Turtle Beach Reports Third Quarter Financial Results

 

Replay ID: 8798099

 

Non-GAAP Financial Measures

In addition to its reported results, the Company has included in this earnings release certain financial results, including adjusted EBITDA, adjusted net income, and constant currency revenue, that the Securities and Exchange Commission defines as “non-GAAP financial measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company's results. “Adjusted Net Income” is defined as net income excluding (i) integration and transaction costs related to the acquisition of the business and assets related to the ROCCAT brand, (ii) the effect of the mark-to-market requirement of the financial instrument obligation, (iii) any change in fair value of contingent consideration and (iv) the release of valuation allowances on deferred tax assets. “Adjusted EBITDAis defined by the Company as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation (non-cash), and certain non-recurring items that we believe are not representative of core operations (e.g., the integration and transaction costs related to the acquisition of the business and assets related to the ROCCAT brand, the mark-to-market adjustment for the financial instrument obligation and the change in fair value of contingent consideration). “Constant currency revenue” is defined by the Company as revenue excluding the impacts of fluctuations in exchange rates from prior periods. These non-GAAP financial measures are presented because management uses non-GAAP financial measures to evaluate the Company’s operating performance, to perform financial planning, and to determine incentive compensation. Therefore, the Company believes that the presentation of non-GAAP financial measures provides useful information to, and facilitates additional analysis by, investors. The presented non-GAAP financial measures exclude items that management does not believe reflect the Company’s core operating performance because such items are inherently unusual, non-operating, unpredictable, non-recurring, or non-cash. See a reconciliation of GAAP results to Adjusted Net Income and Adjusted EBITDA included below for the three- and nine-month periods ended September 30, 2020 and 2019.

 

About Turtle Beach Corporation

Turtle Beach Corporation (www.corp.turtlebeach.com) is one of the world’s leading gaming audio and accessory providers. The Turtle Beach brand (www.turtlebeach.com) is known for pioneering first-to-market features and patented innovations in high-quality, comfort-driven headsets for all levels of gamer, making it a fan-favorite brand and the market leader in console gaming audio for the last decade. Turtle Beach’s ROCCAT brand (www.roccat.org) combines detail-loving German innovation with a genuine passion for designing the best PC gaming products. Under the ROCCAT brand, Turtle Beach creates award-winning


Turtle Beach Reports Third Quarter Financial Results

 

keyboards, mice, headsets, mousepads, and other PC accessories. Turtle Beach’s shares are traded on the Nasdaq Exchange under the symbol: HEAR.

 

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,” “forecast” 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. These 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: 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; risks relating to, and uncertainty caused by or resulting from, the COVID-19 pandemic; 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; and our liquidity. These risks may be in addition to the other factors and matters discussed 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 Securities and Exchange Commission. Except as required by the securities laws of the United States, the Company does not intend to publicly update or revise these forward-looking statements after the date of this release whether as a result of new information, future developments or otherwise.

 

All trademarks are the property of their respective owners.

 

 


For Investor Information, Contact:

For Media Information, Contact:

Cody Slach or Sean McGowan

MacLean Marshall

Gateway Investor Relations

Sr. Director – PR/Communications

On Behalf of Turtle Beach

Turtle Beach Corp.

949.574.3860

858.914.5093

HEAR@gatewayir.com

maclean.marshall@turtlebeach.com

 


 

Turtle Beach Corporation

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)

 

Table 1.

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

ASSETS

 

(in thousands, except par value and share amounts)

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,265

 

 

$

8,249

 

Accounts receivable, net

 

 

53,825

 

 

 

44,530

 

Inventories

 

 

79,453

 

 

 

45,711

 

Prepaid expenses and other current assets

 

 

8,451

 

 

 

4,057

 

Total Current Assets

 

 

168,994

 

 

 

102,547

 

Property and equipment, net

 

 

5,004

 

 

 

3,962

 

Deferred income taxes

 

 

7,800

 

 

 

7,439

 

Goodwill

 

 

8,178

 

 

 

8,515

 

Intangible assets, net

 

 

5,325

 

 

 

6,011

 

Other assets

 

 

6,230

 

 

 

2,877

 

Total Assets

 

$

201,531

 

 

$

131,351

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

 

 

$

15,655

 

Accounts payable

 

 

63,699

 

 

 

22,511

 

Other current liabilities

 

 

34,432

 

 

 

26,422

 

Total Current Liabilities

 

 

98,131

 

 

 

64,588

 

Deferred income taxes

 

 

140

 

 

 

153

 

Other liabilities

 

 

7,524

 

 

 

3,223

 

Total Liabilities

 

 

105,795

 

 

 

67,964

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Common stock, $0.001 par value - 25,000,000 shares authorized; 15,186,990 and 14,488,182 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

 

 

15

 

 

 

14

 

Additional paid-in capital

 

 

187,065

 

 

 

176,776

 

Accumulated deficit

 

 

(91,076

)

 

 

(113,519

)

Accumulated other comprehensive income (loss)

 

 

(268

)

 

 

116

 

Total Stockholders’ Equity

 

 

95,736

 

 

 

63,387

 

Total Liabilities and Stockholders’ Equity

 

$

201,531

 

 

$

131,351

 

 


 

Turtle Beach Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per-share data)

(unaudited)

Table 2.

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net revenue

 

$

112,494

 

 

$

46,723

 

 

$

227,181

 

 

$

132,899

 

Cost of revenue

 

 

66,358

 

 

 

31,680

 

 

 

141,033

 

 

 

89,898

 

Gross profit

 

 

46,136

 

 

 

15,043

 

 

 

86,148

 

 

 

43,001

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

11,857

 

 

 

10,150

 

 

 

29,064

 

 

 

24,581

 

Research and development

 

 

3,260

 

 

 

2,198

 

 

 

8,688

 

 

 

5,388

 

General and administrative

 

 

6,799

 

 

 

5,214

 

 

 

19,232

 

 

 

16,057

 

Total operating expenses

 

 

21,916

 

 

 

17,562

 

 

 

56,984

 

 

 

46,026

 

Operating income (loss)

 

 

24,220

 

 

 

(2,519

)

 

 

29,164

 

 

 

(3,025

)

Interest expense

 

 

103

 

 

 

240

 

 

 

355

 

 

 

595

 

Other non-operating expense (income), net

 

 

(101

)

 

 

302

 

 

 

(1,520

)

 

 

(1,430

)

Income (loss) before income tax

 

 

24,218

 

 

 

(3,061

)

 

 

30,329

 

 

 

(2,190

)

Income tax expense

 

 

6,424

 

 

 

63

 

 

 

7,886

 

 

 

252

 

Net income (loss)

 

$

17,794

 

 

$

(3,124

)

 

$

22,443

 

 

$

(2,442

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.20

 

 

$

(0.22

)

 

$

1.53

 

 

$

(0.17

)

Diluted

 

$

1.04

 

 

$

(0.22

)

 

$

1.41

 

 

$

(0.17

)

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,845

 

 

 

14,506

 

 

 

14,642

 

 

 

14,477

 

Diluted

 

 

17,154

 

 

 

14,506

 

 

 

15,961

 

 

 

14,477

 

 

 


 

Turtle Beach Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Table 3.

 

 

Nine Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

$

32,638

 

 

$

27,304

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

(3,918

)

 

 

(14,295

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Borrowings on revolving credit facilities

 

 

185,486

 

 

 

148,087

 

Repayment of revolving credit facilities

 

 

(201,141

)

 

 

(158,911

)

Proceeds from sale of equity securities

 

 

4,372

 

 

 

-

 

Proceeds from exercise of stock options and warrants

 

 

2,155

 

 

 

214

 

Repurchase of common stock

 

 

-

 

 

 

(1,941

)

Repurchase of common stock to satisfy employee tax withholding obligations

 

 

(215

)

 

 

(201

)

Net cash used for financing activities

 

 

(9,343

)

 

 

(12,752

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(361

)

 

 

(298

)

Net increase (decrease) in cash and cash equivalents

 

 

19,016

 

 

 

(41

)

Cash and cash equivalents - beginning of period

 

 

8,249

 

 

 

7,078

 

Cash and cash equivalents - end of period

 

$

27,265

 

 

$

7,037

 


 

Turtle Beach Corporation

Reconciliation of GAAP and Non-GAAP Measures

(in thousands, except per-share data)

(unaudited)

Table 4.

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

September 30, 2020

 

 

September 30, 2019

 

Net Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income (Loss)

 

$

17,794

 

 

$

(3,124

)

 

$

22,443

 

 

$

(2,442

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on financial instrument obligation

 

 

 

 

 

 

 

 

 

 

 

(1,601

)

Gain on acquisition-related settlement

 

 

 

 

 

 

 

 

(1,702

)

 

 

 

Change in fair value of contingent consideration

 

 

126

 

 

 

 

 

 

366

 

 

 

 

Acquisition integration costs

 

 

26

 

 

 

543

 

 

 

273

 

 

 

2,603

 

Non-GAAP Earnings

 

$

17,946

 

 

$

(2,581

)

 

$

21,380

 

 

$

(1,440

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP- Diluted

 

$

1.04

 

 

$

(0.22

)

 

$

1.41

 

 

$

(0.17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on financial instrument obligation

 

 

 

 

 

 

 

 

 

 

 

 

Gain on acquisition-related settlement

 

 

 

 

 

 

 

 

(0.11

)

 

 

(0.11

)

Change in fair value of contingent consideration

 

 

0.01

 

 

 

 

 

 

0.02

 

 

 

 

Acquisition integration costs

 

 

 

 

 

0.04

 

 

 

0.02

 

 

 

0.18

 

Non-GAAP- Diluted

 

$

1.05

 

 

$

(0.18

)

 

$

1.34

 

 

$

(0.10

)

 


 

Turtle Beach Corporation

GAAP to Adjusted EBITDA Reconciliation

(in thousands)

(unaudited)

Table 5.

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (1)

 

EBITDA

 

Net revenue

 

$

112,494

 

$

-

 

$

-

 

$

-

 

$

-

 

$

112,494

 

Cost of revenue

 

 

66,358

 

 

(645

)

 

-

 

 

(284

)

 

-

 

 

65,429

 

Gross Profit

 

 

46,136

 

 

645

 

 

-

 

 

284

 

 

-

 

 

47,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

21,916

 

 

(596

)

 

(223

)

 

(1,288

)

 

(37

)

 

19,772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

24,220

 

 

1,241

 

 

223

 

 

1,572

 

 

37

 

 

27,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense (income), net

 

 

(101

)

 

 

 

 

 

 

 

 

 

 

(175

)

 

(276

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

24,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

6,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

17,794

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

27,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (1)

 

EBITDA

 

Net revenue

 

$

227,181

 

$

-

 

$

-

 

$

-

 

$

-

 

$

227,181

 

Cost of revenue

 

 

141,033

 

 

(1,828

)

 

-

 

 

(623

)

 

-

 

 

138,582

 

Gross Profit

 

 

86,148

 

 

1,828

 

 

-

 

 

623

 

 

-

 

 

88,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

56,984

 

 

(1,474

)

 

(665

)

 

(3,354

)

 

(381

)

 

51,110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

29,164

 

 

3,302

 

 

665

 

 

3,977

 

 

381

 

 

37,489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense (income), net

 

 

(1,520

)

 

 

 

 

 

 

 

 

 

 

1,192

 

 

(328

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

30,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

7,886

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

22,443

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

37,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Other includes certain business acquisition costs, gain on an acquisition-related settlement and change in fair value of contingent consideration.

 


 

Turtle Beach Corporation

GAAP to Adjusted EBITDA Reconciliation

(in thousands)

(unaudited)

Table 5. (continued)

 

 

Three Months Ended

 

 

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (2)

 

EBITDA

 

Net revenue

 

$

46,723

 

$

-

 

$

-

 

$

-

 

$

-

 

$

46,723

 

Cost of revenue

 

 

31,680

 

 

(570

)

 

-

 

 

(108

)

 

-

 

 

31,002

 

Gross Profit

 

 

15,043

 

 

570

 

 

-

 

 

108

 

 

-

 

 

15,721

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

17,562

 

 

(728

)

 

(192

)

 

(922

)

 

(618

)

 

15,102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

(2,519

)

 

1,298

 

 

192

 

 

1,030

 

 

618

 

 

618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense (income), net

 

 

302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income tax

 

 

(3,061

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(3,124

)

 

 

 

 

 

 

Adjusted EBITDA

 

$

316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (2)

 

EBITDA

 

Net revenue

 

$

132,899

 

$

-

 

$

-

 

$

-