MICROS' 2Q Decent, View Affirmed - Analyst Blog
January 28 2013 - 3:30AM
Zacks
MICROS Systems
Inc. (MCRS) posted adjusted earnings per share (EPS) for
the second quarter of fiscal 2013 of 53 cents, matching the Zacks
Consensus Estimate. The quarter’s result was 13.5% higher than the
year-ago quarter.
Revenues
Revenues were $324.5 million, up 20.0% year over year and above the
Zacks Consensus Estimate of $321.0 million. The year-over-year
improvement was driven by the company’s organic growth as well as
its acquisition of Torex Retail (acquired in June 2012).
On a segment basis, Service revenues came in at $218.5 million,
rising 22.5% from $178.4 million in the previous-year quarter.
Hardware revenues came in at $67.2 million, increasing 17.1% from
the year-ago quarter. Software revenues came in at $38.7 million,
up 12.1% year over year owing to higher sales in retail
vertical.
Operating Results
Reported gross margin was 53.0%, down from 56.3% in the year-ago
quarter. The year- over-year decline was due to low margin Torex
business.
Selling, general and administrative expenses came in at $80.0
million, increasing 4.4% from the year-earlier quarter. Research
and development expenses amounted to $17.5 million, up 44.0% year
over year. Operating margin dropped 110 basis points year over year
to 19.0%.
On a GAAP basis, earnings came in at 54 cents per share versus 47
in the year-ago quarter. Adjusting one-time items and including
stock-based compensation expenses, non-GAAP earnings were 53 cents
versus 47 cents in the year-ago quarter.
Balance Sheet
MICROS ended the quarter with cash and cash equivalents and
short-term investments of $631.8 million versus $582.0 million at
the end of the previous quarter. Receivables decreased 8.4%
sequentially to $215.5 million. Inventory increased 19.1% from the
prior quarter to $52.7 million.
Share Repurchase
The company has repurchased nearly 920,000 shares at an average
price of $43.70 during the second quarter of fiscal 2013.
MICROS board of directors also approved a new buyback plan. Now the
company has been authorized to purchase an additional 2 million
shares. The total shares available to purchase stand at 2.2
million.
Guidance
The company reiterated its guidance for fiscal 2013. The company
continues to expect revenues in the range of $1.3 to $1.325
billion. MICROS projects non-GAAP earnings per share to be within
$2.40 to $2.44.
Additionally, management stated its long-term view of focusing more
on sales increase and product development (especially software).
Apart from this, the company also seeks to spend more on marketing
and selling efforts to increase its market share in the two large
regional markets (North America and Europe, Africa, Middle East),
which are facing macro economic challenges.
Our Take
The company’s second quarter results were modest, with EPS matching
the Zacks Consensus Estimate and revenue beating the same. Though
maintaining fiscal guidance is not encouraging, we believe that
MICROS’ growing focus on developing enhanced software solutions
could help it to outperform.
Despite its positive commentary and existing solutions for
Apple Inc.’s (AAPL) iPad, we are somewhat unsure
about MICROS’ growth potential, which is being overshadowed by
innovative (tablet-based) Point-of-Sales (POS) solutions by its
peers Square, Revel, Groupon Inc. (GRPN) and
NCR Corp. (NCR).
Difficult pricing environment and declining margins keep us bearish
on the stock. Currently, MICROS has a Zacks Rank #4 (Sell).
APPLE INC (AAPL): Free Stock Analysis Report
GROUPON INC (GRPN): Free Stock Analysis Report
MICROS SYS (MCRS): Free Stock Analysis Report
NCR CORP-NEW (NCR): Free Stock Analysis Report
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