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Mercury Systems (MRCY) Q1 Earnings & Revenues Lag Estimates
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Mercury Systems (MRCY - Free Report) reported first-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 24 cents per share, in contrast to the Zacks Consensus Estimate of earnings of 16 cents per share. The bottom line declined 200% year over year, mainly due to increased costs and higher interest expenses.
Mercury Systems’ first-quarter non-GAAP revenues decreased 20.5% to $181 million compared with $227.6 million reported in the year-ago quarter. The top line missed the consensus mark of $218.2 million.
Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems’ total bookings were $191.5 million, resulting in a 1.06 book-to-bill ratio.
The company ended the quarter with a backlog of $1.15 billion, up $73.3 million on a year-over-year basis. Within the next 12 months, products worth $732.8 million from this order backlog are expected to be recognized.
Mercury Systems’ gross profit was $50.5 million, down 35.3% year over year. Moreover, its gross margin contracted by 640 basis points (bps) to 27.9%.
Total operating expenses increased 6.4% to $90.7 million. As a percentage of revenues, operating expenses increased 1,270 bps to 50.1% from 37.5% in the year-ago quarter.
Adjusted EBITDA plunged 93.7% year over year to $2 million. The margin decreased 1,260 bps to 1.1% due to a lower gross margin and higher operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Sep 29, 2023, MRCY’s cash and cash equivalents were $89.4 million compared with $71.5 million as of Jun 30, 2023. The long-term debt as of Sep 29, 2023 was $576.5 million.
The company used $39.1 million in cash for operational activities in the first quarter of fiscal 2024 compared with $66.0 million in the first quarter of fiscal 2023. Mercury generated a negative free cash flow of $47.1 million in the first quarter compared with $73.4 million in the year-ago quarter.
Guidance
For fiscal 2024, Mercury Systems expects revenues between $950 million and 1 billion. It estimates adjusted EBITDA in the range of $160-$185 million.
Mercury forecasts fiscal 2023 adjusted earnings in the $1.19-$1.54 per share band.
Zacks Rank & Stocks to Consider
Currently, Mercury carries a Zacks Rank #3 (Hold).
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Mercury Systems (MRCY) Q1 Earnings & Revenues Lag Estimates
Mercury Systems (MRCY - Free Report) reported first-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 24 cents per share, in contrast to the Zacks Consensus Estimate of earnings of 16 cents per share. The bottom line declined 200% year over year, mainly due to increased costs and higher interest expenses.
Mercury Systems’ first-quarter non-GAAP revenues decreased 20.5% to $181 million compared with $227.6 million reported in the year-ago quarter. The top line missed the consensus mark of $218.2 million.
Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems Inc price-consensus-eps-surprise-chart | Mercury Systems Inc Quote
Q1 in Details
Mercury Systems’ total bookings were $191.5 million, resulting in a 1.06 book-to-bill ratio.
The company ended the quarter with a backlog of $1.15 billion, up $73.3 million on a year-over-year basis. Within the next 12 months, products worth $732.8 million from this order backlog are expected to be recognized.
Mercury Systems’ gross profit was $50.5 million, down 35.3% year over year. Moreover, its gross margin contracted by 640 basis points (bps) to 27.9%.
Total operating expenses increased 6.4% to $90.7 million. As a percentage of revenues, operating expenses increased 1,270 bps to 50.1% from 37.5% in the year-ago quarter.
Adjusted EBITDA plunged 93.7% year over year to $2 million. The margin decreased 1,260 bps to 1.1% due to a lower gross margin and higher operating expenses as a percentage of revenues.
Balance Sheet & Cash Flow
As of Sep 29, 2023, MRCY’s cash and cash equivalents were $89.4 million compared with $71.5 million as of Jun 30, 2023. The long-term debt as of Sep 29, 2023 was $576.5 million.
The company used $39.1 million in cash for operational activities in the first quarter of fiscal 2024 compared with $66.0 million in the first quarter of fiscal 2023. Mercury generated a negative free cash flow of $47.1 million in the first quarter compared with $73.4 million in the year-ago quarter.
Guidance
For fiscal 2024, Mercury Systems expects revenues between $950 million and 1 billion. It estimates adjusted EBITDA in the range of $160-$185 million.
Mercury forecasts fiscal 2023 adjusted earnings in the $1.19-$1.54 per share band.
Zacks Rank & Stocks to Consider
Currently, Mercury carries a Zacks Rank #3 (Hold).
NetEase (NTES - Free Report) , AST SpaceMobile (ASTS - Free Report) and Genius Sports Limited (GENI - Free Report) are some better-ranked stocks that investors can consider in the broader sector. While NTES sports a Zacks Rank #1 (Strong Buy), ASTS and GENI carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of NetEase have gained 54% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
Shares of AST SpaceMobile have declined 17.6% year to date. ASTS is slated to report its third-quarter 2023 results on Nov 13.
Shares of Genius Sports Limited have gained 51.3% year to date. GENI is set to report its third-quarter 2023 results on Nov 13.