Mercury Computer Systems, Inc. (MRCY)
F4Q09 Earnings Call Transcript
August 04, 2009 at 5:00 pm ET
Bob Hult - Senior Vice President and Chief Financial Officer
Mark Aslett - President and Chief Executive Officer
Tyler Hojo - Sidoti & Company
Mark Jordan - Noble Financial
Stephen Levenson - Stifel Nicolaus
Philip Friedman - PW Partners
Previous Statements by MRCY
» Mercury Computer Systems, Inc. F1Q10 (09/30/2009) Earnings Call Transcript
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» Mercury Computer Systems, Inc., F2Q09 (Qtr End 12/31/08) Earnings Call Transcript
Good afternoon and thank you for joining us. With me today is our President and Chief Executive Officer, Mark Aslett.
If you have not received the copy of the earnings release, you can find it on our website at www.mc.com. We would like to remind you that remarks that we may make during this call about future expectations, trends, and plans for the Company and its business constitute forward-looking statements which involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Additional information regarding forward-looking statements and risk factors is included in the press release we issued this afternoon reporting the Company’s fourth quarter and fiscal year 2009 results and in the Company’s periodic reports filed with the SEC.
We caution listeners of today’s conference call not to place undue reliance upon any forward-looking statements, which speak only as of the date of this call. We undertake no obligation to update any forward-looking statements.
In addition to reporting financial results, in accordance with Generally Accepted Accounting Principles or GAAP, we will also be discussing non-GAAP financial measures adjusted to exclude certain charges which we will specifically identify.
Management believes these non-GAAP financial measures assist in providing a more complete understanding of the Company's underlying operational results and trends and management uses these measures along with their corresponding GAAP financial measures to manage the Company's business, to evaluate its performance compared to prior periods in the marketplace, and to establish operational goals; however, they are not meant to be considered in isolation or as a substitute for financial information provided in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial results discussed in today's conference call is contained in the press release we issued this afternoon.
I am now pleased to turn the call over to Mercury's President and CEO, Mark Aslett.
Thanks Bob. Good afternoon everyone and thank you for joining us.
I will begin with an update on the business while Bob will review the financials and discuss our guidance for the first quarter, and then we will open it up for your questions.
On our call 12 months ago, we said fiscal 2009 would be a pivotal transition year for Mercury and it was. We executed successfully on each of the three goals on our turnaround strategy. We refocused the business and completed the divestiture of our non-core businesses in a very challenging M&A environment. We improved the underlying operations of the business and return the Company to profitability and we developed a strong and growing position for Mercury in the defense, intelligence, surveillance and reconnaissance or ISR space.
As a result, we exited fiscal 2009 a more focused and profitable enterprise. From a financial reporting standpoint, we have finally unmasked the two profitability and potential in our core business. Now, it is all about growth.
The progress we made in fiscal 2009 positions us well to expand our business on both the top and bottom line as we begin the new fiscal year. We are in a design-win led business so if you look at the factors that we believe will drive our growth going forward, the first is growth in the number and value of our design wins. Fiscal 2009 was a great year in this regard as the five year probable value of our defense design wins increased 51% from fiscal 2008.
The second growth driver will be growth and complementary ISR related services and systems integration business in ASC. We also made excellent progress in expanding this part of our business in fiscal 2009 delivering year-over-year revenue growth of 157%.
Our third growth driver is Mercury Federal Systems. The defense electronics market as a whole is 10 times larger than the commercial item defense electronics market that ACS has targeted in the past. Fiscal 2009 proved that the Mercury Federal model can work and worked well.
Revenue in Merc Fed first real operating year grew to $5.7 million from essentially zero in fiscal 2008 on $11.9 million in bookings. Be on defense or our ACS commercial business, the recession driven erosion continued in the fourth quarter. Commercial revenue was down 34% year-over-year for the fourth quarter and down 24% for the full year.
Our return to growth in commercial will primarily depend upon the timing of any eventual rebound in the semiconductor space. At this point, the signs of improvement in that industry are inconsistent and as a result, we expect to see further declines in our commercial bookings and revenue in the first quarter of fiscal 2010.
Looking ahead however, we have laid the groundwork for re-growth in this part of our business as well with significant semiconductor design wins in FY09. I will touch more on the growth outlook in a few minutes, but first on comments on our fourth quarter results which clearly were better than anticipated.