SAN DIEGO, Nov. 5, 2015 (GLOBE NEWSWIRE) — Mad Catz Interactive, Inc. (“Mad Catz” or the “Company”) (NYSE MKT:MCZ) (TSX:MCZ), today announced financial results for the fiscal 2016 second quarter ended September 30, 2015.
Key Highlights of Fiscal 2016 Second Quarter and Subsequent:
- Fiscal 2016 second quarter net sales increased 73% to $38.9 million, the highest second quarter net sales in the Company’s history;
- Net sales growth driven by a 272% increase in net sales to the Americas, partially offset by an 11% decrease in net sales to EMEA and a 48% decrease in net sales to APAC;
- Gross margin declined to 23.1% from 30.0% in the prior year quarter;
- Total operating expenses increased 14% from the prior year period to $8.1 million;
- Operating income was $0.9 million compared to an operating loss of $0.4 million in the prior year quarter;
- Diluted loss per share was ($0.02) for the fiscal 2016 second quarter, compared to a diluted loss per share of ($0.01) last year;
- Net position of bank loans, less cash, of $12.7 million at September 30, 2015, compared to $5.8 million at June 30, 2015 and $8.9 million at September 30, 2014;
- Shipped Rock Band™ 4 Band-in-a Box™ Software Bundle, Wireless Fender™ Stratocaster™ Guitar Controller and Software Bundle, and stand-alone software for Xbox One and PlayStation™ 4 to retailers ahead of the October 6th launch date for Rock Band 4;
- Announced F.R.E.Q.TE™ 7.1 surround sound gaming headset for Windows PC;
- Announced pre-order availability of the first Street Fighter™ V licensed fightstick starting October 26, 2015;
- Shipped R.A.T. PROX™ high-performance gaming mouse, a 2015 CES Innovation Award Honoree;
- Shipped R.A.T. PROS™ tournament-grade gaming mouse; and,
- Established an “At-the-Market” (“ATM”) equity offering program through which the Company may sell from time to time up to an aggregate of $25.0 million of our common stock.
| Summary of Financials | ||||||
| (in thousands, except margins and per share data) | ||||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | |
| Net sales | $38,918 | $22,467 | 73% | $51,892 | $39,214 | 32% |
| Gross profit | 9,006 | 6,731 | 34% | 11,884 | 11,794 | 1% |
| Total operating expenses | 8,147 | 7,155 | 14% | 14,787 | 13,349 | 11% |
| Operating income (loss) | 859 | (424) | (303%) | (2,903) | (1,555) | 87% |
| Net loss | (1,611) | (922) | 75% | (5,576) | (2,167) | 157% |
| Net loss per share, basic and diluted | ($0.02) | ($0.01) | 100% | ($0.08) | ($0.03) | 167% |
| Gross margin | 23.1% | 30.0% | (690) bps | 22.9% | 30.1% | (720) bps |
| Adjusted EBITDA (loss) (1) | $1,391 | ($111) | (1,353%) | ($1,674) | ($557) | 201% |
| (1) Definitions, disclosures and reconciliations regarding non-GAAP financial information are included on page 8. |
Commenting on the Company’s fiscal 2016 second quarter results, Darren Richardson, President and Chief Executive Officer of Mad Catz, said, “We are very pleased to announce record second quarter sales driven by the successful launch of Rock Band 4. As expected, we started shipping product to retailers at the end of September, ahead of the October 6th launch date, and we expect Rock Band 4 to contribute to significant sales growth, improved operating leverage, and increased cash flow in Fiscal 2016.”
| Summary of Key Sales Metrics | ||||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||||
| (in thousands) | 2015 | 2014 | Change | 2015 | 2014 | Change |
| Net Sales by Geography | ||||||
| Americas | $27,027 | $7,260 | 272% | $32,002 | $12,709 | 152% |
| EMEA | 9,656 | 10,904 | (11%) | 15,298 | 19,278 | (21%) |
| APAC | 2,235 | 4,303 | (48%) | 4,592 | 7,227 | (36%) |
| $38,918 | $22,467 | 73% | $51,892 | $39,214 | 32% | |
| Sales by Platform as a % of Gross Sales | ||||||
| Next gen consoles (a) | 73% | 21% | 61% | 17% | ||
| PC and Mac | 17% | 43% | 25% | 45% | ||
| Universal | 6% | 20% | 8% | 22% | ||
| Smart devices | 3% | 11% | 5% | 10% | ||
| Legacy consoles (b) | 1% | 5% | 1% | 6% | ||
| 100% | 100% | 100% | 100% | |||
| Sales by Category as a % of Gross Sales | ||||||
| Specialty controllers | 69% | 25% | 59% | 24% | ||
| Audio | 17% | 39% | 22% | 39% | ||
| Mice and keyboards | 7% | 22% | 10% | 23% | ||
| Games and other | 5% | 1% | 4% | 1% | ||
| Controllers | 1% | 9% | 3% | 9% | ||
| Accessories | 1% | 4% | 2% | 4% | ||
| 100% | 100% | 100% | 100% | |||
| Sales by Brand as a % of Gross Sales | ||||||
| Mad Catz | 75% | 34% | 64% | 34% | ||
| Tritton | 15% | 37% | 20% | 37% | ||
| Saitek | 9% | 18% | 13% | 18% | ||
| Other | 1% | 11% | 3% | 11% | ||
| 100% | 100% | 100% | 100% | |||
| (a) Includes products developed for Xbox One, PlayStation 4 and Wii U. | ||||||
| (b) Includes products developed for Xbox 360, PlayStation 3 and Wii. |
Karen McGinnis, Chief Financial Officer of Mad Catz, commented, “We are pleased with our return to top-line growth for the quarter and year-to-date and remain confident that our business strategy, product offerings and financial position will help us return to sales growth and profitability in fiscal 2016. We remain focused on effectively managing our inventory, expenses and accounts receivable while positioning the Company to benefit from the upcoming holiday season.”
The Company will host a conference call and simultaneous webcast on November 5, 2015, at 5:00 p.m. ET, which can be accessed by dialing (303) 223-4376. Following its completion, a replay of the call can be accessed for 30 days at the Company’s Web site (www.madcatz.com, select “About Us/Investor Relations”) or via telephone at (800) 633-8284 (reservation #21783853) or, for International callers, at (402) 977-9140.
About Mad Catz
Mad Catz Interactive, Inc. (“Mad Catz”) (NYSE MKT:MCZ) (TSX:MCZ) is a global provider of innovative interactive entertainment products marketed under its Mad Catz® (gaming), Tritton® (audio), and Saitek® (simulation) brands. Mad Catz products cater to passionate gamers across multiple platforms including in-home gaming consoles, handheld gaming consoles, Windows® PC and Mac® computers, smart phones, tablets and other mobile devices. Mad Catz distributes its products through its online store as well as distribution via many leading retailers around the globe. Headquartered in San Diego, California, Mad Catz maintains offices in Europe and Asia. For additional information about Mad Catz and its products, please visit the Company’s website at www.madcatz.com.
Social Media
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 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; availability of capital under our credit facilities; commercial acceptance of new in-home gaming consoles; 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 require 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 | ||||
| (in thousands, except share and per share data) | ||||
| (Unaudited) | ||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||
| 2015 | 2014 | 2015 | 2014 | |
| Net sales | $38,918 | $22,467 | $51,892 | $39,214 |
| Cost of sales | 29,912 | 15,736 | 40,008 | 27,420 |
| Gross profit | 9,006 | 6,731 | 11,884 | 11,794 |
| Operating expenses: | ||||
| Sales and marketing | 4,457 | 3,477 | 7,173 | 5,889 |
| General and administrative | 2,638 | 2,722 | 5,532 | 5,873 |
| Research and development | 941 | 846 | 1,862 | 1,368 |
| Amortization of intangible assets | 111 | 110 | 220 | 219 |
| Total operating expenses | 8,147 | 7,155 | 14,787 | 13,349 |
| Operating income (loss) | 859 | (424) | (2,903) | (1,555) |
| Other expense: | ||||
| Interest expense, net | (364) | (167) | (621) | (325) |
| Foreign currency exchange loss, net | (154) | (382) | (93) | (417) |
| Change in fair value of warrant liabilities | (871) | 74 | (917) | 55 |
| Other income (expense) | 10 | (2) | 22 | 79 |
| Total other expense | (1,379) | (477) | (1,609) | (608) |
| Loss before income taxes | (520) | (901) | (4,512) | (2,163) |
| Income tax expense | (1,091) | (21) | (1,064) | (4) |
| Net loss | ($1,611) | ($922) | ($5,576) | ($2,167) |
| Net loss per share: | ||||
| Basic | ($0.02) | ($0.01) | ($0.08) | ($0.03) |
| Diluted | ($0.02) | ($0.01) | ($0.08) | ($0.03) |
| Shares used in per share computations: | ||||
| Basic | 73,469,571 | 64,149,124 | 73,469,571 | 64,115,591 |
| Diluted | 73,469,571 | 64,149,124 | 73,469,571 | 64,115,591 |
| Consolidated Balance Sheets | ||
| (in thousands) | ||
| (Unaudited) | ||
| September 30, 2015 | March 31, 2015 | |
| ASSETS | ||
| Current assets: | ||
| Cash | $6,970 | $5,142 |
| Accounts receivable, net | 27,659 | 7,823 |
| Other receivables | 992 | 560 |
| Inventories | 33,145 | 15,479 |
| Deferred tax assets | 1,566 | 2,245 |
| Income taxes receivable | 341 | 967 |
| Prepaid expenses and other current assets | 1,897 | 1,293 |
| Total current assets | 72,570 | 33,509 |
| Deferred tax assets | 7,606 | 7,605 |
| Other assets | 686 | 418 |
| Property and equipment, net | 3,826 | 3,376 |
| Intangible assets, net | 2,490 | 2,584 |
| Total assets | $87,178 | $47,492 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
| Current liabilities: | ||
| Bank loans | $19,638 | $7,920 |
| Accounts payable | 38,755 | 16,404 |
| Accrued liabilities | 13,647 | 4,196 |
| Notes payable | 919 | 1,015 |
| Income taxes payable | 557 | 141 |
| Total current liabilities | 73,516 | 29,676 |
| Notes payable, less current portion | 97 | 36 |
| Warrant liabilities | 2,104 | 1,187 |
| Deferred tax liabilities | 43 | 43 |
| Deferred rent | 738 | 762 |
| Total liabilities | 76,498 | 31,704 |
| Shareholders’ equity: | ||
| Common stock | 63,390 | 63,128 |
| Accumulated other comprehensive loss | (4,917) | (5,123) |
| Accumulated deficit | (47,793) | (42,217) |
| Total shareholders’ equity | 10,680 | 15,788 |
| Total liabilities and shareholders’ equity | $87,178 | $47,492 |
| Consolidated Statements of Cash Flows | ||
| (in thousands) | ||
| (Unaudited) | ||
| Six Months Ended September 30, | ||
| 2015 | 2014 | |
| Cash flows from operating activities: | ||
| Net loss | ($5,576) | ($2,167) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Depreciation and amortization | 1,038 | 1,060 |
| Accrued and unpaid interest expense on note payable | — | 10 |
| Amortization of deferred financing fees | 189 | 36 |
| Loss on disposal of assets | 6 | 6 |
| Stock-based compensation | 262 | 240 |
| Change in fair value of warrant liabilities | 917 | (55) |
| Provision for deferred income taxes | 678 | 44 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (19,790) | (4,195) |
| Other receivables | (431) | 205 |
| Inventories | (17,625) | (3,077) |
| Prepaid expenses and other current assets | (357) | (319) |
| Other assets | 85 | 187 |
| Accounts payable | 22,280 | 4,332 |
| Accrued liabilities | 9,602 | 285 |
| Deferred rent | (24) | — |
| Income taxes receivable/payable | 1,045 | (330) |
| Net cash used in operating activities | (7,701) | (3,738) |
| Cash flows from investing activities: | ||
| Purchases of intangible assets | (25) | — |
| Purchases of property and equipment | (1,245) | (686) |
| Net cash used in investing activities | (1,270) | (686) |
| Cash flows from financing activities: | ||
| Borrowings on bank loans | 41,955 | 29,220 |
| Repayments on bank loans | (30,248) | (24,297) |
| Payment of financing fees | (720) | (50) |
| Borrowings on notes payable | 95 | — |
| Repayments on notes payable | (160) | (469) |
| Proceeds from exercise of stock options | — | 236 |
| Payment of expenses related to issuance of common stock | (164) | — |
| Net cash provided by financing activities | 10,758 | 4,640 |
| Effects of foreign currency exchange rate changes on cash | 41 | (46) |
| Net increase in cash | 1,828 | 170 |
| Cash, beginning of period | 5,142 | 1,496 |
| Cash, end of period | $6,970 | $1,666 |
| Supplementary Data | ||||
| Adjusted EBITDA (Loss) Reconciliation (non-GAAP) | ||||
| (in thousands) | ||||
| (Unaudited) | ||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||
| 2015 | 2014 | 2015 | 2014 | |
| Net loss | ($1,611) | ($922) | ($5,576) | ($2,167) |
| Adjustments: | ||||
| Depreciation and amortization | 552 | 580 | 1,038 | 1,096 |
| Stock-based compensation | 124 | 117 | 262 | 240 |
| Change in fair value of warrant liabilities | 871 | (74) | 917 | (55) |
| Interest expense, net | 364 | 167 | 621 | 325 |
| Income tax expense | 1,091 | 21 | 1,064 | 4 |
| Adjusted EBITDA (loss) | $1,391 | ($111) | ($1,674) | ($557) |
| Adjusted EBITDA (loss), a non-GAAP (“Generally Accepted Accounting Principles”) financial measure, represents net loss before interest, taxes, depreciation and amortization, stock-based compensation and change in the fair value of warrant liabilities. Adjusted EBITDA is not intended to represent cash flows for the period, nor is it being presented as an alternative to operating or net loss as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. As defined, Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. Our management believes, however, that in addition to the performance measures found in our financial statements, Adjusted EBITDA is a useful financial performance measurement for assessing our Company’s operating performance. Our management uses Adjusted EBITDA as a measurement of operating performance in comparing our performance on a consistent basis over prior periods, as it removes from operating results the impact of our capital structure, including the interest expense resulting from our outstanding debt, and our asset base, including depreciation and amortization of our capital and intangible assets. In addition, Adjusted EBITDA is an important measure for our lender. |
CONTACT: Karen McGinnis
Chief Financial Officer
Mad Catz Interactive, Inc.
[email protected] or (858) 790-5040
Joseph Jaffoni, Norberto Aja, Jim Leahy
JCIR
[email protected] or (212) 835-8500