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Mercury (MRCY) Q2 Earnings & Revenues Top Estimates, Up Y/Y

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Zacks Equity Research
·4 min read
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Mercury Systems MRCY reported second-quarter fiscal 2021 non-GAAP earnings of 54 cents per share, beating the Zacks Consensus Estimate by 8%. The figure also marks improvement from the year-ago quarter’s earnings of 53 cents per share by a penny.

Revenues of $210.7 million also surpassed the consensus mark of $209.7 million as well as increased 8.7% year over year on robust organic growth.

Quarterly Details

Organic revenues (99.8% of total revenues) went up 9% to $210.5 million in the reported quarter.

Mercury Systems Inc Price, Consensus and EPS Surprise

Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems Inc Price, Consensus and EPS Surprise

Mercury Systems Inc price-consensus-eps-surprise-chart | Mercury Systems Inc Quote

Moreover, acquired revenues (0.2% of total revenues) came in at $0.22 million.

Mercury's total bookings at the end of the fiscal second quarter came in at $210.1 million, reflecting a 1 book-to-bill ratio. The company ended the quarter with a backlog of $945.3 million, up $217.8 million year over year. From this backlog, $598 million worth of products are expected to be shipped within the next 12 months.

Operating Details

Gross margin in the fiscal second quarter shrunk 350 basis points (bps) year on year to 42.1%.

Adjusted EBITDA climbed 5.8% year over year to $45.3 million. However, adjusted EBITDA margin contracted 60 bps year on year to 21.5%.

Selling, general & administrative expenses as a percentage of revenues shrunk 190 bps year over year to 15%.

However, research & development expenses as a percentage of revenues expanded 70 bps to 13.4%.

Operating margin contracted 210 bps year on year to 8.6%.

Balance Sheet and Cash Flow

Mercury had cash and cash equivalents of $109.1 million as of Jan1, 2021, down from the $239.1 million witnessed at the end of the previous quarter.

The company generated $23.9 million of cash flow from operating activities. Free cash flow was $10.2 million. During the first half of fiscal 2021, the company generated $46.9 million of operating cash flow and $22.1 million of free cash flow.

Guidance

For the third quarter of fiscal 2021, revenues are projected at $245-$255 million.

Adjusted EBITDA is anticipated in the band of $52-$54.5 million. Adjusted earnings are estimated to be 59-63 cents per share.

Mercury raised its full-year revenue guidance to $925-$945 million from $865-$885 million.

The adjusted EBITDA forecast has also been raised to $201-$206 million from the $190-$196 million projected earlier. Adjusted earnings are now estimated to be $2.35-$2.42 per share, up from the previous expectation of $2.20-$2.28 per share.

Zacks Rank and Other Stocks to Consider

Mercury currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader technology sector include Shopify SHOP, Zoom Video Communications ZM and Apple AAPL, all flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Shopify, Zoom and Apple is currently pegged at 32.5%, 25% and 11.5%, respectively.

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