Legit Reviews

SAN DIEGO--(BUSINESS WIRE)-- Mad Catz Interactive, Inc. (AMEX/TSX: MCZ)
Conference Call: Today, February 9th, 2011 at 5:00 p.m. ET
Dial-in number: 212/231-2901 (U.S. & International)
Webcast: www.madcatz.com (Select “Investors”)
Replay Information: See release text

Mad Catz Interactive, Inc. (“Mad Catz” or “the Company”) (AMEX/TSX: MCZ), a leading third-party interactive entertainment accessory provider, today announced record quarterly financial results for its fiscal 2011 third quarter ended December 31, 2010.

For the quarter ended December 31, 2010, Mad Catz generated net sales of $93.0 million, the highest quarterly sales in the Company’s history and a 90.6% increase from net sales of $48.8 million in the fiscal 2010 third quarter. Net sales in North America, the Company’s largest market, grew 129.6% to $56.4 million in the fiscal 2011 third quarter, while net sales to Europe increased 52.9% year-over-year to a record $35.1 million. Gross profit in the fiscal 2011 third quarter rose 65.6% to $26.4 million from the prior year period while gross profit margin declined by 4.3 percentage points to 28.4%, primarily due to a shift in the Company’s sales mix which included higher levels of licensed products.

Reflecting tax expense of $4.6 million in the fiscal 2011 third quarter versus $1.6 million in the prior year fiscal third quarter, the Company reported a 73.4% rise in net income to $9.7 million, or $0.15 per diluted share, compared with net income of $5.6 million, or $0.09 per diluted share a year ago.

EBITDA, a non-GAAP measure (defined as earnings before interest, taxes, depreciation and amortization), in the three months ended December 31, 2010, increased by 83.4% to a quarterly record $16.0 million, compared to EBITDA of $8.7 million in the prior year quarter. Adjusted net income and adjusted diluted earnings per share, which exclude the impact of amortization of intangibles, stock-based compensation and goodwill impairment (if any), were $10.2 million and $0.16, respectively, in the fiscal third quarter versus $6.2 million and $0.10, respectively, in the prior year quarter. EBITDA, Adjusted net income and adjusted diluted earning per share are non-GAAP financial measures and are reconciled to the most comparable GAAP measure in the financial tables at the end of this release.

In the fiscal 2011 nine-month period ended December 31, 2010, the Company generated record net sales of $150.3 million, a 62.0% increase from the $92.7 million in the first nine months of the prior fiscal year. Gross profit for the fiscal 2011 year-to-date period increased 46.1% to a record $42.8 million, from $29.3 million in the prior year while gross profit margin was 28.5% compared to 31.6% a year ago. Total operating expenses in the first nine months of fiscal 2011 were $25.7 million, up 17.7% from $21.9 million in the prior year-to-date period and, as a percentage of net sales, declined to 17.1% from 23.6% a year ago. The Company recorded an operating profit of $17.1 million and $7.4 million in the first nine months of fiscal 2011 and fiscal 2010, respectively, representing growth of 129.9%. Reflecting tax expense of $5.6 million in the fiscal 2011 year-to-date period and $2.0 million in the comparable year-ago period, the Company reported net income of $9.4 million, or $0.16 per diluted share, compared with a net income of $3.6 million, or $0.07 per diluted share a year ago.

In the fiscal 2011 year-to-date period, EBITDA rose to a record $19.3 million, an 88.1% increase compared to EBITDA of $10.3 million in the first nine months of fiscal 2010. Adjusted net income and adjusted diluted earnings per share, which exclude the impact of amortization of intangibles and stock-based compensation, were $10.7 million and $0.18, respectively, in the fiscal 2011 year-to-date period versus $5.9 million and $0.11, respectively, in the comparable year ago period.

Third Quarter Fiscal 2011 Financial Highlights:

Net sales for the third quarter of fiscal 2011 increased 90.6% from the prior year quarter:
North American net sales rose 129.6% to $56.4 million or 60.7% of quarterly sales;
European net sales rose 52.9% to $35.1 million or 37.8% of quarterly sales; and
Net sales to other countries increased 14.4% to $1.4 million or 1.5% of quarterly sales.
Gross sales by product group were as follows:
Xbox 360® accounted for 31% of total gross sales in both periods;
PlayStation 3® accounted for 19% of total gross sales vs. 17% in the prior year;
Wii® products represented 19% of total gross sales vs. 14% in the prior year;
PC represented 12% of total gross sales vs. 23% a year ago;
Handhelds represented 2% of total gross sales vs. 3% a year ago; and
All other platforms represented 17% of total gross sales vs. 12% in the prior year.
Gross sales by category were as follows:
Specialty controllers represented 29% of total gross sales vs. 21% a year ago;
Audio products represented 24% of total gross sales vs. 10% in the prior year;
Games represented 16% of total gross sales vs. 2% a year ago;
Controllers represented 16% of total gross sales vs. 26% a year ago;
Accessories represented 9% of total gross sales vs. 30% a year ago;
PC devices represented 6% of total gross sales vs. 8% in the prior year; and
All other sales represented less than 1% of total gross sales vs. 3% a year ago.
Reported net position of bank loan less cash at December 31, 2010, of $15.9 million, compared to $17.4 million at December 31, 2009 and $1.6 million as of March 31, 2010.

New Products Shipped in and Subsequent to Third Quarter of Fiscal 2011 include:

Cyborg R.A.T. 9 Wireless Pro Gaming Mouse;
Cyborg Gaming Lights with amBX Technology for the PC;
Rock Band 3 product range, including wireless Keyboards, Mustang ProGuitar, PRO-Drums and PRO-Cymbals Kit;
Mad Catz Wireless Racing Wheel for the Xbox 360 video game system; and,
Three Licensed Limited Edition Call of Duty®: Black Ops Tritton™ Powered Professional Gaming Audio Headsets for console & PC.

Recent Key Developments and License Agreements:

Announced agreement with THQ Inc. to produce branded videogame accessories based on the WWE® All Stars™ intellectual property;
Released the limited edition Sonic the Hedgehog Figure Inductive Charger featuring a six inch tall Sonic and charge base for use with the Wii;
Entered into agreement with Epic Games, Inc. to produce a range of accessories for Gears of War 3, scheduled to be released exclusively for Xbox 360® during the 2011 holiday season;
Secured license for Marvel® Vs. Capcom® 3: Fate of Two Worlds - Arcade FightStick: for the Xbox® 360 and PS3, expected to be available concurrent with the mid-February game launch; and,
Entered into an agreement with Microsoft® Corporation to produce a range of licensed, co-branded audio headsets under the Company’s Tritton brand and Microsoft’s Xbox 360® brand.

Commenting on the results, Darren Richardson, President and Chief Executive Officer of Mad Catz, said, “We are very pleased with the record results for the fiscal 2011 third quarter and fiscal 2011 year-to-date periods. As we continue to execute on our initiatives to re-position Mad Catz as a provider of premium products that enhance the gaming experience, we remain focused on further leveraging our manufacturing and distribution capabilities and aligning ourselves with key titles. Our line of Rock Band 3 peripherals and Call of Duty: Black Ops products, both of which met with strong consumer demand, are great examples of this alignment with the industry’s biggest franchises. In addition, we enjoyed great success with Tritton Technologies, our gaming audio line acquired in early fiscal 2011. These, along with our highly acclaimed Cyborg pro gaming mice, provide us with the strongest product portfolio in Mad Catz’ history. In addition, our strategy to focus on premium products has resulted in three consecutive years of year-over-year growth in third quarter and nine month net sales, gross profit, earnings, EPS and EBITDA results.

“Reflecting the excellent fiscal third quarter retail sell-in of our range of products, we ended the quarter with $9.9 million of cash, $51.2 million of accounts receivable, $32.5 million of inventories and accounts payable of $55.3 million, including the outstanding balance under our bank loan. We expect significant improvements in our fiscal 2011 year-end balance sheet, including a positive cash position net of bank borrowings, and believe our strengthened balance sheet will allow us the financial flexibility to further grow sales, earnings and free cash flow while pursuing other means to enhance shareholder value.”

Mr. Richardson concluded, “Looking ahead, we continue to actively build and roll out a diversified pipeline of exciting products, such as the recently announced audio headset partnership with Microsoft, the Marvel vs. Capcom Arcade FightSticks for the Xbox 360 and PS3, and the range of accessories for Gears of War 3. Building on what was a great holiday quarter, we are confident in our positioning for the fourth quarter of fiscal 2011 and fiscal 2012 as a whole.”

The Company will host a conference call and simultaneous webcast on February 9, 2011, at 5:00 p.m. ET, which can be accessed by dialing 212/231-2901. Following its completion, a replay of the call can be accessed for 30 days at the Company's Web site (www.madcatz.com, select “Investors”) or for 7 days via telephone at 800/633-8284 (reservation #21509221) or, for International callers, at 402/977-9140.

About Mad Catz Interactive, Inc.

Mad Catz is a leading global provider of innovative products for the interactive entertainment industry. Mad Catz develops and markets accessories for videogame systems and PCs under its Mad Catz (casual gaming), Saitek (simulation), Cyborg (pro gaming), Eclipse (home and office) and Tritton (gaming audio) brands. Mad Catz also operates e-commerce and content websites for videogame and PC products under its GameShark brand, develops, manufactures and markets proprietary earphones under its AirDrives brand, and publishes and distributes video/PC games. Mad Catz distributes its products through most of the leading retailers offering interactive entertainment products and has offices in North America, Europe and Asia. For additional information please go to www.madcatz.com, as well as www.store.gameshark.com, www.saitek.com, www.cyborggaming.com, www.eclipsetouch.com, www.trittontechnologies.com, www.gameshark.com and www.airdrives.com.