Mercury Systems Inc · NASDAQ:MRCY
Mercury Systems — Q1 FY2020 Earnings Presentation
18 slides from Mercury Systems's earnings presentation, Oct 29, 2019
Slide 1: 1st Quarter Fiscal Year 2020 Financial Results
1st 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 October 29, 2019, 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 acquisition described herein and to fiscal 2020 business performance and beyond and th
Slide 3: Introduction
Introduction • Continued strong results for Q1 FY20 • Record revenue, backlog and net income • Industry growth environment continues to be positive • Business model performing extremely well • Investing in people, technologies, capabilities to support organic growth • Organic growth accelerating, su
Slide 4: Financial highlights
Financial highlights Q1 FY20 vs. Q1 FY19 LTM Q1 FY20 vs. LTM Q1 FY19 • Bookings up 21% • Record bookings up 29% • Record backlog up 40% • Record backlog up 40% • Record revenue up 23% • Record revenue up 30% • Organic revenue(1) up 17% • Organic revenue(1) up 19% • Record GAAP net income up 157% • R
Slide 5: Operational achievements
Operational achievements • Continuing to invest in trusted domestic manufacturing capabilities • Focused on working capital and manufacturing operations efficiencies • Expect to complete West Coast RF manufacturing consolidation in Q2 FY20 • Investing $15M to expand scope of trusted microelectronics
Slide 6: Favorable growth environment driving improved results
Favorable growth environment driving improved results • Two-year defense budget deal positive; cautious on extended CR potential • Defense outlays trending higher • Substantial growth in estimated LTV of top 30 programs and pursuits • Favorable trends – delayering, flight to quality, outsourcing, ta
Slide 7: Business outlook and summary
Business outlook and summary • Expect long-term defense spending to increase at low single-digit CAGR • Continue delivering organic revenue growth higher than industry average rate • Supplement high level of organic growth with strategic M&A • Focus on sensor and effector mission systems and C4I mar
Slide 8: Q1 FY20 vs. Q1 FY19
Q1 FY20 vs. Q1 FY19 In $ millions, except percentage and per share data Q1 FY19 Q1 FY20 Change Bookings $178.7 $215.7 21% Book-to-Bill 1.24 1.22 Backlog $507.9 $711.8 40% 12-Month Backlog 377.8 499.2 Revenue $144.1 $177.3 23% Organic Revenue Growth(1) 6% 17% Gross Margin 42.8% 44.2% 1.4 pts Operatin
Slide 9: Balance sheet
Balance sheet As of (In $ millions)(1) 9/30/18 12/31/18 3/31/19 6/30/19 9/27/19 ASSETS Cash & cash equivalents $72.9 $93.9 $112.5 $257.9 $161.3 Accounts receivable, net 153.9 168.3 170.7 176.2 177.5 Inventory, net 121.2 126.4 131.7 137.1 148.5 PP&E, net 50.8 53.1 55.9 60.0 65.9 Goodwill and intangib
Slide 10: Cash flow summary
Cash flow summary For the Fiscal Quarters Ended (In $ millions)(1) 9/30/18 12/31/18 3/31/19 6/30/19 9/27/19 Net Income $7.5 $12.4 $14.1 $12.8 $19.2 Depreciation and amortization 11.5 11.7 11.6 11.6 11.4 Other non-cash items, net 5.5 4.6 6.3 5.1 6.4 Changes in Operating Assets and Liabilities Account
Slide 11: Q2 FY20 guidance
Q2 FY20 guidance In $ millions, except percentage and per share data Q2 FY19(1) Q2 FY20(2) Change Revenue $159.1 $185.0 - $195.0 16% - 23% GAAP Net Income $12.4 $13.9 - $15.4 12% - 24% (3) Effective tax rate 26.6% 26.0% GAAP EPS $0.26 $0.25 - $0.28 (4)% - 8% Weighted-average diluted shares outstandi
Slide 12: FY20 annual guidance
FY20 annual guidance In $ millions, except percentage and per share data FY19(1) FY20(2)(5) Change Revenue $654.7 $775.0 - $790.0 18% - 21% GAAP Net Income $46.8 $72.9 - $77.8 56% - 66% Effective tax rate(3) 21.4% 26% GAAP EPS $0.96 $1.32 - $1.41 38% - 47% Weighted-average diluted shares outstanding
Slide 13: Summary
Summary • Q1 results highlight continued momentum in the business • Record revenue increased 23% YoY; 17% organic revenue growth • Revenue, net income, adj. EBITDA, EPS and adj. EPS exceeded guidance • Bookings exceeding $200M for second consecutive quarter • Achieved 1.22 book-to-bill and record en
Slide 14: Appendix
Appendix © 2019 Mercury Systems, Inc. 14
Slide 15: Adjusted EPS reconciliation
Adjusted EPS reconciliation Q2 FY20(2)(4) FY20(2)(4) (In thousands, except per share data) Q1 FY19 Q1 FY20 LTM Q1 FY19 LTM Q1 FY20 Low High Low High (1) Earnings per share $ 0.16 $ 0.35 $ 0.64 $ 1.15 $ 0.25 $ 0.28 $ 1.32 $ 1.41 Net Income $ 7,479 $ 19,247 $ 30,409 $ 58,543 $ 13,900 $ 15,400 $ 72,900
Slide 16: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Q2 FY20(2)(3) FY20(2)(3) (In thousands) Q1 FY19 Q1 FY20 LTM Q1 FY19 LTM Q1 FY20 Low High Low High Net Income $ 7,479 $ 19,247 $ 30,409 $ 58,543 $ 13,900 $ 15,400 $ 72,900 $ 77,800 Other non-operating adjustments, net(1) 365 301 (652) 300 - - 300 300 Interest (income) e
Slide 17: Free cash flow reconciliation
Free cash flow reconciliation (In thousands) Q1 FY19 Q1 FY20 LTM Q1 FY19 LTM Q1 FY20 Cash provided by operating activities $ 20,029 $ 24,310 $ 55,322 $ 101,798 Purchases of property and equipment (3,727) (9,595) (15,205) (32,559) Free cash flow $ 16,302 $ 14,715 $ 40,117 $ 69,239 © 2019 Mercury Syst
Slide 18: Organic revenue reconciliation
Organic revenue reconciliation (In thousands) Q1 FY19 Q1 FY20 LTM Q1 FY19 LTM Q1 FY20 Organic revenue(1) $ 135,062 $ 158,053 $ 522,177 $ 622,087 Acquired revenue 8,994 19,251 8,994 65,905 Net revenues $ 144,056 $ 177,304 $ 531,171 $ 687,992 Notes: (1) Organic revenue represents total company revenue