hear-8k_20200310.htm

 

 

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: March 10, 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)

 

 

11011 Via Frontera, Suite A/B

San Diego, California

92127

(Address of principal executive offices)

(Zip Code)

 

(888) 496-8001

(Registrant’s telephone number, including area code)

 

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 March 10, 2020, Turtle Beach Corporation (the “Company”) issued a press release announcing its financial results for its year ended December 31, 2019. 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

Press Release of the Company, dated March 10, 2020

 

 

 

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:

March 10, 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 FOURTH QUARTER AND FULL YEAR 2019 RESULTS

 

San Diego, CA – March 10, 2020 Turtle Beach Corporation (Nasdaq: HEAR), a leading gaming  audio and accessory brand, reported financial results for the fourth quarter and full year ended December 31, 2019.

 

Fourth Quarter Summary vs. Year-Ago Quarter:

 

Net revenue was $101.8 million ($102.1 million in constant currency) versus $111.3 million;

 

 

Net income of $20.4 million, or $1.29 per diluted share (includes $7.4 million benefit from the release of valuation allowances on deferred tax assets), compared to net income of $24.6 million, or $1.33 per diluted share; and

 

 

Adjusted EBITDA was $16.6 million compared to $25.0 million.

 

 

2019 Full-Year Summary vs. 2018:

 

Net revenue was $234.7 million ($236.5 million in constant currency) versus $287.4 million;

 

 

Net income of $17.9 million, or $1.04 per diluted share (includes $7.4 million benefit from the release of valuation allowances on deferred tax assets), compared to net income of $39.2 million, or $2.74 per share; and

 

 

Adjusted EBITDA was $22.8 million compared to $57.7 million.

 

 

“As indicated in our pre-announcement, our 2019 sales were the second highest in our history, with 2019 playing out close to our expectations,” said Juergen Stark, CEO, Turtle Beach Corporation. “While we expect the console gaming market to be soft as consumers prepare for Sony and Microsoft’s new consoles slated to launch this fourth quarter, we expect the market to return to growth in 2021. We anticipate continued growth in our PC gaming accessories sales in 2020 and plan to invest in product and brand development to increase our share in this attractive portion of the market.”

 

Fourth Quarter 2019 Financial Results

Net revenue in the fourth quarter of 2019 was $101.8 million compared to $111.3 million in the year-ago quarter. While consumer demand remained above historic levels, this decrease was the result of the expected decline from the record levels of demand in the prior year driven by new headset users buying their first headset for battle royale games. On a constant currency basis, revenue in the fourth quarter of 2019 was $102.1 million.

 

Gross margin in the fourth quarter of 2019 was 35.1% compared to 38.5% in the fourth quarter of


Turtle Beach Reports Fourth Quarter and Full Year 2019 Financial Results

 

2018. This expected decrease was primarily due to a more normal level of promotional activity compared to 2018 when less promotional effort was necessary during the battle royale boom of 2018, as well as increased tariff costs and product mix, partially offset by lower standard freight costs.

 

Operating expenses in the fourth quarter of 2019 were $22.3 million compared to $17.4 million in the 2018 period due primarily to incremental costs associated with the ROCCAT acquisition.  

 

Net income in the fourth quarter of 2019 was $20.4 million compared to $24.6 million in the year-ago quarter. Net income in the fourth quarter of 2019 included a $7.4 million benefit from the release of valuation allowances on deferred tax assets in certain jurisdictions. The decline was driven by lower gross profit because of the expected decline in revenue and the increase in operating expenses.

 

Net income per share in the fourth quarter of 2019 was $1.29 on 15.7 million weighted average diluted shares outstanding, compared to net income per share of $1.33 on 16.2 million weighted average diluted shares outstanding in the year-ago quarter.

 

Adjusted net income (as defined below in “Non-GAAP Financial Measures”) in the fourth quarter of 2019 was $13.0 million, or $0.83 per diluted share, compared to $21.5 million, or $1.33 per share, in the corresponding period in 2018.  

 

Adjusted EBITDA (as defined below in “Non-GAAP Financial Measures”) in the fourth quarter of 2019 was $16.6 million compared to $25.0 million in the year-ago quarter.

 

2019 Financial Results

Net revenue in 2019 was $234.7 million compared to $287.4 million in 2018, which is the second highest year of sales in Turtle Beach’s history. The expected revenue decline for the full year was driven by the decline from 2018’s record levels of demand from new headset users buying their first headset for battle royale games. On a constant currency basis, revenue in 2019 was $236.5 million.

 

Gross margin in 2019 was 33.5% compared to 37.8% in 2018. Margins were impacted by a more normal level of promotions, product mix, increased refurbishment and warehouse costs, as well as a decline in volume-based fixed cost leverage, partially offset by lower standard freight costs.

 

Operating expenses in 2019 were $68.3 million compared to $54.7 million in 2018 due primarily to


Turtle Beach Reports Fourth Quarter and Full Year 2019 Financial Results

 

the addition of ROCCAT operating costs, ROCCAT transaction and integration costs, and additional marketing initiatives, partially offset by decreases in revenue-based compensation as compared to the 2018 period.

 

Net income in 2019 was $17.9 million compared to $39.2 million in 2018. Net income in 2019 included a $7.4 million benefit from the release of valuation allowances on deferred tax assets in certain jurisdictions. The decline was driven by lower gross profit because of the expected decline in revenue and the increase in operating expenses.

 

Net income per share in 2019 was $1.04 on 15.7 million weighted average diluted shares outstanding, compared to net income per share of $2.74 on 14.3 million weighted average diluted shares outstanding in 2018.

 

Adjusted net income (as defined below in “Non-GAAP Financial Measures”) in 2019 was $11.6 million, or $0.74 per diluted share, compared to $44.5 million, or $3.05 per diluted share, in 2018.  

 

Adjusted EBITDA (as defined below in “Non-GAAP Financial Measures”) in 2019 was $22.8 million compared to $57.7 million in the year-ago quarter.

 

Balance Sheet Highlights

At December 31, 2019, the Company had $8.2 million of cash and cash equivalents with $15.7 million of outstanding debt under its revolving line of credit. This compares to $7.1 million of cash and cash equivalents with $37.4 million of outstanding debt under its revolving credit facility at December 31, 2018.

 

Since Turtle Beach’s share repurchase program was announced on April 10, 2019, the Company has repurchased 271,300 shares for $2.5 million, or an average of $9.30 per share.

 



Turtle Beach Reports Fourth Quarter and Full Year 2019 Financial Results

 

2020 Outlook

For the first quarter of 2020, the Company expects revenue to range between $29 million and $31 million. Adjusted EBITDA is expected to range between $(6.5) million and $(7.5) million. Net loss per diluted share is expected to range between $(0.73) and $(0.81), and Adjusted loss per diluted share is expected to range between $(0.72) and $(0.80), both reflecting the aforementioned revenue and EBITDA forecasts. Despite the anticipation of a pretax loss, the Company expects to have a modest tax provision because of taxes in various jurisdictions.

 

For the full year 2020, the Company expects revenue to range between $214 million and $224 million. Adjusted EBITDA is expected to range between $5 million and $10 million reflecting an incremental investment of approximately $9 million to expand the Company’s market share in the PC accessories market. Net loss per diluted share is expected to range between $(0.13) and $(0.46), and adjusted net loss per diluted share is expected to range between $(0.12) and $(0.45), both reflecting the aforementioned revenue and EBITDA forecasts. Despite the anticipation of a pretax loss, the Company expects to have a modest tax provision because of taxes in various jurisdictions.  

 

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, March 10, 2020, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern) to discuss its fourth quarter and full year 2019 results.

 

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

 

Conference Call Details:

Date: Tuesday, March 10, 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: 5092316


Turtle Beach Reports Fourth Quarter and Full Year 2019 Financial Results

 

 

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 www.turtlebeachcorp.com.

 

A replay of the conference call will be available after 8:00 p.m. ET on the same day through March 17, 2020.

 

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

International Replay Number: (404) 537-3406

Replay ID: 5092316

 

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 ROCCAT business, (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 ROCCAT acquisition, 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 supplementary information to, and facilitates additional analysis by, investors.  The presented non-GAAP financial measures exclude items that


Turtle Beach Reports Fourth Quarter and Full Year 2019 Financial Results

 

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 each of the three months and years ended December 31, 2019 and 2018.

 

About Turtle Beach Corporation

Turtle Beach (www.turtlebeach.com) is a leading gaming audio and accessory brand, offering a wide selection of cutting-edge, award-winning gaming headsets. Whether you’re a professional esports athlete, hardcore gamer, casual player, or just starting out, Turtle Beach has the gaming headset to help you truly master your skills. Innovative and advanced technology, amazing high-quality gaming audio, crystal-clear communication, lightweight and comfortable designs, and ease-of-use are just a few features that make Turtle Beach a fan-favorite brand and market leader in console audio for 10 years running. In 2019 Turtle Beach acquired ROCCAT, a leading PC accessories brand that combines detail-loving German innovation with a genuine passion for designing the best PC gaming products. Under the ROCCAT brand, Turtle beach provides award-winning keyboards and mice for PC gamers. 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” 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 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, general business and economic conditions including the impact of coronavirus on consumer demands and manufacturing capabilities, 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. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission, the Company is under no obligation to publicly update or revise any forward-looking statement 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.


Turtle Beach Reports Fourth Quarter and Full Year 2019 Financial Results

 

 

 


For Investor Information, Contact:

For Media Information, Contact:

Cody Slach or Sean McGowan

MacLean Marshall

Gateway Investor Relations

Sr. Director – Brand & 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.

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(unaudited)

 

ASSETS

 

(in thousands, except par value and share amounts)

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,249

 

 

$

7,078

 

Accounts receivable, net

 

 

44,530

 

 

 

52,797

 

Inventories

 

 

45,711

 

 

 

49,472

 

Prepaid expenses and other current assets

 

 

4,057

 

 

 

4,469

 

Total Current Assets

 

 

102,547

 

 

 

113,816

 

Property and equipment, net

 

 

3,962

 

 

 

5,856

 

Deferred income taxes

 

 

7,439

 

 

 

 

Goodwill

 

 

8,515

 

 

 

 

Intangible assets, net

 

 

6,011

 

 

 

1,036

 

Other assets

 

 

2,877

 

 

 

1,212

 

Total Assets

 

$

131,351

 

 

$

121,920

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

15,655

 

 

$

37,385

 

Accounts payable

 

 

22,511

 

 

 

17,724

 

Other current liabilities

 

 

26,422

 

 

 

18,488

 

Total Current Liabilities

 

 

64,588

 

 

 

73,597

 

Deferred income taxes

 

 

153

 

 

 

187

 

Financial instrument obligation

 

 

 

 

 

7,848

 

Other liabilities

 

 

3,223

 

 

 

2,792

 

Total Liabilities

 

 

67,964

 

 

 

84,424

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Common stock, $0.001 par value - 25,000,000 shares authorized; 14,488,152 and 14,268,184 shares issued and outstanding as of December 31, 2019 and 2018, respectively

 

 

14

 

 

 

14

 

Additional paid-in capital

 

 

176,776

 

 

 

169,421

 

Accumulated deficit

 

 

(113,519

)

 

 

(131,463

)

Accumulated other comprehensive income (loss)

 

 

116

 

 

 

(476

)

Total Stockholders’ Equity

 

 

63,387

 

 

 

37,496

 

Total Liabilities and Stockholders’ Equity

 

$

131,351

 

 

$

121,920

 

 


 

Turtle Beach Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per-share data)

(unaudited)

Table 2.

 

 

 

 

Three Months Ended

 

 

Twelve months ended

 

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net revenue

 

$

101,764

 

 

$

111,319

 

 

$

234,663

 

 

$

287,437

 

Cost of revenue

 

 

66,052

 

 

 

68,428

 

 

 

155,950

 

 

 

178,738

 

Gross profit

 

 

35,712

 

 

 

42,891

 

 

 

78,713

 

 

 

108,699

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

14,053

 

 

 

11,125

 

 

 

38,634

 

 

 

32,389

 

Research and development

 

 

2,468

 

 

 

1,555

 

 

 

7,856

 

 

 

5,611

 

General and administrative

 

 

5,739

 

 

 

4,747

 

 

 

21,796

 

 

 

16,658

 

Total operating expenses

 

 

22,260

 

 

 

17,427

 

 

 

68,286

 

 

 

54,658

 

Operating income

 

 

13,452

 

 

 

25,464

 

 

 

10,427

 

 

 

54,041

 

Interest expense

 

 

334

 

 

 

979

 

 

 

929

 

 

 

5,335

 

Other non-operating expense (income), net

 

 

(779

)

 

 

(1,104

)

 

 

(2,209

)

 

 

7,779

 

Income before income tax

 

 

13,897

 

 

 

25,589

 

 

 

11,707

 

 

 

40,927

 

Income tax expense (benefit)

 

 

(6,489

)

 

 

975

 

 

 

(6,237

)

 

 

1,737

 

Net income

 

$

20,386

 

 

$

24,614

 

 

$

17,944

 

 

$

39,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.41

 

 

$

1.73

 

 

$

1.24

 

 

$

2.90

 

Diluted

 

$

1.29

 

 

$

1.33

 

 

$

1.04

 

 

$

2.74

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,501

 

 

 

14,250

 

 

 

14,483

 

 

 

13,512

 

Diluted

 

 

15,748

 

 

 

16,213

 

 

 

15,688

 

 

 

14,289

 

 

 


 

Turtle Beach Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Table 3.

 

 

Year ended

 

 

 

December 31,

2019

 

 

December 31,

2018

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

$

39,374

 

 

$

42,249

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

(14,579

)

 

 

(5,079

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Borrowings on revolving credit facilities

 

 

219,910

 

 

 

361,073

 

Repayment of revolving credit facilities

 

 

(241,640

)

 

 

(362,154

)

Proceeds from term loan

 

 

 

 

 

3,265

 

Repayment of term loan

 

 

 

 

 

(14,985

)

Repayment of subordinated notes - related party

 

 

 

 

 

(23,940

)

Settlement of Series B Preferred Stock

 

 

 

 

 

(1,390

)

Proceeds from exercise of stock options and warrants

 

 

330

 

 

 

4,235

 

Repurchase of common stock

 

 

(2,525

)

 

 

 

Repurchase of common stock to satisfy employee tax withholding obligations

 

 

(255

)

 

 

(246

)

Debt financing costs

 

 

 

 

 

(612

)

Cash portion of loss on debt extinguishment

 

 

 

 

 

(375

)

Net cash used for financing activities

 

 

(24,180

)

 

 

(35,129

)

Effect of exchange rate changes on cash and cash equivalents

 

 

556

 

 

 

(210

)

Net increase (decrease) in cash and cash equivalents

 

 

1,171

 

 

 

1,831

 

Cash and cash equivalents - beginning of period

 

 

7,078

 

 

 

5,247

 

Cash and cash equivalents - end of period

 

$

8,249

 

 

$

7,078

 


 

Turtle Beach Corporation

Reconciliation of GAAP and Non-GAAP Measures

(in thousands, except per-share data)

(unaudited)

Table 4.

 

 

 

Three Months Ended

 

 

Year ended

 

 

 

December 31,

2019

 

 

December 31,

2018

 

 

December 31,

2019

 

 

December 31,

2018

 

Net Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income (Loss)

 

$

20,386

 

 

$

24,614

 

 

$

17,944

 

 

$

39,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss (gain) on financial instrument obligation

 

 

 

 

 

(3,119

)

 

 

(1,601

)

 

 

5,291

 

Release of valuation allowance

 

 

(7,439

)

 

 

 

 

 

(7,439

)

 

 

 

Change in contigent consideration

 

 

(422

)

 

 

 

 

 

(422

)

 

 

 

Acquisition integration costs

 

 

499

 

 

 

 

 

 

3,154

 

 

 

 

Non-GAAP Earnings

 

$

13,023

 

 

$

21,495

 

 

$

11,636

 

 

$

44,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnigns Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP- Diluted

 

$

1.29

 

 

$

1.33

 

 

$

1.04

 

 

$

2.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss (gain) on financial instrument obligation

 

 

 

 

 

 

 

 

 

 

 

0.31

 

Release of valuation allowance

 

 

(0.47

)

 

 

 

 

 

(0.47

)

 

 

 

Change in contigent consideration

 

 

(0.03

)

 

 

 

 

 

(0.03

)

 

 

 

Acquisition integration costs

 

 

0.03

 

 

 

 

 

 

0.20

 

 

 

 

Non-GAAP- Diluted

 

$

0.83

 

 

$

1.33

 

 

$

0.74

 

 

$

3.05

 


 

Turtle Beach Corporation

GAAP to Adjusted EBITDA Reconciliation

(in thousands)

(unaudited)

Table 5.

 

 

Three Months Ended

 

 

 

December 31,

2019

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (1)

 

EBITDA

 

Net revenue

 

$

101,764

 

$

-

 

$

-

 

$

-

 

$

-

 

$

101,764

 

Cost of revenue

 

 

66,052

 

 

(601

)

 

-

 

 

(74

)

 

-

 

 

65,377

 

Gross Profit

 

 

35,712

 

 

601

 

 

-

 

 

74

 

 

-

 

 

36,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

22,260

 

 

(478

)

 

(229

)

 

(929

)

 

(555

)

 

20,070

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

13,452

 

 

1,079

 

 

229

 

 

1,003

 

 

555

 

 

16,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense (income), net

 

 

(780

)

 

 

 

 

 

 

 

 

 

471

 

 

(309

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

13,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(6,489

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

20,386

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

16,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

December 31,

2019

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (1)

 

EBITDA

 

Net revenue

 

$

234,663

 

$

-

 

$

-

 

$

-

 

$

-

 

$

234,663

 

Cost of revenue

 

 

155,950

 

 

(1,950

)

 

-

 

 

(150

)

 

-

 

 

153,850

 

Gross Profit

 

 

78,713

 

 

1,950

 

 

-

 

 

150

 

 

-

 

 

80,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

68,286

 

 

(2,605

)

 

(642

)

 

(3,408

)

 

(3,516

)

 

58,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

10,427

 

 

4,556

 

 

642

 

 

3,558

 

 

3,516

 

 

22,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

929

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense (income), net

 

 

(2,209

)

 

 

 

 

 

 

 

 

 

 

2,072

 

 

(137

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

11,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(6,237

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

17,944

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

22,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Other includes certain business acquisition costs, gain (loss) on financial instrument obligation, and change in fair value of contingenct consideration.

 


 

Turtle Beach Corporation

GAAP to Adjusted EBITDA Reconciliation

(in thousands)

(unaudited)

Table 5. (continued)

 

 

Three Months Ended

 

 

 

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (2)

 

EBITDA

 

Net revenue

 

$

111,319

 

$

-

 

$

-

 

$

-

 

$

-

 

$

111,319

 

Cost of revenue

 

 

68,428

 

 

(260

)

 

-

 

 

111

 

 

-

 

 

68,278

 

Gross Profit

 

 

42,891

 

 

260

 

 

-

 

 

(111

)

 

-

 

 

43,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

17,427

 

 

(750

)

 

(73

)

 

(578

)

 

-

 

 

16,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

25,464

 

 

1,010

 

 

73

 

 

468

 

 

-

 

 

27,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense (income), net

 

 

(1,104

)

 

 

 

 

 

 

 

 

 

 

3,119

 

 

2,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

25,589

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

24,614

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

25,000