Mercury Systems' Q3 Earnings Meet Estimates, Revenues Rise Y/Y

Core Insights - Mercury Systems (MRCY) reported third-quarter fiscal 2025 results with earnings in line with estimates and revenues exceeding expectations [1] - Non-GAAP earnings were 6 cents per share, a significant improvement from a loss of 26 cents in the same quarter last year [1] - Non-GAAP revenues increased by 1.5% year over year to $211.4 million, surpassing the consensus estimate by 4.07% [1] Financial Performance - Total bookings for the quarter were $200.4 million, resulting in a book-to-bill ratio of 0.95 [3] - Total backlog as of March 28, 2025, was $1.34 billion, up by $51 million from the previous year [3] - Gross profit rose to $57.1 million, reflecting a 40.5% year-over-year increase, with gross margin expanding from 19.5% to 27% [4] - Research and development (R&D) expenses decreased by 25.9% year over year to $16 million, representing 7.56% of revenues [5] - Selling, general and administrative (SG&A) expenses fell by 0.3% year over year to $43 million, accounting for 20.4% of revenues [5] - Total operating expenses decreased by 13.7% to $74.5 million, with operating expenses as a percentage of revenues down 620 basis points to 35.3% [6] - Adjusted EBITDA was $24.7 million, a turnaround from a negative EBITDA of $2.397 million in the prior year [6] Cash Flow and Balance Sheet - Cash and cash equivalents stood at $269.8 million as of March 28, 2025, up from $242.6 million at the end of December 2024 [7] - Long-term debt was reported at $591.5 million as of March 27, 2025 [7] - Cash flows from operating activities for the third quarter were $30 million, down from $85.5 million in the previous quarter [7] - Free cash flow for the quarter was $24.1 million, compared to $81.9 million in the second quarter [8] Future Estimates - The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is $248.11 million, indicating a slight year-over-year decline of 0.18% [9] - The consensus estimate for earnings is 21 cents per share, reflecting an 8.7% decline from the same quarter last year [9] Market Performance - MRCY shares have gained 20% year to date, outperforming the Zacks Aerospace sector and peers such as Spirit Aerosystems and CAE [2] - Spirit Aerosystems and CAE have seen year-to-date growth of 8.1%, 4.9%, and 0.2%, respectively [2]