Mad Catz® Reports Fiscal 2017 First Quarter Financial

SAN DIEGO, Aug. 04, 2016 (GLOBE NEWSWIRE) -- Mad Catz Interactive, Inc. (“Mad Catz” or the “Company”) (NYSE MKT:MCZ), today announced financial results for the fiscal 2017 first quarter ended June 30, 2016.

Key Highlights of Fiscal 2017 First Quarter and Subsequent:

• Fiscal 2017 first quarter net sales decreased 17% to $10.8 million, driven by a 29% decrease in net sales to EMEA and a 37% decrease in net sales to APAC, offset partially by a 7% increase in net sales to the Americas;  
• Gross margin declined to (1.0%) from 22.2% in the prior year quarter, driven by $2.7 million of charges related to Rock Band 4 for price reductions with retailers and write-downs of inventory and other assets;
• Total operating expenses decreased 31% from the prior year period to $4.6 million as the Company realized the benefits of restructuring activities undertaken during the fourth quarter of fiscal 2016;
• Operating loss was ($4.7 million) compared to ($3.8 million) in the prior year;
• Diluted net loss per share was ($0.07) compared to ($0.05) in the prior year;
• Net position of bank loans, less cash and restricted cash, was $9.4 million at June 30, 2016, compared to $13.0 million at March 31, 2016 and $5.8 million at June 30, 2015;
• Sold no shares under the “At-the-Market” (“ATM”) equity offering program;
• Announced the initial details of the newest addition to the Tritton audio range: the ARK ^™ series;
• Shipped the “Designed for Samsung” version of the Micro C.T.R.L. ^R™ Mobile Gamepad ;
• Shipped the X-56 Rhino H.O.T.A.S. Advanced Flight Control System™, the Company’s newest addition to its Saitek Pro Flight Range of PC-based simulation accessories;
• Shipped the Tritton Katana HD 7.1 DTS surround sound gaming headset, the first HDMI-powered gaming headset and a 2016 CES Innovation Award Honoree;
• Agreement with Harmonix for Rock Band 4 was terminated resulting in a 120-day wind-down period, ending September 6, 2016, to sell remaining $7.1 million of Rock Band 4 inventory.  

Commenting on the Company’s fiscal 2017 first quarter results, David McKeon, Chief Financial Officer of Mad Catz, said, “We were pleased to finish the first quarter of fiscal 2017 showing positive momentum on the back of our restructuring plan and initiatives put in place last quarter to better address the challenges we face and more fully align the Company with the opportunities that lie ahead.  While we still have much work to accomplish in the quarters ahead, the Mad Catz of today is a more nimble company and is better positioned to take advantage of a growing marketplace.”

“Although Rock Band 4 continues to have a negative effect on our financial performance and we continue to have working capital constraints, we are confident that we can further strengthen our business and deliver a more sustained operating performance for our shareholders by the end of the 2017 fiscal year.”

Karen McGinnis, President and Chief Executive Officer of Mad Catz, commented, “With our lowest cost structure and headcount in over a decade, we continue to make solid progress against our fiscal 2017 operational objectives, including bringing new products to market efficiently, adequately supporting our new product launches, expanding our retail partner footprint and operating with disciplined expense management and focused execution.”

“As we look ahead, we are relentlessly focused on delivering shareholder value and are confident in our ability to achieve results that will match our goals to improve our profitability and cash flow.  We have very compelling product launches in the coming quarters around our Tritton brand as well as several exciting new PC-gaming peripherals, including our R.A.T. line of gaming mice.  These and other new offerings will enable us to build on our strengths, pursue targeted segments within the video game industry, leverage our strong and deep distribution footprint, and deliver products with the right design and features that heighten the gaming experience for all gamers.”

Management Conference Call Webcast The Company will host a conference call and simultaneous webcast on August 4, 2016, at 5:00 p.m. ET, which can be accessed by dialing (303) 223-4386. 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 #21815399) or, for International callers, at (402) 977-9140.

About Mad Catz Mad Catz Interactive, Inc. (“Mad Catz”) (NYSE MKT: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 gamers and simulation enthusiasts across multiple platforms including in-home gaming consoles, handheld gaming consoles, Windows ^® PC and Mac ^® computers, smart phones, tablets and other smart devices.  We distribute our products through 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 .

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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 “seek,” "anticipate," "estimate," "expect," "believe," and “intend” and statements that an event or result “may,” “will,” “should,” “could” or “might” occur or be achieved and other similar expressions together with the negative of such expressions. These forward-looking statements reflect management’s current beliefs and expectations and are based on information currently available to management, as well as its analysis made in light of its experience, perception of trends, current conditions, expected developments and other factors and assumptions believed to be reasonable and relevant in the circumstances. These assumptions include, but are not limited to, continuing demand by consumers for video game consoles and accessories, timely reduction of inventory of products manufactured for the Rock Band 4 video game, the continuance of open trade relations between China and the United States, the ability to maintain or extend our existing licenses, the ability to continue producing and selling our products in accordance with various intellectual property that might apply to said products, the continued financial viability of our largest customers, the continuance of timely and adequate supply from third party manufacturers and suppliers, no significant fluctuations in the value of the U.S. dollar relative to other currencies, the continued satisfaction of our obligations under our existing loan agreements and any future loan agreements we may obtain, and continued listing of our common stock on the NYSE MKT. Forward-looking statements are subject to significant risks, uncertainties, assumptions and other factors, any of which could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. 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. Investors should not place undue reliance on such forward-looking statements. Forward-looking statements are not guarantees of future performance or outcomes and actual results could differ materially from those expressed or implied by the forward-looking statements. We assume no obligation to update or alter such forward-looking statements whether as a result of new information, future events or otherwise except as required by law.

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Adjusted EBITDA, a non-GAAP (“Generally Accepted Accounting Principles”) financial measure, represents net income (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 income (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: David McKeon Chief Financial Officer Mad Catz Interactive, Inc. dmckeon@madcatz.com or (858) 790-5045 Joseph Jaffoni, Norberto Aja, Jim Leahy JCIR mcz@jcir.com or (212) 835-8500