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MICROS Beats in 1Q, Sales Surge

NCR MCRS

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MICROS Systems Inc.’s (MCRS - Analyst Report) non -GAAP diluted earnings per share for the first quarter of fiscal 2013 (ended September 30, 2012) came in at 57 cents compared with 48 cents in the prior-year quarter and 68 cents in the previous quarter. This surpassed the Zacks Consensus Estimate of 54 cents.

On a GAAP basis, earnings came in at 50 cents per share versus 45 cents in the year-ago quarter and 59 cents in the prior quarter.

Revenues

Revenues were $299.9 million, up 16.9% year over year but down 0.9% sequentially. The annual rise in the revenue was driven by the company’s organic growth as well as its recent acquisition of Torex Retail.

On a segment basis, Service revenues came in at $205.3 million, rising 17.4% from $174.9 million in the previous year quarter. Hardware revenues came in at $63.8 million, increasing 31.7% from the year-ago quarter. Software revenues came in at $30.8 million, down 7.5% year over year owing to the seasonal condition.

Income and Expenses

Gross margin came in at 51.1% compared with 56.3% in the year-ago quarter and 54.7% in the last quarter. The year-over-year decline was due to higher cost of sales in the quarter as well as impacts from weak operating conditions in the U.S. and Europe.

In the quarter, selling, general and administrative expenses came in at $72.6 million, decreased 0.1% from the year-earlier quarter. Research and development expenses amounted to $16.4 million, up 48.4% annually.

Operating margin came in at 17.7% versus 20.8% in the previous year period and 23.4% in the previous quarter.

Balance Sheet

MICROS ended the quarter with cash and cash equivalents and short-term investments of $581.2 million versus $582.0 million at the end of the previous quarter. Net accounts receivable were $244 million at the end of the quarter compared with $235.4 million at the end of the prior quarter. As of September 30, 2012, inventory was $48.9 million versus $44.3 million at the end of the previous quarter. 

Share Repurchase

The company repurchased nearly 2,000 shares at an average price of $47.63 during the first quarter of fiscal 2013.

Guidance

The company has reiterated its guidance for fiscal 2013. The company continues to expect that revenue will be within the range of $1.3 to $1.325 billion. MICROS project that non-GAAP earnings per share will be within $2.40 to $2.44. 

The company faces tough competition from NCR Corp. (NCR - Analyst Report), Panasonic Corporation and PAR Technology Corporation , who are continuously strengthening their potentials through expanding their businesses worldwide.

Our Take

The company currently retains a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. We also maintain a long-term ‘Neutral’ recommendation on the stock.

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