Slide 1: Second Quarter Fiscal Year 2024 Financial Results
SECOND QUARTER FISCAL YEAR 2024 FINANCIAL RESULTS Bill Ballhaus Chairman and CEO David Farnsworth Executive Vice President and CFO February 6, 2024, 5:00 pm ET Webcast login at www.mrcy.com/investor Webcast replay available by 7:00 p.m. ET February 6, 2024 © Mercury Systems, Inc.
Slide 2: Forward-looking safe harbor statement
Forward-looking safe harbor statement This presentation 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 refreshe
Slide 3: Today's call
Today’s call Opening remarks on business and results Update on our four focus areas Expectations for performance for FY24 and beyond Q&A 3 © Mercury Systems, Inc. Does not contain Technical Data. //Mercury Proprietary/No Tech Data//
Slide 4: Business and results
Business and results Optimistic about our strategic positioning, business model, and outlook. Solid headway in four priority focus areas and to address transitory dynamics—high mix of development programs and high level of working capital. Near-record bookings of $325.4 million, with a 1.65 bo
Slide 5: Enhancing execution to deliver predictable performance
Enhancing execution to deliver predictable performance Incurred a number of costs we believe obscured the underlying performance of the business. Recognized approximately $48 million of transitory items associated with program cost growth, manufacturing adjustments, and contract settlements. R
Slide 6: Continued progress on risk drivers
Continued progress on risk drivers Majority of business performed predictably in Q2 FY24 Making progress on challenged programs(1) • Majority of business continues to perform predictably and is not impacted by the challenged 2 programs complete / retired 2 19 complete / retired 17 4 complete / retir
Slide 7: Building a thriving organic growth engine
Building a thriving organic growth engine Received first LTAMDS production award earlier than originally anticipated. Expect LTAMDS to drive organic growth in FY25 and become largest revenue contributor. Won large development program on a strategic weapon system. Cost-plus contract has favor
Slide 8: Addressing our cost structure to expand margins
Addressing our cost structure to expand margins Focused execution on development programs and minimizing cost growth impacts. Returning to a historical 20/80 mix of development to production programs. Driving organic growth to generate positive operating leverage. And achieving cost efficien
Slide 9: Driving free cash flow release and improved conversion
Driving free cash flow release and improved conversion Delivered $46 million of operating cash and over $37 million in free cash flow. Made progress to convert unbilled receivables, down nearly $38 million. Continued strong collection trends across billed receivables. Net working capital dec
Slide 10: Expectations for FY24 and beyond
Expectations for FY24 and beyond Continue to see a business capable of delivering above-average industry growth. Updating guidance for full year revenue from prior range of $950 million to $1 billion to $800 million to $850 million. Difficult to provide reliable guidance estimates beyond reven
Slide 11: Q2 FY24 vs. Q2 FY23
Q2 FY24 vs. Q2 FY23 Notes In $ millions, except percentage and per share data Q2 FY24(2) Q2 FY23(2) CHANGE (1) Non-GAAP, see reconciliation table. (2) All references in this Bookings $325.4 $270.3 presentation to the 20% second quarter of fiscal 2024 and Book-to-Bill 1.65 1.18 full fiscal 2024 are t
Slide 12: Balance sheet
Balance sheet Notes As of (1) Rounded amounts used. (In $ millions)(1) 12/30/22 3/31/23 6/30/23 9/29/23 12/29/23 ASSETS Cash & cash equivalents $76.9 $64.4 $71.6 $89.4 $168.6 Accounts receivable, net 479.3 502.3 507.3 480.0 433.7 Inventory, net 312.0 342.8 337.2 363.0 354.2 PP&E, net 122.0 119.5 119
Slide 13: Cash flow summary
Cash flow summary Notes For the Fiscal Quarters Ended (1) Rounded amounts used. (2) Non-GAAP, see (In $ millions)(1) 12/30/22 3/31/23 6/30/23 9/29/23 12/29/23 reconciliation table. Net (Loss) Income ($10.9) $5.2 ($8.2) ($36.7) ($45.6) Depreciation and amortization 27.2 23.9 22.5 22.7 22.2 Other non-
Slide 14: Appendix
mercury APPENDIX 14
Slide 15: Year-over-year revenue and gross profit impacts
Year-over-year revenue and gross profit impacts (In $ millions) Revenue(1) Gross Profit(1)(2) $230 $81 $23 $197 $9 $23 $12 $14 $32 Q2'23 Revenue Program Cost Volume Q2'24 Revenue Q2'23 Gross Program Cost Inventory Volume / Mix Q2'24 Gross Growth Profit Growth Reserve / Profit Scrap Note (1) Q2’23 re
Slide 16: Adjusted EPS reconciliation
Adjusted EPS reconciliation (2) Notes (In thousands, except per share data) Q2 FY23 Q2 FY24 LTM Q2 FY23 LTM Q2 FY24 (1) Per share information is presented on (1) a fully diluted basis. Loss per share $ (0.19) $ (0.79) $ (0.08) $ (1.49) (2) Rounded amounts used. (3) Impact to income taxes is calculat
Slide 17: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation (1)(2) Notes (In thousands) Q2 FY23 Q2 FY24 LTM Q2 FY23 LTM Q2 FY24 1. Rounded amounts used. 2. All references in this presentation to Net loss $ (10,920) $ (45,581) $ (4,201) $ (85,369) the second quarter of fiscal 2024 and full fiscal 2024 are to the quarter ended De
Slide 18: Free cash flow reconciliation; Organic revenue reconciliation
Free cash flow reconciliation (In thousands) Q2 FY23 Q2 FY24 LTM Q2 FY23 LTM Q2 FY24 Cash provided by (used in) operating $ 35,392 $ 45,494 $ (54,334) $ 15,819 Purchases of property and equipment (13,176) (7,990) (34,756) (34,297) Free cash flow $ 22,216 $ 37,504 $ (89,090) $ (18,478) Organic revenu