hear-8k_20200806.htm
false 0001493761 0001493761 2020-08-06 2020-08-06

 

 

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: August 6, 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 August 6, 2020, Turtle Beach Corporation (the “Company”) issued a press release announcing its financial results for its quarter ended June 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 August 6, 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:

August 6, 2020

By:

/s/ JOHN T. HANSON

 

 

 

John T. Hanson

Chief Financial Officer, Treasurer and Secretary

 

 

 

 

hear-ex991_8.htm

Exhibit 99.1

 

TURTLE BEACH REPORTS RECORD SECOND QUARTER 2020 RESULTS

AND SIGNIFICANTLY RAISES FULL-YEAR OUTLOOK

 

San Diego, CA – August 6, 2020 Turtle Beach Corporation (Nasdaq: HEAR), a leading gaming audio and accessory brand, reported record financial results for the second quarter ended June 30, 2020.

 

Second Quarter Summary vs. Year-Ago Quarter:

 

Net revenue increased 93% to $79.7 million ($80.1 million in constant currency);

 

 

Gross margin increased 480 basis points to 36.7%;

 

 

Net income increased significantly to $8.2 million, or $0.51 per diluted share, compared to a net loss of $2.4 million, or $(0.16) per diluted share; and

 

 

Adjusted EBITDA increased to $12.9 million compared to $1.6 million.

 

 

Management Commentary

“Our record-setting performance in the second quarter was driven by a combination of strong consumer demand for headsets, superior execution that allowed us to gain market share, and our ability to leverage operating expenses even as we invested in new growth initiatives,” said Juergen Stark, CEO of Turtle Beach. “We couldn’t be prouder of what our team has accomplished in recent months under challenging conditions. What is most encouraging is that we believe the demand is not simply pulling sales forward that would otherwise have occurred later, but is also being 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 are buying headsets for at-home work, school and socializing.”

 

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 a result of the performance in the second quarter and our belief that demand will remain at elevated levels through the end of the year, we are confident that our results this year will significantly exceed our earlier forecasts for both sales and EBITDA. We’ve stepped-up our investments to capitalize 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.”


Turtle Beach Reports Second Quarter Financial Results

 

Second Quarter 2020 Financial Results

Net revenue in the second quarter of 2020 increased 93% to $79.7 million compared to $41.3 million in the year-ago quarter. This exceeds the previous record of $60.8 million reported in the second quarter of 2018 by 31% when demand for console headsets was fueled by battle royale games such as Fortnite. The Company’s strong performance in the second 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 allowed the Company to achieve the higher revenues and gain market share. On a constant currency basis, revenue in the second quarter of 2020 was $80.1 million.

 

Gross margin in the second quarter of 2020 increased 480 basis points to 36.7% compared to 31.9% in the second quarter of 2019. This significant increase was due to volume-driven fixed cost leverage, lower than normal promotional spending given surging demand, and favorable business mix, partially offset by over $4 million in incremental air freight to enable retail supply.  

 

Operating expenses in the second quarter of 2020 were $19.3 million compared to $15.5 million in the 2019 period, with the increase due primarily to the inclusion of expenses related to ROCCAT for the entire quarter in 2020 (ROCCAT was acquired in May of 2019), additional investments to expand the PC gaming product portfolio and ROCCAT brand, and higher volume-related selling costs, partially offset by lower transaction-related costs.

 

Net income in the second quarter of 2020 improved significantly to $8.2 million compared to a net loss of $2.4 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 second quarter of 2020 was $0.51 on 16.2 million weighted average diluted shares outstanding, compared to a net loss per share of $0.16 on 14.6 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 net income (as defined below in “Non-GAAP Financial Measures”) in the second quarter of 2020 was $6.8 million, or $0.42 per diluted share, compared to an adjusted net loss of $0.9 million, or $(0.06) per share, in the corresponding period in 2019.  

 

Adjusted EBITDA (as defined below in “Non-GAAP Financial Measures”) in the second quarter


Turtle Beach Reports Second Quarter Financial Results

 

of 2020 increased more than eight-fold to $12.9 million compared to $1.6 million in the year-ago quarter.

 

Balance Sheet Highlights

At June 30, 2020, the Company had $21.2 million of cash and cash equivalents with no outstanding debt under its revolving line of credit. This compares to $3.4 million of cash and cash equivalents with $10.8 million of outstanding debt under its revolving credit facility at June 30, 2019.  

 

Increased 2020 Outlook

For the full year 2020, the Company now expects revenue to be approximately $300 million, which is more than 30% higher than the midpoint of its prior forecast range of $224 million to $234 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 new console launches around the holiday season.

 

Adjusted EBITDA is now expected to be approximately $30 million, or more than 160% above the midpoint of the prior range of $9 million and $14 million, reflecting the higher expected revenue for the year, higher gross margin, partially offset by expected air freight of over $10 million to enable supply and increased revenue, and an increase in planned marketing and new product-related investments to approximately $12 million to expand the Company’s position in the PC accessories market and drive future growth.

 

Net income (loss) per diluted share is now expected to approximate $0.85 compared to prior guidance of a range of $(0.22) to $0.03. Adjusted net income (loss) per diluted share is expected to be approximately $0.80 compared to prior guidance of a range of $(0.16) and $0.09, both reflecting the aforementioned revenue and EBITDA forecasts. Per share figures for the full year 2020 assume approximately 16.5 million diluted shares outstanding.

 

Second Half Outlook

For the second half of 2020, the Company expects net revenue to be approximately $185 million and adjusted EBITDA to be approximately $20 million. Net income per diluted share and adjusted net income per diluted share are both expected to be 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),


Turtle Beach Reports Second Quarter Financial Results

 

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, August 6, 2020, at 6:00 a.m. Pacific Time (9:00 a.m. Eastern Time) to discuss its second 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, August 6, 2020

Time: 9:00 a.m. ET / 6:00 a.m. PT

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

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

Conference ID: 4756665

 

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 12:00 p.m. ET on the same day through August 13, 2020.

 

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

International Replay Number: (404) 537-3406

Replay ID: 4756665

 

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


Turtle Beach Reports Second Quarter Financial Results

 

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 EBITDA is 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 each of the three months ended June 30, 2020 and 2019.

 

About Turtle Beach Corporation

Turtle Beach Corporation (corp.turtlebeach.com) is one of the world’s leading gaming audio and accessory providers. The Turtle Beach brand (https://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 (https://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 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”,


Turtle Beach Reports Second Quarter Financial Results

 

“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.

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

ASSETS

 

(in thousands, except par value and share amounts)

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

21,206

 

 

$

8,249

 

Accounts receivable, net

 

 

37,007

 

 

 

44,530

 

Inventories

 

 

44,953

 

 

 

45,711

 

Prepaid expenses and other current assets

 

 

10,233

 

 

 

4,057

 

Total Current Assets

 

 

113,399

 

 

 

102,547

 

Property and equipment, net

 

 

4,366

 

 

 

3,962

 

Deferred income taxes

 

 

6,664

 

 

 

7,439

 

Goodwill

 

 

8,178

 

 

 

8,515

 

Intangible assets, net

 

 

5,518

 

 

 

6,011

 

Other assets

 

 

2,370

 

 

 

2,877

 

Total Assets

 

$

140,495

 

 

$

131,351

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

 

 

$

15,655

 

Accounts payable

 

 

41,694

 

 

 

22,511

 

Other current liabilities

 

 

26,331

 

 

 

26,422

 

Total Current Liabilities

 

 

68,025

 

 

 

64,588

 

Deferred income taxes

 

 

140

 

 

 

153

 

Other liabilities

 

 

2,869

 

 

 

3,223

 

Total Liabilities

 

 

71,034

 

 

 

67,964

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Common stock, $0.001 par value - 25,000,000 shares authorized; 14,594,731 and 14,488,152 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

 

 

15

 

 

 

14

 

Additional paid-in capital

 

 

179,132

 

 

 

176,776

 

Accumulated deficit

 

 

(108,870

)

 

 

(113,519

)

Accumulated other comprehensive income (loss)

 

 

(816

)

 

 

116

 

Total Stockholders’ Equity

 

 

69,461

 

 

 

63,387

 

Total Liabilities and Stockholders’ Equity

 

$

140,495

 

 

$

131,351

 

 


 

Turtle Beach Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per-share data)

(unaudited)

Table 2.

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net revenue

 

$

79,680

 

 

$

41,330

 

 

$

114,687

 

 

$

86,176

 

Cost of revenue

 

 

50,453

 

 

 

28,159

 

 

$

74,675

 

 

$

58,218

 

Gross profit

 

 

29,227

 

 

 

13,171

 

 

 

40,012

 

 

 

27,958

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

9,559

 

 

 

7,550

 

 

$

17,207

 

 

$

14,431

 

Research and development

 

 

3,001

 

 

 

1,734

 

 

$

5,428

 

 

$

3,190

 

General and administrative

 

 

6,710

 

 

 

6,194

 

 

$

12,433

 

 

$

10,843

 

Total operating expenses

 

 

19,270

 

 

 

15,478

 

 

 

35,068

 

 

 

28,464

 

Operating income (loss)

 

 

9,957

 

 

 

(2,307

)

 

 

4,944

 

 

 

(506

)

Interest expense

 

 

83

 

 

 

111

 

 

$

252

 

 

$

355

 

Other non-operating expense, net

 

 

(1,616

)

 

 

(70

)

 

$

(1,419

)

 

$

(1,732

)

Income (loss) before income tax

 

 

11,490

 

 

 

(2,348

)

 

 

6,111

 

 

 

871

 

Income tax expense

 

 

3,286

 

 

 

25

 

 

$

1,462

 

 

$

189

 

Net income (loss)

 

$

8,204

 

 

$

(2,373

)

 

$

4,649

 

 

$

682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.56

 

 

$

(0.16

)

 

$

0.32

 

 

$

0.05

 

Diluted

 

$

0.51

 

 

$

(0.16

)

 

$

0.30

 

 

$

(0.06

)

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,581

 

 

 

14,586

 

 

 

14,538

 

 

 

14,462

 

Diluted

 

 

16,229

 

 

 

14,586

 

 

 

15,363

 

 

 

15,699

 

 

 


 

Turtle Beach Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Table 3.

 

 

Six Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

$

31,842

 

 

$

38,172

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

(2,303

)

 

 

(13,674

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Borrowings on revolving credit facilities

 

 

48,426

 

 

 

99,453

 

Repayment of revolving credit facilities

 

 

(64,081

)

 

 

(126,036

)

Proceeds from exercise of stock options and warrants

 

 

59

 

 

 

94

 

Repurchase of common stock

 

 

-

 

 

 

(1,499

)

Repurchase of common stock to satisfy employee tax withholding obligations

 

 

(108

)

 

 

(145

)

Net cash used for financing activities

 

 

(15,704

)

 

 

(28,133

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(878

)

 

 

3

 

Net increase (decrease) in cash and cash equivalents

 

 

12,957

 

 

 

(3,632

)

Cash and cash equivalents - beginning of period

 

 

8,249

 

 

 

7,078

 

Cash and cash equivalents - end of period

 

$

21,206

 

 

$

3,446

 


 

Turtle Beach Corporation

Reconciliation of GAAP and Non-GAAP Measures

(in thousands, except per-share data)

(unaudited)

Table 4.

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Net Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income (Loss)

 

$

8,204

 

 

$

(2,373

)

 

$

4,649

 

 

$

682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on financial instrument obligation

 

 

 

 

 

 

 

 

 

 

 

(1,601

)

Gain on acquisition-related settlement

 

 

(1,702

)

 

 

 

 

 

(1,702

)

 

 

 

Change in fair value of contingent consideration

 

 

223

 

 

 

 

 

 

238

 

 

 

 

Acquisition integration costs

 

 

44

 

 

 

1,477

 

 

 

244

 

 

 

2,214

 

Non-GAAP Earnings

 

$

6,769

 

 

$

(896

)

 

$

3,429

 

 

$

1,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP- Diluted

 

$

0.51

 

 

$

(0.16

)

 

$

0.30

 

 

$

(0.06

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on financial instrument obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on acquisition-related settlement

 

 

(0.10

)

 

 

 

 

 

(0.11

)

 

 

 

Change in fair value of contingent consideration

 

 

0.01

 

 

 

 

 

 

0.01

 

 

 

 

Acquisition integration costs

 

 

 

 

 

0.10

 

 

 

0.02

 

 

 

0.14

 

Non-GAAP- Diluted

 

$

0.42

 

 

$

(0.06

)

 

$

0.22

 

 

$

0.08

 

 


 

Turtle Beach Corporation

GAAP to Adjusted EBITDA Reconciliation

(in thousands)

(unaudited)

Table 5.

 

 

Three Months Ended

 

 

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (1)

 

EBITDA

 

Net revenue

 

$

79,680

 

$

-

 

$

-

 

$

-

 

$

-

 

$

79,680

 

Cost of revenue

 

 

50,453

 

 

(593

)

 

-

 

 

(280

)

 

-

 

 

49,580

 

Gross Profit

 

 

29,227

 

 

593

 

 

-

 

 

280

 

 

-

 

 

30,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

19,270

 

 

(435

)

 

(220

)

 

(1,126

)

 

(63

)

 

17,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

9,957

 

 

1,028

 

 

220

 

 

1,406

 

 

63

 

 

12,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense, net

 

 

(1,616

)

 

 

 

 

 

 

 

 

 

 

1,388

 

 

(228

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

11,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

3,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

8,204

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

12,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (1)

 

EBITDA

 

Net revenue

 

$

114,687

 

$

-

 

$

-

 

$

-

 

$

-

 

$

114,687

 

Cost of revenue

 

 

74,675

 

 

(1,184

)

 

-

 

 

(338

)

 

-

 

 

73,153

 

Gross Profit

 

 

40,012

 

 

1,184

 

 

-

 

 

338

 

 

-

 

 

41,534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

35,068

 

 

(877

)

 

(443

)

 

(2,067

)

 

(343

)

 

31,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

4,944

 

 

2,061

 

 

443

 

 

2,405

 

 

343

 

 

10,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense, net

 

 

(1,419

)

 

 

 

 

 

 

 

 

 

 

1,367

 

 

(52

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

6,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

1,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

4,649

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

10,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

 

June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Adj

 

 

 

 

 

 

 

 

 

As

 

Adj

 

Adj

 

Stock

 

 

 

 

Adj

 

 

 

Reported

 

Depreciation

 

Amortization

 

Compensation

 

Other (2)

 

EBITDA

 

Net revenue

 

$

41,330

 

$

-

 

$

-

 

$

-

 

$

-

 

$

41,330

 

Cost of revenue

 

 

28,159

 

 

(427

)

 

-

 

 

(93

)

 

-

 

 

27,638

 

Gross Profit

 

 

13,171

 

 

427

 

 

-

 

 

93

 

 

-

 

 

13,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

15,478

 

 

(713

)

 

(159

)

 

(910

)

 

(1,563

)

 

12,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

(2,307

)

 

1,140

 

 

159

 

 

1,003

 

 

1,563

 

 

1,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-operating expense, net

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income tax

 

 

(2,348

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(2,373

)

 

 

 

 

 

 

Adjusted EBITDA

 

$

1,628