hear-10q_20210930.htm
0001493761 --12-31 Q3 false P3Y P7Y9M10D P7Y3M3D P7Y2M23D P6Y6M3D P6Y1M6D 0.005 0.596 0.011 0.598 P6Y3M18D http://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesCurrent http://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesNoncurrent 0001493761 2021-01-01 2021-09-30 xbrli:shares 0001493761 2021-10-31 iso4217:USD 0001493761 2021-07-01 2021-09-30 0001493761 2020-07-01 2020-09-30 0001493761 2020-01-01 2020-09-30 iso4217:USD xbrli:shares 0001493761 2021-09-30 0001493761 2020-12-31 0001493761 2019-12-31 0001493761 2020-09-30 0001493761 us-gaap:CommonStockMember 2020-12-31 0001493761 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001493761 us-gaap:RetainedEarningsMember 2020-12-31 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001493761 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001493761 2021-01-01 2021-03-31 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001493761 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001493761 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001493761 us-gaap:CommonStockMember 2021-03-31 0001493761 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001493761 us-gaap:RetainedEarningsMember 2021-03-31 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001493761 2021-03-31 0001493761 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001493761 2021-04-01 2021-06-30 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001493761 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001493761 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001493761 us-gaap:CommonStockMember 2021-06-30 0001493761 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001493761 us-gaap:RetainedEarningsMember 2021-06-30 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001493761 2021-06-30 0001493761 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-01 2021-09-30 0001493761 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001493761 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001493761 us-gaap:CommonStockMember 2021-09-30 0001493761 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001493761 us-gaap:RetainedEarningsMember 2021-09-30 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001493761 us-gaap:CommonStockMember 2019-12-31 0001493761 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001493761 us-gaap:RetainedEarningsMember 2019-12-31 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001493761 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001493761 2020-01-01 2020-03-31 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001493761 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001493761 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001493761 us-gaap:CommonStockMember 2020-03-31 0001493761 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001493761 us-gaap:RetainedEarningsMember 2020-03-31 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001493761 2020-03-31 0001493761 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0001493761 2020-04-01 2020-06-30 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0001493761 us-gaap:CommonStockMember 2020-04-01 2020-06-30 0001493761 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0001493761 us-gaap:CommonStockMember 2020-06-30 0001493761 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001493761 us-gaap:RetainedEarningsMember 2020-06-30 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001493761 2020-06-30 0001493761 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0001493761 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001493761 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001493761 us-gaap:CommonStockMember 2020-09-30 0001493761 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001493761 us-gaap:RetainedEarningsMember 2020-09-30 0001493761 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0001493761 us-gaap:RestrictedStockMember 2021-01-01 2021-09-30 0001493761 hear:NeatMicrophonesMember 2021-01-12 2021-01-12 0001493761 hear:NeatMicrophonesMember srt:MaximumMember 2021-01-12 0001493761 hear:NeatMicrophonesMember us-gaap:GeneralAndAdministrativeExpenseMember 2021-07-01 2021-09-30 0001493761 hear:NeatMicrophonesMember us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-09-30 0001493761 hear:NeatMicrophonesMember us-gaap:DevelopedTechnologyRightsMember 2021-01-01 2021-09-30 0001493761 hear:NeatMicrophonesMember us-gaap:CustomerRelationshipsMember 2021-01-01 2021-09-30 0001493761 hear:NeatMicrophonesMember us-gaap:TradeNamesMember 2021-01-01 2021-09-30 0001493761 hear:NeatMicrophonesMember us-gaap:DevelopedTechnologyRightsMember 2021-09-30 0001493761 hear:NeatMicrophonesMember us-gaap:CustomerRelationshipsMember 2021-09-30 0001493761 hear:NeatMicrophonesMember us-gaap:TradeNamesMember 2021-09-30 0001493761 hear:NeatMicrophonesMember 2021-09-30 0001493761 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-09-30 0001493761 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-09-30 0001493761 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-12-31 0001493761 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-12-31 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2021-06-30 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2020-06-30 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2020-12-31 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2019-12-31 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2021-07-01 2021-09-30 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2020-07-01 2020-09-30 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2021-01-01 2021-09-30 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2020-01-01 2020-09-30 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2021-09-30 0001493761 us-gaap:SalesReturnsAndAllowancesMember 2020-09-30 0001493761 us-gaap:MachineryAndEquipmentMember 2021-09-30 0001493761 us-gaap:MachineryAndEquipmentMember 2020-12-31 0001493761 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2021-09-30 0001493761 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2020-12-31 0001493761 us-gaap:FurnitureAndFixturesMember 2021-09-30 0001493761 us-gaap:FurnitureAndFixturesMember 2020-12-31 0001493761 us-gaap:ToolsDiesAndMoldsMember 2021-09-30 0001493761 us-gaap:ToolsDiesAndMoldsMember 2020-12-31 0001493761 us-gaap:LeaseholdImprovementsMember 2021-09-30 0001493761 us-gaap:LeaseholdImprovementsMember 2020-12-31 0001493761 hear:MarketingAndTradeShowEquipmentMember 2021-09-30 0001493761 hear:MarketingAndTradeShowEquipmentMember 2020-12-31 0001493761 us-gaap:CustomerRelationshipsMember 2021-09-30 0001493761 us-gaap:TradeNamesMember 2021-09-30 0001493761 us-gaap:DevelopedTechnologyRightsMember 2021-09-30 0001493761 us-gaap:CustomerRelationshipsMember 2020-12-31 0001493761 us-gaap:TradeNamesMember 2020-12-31 0001493761 us-gaap:DevelopedTechnologyRightsMember 2020-12-31 0001493761 hear:AcquisitionOfLygoInternationalLimitedMember us-gaap:CustomerRelationshipsMember 2012-10-01 2012-10-31 0001493761 us-gaap:LineOfCreditMember 2021-09-30 0001493761 us-gaap:LineOfCreditMember 2020-12-31 0001493761 us-gaap:RevolvingCreditFacilityMember 2018-01-01 2018-12-31 0001493761 us-gaap:RevolvingCreditFacilityMember 2018-12-31 0001493761 hear:UKBorrowerMember us-gaap:RevolvingCreditFacilityMember 2018-12-31 0001493761 srt:MaximumMember hear:ROCCATGMBHAndSubsidiariesMember hear:TBGermanyGmbHMember us-gaap:RevolvingCreditFacilityMember 2019-05-31 xbrli:pure 0001493761 us-gaap:BaseRateMember srt:MinimumMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 us-gaap:BaseRateMember srt:MaximumMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 us-gaap:LondonInterbankOfferedRateLIBORMember srt:MinimumMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 us-gaap:LondonInterbankOfferedRateLIBORMember srt:MaximumMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 us-gaap:AdjustableRateLoansMember srt:MinimumMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 us-gaap:AdjustableRateLoansMember srt:MaximumMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 us-gaap:BaseRateMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 us-gaap:LondonInterbankOfferedRateLIBORMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-09-30 0001493761 us-gaap:RevolvingCreditFacilityMember 2021-09-30 0001493761 us-gaap:CostOfSalesMember 2021-07-01 2021-09-30 0001493761 us-gaap:CostOfSalesMember 2020-07-01 2020-09-30 0001493761 us-gaap:CostOfSalesMember 2021-01-01 2021-09-30 0001493761 us-gaap:CostOfSalesMember 2020-01-01 2020-09-30 0001493761 us-gaap:SellingAndMarketingExpenseMember 2021-07-01 2021-09-30 0001493761 us-gaap:SellingAndMarketingExpenseMember 2020-07-01 2020-09-30 0001493761 us-gaap:SellingAndMarketingExpenseMember 2021-01-01 2021-09-30 0001493761 us-gaap:SellingAndMarketingExpenseMember 2020-01-01 2020-09-30 0001493761 us-gaap:ResearchAndDevelopmentExpenseMember 2021-07-01 2021-09-30 0001493761 us-gaap:ResearchAndDevelopmentExpenseMember 2020-07-01 2020-09-30 0001493761 us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-09-30 0001493761 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-09-30 0001493761 us-gaap:GeneralAndAdministrativeExpenseMember 2021-07-01 2021-09-30 0001493761 us-gaap:GeneralAndAdministrativeExpenseMember 2020-07-01 2020-09-30 0001493761 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-09-30 0001493761 us-gaap:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-09-30 0001493761 hear:PerformanceBasedRestrictedStockMember 2021-01-01 2021-09-30 0001493761 2020-01-01 2020-12-31 0001493761 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-09-30 0001493761 hear:NonExecutivesMember 2021-01-01 2021-09-30 0001493761 srt:ExecutiveOfficerMember 2021-01-01 2021-09-30 0001493761 srt:MaximumMember 2021-01-01 2021-09-30 0001493761 us-gaap:EmployeeStockOptionMember 2021-09-30 0001493761 us-gaap:RestrictedStockMember 2020-12-31 0001493761 us-gaap:RestrictedStockMember 2021-09-30 0001493761 hear:PerformanceBasedRestrictedStockMember 2021-09-30 0001493761 hear:PerformanceBasedRestrictedStockMember srt:MinimumMember 2021-01-01 2021-09-30 0001493761 hear:PerformanceBasedRestrictedStockMember srt:MaximumMember 2021-01-01 2021-09-30 0001493761 hear:ATMEquityOfferingSalesAgreementMember hear:BofASecuritiesIncMember 2020-08-07 0001493761 hear:ATMEquityOfferingSalesAgreementMember hear:BofASecuritiesIncMember srt:MaximumMember 2020-08-07 2020-08-07 0001493761 hear:ATMEquityOfferingSalesAgreementMember 2020-01-01 2020-12-31 0001493761 hear:ATMEquityOfferingSalesAgreementMember 2021-01-01 2021-09-30 0001493761 hear:ATMEquityOfferingSalesAgreementMember 2020-12-31 0001493761 us-gaap:StockOptionMember 2021-07-01 2021-09-30 0001493761 us-gaap:StockOptionMember 2020-07-01 2020-09-30 0001493761 us-gaap:StockOptionMember 2021-01-01 2021-09-30 0001493761 us-gaap:StockOptionMember 2020-01-01 2020-09-30 0001493761 us-gaap:RestrictedStockMember 2021-07-01 2021-09-30 0001493761 us-gaap:RestrictedStockMember 2020-07-01 2020-09-30 0001493761 us-gaap:RestrictedStockMember 2021-01-01 2021-09-30 0001493761 us-gaap:RestrictedStockMember 2020-01-01 2020-09-30 0001493761 country:US 2021-07-01 2021-09-30 0001493761 country:US 2020-07-01 2020-09-30 0001493761 country:US 2021-01-01 2021-09-30 0001493761 country:US 2020-01-01 2020-09-30 0001493761 country:GB 2021-07-01 2021-09-30 0001493761 country:GB 2020-07-01 2020-09-30 0001493761 country:GB 2021-01-01 2021-09-30 0001493761 country:GB 2020-01-01 2020-09-30 0001493761 srt:EuropeMember 2021-07-01 2021-09-30 0001493761 srt:EuropeMember 2020-07-01 2020-09-30 0001493761 srt:EuropeMember 2021-01-01 2021-09-30 0001493761 srt:EuropeMember 2020-01-01 2020-09-30 0001493761 hear:OtherCountriesMember 2021-07-01 2021-09-30 0001493761 hear:OtherCountriesMember 2020-07-01 2020-09-30 0001493761 hear:OtherCountriesMember 2021-01-01 2021-09-30 0001493761 hear:OtherCountriesMember 2020-01-01 2020-09-30 0001493761 hear:MergerOfVTBHoldingsIncAndParametricSoundCorporationMember hear:VTBHoldingsIncMember 2013-08-05 0001493761 hear:MergerOfVTBHoldingsIncAndParametricSoundCorporationMember hear:ParametricSoundCorporationMember 2013-08-05 hear:Claim 0001493761 2020-05-22 hear:Motion 0001493761 2020-08-10 hear:Distributor 0001493761 2020-05-05 hear:Company 0001493761 2020-07-01 iso4217:EUR 0001493761 srt:MinimumMember 2021-09-30 0001493761 srt:MaximumMember 2021-09-30 0001493761 srt:WeightedAverageMember 2021-09-30

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to           

 

Commission File Number: 001-35465

 

TURTLE BEACH CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada

27-2767540

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

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)     

 

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

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   No

The number of shares of the registrant’s Common Stock, par value $0.001 per share, outstanding on October 31,2021 was 16,045,984

 


 

INDEX

 

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

2

 

 

 

Item 1.

Financial Statements (unaudited)

2

 

 

 

 

  Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 2021 and 2020

2

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and 2020

3

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020

5

 

 

 

 

Condensed Consolidated Statement of Stockholder's Equity (Deficit) for the Nine Months Ended September 30, 2021 and 2020

6

 

 

 

 

Notes to Condensed Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

 

 

 

Item 4.

Controls and Procedures

27

 

 

 

PART II. OTHER INFORMATION

28

 

 

 

Item 1.

Legal Proceedings

28

 

 

 

Item 1A.

Risk Factors

28

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

 

 

 

Item 5.

Other Information

38

 

 

 

Item 6.

Exhibits

39

 

 

SIGNATURES

40

 

 

1


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Turtle Beach Corporation

Condensed Consolidated Statements of Operations

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(in thousands, except per-share data)

 

Net revenue

 

$

85,307

 

 

$

112,494

 

 

$

256,924

 

 

$

227,181

 

Cost of revenue

 

 

56,034

 

 

 

66,358

 

 

 

164,086

 

 

 

141,033

 

Gross profit

 

 

29,273

 

 

 

46,136

 

 

 

92,838

 

 

 

86,148

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

14,301

 

 

 

11,857

 

 

 

41,524

 

 

 

29,064

 

Research and development

 

 

4,520

 

 

 

3,260

 

 

 

12,929

 

 

 

8,688

 

General and administrative

 

 

8,962

 

 

 

6,799

 

 

 

24,172

 

 

 

19,232

 

Total operating expenses

 

 

27,783

 

 

 

21,916

 

 

 

78,625

 

 

 

56,984

 

Operating income

 

 

1,490

 

 

 

24,220

 

 

 

14,213

 

 

 

29,164

 

Interest expense

 

 

101

 

 

 

103

 

 

 

271

 

 

 

355

 

Other non-operating expense, net

 

 

585

 

 

 

(101

)

 

 

1,099

 

 

 

(1,520

)

Income before income tax

 

 

804

 

 

 

24,218

 

 

 

12,843

 

 

 

30,329

 

Income tax expense (benefit)

 

 

(1,819

)

 

 

6,424

 

 

 

(339

)

 

 

7,886

 

Net income

 

$

2,623

 

 

$

17,794

 

 

$

13,182

 

 

$

22,443

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

 

$

1.20

 

 

$

0.83

 

 

$

1.53

 

Diluted

 

$

0.14

 

 

$

1.04

 

 

$

0.72

 

 

$

1.41

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

16,079

 

 

 

14,845

 

 

 

15,852

 

 

 

14,642

 

Diluted

 

 

18,335

 

 

 

17,154

 

 

 

18,248

 

 

 

15,961

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited)

2


Turtle Beach Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

2021

 

 

September 30,

2020

 

 

September 30,

2021

 

 

September 30,

2020

 

 

 

(in thousands)

 

Net income

 

$

2,623

 

 

$

17,794

 

 

$

13,182

 

 

$

22,443

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(460

)

 

 

548

 

 

 

(366

)

 

 

(384

)

Other comprehensive income (loss)

 

 

(460

)

 

 

548

 

 

 

(366

)

 

 

(384

)

Comprehensive income

 

$

2,163

 

 

$

18,342

 

 

$

12,816

 

 

$

22,059

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited)

 

3


 

 

Turtle Beach Corporation

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

(in thousands, except par value and share amounts)

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

28,058

 

 

$

46,681

 

Accounts receivable, net

 

 

36,989

 

 

 

43,867

 

Inventories

 

 

113,288

 

 

 

71,301

 

Prepaid expenses and other current assets

 

 

16,605

 

 

 

8,127

 

Total Current Assets

 

 

194,940

 

 

 

169,976

 

Property and equipment, net

 

 

7,276

 

 

 

6,575

 

Deferred income taxes

 

 

8,638

 

 

 

6,946

 

Goodwill

 

 

10,686

 

 

 

8,178

 

Intangible assets, net

 

 

6,107

 

 

 

5,138

 

Other assets

 

 

8,631

 

 

 

6,640

 

Total Assets

 

$

236,278

 

 

$

203,453

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

 

 

$

 

Accounts payable

 

 

55,526

 

 

 

42,529

 

Other current liabilities

 

 

36,015

 

 

 

36,122

 

Total Current Liabilities

 

 

91,541

 

 

 

78,651

 

Income tax payable

 

 

3,798

 

 

 

3,146

 

Other liabilities

 

 

7,322

 

 

 

5,257

 

Total Liabilities

 

 

102,661

 

 

 

87,054

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Common stock, $0.001 par value - 25,000,000 shares authorized; 16,043,808 and 15,475,504 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

 

16

 

 

 

15

 

Additional paid-in capital

 

 

194,969

 

 

 

190,568

 

Accumulated deficit

 

 

(61,591

)

 

 

(74,773

)

Accumulated other comprehensive income (loss)

 

 

223

 

 

 

589

 

Total Stockholders’ Equity

 

 

133,617

 

 

 

116,399

 

Total Liabilities and Stockholders’ Equity

 

$

236,278

 

 

$

203,453

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited)

 

4


 

Turtle Beach Corporation

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30, 2021

 

 

September 30, 2020

 

 

 

(in thousands)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

13,182

 

 

$

22,443

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,919

 

 

 

3,302

 

Amortization of intangible assets

 

 

946

 

 

 

665

 

Amortization of debt financing costs

 

 

142

 

 

 

142

 

Stock-based compensation

 

 

5,225

 

 

 

3,977

 

Deferred income taxes

 

 

(1,692

)

 

 

(375

)

Change in sales returns reserve

 

 

(3,676

)

 

 

2,173

 

Provision for obsolete inventory

 

 

1,628

 

 

 

2,216

 

Increase in fair value of contingent consideration

 

 

 

 

 

510

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

10,554

 

 

 

(11,468

)

Inventories

 

 

(43,614

)

 

 

(35,957

)

Accounts payable

 

 

11,994

 

 

 

40,763

 

Prepaid expenses and other assets

 

 

(8,490

)

 

 

(4,322

)

Income taxes payable

 

 

(7,367

)

 

 

6,769

 

Other liabilities

 

 

7,970

 

 

 

1,800

 

Net cash provided by (used for) operating activities

 

 

(10,279

)

 

 

32,638

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(4,545

)

 

 

(3,918

)

Acquisition of a business, net of cash acquired

 

 

(2,500

)

 

 

 

Net cash used for investing activities

 

 

(7,045

)

 

 

(3,918

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Borrowings on revolving credit facilities

 

 

120,858

 

 

 

185,486

 

Repayment of revolving credit facilities

 

 

(120,858

)

 

 

(201,141

)

Proceeds from sale of equity securities

 

 

 

 

 

4,372

 

Proceeds from exercise of stock options and warrants

 

 

4,408

 

 

 

2,155

 

Repurchase of common stock to satisfy employee tax withholding obligations

 

 

(463

)

 

 

(215

)

Repurchase of common stock

 

 

(4,882

)

 

 

 

Net cash cash used for financing activities

 

 

(937

)

 

 

(9,343

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(362

)

 

 

(361

)

Net increase (decrease) in cash and cash equivalents

 

 

(18,623

)

 

 

19,016

 

Cash and cash equivalents - beginning of period

 

 

46,681

 

 

 

8,249

 

Cash and cash equivalents - end of period

 

$

28,058

 

 

$

27,265

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF INFORMATION

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

130

 

 

$

245

 

Cash paid for income taxes

 

$

8,045

 

 

$

800

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited)

5


Turtle Beach Corporation

Condensed Consolidated Statement of StockholdersEquity (Deficit)

(unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Total

 

 

 

(in thousands)

 

Balance at December 31, 2020

 

 

15,476

 

 

$

15

 

 

$

190,568

 

 

$

(74,773

)

 

$

589

 

 

$

116,399

 

Net income

 

 

 

 

 

 

 

 

 

 

 

8,838

 

 

 

 

 

 

8,838

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(711

)

 

 

(711

)

Issuance of restricted stock

 

 

26

 

 

 

 

 

 

113

 

 

 

 

 

 

 

 

 

113

 

Repurchase of common stock and retirement of related treasury shares

 

 

(6

)

 

 

 

 

 

(215

)

 

 

 

 

 

 

 

 

(215

)

Stock options exercised

 

 

159

 

 

 

1

 

 

 

911

 

 

 

 

 

 

 

 

 

912

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,786

 

 

 

 

 

 

 

 

 

1,786

 

Balance at March 31, 2021

 

 

15,655

 

 

$

16

 

 

$

193,163

 

 

$

(65,935

)

 

$

(122

)

 

$

127,122

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,721

 

 

 

 

 

 

1,721

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

805

 

 

 

805

 

Issuance of restricted stock

 

 

202

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Repurchase of common stock and retirement of related treasury shares

 

 

(9

)

 

 

 

 

 

(248

)

 

 

 

 

 

 

 

 

(248

)

Stock options exercised

 

 

217

 

 

 

 

 

 

2,350

 

 

 

 

 

 

 

 

 

2,350

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,941

 

 

 

 

 

 

 

 

 

1,941

 

Balance at June 30, 2021

 

 

16,065

 

 

 

16

 

 

 

197,207

 

 

 

(64,214

)

 

 

683

 

 

 

133,692

 

Net income

 

 

 

 

 

 

 

 

 

 

 

2,623

 

 

 

 

 

 

2,623

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(460

)

 

 

(460

)

Issuance of restricted stock

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of common stock and retirement of related treasury shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock buyback

 

 

(169

)

 

 

 

 

 

(4,882

)

 

 

 

 

 

 

 

 

(4,882

)

Stock options exercised

 

 

127

 

 

 

 

 

 

1,146

 

 

 

 

 

 

 

 

 

1,146

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,498

 

 

 

 

 

 

 

 

 

1,498

 

Balance at September 30, 2021

 

 

16,045

 

 

$

16

 

 

$

194,969

 

 

$

(61,591

)

 

$

223

 

 

$

133,617

 

6


 

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

 

 

Total

 

 

 

(in thousands)

 

Balance at December 31, 2019

 

 

14,488

 

 

$

14

 

 

$

176,776

 

 

$

(113,519

)

 

$

116

 

 

 

 

$

63,387

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,555

)

 

 

 

 

 

 

 

(3,555

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(819

)

 

 

 

 

(819

)

Issuance of restricted stock

 

 

19

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Repurchase of common stock and retirement of related treasury shares

 

 

(7

)

 

 

 

 

 

(48

)

 

 

 

 

 

 

 

 

 

 

(48

)

Stock options exercised

 

 

6