ANDOVER, Mass., Feb. 02, 2021 (GLOBE NEWSWIRE) -- Mercury Systems, Inc. (NASDAQ: MRCY), reported operating results for the second quarter of fiscal 2021, ended January 1, 2021.
Management Comments
“The solid financial performance in the second quarter is a testament to the continued resilience of our people and business,” said Mark Aslett, Mercury’s President and Chief Executive Officer. “Revenue exceeded guidance while bookings surpassed $200 million for the seventh consecutive quarter. We completed the acquisition of Physical Optics Corporation which more than doubles our global avionics business and expands our collective footprint in the platform and mission management market. Our progress also reflects Mercury's continued strategic evolution as a technology leader, evidenced by our expanded market and product capabilities, and signified by our recently unveiled brand refresh. Given the acquisition of Physical Optics Corporation, we are substantially raising our FY21 guidance,” said Aslett.
Second Quarter Fiscal 2021 Results
Total Company second quarter fiscal 2021 revenues were $210.7 million, compared to $193.9 million in the second quarter of fiscal 2020. The second quarter fiscal 2021 results included an aggregate of approximately $0.2 million of revenue attributable to the Physical Optics Corporation acquired business.
Total Company GAAP net income for the second quarter of fiscal 2021 was $12.7 million, or $0.23 per share, compared to $15.7 million, or $0.29 per share, for the second quarter of fiscal 2020. Adjusted earnings per share (“adjusted EPS”) was $0.54 per share for the second quarter of fiscal 2021, compared to $0.53 per share in the second quarter of fiscal 2020.
Second quarter fiscal 2021 adjusted EBITDA for the total Company was $45.3 million, compared to $42.8 million for the second quarter of fiscal 2020.
Cash flows from operating activities in the second quarter of fiscal 2021 were $23.9 million, compared to $32.1 million in the second quarter of fiscal 2020. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $10.2 million for the second quarter of fiscal 2021 and $20.7 million for the second quarter of fiscal 2020.
All per share information is presented on a fully diluted basis.
Bookings and Backlog
Total bookings for the second quarter of fiscal 2021 were $210.1 million, yielding a book-to-bill ratio of 1.00 for the quarter.
Mercury’s total backlog at January 1, 2021 was $945.3 million, a $217.8 million increase from a year ago. Of the January 1, 2021 total backlog, $598.0 million represents orders expected to be shipped within the next 12 months.
Business Outlook
This section presents our current expectations and estimates, given current visibility, on our business outlook for the current fiscal quarter and fiscal year 2021. It is possible that actual performance will differ materially from the estimates given, either on the upside or on the downside. Investors should consider all of the risks with respect to these estimates, including those listed in the Safe Harbor Statement below and in the Second Quarter Fiscal 2021 Earnings Presentation and in our periodic filings with the U.S. Securities and Exchange Commission, and make themselves aware of how these risks may impact our actual performance. Effective as of July 1, 2019, the Company's fiscal year has changed to the 52-week or 53-week period ending on the Friday closest to the last day in June. All references in this press release to the third quarter of fiscal 2021 are to the quarter ending April 2, 2021 and to full fiscal 2021 are to the 52-week period ending July 2, 2021.
For the third quarter of fiscal 2021, revenues are forecasted to be in the range of $245.0 million to $255.0 million. GAAP net income for the third quarter is expected to be approximately $15.9 million to $17.8 million, or $0.29 to $0.32 per share, assuming no incremental restructuring, acquisition, other non-operating adjustments, non-recurring financing in the period, an effective tax rate, excluding discrete items, of approximately 26% and approximately 55.7 million weighted average diluted shares outstanding. Adjusted EBITDA for the third quarter of fiscal 2021 is expected to be in the range of $52.0 million to $54.5 million. Adjusted EPS is expected to be in the range of $0.59 to $0.63 per share.
For the full fiscal year 2021, we currently expect revenue of $925.0 million to $945.0 million, and GAAP net income of $69.1 million to $72.8 million, or $1.24 to $1.31 per share, assuming no incremental restructuring, acquisition, other non-operating adjustments, non-recurring financing in the period, an effective tax rate, excluding discrete items, of approximately 26% for the remainder of the year and approximately 55.5 million weighted average diluted shares outstanding. Adjusted EBITDA for the full fiscal year is expected to be approximately $201.0 million to $206.0 million, and adjusted EPS for the full fiscal year is expected to be approximately $2.35 to $2.42 per share.
Recent Highlights
December – Mercury announced the completion of its acquisition of Physical Optics Corporation (POC). Pursuant to the terms of the definitive agreement applicable to the acquisition, Mercury acquired POC for a purchase price of $310 million, subject to net working capital and net debt adjustments. The acquisition was funded through a combination of cash on hand and Mercury’s existing revolving credit facility.
December – Mercury announced it received a $14 million order from a leading defense prime contractor for digital signal processing modules for deployment in a multi-mode tactical radar application. The infusion of this advanced processing capability delivers earlier threat warnings by equipping the airborne radar with the ability to detect stealthier threats from farther away. The order was booked in the Company’s fiscal 2021 first quarter and is expected to be shipped over multiple quarters.
December – Mercury announced a new family of open architecture electromagnetic spectrum (EMS) processing subsystems, enabling customers to develop and deploy electronic warfare and signal intelligence solutions more rapidly and cost-effectively than typical custom solutions.
December – Mercury announced the MissionPak™ SLC ultra-portable secure solid-state drive (SSD) for mission-critical applications requiring reliability, security and ruggedization. Approximately the same size as a typical commercial USB flash drive, Mercury’s latest secure SSD has been precision-engineered to withstand the harshest operating environments while simultaneously protecting sensitive data from cyberattack.
November – Mercury announced it was named one of the Top Places to Work in Massachusetts in The Boston Globe's 13th annual list published online at Globe.com and featured in The Boston Globe Magazine on November 22, 2020. Top Places to Work recognizes the most admired workplaces in the state as voted by employees via an Energage survey that measures opinions about their company’s direction, execution, connection, management, work, pay and benefits, and engagement. More than 80,000 employees across 285 Massachusetts companies took part in the survey. Mercury was ranked #12 in the large employer's category.
October – Mercury announced it was named to Fortune magazine's 2020 List of 100 Fastest-Growing Companies. The annual Fortune list ranks public companies with market capitalization of $250 million or more, based on revenue growth rate, EPS growth rate and three-year annualized total return. Mercury achieved a ranking of #50 on the list and was the highest-ranked aerospace and defense company included.
October – Mercury announced it received the “Medium Manufacturer of the Year” award from the Arizona Manufacturers Council (AMC) during the 2020 Arizona Manufacturing Summit and awards ceremony held virtually on Friday, Oct. 23, 2020. Mercury’s Phoenix, Ariz., manufacturing facility received the award for its accomplishments in championing innovation, excellence, sustainability and leadership, and serving as a role model in the manufacturing sector.
October – Mercury announced that Chief Technology Officer Dr. William Conley was selected as a member of the Board of Advisors for Hudson Institute’s Center for Defense Concepts and Technology, a leading global authority on international security issues based in Washington, D.C.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted earnings per share (“adjusted EPS”), free cash flow, organic revenue and acquired revenue, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non-GAAP financial measures are useful to help investors understand its past financial performance and prospects for the future. However, these non-GAAP measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP measures assist in providing a more complete understanding of the Company’s underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. A reconciliation of GAAP to non-GAAP financial results discussed in this press release is contained in the attached exhibits.
About Mercury Systems – Innovation That Matters®
Mercury Systems, Inc. (the “Company” or “Mercury”) is a leading technology company serving the aerospace and defense industry, positioned at the intersection of high-tech and defense. Headquartered in Andover, Massachusetts, the Company delivers solutions that power a broad range of aerospace and defense programs, optimized for mission success in some of the most challenging and demanding environments. The Company envisions, creates and delivers innovative technology solutions purpose-built to meet its customers’ most-pressing high-tech needs, including those specific to the defense community. To learn more, visit www.mrcy.com, or follow us on Twitter.
