Good day everyone, and welcome to the Mercury Systems Fourth Quarter Fiscal 2016 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.

Thank you, operator. 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. We like to remind you that remarks that we may make during this call about future expectations, trends, and plans for the company and its business constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words may, will, could, should, would, plans, expects, anticipates, continue, estimate, project, intend, likely, forecast, probable, possible, potential, assumes and other similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to continued funding of defense programs, the timing of such funding, general economic and business conditions, including unforeseen weakness in the company's markets, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in or in the U.S. government's interpretation of federal procurement rules and regulations, market acceptance of the company's products, shortages in components, production delays or unanticipated expenses due to performance quality issues with outsourced components, inability to fully realize the expected benefits from acquisitions and restructurings or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, changes to export regulations, increases in tax rates, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, unanticipated…

Thanks, Gerry. Good afternoon, everyone and thanks for joining us. I'll 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 concluded a strong fiscal 2016 with a very busy fourth quarter, and we're positioned well as we head into the new fiscal year. During the quarter, we closed the largest acquisitions in the Company's history. We successfully completed equity and debt financing [ph] for future transactions. And at the same time we delivered the strong growth in both revenue and profitability while finishing the year with record catalog. For fiscal 2016 as a whole, including the businesses acquired from Microsemi, Mercury's revenues grew 15% year-over-year. GAAP income from continuing operations for fiscal 2016 increased 37% and adjusted EBITDA was up 29%. Bookings grew 11% and year-end backlog increased 38% to a new Company record of nearly $288 million. Our 12 month forward revenue coverage remains strong positioning us well for fiscal 2017. Fiscal 2016 was the strong year for us organically also. We continue to scale up our business, at the same time we delivered the industry average growth and profitability in line with our target business model. Excluding the results for the acquired business, revenue for fiscal 2016 grew 8% year-over-year, exceeding the top end of our guidance. Bookings were roughly flat with fiscal 2015 while our backlog achieved a new record for the third year in a row growing 8% year-over-year. Adjusted EBITDA was up 18% or so exceeding our guidance. Fiscal 2016 concluded on a high note last month. Our advanced microelectronic sensor in New Hampshire was named a winner at the prestigious James Cogswell [ph], outstanding security achievement award. Receiving this award from the Defense Security Service, validates the work…

Thank you, Mark and good afternoon again, everyone. Before we go through the financial results, I like to remind you that unless otherwise noted, I'll be discussing the company's financial results, comparisons to prior periods and guidance on a continuing operations basis. In addition, based on the way we now operate the combined business, we are reporting Mercury's financial results as a single segment. This eliminates the historical distinction between Mercury Commercial Electronics and Mercury Defense Systems. Our business has become more highly-integrated around the technologies we have developed internally and acquired in recent years, as well through our centralized and integrated go-to market strategy and corporate support functions. This process was solidified by our Q4 acquisition. Reporting as a single segment reflects this integration. As Mark discussed, Q4 was a period of extraordinary activity for Mercury. We completed the largest acquisition in the company's history, in conjunction with completing two significant financing transactions. In the process, we maintained a strong balance sheet and flexible capital structure to support future growth. Along with all of this, we also put together a very solid fourth quarter, delivering a strong finish to a successful fiscal 2016. On a consolidated basis including the recently acquired Microsemi businesses, fiscal 2016 marked another year of double digit growth in both revenue and backlog. Our book to-go ratios were positive, coming in at 1.22 for Q4 and 1.11 for 2016 as a whole. Our record backlog of $287.7 million on a consolidated basis was up $79.7 million or 38% from $208 million a year ago. Of this total backlog, approximately $224.9 million relates to the organic business, which is also a record. Approximately $239.2 million of the backlog or 83% of the total is expected to be shipped within the next 12 months. Our fiscal '16…

[Operator instruction] Our first question comes from Sheila Kahyaoglu from Jefferies. Your line is now open.

Revenue outlook and how we should think about the core business performing and maybe decelerating growth rate in that business little bit and maybe you could give a different color with that the top best programs in the direction of those.

So we missed the first part of your question, Sheila I think you might have been on mute when you it, could you just repeat it please.

Sure in terms of the fiscal 2017 by the new outlook the implied guidance with the Microsemi assets implies the organic businesses is about -- the core business is about flat organically. Can you just give us an idea why that's decelerating from a robust fiscal 2016 and also if you could give us some color in terms of the top five programs.

Sure, so I think overall we typically tend to start the year at somewhat conservatively I think it’s probably likely in the case of fiscal 2017 particularly given here what we expect to occur which is another budget continuing resolution. You know the uptakes we do expect --- I think it's because the prepared remarks growth in both the organic as well as the recently acquired business. And the overture in the pipeline really looks pretty good for next year. We're expecting growth to be driven by -- as well as electronic warfare as well as growth piece is larger tight to the activities that – the opportunities we see occurring in the Intel service products that we can bringing to market. We also expect growth across pretty much all of our major product lines in which I think is doing quite well. Overall next year from revenue prospective we anticipate that our top revenue programs will be SEWIP, Aegis [ph].

And just to slow down I guess in the patriot is the only one that goes up verses 16.

Yes, so part of it was actually third largest revenue program in fiscal 2016 clearly a really important program for the company. We don't expect that the revenues in fiscal 2017 will be as high as what they were this year, that being said we do expect very strong growth in bookings year-over-year based upon various foreign military national sales that including likely Japan upgrade as well as potentially Poland.

Thank you very much for the color.

Thank you. Our next question comes from Jason Gursky from Citi. Your line is now open.

Hi, good afternoon guys. You touched on part of my question in response to Sheila there but I was wondering if you could address what you used to the opportunity and risks to the guidance that you just issued, I think you suggested that there might be some conservatism. At this point in the year on the organic side of the business partner there might be some opportunities. Can you help perform this initial credit cards but if you could talk a little bit about what you think what gets in there and then what are the risks to the guidance, what's going to happen guidance this year.

I think the guidance that we gave is kind of balance given you know where we are in the year and what we see right now, we do anticipate as I just mentioned another course roughly in election Cycle. I think the risks that we see are actually due to the timing as specific programs, here are example during fiscal 2016 we did experience some order delays on the Aegis program that we expect to week hoop in fiscal 2017 and Aegis is likely going to be a significant revenue contributor as well as bookings contributor this fiscal year. Well with respect to you know what is kind of going up and down, I kind of went through you know what we see happening from market segment perspective, we see strong growth opportunities and – and EW modernization is wildly strong opportunity pipeline with respect to program protection that in the advanced embedded security capabilities that we have. The top revenue growth programs in fiscal 2017, are likely going to be LRDR [Ph] F-35 and Aegis and probably -- and we do expect in taking to account in our guidance some decline in revenues year-over-year Patriot being one of them. So we think in summary the guidance that is appropriate in based on where we are in the year and face in terms of what we see happening in the environment.

Have one follow up if I might. I just want to talk a little bit about the cash cycle, and whether you see there any risks opportunities both on the payables and receivables side -- Some of the OEMs of your referred Customers suggesting that they are getting some slow payments out of DOD. Trying to get a sense of whether this is becoming a widespread industry phenomena and whether it is also attracting suppliers like yourself, thanks.

Sure. So we haven't really seen what we would call any direct impact from some of I think what you're talking about that's happened across, which isn't to say that we never would. But I think more of what we're seeing in our cash flow cycle is simply a little bit of transition to more services leading engagements which are bringing more services work through the front end on some of the newer program opportunities, that will tend to cycle through with some build-up of receivables some which will be until this we reach milestones and so on, and on those convert overtime on the we've seen what we consider to be appropriate levels and timing to those conversions as we go forward. And it's something that we you know continue to watch and look for opportunities to manage as effectively as they can be. And as we pointed out before we actually are pretty fond of the service and when engagement because it is exactly that element that leads to the longer term product sales cycle on the back end of those programs, which is where we tend to make better money and where you see some of those filled up and receivables tend to convert down to more you know desirable levels I guess I would call it. And in overall we have seen anything related to collections that we thought was alarming.

Sure, thank you.

[Operator instruction] Our next question comes from Michael Ciarmoli from KeyBanc Capital. Your line is now open.

Good afternoon guys, thanks for taking my question. maybe just elaborate or dig deeper on the regular deceleration so you've got the top profile growth program you just mention I mean are you saying some of these grow at a slower rate as they just mature and flatten out, and now and then maybe you know who could you also talk a bit about what probably your big program pipeline looks like you know what big programs that are out there that we should be monitoring that that could potentially help reaccelerate that pipeline.

Yes so I wouldn't get too hung up in terms the and the top line, again the guidance that we give is kind of in line with what we see in this phase of the year, and just what's happening in the environment. our programs overall I think of performing pretty well, I went through it Patriot we do expect strong growth in bookings in next fiscal year there will be some revenue reduction, but again it's more just based upon just that the timing is the FMS programs. Aegis is going to be another strong contributor we seeing more opportunities there, largely driven by the continued modernization of the domestic lease. The other additional opportunities associated with FMS development production. We are seeing additional opportunities associate with huge attacking sessions. We’re expanding out beyond the center of all that part of the computer architectures onboard, as well is give potential opportunities in the IR and Microwave to main, you know Aegis we feel really good about. SEWIP continues to grow. We won on a another design win on the SEWIP walk to program, this past quarter with Lockheed, our largest booking in Q4 was actually – with SEWIP walk 3, so that program continues to do well and also. Yet 35 in terms of our existing business again I think its doing well we expect to see growth in that business next fiscal year. [indiscernible] which is the major program that we hide in our former MPS rating segment is being good growth as well, a lot because the program is moving into production. You know we feel really good about the position that we are in, the business that we just acquired, I think they're going over it now with pretty excited about that is the opportunity in the guided missile and decision ammunition demand here there appears to be an uptake in spending in that particular area. And we've consolidate together between both businesses a set of capabilities that we think will allow it to continue to grow our business longer term. So we feel pretty good about the position that we're in like overall.

Got it, that makes sense. And then just one more for me, the growth sort of implies that I don't know if we have the exact traveling but if its $115 million so there are looking to be growing maybe a 12% growth rate, is that rate being accelerated to some extent by synergy, you think that you know just trying to get a sense of how Microsemi is trending from you know from a programmatic and top line standpoint.

Yes, so overall, I think the business has been growing kind of low single digit we have said that every time we believe that we can reflect that growth rate north wards. Largely as a result of or channel, here in terms of the early integration efforts we basically trained both sales forces and we’ve been dying joint poles together and there has been a fair amount of activity, in terms the combined businesses together you know we've pursued a very large RS sub-system for the next generation radar, on a standalone basis I think neither company would being able to deliver and it’s a combined RS capabilities, mechanical packaging expertise, as well as get manufactured these capabilities in the new Phoenix facility, that will allow us to go after what is other than from an opportunity perspective. So we think that we will be able to reflect the growth rates over time, and we have seen some of that occurring fiscal 2017.

Great, thanks. And Gerry I may have missed it, did you give a growth margin for 2017.

Yes, we said -- we didn’t give it for the full year for Q1 we expected it to be 44-esh and again that’s the negative impact of the first accounting adjustment in that quarter.

So you are not going to give us a full year once?

No.

Okay fair enough, thanks guys.

Thank you. Mr. Aslett, it appears there are further questions; therefor I would like to turn the call over to you for any closing remarks.

Okay. Well, thank you all very much for listening in the call. We look forward to speaking to you again next quarter, thank you.