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TheStreet Open House

Mad Catz® Reports Fiscal 2014 Second Quarter Financial Results

Mad Catz Interactive, Inc. (“Mad Catz” or the “Company”) (NYSE MKT/TSX: MCZ), today announced financial results for the fiscal 2014 second quarter ended September 30, 2013.

Key Fiscal 2014 Second Quarter Highlights:

  • Net sales in the quarter declined 43% to $17.8 million, as the Company’s sales to North America declined 51% and sales to Europe and APAC each declined 37%;
  • Gross margin was 26.7%, compared to 28.8% in the second quarter last year;
  • Total operating expenses decreased slightly year-over-year to $8.4 million;
  • Diluted loss per share of $0.07 compared to diluted loss per share of $0.01 in the second quarter last year;
  • Net position of bank loan, less cash, was $11.4 million at September 30, 2013, compared to $6.1 million at March 31, 2013 and $19.3 million at September 30, 2012;
  • Shipped the TRITTON ® Pro+ True 5.1 Surround Sound Headset for Windows ® PC and Mac;
  • Shipped the S.T.R.I.K.E.3 Professional Gaming Keyboard for Windows ® PC;
  • Announced the Force Feedback Racing Wheel for Xbox One ;
  • Entered into an agreement with Electronics Arts to create a range of Titanfall -branded gaming products around the Company’s TRITTON gaming headsets, R.A.T. mice, S.T.R.I.K.E. keyboards, F.R.E.Q. gaming headsets and G.L.I.D.E. gaming surfaces; and
  • Began taking pre-orders for the Mad Catz M.O.J.O. Android Micro Console, which is expected to begin shipping in limited quantities on December 10, 2013.
 

Summary of Financials

(in US$ thousands, except margins and per-share data)
 
      Three Months         Six Months    
Ended September 30, Ended September 30,
2013     2012 Change 2013     2012 Change
 
Net sales $17,839 $31,215 (43)% $36,523 $53,037 (31)%
Gross profit 4,770 8,987 (47)% 10,135 15,262 (34)%
Total operating expenses 8,387 8,475 (1)% 15,870 16,442 (3)%
Operating (loss) income (3,617) 512 (806)% (5,735) (1,180) 386%
Net loss ($4,545) ($450) 910% ($6,610) ($2,167) 205%
Net loss per share, basic and diluted ($0.07) ($0.01) 600% ($0.10) ($0.03) 233%
 
Gross margin 26.7% 28.8% (2.1)% 27.7% 28.8% (1.1)%
 
EBITDA (loss) (1) ($3,569) $993 (459)% ($4,963) $628 (890)%
Adjusted EBITDA (loss) (1) ($3,005) $1,556 (293)% ($4,130) $1,666 (348)%
 

(1) Definitions, disclosures and reconciliations regarding non-GAAP financial information are included on page 7.

Commenting on the results, Darren Richardson, President and Chief Executive Officer of Mad Catz, said, “Our fiscal 2014 second quarter results were significantly impacted by the ongoing console transition around the upcoming launch of the Xbox One and PlayStation 4 gaming consoles. Sales were generally down across the board during the quarter, with Saitek-branded PC and Mac products being the one of our three brands showing a gain over the prior year. Our Tritton headset business was impacted by a significant shift towards lower price point products, while sales of our legacy controller products and non-recurring games, specifically Damage Inc., also contributed to the decline in net sales.”

 
Summary of Key Sales Metrics
 
      Three Months         Six Months    
Ended September 30, Ended September 30,
(in US$ thousands) 2013     2012 Change 2013     2012 Change
 
Net Sales by Geography
Europe $9,477 $14,970 (37)% $19,592 $24,766 (21)%
North America 6,718 13,643 (51)% 13,318 24,082 (45)%
APAC 1,644 2,602 (37)% 3,613 4,189 (14)%
Total $17,839 $31,215 (43)% $36,523 $53,037 (31)%
 
Sales by Platform as a % of Gross Sales
PC and Mac 49% 31% 48% 33%
Universal 30% 24% 28% 26%
Xbox 360 11% 32% 14% 30%
Playstation 3 6% 10% 8% 8%
All Others 4% 3% 2% 3%
Total 100% 100% 100% 100%
 
Sales by Product Category as a % of Gross Sales
Audio 41% 44% 43% 44%
Mice and Keyboards 32% 20% 31% 20%
Specialty Controllers 16% 14% 17% 14%
Accessories 8% 7% 7% 8%
Controllers 1% 5% 1% 7%
Games and Other 2% 10% 1% 7%
Total 100% 100% 100% 100%
 
Sales by Brand as a % of Gross Sales
Mad Catz 49% 51% 48% 49%
Tritton 37% 39% 38% 40%
Saitek 13% 8% 12% 9%
Other 1% 2% 2% 2%
Total 100% 100% 100% 100%
 

“The video game industry and Mad Catz are in front of a major milestone as the 2013 holiday season approaches and I am confident that our newest products position us to benefit from this inflection point as the console transition and rapidly growing appeal of mobile gaming gain traction. We are excited by the opportunities the Xbox One and PlayStation 4 consoles will bring and believe our products will make a positive contribution to sales as the new consoles roll out creating a spur in sales of products for both legacy and new consoles. In addition, we believe our GameSmart initiative, including our M.O.J.O. micro console for Android, will position us for the emergence of a new industry segment for mobile products.”

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