Mercury Systems (MRCY) Q4 2025 Earnings Call August 11, 2025 05:00 PM ET Company ParticipantsTyler Hojo - VP - IRWilliam Ballhaus - Chairman & CEODavid Farnsworth - EVP & CFOKen Herbert - Managing DirectorPete Skibitski - Director - Aerospace & Defense Equity ResearchSeth Seifman - Executive DirectorConor Walters - US Aerospace & Defense and Airlines Equity Research AssociateSamuel Struhsaker - Equity Research AssociateConference Call ParticipantsPeter Arment - Senior Research AnalystJonathan Ho - Research ...

Market Outlook - The market is expected to experience a volatile pattern in early August, followed by a return to an upward trend in late August, potentially reaching new highs[2] - Concerns regarding the US-China tariff conflict may persist until around August 12, after which risk appetite is likely to recover[3] - The overall free cash flow of listed companies is anticipated to improve, reinforcing the logic for re-evaluating A-shares[3] Economic Indicators - The GDP growth rate for the first half of the year is reported at 5.3%, indicating a stable economic environment[17] - The second quarter earnings growth for listed companies is expected to remain between 0% and 5%[16] - The market has successfully surpassed key resistance levels, with the Shanghai Composite Index above 3450 and the WIND All A Index above 5400 points[18] Investment Strategy - A "barbell" investment strategy is recommended, focusing on high ROE and free cash flow companies on one side, and sectors like AI and defense on the other[19] - Key sectors to watch include non-bank financials, pharmaceuticals, electric power equipment, and machinery[21] Fund Flows - Incremental capital is expected to continue flowing into the market, driven by financing, private equity, and industry ETFs[7] - The net inflow of funds is likely to persist, supported by the positive feedback loop from the market's performance[25] Industry Focus - Attention should be given to sectors with high earnings growth or marginal improvement, particularly in TMT, manufacturing, and essential consumer goods[8] - The focus on "de-involution" competition is expected to drive capacity clearing in various industries, enhancing profitability[21]