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Mercury Systems (MRCY) Lags Q2 Earnings & Revenue Estimates
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Mercury Systems (MRCY - Free Report) reported lower-than-expected results for the second quarter, wherein both the top line and the bottom line missed the Zacks Consensus Estimate.
The aerospace and defense tech firm's non-GAAP earnings of 26 cents per share missed the Zacks Consensus Estimate of 33 cents and came in below the company’s guidance range of 31-36 cents. The bottom line declined 33.3% year over year, mainly due to increased costs and higher interest expenses.
Mercury Systems’ second-quarter non-GAAP revenues increased 4.2% to $229.6 million from $220.4 million reported in the year-ago quarter. The top line missed the consensus mark of $233.3 million but came within the guided range of $225-$240 million.
Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems’ acquired businesses (5.8% of the total revenues) — Avalex Technologies and Atlanta Micro — cumulatively contributed $13.3 million to second-quarter revenues. Organic revenues (94.2% of the total revenues) increased 0.9% year over year and contributed $216.3 million to second-quarter sales.
Mercury Systems’ total bookings were $270.3 million, resulting in a 1.18 book-to-bill ratio.
The company ended the quarter with a backlog of $1.12 billion, up $164 million on a year-over-year basis. Within the next 12 months, products worth $765.5 million from this order backlog are expected to be shipped.
Operating Details
Mercury Systems’ gross profit was $81 million, down 7.2% year over year. Moreover, its gross margin contracted by 430 basis points (bps) to 35.3%.
Total operating expenses increased 1% to $88.5 million. As a percentage of revenues, operating expenses declined 120 bps to 38.6% from 39.8% in the year-ago quarter.
Adjusted EBITDA plunged by 6.3% year over year to $35.7 million. The margin decreased by 180 bps to 15.5%, mainly due to a lower gross margin, partially offset by the reduction in operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Dec 30, 2022, MRCY’s cash and cash equivalents were $76.9 million compared with $52 million as of Sep 30, 2022. The long-term debt as of Dec 30, 2022 was $511.5 million.
The company generated $35.4 million in cash for operational activities in the second quarter while it used $30.6 million cash for operational activities in the first half of fiscal 2023. Mercury’s free cash flow was $22.2 million in the reported quarter. It generated a negative cash flow of $51.2 million in the first six months of fiscal 2023.
Revised Guidance
For the third quarter of fiscal 2023, Mercury Systems projects revenues between $255 million and $260 million. Adjusted EBITDA is anticipated between $40 million and $47 million. Adjusted earnings are projected in the range of 32-42 cents per share.
For fiscal 2023, Mercury Systems expects revenues between $1.01 billion and 1.05 billion. It estimates adjusted EBITDA in the range of $202.5-$215 million.
Mercury lowered the forecast for fiscal 2023 adjusted earnings to the $1.90-$2.08 per share band from the earlier range of $1.93-$2.10 per share.
Zacks Rank & Key Picks
Currently, Mercury has a Zacks Rank #3 (Hold). Shares of MRCY have decreased 11.2% in the past year.
The Zacks Consensus Estimate for Axcelis’ fourth-quarter 2022 earnings has been revised 41 cents northward to $1.46 per share over the past 30 days. For 2022, earnings estimates have improved by 8.5% to $5.21 per share over the past 30 days.
ACLS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 23.2%. Shares of the company have risen 73.8% in the past year.
The Zacks Consensus Estimate for Bandwidth’s fourth-quarter 2022 earnings has been revised by a penny to 4 cents per share over the past 90 days. For 2022, earnings estimates have moved north by 25 cents to 37 cents per share in the past 90 days.
BAND's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 301.8%. Shares of the company have declined 59.9% in the past year.
The Zacks Consensus Estimate for Nutanix's second-quarter fiscal 2023 loss has been revised a penny north to 13 cents per share over the past 30 days. For fiscal 2023, earnings estimates have moved north by 3 cents to 17 cents per share in the past 90 days.
NTNX earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 86.1%. Shares of the company have jumped 0.2% in the past year.
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Mercury Systems (MRCY) Lags Q2 Earnings & Revenue Estimates
Mercury Systems (MRCY - Free Report) reported lower-than-expected results for the second quarter, wherein both the top line and the bottom line missed the Zacks Consensus Estimate.
The aerospace and defense tech firm's non-GAAP earnings of 26 cents per share missed the Zacks Consensus Estimate of 33 cents and came in below the company’s guidance range of 31-36 cents. The bottom line declined 33.3% year over year, mainly due to increased costs and higher interest expenses.
Mercury Systems’ second-quarter non-GAAP revenues increased 4.2% to $229.6 million from $220.4 million reported in the year-ago quarter. The top line missed the consensus mark of $233.3 million but came within the guided range of $225-$240 million.
Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems Inc price-consensus-eps-surprise-chart | Mercury Systems Inc Quote
Q2 in Details
Mercury Systems’ acquired businesses (5.8% of the total revenues) — Avalex Technologies and Atlanta Micro — cumulatively contributed $13.3 million to second-quarter revenues. Organic revenues (94.2% of the total revenues) increased 0.9% year over year and contributed $216.3 million to second-quarter sales.
Mercury Systems’ total bookings were $270.3 million, resulting in a 1.18 book-to-bill ratio.
The company ended the quarter with a backlog of $1.12 billion, up $164 million on a year-over-year basis. Within the next 12 months, products worth $765.5 million from this order backlog are expected to be shipped.
Operating Details
Mercury Systems’ gross profit was $81 million, down 7.2% year over year. Moreover, its gross margin contracted by 430 basis points (bps) to 35.3%.
Total operating expenses increased 1% to $88.5 million. As a percentage of revenues, operating expenses declined 120 bps to 38.6% from 39.8% in the year-ago quarter.
Adjusted EBITDA plunged by 6.3% year over year to $35.7 million. The margin decreased by 180 bps to 15.5%, mainly due to a lower gross margin, partially offset by the reduction in operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Dec 30, 2022, MRCY’s cash and cash equivalents were $76.9 million compared with $52 million as of Sep 30, 2022. The long-term debt as of Dec 30, 2022 was $511.5 million.
The company generated $35.4 million in cash for operational activities in the second quarter while it used $30.6 million cash for operational activities in the first half of fiscal 2023. Mercury’s free cash flow was $22.2 million in the reported quarter. It generated a negative cash flow of $51.2 million in the first six months of fiscal 2023.
Revised Guidance
For the third quarter of fiscal 2023, Mercury Systems projects revenues between $255 million and $260 million. Adjusted EBITDA is anticipated between $40 million and $47 million. Adjusted earnings are projected in the range of 32-42 cents per share.
For fiscal 2023, Mercury Systems expects revenues between $1.01 billion and 1.05 billion. It estimates adjusted EBITDA in the range of $202.5-$215 million.
Mercury lowered the forecast for fiscal 2023 adjusted earnings to the $1.90-$2.08 per share band from the earlier range of $1.93-$2.10 per share.
Zacks Rank & Key Picks
Currently, Mercury has a Zacks Rank #3 (Hold). Shares of MRCY have decreased 11.2% in the past year.
Some top-ranked stocks from the broader Computer and Technology sector are Axcelis Technologies (ACLS - Free Report) , Bandwidth (BAND - Free Report) and Nutanix (NTNX - Free Report) . While Axcelis sports a Zacks Rank #1 (Strong Buy), Bandwidth and Nutanix carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Axcelis’ fourth-quarter 2022 earnings has been revised 41 cents northward to $1.46 per share over the past 30 days. For 2022, earnings estimates have improved by 8.5% to $5.21 per share over the past 30 days.
ACLS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 23.2%. Shares of the company have risen 73.8% in the past year.
The Zacks Consensus Estimate for Bandwidth’s fourth-quarter 2022 earnings has been revised by a penny to 4 cents per share over the past 90 days. For 2022, earnings estimates have moved north by 25 cents to 37 cents per share in the past 90 days.
BAND's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 301.8%. Shares of the company have declined 59.9% in the past year.
The Zacks Consensus Estimate for Nutanix's second-quarter fiscal 2023 loss has been revised a penny north to 13 cents per share over the past 30 days. For fiscal 2023, earnings estimates have moved north by 3 cents to 17 cents per share in the past 90 days.
NTNX earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 86.1%. Shares of the company have jumped 0.2% in the past year.