Mercury Systems, Inc. (NASDAQ:MRCY) Q2 2015 Earnings Conference Call - Final Transcript
Jan 27, 2015 • 05:00 pm ET
Good day, everyone and welcome to the Mercury Systems Second Quarter Fiscal 2015 Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn the call over to the Company's Executive Vice President and Chief Financial Officer, Gerry Haines. Please go ahead, sir.
Gerry M. Haines II
Good afternoon and thank you for joining us. With me today is our President and Chief Executive Officer, Mark Aslett. If you haven't received a copy of the earnings press release we issued earlier this afternoon you can find it on our website at www.mrcy.com. (Forward-looking statement)
With that I will turn the call over to Mercury's President and CEO, Mark Aslett.
Thanks Gerry. Good afternoon, everyone and thank you for joining us. I will begin today's call with a business update. Gerry will review the financials and guidance and then we will open it up to your questions. Mercury continued to deliver strong results from continuing operations in the second quarter of fiscal 2015. Revenue was up 12% from Q2 last year, approaching the top end of our guidance.
Demonstrating the operating leverage we built in the business as a result of our acquisition integration efforts adjusted EBITDA more than doubled to $10.7 million on less than $7 million of incremental revenue. Adjusted EBITDA was above the high end of our guidance and at 19% of revenues within our target business model. We remained GAAP profitable and we continued to generate positive cash flow from operations which was up substantially from the sequential first quarter.
Given this momentum we're raising our earnings guidance for full year fiscal 2015. Looking at our Q2 growth metrics in detail, total bookings were down year-over-year to $44 million leading to a total book-to-bill at 0.8. Including our strong bookings in Q1 total bookings for the first half are up 39% year-over-year with a 1.2 book-to-bill.
Our largest programs this quarter from a booking perspective were Global Hawk, Aegis, SEWIP Block 2 and Gorgon Stare. Total defense bookings for the quarter were down 9% year-over-year to $41.2 million. For the first half however total defense bookings were up 42% driven largely by continued strength in our Mercury Commercial Electronics or MCE. Our defense book-to-bill in Q2 was also 0.8 compared with 0.9 in Q2 of fiscal 2014.
Defense backlog and total backlog exiting Q2 were up 64% and 51%, respectively, year-over-year. International defense bookings, including FMS were 15% of the total bookings compared with 49% in Q2 of FY14. Our total defense revenues for Q2 were $53.5 million, up 10% year-over-year. International defense revenues, including FMS were 24% of total revenues compared with 16% in Q2 of FY14.
Revenues from radar and electronic warfare accounted for 88% of total defense revenues in the second quarter versus 82% in Q2 last year. Radar defense revenues, which make up the largest segment of MCE revenues grew 14% year-over-year in the second quarter. And EW revenues grew 27%. Patriot, F-35, Aegis and SEWIP Block 2 were our