sair Gaming(US:CRSR)2021-11-01 16:00Financial Performance - Net revenue for the three months ended September 30, 2021, was $391.1 million, a decrease of 14.4% compared to $457.1 million for the same period in 2020[127]. - Net income for the three months ended September 30, 2021, was $1.8 million, down from $36.4 million in the same period in 2020[127]. - For the nine months ended September 30, 2021, net revenue increased by 21.6% to $1.4 billion from $1.1 billion in 2020[127]. - Net revenue decreased by $66.0 million, or 14.4%, for the three months ended September 30, 2021, compared to the same period last year, primarily due to a 13.8% decrease in sales for the gamer and creator peripherals segment and a 14.8% decrease in sales for gaming components and systems segment[157]. - Net revenue increased by $247.4 million, or 21.6%, for the nine months ended September 30, 2021, compared to the same period last year, driven by a 35.3% increase in sales for the gamer and creator peripherals segment[158]. - Total net revenue for the three months ended September 30, 2021, was $391.1 million, a decrease from $457.1 million in the same period last year[172]. Segment Performance - Net revenue of the gamer and creator peripherals segment decreased by $22.3 million, or 13.8%, for the three months ended September 30, 2021, due to supply and logistics constraints[173]. - Net revenue of the gaming components and systems segment decreased by $43.7 million, or 14.8%, for the three months ended September 30, 2021, primarily due to GPU shortages[176]. Cost and Expenses - The company experienced increased distribution costs due to COVID-19, affecting operating costs significantly in Q3 2021[138]. - Sales, general and administrative (SG&A) expenses increased by $10.8 million, or 16.5%, for the three months ended September 30, 2021, compared to the same period last year[162]. - SG&A expenses increased by $58.3 million, or 33.1%, for the nine months ended September 30, 2021, compared to the same period last year, largely due to increased distribution costs and personnel-related expenses[163]. - Product development expenses increased by $1.6 million, or 12.3%, for the three months ended September 30, 2021, compared to the same period last year[164]. - Product development expenses increased by $8.9 million, or 24.4%, for the nine months ended September 30, 2021, compared to the same period last year, driven by higher personnel-related expenses and other product development costs[165]. Profitability - Gross profit for the three months ended September 30, 2021, was $101,362, down from $127,944 for the same period last year, resulting in a gross margin decrease to 25.9% from 28.0%[159]. - Gross margin increased to 28.1% for the nine months ended September 30, 2021, up from 27.2% for the same period last year, primarily due to improved product mix and increased sales volume[160]. - Total gross profit for the three months ended September 30, 2021, was $101.4 million, down from $127.9 million in the same period last year[177]. - Gross profit for the gamer and creator peripherals segment decreased by $11.4 million, or 19.0%, for the three months ended September 30, 2021, compared to the same period last year[178]. Cash Flow and Financing - As of September 30, 2021, the company had cash and restricted cash totaling $76.3 million[182]. - The company anticipates principal uses of cash will include inventory purchases, payroll, and operating expenses, with existing cash expected to fund operations for at least the next 12 months[183]. - The company may seek additional equity or debt financing for future business activities, which could result in dilution to stockholders or debt service obligations[183]. - Net cash provided by operating activities for the nine months ended September 30, 2021 was $25.1 million, down from $100.3 million in the same period of 2020, reflecting a decrease of 74.9%[185][186]. - Cash used in investing activities increased to $14.0 million for the nine months ended September 30, 2021, compared to $5.9 million in the same period of 2020, representing an increase of 137.3%[187][188]. - Cash used in financing activities was $67.2 million for the nine months ended September 30, 2021, significantly higher than $26.4 million in the same period of 2020, an increase of 154.5%[189][190]. - The company repaid $327.0 million of debt during the nine months ended September 30, 2021, primarily related to the First Lien Term Loan[189]. Debt and Leverage - As of September 30, 2021, the company had a Consolidated Total Net Leverage Ratio of 0.8 to 1.0 and a Consolidated Interest Coverage Ratio of 10.4 to 1.0[202]. - The company entered into a new Credit Agreement on September 3, 2021, providing for a $100.0 million revolving credit facility and a $250.0 million term loan facility[198][199]. - A hypothetical 100 basis point change in interest rates would result in a change to annual interest expense by approximately $2.5 million as of September 30, 2021[210]. Foreign Currency Exposure - Approximately 20.5% of the company's net revenue for the nine months ended September 30, 2021 was denominated in foreign currencies, primarily Euro and British Pound[211]. - For the nine months ended September 30, 2021, the impact of changes in foreign currency rates resulted in a net loss of $(4.1) million, compared to a loss of $(0.3) million for the same period in 2020[213]. - A hypothetical ten percent change in exchange rates would impact gains or losses on foreign currency exchange by approximately $2.8 million for the nine months ended September 30, 2021[213]. Internal Controls and Reporting - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended September 30, 2021[218]. - The company's disclosure controls and procedures were evaluated as effective as of September 30, 2021, providing reasonable assurance for timely reporting[217]. - The company intends to continue monitoring and upgrading internal controls as necessary, although no assurance can be given that improvements will be sufficient[215].