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Mercury Systems Reports Second Quarter Fiscal 2014 Results And Final Phase Of Acquisition Integration Plan

"Our objectives for these initiatives are to leverage Mercury's recent acquisitions to make the business more efficient, and to take out costs to improve margins and reduce operating expenses," Aslett said. "Successful execution of these initiatives over the next 18 months should result in approximately $16 million of aggregate annualized expense reductions when complete. Approximately $4 million of savings should be realized in the second half of fiscal 2014. We believe that, as a result, we will be positioned to achieve our target business model for fiscal 2015 using a revenue growth assumption of approximately 10%, reflecting the prevailing industry conditions."

"Mercury's strategy, technology, capabilities and ongoing programs and platforms align well with the Defense Department's new roles and missions," said Aslett. "As a result, we have excellent potential to win next-generation ISR and EW business in opportunities related to priorities such as the Pacific pivot, and the upgrade of aging military platforms, as well as growth in foreign military and international sales. In addition, as a leading outsourcing partner to the primes, we are positioned to capture significant upside from defense procurement reform."

"At the same time, we believe that implementing the second and final phase of our integration plan will create substantial operating leverage in our business as we continue to grow the top line. This leverage should further strengthen Mercury's position to deliver significantly improved profitability, cash flow generation and shareholder value going forward," Aslett concluded.

Backlog

Mercury's total backlog at December 31, 2013 was $130.5 million, a $2.7 million decrease from December 31, 2012. Of the December 31, 2013 total backlog, $101.4 million represents orders scheduled to be shipped over the next 12 months. The defense backlog at December 31, 2013 was $112.6 million, a $1.7 million decrease from December 31, 2012. Bookings for the second quarter of fiscal 2014 were $50.3 million, a 20% decrease, compared to $62.8 million for the second quarter of fiscal 2013. The total book-to-bill ratio was 0.9 for the second quarter of fiscal 2014, compared to 1.3 for the second quarter of fiscal 2013.

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