Turtle Beach Corporation · NASDAQ:TBCH
Turtle Beach — Investor Presentation (March 2024)
40 slides from Turtle Beach's investor presentation, Mar 18, 2024
Slide 1: Turtle Beach Corporation Investor Presentation
TURTLE BEACH CORPORATION INVESTOR PRESENTATION NASDAQ: HEAR | MARCH 13, 2024
Slide 2: Safe Harbor Statement & Important Information
SAFE HARBOR STATEMENT & IMPORTANT INFORMATION Forward-Looking Information and Statements This presentation, including the appendix, includes forward-looking information and statements within the meaning of the federal securities laws. Except for historical information contained in this release, stat
Slide 3: Welcome to the Beach!
WELCOME TO THE BEACH! 3
Slide 4: Turtle Beach is a top gaming accessory leader
TURTLE BEACH IS… A TOP 5 GAMING ACCESSORY LEADER and the second largest third-party brand in the $8.4B(1) multi-category global gaming accessories market. THE BEST-SELLING GAMING HEADSET BRAND for the past 14 years, and one of the most recognized brand names in gaming. • Gaming Headsets with over 72
Slide 5: Top brand loyalty & customer service
TOP BRAND LOYALTY & CUSTOMER SERVICE MILLIONS OF FANS TRUST TURTLE BEACH TO PROVIDE THE BEST GAMING EXPERIENCE, INCLUDING CUSTOMER SUPPORT Turtle Beach had the highest headset brand loyalty(1) among On Trustpilot, Turtle Beach is a top-rated brand with active PC and/or console headset owners in the
Slide 6: Compelling partnerships
COMPELLING PARTNERSHIPS A SAMPLING OF TURTLE BEACH’S CURRENT CREATOR & ESPORTS PARTNERSHIPS Gen ..G E sports Global E sports Team Ali-A Mahluna Dr Disrespect Shlorox 41M Reach 951k Reach 11M Reach 663k Reach UCSD Esports Team GO Nicewigg Black Krystel Big Cheese Kay Pea 1st Collegiate French Esports
Slide 7: A history of innovation
A HISTORY OF INNOVATION TURTLE BEACH HAS A RICH HISTORY OF LAUNCHING PRODUCTS WITH GROUNDBREAKING FEATURES 2005 2008 2014 2018 2021 2022 2023 Industry First Industry First Industry First Vulcan Controller Flight Sim Mobile First Ultra- Xbox Headset Wireless Wireless Series Keyboards Category Categor
Slide 8: Environmental, Social, & Governance
ENVIRONMENTAL, SOCIAL, & GOVERNANCE Turtle Beach has published its inaugural Environmental, Social, and Governance report. The Stealth 600 Gen 2 MAX Pink & Teal headsets were Turtle Beach’s first carbon neutral products, and the Company has now published its inaugural ESG report outlining its ESG le
Slide 9: Turtle Beach + PDP
YY TURTLE BEACH PoP
Slide 10: PDP is a leading gaming accessories company with strong momentum
PDP IS A LEADING GAMING ACCESSORIES COMPANY WITH STRONG MOMENTUM Top 10 Powerful Omni-Channel Premier Gaming Accessories Platform with Distribution Model Established Retail Relationships Global Gaming Hardware Manufacturer Innovative Product Portfolio Augmented by Attractive Nintendo & PlayStation L
Slide 11: Strategic summary
STRATEGIC SUMMARY Expands Complementary Overall Portfolio l Significantly grows breadth of controllers and other incremental product categories l Strengthens attractive licensed portfolios including valuable Nintendo and Sony partnerships l Expands product offering including licensed models within c
Slide 12: Gaming accessory markets & products
GAMING ACCESSORY MARKETS & PRODUCTS 12
Slide 13: Gaming market is growing
GAMING MARKET IS GROWING GAMING HIGHLIGHTS Console Hardware Growth Global Gamer #’s Surging $17B in 2022 expected to grow Forecast to reach 3.7B gamers to $22B by 2025(2) with current around the world in 2026. generation supply vastly improved CAGR 3.7% 2021-2026(1) Gaming Engagement & Gaming Simula
Slide 14: Executing our growth strategy
EXECUTING OUR GROWTH STRATEGY TO FUEL TURTLE BEACH’S POSITION AS THE 2ND LARGEST 3RD PARTY GAMING ACCESSORY MAKER Targets: Revenue 10%+ CAGR EBITDA 10%+ Margins Global Market Sizes: Newzoo Peripheral Market Forecast, June 2023 & Internal Estimates
Slide 15: PDP's broad product portfolio
PDP’S BROAD PRODUCT PORTFOLIO WITH STRONG INNOVATION & DESIGN… Controllers Headsets Accessories Nintendo Switch White Afterglow Nintendo Switch Oled Nintendo Switch Moonlight Nintendo Switch Sonic Go Nintendo Switch Joy-Con Nintendo Switch Joy-Con Wave Wireless Controller Rematch Controller Black Ai
Slide 16: Highly complementary to Turtle Beach's catalog of products
…IS HIGHLY COMPLEMENTARY TO TURTLE BEACH’S CATALOG OF PRODUCTS Headsets PC Peripherals Controllers & Simulation St um Stealth Pro Ultra Stealth 700 Gen 2 MAX Stealth 700 Gen 2 MAX Wireless Controller for Xbox & PC Premium Multiplatform Premium Multiplatform Dr Disrespect Limited for Xbox & PC Wirele
Slide 17: The market leader in console gaming headsets
THE MARKET LEADER IN CONSOLE GAMING HEADSETS – BY FAR FOR THE PAST 14 YEARS AND COUNTING #1 GAMING HEADSET(1) #1 SHARE POSITION(1) PROVIDER FOR XBOX & PLAYSTATION HIGHEST REVENUE AND UNIT SHARE 00 .0 0% 0 .0% ..0% . STRONG BRAND & REPUTATION AMONG GAMERS, RETAILERS, GAMING INDUSTRY Competitors Turtl
Slide 18: A complete portfolio of console gaming headsets
A COMPLETE PORTFOLIO OF CONSOLE GAMING HEADSETS ENABLES CONSUMER UPGRADES OVER TIME, FROM ENTRY-LEVEL TO ULTRA-PREMIUM Feature Upgrades & Improvements 40 mm Memory Mic Bluetooth & Ultra-Wireless Speakers Wired Foam Monitoring App-Based Premium Connectivity Multiplatform Metal-Reinforced Settings Eve
Slide 19: PC gaming accessories
PC GAMING ACCESSORIES $3.2B PC Gaming Accessories Market Total addressable market for PC gaming accessories, including keyboards, mice, PC headsets is roughly $3.2B(1). Award-Winning Product Line Turtle Beach entered the PC gaming accessories market in 2019 and has significantly expanded its lineup
Slide 20: Gaming controllers
GAMING CONTROLLERS $500M 3rd Party Controllers Market Total addressable market for third-party gamepad controllers is roughly $500M(1) with the same retail footprint and consumer base that knows and loves Turtle Beach headsets. Microsoft Partnership Leveraged Microsoft partnership to enter the gamep
Slide 21: Gaming simulation accessories
GAMING SIMULATION ACCESSORIES $1.2B Simulation Accessories Markets PC/console flight sim hardware adds over $419M(1) in global market opportunity and is ripe for new products and innovation. Racing sim adds another $773M(1). Flight Sim 2020 PC Launch MSFT Flight Sim 2020 launched on PC August 2020,
Slide 22: Leadership across gaming categories
LEADERSHIP ACROSS GAMING CATEGORIES CONSOLE PC GAME GAMING HEADSETS PERIPHERALS CONTROLLERS SIMULATION Best Flight Stick for Xbox Best Wireless Xbox Headset • Global market leader • #1 selling flight controller in • First game controller with • #3 best-selling keyboard in 2022 & YTD 2023 in US, & #2
Slide 23: Meet Turtle Beach's leadership team
MEET TURTLE BEACH’S LEADERSHIP TEAM Joined in 2013 & has spent the last 7 years leading the Turtle Beach’s global sales team CRIS • 25+ years in consumer electronics and automotive Joined in 2013 & leads the teams that design KEIRN • 17 years with Motorola in engineering, and produce Turtle Beach ac
Slide 24: Meet Turtle Beach's Board of Directors
MEET TURTLE BEACH’S BOARD OF DIRECTORS 25+ years senior leadership experience in Nearly 30 years of experience in executive capital markets and investment management leadership, M&A, and capital allocation JULIA W. • Impact investor supporting clients’ strategies and SZE generating growth TERRY • Fo
Slide 25: Financials & investor highlights
FINANCIALS & INVESTOR HIGHLIGHTS 25
Slide 26: 2023 key results
2023 KEY RESULTS Strong US Video Games Market in Dec. 2023 and full year 2023 • Consumer spending on video games content, hardware, and accessories was up 1% for 2023, and 4% in December 2023 over the same period last year. • While consumer spending on hardware stayed flat in 2023, it was up 4% in D
Slide 27: 2024 guidance
2024 GUIDANCE 2024 GUIDANCE1 Net Revenue(1) Adj. EBITDA(1) $370M—$380M $51M—$54M up 43%—47% up $44M—$47M vs. 2023 vs. 2023 Strong January 2024 Results: Market revenue is up YOY and Turtle Beach unit share over 50% 1. 2024 Net Revenue and Adj. EBITDA guidance incorporates approximately 9 months of op
Slide 28: Turtle Beach x PDP: complementary financial profile
TURTLE BEACH X PDP: A COMPELLING & COMPLEMENTARY FINANCIAL PROFILE PDPPro Forma Company Financial Estimate Overview $115M – $120M 1st Full Four Quarters Net Revenue $22M – $28M NTM Adjusted EBITDA, Including Partial Synergies $10M - $12M of Annual Cost Synergies, Fully Realized by 2H 2025 50%+ Reven
Slide 29: Quarterly financial review
QUARTERLY FINANCIAL REVIEW $ Millions Q4 2022 Q4 2023 Commentary (except per-share data) Reflects softer-than-expected console gaming headset market in Revenue $100.9 $99.5 October and November but returned to growth in late December. Year-over-year improvement primarily driven by lower freight cost
Slide 30: Full year financial review
FULL YEAR FINANCIAL REVIEW $ Millions 2022 2023 Commentary (except per-share data) Reflects outperformance of accessories markets, increased demand for Revenue $240.2 $258.1 console gaming headsets and flight simulation, and share gains across key categories and geographies Year-over-year improvemen
Slide 31: Long-term financial targets
LONG-TERM FINANCIAL TARGETS Metric Target Revenue 10%+ CAGR Gross Margins % Mid-high 30’s Adjusted EBITDA 10%+ Margins Maintain leadership in gaming headsets and controllers Continue to drive growth in adjacent accessories categories Proactively manage operating expenses 31
Slide 32: Appendix
APPENDIX 32
Slide 33: GAAP net income to Adjusted EBITDA reconciliation
GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION FOURTH QUARTER & FULL-YEAR 2023 COMPARED TO 2022 Three Months Ended 12 Months Ended December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Net Income (Loss) $8,552 $(23,233) $(17,679) $(59,546) Interest expense 251 577 504 1,220 Depr
Slide 34: Balance sheet
BALANCE SHEET Balance Sheet Highlights Balance Sheet $ Millions Comments As of Dec 31, 2022 As of Dec 31, 2023 • Inventory decreased from the elevated year-ago period where the Company increased product Cash & Cash and component purchases due to longer freight $11.4 $18.7 Equivalents transit times a
Slide 35: Transaction overview
Following our comprehensive strategic review, Turtle Beach announces the highly accretive acquisition of PDP to further strengthen its leading gaming accessories portfolio, improve profitability, and meaningfully enhance scale. TRANSACTION OVERVIEW Combines two gaming leaders with best-in-class team
Slide 36: Pro forma financial summary
PRO FORMA FINANCIAL SUMMARY Pro Forma Company at Close (Prior to Tender Offer) ~21.1M Shares Outstanding $50M Total Debt ($0M drawn on ABL, $50M of a new Term Loan) $6.5M Cash on Balance Sheet $370M – $380M 2024E Net Revenue, assuming 9-months of PDP contributions $51M – $54M 2024E Adjusted EBITDA,
Slide 37: Pro forma financial summary following May 2024 tender completion
PRO FORMA FINANCIAL SUMMARY FOLLOWING MAY 2024 TENDER COMPLETION Pro Forma Company (Following a Fully Exhausted $30M Tender) ~18.9M – 19.1M Shares Outstanding, Predicated on Execution Price $80M Total Debt ($30M drawn on ABL, $50M of a new Term Loan) $6.5M Cash on Balance Sheet $390M – $410M NTM Net
Slide 38: Illustrative pro forma merged company valuation
LLUSTRATIVE PRO FORMA MERGED COMPANY VALUATION EV / NTM Estimated EBITDA Multiples of Publicly Traded Gaming Peers Relative to Turtle Beach 18.9x ‘CY23 – CY24E Revenue Growth1: NTM Est. EBITDA Margin1: Net Debt / FY24 NTM EBITDA1: 2.8% 16.1% (2.0x) 11.8x 4.9% 7.7% 0.2x 10.4x 2.6% 17.0% x EV / NTM Es
Slide 39: Contacts
CONTACTS Investor Relations: Alex Thompson Gateway Group Turtle Beach: +1 (949) 574-3860 MacLean Marshall HEAR@gateway-grp.com Sr. Director, Global Communications Turtle Beach Corporation +1 (310) 431-6215 maclean.marshall@turtlebeach.com
Slide 40: Thank you
THANK YOU