Turtle Beach Reports Strong First Quarter 2021 Results And Raises Full-Year Outlook
Turtle Beach Corporation (Nasdaq: HEAR) reported a record first quarter for 2021, with net revenue of $93.1 million, up 166% from $35 million a year earlier. The company posted a net income of $8.8 million or $0.49 per diluted share, recovering from a net loss of $3.6 million last year. Adjusted EBITDA rose to $15.3 million from a loss of $2.7 million. Cash flow from operations increased 20% to $21.1 million. Turtle Beach also raised its full-year outlook, now expecting $385 million in revenue.
- Net revenue increased by 166% to $93.1 million.
- Net income reached $8.8 million, compared to a net loss of $3.6 million.
- Adjusted EBITDA improved to $15.3 million from a negative $2.7 million.
- Cash flow from operations increased by 20% to $21.1 million.
- Full-year revenue forecast raised to approximately $385 million, up from $360 million.
- Operating expenses increased to $22.6 million from $15.8 million, attributed to R&D and administrative costs.
WHITE PLAINS, N.Y., May 5, 2021 /PRNewswire/ -- Leading gaming accessory maker Turtle Beach Corporation (Nasdaq: HEAR), reported financial results for the first quarter ended March 31, 2021.
First Quarter Summary vs. Year-Ago Quarter:
- Net revenue was
$93.1 million , an increase of166% compared to$35.0 million ; - Net income of
$8.8 million , or$0.49 per diluted share, compared to net loss of$(3.6) million , or$(0.25) per diluted share; - Adjusted EBITDA was
$15.3 million , an increase of$18.0 million compared to$(2.7) million ; and - Cash flow from operations was
$21.1 million , an increase of20% compared to$17.5 million .
Management Commentary
"We turned in another stellar performance in the first quarter, with sales, gross margin, net income and adjusted EBITDA all reaching record high levels for the first quarter," said Juergen Stark, CEO, Turtle Beach. "Consumer demand for console headsets and PC gaming accessories remained at elevated levels, our category expansions are going well, and our operational excellence again allowed us to gain market share, leverage operating costs, and deliver better than expected results.
"The strong secular trends that make gaming such a great category continue. According to NPD, U.S. retail sales of console headsets in the first quarter continued at record levels. During the quarter, the overall console market in the US rose
"We believe these results continue to underscore the strength of our brand, the innovation of our products and the superiority of our execution. Although a number of factors will drive a different phasing of our revenue this year, we believe the combination of our strong market share in console headsets, greatly expanded offering of PC gaming accessories and new product launches in several new categories will allow us to increase our annual sales and top a record 2020. In fact, we are raising our full year revenue and profit outlook to reflect the degree to which our first quarter results exceeded our prior outlook.
"As previously announced, we have multiple new product initiatives planned for 2021, including the continued significant expansion of our PC gaming accessories line, the launch of several new Neat Microphone products, and the entry into other new product categories. We are making the necessary investments to fuel these product launches, and believe they will contribute meaningfully to our growth this year and well beyond.
First Quarter 2021 Financial Results
Net revenue in the first quarter of 2021 was
Gross margin in the first quarter of 2021 was
Operating expenses in the first quarter of 2021 were
Net income in the first quarter of 2021 was
Adjusted EBITDA (as defined below in "Non-GAAP Financial Measures") in the first quarter of 2021 was
Balance Sheet and Cash Flow Highlights
At March 31, 2021, the Company had
Revised 2021 Outlook
For the full year 2021, the Company now expects revenue to be approximately
For the second quarter of 2021, the Company expects revenue to be approximately
1Source: The NPD Group/Retail Tracking Service/Video Games/Console & PC_Tech/US/Dollar share/Jan-March 2021
With respect to the Company's adjusted EBITDA outlook for the second quarter and full year 2021, 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, May 5, 2021, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its first quarter 2021 results.
Chairman and CEO Juergen Stark and CFO John Hanson will host the call, followed by a question and answer session.
Conference Call Details:
Date: Wednesday, May 5, 2021
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: 7795124
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 May 12, 2021.
Toll-Free Replay Number: (855) 859-2056
International Replay Number: (404) 537-3406
Replay ID: 7795124
Non-GAAP Financial Measures
In addition to its reported results, the Company has included in this earnings release certain financial results, including adjusted EBITDA, and adjusted net income that the 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 acquisitions, (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 acquisitions, the mark-to-market adjustment for the financial instrument obligation and the change in fair value of contingent consideration). 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 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 March 31, 2021 and 2020.
About Turtle Beach Corporation
Turtle Beach Corporation (https://corp.turtlebeach.com) is one of the world's leading gaming 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.com) 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 Neat Microphones brand (www.neatmic.com) creates high-quality USB and analog microphones for gamers, streamers, and professionals that embrace cutting-edge technology and design. 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 capital markets activities, 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; delays or disruptions in the supply of components for our products; risks relating to, and uncertainty caused by or resulting from, the COVID-19 pandemic, general business and economic conditions, risks associated with the expansion of our business including acquisitions, 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 Corporation | ||||||||
Table 1. | ||||||||
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2021 | 2020 | |||||||
Net revenue | $ | 93,053 | $ | 35,007 | ||||
Cost of revenue | 58,198 | 24,222 | ||||||
Gross profit | 34,855 | 10,785 | ||||||
Operating expenses: | ||||||||
Selling and marketing | 11,545 | 7,648 | ||||||
Research and development | 3,993 | 2,427 | ||||||
General and administrative | 7,037 | 5,723 | ||||||
Total operating expenses | 22,575 | 15,798 | ||||||
Operating income (loss) | 12,280 | (5,013) | ||||||
Interest expense | 97 | 169 | ||||||
Other non-operating expense, net | 579 | 197 | ||||||
Income (loss) before income tax | 11,604 | (5,379) | ||||||
Income tax expense (benefit) | 2,766 | (1,824) | ||||||
Net income (loss) | $ | 8,838 | $ | (3,555) | ||||
Net income (loss) per share | ||||||||
Basic | $ | 0.57 | $ | (0.25) | ||||
Diluted | $ | 0.49 | $ | (0.25) | ||||
Weighted average number of shares: | ||||||||
Basic | 15,551 | 14,495 | ||||||
Diluted | 18,076 | 14,495 | ||||||
Turtle Beach Corporation | ||||||||
Table 2. | ||||||||
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
(unaudited) | ||||||||
ASSETS | (in thousands, except par value and share amounts) | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 62,965 | $ | 46,681 | ||||
Accounts receivable, net | 32,370 | 43,867 | ||||||
Inventories | 59,136 | 71,301 | ||||||
Prepaid expenses and other current assets | 14,685 | 8,127 | ||||||
Total Current Assets | 169,156 | 169,976 | ||||||
Property and equipment, net | 7,089 | 6,575 | ||||||
Deferred income taxes | 7,334 | 6,946 | ||||||
Goodwill | 10,686 | 8,178 | ||||||
Intangible assets, net | 6,760 | 5,138 | ||||||
Other assets | 6,380 | 6,640 | ||||||
Total Assets | $ | 207,405 | $ | 203,453 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Revolving credit facility | $ | — | $ | — | ||||
Accounts payable | 27,761 | 42,529 | ||||||
Other current liabilities | 44,011 | 36,122 | ||||||
Total Current Liabilities | 71,772 | 78,651 | ||||||
Income tax payable | 3,432 | 3,146 | ||||||
Other liabilities | 5,079 | 5,257 | ||||||
Total Liabilities | 80,283 | 87,054 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Equity | ||||||||
Common stock, | 16 | 15 | ||||||
Additional paid-in capital | 193,163 | 190,568 | ||||||
Accumulated deficit | (65,935) | (74,773) | ||||||
Accumulated other comprehensive income (loss) | (122) | 589 | ||||||
Total Stockholders' Equity | 127,122 | 116,399 | ||||||
Total Liabilities and Stockholders' Equity | $ | 207,405 | $ | 203,453 | ||||
Turtle Beach Corporation | ||||||||
Table 3. | ||||||||
Three Months Ended | ||||||||
March 31, 2021 | March 31, 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | $ | 21,087 | $ | 17,526 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | (4,780) | (890) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Borrowings on revolving credit facilities | 97,032 | 48,426 | ||||||
Repayment of revolving credit facilities | (97,032) | (63,780) | ||||||
Proceeds from exercise of stock options and warrants | 911 | 18 | ||||||
Repurchase of common stock to satisfy employee tax withholding obligations | (215) | (48) | ||||||
Net cash provided by (used for) financing activities | 696 | (15,384) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (719) | (768) | ||||||
Net increase in cash and cash equivalents | 16,284 | 484 | ||||||
Cash and cash equivalents - beginning of period | 46,681 | 8,249 | ||||||
Cash and cash equivalents - end of period | $ | 62,965 | $ | 8,733 | ||||
Turtle Beach Corporation | ||||||||
Table 4. | ||||||||
Three Months Ended | ||||||||
March 31, 2021 | March 31, 2020 | |||||||
Net Income (Loss) | ||||||||
GAAP Net Income (Loss) | $ | 8,838 | $ | (3,555) | ||||
Adjustments, net of tax: | ||||||||
Non-recurring business costs | 465 | — | ||||||
Acquisition integration costs | 118 | 182 | ||||||
Non-GAAP Earnings | $ | 9,421 | $ | (3,373) | ||||
Diluted Earnings Per Share | ||||||||
GAAP- Diluted | $ | 0.49 | $ | (0.25) | ||||
Non-recurring business costs | 0.03 | — | ||||||
Acquisition integration costs | 0.01 | 0.02 | ||||||
Non-GAAP- Diluted | $ | 0.52 | $ | (0.23) | ||||
Turtle Beach Corporation | |||||||||||||||||||
Table 5. | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
March 31, 2021 | |||||||||||||||||||
Adj | |||||||||||||||||||
As | Adj | Adj | Stock | Adj | |||||||||||||||
Reported | Depreciation | Amortization | Compensation | Other (1) | EBITDA | ||||||||||||||
Net revenue | $ | 93,053 | $ | - | $ | - | $ | - | $ | - | $ | 93,053 | |||||||
Cost of revenue | 58,198 | (237) | - | (397) | - | 57,564 | |||||||||||||
Gross Profit | 34,855 | 237 | - | 397 | - | 35,489 | |||||||||||||
Operating expenses | 22,575 | (502) | (303) | (1,389) | (801) | 19,580 | |||||||||||||
Operating income | 12,280 | 739 | 303 | 1,786 | 801 | 15,909 | |||||||||||||
Interest expense | 97 | ||||||||||||||||||
Other non-operating expense | 579 | - | 579 | ||||||||||||||||
Income before income tax | 11,604 | ||||||||||||||||||
Income tax expense | 2,766 | ||||||||||||||||||
Net income | $ | 8,838 | Adjusted EBITDA | $ | 15,330 | ||||||||||||||
(1) Other includes certain non-recurring business costs. |
Turtle Beach Corporation | |||||||||||||||||||
Table 5. (continued) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
March 31, 2020 | |||||||||||||||||||
Adj | |||||||||||||||||||
As | Adj | Adj | Stock | Adj | |||||||||||||||
Reported | Depreciation | Amortization | Compensation | Other (2) | EBITDA | ||||||||||||||
Net revenue | $ | 35,007 | $ | - | $ | - | $ | - | $ | - | $ | 35,007 | |||||||
Cost of revenue | 24,222 | (590) | - | (58) | - | 23,574 | |||||||||||||
Gross Profit | 10,784 | 590 | - | 58 | - | 11,433 | |||||||||||||
Operating expenses | 15,798 | (443) | (222) | (941) | (281) | 13,911 | |||||||||||||
Operating income (loss) | (5,013) | 1,033 | 222 | 999 | 281 | (2,478) | |||||||||||||
Interest expense | 169 | ||||||||||||||||||
Other non-operating expense | 197 | (21) | 176 | ||||||||||||||||
Income (loss) before income tax | (5,377) | ||||||||||||||||||
Income tax benefit | (1,824) | ||||||||||||||||||
Net loss | $ | (3,554) | Adjusted EBITDA | $ | (2,654) | ||||||||||||||
(2) Other includes certain business acquisition costs and change in fair value of contingent consideration. |
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SOURCE Turtle Beach Corporation
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