After the markets closed on Tuesday, April 29, Mercury Systems announced results above Street consensus for both top- and bottom-line results. Mercury announced that its restructuring and acquisition integration plans are ahead of schedule, ultimately leading to cost savings earlier than expected. Mercury also achieved record bookings of $74 million or a book-to-bill ratio of 1.4 for the quarter. Strong bookings activity was driven by demand for SEWIP, AEGIS, and Patriot programs.
Strong results allowed the company to raise EBITDA and EPS guidance for the full fiscal year. Mercury plans to achieve nearly $16 million in annualized cost savings, tied to acquisition integration, reallocation of resources, and facilities consolidation. The company continues to view fiscal 2015 as a year in which it can return to its target business model of 45%-50% gross margins and 18%-22% adjusted EBITDA margins, driven by 10% top-line growth.
The only other impact to the quarter was a slight delay in timing for SEWIP Block 2 work, where the order was received, but now is expected to ship in the first half of fiscal 2015. This led Mercury to tighten its revenue outlook for fiscal 2014, but we view it as purely a timing issue.
Things are clearly improving for Mercury and that the business appears to be solidly on track for improved performance. In our view, one of the primary catalysts for fiscal 2015 will be full-rate production from long-standing design wins, such as SEWIP Block 2 and the Patriot missile program.