MCRS

MICROS Systems, Inc. (MCRS)

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MICROS Systems (MCRS)

Q3 2013 Earnings Call

April 25, 2013 4:45 pm ET

Executives

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

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

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

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

Analysts

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

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

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

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

Keith M. Housum - Northcoast Research

Arvind Rajamohan - Stifel, Nicolaus & Co., Inc., Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the MICROS Systems Fiscal Year 2013 Third Quarter Review. [Operator Instructions] Quick reminder, this conference is being recorded April 25, 2013.

It's now my pleasure to turn the conference over to Peter Rogers, Executive Vice President of Investor Relations. Please go ahead, sir.

Peter J. Rogers

Good afternoon, ladies and gentlemen. Thank you, David. This is Peter Rogers. On behalf of the entire MICROS team assembled here today, thank you for joining us to discuss our fiscal 2013 third quarter results. I'm here today with Peter Altabef, our President and CEO; Cynthia Russo, our CFO; and Thomas Patz, our Chief Legal Counsel and EVP of Strategic Initiatives.

I'll start by reading our Safe Harbor statement and turn the call over to Peter Altabef for his comments.

Some of the comments today are forward-looking statements that involve risks and uncertainties, such as uncertainties of product demand and market acceptance, the 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 patent 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 to conform to actual results or changes in MICROS expectations. Other risks and uncertainties associated with MICROS business are identified in the management's discussion, analysis of financial condition and results of operations and Business and Investment Risk sections of MICROS SEC filings.

Peter?

Peter A. Altabef

Thank you, Peter, and good afternoon, everyone. I join Peter in thanking you for your participation on the call today. In addition to answering your questions, I'd like to accomplish 3 things on today's call: first, I will review our results for the quarter; second, I'd like to share with you some of my observations for my first several months with the company; and finally, I'll discuss where we are going and what you should expect from us.

Our revenue for the quarter was $315.1 million, a 13.3% increase over the year-ago quarter. While this is a record level of revenue for our third fiscal quarter, we came in below our expectations. Excluding Torex, which we acquired at the end of May last year, our revenue declined 4% on an as reported basis, 3.1% in constant currency.

Our focus on controlling costs drove strong margin and earnings results. Our non-GAAP earnings were $0.62 a share, which is a record for our fiscal third quarter.

The biggest negative contributor to our revenue performance in the quarter was the global macro environment, particularly in North America and Europe. We clearly saw the impact of the macro environment on our clients' willingness to invest, as well as longer sales cycles associated with new deals.

In addition, in the restaurant industry, we continue to see average sales per unit under pressure in some sub-segments, as well as a relative shift in emphasis from table service to fast casual and quick service restaurants, which often have lower technology spend per store.

Finally, because the U.K. represents about 14% of our revenue, the ongoing subpar economy there has had an important negative effect on us.

With respect to our operations, EAME now represents 45% of our total revenue, with the U.S. and Canada, 39%; Asia Pacific, 12%; and Latin America, 4%.

We signed a meaningful number of important new contracts in the quarter. In restaurants, we signed contracts covering more than 1,000 sites from 7 major restaurant chains around the world. And we are in active discussions with other major chains representing several thousand additional sites.

We're also happy to announce that Starwood has selected our Simphony cloud solution as its next-generation global point-of-sale platform.

In hotels, we're clear to announce that Marriott International has elected Opera for its hotel brands worldwide. As you know, this is a major win for the company, one that we have been working on for more than 2 years. While it will take time for the financial returns of this relationship to become apparent, it is a major advance for Opera 9, our next-generation web-based hotel enterprise platform.

Tom Patz, who led our efforts with Marriott, is on the call and can answer questions about the announcement in the Q&A portion of the call.

In addition, we had 2 major hotel chain wins in South America, one in Africa and numerous large and independent hotel wins in North America and EAME.

In retail, we had 11 significant contract wins. We signed our first software license contract for the Lucas enterprise platform in South America with a major retailer. This deal was made possible by our acquisition of Torex and reflects the fact that, in addition to making excellent progress integrating Torex into our operations, we're also integrating Torex's products into the broad suite of MICROS' offerings.

Read the rest of this transcript for free on seekingalpha.com