Mercury Systems, Inc. (NASDAQ:MRCY) Q1 2020 Earnings Conference Call - Final Transcript

Oct 29, 2019 • 05:00 pm ET

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Mercury Systems, Inc. (NASDAQ:MRCY) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, everyone, and welcome to the Mercury Systems' First Quarter Fiscal 2020 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, Mike Ruppert. Please go ahead, sir.

Executive
Michael Ruppert

Good afternoon, and thank you for joining us. With me today is our President and Chief Executive Officer, Mark Aslett. If you've not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our website at mrcy.com. The slide presentation that Mark and I will be referring to is posted on the Investor Relations section of the website under Events & Presentations.

Please turn to Slide 2 in the presentation. Before we get started, I would like to remind you that today's presentation includes forward-looking statements, including information regarding Mercury's financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are subject to future risks and uncertainties that could cause our actual results or performance to differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements on Slide 2 in the earnings press release and the risk factors included in Mercury's SEC filings.

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 also discuss several non-GAAP financial measures, specifically adjusted income, adjusted earnings per share, adjusted EBITDA, free cash flow, organic revenue and acquired revenue. A reconciliation of these non-GAAP metrics is included as an appendix to today's slide presentation and in the earnings press release.

I'll now turn the call over to Mercury's President and CEO, Mark Aslett. Please turn to Slide 3.

Executive
Mark Aslett

Thanks, Mike. Good afternoon, everyone, and thanks for joining us. I'll begin with the business update, mike will review the financials and guidance, and then we'll open it up for your questions. Mercury delivered strong results for the first quarter of fiscal '20, extending the momentum from fiscal '19 with record revenue, backlog and net income. The industry environment is positive, and our business model is performing extremely well. We continue to execute strategically by investing in our people, technologies and capabilities, growing organically and supplementing organic growth with strategic M&A. Given the strong start to the year, we're raising our fiscal '20 revenue guidance. In addition, we now expect to deliver 11% to 12% organic growth for the year.

Turning to our Q1 financial highlights on Slide 4. Our revenues are growing faster than the industry average. Total revenue for the first quarter increased 23% from Q1 of fiscal '19, exceeding the high end of our guidance. Organic revenue was up 17% compared with 6% growth in Q1 last year. Our largest revenue programs in the quarter were next-generation missile system, SEWIP, Filthy Buzzard, E-2D Hawkeye and CPS. Q1 was another very strong quarter for new business. Total bookings were up 21%