Turtle Beach Corporation · NASDAQ:TBCH
Turtle Beach — Q4 2023 Earnings Presentation
31 slides from Turtle Beach's earnings presentation, Mar 13, 2024
Slide 1: Fourth Quarter & Full-Year 2023 Earnings Presentation
FOURTH QUARTER & FULL-YEAR 2023 EARNINGS 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: New Products & Latest News
NEW PRODUCTS & LATEST NEWS 3
Slide 4: VelocityOne Race
VELOCITYONE RACE UPDATED UNIVERSAL WHEEL & PEDAL RACING SIMULATION SYSTEM Grab the Wheel and Floor It VelocityOne Race launched late February 2024 as Turtle Beach’s initial entry into the racing simulation gaming accessories market. Designed for racing sim fans on Xbox and PC, this groundbreaking wh
Slide 5: VelocityOne Flightdeck
VELOCITYONE FLIGHTDECK MAC TO CREATE VO UPDATED COMBAT HOTAS FLIGHT SIMULATION CONTROL SYSTEM FLIGHTDECK SLIDE Update pic with higher res image Become the Top Gun Add with All the Right Stuff Windows “5/5 – I never expected Turtle Beach to build my central new favorite flight stick but the VelocityO
Slide 6: Stealth Ultra
STEALTH ULTRA UPDATED PREMIUM WIRELESS SMART GAME CONTROLLER Turn Your Controller Into A Command Center ”9/10 – what The Xbox Elite Controller Should Have Been." – IGN.com Turtle Beach’s new king of wireless controllers for gamers on Xbox and PC launched December 2023 and has set the new standard fo
Slide 7: Stealth 700 Gen 2 MAX Dr Disrespect Limited Edition
STEALTH 700 GEN 2 MAX DR DISRESPECT LIMITED-EDITION FOR PLAYSTATION The Best Way to Dominate Like A Champion Is to Be Like the 2X CHAMPION In late October 2023 Turtle Beach stepped into The Arena once again with the exclusive Stealth 700 Gen 2 Dr Disrespect Limited-Edition – another devastatingly ha
Slide 8: Atom Controller
ATOM CONTROLLER MOBILE GAME CONTROLLER It’s Time to Split the Atom “4.5/5 – Don’t struggle with on-screen controls when gaming on your iPhone. The Turtle Beach Atom Controller is the way to go." – Cult of Mac Turtle Beach’s Atom Controller for iOS is compact and portable, and its magnetic two-piece
Slide 9: REACT-R Controller
REACT-R CONTROLLER NEW RED, NEBULA, AND PIXEL GREEN COLORWAYS Put Victory Within Your Grasp "5/5 – Undoubtedly one of the best Xbox controllers on the market." – The Mirror Since its release, the officially licensed for Xbox REACT-R Controller has impressed Xbox and PC gamers by providing them with
Slide 10: Turtle Beach + PDP
Bi ’ WY TURTLE BEACH
Slide 11: PDP is a Leading Gaming Accessories Company with Strong Momentum
PDP IS A LEADING GAMING ACCESSORIES COMPANY WITH STRONG MOMENTUM Premier Gaming Accessories Platform with Top 10 Powerful Omni-Channel Distribution Model Established Retail Relationships Global Gaming Hardware Manufacturer Innovative Product Portfolio Augmented by Attractive Nintendo & PlayStation L
Slide 12: PDP's Broad Product Portfolio with Strong Innovation & Design
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 13: Highly Complementary to Turtle Beach's Catalog of Products
…IS HIGHLY COMPLEMENTARY TO TURTLE BEACH’S CATALOG OF PRODUCTS Headsets PC Peripherals Controllers & Simulation Stealth Ultra Premium Recon Wired Controller Stealth Pro Ultra Stealth 700 Gen 2 MAX Stealth 700 Gen 2 MAX Wireless Controller for Xbox & PC Premium Multiplatform Premium Multiplatform Dr
Slide 14: 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 15: Financials & Outlook
FINANCIALS & OUTLOOK 15
Slide 16: 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 17: 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 18: 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 19: 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 20: 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 mont
Slide 21: Turtle Beach x PDP: A Complementary Financial Profile
TURTLE BEACH X PDP: A COMPELLING & COMPLEMENTARY FINANCIAL PROFILE PDP Pro Forma Company Financial Estimate Overview $115M – $120M $390M – $410M st 1 Full Four Quarters NTM Net Revenue Net Revenue (Q2 2024 – Q1 2025) $22M – $28M $60M – $65M NTM Adjusted EBITDA, NTM Adjusted EBITDA Including Partial
Slide 22: Executing Our Growth Strategy
EXECUTING OUR GROWTH STRATEGY TO FUEL TURTLE BEACH'S POSITION AS THE 2ND LARGEST 3RD PARTY GAMING ACCESSORIES MAKER $3.8B Market $3.2B Market Continue Growth in Controllers, Gaming $1.4B Simulation and More Market Further Scale Our PC Gaming Accessories Targets: Continue Leading in Gaming Headsets R
Slide 23: 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 23
Slide 24: Appendix
APPENDIX 24
Slide 25: 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 26: Transaction Overview
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. l Combines two gaming leaders with best-in-class te
Slide 27: 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 28: 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 29: Illustrative Pro Forma Merged Company Valuation
ILLUSTRATIVE PRO FORMA MERGED COMPANY VALUATION EV / NTM Estimated EBITDA Multiples of Publicly Traded Gaming Peers Relative to Turtle Beach 18.9x Illustrative Equity Value for Turtle Beach Post-Tender2 EV / NTM Implied HEAR Est. EBITDA3 Share Price 11.8x 10.4x 12.0x ~$36 11.0x ~$33 10.0x ~$29 9.0x
Slide 30: Contacts
CONTACTS Investor Relations: Turtle Beach: Alex Thompson MacLean Marshall Gateway Group Sr. Director, Global Communications +1 (949) 574-3860 Turtle Beach Corporation HEAR@gateway-grp.com +1 (310) 431-6215 maclean.marshall@turtlebeach.com
Slide 31: Thank You
THANK YOU