Mercury Systems Inc (MRCY)

Get MRCY Alerts
*Delayed - data as of Nov. 25, 2015  -  Find a broker to begin trading MRCY now
Exchange: NASDAQ
Industry: Capital Goods
Community Rating:
Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
Basic Chart Interactive Chart
Company Headlines Press Releases Market Stream
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save Stocks

Mercury Systems, Inc. (MRCY)

F2Q 2014 Earnings Conference Call

January 28, 2014 17:00 ET


Mark Aslett - President and Chief Executive Officer

Kevin Bisson - Senior Vice President and Chief Financial Officer


Kevin Ciabattoni - KeyBanc Capital

Jonathan Ho - William Blair

Tyler Hojo - Sidoti & Company

Peter Arment - Sterne, Agee

Mark Jordan - Noble Financial

Brian Ruttenbur - CRT Capital

Sheila Kahyaoglu - Jefferies



Good day, everyone and welcome to the Mercury Systems’ Second Quarter Fiscal 2014 Earnings Conference Call. Today’s call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the company’s Senior Vice President and Chief Financial Officer, Mr. Kevin Bisson. Please go ahead, sir.

Kevin Bisson - Senior Vice President and Chief Financial Officer

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 a copy of the earnings press release we issued earlier this afternoon, you can find it on our website at

We would like to remind you that remarks that we 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, as well as the timing and amounts 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 and technological advances in 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, 2013. 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 statement to reflect events or circumstances after the date on which such statement is made.

I would 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?

Mark Aslett - President and Chief Executive Officer

Thanks, Kevin. Good afternoon, everyone and thanks for joining us. I will begin today’s call with a business update. Kevin will review the financials and guidance and then we will open it up for your questions.

Despite challenging conditions in the industry, Mercury performed well in the second quarter. Total revenue for the quarter was $53 million versus our guidance of $48 million to $54 million. Our GAAP loss from continuing operations was $0.03 per share favorable to our guidance of a loss of $0.12 to $0.06 and much improved both sequentially and year-over-year. Adjusted EBITDA was 10% of revenue, up substantially from last quarter in Q2 last year and well above the high end of our guidance. Cash flow also exceeded our plan due to higher than expected collections at quarter end. We continue to make good progress on our most important programs.

Total revenues in our defense business for the second quarter increased 10% sequentially from Q1 to $50.8 million and were up 12% versus the second quarter last year. Total defense bookings increased 10% sequentially to $47.9 million. Our total book-to-bill was 0.9 compared with 1.3 in Q2 last year. Our book-to-bill in defense was 0.9 flat sequentially and down from 1.2 a year ago. Defense backlog and total backlog exiting the second quarter were both down 2% sequentially. From a bookings perspective, our largest programs this quarter were for F-15 EW upgrades with BAE, Aegis with Lockheed Martin as well as ASIP, the airborne signals intelligence program and a classified airborne program both with Northrop.

Read the rest of this transcript for free on