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Mercury Systems (MRCY) reported second-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The aerospace and defense tech firm reported non-GAAP earnings of 7 cents per share, surpassing the Zacks Consensus Estimate of a loss of 8 cents. The bottom line skyrocketed 116.7% year over year.Mercury Systems’ non-GAAP revenues increased 13% year over year to $223.1 million. The top line beat the cons ...

For the quarter ended December 2024, Mercury Systems (MRCY) reported revenue of $223.13 million, up 13% over the same period last year. EPS came in at $0.07, compared to -$0.42 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $180.52 million, representing a surprise of +23.60%. The company delivered an EPS surprise of +187.50%, with the consensus EPS estimate being -$0.08.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings ...

SECOND QUARTER FISCAL YEAR 2025 FINANCIAL RESULTS Bill Ballhaus Chairman and CEO David Farnsworth Executive Vice President and CFO February 4, 2025, 5:00 pm ET WEBCAST LOGIN AT WWW.MRCY.COM/INVESTOR WEBCAST REPLAY AVAILABLE BY 7:00 P.M. ET FEBRUARY 4, 2025 /Mercury Proprietary/No Tech Data/ © 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 th ...

Company Performance - Mercury Systems reported quarterly earnings of $0.07 per share, exceeding the Zacks Consensus Estimate of a loss of $0.08 per share, and showing improvement from a loss of $0.42 per share a year ago, resulting in an earnings surprise of 187.50% [1] - The company achieved revenues of $223.13 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 23.60% and increasing from $197.46 million year-over-year [2] - Over the last four quarters, Mercury Systems has surpassed consensus EPS estimates three times and has also topped consensus revenue estimates three times [2] Stock Outlook - The immediate price movement of Mercury Systems' stock will largely depend on management's commentary during the earnings call and the sustainability of earnings expectations [3][4] - The stock has underperformed the market, with a year-to-date loss of about 0% compared to the S&P 500's gain of 1.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $210.09 million, and for the current fiscal year, it is $0.31 on revenues of $848.94 million [7] Industry Context - The Aerospace - Defense Equipment industry, to which Mercury Systems belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Mercury Systems' stock performance [5][6]

Revenue Performance - Total revenues increased by $25.7 million, or 13.0%, to $223.1 million for the second quarter ended December 27, 2024, compared to $197.5 million for the same period in 2023[133]. - Total revenues increased by $49.1 million, or 13.0%, to $427.6 million for the six months ended December 27, 2024, compared to $378.5 million for the same period in 2023[151]. - Point in time revenue represented 55% of total revenues for the second quarter ended December 27, 2024, an increase from 47% in the prior year[133]. - The increase in total revenue by end application was primarily driven by radar applications, which increased by $36.0 million[134]. Profitability and Loss - The company reported a net loss of $17.6 million for the second quarter ended December 27, 2024, compared to a net loss of $45.6 million for the same period in 2023[129]. - The net loss for the six months ended December 27, 2024, was $35.1 million, an improvement from a net loss of $82.3 million in the same period in 2023[188]. - For the second quarter ended December 27, 2024, the company reported a net loss of $17,579,000, or $(0.30) per share, compared to a net loss of $45,581,000, or $(0.79) per share for the same period in 2023[192]. - For the six months ended December 27, 2024, the company reported a net loss of $35,104,000, or $(0.60) per share, compared to a net loss of $82,289,000, or $(1.44) per share for the same period in 2023[194]. Expenses Management - Research and development expenses decreased by $7.1 million, or 25.0%, to $21.4 million, primarily due to headcount reductions of 111 employees[138]. - Selling, general and administrative expenses decreased by $4.0 million, or 8.9%, to $40.5 million, mainly due to lower bad debt expense and compensation costs[137]. - Research and development expenses decreased by $20.6 million, or 34.1%, to $39.8 million, mainly due to headcount reductions and decreased spending on outside services[156]. - Selling, general and administrative expenses decreased by $6.6 million, or 8.2%, to $73.7 million, primarily due to workforce reductions and lower bad debt expenses[155]. Cash Flow and Financial Position - Cash provided by operating activities for the six months ended December 27, 2024, was $70.8 million, a significant increase from $6.4 million for the same period in 2023[175]. - The company generated $85,462,000 in net cash provided by operating activities for the second quarter, an increase from $45,494,000 in the same quarter of 2023[198]. - Free cash flow for the second quarter was $81,907,000, compared to $37,504,000 in the prior year[198]. - For the six months ended December 27, 2024, free cash flow was $61,011,000, a significant improvement from a negative free cash flow of $(9,579,000) in the same period of 2023[198]. Tax and Interest - The company recorded an income tax benefit of $12.3 million on a loss before income taxes of $47.4 million for the six months ended December 27, 2024[163]. - The effective tax rate for the six months ended December 27, 2024 was affected by federal and state research and development credits and non-deductible compensation[164]. - Interest income rose to $1.0 million for the six months ended December 27, 2024, compared to $0.1 million in the prior year, attributed to higher average cash and cash equivalents[160]. - Interest expense increased to $17.3 million from $16.5 million, driven by higher average outstanding borrowings[161]. Workforce and Restructuring - The company executed a workforce reduction on January 29, 2025, eliminating approximately 145 positions, with expected restructuring charges of $5.0 million[141]. - The company has over 2,374 employees, focusing on engineering and research to maintain technological leads in high-performance sensor processing[128]. Strategic Initiatives - The company filed a shelf registration statement on October 4, 2023, to raise capital for acquisitions, debt repayment, and other corporate purposes[168]. - The company continues to explore acquisitions or strategic alliances as part of its growth strategy[181]. - 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[169]. Market Presence - Mercury Systems' products are deployed in more than 300 programs across 35 countries, highlighting its global market presence[123]. Other Financial Metrics - Adjusted EBITDA for the six months ended December 27, 2024, was $43.5 million, compared to an adjusted EBITDA of $(19.4) million for the same period in 2023[188]. - Adjusted income for the second quarter was $3,940,000, or $0.07 per share, compared to an adjusted loss of $24,181,000, or $(0.42) per share in the prior year[192]. - Adjusted income for the six months was $6,384,000, or $0.11 per share, compared to an adjusted loss of $37,860,000, or $(0.66) per share in the prior year[194]. - The company incurred $22,389,000 in amortization of intangible assets for the six months ended December 27, 2024, compared to $24,817,000 in the same period of 2023[194]. - The company reported $11,424,000 in stock-based and other non-cash compensation expense for the second quarter of 2024, up from $10,195,000 in the same quarter of 2023[192]. - There were no material changes in the company's exposure to market risk from June 28, 2024, to December 27, 2024[202].

[Financial & Operational Highlights](index=1&type=section&id=Financial%20&%20Operational%20Highlights) Mercury Systems reported strong Q2 FY2025 results, exceeding expectations with significant growth in revenue, Adjusted EBITDA, and record free cash flow, driven by solid execution and a record backlog - The CEO stated that the company delivered solid results in Q2 FY2025, in line with or ahead of expectations, and is optimistic about ongoing efforts to improve performance[2](index=2&type=chunk) Q2 FY2025 Key Metrics | Metric | Value | Note | | :--- | :--- | :--- | | Bookings | $242.4 million | Book-to-bill ratio of 1.09 | | Trailing-Twelve-Month Book-to-Bill | 1.12 | - | | Revenue | $223.1 million | Up 13% YoY | | Adjusted EBITDA | $22.0 million | Up substantially YoY | | Adjusted EBITDA Margin | 9.9% | Up substantially YoY | | Free Cash Flow | $81.9 million | Record; up $44.4 million YoY | | Backlog | $1.4 billion | Record; up 6% YoY | - Progress was noted in all four priority areas, including reduced operating expenses and a **$114.9 million** year-over-year reduction in net working capital[3](index=3&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) Mercury's Q2 FY2025 saw significant revenue growth, a narrowed GAAP net loss, positive adjusted EPS, and a strong recovery in Adjusted EBITDA, culminating in a record $1.4 billion backlog Q2 FY2025 vs. Q2 FY2024 Performance | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $223.1M | $197.5M | +13.0% | | Bookings | $242.4M | N/A | - | | Book-to-Bill Ratio | 1.09 | N/A | - | | GAAP Net Loss | $(17.6)M | $(45.6)M | +$28.0M | | GAAP Loss Per Share | $(0.30) | $(0.79) | +$0.49 | | Adjusted EPS | $0.07 | $(0.42) | +$0.49 | | Adjusted EBITDA | $22.0M | $(21.3)M | +$43.3M | | Operating Cash Flow | $85.5M | $45.5M | +$40.0M | | Free Cash Flow | $81.9M | $37.5M | +$44.4M | - The company's total backlog reached a record **$1.4 billion** as of December 27, 2024, an increase of approximately **$80.0 million** from the previous year[9](index=9&type=chunk) - Of the total backlog, **$789.9 million** is expected to be recognized as revenue within the next 12 months[9](index=9&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) This section presents the unaudited consolidated balance sheets, statements of operations, and cash flows, detailing the company's financial position and performance [Unaudited Consolidated Balance Sheets](index=7&type=section&id=UNAUDITED%20CONSOLIDATED%20BALANCE%20SHEETS) As of December 27, 2024, Mercury Systems reported total assets of **$2.401 billion**, with increased cash and total liabilities, while shareholders' equity slightly decreased Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 27, 2024 | Jun 28, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $242,565 | $180,521 | | Total current assets | $990,684 | $953,784 | | Goodwill | $938,093 | $938,093 | | **Total assets** | **$2,401,455** | **$2,378,905** | | **Liabilities & Equity** | | | | Total current liabilities | $273,533 | $234,416 | | Long-term debt | $591,500 | $591,500 | | **Total liabilities** | **$941,179** | **$906,130** | | **Total shareholders' equity** | **$1,460,276** | **$1,472,775** | [Unaudited Consolidated Statements of Operations](index=8&type=section&id=UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 FY2025, net revenues increased to **$223.1 million**, and the GAAP net loss significantly narrowed to **$17.6 million**, driven by improved gross margin and reduced operating expenses Q2 Statement of Operations (in thousands, except per share data) | Metric | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Net revenues | $223,125 | $197,463 | | Gross margin | $60,826 | $31,520 | | Loss from operations | $(12,415) | $(53,929) | | **Net loss** | **$(17,579)** | **$(45,581)** | | **Diluted net loss per share** | **$(0.30)** | **$(0.79)** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash provided by operating activities significantly increased to **$85.5 million** in Q2 FY2025, contributing to a strong ending cash balance of **$242.6 million** Q2 Statement of Cash Flows (in thousands) | Metric | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $85,462 | $45,494 | | Net cash used in investing activities | $(1,655) | $(7,990) | | Net cash provided by financing activities | $1,492 | $41,217 | | Net increase in cash and cash equivalents | $84,442 | $79,277 | | **Cash and cash equivalents at end of period** | **$242,565** | **$168,646** | [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Mercury Systems provides non-GAAP financial measures, including Adjusted EBITDA, Free Cash Flow, Adjusted Income, and Adjusted EPS, with detailed reconciliations to offer a clearer view of operational performance - The company provides non-GAAP financial measures like adjusted EBITDA, adjusted income, adjusted EPS, and free cash flow to help investors understand its past financial performance and future prospects[13](index=13&type=chunk) - Management uses these non-GAAP measures for internal budgeting, evaluating performance, establishing operational goals, and determining a portion of executive bonus compensation[36](index=36&type=chunk) - Adjustments to GAAP figures include items such as amortization, restructuring charges, acquisition costs, litigation expenses, and stock-based compensation[28](index=28&type=chunk)[29](index=29&type=chunk)[32](index=32&type=chunk) [Reconciliation of Net Loss to Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q2 FY2025 significantly improved to **$22.0 million** from a negative **$(21.3) million** in Q2 FY2024, primarily due to adjustments for non-cash and specified items Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Description | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Net loss (GAAP) | $(17,579) | $(45,581) | | Adjustments: | | | | Interest expense, net | 8,024 | 8,645 | | Income tax benefit | (6,725) | (18,141) | | Depreciation & Amortization | 20,922 | 22,193 | | Stock-based compensation | 11,424 | 10,195 | | Other adjustments | 5,963 | 1,331 | | **Adjusted EBITDA (Non-GAAP)** | **$22,029** | **$(21,308)** | [Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow](index=13&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) Free Cash Flow reached a record **$81.9 million** in Q2 FY2025, a substantial increase from the prior year, derived from operating cash flow less capital expenditures Free Cash Flow Reconciliation (in thousands) | Description | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Net cash provided by operating activities (GAAP) | $85,462 | $45,494 | | Purchases of property and equipment | $(3,555) | $(7,990) | | **Free cash flow (Non-GAAP)** | **$81,907** | **$37,504** | [Reconciliation of Net Loss to Adjusted Income and Adjusted EPS](index=14&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20Income%20and%20Adjusted%20EPS) Q2 FY2025 saw a significant turnaround to Adjusted Income of **$3.9 million** and Adjusted EPS of **$0.07**, primarily due to adjustments for amortization and stock-based compensation Adjusted Income and EPS Reconciliation (in thousands, except per share data) | Description | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Net loss (GAAP) | $(17,579) | $(45,581) | | Amortization of intangible assets | 11,154 | 12,270 | | Stock-based and other non-cash compensation | 11,424 | 10,195 | | Other adjustments | 5,963 | 1,383 | | Impact to income taxes | (7,022) | (2,446) | | **Adjusted income (loss) (Non-GAAP)** | **$3,940** | **$(24,181)** | | **Adjusted earnings (loss) per share (Non-GAAP)** | **$0.07** | **$(0.42)** | [Other Information](index=3&type=section&id=Other%20Information) This section provides supplementary information, including details for the investor conference call, a corporate overview of Mercury Systems, and a forward-looking safe harbor statement regarding potential risks - Management will host a conference call and webcast on February 4, 2025, to discuss the quarterly results and business outlook[11](index=11&type=chunk) - Mercury Systems is a technology company that delivers mission-critical processing power for aerospace and defense missions, with products deployed in over **300 programs** across **35 countries**[15](index=15&type=chunk) - The press release includes a forward-looking safe harbor statement, cautioning that actual results could differ materially from projections due to various risks and uncertainties, such as defense program funding, supply chain issues, and geopolitical unrest[17](index=17&type=chunk)

Core Insights - Mercury Systems, Inc. reported solid financial results for the second quarter of fiscal year 2025, with revenues and adjusted EBITDA showing significant year-over-year growth [1][2][4] Financial Performance - Bookings for the quarter reached $242.4 million, resulting in a trailing-twelve-month book-to-bill ratio of 1.12 [2][3] - Revenue for the second quarter was $223.1 million, reflecting a 13% increase compared to $197.5 million in the same quarter of fiscal 2024 [2][3] - Adjusted EBITDA was $22.0 million, a substantial improvement from $(21.3) million in the prior year [5][21] - Free cash flow reached a record $81.9 million, up from $37.5 million year-over-year [2][6] Backlog and Operational Efficiency - The total backlog as of December 27, 2024, was $1.4 billion, an increase of approximately $80.0 million from the previous year [7][9] - Operating expenses were reduced, contributing to increased positive operating leverage [2][6] Net Loss and Earnings - The GAAP net loss for the quarter was $17.6 million, or $0.30 per share, compared to a net loss of $45.6 million, or $0.79 per share, in the same quarter of fiscal 2024 [4][18] - Adjusted earnings per share (EPS) improved to $0.07 from $(0.42) in the prior year [4][41] Cash Flow and Liquidity - Cash flows from operating activities were $85.5 million, compared to $45.5 million in the same quarter of fiscal 2024 [6][20] - The company ended the quarter with cash and cash equivalents of $242.6 million, up from $180.5 million at the end of the previous fiscal year [16][20]

Mercury Systems’ (MRCY) shares appreciated 22.7% in the trailing six months, outperforming the Zacks Aerospace sector and the Zacks Aerospace – Defense Equipment Industry, and its peers, including Hexcel (HXL) , AAR (AIR) and Woodward (WWD) .Over the same timeframe, shares of Hexcel, AAR and Woodward have returned 11.3%, 8.4%, and 7%, respectively. Meanwhile, the sector and the industry have returned 7.3% and 20.4%, respectively.Mercury Systems’ positive share price movement reflects its ability to deliver ...

ANDOVER, Mass., Jan. 21, 2025 (GLOBE NEWSWIRE) -- Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), a technology company that delivers mission-critical processing power to the edge, today announced it was awarded a $24.5 million contract to develop a data processing and storage subsystem for a U.S. Defense Department satellite program. Under a contract with an innovative space systems prime contractor, Mercury will deliver a number of these subsystems that leverage its commercial products and deep experti ...