Mercury Systems(US:MRCY)2026-02-03 22:08Financial Performance - Total revenues increased by $9.7 million, or 4.4%, to $232.9 million for the second quarter ended December 26, 2025, compared to $223.1 million for the same period in 2024[140] - Total revenues increased by $30.5 million, or 7.1%, to $458.1 million for the six months ended December 26, 2025, compared to $427.6 million for the same period in 2024[158] - The net loss for the second quarter ended December 26, 2025, was $15.1 million, compared to a net loss of $17.6 million for the same period in 2024[139] - Net loss for the six months ended December 26, 2025, was $27.6 million, compared to a net loss of $35.1 million for the same period in 2024[157] - Net loss for the second quarter ended December 26, 2025, was $15,095 thousand, compared to a net loss of $17,579 thousand for the same period in 2024, representing a 8.4% improvement[196] - For the six months ended December 26, 2025, the net loss was $27,610 thousand, compared to $35,104 thousand for the same period in 2024, showing a 21.2% improvement[201] Margins and Expenses - Gross margin was 26.0% for the second quarter ended December 26, 2025, a decrease of 130 basis points from 27.3% in the prior year[142] - Gross margin improved to 27.0%, up 70 basis points from 26.3% in the prior year, driven by lower manufacturing variances and net estimate at completion changes[160] - Research and development expenses decreased by $6.0 million, or 28.0%, to $15.4 million during the second quarter ended December 26, 2025, primarily due to efficiency improvements and headcount reductions[145] - Research and development expenses decreased by $11.2 million, or 28.1%, to $28.6 million, attributed to efficiency improvements and headcount reductions[163] - Selling, general and administrative expenses increased by $1.6 million, or 4.0%, to $42.1 million during the second quarter ended December 26, 2025, driven by higher litigation and settlement expenses[144] - Selling, general and administrative expenses rose by $14.4 million, or 19.5%, to $88.0 million, primarily due to higher litigation and settlement expenses[162] Cash Flow and Capital Management - Net cash provided by operating activities was $53.8 million for the six months ended December 26, 2025, down from $70.8 million in the same period of the previous year[184] - Net cash provided by operating activities for the second quarter ended December 26, 2025, was $51,611 thousand, compared to $85,462 thousand for the same period in 2024, reflecting a decrease of 39.7%[205] - Cash and cash equivalents increased by $25.9 million from June 27, 2025, resulting in a total of $334.99 million at the end of the period[183] - The company incurred $15.0 million in cash for the purchase and retirement of common stock during the six months ended December 26, 2025[186] - The company has a 5-year Revolver with a borrowing capacity of $850.0 million, with outstanding borrowings of $591.5 million as of December 26, 2025[178] Strategic Initiatives - The company is committed to investing in R&D and maintaining a diverse workforce to drive innovation and meet customer needs[135] - The company is exploring acquisitions or strategic alliances as part of its growth strategy, which may incur significant costs[190] - A new share repurchase program was authorized for up to $200.0 million, with $185.0 million available for future repurchases as of December 26, 2025[181] Employee and Workforce Information - The company had 2,135 employees as of December 26, 2025, focusing on engineering and research to maintain technological leads[135] - The company incurred $4.1 million in restructuring and other charges during the second quarter ended December 26, 2025, primarily related to severance for workforce reductions[147] - Restructuring and other charges increased to $5.6 million, primarily related to severance costs from workforce reductions[165] Other Financial Metrics - Adjusted EBITDA for the second quarter ended December 26, 2025, was $30,015 thousand, up 36.4% from $22,029 thousand in the prior year[196] - Adjusted income for the second quarter ended December 26, 2025, was $9,437 thousand, or $0.16 per share, compared to $3,940 thousand, or $0.07 per share, in the same quarter of 2024[199] - The effective tax rate for the six months ended December 26, 2025, was impacted by federal and state research and development credits and non-deductible compensation[172] - Interest income increased to $3.7 million for the six months ended December 26, 2025, compared to $1.0 million in the prior year, driven by higher average cash and cash equivalents[168] - Interest expense decreased to $15.7 million from $17.3 million, reflecting lower interest rates on the Revolver[169] - The company reported an impact to income taxes of $(8,135) thousand for the second quarter ended December 26, 2025, compared to $(7,022) thousand for the same period in 2024[199] - Free cash flow for the second quarter ended December 26, 2025, was $45,709 thousand, compared to $81,907 thousand for the same period in 2024, indicating a decrease of 44.3%[205] - Total commitments and contractual obligations amounted to $277.7 million as of December 26, 2025, including $203.7 million in purchase obligations[187] - Acquisition costs and other related expenses were $0.7 million for the six months ended December 26, 2025, compared to $0.4 million in the prior year[166] - Point in time revenue and over time revenue represented 55% and 45% of total revenues, respectively, for the second quarter ended December 26, 2025[140]