Mercury Systems(US:MRCY)2023-11-07 21:37Financial Performance - Total revenues decreased by $46.6 million, or 20.5%, to $181.0 million for the first quarter ended September 29, 2023, compared to $227.6 million for the same period in 2022[123] - The net loss for the first quarter ended September 29, 2023, was $36.7 million, compared to a net loss of $14.3 million for the same period in 2022[119] - Loss from operations was $40.2 million for the first quarter ended September 29, 2023, compared to a loss of $7.2 million in the prior year[122] - Adjusted EBITDA for the first quarter ended September 29, 2023, was $1,957 thousand, a significant decrease from $31,161 thousand in the prior year[160] - Free cash flow for the first quarter ended September 29, 2023, was $(47,083) thousand, compared to $(73,367) thousand in the prior year[168] - Organic revenue for the first quarter ended September 29, 2023, was $180,991 thousand, reflecting a decrease of $46,588 thousand or 20% year-over-year[169] Expenses - Gross margin was 27.9% for the first quarter ended September 29, 2023, a decrease of 640 basis points from 34.3% in the prior year[126] - Research and development expenses increased by $4.1 million, or 14.8%, to $31.9 million for the first quarter ended September 29, 2023, due to an increase in headcount[128] - Selling, general and administrative expenses decreased by $3.1 million, or 8.1%, to $35.8 million for the first quarter ended September 29, 2023, primarily due to cost-saving measures[127] - Amortization of intangible assets decreased by $2.0 million to $12.5 million for the first quarter ended September 29, 2023, due to the full amortization of backlog intangible from the Avalex acquisition[129] - Interest expense increased to $7.9 million in the first quarter ended September 29, 2023, compared to $4.5 million in the prior year, driven by higher interest rates and increased borrowings of $576.5 million[133] - Other net expenses decreased to $1.8 million in the first quarter ended September 29, 2023, from $3.6 million in the same quarter last year[134] - Restructuring and other charges amounted to $9,546 thousand in the first quarter of 2023, compared to $1,508 thousand in the same period of 2022[163] Revenue Sources - The company recognized approximately $38.7 million in revenue over time, representing 58% of total revenues for the first quarter ended September 29, 2023, down from 63% in the prior year[123] - The decrease in total revenue was primarily driven by declines in radar, C4I, and electronic warfare applications, totaling $44.5 million[125] Employment and Cost-Saving Measures - The company employed 2,539 employees as of September 29, 2023, focusing on engineering and research activities[118] - The company initiated cost-saving measures resulting in the elimination of approximately 150 positions, incurring $9.5 million in severance costs during the first quarter ended September 29, 2023[130] Cash Flow and Obligations - Cash used in operating activities was $39.1 million for the first quarter ended September 29, 2023, an improvement from $66.0 million in the prior year[147] - The company invested $8.0 million in the first quarter ended September 29, 2023, an increase from $7.3 million in the same period last year[148] - The company had $65.0 million of borrowings on its Revolver in the first quarter ended September 29, 2023, compared to $60.0 million in the prior year[149] - Total cash and cash equivalents increased by $17.8 million to $89.4 million as of September 29, 2023[145] - The company has a total of $128.7 million in purchase obligations as of September 29, 2023, primarily for inventory components and services[150] Taxation - The company recorded an income tax benefit of $13.0 million on a loss before income taxes of $49.7 million for the first quarter ended September 29, 2023[135] - The impact to income taxes for the first quarter ended September 29, 2023, was $(10,758) thousand, compared to $(5,191) thousand in the prior year[163] Shareholder Impact - Diluted loss per share for the first quarter ended September 29, 2023, was $(0.64), compared to $(0.26) for the same period in 2022[163] - The company expects to continue incurring expenses similar to those reflected in adjusted income and adjusted EPS, indicating ongoing operational costs[161]