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]

Core Insights - Mercury Systems, Inc. reported solid financial results for the third quarter of fiscal year 2025, with revenues of $211.4 million, reflecting an 8.9% year-to-date growth compared to the previous year [2][4][19] - The company secured bookings of $200.4 million in the quarter, resulting in a trailing twelve-month book-to-bill ratio of 1.1, indicating strong demand for its products and services [3][10] - Adjusted EBITDA for the quarter was $24.7 million, a significant improvement from a loss of $(2.4) million in the same quarter of the previous year, showcasing enhanced operational efficiency [6][34] Financial Performance - Total revenues for the third quarter of fiscal 2025 were $211.4 million, compared to $208.3 million in the same quarter of fiscal 2024 [4] - The company reported a GAAP net loss of $19.2 million, or $0.33 per share, which is an improvement from a net loss of $44.6 million, or $0.77 per share, in the prior year [5][19] - Free cash flow for the quarter was $24.1 million, a substantial increase of $49.8 million year-over-year, indicating strong cash generation capabilities [7][40] Operational Highlights - Mercury's total backlog as of March 28, 2025, was $1.34 billion, reflecting a $51.0 million increase from the previous year, with $787.6 million expected to be recognized as revenue within the next 12 months [8][10] - The company achieved a gross margin of $57.1 million for the quarter, compared to $40.6 million in the same quarter of the previous year, indicating improved profitability [19] - Operating cash flow was reported at $30.0 million, a significant turnaround from $(17.8) million in the same quarter of fiscal 2024 [7][21] Strategic Outlook - The CEO expressed confidence in the company's strategic positioning and its ability to deliver predictable organic growth with expanding margins and robust free cash flow [2] - Management plans to discuss the quarterly financial results, business highlights, and outlook in an upcoming conference call, indicating a commitment to transparency and investor engagement [9]

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].

Financial Results Announcement - Mercury Systems Inc. will release its third quarter fiscal year 2025 financial results after the market close on May 6, 2025 [1] - A conference call and webcast will be held at 5:00 p.m. ET on the same day to discuss the quarterly financial results, business highlights, and outlook [2] Conference Call Details - Participants can register online for the conference call or webcast at ir.mrcy.com/events-presentations, with a request to register a day in advance or at least 15 minutes before the call [3] - A replay of the webcast will be available two hours after the call and archived for six months [3] Company Overview - Mercury Systems is a technology company that provides mission-critical processing power to the edge, focusing on aerospace and defense missions [4] - The Mercury Processing Platform enables customers to utilize innovative capabilities from silicon to system scale, facilitating timely data-driven decisions [4] - Mercury's products and solutions are deployed in over 300 programs across 35 countries, covering applications in mission computing, sensor processing, command and control, and communications [4]

Core Viewpoint - Mercury Systems, Inc. has entered into a strategic supply agreement with Cicor Group, allowing Cicor to acquire a manufacturing operation in Switzerland and supply electronic products to Mercury over the next five years [1][2]. Group 1: Strategic Agreement - The agreement enables Mercury to transition its Swiss electronic board manufacturing operations to Cicor, a leading European manufacturer for aerospace and defense electronics, in response to increased demand for commercial defense products [2][3]. - The transaction is expected to be completed within approximately one month, subject to customary closing conditions, and production will be relocated to Cicor sites in the UK and Switzerland within the next 18 months [3]. Group 2: Operational Focus - Following the transition, Mercury's facilities in Switzerland, Spain, and the UK will concentrate on their core competencies of engineering design and systems integration, which is anticipated to drive the company's growth in the international market [2][3]. - Mercury will continue to source boards from its U.S. operations alongside purchasing from Cicor to maintain a robust supply chain [3]. Group 3: Market Position and Commitment - Mercury Systems is dedicated to delivering mission-critical processing capabilities to the aerospace and defense sector, aiming to scale quickly to meet the growing demand for advanced commercial processing technologies globally [4]. - The company operates in over 300 programs across 35 countries, providing a wide range of applications in mission computing, sensor processing, command and control, and communications [4].

Core Viewpoint - A shareholder class action lawsuit has been filed against Mercury Systems, Inc. for allegedly making false and misleading statements regarding its M&A strategy and the integration of acquired companies, which negatively impacted its financial performance [1][2]. Group 1: Allegations and Impact - The lawsuit claims that from February 3, 2021, to February 6, 2024, Mercury and its executives misled investors about the integration of acquisitions, leading to a significant decline in stock value [2][4]. - Following corrective disclosures starting in August 2022, Mercury's stock price dropped from above $50.00 to below $30.00, representing a decline of approximately 40% [3]. Group 2: Legal Proceedings - The investigation aims to determine if Mercury's board of directors violated securities laws or breached fiduciary duties related to the alleged misconduct [4]. - Current shareholders who acquired shares before August 2022 are encouraged to seek legal advice regarding their rights and options [5].

Company Overview - Mercury Systems (MRCY) is a notable stock within the Aerospace sector, currently ranked 2 in the Zacks Sector Rank, which evaluates 51 companies in this group [2] - The Zacks Rank system, which focuses on earnings estimates and revisions, currently assigns Mercury Systems a Zacks Rank of 2 (Buy) [3] Performance Analysis - Over the past 90 days, the Zacks Consensus Estimate for MRCY's full-year earnings has increased by 71.4%, indicating improved analyst sentiment and a stronger earnings outlook [4] - Year-to-date, Mercury Systems has gained approximately 7.3%, significantly outperforming the Aerospace sector average gain of about 0.1% [4] - In comparison, StandardAero, Inc. (SARO) has also outperformed the sector with a year-to-date increase of 17% [5] Industry Context - Mercury Systems operates within the Aerospace - Defense Equipment industry, which consists of 26 stocks and is currently ranked 39 in the Zacks Industry Rank; this industry has seen an average decline of 0.2% year-to-date [6] - Conversely, StandardAero, Inc. is part of the Aerospace - Defense industry, which includes 24 stocks and is ranked 132, with a year-to-date performance of +0.2% [6] Future Outlook - Investors interested in Aerospace stocks should monitor Mercury Systems and StandardAero, Inc. for potential continued strong performance [7]

NEW YORK, March 4, 2025 /PRNewswire/ -- Kuehn Law, PLLC, a shareholder litigation law firm, is investigating whether certain officers and directors of Mercury Systems, Inc. (NASDAQ: MRCY) breached their fiduciary duties to shareholders. According to a federal securities lawsuit, Insiders at Mercury Systems caused the company to misrepresent or fail to disclose that (1) Mercury had switched from "point-in-time" to "long-term contracts" in order to improperly boost reported revenues; (2) several of Mercury's ...

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