sair Gaming(US:CRSR)2022-11-02 16:00Revenue Performance - Revenue for the three months ended September 30, 2022, decreased by $79.4 million or 20.3% compared to the same period last year[131]. - Revenue for the nine months ended September 30, 2022, decreased by $417.1 million or 29.9% compared to the same period last year[131]. - Net revenue decreased by $79.4 million, or 20.3%, for the three months ended September 30, 2022, primarily due to a 30.5% decrease in sales for the gamer and creator peripherals segment[162]. - For the nine months ended September 30, 2022, net revenue decreased by $417.1 million, or 29.9%, attributed to a 32.0% decrease in sales for the gamer and creator peripherals segment[163]. - The decrease in net revenue was significantly impacted by consumer spending in Europe, accounting for approximately 71.3% of the decline in the three months ended September 30, 2022[164]. Gross Margins and Profitability - Gross margins decreased from 25.9% to 23.0% for the three months ended September 30, 2022, and from 28.1% to 20.4% for the nine months ended September 30, 2022[131]. - Gross profit for the three months ended September 30, 2022, was $71,560, with a gross margin of 23.0%, down from 25.9% in the same period last year[166]. - The gross margin of the gamer and creator peripherals segment decreased by 2.1% for the three months ended September 30, 2022, primarily due to increased promotional activity and logistics costs[186]. - The gross margin of the gaming components and systems segment decreased by 2.5% for the three months ended September 30, 2022, primarily due to a change in sales mix toward lower margin products[187]. Expenses and Cost Management - SG&A expenses decreased by $9.2 million, or 12.1%, for the three months ended September 30, 2022, primarily due to lower distribution costs and marketing expenses[168]. - Total operating expenses for the three months ended September 30, 2022, were $82,548, compared to $90,607 in the same period last year[159]. - The company expects total SG&A expenses to rise in absolute dollars due to increased promotional activities and business growth[149]. - Product development expenses are expected to increase in absolute dollars as the company continues to invest in new product development and enhancements[151]. - Product development expenses increased by $1.1 million, or 7.7%, for the three months ended September 30, 2022, compared to the same period last year, primarily due to a $0.9 million increase in amortization of intangible assets from the iDisplay acquisition[170]. Cash and Liquidity - Cash and restricted cash totaled $61.7 million as of September 30, 2022, with a Term Loan outstanding of $245.0 million[131]. - As of September 30, 2022, the company had cash and restricted cash totaling $61.7 million, including $19.7 million held by foreign subsidiaries[188]. - The company expects that anticipated cash flows from operations, combined with current cash balances and borrowings under the Revolving Credit Facility, will be sufficient to fund principal uses of cash for at least the next twelve months[188]. - Cash used in investing activities for the nine months ended September 30, 2022 was $40.5 million, primarily due to a $19.5 million acquisition of iDisplay and $19.9 million in capital expenditures[193]. - Cash used in financing activities was $3.9 million for the nine months ended September 30, 2022, significantly lower than $67.2 million in the same period of 2021[195]. Debt and Financial Obligations - As of September 30, 2022, the total principal outstanding of the Term Loan was $245.0 million, with an available capacity under the Revolving Credit Facility of $100 million[203]. - Total contractual cash obligations as of September 30, 2022 amounted to $448.8 million, with $292.9 million related to debt principal and interest payments[205]. - The Credit Agreement allows for a maximum Consolidated Total Net Leverage Ratio of 3.0 to 1.0, which can increase to 3.50 to 1.0 under certain conditions[200][202]. Foreign Currency Impact - Approximately 16.1% of net revenue for the nine months ended September 30, 2022 was denominated in foreign currencies, primarily Euro and British Pound[212]. - The impact of changes in foreign currency rates resulted in gains of $1.5 million for the nine months ended September 30, 2022, compared to losses of $4.1 million in the same period of 2021[214]. - The company entered into forward currency contracts with an outstanding notional principal amount of $32.4 million as of September 30, 2022, to mitigate currency fluctuations[213]. - A hypothetical ten percent change in exchange rates would increase or decrease the company's gains or losses on foreign currency exchange by approximately $1.0 million for the nine months ended September 30, 2022[214]. Taxation - The effective tax rate for the three months ended September 30, 2022, was 50.7%, an increase from 17.4% in the same period last year, primarily due to changes in the forecast and the mix of losses between various jurisdictions[178]. - The effective tax rate for the nine months ended September 30, 2022, was 15.6%, a decrease from 17.2% in the same period last year, primarily due to an increase in losses in foreign subsidiaries[179]. Internal Controls and Compliance - The company's disclosure controls and procedures were evaluated as effective as of September 30, 2022, providing reasonable assurance for timely decision-making regarding required disclosures[217]. - There were no changes in the company's internal control over financial reporting during the quarter ended September 30, 2022, that materially affected its effectiveness[218].