Mercury Systems(MRCY)2025-02-04 22:08Revenue 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].