Mad Catz Interactive, Inc. (“Mad Catz” or “the Company”) (AMEX/TSX: MCZ), a leading third-party interactive entertainment accessory provider, today announced record second quarter financial results for its fiscal 2011 second quarter ended September 30, 2010.
For the period ended September 30, 2010, the Company generated record second quarter net sales of $37.4 million, a 73.2% increase from $21.6 million in the prior year quarter. Gross profit increased 55.5% to a fiscal second quarter record $10.5 million from $6.8 million in the September 2009 quarter, while gross profit margin was 28.1% compared to 31.3% a year ago.
Total operating expenses in the fiscal 2011 second quarter were $8.6 million, up 23.7% from $6.9 million in the prior year quarter. Total operating expenses as a percentage of net sales were 22.9% compared to 32.1% of net sales in the prior year period and the Company recorded a record second quarter operating profit of $1.9 million compared to a loss of $0.2 million in the prior year quarter.
Reflecting income tax expense of $1.1 million in the second quarter of fiscal 2011 and $0.2 million in the prior year quarter, the Company reported record second quarter net income of $1.1 million, or $0.02 per diluted share, compared with a net loss of $1.0 million, or a loss of $0.02 per diluted share, in the comparable prior year period.
EBITDA, a non-GAAP measure (defined as earnings before interest, taxes, depreciation and amortization), in the three months ended September 30, 2010, increased to a second quarter record $3.6 million, compared with EBITDA of $0.8 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 $1.6 million and $0.03, respectively, in the fiscal second quarter versus $0.1 million and $0.00, respectively, in the prior year quarter.
In the six months ended September 30, 2010, the Company generated record first half fiscal year net sales of $57.3 million, a 30.3% increase from the $44.0 million in the prior fiscal year to date. Gross profit for the fiscal 2011 year to date period increased 22.6% to a record $16.4 million from $13.4 million in the prior fiscal year to date while gross profit margin was 28.7% compared to 30.5% a year ago. Total operating expenses were $15.3 million, up 12.6% from $13.6 million in the prior year to date, and, as a percentage of net sales, were 26.7% compared to 30.9% in the six months ended September 30, 2009. The Company recorded an operating profit of $1.1 million compared to a loss of $0.2 million in the first half of fiscal 2010. Reflecting tax expense of $1.0 million year to date in fiscal 2011 and $0.4 million in the prior fiscal year to date, the Company reported a net loss of $0.2 million, or $0.00 per diluted share, compared with a net loss of $2.0 million, or a loss of $0.04 per diluted share, in the prior fiscal year to date period.
EBITDA increased to a record $3.3 million in the fiscal 2011 year to date period, compared with EBITDA of $1.6 million in the first six 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 $0.5 million and $0.01, respectively, in the fiscal year to date period versus $0.2 million and $0.00, respectively, in the comparable year ago period.
Second Quarter Fiscal 2011 Financial Highlights:
- Net sales for the second quarter of fiscal 2011 increased 73.2% from the prior year quarter:
- North American net sales rose 103.0% to $24.4 million or 65.2% of quarterly sales;
- European net sales rose 43.9% to $12.2 million or 32.7% of quarterly sales; and,
- Net sales to other countries decreased 28.0% to $0.8 million or 2.1% of quarterly sales.
- Gross sales by platform were as follows:
- Xbox 360 accounted for 37% of total gross sales vs. 26% a year ago;
- PC represented 17% of total gross sales vs. 32% a year ago;
- PlayStation 3 accounted for 12% of total gross sales vs. 11% in the prior year;
- Wii products represented 11% of total gross sales in both periods;
- Handhelds represented 4% of total gross sales vs. 5% a year ago; and,
- All other platforms represented 19% of total gross sales vs. 15% in the prior year.
- Gross sales by category were as follows:
- Audio products represented 27% of total gross sales vs. 9% in the prior year;
- Specialty controllers represented 23% of total gross sales vs. 35% a year ago;
- Games represented 15% of total gross sales vs. 2% a year ago;
- Accessories represented 14% of total gross sales vs. 23% a year ago;
- Controllers represented 12% of total gross sales vs. 22% a year ago;
- PC devices represented 8% of total gross sales vs. 9% in the prior year; and,
- All other sales represented 1% of total gross sales vs. 0% a year ago.
- Reported net position of bank loan less cash at September 30, 2010, of $24.6 million, compared to $1.6 million as of March 31, 2010, and $13.0 million at September 30, 2009.
New Products Shipped in and Subsequent to Second Quarter of Fiscal 2011 include:
- Cyborg R.A.T. 3 Pro Gaming Mouse;
- Cyborg R.A.T. 9 Wireless Pro Gaming Mouse;
- Cyborg F.L.Y.9 Wireless Flight Stick;
- A range of Rock Band 3 products including wireless Keyboards, Mustang ProGuitar, PRO-Drums and PRO-Cymbals Kit;
- Call of Duty:Black Ops ProGaming Headset, Stealth Mouse and Pro Gaming Glasses;
- Eclipse mobilemouse; and,
- Mad Catz Xbox 360 Wireless Racing Wheel.
Recent Key Developments and License Agreements:
- Amended asset backed revolving credit facility with Wells Fargo Capital Finance to expand near-term availability to $50 million;
- Expanded multi-year licensing agreement with Harmonix Music Systems, Inc., granting Mad Catz rights to distribute bundles of the Rock Band 3 game with selected music videogame controllers wherever Rock Band is sold and adding several new accessories to the range of licensed peripherals Mad Catz can produce and distribute; and,
- Announced an agreement to produce branded videogame accessories based on the WWE® All Stars™ intellectual property, including a range of FightStick and FightPad videogame accessories for the Xbox 360, PS3 and the Wii
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