Mad Catz® Reports Fiscal 2014 First Quarter Financial Results

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Mad Catz ® Reports Fiscal 2014 First Quarter Financial Results

Net Sales - $18.7 million; Diluted Loss per Share - $0.03

SAN DIEGO--(BUSINESS WIRE)-- Mad Catz Interactive, Inc. ("Mad Catz" or "the Company") (NYSE MKT/TSX: MCZ), today announced financial results for the fiscal 2014 first quarter ended June 30, 2013.

Key Fiscal 2014 First Quarter Highlights:

  • Net sales in the quarter declined 14% to $18.7 million, as a 37% decrease in sales to North America was partially offset by increases in sales of 3% in Europe and 24% in APAC;
  • Gross margin remained stable at 28.7% versus the first quarter last year;
  • Total operating expenses declined 6% year-over-year to $7.5 million, driven primarily by lower acquisition-related items;
  • Diluted loss per share of $0.03 remained flat versus the prior year;
  • Net position of bank loan, less cash, was $8.4 million at June 30, 2013 compared to $6.1 million at March 31, 2013 and $11.9 million at June 30, 2012;
  • Shipped the TRITTON™ Kunai™ Universal Headset for consoles, PC, Mac and smart devices;
  • Shipped the TRITTON F.R.E.Q.7 surround sound gaming headset, Mad Catz M.O.U.S.9 wireless mouse and R.A.T.M gaming mouse for PC, Mac and smart devices;
  • Announced the Mad Catz M.O.J.O. Android™ Micro Console as part of the Company's GameSmart initiative;
  • Announced the Mad Catz C.T.R.L.R Wireless GamePad for mobile and smart devices;
  • Announced the TRITTON Kunai Stereo Gaming Headset, the TRITTON Pro+ True 5.1 Surround Sound Headset for PC and Mac as well as the TRITTON F.R.E.Q.4D Gaming Headset for PC, Mac and smart devices;
  • Announced the Mad Catz Killer Instinct™ Arcade FightStick™ Tournament Edition 2 and the Mad Catz Arcade FightStick Tournament Edition 2 for Xbox One™; and
  • Announced the appointment of Karen McGinnis as Chief Financial Officer.
Summary of Financials
(in US$ thousands, except margins and per-share data)
Three Months
Ended June 30,
  2013     2012   Change
Net sales $ 18,684 $ 21,822 -14 %
Gross profit 5,365 6,275 -15 %
Total operating expenses   7,483     7,967   -6 %
Operating loss   (2,118 )   (1,692 ) 25 %
Net loss   (2,065 )   (1,717 ) 20 %
Net loss per share, basic and diluted   ($0.03 )   ($0.03 ) -
Gross margin 28.7 % 28.8 % -0.1 %
EBITDA (loss) (1) ($1,402 ) ($402 ) 249 %
Adjusted EBITDA (loss) (1) ($1,385 ) ($592 ) 134 %

(1) Definitions, disclosures and reconciliations regarding non-GAAP financial information are included on page 8.

Commenting on the results, Darren Richardson, President and Chief Executive Officer of Mad Catz, said, "We entered fiscal 2014 with several key objectives, including furthering the transition of our business toward higher-value products, positioning the Company to take full advantage of the shift towards mobile gaming, and strategically leveraging our resources to best benefit from the launch of the Xbox One and PlayStation 4 gaming consoles during the upcoming holiday season.

"As expected, we saw a decline in our console-related product sales during the first quarter due to the consumer anticipation around the upcoming console transition. However, this decline was partially offset by continuing strong sales growth in our PC and Mac products. We continued to grow our presence and market share across emerging markets, and were especially pleased with the on-going growth in Europe where we grew market share in the face of considerable headwinds."

Mr. Richardson concluded, "The video gaming industry is clearly at an important inflection point, our entire range of products - across the Mad Catz, Tritton and Saitek brands - are positioned to take advantage of this shift and to provide a platform for long-term growth. We are particularly excited about the potential for our mobile product ecosystem around GameSmart as well as our upcoming offering of unique products for both the Xbox One and PlayStation 4 consoles. We believe these products will make a positive contribution to sales as our fiscal year unfolds."

Karen McGinnis, Chief Financial Officer of Mad Catz, added, "While console-related sales were down significantly as consumers prepare for the upcoming launch of the next generation gaming consoles, gross sales of products for the PC and Mac were up over 26% driven principally by our professional gaming mice and keyboards. And, despite a year-over-year decline in gross sales of audio devices, we saw strength at the lower price points of our audio product range driven by the Kunai line of headsets. We successfully held the line on gross margin at 28.7% for the quarter and saw a 6% decrease in total operating expenses, keeping our net loss per share flat year-over-year at $0.03."

Summary of Key Sales Metrics
Three Months
Ended June 30,
(in US$ thousands)   2013     2012   Change
Net Sales by Geography
Europe $ 10,115 $ 9,796 3 %
North America 6,600 10,439 -37 %
APAC   1,969     1,587   24 %
Total $ 18,684   $ 21,822   -14 %
Sales by Platform as a % of Gross Sales
PC & Mac 47 % 34 %
Universal 26 % 28 %
Xbox 360 17 % 28 %
Playstation 3 9 % 7 %
Other   1 %   3 %
Total   100 %   100 %
Sales by Category as a % of Gross Sales
Audio 44 % 44 %
Mice and Keyboards 30 % 21 %
Specialty Controllers 17 % 16 %
Accessories 6 % 8 %
Controllers 2 % 9 %
Games and Other   1 %   2 %
Total   100 %   100 %
Sales by Brand as a % of Gross Sales
Mad Catz 47 % 46 %
Tritton 39 % 41 %
Saitek 11 % 10 %
Other   3 %   3 %
Total   100 %   100 %

The Company will host a conference call and simultaneous webcast on August 8, 2013, at 5:00 p.m. ET, which can be accessed by dialing (212) 271-4651. Following its completion, a replay of the call can be accessed for 30 days at the Company's Web site (, select "About Us/Investors") or for 7 days via telephone at (800) 633-8284 (reservation #21668502) or, for International callers, at (402) 977-9140.

About Mad Catz

Mad Catz Interactive, Inc. ("Mad Catz") (NYSE MKT: MCZ) is a leading global provider of innovative interactive entertainment and leisure products marketed under its Mad Catz® (gaming), Tritton® (audio), and Saitek® (simulation) brands. Mad Catz also develops flight simulation software through its internal ThunderHawk Studios™; publishes games under its Mad Catz brand; and, distributes games and videogame products for third parties. Mad Catz distributes its products through most leading retailers offering interactive entertainment and leisure products and maintains offices in North America, Europe and Asia. For additional information about Mad Catz and its products, please visit the Company's website at

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Safe Harbor

Information in this press release that involves the Company's expectations business prospects, plans, intentions or strategies regarding its future are forward-looking statements that are not facts and that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "anticipate," "estimate," "expect," "project," "intend," "should," "plan," "goal," "believe," 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 the Company's actual future results to differ materially from those expressed in the forward-looking statements set forth in this release include the following: the ability to maintain or renew the Company's licenses; competitive developments affecting the Company's current products; first-party price reductions; the ability to successfully market both new and existing products domestically and internationally; difficulties or delays in manufacturing; unanticipated product delays; or a downturn in the market or industry. A further list and description of these and other factors, risks, uncertainties and other matters can be found in the Company's most recent annual report, and any subsequent quarterly reports, filed with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators. The forward-looking statements in this release are based upon information available to the Company as of the date of this release, and the Company assumes no obligation to update any such forward-looking statements as a result of new information or future events or developments, except as may be required by applicable law. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of the Company and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.


Consolidated Statements of Operations

(unaudited, in US$ thousands, except share and per share data)

Three Months
Ended June 30,
  2013     2012  
Net sales $ 18,684 $ 21,822
Cost of sales   13,319     15,547  
Gross profit   5,365     6,275  
Operating expenses
Sales and marketing 2,906 3,239
General and administrative 3,233 2,956
Research and development 1,011 1,021
Acquisition related items 99 518
Amortization of intangibles   234     233  
Total operating expenses   7,483     7,967  
Operating loss (2,118 ) (1,692 )
Other (expense) income:
Interest expense, net (118 ) (269 )
Foreign currency exchange (loss) gain, net (24 ) 256
Change in fair value of warrant liability (17 ) 190
Other income   71     65  
Total other (expense) income   (88 )   242  
Loss before income taxes (2,206 ) (1,450 )
Income tax benefit (expense)   141     (267 )
Net loss   ($2,065 )   ($1,717 )
Net loss per share:    
Basic and diluted   ($0.03 )   ($0.03 )
Weighted average common shares outstanding:    
Basic and diluted   63,477,399     63,462,399  
Consolidated Balance Sheets

(unaudited, in US$ thousands)

June 30, March 31,
  2013     2013  
Current assets:
Cash $ 2,398 $ 2,773
Accounts receivable, net 8,979 13,884
Other receivables 2,036 1,374
Inventories 25,301 23,795
Deferred tax assets 247 257
Income tax receivable 467 344
Prepaid expenses and other current assets   2,740     2,711  
Total current assets 42,168
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