MICROS Systems Inc.
) posted adjusted earnings per share (EPS) for the second quarter
of fiscal 2013 of 53 cents, matching the Zacks Consensus
Estimate. The quarter's result was 13.5% higher than the year-ago
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Revenues were $324.5 million, up 20.0% year over year and above
the Zacks Consensus Estimate of $321.0 million. The
year-over-year improvement was driven by the company's organic
growth as well as its acquisition of Torex Retail (acquired in
On a segment basis, Service revenues came in at $218.5 million,
rising 22.5% from $178.4 million in the previous-year quarter.
Hardware revenues came in at $67.2 million, increasing 17.1% from
the year-ago quarter. Software revenues came in at $38.7 million,
up 12.1% year over year owing to higher sales in retail vertical.
Reported gross margin was 53.0%, down from 56.3% in the year-ago
quarter. The year- over-year decline was due to low margin Torex
Selling, general and administrative expenses came in at $80.0
million, increasing 4.4% from the year-earlier quarter. Research
and development expenses amounted to $17.5 million, up 44.0% year
over year. Operating margin dropped 110 basis points year over
year to 19.0%.
On a GAAP basis, earnings came in at 54 cents per share versus 47
in the year-ago quarter. Adjusting one-time items and including
stock-based compensation expenses, non-GAAP earnings were 53
cents versus 47 cents in the year-ago quarter.
MICROS ended the quarter with cash and cash equivalents and
short-term investments of $631.8 million versus $582.0 million at
the end of the previous quarter. Receivables decreased 8.4%
sequentially to $215.5 million. Inventory increased 19.1% from
the prior quarter to $52.7 million.
The company has repurchased nearly 920,000 shares at an average
price of $43.70 during the second quarter of fiscal 2013.
MICROS board of directors also approved a new buyback plan. Now
the company has been authorized to purchase an additional 2
million shares. The total shares available to purchase stand at
The company reiterated its guidance for fiscal 2013. The company
continues to expect revenues in the range of $1.3 to $1.325
billion. MICROS projects non-GAAP earnings per share to be within
$2.40 to $2.44.
Additionally, management stated its long-term view of focusing
more on sales increase and product development (especially
software). Apart from this, the company also seeks to spend more
on marketing and selling efforts to increase its market share in
the two large regional markets (North America and Europe, Africa,
Middle East), which are facing macro economic challenges.
The company's second quarter results were modest, with EPS
matching the Zacks Consensus Estimate and revenue beating the
same. Though maintaining fiscal guidance is not encouraging, we
believe that MICROS' growing focus on developing enhanced
software solutions could help it to outperform.
Despite its positive commentary and existing solutions for
) iPad, we are somewhat unsure about MICROS' growth potential,
which is being overshadowed by innovative (tablet-based)
Point-of-Sales (POS) solutions by its peers Square, Revel,
Difficult pricing environment and declining margins keep us
bearish on the stock. Currently, MICROS has a Zacks Rank #4