Mad Catz Interactive, Inc. (MCZ)
F4Q10 (Qtr End 03/31/10) Earnings Call
June 10, 2010 5:00 pm ET
Norberto Aja – IR, Jaffoni & Collins, Inc.
Darren Richardson – President, CEO & COO
Stewart Halpern – CFO
Sean McGowan – Needham
Ronald Rotter – RLR Partners
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Ladies and gentlemen, welcome to the Mad Catz fiscal 2010 fourth quarter and full-year 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, June 10, 2010.
I would now like to turn the conference over to Norberto Aja. Please go ahead, sir.
Thank you, operator. Welcome to our fiscal 2010 fourth quarter and full year results conference call. With me on the call today are Darren Richardson, Mad Catz’s President and Chief Executive Officer; and Stewart Halpern, Mad Catz’s Chief Financial Officer.
Before we begin, however, let me just take a few minutes to read the Safe Harbor language. On today’s discussion it 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 and 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 webcast includes 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 don’t hesitate to contact me at 212-835-8500.
I would now like to introduce Mr. Darren Richardson, President and Chief Executive Officer of Mad Catz. Darren?
Thank you, Norberto. Good afternoon, everyone, and thank you for joining us on the call. Earlier today, we announced our results for the fiscal fourth quarter and full year 2010, which reflect record sales for both periods.
On today’s call, I’ll provide an overview of our fourth quarter and fiscal 2010 results. Then Stewart will review our financial performance and discuss some of our operating goals going forward. Afterwards, I’ll provide an update on our new product development initiative and provide some thoughts on the outlook for our sector in fiscal 2011.
We’re pleased we delivered strong Q4 results to cap off what is arguably the best year in the Company’s history. The quarterly and annual results set or match records on a number of key criteria and demonstrate the excellent progress we are making on the key initiatives we’ve discussed to build shareholder value, and we did so while navigating a very challenging period for the video game industry and the world economy.
Fiscal 2010 delivered another year of record sales and we continue to leverage that top-line performance all the way down through the income statement. We exceeded our fiscal year target of reducing operating cost by over 10%.
The sales growth, gross margins, and vigilance on cost delivered strong results on gross profit, operating income, net income, earnings per share and EBITDA for the quarter and the fiscal year.
But the most telling numbers to me are the bank loan finishing the year at $3.8 million and the cash at bank of $2.2 million resulting in a net loan balance position of $1.6 million, down markedly from $17.4 million as of December 31, 2009 and $10.4 million at the same time last year at March 31, 2009. Everything we do at the company is ultimately aimed at increasing earnings and free cash flow and our fiscal 2010 results demonstrate that’s what we are doing.
With that let me turn the call over to the Mad Catz CFO, Stewart Halpern to review our financial results for the quarter and the fiscal year-end. Stewart?
Thank you, Darren. As Darren mentioned, we are very pleased to be reporting record fourth quarter and fiscal year revenue for the second consecutive year. Sales for Q4 this year were $26.3 million, up 15.4% from $22.8 million in Q4 of last year.
During the Q4 period we increased sales in each of North America, Europe, and rest of world territories and benefited from the release of our suite of new FightingSticks and FightPads for the latest iteration in the Capcom Street Fighter franchise, Super Street Fighter II, as well as continuing strength across a range of core products. Sales for the full year of fiscal 2010 were $119 million, an increase of 5.7% over fiscal 2009.