Mad Catz® Reports Fiscal 2017 Second Quarter Financial Results

SAN DIEGO, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Mad Catz Interactive, Inc. ("Mad Catz" or the "Company") (NYSE MKT:MCZ), today announced financial results for the fiscal 2017 second quarter ended September 30, 2016.

Key Highlights of Fiscal 2017 Second Quarter and Subsequent:
  • Fiscal 2017 second quarter net sales decreased 62% to $14.9 million, driven primarily by a decrease in sales of Rock Band 4 products; by geography, the Company recorded a 63% decrease in net sales to the Americas, a 62% decrease in net sales to EMEA and a 44% decrease in net sales to APAC;  
  • Gross margin declined to 3.6% from 23.1% in the prior year quarter, driven primarily by charges of $2.2 million related to Rock Band 4 in connection with price reductions to retailers and write-downs of inventory and other assets, as well as product mix and increased freight costs;
  • Sold the Saitek simulation product line to Logitech for $13.0 million cash;
  • Total sales and marketing, general and administrative, and research and development expenses decreased 49% from the prior year period to $4.1 million as the Company continued to realize the benefits of restructuring activities undertaken during the fourth quarter of fiscal 2016 and from lower cooperative advertising costs as a result of lower Rock Band 4 sales;
  • Operating income, which included an $8.2 million gain on the Saitek sale, increased to $4.5 million from $0.9 million in the prior year;
  • Diluted net income per share was $0.06, compared to diluted net loss of ($0.02) in the prior year;
  • Net position of bank loans, less cash and restricted cash, was $9.2 million at September 30, 2016, compared to $9.4 million at June 30, 2016 and $12.7 million at September 30, 2015;
  • Sold no shares under the "At-the-Market" ("ATM") equity offering program;
  • Completed the sale of the remaining Rock Band 4 inventory prior to the end of the wind-down period;
  • Shipped the new Tritton ARK™ 100 headsets, part of the Company's new Tritton ARK Series line of innovative gaming headsets; and
  • Announced the details and shipment schedule of the Company's entirely upgraded line of RAT mice, which include the RAT1, RAT4, RAT6, RAT8, RAT PRO S+ and RAT PRO X+.
 
Summary of Financials
(in thousands, except margins and per share data)
                       
  Three Months       Six Months    
  Ended September 30,       Ended September 30,    
    2016       2015     Change     2016       2015     Change
                       
Net sales $ 14,867     $ 38,918       (62 %)   $ 25,655     $ 51,892       (51 %)
Gross profit   528       9,006       (94 %)     424       11,884       (96 %)
Net operating expenses   (3,950 )     8,147       (148 %)     654       14,787       (96 %)
Operating income (loss)   4,478       859       421 %     (230 )     (2,903 )     (92 %)
Net income (loss)   4,080       (1,611 )     (353 %)     (713 )     (5,576 )     (87 %)
Net loss per share, basic and diluted $ 0.06     $ (0.02 )     (353 %)   $ (0.01 )   $ (0.08 )     (87 %)
                       
Gross margin   3.6 %     23.1 %   (1,950) bps     1.7 %     22.9 %   (2,120) bps
                       
Adjusted EBITDA (loss) (1) $ 5,360     $ 1,391       285 %   $ 1,885     $ (1,674 )     (213 %)
                       
(1)  Definitions, disclosures and reconciliations regarding non-GAAP financial information are included on page 8.
                       

Commenting on the Company's fiscal 2017 second quarter results, David McKeon, Chief Financial Officer of Mad Catz, said, "The fiscal 2017 second quarter marked a pivotal time for Mad Catz as we successfully sold our remaining Rock Band 4 inventory ahead of the wind-down period, completed the sale of our Saitek-branded product line to Logitech and continued to leverage the strategic initiatives implemented in the fiscal first quarter related to operational efficiencies and product execution. Although working capital constraints had some impact on our product launch timing and top line revenue in the quarter, we made significant improvements in working capital during the quarter and successfully brought a number of new Tritton and Mad Catz branded products to market ahead of the holiday season."

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