Mercury Systems Inc · NASDAQ:MRCY
Mercury Systems — Q3 FY2020 Earnings Presentation
18 slides from Mercury Systems's earnings presentation, Apr 28, 2020
Slide 1: Third Quarter Fiscal Year 2020 Financial Results
Third Quarter Fiscal Year 2020 Financial Results Mark Aslett President and CEO Conference call: Dial (877) 303-6977 in the USA and Canada, Michael Ruppert (760) 298-5079 in all other countries Executive Vice President and CFO Webcast login at www.mrcy.com/investor April 28, 2020, 5:00 pm ET Webcast
Slide 2: Forward-looking safe harbor statement
Forward-looking safe harbor statement This presentation contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the acquisitions described herein and to fiscal 2020 business performance and beyond and t
Slide 3: Our COVID-19 response
Our COVID-19 response • Created COVID-19 response team with four key goals to guide decision-making 1. Protect the health, safety and livelihoods of employees 2. Reduce and mitigate operational and financial risks in business 3. Continue to deliver on commitments to customers and shareholders 4. Con
Slide 4: Strong Q3 results despite challenges
Strong Q3 results despite challenges Q3 FY20 vs. Q3 FY19 LTM Q3 FY20 vs. LTM Q3 FY19 • Record bookings up 32% • Record bookings up 29% • Record backlog up 38% • Record backlog up 38% • Record revenue up 19% • Record revenue up 20% • Organic revenue(1) up 11% • Organic revenue(1) up 11% • Record GAAP
Slide 5: Protecting health, safety and livelihoods of employees
Protecting health, safety and livelihoods of employees… • Continued to pay hourly employees in California sites temporarily shut down • Committed to do same at facilities that may be closed as crisis continues • Increased overtime pay to 2x regular rate; adjusted sick-leave policies • Created $1M re
Slide 6: Business conditions remain robust
Business conditions remain robust • COVID-19 not expected to have near-term impact on defense spending • Brief delays in order approval and flow; no fundamental demand change • Benefiting from significant wave of sensor and C4I modernization • Healthy demand in weapons, space, avionics, mission comp
Slide 7: Business outlook and summary
Business outlook and summary • Low single-digit CAGR in overall defense spending forecast unchanged • Potential risks for CR in GFY21; crowding out of defense spending by stimulus • Continue delivering organic revenue growth higher than industry average rate • Strong balance sheet to supplement grow
Slide 8: Q3 FY20 vs. Q3 FY19
Q3 FY20 vs. Q3 FY19 In $ millions, except percentage and per share data Q3 FY19 Q3 FY20(3) Change Bookings $189.7 $250.3 32% Book-to-Bill 1.09 1.20 Backlog $558.2 $769.8 38% 12-Month Backlog 367.3 544.8 Revenue $174.6 $208.0 19% (1) Organic Revenue Growth 31% 11% Gross Margin 42.3% 44.9% 2.6 pts Ope
Slide 9: Balance sheet
Balance sheet As of (In $ millions)(1) 3/31/19 6/30/19 9/27/19 12/27/19 3/27/20 ASSETS Cash & cash equivalents $112.5 $257.9 $161.3 $182.0 $407.1 Accounts receivable, net 170.7 176.2 177.5 193.4 214.0 Inventory, net 131.7 137.1 148.5 153.6 161.9 PP&E, net 55.9 60.0 65.9 72.7 78.7 Goodwill and intang
Slide 10: Cash flow summary
Cash flow summary For the Fiscal Quarters Ended (In $ millions)(1) 3/31/19 6/30/19 9/27/19 12/27/19 3/27/20 Net Income $14.1 $12.8 $19.2 $15.7 $23.6 Depreciation and amortization 11.6 11.6 11.4 12.5 12.7 Termination of interest rate swap - 5.4 - - - Gain on sale of investment - - - - (3.8) Other non
Slide 11: FY20 annual guidance
FY20 annual guidance In $ millions, except percentage and per share data FY19(1) FY20(2)(5) Change Revenue $654.7 $785.0 - $795.0 20% - 21% GAAP Net Income $46.8 $76.1 - $78.3 63% - 67% Effective tax rate(3) 21.4% 16.0% GAAP EPS $0.96 $1.38 - $1.42 44% - 48% Weighted-average diluted shares outstandi
Slide 12: Q4 FY20 guidance
Q4 FY20 guidance In $ millions, except percentage and per share data Q4 FY19(1) Q4 FY20(2) Change Revenue $177.0 $205.8 - $215.8 16% - 22% GAAP Net Income $12.8 $17.6 - $19.8 37% - 55% (3) Effective tax rate (1.7)% 26.0% GAAP EPS $0.25 $0.32 - $0.36 28% - 44% Weighted-average diluted shares outstand
Slide 13: Summary
Summary • Record financial performance a testament to phenomenal team at Mercury • Record bookings and revenue highlight continued momentum in business • Record net income, adjusted EBITDA, EPS and adjusted EPS • Strong cash flow generation and flexible capital structure position us well in time of
Slide 14: Appendix
Appendix © 2020 Mercury Systems, Inc.
Slide 15: Adjusted EPS reconciliation
Adjusted EPS reconciliation (2)(6) (2)(6) Q4 FY20 FY20 (In thousands, except per share data) Q3 FY19 Q3 FY20 LTM Q3 FY19 LTM Q3 FY20 Low High Low High (1) Earnings per share $ 0.29 $ 0.43 $ 0.92 $ 1.32 $ 0.32 $ 0.36 $ 1.38 $ 1.42 $ - Net Income $ 14,109 $ 23,565 $ 44,072 $ 71,292 $ 17,600 $ 19,800 $
Slide 16: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation (2)(3) (2)(3) Q4 FY20 FY20 (In thousands) Q3 FY19 Q3 FY20 LTM Q3 FY19 LTM Q3 FY20 Low High Low High Net Income $ 14,109 $ 23,565 $ 44,072 $ 71,292 $ 17,600 $ 19,800 $ 76,100 $ 78,300 (1) Other non-operating adjustments, net (502) (3,138) (152) (2,867) - - (3,400) (3,40
Slide 17: Free cash flow reconciliation
Free cash flow reconciliation (In thousands) Q3 FY19 Q3 FY20 LTM Q3 FY19 LTM Q3 FY20 Cash provided by operating activities $ 26,218 $ 30,082 $ 97,189 $ 112,429 Purchases of property and equipment (7,060) (10,869) (21,901) (40,617) Free cash flow $ 19,158 $ 19,213 $ 75,288 $ 71,812 © 2020 Mercury Sys
Slide 18: Organic revenue reconciliation
Organic revenue reconciliation (In thousands) Q3 FY19 Q3 FY20 LTM Q3 FY19 LTM Q3 FY20 (1) Organic revenue $ 172,159 $ 191,473 $ 619,177 $ 685,658 Acquired revenue 2,477 16,543 11,471 70,538 Net revenues $ 174,636 $ 208,016 $ 630,648 $ 756,196 Notes: (1) Organic revenue represents total company reven