Mercury Systems Reports First Quarter Fiscal 2021 Results

Rhea-AI Summary

Mercury Systems (MRCY) reported a strong first quarter for fiscal 2021, with revenue of $205.6 million, reflecting a 16% increase year-over-year, including 12% organic growth. Key metrics, such as net income of $15.8 million ($0.29 per share) and adjusted EBITDA of $42.8 million, surpassed guidance. The backlog reached $826 million, up 16% from the previous year. For the second quarter, revenues are projected between $200 million and $210 million, with adjusted EPS expected to be around $0.48 to $0.51. Overall, the outlook for fiscal 2021 appears positive, with revenues forecasted between $865 million and $885 million.

Positive

• Revenue rose 16% year-over-year to $205.6 million.
• Adjusted EPS increased to $0.51 from $0.45 year-over-year.
• Backlog grew to $826 million, a 16% increase compared to the previous year.
• Outlook for fiscal 2021 projects revenue between $865 million and $885 million.

Negative

• GAAP net income declined to $15.8 million from $19.2 million year-over-year.
• Cash flow from operations decreased to $22.9 million from $24.3 million a year ago.
• Free cash flow dropped to $12.0 million compared to $14.7 million the prior year.

First Quarter Highlights Include:
Revenue increased 16% over prior year with 12% organic growth
Revenue, net income, adjusted EBITDA, EPS and adjusted EPS exceed guidance
Backlog of $826 million increased 16% over prior year

ANDOVER, Mass., Nov. 03, 2020 (GLOBE NEWSWIRE) -- Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), reported operating results for the first quarter of fiscal 2021, ended October 2, 2020.

Management Comments
“The financial performance of the business in the first quarter reflects a strong start to our fiscal year,” said Mark Aslett, Mercury’s President and Chief Executive Officer.  “We exceeded our guidance for revenues, net income, adjusted EBITDA, EPS and adjusted EPS. During the quarter, we continued to invest in precautionary COVID measures, including rapid, on-site testing. Protecting the health and safety of our employees while delivering on our commitments to our customers and shareholders remains our top priority.  Our outlook for the year remains positive given our strategy and technology is aligned with major industry drivers and trends and our balance sheet remains strong,” said Aslett.

First Quarter Fiscal 2021 Results
Total Company first quarter fiscal 2021 revenues were $205.6 million, compared to $177.3 million in the first quarter of fiscal 2020. The first quarter fiscal 2021 results included an aggregate of approximately $8.8 million of revenue attributable to the American Panel Corporation acquired business.

Total Company GAAP net income for the first quarter of fiscal 2021 was $15.8 million, or $0.29 per share, compared to $19.2 million, or $0.35 per share, for the first quarter of fiscal 2020.  Adjusted earnings per share (“adjusted EPS”) was $0.51 per share for the first quarter of fiscal 2021, compared to $0.45 per share in the first quarter of fiscal 2020.

First quarter fiscal 2021 adjusted EBITDA for the total Company was $42.8 million, compared to $36.7 million for the first quarter of fiscal 2020.

Cash flows from operating activities in the first quarter of fiscal 2021 were $22.9 million, compared to $24.3 million in the first quarter of fiscal 2020. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $12.0 million for the first quarter of fiscal 2021 and $14.7 million for the first quarter of fiscal 2020.

All per share information is presented on a fully diluted basis.

Bookings and Backlog
Total bookings for the first quarter of fiscal 2021 were $200.7 million, yielding a book-to-bill ratio of 0.98 for the quarter.

Mercury’s total backlog at October 2, 2020 was $826.1 million, a $114.3 million increase from a year ago. Of the October 2, 2020 total backlog, $516.1 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 First 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 second quarter of fiscal 2021 are to the quarter ending January 1, 2021 and to full fiscal 2021 are to the 52-week period ending July 2, 2021.

For the second quarter of fiscal 2021, revenues are forecasted to be in the range of $200.0 million to $210.0 million. GAAP net income for the second quarter is expected to be approximately $11.9 million to $13.4 million, or $0.21 to $0.24 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 55.5 million weighted average diluted shares outstanding. Adjusted EBITDA for the second quarter of fiscal 2021 is expected to be in the range of $42.0 million to $44.0 million. Adjusted EPS is expected to be in the range of $0.48 to $0.51 per share.

For the full fiscal year 2021, we currently expect revenue of $865.0 million to $885.0 million, and GAAP net income of $67.9 million to $72.3 million, or $1.22 to $1.30 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 $190.0 million to $196.0 million, and adjusted EPS for the full fiscal year is expected to be approximately $2.20 to $2.28 per share.

Recent Highlights

September – Mercury announced the TAC-3290 family of adaptive microwave tuners that deliver multi-mission operation to a wide range of applications such as signal intelligence and radio frequency testing.

September – Mercury announced that CEO Mark Aslett had been awarded the top honor in Glassdoor’s “25 Highest Rated CEOs During COVID-19” report published in September. The report features CEOs in tech, health care, finance and several other industries who have demonstrated exceptional strength despite the challenges involved in navigating the pandemic, including remote work and other unexpected changes.

September – Mercury announced the new HDC-U.2 High Density Compute and HDS8R storage blades, uniquely combining both storage and compute capabilities into single-blade Enterprise & Datacenter SSD Form Factors so customers can minimize their overall computing footprint without sacrificing storage capacity or computing speed.

September – Mercury announced the RFS1080, the first commercially available offering in their trusted system-in-package ("SiP") product family. By delivering the latest commercially developed integrated circuits at chip scale, Mercury’s SiP devices revolutionize edge processing applications by maximizing performance in a trusted, highly customizable architecture.

August – Mercury announced the receipt of a new U.S. patent covering various methods to protect controller area network-based systems from malicious cyberattacks. This new patent adds to Mercury’s intellectual property portfolio of more than 80 issued patents.

August – Mercury announced that its Andover facility received the 2020 James

FAQ

What were Mercury Systems' earnings for the first quarter of fiscal 2021?

Mercury Systems reported earnings of $15.8 million, or $0.29 per share, for the first quarter of fiscal 2021.

How did Mercury Systems' revenue perform in the first quarter of fiscal 2021?

The revenue for the first quarter of fiscal 2021 was $205.6 million, which is a 16% increase over the previous year.

What is the revenue outlook for Mercury Systems for fiscal 2021?

Mercury Systems expects revenue for fiscal 2021 to be between $865 million and $885 million.

What is the adjusted EPS forecast for Mercury Systems for the second quarter of fiscal 2021?

The adjusted EPS for the second quarter of fiscal 2021 is expected to be in the range of $0.48 to $0.51.

What is Mercury Systems' backlog as of October 2, 2020?

As of October 2, 2020, Mercury Systems' backlog was $826 million, a 16% increase from the previous year.