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Mercury Systems, Inc. (MRCY)
F4Q13 Earnings Conference Call
August 06, 2013 5:00 pm ET
Mark Aslett - President and Chief Executive Officer
Kevin M. Bisson - Senior Vice President, Chief Financial Officer and Treasurer
Tyler Hojo - Sidoti and Company
Mark Jordan - Noble Financial
Peter Arment - Sterne Agee
Sheila Kahyaoglu - Jeffries
Jonathan Ho with William Blair
Michael Ciarmoli - KeyBanc Capital
Previous Statements by MRCY
» Mercury Systems' CEO Discusses F3Q13 Results - Earnings Call Transcript
» Mercury Computer Systems' CEO Discusses F2Q13 Results - Earnings Call Transcript
» Mercury Computer Systems CEO Discusses F1Q2011 Results - Earnings Call Transcript
» Mercury Computer Systems, Inc. F4Q10 (Qtr End 06/30/10) Earnings Call Transcript
Kevin M. Bisson
Thanks Kate. Good afternoon and thanks for joining us. With me today is our President and Chief Executive Officer, Mark Aslett. If you have not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our website at www.mrcy.com.
We’d 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 as that term is defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by the use of the words may, will, could, should, would, plans, expects, anticipates, continue, estimate, project, intend, likely, forecast, probable, potential and similar expressions.
These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include but are not limited to, continued funding of defense programs, the timing of such funding, general economic and business conditions including unforeseen weakness in the Company’s markets, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in the U.S. government’s interpretation of federal procurement rules and regulations, market acceptance of the Company’s products, shortages in components, production delays due to performance quality issues with outsourced components, inability to fully realize the expected benefits from acquisitions and restructurings or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, changes to export regulations, increases in tax rates, changes to Generally Accepted Accounting Principles, difficulties in retaining key employees and customers, unanticipated costs under fixed price service and system integration engagements, and various other factors beyond our control.
These risks and uncertainties also include such additional risk factors as are discussed in the Company’s filings with the U.S. Securities and Exchange Commission including its Annual Report on Form 10-K for the fiscal year ended June 30, 2012. The Company cautions readers not to place undue reliance upon any such forward-looking statements which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made.
I’d also like to mention that in addition to reporting financial results in accordance with Generally Accepted Accounting Principles or GAAP, during our call, we will discuss several non-GAAP financial measures, specifically adjusted EBITDA and free cash flow.
Adjusted EBITDA excludes interest income and expense, income taxes, depreciation, amortization of acquired intangible assets, restructuring expense, impairment of long-lived assets, acquisition costs and other related expenses, fair-value adjustments from purchase accounting and stock-based compensation costs. Free cash flow excludes capital expenditures from cash flows from operating activities. Reconciliation of adjusted EBITDA to GAAP net income and free cash flow to GAAP cash flows from operations are included in the press release we issued this afternoon.
With that, I will turn the call over to Mercury’s President and CEO, Mark Aslett. Mark?
Thanks Kevin. Good afternoon, everyone, and thank you for joining us. I’ll begin today’s call with a business update, Kevin will review the financials and guidance and then we’ll open it up for your questions.
Mercury closed fiscal 2013 with a very strong quarter for bookings and backlog as we anticipated. We made good progress in our most important programs and design wins were up substantially compared with Q3. So revenue for the quarter grew by $1 million sequentially to $55 million versus our guidance of $48 million to $54 million. We had a GAAP loss from continuing operations of $0.07 per share versus our guidance of a loss of $0.13 to $0.07. This loss however included $0.03 per share in unforecasted restructuring charges related to our new advanced microelectronics center which I will discuss a little later. Fourth-quarter adjusted EBITDA was 7%, significantly above the high end of our guidance and we continued to generate positive cash flow in the quarter. We were at or above guidance on all our key metrics and concluded FY '13 with positive momentum despite the industry headwinds that have persisted all year.
It was five quarters ago when we first talked about potential adverse impact out of budget sequestration beginning in January 2013, and a year ago when the pre-sequestration slow down began having a material impact on our business. We responded aggressively through the fiscal year with a series of decisive actions to reduce our operating expenses and minimize working capital. We also completed two restructurings that enabled us to continue driving improvements and successfully manage the business at the lower revenue run rate we anticipated.