Director, Global CommunicationsTurtle Beach Corporation(858) 914-5093maclean.marshall@turtlebeach.com Turtle Beach CorporationCondensed Consolidated Statements of Operations(in thousands, except per-share data)(unaudited)Table 1. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2024 2023 2024 2023 Net revenue $94,363 $59,158 $226,689 $158,584 Cost of revenue 60,232 41,469 151,696 114,884 Gross profit 34,131 17,689 74,993 43,700 Operating expenses: Selling and marketing 13,535 10,583 36,289 30,457 Research and development 4,311 4,380 12,802 12,670 General and administrative 6,352 5,243 19,489 25,375 Acquisition-related cost 3,510 - 9,814 - Total operating expenses 27,708 20,206 78,394 68,502 Operating income (loss) 6,423 (2,517) (3,401) (24,802)Interest expense 2,712 107 5,082 253 Other non-operating expense, net 252 481 974 799 Income (loss) before income tax 3,459 (3,105) (9,457) (25,854)Income tax expense (benefit) 46 501 (5,501) 377 Net income (loss) $3,413 $(3,606) $(3,956) $(26,231) Net income (loss) per share Basic $0.17 $(0.21) $(0.20) $(1.54)Diluted $0.16 $(0.21) $(0.20) $(1.54)Weighted average number of shares: Basic 20,553 17,345 20,050 17,029 Diluted 21,501 17,345 20,050 17,029 Turtle Beach CorporationCondensed Consolidated Balance Sheets(in thousands, except par value and share amounts)Table 2. September 30, December 31, 2024 2023 (unaudited) ASSETS Current Assets: Cash and cash equivalents $13,803 $18,726 Accounts receivable, net 70,703 54,390 Inventories 102,263 44,019 Prepaid expenses and other current assets 9,686 7,720 Total Current Assets 196,455 124,855 Property and equipment, net 5,753 4,824 Goodwill 56,700 10,686 Intangible assets, net 44,544 1,734 Other assets 9,749 7,868 Total Assets $313,201 $149,967 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Revolving credit facility $58,626 $— Accounts payable 66,394 26,908 Other current liabilities 30,689 29,424 Total Current Liabilities 155,709 56,332 Debt, non-current 45,696 — Income tax payable 1,489 1,546 Other liabilities 8,488 7,012 Total Liabilities 211,382 64,890 Commitments and Contingencies Stockholders’ Equity Common stock 20 18 Additional paid-in capital 239,345 220,185 Accumulated deficit (138,233) (134,277)Accumulated other comprehensive loss 687 (849)Total Stockholders’ Equity 101,819 85,077 Total Liabilities and Stockholders’ Equity $313,201 $149,967 Turtle Beach CorporationCondensed Consolidated Statements of Cash Flows(in thousands)(unaudited)Table 3. Nine Months Ended September 30,2024 September 30,2023 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(3,956) $(26,231)Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 3,261 2,912 Costs recognized on sale of acquired inventory 2,085 — Amortization of intangible assets 4,843 761 Amortization of debt financing costs 625 108 Stock-based compensation 3,447 8,554 Deferred income taxes (6,739) (178)Change in sales returns reserve 1,369 (2,473)Provision for obsolete inventory 4,690 200 Loss on impairment of asset 753 — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 4,344 12,563 Inventories (43,597) (4,986)Accounts payable 30,050 19,072 Prepaid expenses and other assets 127 385 Income taxes payable 485 126 Other liabilities (10,340) (2,869)Net cash provided (used for) by operating activities (8,553) 7,944 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (3,392) (1,924)Acquisition of a business, net of cash acquired (77,294) — Net cash used for investing activities (80,686) (1,924)CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on revolving credit facilities 242,609 149,995 Repayment of revolving credit facilities (183,983) (155,787)Proceeds of term loan 50,000 — Repayment of term loan (729) — Proceeds from exercise of stock options and warrants 3,004 1,718 Repurchase of common stock (25,339) (974)Debt issuance costs (2,897) (80)Net cash provided by (used for) financing activities 82,665 (5,128)Effect of exchange rate changes on cash and cash equivalents 1,651 52 Net increase (decrease) in cash and cash equivalents (4,923) 944 Cash and cash equivalents - beginning of period 18,726 11,396 Cash and cash equivalents - end of period $13,803 $12,340 Turtle Beach CorporationGAAP to Adjusted EBITDA Reconciliation(in thousands)Table 4. Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 (in thousands) Net loss $3,413 $(3,606) $(3,956) $(26,231)Interest expense 2,712 107 5,082 253 Depreciation and amortization 3,322 1,212 8,104 3,673 Stock-based compensation 1,496 1,625 3,447 8,554 Income tax benefit (1) 46 501 (5,501) 377 Restructuring expense (2) 910 1,104 1,657 1,104 CEO transition related costs (3) — — — 2,874 Business transaction expense (4) 3,510 — 9,814 — Incremental costs on acquired inventory (5) 833 — 2,084 — Proxy contest and other (6) 26 94 30 1,936 Adjusted EBITDA $16,268 $1,037 $20,761 $(7,460) (1) An income tax benefit of $7.0 million was recorded in the three months ended March 31, 2024 as a result of the reversal of a portion of the Company’s deferred tax asset valuation allowance.(2) Restructuring charges are expenses that are paid in connection with reorganization of our operations.
– Third Quarter Net Revenue of $94.4 million, up 60% Year-over-Year –– Net Income was $3.4 million compared to a Net Loss of ($3.6) in prior year –– Adjusted EBITDA was $16.3 million compared to $1.0 in prior year –– Raising Full Year 2024 EBITDA Guidance Again on Continued Execution Strength –– Repurchased $10.1 Million of Common Shares in the Third Quarter – WHITE PLAINS, N.Y., Nov.07, 2024 (GLOBE NEWSWIRE) -- Turtle Beach Corporation (Nasdaq: HEAR), a leading gaming accessories brand, today reported financial results for the third quarter ended September 30, 2024.
Information reconciling full year 2024 Adjusted EBITDA to its most directly comparable GAAP financial measure, net income (loss), is unavailable to the Company without unreasonable effort due to the variability, complexity, and lack of visibility with respect to certain reconciling items between Adjusted EBITDA and net income (loss), including other income (expense), provision for income taxes and stock-based compensation.
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