Mad Catz (MCZ) Misses Q3 EPS by 6c; Announces Restructuring Plan

Mad Catz (NYSE: MCZ) reported Q3 EPS of $0.02, $0.06 worse than the analyst estimate of $0.08. Revenue for the quarter came in at $65.04 million versus the consensus estimate of $91 million.

Restructuring Plan

On February 5, 2016, the Company’s Board of Directors approved a restructuring plan focused on lowering operating costs, increasing efficiencies and better aligning its workforce with the needs of the business. The plan consists of a reduction in the number of positions across the organization equal to approximately 37% of the total workforce and includes changes at the executive level. As a result of these actions, the Company expects to record a pre-tax cash restructuring charge of approximately $3.0 million during the fourth quarter of fiscal 2016, comprised primarily of severance and benefits afforded to terminated employees and executive officers (inclusive of amounts due Messrs. Richardson and Peterson pursuant to their amended and restated employment agreements, dated as of April 22, 2014). The Company anticipates that the actions associated with these headcount reductions will be substantially completed by the end of the fourth quarter of fiscal 2016, and that these actions will result in annual savings in excess of $5.0 million starting in the first quarter of fiscal 2017.

In addition and as announced yesterday on February 8, 2016, the Company’s Board of Directors approved several changes to its executive leadership team and Board of Directors composition, effective immediately. Those changes include:

Departures

• Thomas Brown resigned from the Company’s Board, including from his roles as Chairman of the Board and member of the Audit Committee;
• Darren Richardson agreed to resign from his position as President and Chief Executive Officer of the Company and as a member of the Company’s Board of Directors; and,
• Whitney Peterson agreed to resign from his position as Senior Vice President of Business Affairs, General Counsel, and Corporate Secretary of the Company.

Appointments

• Mr. John Nyholt as Chairman of the Board. Mr. Nyholt has been a director of the Company since October 2013;
• Karen McGinnis as President and Chief Executive Officer and member of the Company’s Board. Ms. McGinnis was previously Chief Financial Officer of the Company;
• David McKeon as Chief Financial Officer. Mr. McKeon was previously VP, Corporate Controller of the Company;
• Tyson Marshall as General Counsel and Corporate Secretary. Mr. Marshall was previously Associate General Counsel of the Company; and,
• Andrew Young as Chief Technology Officer. Mr. Young was previously Vice President, Product Development of the Company.

For earnings history and earnings-related data on Mad Catz (MCZ) click here.

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