Mercury Systems(MRCY) - 2025 Q3 - Quarterly Report

Financial Performance - Consolidated revenues for the third quarter ended March 28, 2025, were $211.4 million, a 1.5$208.3 million in the same quarter of the previous year[129]. - The company reported a net loss of $19.2 million for the third quarter, compared to a net loss of$44.6 million in the same quarter last year[129]. - Total revenues rose by $52.2 million, or 8.9$638.9 million for the nine months ended March 28, 2025, compared to $586.7 million in the prior year[148]. - Net loss narrowed to$54.3 million, or 8.5% of revenue, for the nine months ended March 28, 2025, compared to a net loss of $126.9 million, or 21.6$19,170,000, resulting in a loss per share of $0.33, compared to a net loss of$44,574,000 and a loss per share of $0.77 for the same period in 2024[189]. - For the nine months ended March 28, 2025, the net loss was$54,274,000, with a loss per share of $0.93, compared to a net loss of$126,863,000 and a loss per share of $2.20 for the same period in 2024[191]. Expenses and Cost Management - Gross margin improved to 27.0$3.7 million[135]. - Research and development expenses decreased by 25.9% to 16.0 million, primarily due to headcount reductions of 185 R&D employees[138]. - Selling, general and administrative expenses decreased by 0.4% to 43.0 million, attributed to lower bad debt expense and compensation costs[137]. - Total operating expenses were $74.5 million, down from$86.3 million in the prior year, reflecting cost-saving measures[132]. - Selling, general and administrative expenses decreased by $6.7 million, or 5.4$116.7 million during the nine months ended March 28, 2025[153]. - Research and development expenses decreased by $26.2 million, or 32.0$55.7 million for the nine months ended March 28, 2025[154]. - Interest expense decreased to $25.4 million during the nine months ended March 28, 2025, from$25.9 million in the same period of 2024[159]. - Other expense, net decreased to $2.9 million during the nine months ended March 28, 2025, compared to$5.7 million in the prior year[160]. Cash Flow and Liquidity - The company had a net cash inflow of $100.8 million from operating activities for the nine months ended March 28, 2025, compared to an outflow of$11.4 million for the same period in 2024[174]. - Cash and cash equivalents increased by $89.3 million from June 28, 2024, to March 28, 2025, totaling$269.8 million at the end of the period[173]. - Free cash flow for the third quarter ended March 28, 2025, was $24,060,000, compared to a negative free cash flow of$25,743,000 for the same period in 2024[195]. - For the nine months ended March 28, 2025, free cash flow was $85,071,000, while for the same period in 2024, it was a negative$35,322,000[195]. - The company reported net cash provided by operating activities of $29,974,000 for the third quarter ended March 28, 2025, compared to a cash used in operating activities of$17,805,000 for the same period in 2024[195]. Investments and Strategic Initiatives - The company invested $11.1 million in investing activities during the nine months ended March 28, 2025, a decrease of$12.8 million compared to $23.9 million in the same period in 2024[175]. - The company is exploring acquisitions or strategic alliances as part of its growth strategy[180]. Employee and Workforce Management - The company had 2,200 employees as of March 28, 2025, focusing on engineering and research to maintain technological leads[128]. - Restructuring and other charges amounted to$4.9 million, down from $9.8 million in the prior year, related to workforce reductions[140]. Tax and Regulatory Matters - The effective tax rate for the nine months ended March 28, 2025, was impacted by federal and state research and development credits and return to provision adjustments[162]. - The company maintains a valuation allowance on the majority of foreign net operating loss carryforwards and state research and development tax credit carryforwards[163]. Debt and Financing - As of March 28, 2025, the company had a borrowing capacity of approximately$900.0 million, with outstanding borrowings of $591.5 million[169]. - 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[167]. Litigation and Market Risk - The company experienced litigation and settlement expenses of$5,467,000 for the third quarter ended March 28, 2025, compared to $2,096,000 for the same period in 2024[189]. - There were no material changes in the company's exposure to market risk from June 28, 2024, to March 28, 2025[199].