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Aug. 4, 2020, 4:03 p.m. EDT

Mercury Systems Reports Fourth Quarter and Fiscal Year 2020 Results

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ANDOVER, Mass., Aug 04, 2020 (GLOBE NEWSWIRE via COMTEX) -- Fourth Quarter Highlights Include:

Record bookings of $279 million increased 15% over prior year

Record revenue increased 23% over prior year with 17% organic growth

Record net income, adjusted EBITDA, EPS and adjusted EPS

Record backlog increased 33% over prior year

Mercury Systems, Inc. /zigman2/quotes/204481634/composite MRCY -0.58% , reported operating results for the fourth quarter and fiscal year ended July 3, 2020.

Management Comments

"Our strong performance in the fourth quarter of fiscal year 2020 culminates a record fiscal year for the business," said Mark Aslett, Mercury's President and Chief Executive Officer. "We achieved our highest ever bookings of $279 million, yielding a book-to-bill ratio of 1.28 as well as record revenues, net income, adjusted EBITDA, EPS and adjusted EPS. Our people and our business have remained resilient in light of the COVID-19 pandemic. As we enter fiscal year 2021, we will continue to focus on the mission-critical work we do to support our customers and the ongoing security of our nation while also protecting the safety and livelihoods of our employees. With record backlog, design wins and a strong balance sheet, we are well-positioned for continued growth and profitability," said Aslett.

Fourth Quarter Fiscal 2020 Results

Total Company fourth quarter fiscal 2020 revenues were $217.4 million, compared to $177.0 million in the fourth quarter of fiscal 2019. The fourth quarter fiscal 2020 results included an aggregate of approximately $11.9 million of revenue attributable to The Athena Group, Syntonic Microwave and American Panel Corporation acquired businesses.

Total Company GAAP net income for the fourth quarter of fiscal 2020 was $27.2 million, or $0.49 per share, compared to $12.8 million, or $0.25 per share, for the fourth quarter of fiscal 2019. Adjusted earnings per share ("adjusted EPS") was $0.72 per share for the fourth quarter of fiscal 2020, compared to $0.48 per share in the fourth quarter of fiscal 2019.

Fourth quarter fiscal 2020 adjusted EBITDA for the total Company was $49.6 million, compared to $37.9 million for the fourth quarter of fiscal 2019.

Cash flows from operating activities in the fourth quarter of fiscal 2020 were $28.7 million, compared to $26.0 million in the fourth quarter of fiscal 2019. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $17.2 million for the fourth quarter of fiscal 2020 and $17.1 million for the fourth quarter of fiscal 2019.

All per share information is presented on a fully diluted basis

Full Year Fiscal 2020 Results

Full year fiscal 2020 revenues were $796.6 million, compared to $654.7 million for full year fiscal 2019, an increase of 22% from fiscal 2019. The full year fiscal 2020 results include organic revenue of $732.6 million, an increase of 14% from fiscal 2019. Organic revenue represents total company revenue excluding net revenue from acquisitions for the first four full quarters since the entity's' acquisition date (which excludes any intercompany transactions). After the completion of four full fiscal quarters, acquired businesses are treated as organic for current and comparable historical periods.

Total Company GAAP net income for fiscal 2020 was $85.7 million, or $1.56 per share, compared to $46.8 million, or $0.96 per share, for fiscal 2019. Adjusted earnings per share was $2.30 for fiscal 2020, compared to $1.84 for fiscal 2019. Fiscal 2020 adjusted EBITDA for the total Company was $176.2 million, compared to $145.3 million for fiscal 2019. Cash flows from operating activities for fiscal 2020 were $115.2 million, compared to $97.5 million for fiscal 2019.

Bookings and Backlog

Total bookings for the fourth quarter of fiscal 2020 were $278.6 million, yielding a book-to-bill ratio of 1.28 for the quarter.

Mercury's total backlog at July 3, 2020 was $831.1 million, a $205.7 million increase from a year ago. Of the July 3, 2020 total backlog, $567.7 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 Fourth Quarter and Fiscal 2020 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 fourth quarter and full fiscal 2020 are to the 53-week period ended July 3, 2020, and to the first quarter of fiscal 2021 and full fiscal 2021 are to the quarter ending October 2, 2020 and 52-week period ending July 2, 2021.

For the first quarter of fiscal 2021, revenues are forecasted to be in the range of $190.0 million to $205.0 million. GAAP net income for the first quarter is expected to be approximately $10.1 million to $12.3 million, or $0.18 to $0.22 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 55.4 million weighted average diluted shares outstanding. Adjusted EBITDA for the first quarter of fiscal 2021 is expected to be in the range of $38.0 million to $41.0 million. Adjusted EPS is expected to be in the range of $0.43 to $0.47 per share.

For the full fiscal year 2021, we currently expect revenue of $860.0 million to $885.0 million, and GAAP net income of $68.5 million to $74.4 million, or $1.23 to $1.34 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 year and approximately 55.5 million weighted average diluted shares outstanding. Adjusted EBITDA for the full fiscal year is expected to be approximately $188.0 million to $196.0 million, and adjusted EPS for the full fiscal year is expected to be approximately $2.15 to $2.26 per share.

Recent Highlights

June - Mercury announced it received a $25 million follow-on order from a leading defense prime contractor for integrated radio frequency and digital subsystems for an advanced naval electronic support application. The order was booked in the Company's fiscal 2020 fourth quarter and is expected to be shipped over the next several quarters.

June - Mercury announced it received a $3.9 million multi-phase contract award from a leading defense prime contractor for the development of a high-density system-in-package solution for radar systems utilizing its novel 2.5D chip-scale integration technology. The award has an 18-month planned performance and shipment period.

June - Mercury announced volume production of its newest, high-density secure memory device, with the most capacity in the smallest form factor available. Mercury takes data-intensive processing applications to the edge by embedding 4GB of double data rate third-generation (DDR3) synchronous dynamic random-access memory in a compact, ruggedized package for optimal data center-grade performance in harsh environments.

June - Mercury announced that it has received a $49 million order from a leading defense prime contractor for high-performance signal processing and radio frequency solutions for a missile defense program. The order was received in the Company's fiscal 2020 fourth quarter and is expected to be shipped over the next several quarters.

June - Mercury announced the new GSC6204 OpenVPX(TM) NVIDIA(R) Turing(R) architecture-based GPU co-processing engine, providing accelerated high-performance computing capabilities to commercial aerospace and defense applications.

April - Mercury announced the SpectrumSeries(TM) RFM3103s ultra-wideband dual upconverter, designed to align with the emerging sensor open systems architecture technical standard for demanding electronic warfare environments. By creating a common architecture that streamlines system integration, the rugged, compact upconverter pioneers system interoperability and upgradeability, supporting an increased and more diverse range of unmanned systems on various platforms including ground, airborne, and subsurface.

April - Mercury announced it received a $30 million multi-year award from a leading defense prime contractor to provide video display technology for integration into mobile ground vehicles. The award has a 36-month planned performance and shipment period.

April - Mercury announced it received a $4.7 million order from a leading defense prime contractor to provide artificial intelligence processing technology for integration into an advanced airborne electro-optic system. The order was booked in the Company's fiscal 2020 third quarter and is expected to be shipped over the next several quarters.

Conference Call Information

Mercury will host a conference call and simultaneous webcast on Tuesday, August 4, 2020, at 5:00 p.m. ET to discuss the fourth quarter and full year fiscal 2020 results and review its financial and business outlook going forward.

The live audio webcast as well as the Company's earnings presentation can be accessed from the 'Events and Presentations' page of Mercury's IR website at mrcy.com/investor. Please log into the webcast 15 minutes prior to the scheduled start time.

To join the conference call by phone, dial (877) 303-6977 in the USA and Canada, or (760) 298-5079 in all other countries. Please dial in 15 minutes prior to the scheduled start time.

A replay of the webcast will be available two hours after the call and archived for six months on the 'Events and Presentations'.

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(R)

Mercury Systems is the leader in making trusted, secure mission-critical technologies profoundly more accessible to aerospace and defense. Our innovative solutions power more than 300 aerospace, commercial aviation, defense, security and intelligence programs, configured and optimized for mission success in some of the most challenging and demanding environments. Headquartered in Andover, Mass., with manufacturing and design facilities around the world, Mercury specializes in engineering, adapting and manufacturing new solutions purpose-built to meet current and emerging high-tech needs. Our products and solutions have been successfully deployed with over 25 different defense prime contractors, a testament to our deep domain expertise and our commitment to Innovation that Matters(R). To learn more, visit www.mrcy.com , or follow us on Twitter.

Investors and others should note that we announce material financial information using our website ( www.mrcy.com ), SEC filings, press releases, public conference calls, webcasts, and social media, including Twitter (twitter.com/mrcy and twitter.com/mrcy_CEO) and LinkedIn ( www.linkedin.com/company/mercury-systems ). Therefore, we encourage investors and others interested in Mercury to review the information we post on the social media and other communication channels listed on our website.

Forward-Looking Safe Harbor Statement

This press release 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 2021 business performance and beyond and the Company's plans for growth and improvement in profitability and cash flow. 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, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company's markets, effects of epidemics and pandemics such as COVID, effects of any U.S. Federal government shutdown or extended continuing resolution, 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 in technological advances and delivering technological innovations, changes in, or in the U.S. Government's interpretation of, federal export control or procurement rules and regulations, market acceptance of the Company's products, shortages in components, production delays or unanticipated expenses 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, increases in interest rates, changes to industrial security and cyber-security regulations and requirements, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, 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, 2019, and as updated by the Company's Current Report on Form 8-K filed on April 28, 2020. 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.

Contact:

Michael D. Ruppert, CFO

/zigman2/quotes/204481634/composite
US : U.S.: Nasdaq
$ 77.01
-0.45 -0.58%
Volume: 239,400
Oct. 1, 2020 1:04p
P/E Ratio
49.54
Dividend Yield
N/A
Market Cap
$4.34 billion
Rev. per Employee
$433,597
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