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Mercury Systems (MRCY) Q3 Earnings & Revenues Miss Estimates
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Mercury Systems (MRCY - Free Report) reported third-quarter fiscal 2024 results, wherein both the top and bottom lines missed the Zacks Consensus Estimate.
The aerospace and defense tech firm reported a non-GAAP loss of 26 cents per share, wider than the Zacks Consensus Estimate of a loss of 15 cents. The bottom line plunged 165% year over year, mainly due to increased costs and higher interest expenses.
Mercury Systems’ non-GAAP revenues decreased 21% to $208.26 million from $263.5 million reported in the year-ago quarter. The top line missed the consensus mark of $212 million.
Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems’ total bookings were $219.9 million, resulting in a 1.06 book-to-bill ratio.
The company ended the quarter with a backlog of $1.29 billion, which increased $190.5 million from the year-ago quarter’s figure. Within the next 12 months, products worth $761.2 million from this order backlog are expected to be recognized as revenues.
Mercury Systems’ gross profit was $40.6 million, down 55% year over year. Moreover, its gross margin contracted 1,480 basis points (bps) to 19.5%.
Total operating expenses decreased 2.3% to $86.3 million. As a percentage of revenues, operating expenses increased 790 bps to 41.4% from 33.5% in the year-ago quarter.
The company reported a negative adjusted EBITDA of $2.4 million against an adjusted EBITDA of $43.5 million in the prior-year quarter. The margin decreased 1,760 bps to 1.2%, primarily due to a lower gross margin and higher operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Mar 29, 2024, MRCY’s cash and cash equivalents were $142.6 million compared with $168.6 million as of Dec 29, 2023. The long-term debt as of Mar 29, 2024, was $616.5 million.
The company used $17.8 million in cash for operational activities in the third quarter of fiscal 2024 compared with $3.2 million in the year-ago quarter. MRCY generated a negative free cash flow of $25.7 million compared with a negative $12.7 million in the year-ago quarter.
Guidance
For fiscal 2024, Mercury Systems expects revenues between $800 million and $850 million. It estimates adjusted EBITDA margins in mid-20 percent.
The company forecasts fiscal 2024 bookings to exceed $1 billion. It estimates positive free cash flow for the fiscal year.
Zacks Rank & Stocks to Consider
Currently, Mercury Systems carries a Zacks Rank #3 (Hold).
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Mercury Systems (MRCY) Q3 Earnings & Revenues Miss Estimates
Mercury Systems (MRCY - Free Report) reported third-quarter fiscal 2024 results, wherein both the top and bottom lines missed the Zacks Consensus Estimate.
The aerospace and defense tech firm reported a non-GAAP loss of 26 cents per share, wider than the Zacks Consensus Estimate of a loss of 15 cents. The bottom line plunged 165% year over year, mainly due to increased costs and higher interest expenses.
Mercury Systems’ non-GAAP revenues decreased 21% to $208.26 million from $263.5 million reported in the year-ago quarter. The top line missed the consensus mark of $212 million.
Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems Inc price-consensus-eps-surprise-chart | Mercury Systems Inc Quote
Q3 in Details
Mercury Systems’ total bookings were $219.9 million, resulting in a 1.06 book-to-bill ratio.
The company ended the quarter with a backlog of $1.29 billion, which increased $190.5 million from the year-ago quarter’s figure. Within the next 12 months, products worth $761.2 million from this order backlog are expected to be recognized as revenues.
Mercury Systems’ gross profit was $40.6 million, down 55% year over year. Moreover, its gross margin contracted 1,480 basis points (bps) to 19.5%.
Total operating expenses decreased 2.3% to $86.3 million. As a percentage of revenues, operating expenses increased 790 bps to 41.4% from 33.5% in the year-ago quarter.
The company reported a negative adjusted EBITDA of $2.4 million against an adjusted EBITDA of $43.5 million in the prior-year quarter. The margin decreased 1,760 bps to 1.2%, primarily due to a lower gross margin and higher operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Mar 29, 2024, MRCY’s cash and cash equivalents were $142.6 million compared with $168.6 million as of Dec 29, 2023. The long-term debt as of Mar 29, 2024, was $616.5 million.
The company used $17.8 million in cash for operational activities in the third quarter of fiscal 2024 compared with $3.2 million in the year-ago quarter. MRCY generated a negative free cash flow of $25.7 million compared with a negative $12.7 million in the year-ago quarter.
Guidance
For fiscal 2024, Mercury Systems expects revenues between $800 million and $850 million. It estimates adjusted EBITDA margins in mid-20 percent.
The company forecasts fiscal 2024 bookings to exceed $1 billion. It estimates positive free cash flow for the fiscal year.
Zacks Rank & Stocks to Consider
Currently, Mercury Systems carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Computer and Technology sector are Babcock (BK - Free Report) , NVIDIA (NVDA - Free Report) and Dell Technologies (DELL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Babcock have risen 10.3% year to date. BK is set to report first-quarter 2024 results on May 9.
Shares of NVIDIA have surged 82.9% year to date. NVDA is slated to report first-quarter fiscal 2025 results on May 22.
Shares of Dell Technologies have rallied 66.7% year to date. DELL is set to report first-quarter fiscal 2025 results on May 30.