It has been about a month since the last earnings report for Mercury Systems (MRCY) . Shares have added about 7.6% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Mercury Systems due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Moving Since The ...

Mercury Systems (MRCY) reported third-quarter fiscal 2025 results, wherein earnings were in line with the Zacks Consensus Estimate and revenues beat the same.The aerospace and defence technology provider reported non-GAAP earnings of 6 cents per share, in line with the Zacks Consensus Estimate. The company had incurred a loss of 26 cents in the year-ago quarter.Mercury’s non-GAAP revenues increased 1.5% year over year to $211.4 million. The top line beat the consensus mark by 4.07%.MRCY shares were more or ...

THIRD QUARTER FISCAL YEAR 2025 FINANCIAL RESULTS Bill Ballhaus Chairman and CEO David Farnsworth Executive Vice President and CFO May 6, 2025, 5:00 pm ET WEBCAST LOGIN AT WWW.MRCY.COM/INVESTOR WEBCAST REPLAY AVAILABLE BY 7:00 P.M. ET MAY 6, 2025 © Mercury Systems, Inc. 1 Forward-looking safe harbor statement This presentation contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the Company's focus on enhance ...

Company Performance - Mercury Systems reported quarterly earnings of $0.06 per share, matching the Zacks Consensus Estimate, compared to a loss of $0.26 per share a year ago [1] - The company posted revenues of $211.36 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 4.07% and showing an increase from $208.26 million year-over-year [2] - Over the last four quarters, Mercury Systems has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Movement and Outlook - Mercury Systems shares have increased approximately 21.8% since the beginning of the year, while the S&P 500 has declined by 3.9% [3] - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.21 on revenues of $248.11 million, and for the current fiscal year, it is $0.39 on revenues of $878.75 million [7] Industry Context - The Aerospace - Defense Equipment industry, to which Mercury Systems belongs, is currently ranked in the top 12% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Mercury Systems (MRCY) Q3 2025 Earnings Call May 06, 2025 05:00 PM ET Company Participants Tyler Hojo - VP - Investor RelationsWilliam Ballhaus - Chairman & CEODavid Farnsworth - Executive VP & CFOMichael Ciarmoli - Managing Director - Aerospace & Defense Equity ResearchPete Skibitski - Director - Aerospace & Defense Equity ResearchKen Herbert - Managing DirectorConor Walters - US Aerospace & Defense and Airlines Equity Research AssociateGarrett Burkam - Equity Research Associate Conference Call Participant ...

Financial Performance - Consolidated revenues for the third quarter ended March 28, 2025, were $211.4 million, a 1.5% increase from $208.3 million in the same quarter of the previous year[129]. - The company reported a net loss of $19.2 million for the third quarter, compared to a net loss of $44.6 million in the same quarter last year[129]. - Total revenues rose by $52.2 million, or 8.9%, to $638.9 million for the nine months ended March 28, 2025, compared to $586.7 million in the prior year[148]. - Net loss narrowed to $54.3 million, or 8.5% of revenue, for the nine months ended March 28, 2025, compared to a net loss of $126.9 million, or 21.6% of revenue, in the prior year[147]. - For the third quarter ended March 28, 2025, the net loss was $19,170,000, resulting in a loss per share of $0.33, compared to a net loss of $44,574,000 and a loss per share of $0.77 for the same period in 2024[189]. - For the nine months ended March 28, 2025, the net loss was $54,274,000, with a loss per share of $0.93, compared to a net loss of $126,863,000 and a loss per share of $2.20 for the same period in 2024[191]. Expenses and Cost Management - Gross margin improved to 27.0%, up 750 basis points from 19.5% in the prior year, driven by a net estimate at completion change impact of approximately $3.7 million[135]. - Research and development expenses decreased by 25.9% to $16.0 million, primarily due to headcount reductions of 185 R&D employees[138]. - Selling, general and administrative expenses decreased by 0.4% to $43.0 million, attributed to lower bad debt expense and compensation costs[137]. - Total operating expenses were $74.5 million, down from $86.3 million in the prior year, reflecting cost-saving measures[132]. - Selling, general and administrative expenses decreased by $6.7 million, or 5.4%, to $116.7 million during the nine months ended March 28, 2025[153]. - Research and development expenses decreased by $26.2 million, or 32.0%, to $55.7 million for the nine months ended March 28, 2025[154]. - Interest expense decreased to $25.4 million during the nine months ended March 28, 2025, from $25.9 million in the same period of 2024[159]. - Other expense, net decreased to $2.9 million during the nine months ended March 28, 2025, compared to $5.7 million in the prior year[160]. Cash Flow and Liquidity - The company had a net cash inflow of $100.8 million from operating activities for the nine months ended March 28, 2025, compared to an outflow of $11.4 million for the same period in 2024[174]. - Cash and cash equivalents increased by $89.3 million from June 28, 2024, to March 28, 2025, totaling $269.8 million at the end of the period[173]. - Free cash flow for the third quarter ended March 28, 2025, was $24,060,000, compared to a negative free cash flow of $25,743,000 for the same period in 2024[195]. - For the nine months ended March 28, 2025, free cash flow was $85,071,000, while for the same period in 2024, it was a negative $35,322,000[195]. - The company reported net cash provided by operating activities of $29,974,000 for the third quarter ended March 28, 2025, compared to a cash used in operating activities of $17,805,000 for the same period in 2024[195]. Investments and Strategic Initiatives - The company invested $11.1 million in investing activities during the nine months ended March 28, 2025, a decrease of $12.8 million compared to $23.9 million in the same period in 2024[175]. - The company is exploring acquisitions or strategic alliances as part of its growth strategy[180]. Employee and Workforce Management - The company had 2,200 employees as of March 28, 2025, focusing on engineering and research to maintain technological leads[128]. - Restructuring and other charges amounted to $4.9 million, down from $9.8 million in the prior year, related to workforce reductions[140]. Tax and Regulatory Matters - The effective tax rate for the nine months ended March 28, 2025, was impacted by federal and state research and development credits and return to provision adjustments[162]. - The company maintains a valuation allowance on the majority of foreign net operating loss carryforwards and state research and development tax credit carryforwards[163]. Debt and Financing - As of March 28, 2025, the company had a borrowing capacity of approximately $900.0 million, with outstanding borrowings of $591.5 million[169]. - The company executed Amendment No. 5 to the Revolver, increasing the Consolidated Total Net Leverage Ratio covenant from 4.50 to 5.25 for Q2 2024[167]. Litigation and Market Risk - The company experienced litigation and settlement expenses of $5,467,000 for the third quarter ended March 28, 2025, compared to $2,096,000 for the same period in 2024[189]. - There were no material changes in the company's exposure to market risk from June 28, 2024, to March 28, 2025[199].

Financial Data and Key Metrics Changes - Bookings for Q3 were $200 million with a trailing twelve-month book-to-bill ratio of 1.1, while revenue was $211 million, reflecting a year-to-date revenue growth of 8.9% [7][20] - Adjusted EBITDA for Q3 was $25 million, with an adjusted EBITDA margin of 11.7%, both significantly up year-over-year [7][20] - Free cash flow for Q3 was $24 million, an increase of $50 million year-over-year, resulting in $146 million of free cash flow over the last four quarters [7][20] Business Line Data and Key Metrics Changes - The company recognized approximately $3.7 million of net EAC change impacts in Q3, the lowest level in several quarters, indicating improved program management capabilities [8][9] - Q3 bookings included significant contract awards, such as $40 million in production contracts for the common processing architecture and a $20 million follow-on production order for the F-35 program [10][11] Market Data and Key Metrics Changes - The backlog increased by 4% year-over-year to $1.34 billion, driven by strong bookings primarily in production contracts [10][20] - The company reported that over 80% of trailing twelve-month bookings were production in nature, indicating a shift towards production-focused contracts [12] Company Strategy and Development Direction - The company is focused on four priorities: delivering predictable performance, driving organic growth, expanding margins, and improving free cash flow [6][8] - The acquisition of Starlab, a cybersecurity software provider, is expected to enhance the company's competitive position and differentiation in the market [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's strategic positioning and the ability to deliver predictable organic growth with expanding margins and robust free cash flow [5][16] - For FY 2025, the company expects annual revenue growth approaching mid-single digits, with adjusted EBITDA margins in the low double digits [16][17] Other Important Information - The company ended Q3 with $270 million in cash, driven by improved cash flow from operations [23] - Net working capital decreased by approximately $148 million year-over-year, demonstrating progress in reversing a multi-year trend of growth in working capital [25] Q&A Session Summary Question: Update on LTAMDS program - Management noted that LTAMDS has achieved significant milestones and is moving into initial production, indicating strong growth prospects [29] Question: Increase in deferred revenues - Management explained that the increase in deferred revenues is linked to achieving milestones with customers, which allows for solid payment terms [30][31] Question: Optimal net working capital level - Management indicated a target of 30% to 40% for net working capital as a percentage of revenues, with current levels at around 51% [36][38] Question: Impact of low margin backlog - Management stated that the low margin backlog will gradually improve as new bookings are added, but it will take several quarters to fully transition [39][92] Question: Revenue split between development and production - Management did not provide specific revenue splits but indicated that revenue trends will follow the bookings mix, which is increasingly production-focused [52] Question: Competitive landscape and growth opportunities - Management expressed confidence in the company's position to outgrow the industry, supported by a strong book-to-bill ratio and recent contract wins [66][68] Question: Tariffs impact on supply chain - Management reported no material impact from tariffs in FY 2025 and indicated that sourcing remains stable [110][111]

Financial Performance - Q3 FY25 bookings were $200.4 million, with a trailing-twelve-month book-to-bill ratio of 1.1[5] - Revenue for Q3 FY25 was $211.4 million, reflecting an 8.9% year-to-date growth compared to the previous fiscal year[4] - Adjusted EBITDA for Q3 FY25 was $24.7 million, with an adjusted EBITDA margin of 11.7%, significantly up from $(2.4) million in Q3 FY24[8] - Free cash flow for Q3 FY25 was $24.1 million, an increase of $49.8 million year-over-year[4] - Total backlog as of March 28, 2025, was $1.34 billion, representing a 4% increase year-over-year[10] - GAAP net loss for Q3 FY25 was $19.2 million, improving from a net loss of $44.6 million in Q3 FY24[7] - Adjusted earnings per share (EPS) for Q3 FY25 was $0.06, compared to $(0.26) per share in Q3 FY24[7] - Net revenues for the third quarter of 2025 were $211,358 thousand, a slight increase of 1% compared to $208,258 thousand in the same quarter of 2024[23] - The net loss for the third quarter of 2025 was $19,170 thousand, compared to a net loss of $44,574 thousand in the same quarter of 2024, representing a 57% improvement[23] - For the nine months ended March 28, 2025, the net loss was $54,274,000, compared to $126,863,000 for the same period in 2024, showing a 57.3% improvement[52] Cash Flow and Liquidity - Operating cash flow for Q3 FY25 was $30.0 million, compared to $(17.8) million in Q3 FY24[9] - Cash and cash equivalents increased to $269.8 million as of March 28, 2025, from $180.5 million a year earlier[22] - Cash flows from operating activities generated $29,974 thousand in Q3 2025, a turnaround from a cash outflow of $17,805 thousand in Q3 2024[24] - Cash and cash equivalents at the end of Q3 2025 were $269,822 thousand, significantly higher than $142,645 thousand at the end of Q3 2024[24] - The company reported net cash provided by operating activities of $29,974,000 for the third quarter, a substantial increase from $(17,805,000) in the prior year[46] Expenses and Cost Management - Total operating expenses decreased to $74,454 thousand in Q3 2025, down 14% from $86,298 thousand in Q3 2024[23] - Research and development expenses decreased to $15,983 thousand in Q3 2025, down 26% from $21,563 thousand in Q3 2024[23] - The company incurred restructuring and other charges of $4,931 thousand in Q3 2025, down from $9,841 thousand in Q3 2024, indicating a reduction of 50%[23] - Total interest expense for the third quarter was $6,778,000, down from $8,777,000 in the same quarter of the previous year, reflecting a 22.7% decrease[41] Shareholder Information - The diluted weighted-average shares outstanding for the third quarter were 59,367,000, compared to 57,698,000 in the prior year, reflecting an increase in shares[49] - Adjusted income for the third quarter was $3,589,000, translating to adjusted earnings per share of $0.06, compared to an adjusted loss of $15,136,000 or $(0.26) per share in the previous year[49] Future Outlook - The company expects to continue incurring expenditures similar to those reflected in the free cash flow financial adjustment, indicating ongoing investment in business operations[44]

ANDOVER, Mass., May 06, 2025 (GLOBE NEWSWIRE) -- Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), reported operating results for the third quarter of fiscal year 2025, ended March 28, 2025. "We delivered solid results in the third quarter of fiscal 2025 that were once again in line with or ahead of our expectations, reinforcing the confidence we have in our strategic positioning and expectations to deliver predictable organic growth with expanding margins and robust free cash flow," said Bill Ballhaus, M ...

Core Viewpoint - Mercury Systems, Inc. has completed the acquisition of Star Lab, enhancing its secure processing capabilities for aerospace and defense applications [1][2]. Group 1: Acquisition Details - The acquisition of Star Lab, a subsidiary of Wind River Systems, focuses on anti-tamper and cybersecurity software solutions that protect mission-critical processors from advanced attacks [2]. - Mercury has collaborated with Star Lab for over a decade, utilizing its technology in various products to safeguard confidential data from adversarial threats [2][3]. - Star Lab's software integrates seamlessly with many Mercury products, enhancing cybersecurity protection across a wide range of solutions [3]. Group 2: Strategic Importance - The acquisition will allow Mercury to expand its portfolio of fully integrated security solutions, addressing the increasing need for holistic security in government missions [4]. - Mercury is recognized as a leader in secure processing technologies, with expertise in advanced cryptography and physical protection technologies [4]. Group 3: Company Overview - Mercury Systems delivers mission-critical processing power to the edge, supporting advanced technologies for aerospace and defense missions [5]. - The company operates in over 300 programs across 35 countries, providing solutions in mission computing, sensor processing, command and control, and communications [5].