Financial Data and Key Metrics Changes - Q4 2025 revenue reached a record $215.8 million, a 9.4% increase from $197.3 million in Q4 2024, marking the 19th consecutive quarter of year-over-year revenue growth [8][24] - Gross margins improved to 27.7% in Q4 2025, up from 23.5% in Q4 2024, with adjusted EBITDA margins at 17.5%, up from 13% in 2022 [10][12][14] - GAAP EPS was $0.48 per diluted share in Q4 2025, compared to $0.45 in Q4 2024, while adjusted diluted EPS was $1.05, up from $0.75 in the prior year [13][27] Business Line Data and Key Metrics Changes - Military and space segment revenues grew 13% to $124 million in Q4 2025, driven by strong performance in fixed-wing aircraft, rotorcraft, and missiles [17][24] - Commercial aerospace segment revenue increased by 1% to $82 million, with growth in A320 and 787 platforms offsetting declines in the 737 MAX [20][24] - Structural Systems segment revenue was $96 million, up from $90 million, with operating income margin increasing to 15.2% from 3.6% [28] - Electronic Systems segment revenue rose to $120 million, with operating income margin at 18.4%, up from 17.7% [29] Market Data and Key Metrics Changes - The remaining performance obligation (RPO) grew to a record $1.1 billion, increasing by $75 million sequentially, primarily in defense businesses [9] - Book-to-bill ratio was 1.3x in Q4, indicating strong order intake relative to revenue [10] - The company expects continued strength in defense business and a recovery in commercial aerospace in the second half of 2026 [16] Company Strategy and Development Direction - The company is executing its VISION 2027 strategy, focusing on increasing the revenue percentage of engineered products and aftermarket content, which rose to 23% in 2025 from 15% in 2022 [7] - The next investor conference will present the Vision 2032 strategy, indicating a long-term growth outlook [8] - The company aims to achieve an 18% EBITDA margin by 2027, with current margins trending positively [12][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum from both military and commercial aerospace markets, anticipating mid-to-high single-digit revenue growth for 2026 [16][14] - The company highlighted the importance of relationships with defense primes and the expected ramp-up in missile production as key growth drivers [18][70] - Management noted that tariffs have not materially impacted results and expect to continue mitigating their effects [25][26] Other Important Information - The company entered into a binding settlement for the Guaymas fire litigation, resulting in a $150 million payment, with $56 million covered by insurance [15] - The restructuring program has been completed, with expected annual savings of $11 million to $13 million by the end of 2026 [31] Q&A Session Summary Question: Inventory destocking and working capital - Management expects continued destocking in the first half of 2026, with improvements anticipated in the second half as inventory levels decrease [39][40] Question: Medium-term opportunities in defense - Management indicated that they have significant existing capacity to meet increased demand, with a conservative estimate of at least 30% available capacity [50][51] Question: Margin outlook for 2026 - Management suggested that the exit rate for EBITDA margins should be viewed closer to 16.5% for 2026, with potential for improvement as production ramps up [59][60] Question: M&A market activity - Management noted increased activity in the M&A market, with a focus on disciplined evaluation of opportunities within their target range [96][97]

PRESS RELEASE Bloomberg (THEON:NA) / Reuters (THEON.AS) Transformative year leading to a materially enhanced strategic platformOrder intake up over 180%, supported by c.€1 bn firm order through OCCARRevenue and Adj. EBIT up c. 26% and 28% respectively vs FY 2024, with Adj. EBIT margin >26%Have entered 2026 with strong momentum from structural growth trends, historically high backlog and expanded product portfolioSmall bolt-on M&A envisaged in FY 2026 without the need for a new Share Capital Increase 16 Feb ...

Core Insights - The company reported a record financial performance for the full year 2025, with significant growth in revenue and operating income across all segments, driven by strong demand in naval defense and commercial nuclear markets [1][4][11] - New orders increased by 18% in the fourth quarter, resulting in a book-to-bill ratio of nearly 1.2 times, indicating robust demand [1][6] - The company achieved a record operating margin of 18.6%, reflecting a year-over-year expansion of 110 basis points, attributed to operational excellence initiatives and restructuring actions [1][5][11] Financial Performance - Total sales for the fourth quarter reached $947 million, a 15% increase year-over-year, with organic growth of 11% [3][12] - Operating income rose by 14%, with diluted earnings per share growing by 16% year-over-year, driven by higher aerospace and defense sales [2][5] - Free cash flow was strong at $315 million, up 13%, reflecting a conversion rate of 224% [2] Segment Performance - Aerospace and Defense markets saw a 16% growth, exceeding expectations, driven by increased revenues in Ground and Naval Defense [3][12] - Commercial aerospace sales increased by over 20%, with a 13% growth in commercial markets, primarily due to higher revenues in the Power and Process market [2][15] - The Enablement Power segment reported a 21% increase in sales, driven by strong revenue growth in Naval Defense and aftermarket services [15][16] Future Outlook - For 2026, the company projects organic sales growth of 6% to 8%, with operating income growth expected to outpace sales growth [10][11] - The guidance includes anticipated operating margin expansion of 30 to 60 basis points, reaching a range of 18.9% to 19.2% [10][11] - Diluted EPS is expected to grow by 11% to 15%, supported by strong operational performance and a reduction in share count due to share repurchases [31][32] Market Trends - The company is well-positioned to benefit from increased global defense spending, particularly from the U.S. budget and NATO commitments [35][39] - In the commercial nuclear sector, the U.S. government's support for nuclear energy is expected to accelerate opportunities, including the construction of new reactors [41][42] - The company anticipates strong growth in small modular reactor (SMR) developments as projects transition from design to prototype stages [43][44] Operational Excellence - The company continues to focus on operational and commercial excellence, which has contributed to margin expansion and improved profitability [66][70] - Investments in research and development are being accelerated to support future organic growth, with a commitment to grow R&D faster than sales over time [5][37] - The disciplined approach to capital allocation aims to enhance shareholder value through strategic investments and share repurchases [9][10]

Financial Data and Key Metrics Changes - Sales for Q4 2025 reached $947 million, a 15% increase year-over-year, with organic growth of 11% and contributions from the I&C Solutions acquisition [4][5] - Operating income increased by 14%, with an operating margin of 19.7% [5][6] - Diluted earnings per share grew by 16% year-over-year, driven primarily by higher A&D sales [5][6] - Free cash flow was strong at $315 million, up 13%, reflecting a 224% conversion rate [6] - For the full year 2025, diluted earnings per share increased by 21%, and adjusted free cash flow reached a record $554 million [7][8] Business Line Data and Key Metrics Changes - Aerospace & Industrial segment sales increased by 5%, with strong OEM sales growth in commercial aerospace [12][13] - Defense Electronics segment saw a 17% sales growth, driven by increased demand for tactical communications equipment and embedded computing revenues [14][15] - Naval & Power segment sales increased by 21%, primarily due to strong revenue growth in naval defense and contributions from the I&C Solutions acquisition [15][16] Market Data and Key Metrics Changes - A&D markets experienced a 16% growth, with commercial aerospace sales increasing by over 20% [5][9] - The overall order book reached a record of $4.1 billion, up 10% year-over-year, with a book-to-bill ratio of nearly 1.2 times [8][10] - Commercial nuclear market showed tremendous growth, driven by strong demand for aftermarket equipment and advancements in SMR designs [9][21] Company Strategy and Development Direction - The company continues to execute its "Pivot to Growth" strategy, focusing on operational and commercial excellence to drive sales and profitability [4][10] - Investments in research and development are being accelerated to support future organic growth, with a commitment to grow R&D faster than sales over time [7][10] - The company is well-positioned to benefit from increased global defense spending and the U.S. government's focus on nuclear energy dominance [32][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong performance in 2026, projecting organic sales growth of 6%-8% [10][11] - The outlook for A&D markets includes anticipated growth driven by U.S. defense budget priorities and increased demand for secure embedded computing solutions [18][20] - Management acknowledged potential headwinds in ground defense due to delays in orders but remains optimistic about future opportunities [8][19] Other Important Information - The company executed a record $465 million in share repurchases in 2025 and increased its annual dividend for the ninth consecutive year [10] - Capital expenditures are expected to increase by more than 25% year-over-year, reflecting ongoing investments to support growth [29][30] Q&A Session Questions and Answers Question: Exposure to missile programs and growth opportunities - The company has minor exposure to missile programs, primarily in telemetry and flight test instrumentation, but is well-positioned in related areas such as the Iron Dome [43][44] Question: Clarification on expected AP1000 orders - Orders could come from either European customers or the U.S., with Westinghouse as the primary customer; specifics on order size are not available at this time [46][47] Question: Free cash flow guidance and working capital dynamics - The company has improved working capital management, targeting a working capital percentage of sales of approximately 18% for 2026, which would be a record [55][57] Question: C-17 order timing and defense electronics bookings - The C-17 order is a Q1 order, and delayed bookings in defense electronics were noted, impacting the book-to-bill ratio [60] Question: Operational and commercial excellence initiatives - The Operational Growth Platform has contributed approximately $12 million to the P&L in 2025, with ongoing initiatives expected to continue driving margin expansion [68][72]

Czech defense firm Excalibur International, part of the CSG group, and Türkiye’s defense electronics leader Aselsan have signed a strategic cooperation agreement to establish an EU-based joint venture while simultaneously introducing the Korkut air defence system integrated on the Tatra Force 6×6 wheeled platform. The partnership aims to expand joint defense capabilities for European and global markets. The agreement is a significant step toward strengthening defense cooperation not only in Central and Eas ...

Core Insights - Mercury Systems reported revenue of $232.87 million for the quarter ended December 2025, reflecting a year-over-year increase of 4.4% and a surprise of +12.29% over the Zacks Consensus Estimate of $207.39 million [1] - The company's EPS for the quarter was $0.16, significantly higher than the $0.07 reported in the same quarter last year, resulting in an EPS surprise of +128.57% compared to the consensus estimate [1] Revenue Performance - Net Revenue from Sensor & Effector - Radar was $53.72 million, exceeding the two-analyst average estimate of $34.55 million, with a year-over-year change of +14% [4] - Net Revenue from Sensor & Effector - Electronic Warfare reached $27.48 million, surpassing the average estimate of $20.07 million, marking a year-over-year increase of +14.9% [4] - Net Revenue from Other was reported at $36.85 million, slightly below the average estimate of $39.5 million, showing a year-over-year decline of -11.2% [4] - Total Net Revenue from Sensor & Effector was $105.16 million, compared to the average estimate of $74.32 million, indicating a year-over-year change of +12.9% [4] - Net Revenue from C4I was $90.87 million, slightly below the average estimate of $93.33 million, with a year-over-year change of +2.7% [4] - Net Revenue from Other Sensor & Effector was $23.95 million, exceeding the average estimate of $19.7 million, representing a year-over-year increase of +8.2% [4] Stock Performance - Shares of Mercury Systems have returned +15.5% over the past month, outperforming the Zacks S&P 500 composite's +1.8% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Insights - The company reported Q2 FY 2026 results that exceeded expectations, showcasing solid year-over-year growth in backlog, revenue, adjusted EBITDA, and free cash flow [1][4][18] - Key priorities include performance excellence, driving organic growth, expanding margins, and improving free cash flow [1][5][12][14] Financial Performance - Bookings for Q2 were $288 million with a book-to-bill ratio of 1.23, resulting in a record backlog of nearly $1.5 billion, an increase of 8.8% year-over-year [4][10][18] - Revenue for Q2 was $233 million, reflecting a 4.4% increase compared to the previous year, with first-half revenue up 7.1% year-over-year [4][18][19] - Adjusted EBITDA was $30 million, up 36.3% year-over-year, with an adjusted EBITDA margin of 12.9%, an increase of 300 basis points [5][23][12] - Free cash flow for Q2 was $46 million, significantly ahead of expectations, with net working capital reduced by $61 million year-over-year [5][14][24] Operational Highlights - The company accelerated progress on high-priority customer programs, generating approximately $30 million of revenue planned for Q3 [6][19] - Efforts to increase capacity and automate processes are ongoing, including the expansion of manufacturing space in Phoenix, Arizona [7][8][39] - The focus on customer deliveries led to record first-half revenue and the highest first-half point-in-time revenue since FY 2021 [7][18] Strategic Initiatives - The company is focused on expanding margins through backlog margin expansion and operational optimization, with a goal of achieving adjusted EBITDA margins in the low to mid-twenty percent range [12][13] - Continued emphasis on reducing net working capital, which is now at its lowest level since Q1 FY 2022, with net debt also reduced to $257 million [14][24] - The company anticipates that increased defense budgets and domestic priorities will positively impact demand across multiple programs [11][73] Future Outlook - The company maintains its full-year view for FY 2026, expecting low single-digit annual revenue growth, with Q3 revenue anticipated to be down year-over-year [16][18] - Adjusted EBITDA margin is expected to approach the mid-teens for the full year, with Q4 anticipated to have the highest margin of the fiscal year [17][18] - The company remains optimistic about potential tailwinds from increased global defense budgets and domestic initiatives like Golden Dome [18][73]

Financial Data and Key Metrics Changes - Bookings reached $288 million with a book-to-bill ratio of 1.23, resulting in a record backlog of nearly $1.5 billion, an increase of 8.8% year-over-year [7][21] - Revenue for Q2 was $233 million, reflecting a year-over-year increase of 4.4% [21] - Adjusted EBITDA was $30 million, up 36.3% year-over-year, with an adjusted EBITDA margin of 12.9%, an increase of 300 basis points [7][24] - Free cash flow was $46 million, significantly ahead of expectations, with cash on hand totaling $335 million [8][25] Business Line Data and Key Metrics Changes - The company recognized $4 million in net adverse EAC changes, consistent with previous quarters, indicating sound execution on development and production programs [9] - Approximately $30 million of revenue was accelerated from Q3 into Q2, positively impacting adjusted EBITDA by $10 million [9][24] Market Data and Key Metrics Changes - The company experienced solid execution across its broad portfolio, contributing to a record first-half revenue and the highest first-half point-in-time revenue since FY 2021 [9][17] - Bookings included significant awards from both domestic and international customers, reflecting a mix of franchise program extensions and new design wins [11][12] Company Strategy and Development Direction - The company is focused on four priorities: performance excellence, driving organic growth, expanding margins, and improving free cash flow [5][10] - The strategy includes increasing capacity, adding automation, and consolidating subscale sites to drive scalability and efficiency [10] - The company aims for adjusted EBITDA margins in the low-to-mid 20% range and free cash flow conversion of 50% [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the market backdrop and the potential for increased global defense budgets to positively impact demand [19][90] - The company maintains its full-year outlook for FY 2026, expecting low single-digit annual revenue growth, with Q3 revenue anticipated to decline year-over-year [18][19] Other Important Information - The company ended Q2 with net debt of $257 million, the lowest level since Q1 FY 2022, and continues to focus on reducing net working capital [16][25] - Operating expenses decreased year-over-year, driven by efficiency improvements and headcount reductions [23] Q&A Session Questions and Answers Question: How much lower margin backlog is left to convert? - Management indicated that the lower margin backlog will continue to flow through over time, with expectations for most of the impact to be resolved by FY 2027 [33][34] Question: What is the current capacity for the Common Processing Architecture (CPA)? - The company is ramping up production in CPA and is confident in meeting increased demand without significant additional investment [41][42] Question: Why is there no upward revision in guidance despite strong performance? - Management explained that while they have outperformed expectations, they are cautious about future accelerations due to uncertainties in material availability [44][48] Question: What is the impact of unbilled receivables on revenue? - Management acknowledged that unbilled balances are still high and represent a drag on revenue, but they did not quantify the exact impact [73] Question: What is the status of the Golden Dome initiative and international orders? - Management noted ongoing conversations regarding Golden Dome and international opportunities, with potential for significant increases in quantities if these materialize [90]

Financial Data and Key Metrics Changes - Bookings reached $288 million with a book-to-bill ratio of 1.23, resulting in a record backlog of nearly $1.5 billion, an increase of 8.8% year-over-year [7][21] - Revenue for Q2 was $233 million, reflecting a year-over-year increase of 4.4% [21] - Adjusted EBITDA was approximately $30 million, up 36.3% year-over-year, with an adjusted EBITDA margin of 12.9%, an increase of 300 basis points [7][24] - Free cash flow for the quarter was $46 million, down from $82 million in the prior year, primarily due to accelerated cash receipts [25][28] Business Line Data and Key Metrics Changes - The company recognized $4 million of net adverse EAC changes, consistent with previous quarters, indicating sound execution on development and production programs [9] - Approximately $30 million of revenue was generated from accelerated progress on high-priority programs, primarily planned for Q3 [22] Market Data and Key Metrics Changes - The company noted increased defense budgets globally and domestic priorities like Golden Dome as potential drivers for higher demand across multiple programs [13][19] - Customer conversations are progressing regarding significant increases in quantities for various programs, indicating optimism for future demand [90] Company Strategy and Development Direction - The company is focused on four priorities: performance excellence, driving organic growth, expanding margins, and improving free cash flow [5][10] - Efforts to increase capacity and automate processes are ongoing, with a new 50,000 sq ft factory space in Phoenix to support ramp production [10][41] - The company aims for adjusted EBITDA margins in the low-to-mid 20% range and free cash flow conversion of 50% [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market backdrop and the company's ability to deliver results in line with targeted profiles, despite expecting Q3 revenue to be down year-over-year [18][19] - The company maintains its full-year view for FY 2026, anticipating low single-digit annual revenue growth [18] Other Important Information - The company ended Q2 with $335 million in cash, with net debt reduced to $257 million, the lowest level since Q1 FY 2022 [16][25] - Operating expenses decreased year-over-year, driven by efficiency improvements and headcount reductions [23] Q&A Session Summary Question: How much lower margin backlog is left to convert? - Management indicated that the lower margin backlog will continue to flow through over time, with expectations for improvement as higher margin bookings replace it [33][34] Question: What is the impact of the stop work order on the SCAR program? - Management stated that they do not quantify individual contracts, but the SCAR program is incorporated into their outlook without significant changes [83] Question: What are the potential choke points affecting acceleration? - Management noted that they are actively working with suppliers to address material availability, but cannot guarantee acceleration until materials are confirmed [75][76]

Core Insights - Kopin Corporation has received an initial microdisplay production order for a new rotary-wing helmet-mounted display (HMD) system aimed at mission-critical defense applications [1][3] - The rotary-wing HMD system utilizes Kopin's custom-designed active-matrix liquid crystal (AMLCD) microdisplays, providing augmented reality (AR) capabilities that enhance situational awareness and operational effectiveness for pilots [2][3] Company Overview - Kopin Corporation specializes in application-specific optical systems and high-performance microdisplays for various sectors, including defense, training, enterprise, industrial, consumer, and medical products [1][4] - The company's product portfolio includes microdisplays, display modules, eyepiece assemblies, image projection modules, and various display technologies such as AMLCD, FLCoS, µLED, and OLED [4]