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Mercury Systems(MRCY) - 2025 Q2 - Quarterly Report
MRCYMercury Systems(MRCY)2025-02-04 22:08
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Revenue Performance - Total revenues increased by 25.7million,or13.025.7 million, or 13.0%, to 223.1 million for the second quarter ended December 27, 2024, compared to 197.5millionforthesameperiodin2023[133].−Totalrevenuesincreasedby197.5 million for the same period in 2023[133]. - Total revenues increased by 49.1 million, or 13.0%, to 427.6millionforthesixmonthsendedDecember27,2024,comparedto427.6 million for the six months ended December 27, 2024, compared to 378.5 million for the same period in 2023[151]. - Point in time revenue represented 55% of total revenues for the second quarter ended December 27, 2024, an increase from 47% in the prior year[133]. - The increase in total revenue by end application was primarily driven by radar applications, which increased by 36.0million[134].ProfitabilityandLoss−Thecompanyreportedanetlossof36.0 million[134]. Profitability and Loss - The company reported a net loss of 17.6 million for the second quarter ended December 27, 2024, compared to a net loss of 45.6millionforthesameperiodin2023[129].−ThenetlossforthesixmonthsendedDecember27,2024,was45.6 million for the same period in 2023[129]. - The net loss for the six months ended December 27, 2024, was 35.1 million, an improvement from a net loss of 82.3millioninthesameperiodin2023[188].−ForthesecondquarterendedDecember27,2024,thecompanyreportedanetlossof82.3 million in the same period in 2023[188]. - For the second quarter ended December 27, 2024, the company reported a net loss of 17,579,000, or (0.30)pershare,comparedtoanetlossof(0.30) per share, compared to a net loss of 45,581,000, or (0.79)pershareforthesameperiodin2023[192].−ForthesixmonthsendedDecember27,2024,thecompanyreportedanetlossof(0.79) per share for the same period in 2023[192]. - For the six months ended December 27, 2024, the company reported a net loss of 35,104,000, or (0.60)pershare,comparedtoanetlossof(0.60) per share, compared to a net loss of 82,289,000, or (1.44)pershareforthesameperiodin2023[194].ExpensesManagement−Researchanddevelopmentexpensesdecreasedby(1.44) per share for the same period in 2023[194]. Expenses Management - Research and development expenses decreased by 7.1 million, or 25.0%, to 21.4million,primarilyduetoheadcountreductionsof111employees[138].−Selling,generalandadministrativeexpensesdecreasedby21.4 million, primarily due to headcount reductions of 111 employees[138]. - Selling, general and administrative expenses decreased by 4.0 million, or 8.9%, to 40.5million,mainlyduetolowerbaddebtexpenseandcompensationcosts[137].−Researchanddevelopmentexpensesdecreasedby40.5 million, mainly due to lower bad debt expense and compensation costs[137]. - Research and development expenses decreased by 20.6 million, or 34.1%, to 39.8million,mainlyduetoheadcountreductionsanddecreasedspendingonoutsideservices[156].−Selling,generalandadministrativeexpensesdecreasedby39.8 million, mainly due to headcount reductions and decreased spending on outside services[156]. - Selling, general and administrative expenses decreased by 6.6 million, or 8.2%, to 73.7million,primarilyduetoworkforcereductionsandlowerbaddebtexpenses[155].CashFlowandFinancialPosition−CashprovidedbyoperatingactivitiesforthesixmonthsendedDecember27,2024,was73.7 million, primarily due to workforce reductions and lower bad debt expenses[155]. Cash Flow and Financial Position - Cash provided by operating activities for the six months ended December 27, 2024, was 70.8 million, a significant increase from 6.4millionforthesameperiodin2023[175].−Thecompanygenerated6.4 million for the same period in 2023[175]. - The company generated 85,462,000 in net cash provided by operating activities for the second quarter, an increase from 45,494,000inthesamequarterof2023[198].−Freecashflowforthesecondquarterwas45,494,000 in the same quarter of 2023[198]. - Free cash flow for the second quarter was 81,907,000, compared to 37,504,000intheprioryear[198].−ForthesixmonthsendedDecember27,2024,freecashflowwas37,504,000 in the prior year[198]. - For the six months ended December 27, 2024, free cash flow was 61,011,000, a significant improvement from a negative free cash flow of (9,579,000)inthesameperiodof2023[198].TaxandInterest−Thecompanyrecordedanincometaxbenefitof(9,579,000) in the same period of 2023[198]. Tax and Interest - The company recorded an income tax benefit of 12.3 million on a loss before income taxes of 47.4millionforthesixmonthsendedDecember27,2024[163].−TheeffectivetaxrateforthesixmonthsendedDecember27,2024wasaffectedbyfederalandstateresearchanddevelopmentcreditsandnon−deductiblecompensation[164].−Interestincomeroseto47.4 million for the six months ended December 27, 2024[163]. - The effective tax rate for the six months ended December 27, 2024 was affected by federal and state research and development credits and non-deductible compensation[164]. - Interest income rose to 1.0 million for the six months ended December 27, 2024, compared to 0.1millionintheprioryear,attributedtohigheraveragecashandcashequivalents[160].−Interestexpenseincreasedto0.1 million in the prior year, attributed to higher average cash and cash equivalents[160]. - Interest expense increased to 17.3 million from 16.5million,drivenbyhigheraverageoutstandingborrowings[161].WorkforceandRestructuring−ThecompanyexecutedaworkforcereductiononJanuary29,2025,eliminatingapproximately145positions,withexpectedrestructuringchargesof16.5 million, driven by higher average outstanding borrowings[161]. Workforce and Restructuring - The company executed a workforce reduction on January 29, 2025, eliminating approximately 145 positions, with expected restructuring charges of 5.0 million[141]. - The company has over 2,374 employees, focusing on engineering and research to maintain technological leads in high-performance sensor processing[128]. Strategic Initiatives - The company filed a shelf registration statement on October 4, 2023, to raise capital for acquisitions, debt repayment, and other corporate purposes[168]. - The company continues to explore acquisitions or strategic alliances as part of its growth strategy[181]. - The company executed Amendment No. 5 to the Revolver, increasing the Consolidated Total Net Leverage Ratio covenant from 4.50 to 5.25 for Q2 2024[169]. Market Presence - Mercury Systems' products are deployed in more than 300 programs across 35 countries, highlighting its global market presence[123]. Other Financial Metrics - Adjusted EBITDA for the six months ended December 27, 2024, was 43.5million,comparedtoanadjustedEBITDAof43.5 million, compared to an adjusted EBITDA of (19.4) million for the same period in 2023[188]. - Adjusted income for the second quarter was 3,940,000,or3,940,000, or 0.07 per share, compared to an adjusted loss of 24,181,000,or24,181,000, or (0.42) per share in the prior year[192]. - Adjusted income for the six months was 6,384,000,or6,384,000, or 0.11 per share, compared to an adjusted loss of 37,860,000,or37,860,000, or (0.66) per share in the prior year[194]. - The company incurred 22,389,000inamortizationofintangibleassetsforthesixmonthsendedDecember27,2024,comparedto22,389,000 in amortization of intangible assets for the six months ended December 27, 2024, compared to 24,817,000 in the same period of 2023[194]. - The company reported 11,424,000instock−basedandothernon−cashcompensationexpenseforthesecondquarterof2024,upfrom11,424,000 in stock-based and other non-cash compensation expense for the second quarter of 2024, up from 10,195,000 in the same quarter of 2023[192]. - There were no material changes in the company's exposure to market risk from June 28, 2024, to December 27, 2024[202].