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Mercury Computer Systems CEO Discusses F1Q2011 Results - Earnings Call Transcript

Additional information regarding forward-looking statements and risk factors is included in the company's periodic reports filed with the SEC. We caution listeners of the today's conference call not to place undue reliance on any forward-looking statement which speak only as of the date of this call. We undertake no obligation to update any forward-looking statements.

I'd also like to mention that in addition to reporting financial results in accordance with generally accepted accounting principles or GAAP, during our call we will discuss several non-GAAP financial measures, specifically adjusted EBITDA and free cash flow.

Adjusted EBITDA excludes interest income and expense, income taxes, depreciation, amortization of acquired intangible assets, restructuring expense, impairment of long-lived assets, acquisition and other related expenses in stock-based compensation costs. Free cash flow excludes capital expenditures from cash flows from operating activities.

A reconciliation of adjusted EBITDA to GAAP net income from continuing operations and our free cash flow to GAAP cash flows from operating activities are included in the press release we issued this afternoon. I am now pleased to turn the call over to Mercury's president and CEO, Mark Aslett.

Mark Aslett

Thanks, Bob. Good afternoon, everyone, and thanks for joining us. I'll begin with an update on our business for the first quarter, Bob will review the financials and discuss our guidance and then we'll open it up for your questions.

Mercury continued to perform well in Q1. Revenue and GAAP EPS both exceeded the high end of our guidance range. Bookings and 12-month backlog were up 6% and 45% year-over-year respectively. Adjusted EBITDA for Q1 increased 13% year-over-year and was well above our guidance. Finally, operating cash flow grew to $9.4 million, an increase of 259% year-over-year.

Looking at our defense business, total defense revenue, including ACS and Mercury Federal, was in line with our expectations of $37.7 million, down 7.6% from Q1 of last year. Our commercial business more than made up the difference, however, as revenue grew nearly 120% year-over-year to $14.4 million.

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