Mad Catz Interactive, Inc. (USA) (MCZ) Announces Fiscal 2017 Second Quarter Results; Shares Pop 8%


Mad Catz Interactive, Inc. (USA) (NYSEMKT:MCZ) announced financial results for the fiscal 2017 second quarter endedSeptember 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 theAmericas, 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+.

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.”

“While we still have much work to accomplish in the quarters ahead, we are pleased with the improvements we are achieving across our business.  We remain confident that the benefits we are seeing on the back of our restructuring plan will positively impact our business in the coming quarters and help us achieve top and bottom line growth in our continuing product lines as well as added value for our shareholders.”

Karen McGinnis, President and Chief Executive Officer of Mad Catz, added, “The fiscal second quarter results show that our strategy is clearly working and that we continue to make solid progress against our operational objectives while positioning Mad Catz to leverage the opportunities ahead around console, PC and mobile gaming.  Our recent new product launches demonstrate the continued power of our innovation engine and reflect our ability to address profitable growth across our market opportunities.”

“As we enter the second half of fiscal 2017 and the holiday season, we will continue to focus on delivering shareholder value by efficiently bringing new products to market, supporting our new product launches, further expanding our retail partner footprint and maintaining operational discipline and focused execution. We’ve got momentum, a winning product portfolio and an exceptional team to lead us along the way.” (Original Source)

Shares of Mad Catz are rising nearly 8% to $0.24 in after-hours trading Thursday. MCZ has a 1-year high of $0.62 and a 1-year low of $0.16. The stock’s 50-day moving average is $0.21 and its 200-day moving average is $0.22.

Mad Catz provides of innovative interactive entertainment products. It includes designing, manufacturing, sales, marketing, and distribution of products marketed under Mad Catz (gaming), Tritton (audio), and Saitek (simulation) brands. 

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