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Q2 2013 Earnings Call

January 24, 2013 4:45 pm ET


A. L. Giannopoulos - Executive Chairman

Peter J. Rogers - Executive Vice President of Investor Relations & Business Development

Cynthia A. Russo - Chief Financial Officer, Executive Vice President and Principal Accounting officer

Peter A. Altabef - Chief Executive Officer, President and Director

Thomas L. Patz - Executive Vice President of Strategic Initiatives, General Counsel and Corporate Secretary


Gil B. Luria - Wedbush Securities Inc., Research Division

Mayank Tandon - Needham & Company, LLC, Research Division

Terrell Frederick Tillman - Raymond James & Associates, Inc., Research Division

Ross MacMillan - Jefferies & Company, Inc., Research Division

Keith M. Housum - Northcoast Research

Bhavan Suri - William Blair & Company L.L.C., Research Division

Daniel R. Perlin - RBC Capital Markets, LLC, Research Division



Ladies and gentlemen, thank you for standing by, and welcome to the Fiscal Year 2013 Second Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, January 24, 2013. I now have the pleasure to turn the call over to Mr. Tom Giannopoulos, Executive Chairman. Please go ahead.

A. L. Giannopoulos

Okay. Thanks, Kim, and good afternoon, everyone. Again, thanks for attending this conference call. This is the Q2 FY 2013 conference call. As we all know by now, our fiscal year goes July through June, as -- this is the second quarter through December of 2012.

With me are Cindy Russo, who is, of course, our CFO; Tom Patz, Legal Counsel and Product -- I mean, Business Development; of course, we have Peter Rogers, EVP of Investor Relations; and last but not least, we have Mr. Peter Altabef, we have to be careful how we say the Altabef, who is, as you know, effective this year, January 1 or 2, he was appointed the new Chief Executive Officer, President and CEO of MICROS Systems Inc., taking over for me that particular job as I march towards retirement.

So we'll begin with Peter Rogers and the disclaimer.

Peter J. Rogers

Thank you, Tom. Good afternoon, ladies and gentlemen. Some of the comments today are forward-looking statements that involve risks and uncertainties, such as uncertainties of product demand and market acceptance, impact of competitor products and pricing on margins, the ability to obtain on acceptable terms the right to incorporate in MICROS products and services, technology patented by others, environmental and health-related events, unanticipated tax liabilities and the effects of terrorist activity and armed conflict.

MICROS undertakes no duty to update any forward-looking statements that conform to actual results or changes in MICROS' expectations. Other risks and uncertainties associated with MICROS’ business are identified in the management's discussion and analysis of financial condition and the results of operations and business investment risk sections of MICROS' SEC filings. Tom?

A. L. Giannopoulos

Thanks, Peter. The financial results, as you can see from the press release, second page there, for the quarter, the December quarter and year-to-date, the first 6 months are excellent and consistent with our internal, external expectations and very encouraging for our future performance considering the global economic conditions.

Again, if you go down the line, revenue, it came in at $324 million, which is an increase of plus 20% over last year, and year-to-date, our revenue stands at $624,371,000, which is an 18.4% -- 18.5% increase over last year's $526,961,000.

Gross margin for the year -- for the quarter was $172 million or 53.1% versus last year's $152,321,000 or 56.33%, which was obviously a very, very good number last year. Gross margin for the 6 months of $325,379,000 or 51.1% and then versus $296,737,000 or 56.31%. The lower gross margin normally is attributed to the acquisition of Torex as their margins are lower than ours and as we reconcile our organization, we'll be in our -- our overall gross margin will be affected by the numbers from Torex.

Going down the line, operating expenses for the quarter were $110 million. This includes -- this is on a GAAP basis, $110 million versus $98 million, a modest increase and consistent with our expectations. And then income from operations came in at $61,591,000, this is on a GAAP basis, and net income of $44 million versus $38 million. If you go down the line and adjusted numbers for the GAAP non-GAAP basis, our net income increased by 11.6% from $42 million to $46 million over the quarter. Over the first 6 months, a 14.7% increase from $81 million to $93 million, and then the EPS increased by 13.73% for the quarter from $0.51 to $0.58 and then plus 15.1% -- 15% from $0.99 to $1.14.

Overall, a very excellent performance as far as the numbers are concerned. And then I will ask Cindy to read -- to go over the rest of the numbers from the balance sheet.

Cynthia A. Russo

Thanks, Tom. The highlights of the balance sheet for the quarter are as follows. Cash on hand at December 31, 2012, totaled $637.4 million, an increase of $21.8 million over the previous quarter or $62 million excluding the repurchase of common stock. During the second quarter, we purchased a total of 920,000 shares at an average price of $43.70 per share. Thus far in Q3, MICROS has repurchase an additional 225,000 shares of common stock for $9.7 million.

I am pleased to announce that the MICROS Board of Directors has approved a new buyback plan. The company has received the authorization to purchase an additional 2 million shares. The total shares available to purchase stand at 2.2 million as of today's call.

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