Mad Catz Interactive, Inc. (MCZ)
F1Q11 (Qtr End 06/30/10) Earnings Call Transcript
August 5, 2010 5:00 pm ET
Norberto Aja – IR, Jaffoni & Collins, Inc.
Darren Richardson – President, CEO and COO
Stewart Halpern – CFO
Ronald Rotter – R.L.R. Partners
Jeremy Levine – Mindscape Trading
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Ladies and gentlemen, thank you for standing by. Welcome to the fiscal 2011 first quarter results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards we’ll conduct a question-and-answer session. (Operator instructions) As a reminder, this conference is being recorded, Thursday, August 5, 2010.
I would now like to turn the conference over to Norberto Aja, investor relations for Mad Catz. Please go ahead sir.
Thank you, operator, and good day and welcome to the fiscal 2011 first quarter Mad Catz conference call. With me on the call today are Darren Richardson, Mad Catz’s President and Chief Executive Officer, along with Stewart Halpern, Mad Catz’s Chief Financial Officer.
Darren will provide an overview of the results and also comment on the drivers behind them. Afterwards, Stewart will review the financial results in greater detail, and discuss some of our operating goals going forward. Darren will then close the call with some thoughts on the outlook for our sector in the balance of fiscal 2011.
However, before we begin, let me just – today’s discussion will contain forward-looking statements about the company’s financial results, estimates and business prospects that involve substantial risks and uncertainties.
The company assumes no obligation to update the forward-looking statements contained in this conference call as a result of new information or future events or developments. You can identify these statements by the fact that they use the words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “belief,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance.
Among the factors that could cause actual results to differ materially are the following, the ability to maintain or renew the company’s licenses; competitive developments affecting the company’s current products; first party price reductions; price protection taken in response to price cuts; the ability to successfully market both new and existing products domestically, as well as internationally; difficulties or delays in manufacturing; delays in the company’s ability to obtain products from its manufacturers in China; market and general economic conditions. A further list and description of these risks, uncertainties and other matters can be found in the company’s reports filed with the appropriate regulatory authorities.
Today’s call and web cast include non-GAAP financial measures within the meaning of the SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in today’s press release.
As part of Mad Catz’s ongoing investor relations effort, the company regularly meets or conducts calls with the members of the investment community. If you are interested in meeting with Mad Catz’s management, please call me at 212-835-8500.
With that, I would now like to introduce Darren Richardson, President and Chief Executive Officer of Mad Catz. Darren?
Thank you, Norberto. Good afternoon, everyone, and thank you for listening today. Earlier today, we announced fiscal 2011 first quarter results. The fiscal first quarter is seasonally our weakest sales quarter of the year, and this year we had a comparison due in part to the success of our Street Fighter product line in the same quarter last year. However, we continue to believe we can meet or exceed our previously stated goal of high single-digit revenue growth in fiscal 2011 relative to the record $119 million of net sales in the fiscal year ended March 31, 2010.
As I mentioned on the last call, there are a number of very positive factors that will affect the years [ph] in our first quarter, including the acquisition of TRITTON Technologies, our new gaming audio line, the launch of Rock Band peripherals and bundles under our agreement with Harmonix, our Call of Duty Black Ops license agreement with Activision, together with the ongoing launch of the strongest portfolio of new products in Mad Catz’s history. We believe, we will start to see the benefits beginning in our fiscal second quarter.
With that, let me turn the call over to Mad Catz’s CFO, Stewart Halpern to review our financial results for the quarter. Stewart?
Thank you, Darren. Net sales for fiscal 2011 first quarter decreased 11% to $19.9 million from $22.4 million in the fiscal 2010 first quarter. As Darren mentioned, decrease in overall sales was primarily due to the difficult comparison versus last year, which included very strong follow on sales of Street Fighter 4 based accessories. Also contributing to the decline were lower sales on the PC and hand-held platforms.
The decline in PC platform sales was due in large part to end of life product issues as reviewed last quarter. We continue to believe our recent new product releases will reverse this, but the timing and volumes of the new R.A.T. and Eclipse products shipped in Q1 weren’t yet sufficient to offset the trend. Sales of products for handheld products were down primarily due to not having a catalyst this year to match the boost in the category last year from the launch of Nintendo DSi.