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| Statement |
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| The transaction creates a powerhouse with the combination of industry-leading teams and expertise, significant product momentum and proven track records of delivering profitable growth |
| Despite reduced year-over-year promotional spend in January 2024, we're seeing continued share growth in key areas, including console gaming headsets, positioning us well for our upcoming new product launches, set to differentiate the gaming accessories landscape in 2024 |
| So we're feeling really good and optimistic about how that console market looks from an accessory standpoint for the next year with all these dynamics in play |
| Gaming portfolio and industry leading team, together, we are a stronger business with an industry leading product portfolio poised for growth |
| And we're seeing really great demand on those as we launch these new innovative headsets and controllers and simulation products and PC products just across the Board |
| In addition to the significant scale benefits that come with diversifying our revenue base and tangential categories with the same partners and consumers, we believe we will realize significant cost synergies in the deal |
| These synergies, alongside PDP's attractive standalone profile, have allowed Turtle Beach to acquire PDP at a highly attractive multiple, both on a pre- and post-synergy basis |
| This acquisition will significantly increase our profitability and free cash flow generation throughout the cycle, better minimize our earnings and free cash flow volatility and create a global powerhouse in the gaming category |
| Bringing PDP's leading gaming controller category to Turtle Beach will provide additional scale and create future development opportunities in addition to an estimated $10 million to $12 million in cost synergies and meaningful revenue synergies |
| We continue to advance our enhancements in profitability and we expect to deliver strong adjusted EBITDA growth in 2024 |
| And we're continuing to see very strong demand even in January and early part of this year from a year-over-year comp perspective |
| And we've seen very strong console demand out there |
| This is a step change for us, same for PDP, taking these two very complementary portfolios and combining them, not to mention the great expertise on the teams on both sides, it really gives us a competitive advantage in that space |
| Doubling down on console controller is exciting |
| Our full year adjusted EBITDA improved significantly to $6.5 million compared to an adjusted EBITDA loss of $29.9 million in the year ago period |
| We are enthusiastic about this new, refreshed and transformed Turtle Beach and its future prospects for shareholders, employees and customers |
| As you know, the categories can vary year-to-year on which ones may be up or down, and we really believe this gives us a much better balance across the business |
| So we have strong, licensed partners as a combined company across all the first-party manufacturers |
| As Cris noted, our full year 2023 revenue was $258.1 million that’s an increase of 7.5% compared to the year ago period, driven by revenue and share gains for both our console headset and simulation products |
| And we've got a terrific relationship with all three, and we're looking with the combined portfolio that we now have – it just makes it much more powerful for us as we're talking to retailers and to licensed partners about what we can offer as a company |
| The channel inventory is in a very good place |
| We’re seeing really good results with our retail partners right now |
| The acquisition of PDP adds significant financial benefits to Turtle Beach that fundamentally transforms the financial profile of the company |
| It really helps to sustain that demand and carry through to that next – because the next major release probably from Microsoft and Sony at least is still a few years out, and so having those midterm releases really helps keep the momentum moving |
| The Board has been hard at work over the past year, and we are excited about the future for the company and its shareholders |
| The fourth quarter promotional spend was successful in preparing our inventory and the channel inventory levels for the significant upcoming new product launches throughout 2024, including groundbreaking new wireless models |
| console headset value grew 300 basis points – our share grew 300 basis points year-over-year in the fourth quarter and was up for the full year 2023 |
| So we're feeling good about how that is coming out |
| Our 2023 full year net revenue increased by 7.5% year-over-year as a result of significant share gains across multiple categories and geographies, including our core business of console gaming headsets |
| And we're seeing significant growth on the profitability side hitting that 14% number |
| Statement |
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| Just a little comment on the fourth quarter in your existing business came in below last year, below consensus, certainly below my estimate |
| Fourth quarter revenues at $99.5 million were down slightly compared to the $100.9 million a year ago, driven by higher than expected promotional spend due to the softer than expected console gaming headset market |
| As you’ll recall, in the year ago period, we recorded a $9.8 million charge for potential excess components and finished goods relating to the pandemic driven supply chain impacts and a weak gaming market |
| But that did lead to some pressure from the market standpoint on the revenue |
| And a little bit of the softness, I think, that we saw in the market last year that's now recovered, there were so many great games out last year, and you could finally go and buy a console, and that was really the first year that happened in this console cycle |
| If you remember, the gaming headset market was up about 2% year to date at the end of Q3, and then October, November took a double digit percentage drop year-over-year |
| Question on the anticipated annual run rate cost synergies |
| When you look at the markets, last holiday we did see a pretty significant dip |
| Are you suggesting that it’s just a reduction in price that drove the decrease in revenue? Or was volume also lower than you would have thought? Cris Keirn Yeah, that’s a great question |
| Fortunately, we’ve seen that recover and December was back to growth |
| These statements involve risks and uncertainties regarding the company's operations and future results that could cause Turtle Beach Corporation's results to differ materially from management's current expectations |
| They're rough and tough |
| And the way we think about it is we had this massive demand during the pandemic |
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