Q4 FY24 Bookings of $284.4 million; book-to-bill ratio of 1.14 Q4 FY24 Revenue of $248.6 million; GAAP net loss and adjusted EBITDA ($10.8) million and $31.2 million, respectively Record backlog of $1.3 billion; up 16% year-over-year ANDOVER, Mass., Aug. 13, 2024 (GLOBE NEWSWIRE) -- Mercury Systems, Inc. (NASDAQ:MRCY, www.mrcy.com)), reported operating results for the fourth quarter and fiscal year 2024, ended June 28, 2024. "In fiscal 2024, we made considerable progress in addressing what we believe to be transient challenges in the business, and we enter fiscal 2025 confident in our strategic positioning as a leader in mission-critical processing at the edge and our ability to deliver predictable organic growth with expanding margins and robust free cash flow," said Bill Ballhaus, Mercury's Chairman and CEO. "Our fourth quarter fiscal 2024 results reflect solid progress in each of our four priority focus areas, with highlights that include retiring risk across our remaining challenged programs and returning to pilot production on our common processing architecture area; expanding our record backlog to over $1.3 billion, up 16% year-over-year; further streamlining of our operations to increase positive operating leverage as we expect to return to organic growth; and reversing the multi-year trend of growth in working capital, producing a record $61.4 million of free cash flow in the quarter." Fourth Quarter Fiscal 2024 Results Total Company fourth quarter fiscal 2024 revenues were $248.6 million, compared to $253.2 million in the fourth quarter of fiscal 2023. Total bookings for the fourth quarter of fiscal 2024 were $284.4 million, yielding a book-to-bill ratio of 1.14 for the quarter. Total Company GAAP net loss and loss per share for the fourth quarter of fiscal 2024 were $10.8 million, and $0.19, respectively, compared to GAAP net loss and loss per share of $8.2 million, and $0.15, respectively, for the fourth quarter of fiscal 2023. Adjusted earnings per share ("adjusted EPS") was $0.23 per share for the fourth quarter of fiscal 2024, compared to $0.11 per share in the fourth quarter of fiscal 2023. Fourth quarter fiscal 2024 adjusted EBITDA for the total Company was $31.2 million, compared to $21.9 million for the fourth quarter of fiscal 2023. Cash flows provided by operating activities in the fourth quarter of fiscal 2024 were $71.8 million, compared to $12.6 million in the fourth quarter of fiscal 2023. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $61.4 million for the fourth quarter of fiscal 2024 and $3.8 million for the fourth quarter of fiscal 2023. Full Year Fiscal 2024 Results Full year fiscal 2024 revenues were $835.3 million, compared to $973.9 million full year fiscal 2023. Total bookings for fiscal 2024 were $1.02 billion, yielding a book-to-bill ratio of 1.22 for the year. Total Company GAAP net loss and loss per share for fiscal 2024 was $137.6 million, and $2.38, respectively, compared to GAAP net loss and loss per share of $28.3 million, and $0.50, respectively, for fiscal 2023. Adjusted (loss) earnings per share ("adjusted EPS") was ($0.69) per share for fiscal 2024, compared to $1.00 per share for fiscal 2023. Fiscal 2024 adjusted EBITDA for the total Company was $9.4 million, compared to $132.3 million for fiscal 2023. Cash flows provided by (used in) operating activities in fiscal 2024 were $60.4 million, compared to $(21.3) million in fiscal 2023. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $26.1 million for fiscal 2024 and $(60.1) million for fiscal 2023. Backlog Mercury's total backlog at June 28, 2024 was $1.33 billion, a $185.9 million increase from a year ago. Of the June 28, 2024 total backlog, $758.9 million represents orders expected to be recognized as revenue within the next 12 months. Conference Call Information Management will host a conference call and simultaneous webcast at 5:00 p.m. ET on Tuesday, August 13, 2024, to discuss Mercury's quarterly financial results, business highlights and outlook. In addition, Company representatives may answer questions concerning business and financial developments and trends, the Company's view on earnings forecasts, and other business and financial matters affecting the Company, the responses to which may contain information that has not been previously disclosed. To attend the conference call or webcast, participants should register online at ir.mrcy.com/events-presentations. Participants are requested to register a day in advance or at a minimum 15 minutes before the start of the call. A replay of the webcast will be available two hours after the call and archived on the same web page for six months. Use of Non-GAAP Financial Measures In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted earnings per share ("adjusted EPS") and free cash flow, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non-GAAP financial measures are useful to help investors understand its past financial performance and prospects for the future. However, these non-GAAP measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP measures assist in providing a more complete understanding of the Company's underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company's business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. A reconciliation of GAAP to non-GAAP financial results discussed in this press release is contained in the attached exhibits. Mercury Systems – Innovation that Matters®Mercury Systems is a technology company that delivers mission-critical processing power to the edge, making advanced technologies profoundly more accessible for today's most challenging aerospace and defense missions. The Mercury Processing Platform allows customers to tap into innovative capabilities from silicon to system scale, turning data into decisions on timelines that matter. Mercury's products and solutions are deployed in more than 300 programs and across 35 countries, enabling a broad range of applications in mission computing, sensor processing, command and control, and communications. Mercury is headquartered in Andover, Massachusetts, and has 24 locations worldwide. To learn more, visit mrcy.com. (NASDAQ:MRCY) Investors and others should note that we announce material financial information using our website (www.mrcy.com), SEC filings, press releases, public conference calls, webcasts, and social media, including X (X.com/mrcy) and LinkedIn (www.linkedin.com/company/mercury-systems). Therefore, we encourage investors and others interested in Mercury to review the information we post on the social media and other communication channels listed on our website. Forward-Looking Safe Harbor Statement This press release contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the Company's focus on enhanced execution of the Company's strategic plan under a refreshed Board and leadership team. You can identify these statements by the words "may," "will," "could," "should," "would," "plans," "expects," "anticipates," "continue," "estimate," "project," "intend," "likely," "forecast," "probable," "potential," and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, continued funding of defense programs, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company's markets, effects of any U.S. federal government shutdown or extended continuing resolution, effects of geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in or cost increases related to completing development, engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S. government's interpretation of, federal export control or procurement rules and regulations, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of the Company's products, shortages in or delays in receiving components, supply chain delays or volatility for critical components such as semiconductors, production delays or unanticipated expenses including due to quality issues or manufacturing execution issues, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, the impact of supply chain disruption, inflation and labor shortages, among other things, on program execution and the resulting effect on customer satisfaction, inability to fully realize the expected benefits from acquisitions, restructurings, and operational efficiency initiatives or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, effects of shareholder activism, increases in interest rates, changes to industrial security and cyber-security regulations and requirements and impacts from any cyber or insider threat events, changes in tax rates or tax regulations, such as the deductibility of internal research and development, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, litigation, including the dispute arising with the former CEO over his resignation, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 28, 2024 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. Contact:David E. Farnsworth, CFOMercury Systems, Inc.978-967-1991 Mercury Systems and Innovation That Matters are registered trademarks of Mercury Systems, Inc. Other product and company names mentioned may be trademarks and/or registered trademarks of their respective holders.   MERCURY SYSTEMS, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands)     June 28,   June 30,     2024   2023           Assets         Current assets:         Cash and cash equivalents   $ 180,521     $ 71,563   Accounts receivable, net     111,441       124,729   Unbilled receivables and costs in excess of billings, net     304,029       382,558   Inventory     335,300       337,216   Prepaid expenses and other current assets     22,493       20,952   Total current assets     953,784       937,018             Property and equipment, net     110,353       119,554   Goodwill     938,093       938,093   Intangible assets, net     250,512       298,051   Operating lease right-of-use assets, net     60,860       63,015   Deferred tax asset     58,612       27,099   Other non-current assets     6,691       8,537   Total assets   $ 2,378,905     $ 2,391,367             Liabilities and Shareholders' Equity         Current liabilities:         Accounts payable   $ 81,068     $ 103,986   Accrued expenses     42,926       28,423   Accrued compensation     36,398       30,419   Income taxes payable     109       13,874   Deferred revenues and customer advances     73,915       56,562   Total current liabilities     234,416       233,264             Income taxes payable     7,713       5,166   Long-term debt     591,500       511,500   Operating lease liabilities     62,584       66,797   Other non-current liabilities     9,917       7,955   Total liabilities     906,130       824,682             Shareholders' equity:         Preferred stock     —       —   Common stock     581       570   Additional paid-in capital     1,242,402       1,196,847   Retained earnings     219,799       357,439   Accumulated other comprehensive income     9,993       11,829   Total shareholders' equity     1,472,775       1,566,685   Total liabilities and shareholders' equity   $ 2,378,905     $ 2,391,367                       MERCURY SYSTEMS, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)     Fourth Quarters Ended   Twelve Months Ended     June 28, 2024   June 30, 2023   June 28, 2024   June 30, 2023 Net revenues   $ 248,563     $ 253,236     $ 835,275     $ 973,882   Cost of revenues(1)     175,351       185,852       639,374       657,154   Gross margin     73,212       67,384       195,901       316,728                     Operating expenses:                 Selling, general and administrative(1)     43,365       32,011       166,786       160,637   Research and development(1)     19,417       27,611       101,328       108,799   Amortization of intangible assets     11,311       12,633       47,661       53,552   Restructuring and other charges     6,781       626       26,170       6,981   Acquisition costs and other related expenses     306       3,401       1,710       8,444   Total operating expenses     81,180       76,282       343,655       338,413                     Loss from operations     (7,968 )     (8,898 )     (147,754 )     (21,685 )                   Interest income     525       724       1,199       1,053   Interest expense     (9,159