Slide 1: Fourth Quarter and Fiscal Year 2024 Financial Results
FOURTH QUARTER AND FISCAL YEAR 2024 FINANCIAL RESULTS Bill Ballhaus Chairman and CEO David Farnsworth Executive Vice President and CFO August 13, 2024, 5:00 pm ET Webcast login at www.mrcy.com/investor Webcast replay available by 7:00 p.m. ET August 13, 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 fiscal year 2025 and beyond ▪ Q&A 3 © Mercury Systems, Inc. Does not contain Technical Data. /Mercury //Mercury Propriet ary /No Tech Proprietary/No TechData/ Data//
Slide 4: Business and results
Business and results ▪ Made considerable progress addressing what we believe to be transient challenges in the business during fiscal year 2024. ▪ Fourth quarter and fiscal year 2024 results in line with or ahead of expectations, with record free cash flow achieved in the fourth quarter. ▪ Retired a
Slide 5: Enhancing execution to deliver predictable performance
Enhancing execution to deliver predictable performance Working to mitigate impact of select items on revenue and pre-tax earnings Q3 Fiscal Year 2024 Q4 Fiscal Year 2024 $39 (4) $6 (3) (2) $5 $12 (1) (4) $16 (2) $4 $16 (1) $3 $10 Net EAC Inventory Warranty Contract Total Net EAC Change Inventory Con
Slide 6: Continued progress on risk drivers
Continued progress on risk drivers Executed return to initial pilot production of Common Processing Architecture Making progress on challenged programs(1) 2 complete / retired 2 complete / retired 4 19 complete / retired 17 15 2 complete / retired 3 complete / retired 11 9 Two of six (2) 6 remaining
Slide 7: Building a thriving organic growth engine
Building a thriving organic growth engine ▪ Demand continues to remain strong with a book to bill of 1.14 in the fourth quarter. ▪ Expanded record backlog to over $1.3 billion, up 16% year-over-year. ▪ Approximately 80% of firm fixed price bookings in fiscal year 2024 are production in nature. ▪ Sec
Slide 8: Addressing our cost structure to expand margins
Addressing our cost structure to expand margins ▪ Margins impacted by what we believe to be transitory items and negative operating leverage. ▪ Focus remains on minimizing cost growth impacts, returning to 20/80 mix of development to production programs, driving organic growth to generate positive o
Slide 9: Driving free cash flow release and improved conversion
Driving free cash flow release and improved conversion ▪ Net working capital down $93.3 million in fiscal year 2024 after years of expansion. ▪ 44% increase in WIP year-over-year reflecting progress toward cash. ▪ Past three quarters were the three highest billings quarters on overtime revenue contr
Slide 10: Expectations for Fiscal Year 2025 and beyond
Expectations for Fiscal Year 2025 and beyond ▪ Confidence in our approach to achieve target profile over time of above market top line growth, low to mid 20% adjusted EBITDA margins, and free cash flow conversion of 50%. ▪ Expect to make further progress on primary challenges of high working capital
Slide 11: Q4 Fiscal Year 2024 vs. Q4 Fiscal Year 2023
Q4 Fiscal Year 2024 vs. Q4 Fiscal Year 2023 Notes In $ millions, except percentage and per share data Q4 FY24(2) Q4 FY23(2) CHANGE (1) Non-GAAP, see reconciliation table. (2) Al l references in this presentation to t he Bookings $284.4 $293.8 fourth quarter of fiscal 2024 are (3%) to t he quarter en
Slide 12: Fiscal Year 2024 vs. Fiscal Year 2023
Fiscal Year 2024 vs. Fiscal Year 2023 Notes In $ millions, except percentage and per share data FY24(2) FY23(2) CHANGE (1) Non-GAAP, see reconciliation table. (2) Al l references in this presentation to t he fiscal year Bookings $1,021.2 $1,076.0 2024 are to the fiscal year ended (5%) June 28, 2024
Slide 13: Balance sheet
Balance sheet Notes As of (1) Rounded amounts used. (In $ millions)(1) 6/30/23 9/29/23 12/29/23 3/29/24 6/28/24 ASSETS Cash & cash equivalents $71.6 $89.4 $168.6 $142.6 $180.5 Accounts receivable, net 507.3 480.0 433.7 417.2 415.5 Inventory, net 337.2 363.0 354.2 343.0 335.3 PP&E, net 119.6 117.2 11
Slide 14: Cash flow summary
Cash flow summary Notes For the Fiscal Quarters Ended (1) Rounded amounts used. (2) Non-GAAP, see reconciliation table. (In $ millions)(1) 6/30/23 9/29/23 12/29/23 3/29/24 6/28/24 Net Loss ($8.2) ($36.7) ($45.6) ($44.6) ($10.8) Depreciation and amortization 22.5 22.7 22.2 21.8 21.4 Other non-cash it
Slide 15: Appendix
APPENDIX 15
Slide 16: Adjusted EPS reconciliation
Adjusted EPS reconciliation Notes (1) Per share informat ion is presented on (2) (In thousands, except per share data) Q4 FY23 Q4 FY24 FY23 FY24 a ful ly diluted basis. (2) Rounded amounts used. (3) Impact to income taxes i s calculated by Loss per share (1) $ (0.15) $ (0.19) $ (0.50) $ (2.38) recas
Slide 17: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation (In thousands) (1)(2) Q4 FY23 Q4 FY24 FY23 FY24 Notes (1) Rounded amounts used. Net Loss $ (8,236) $ (10,777) $ (28,335) $ (137,640) (2) Al l references in this presentation to the fourth quarter of fiscal 2024 and fiscal 2024 are to t he quarter Other non-operating ad
Slide 18: Free cash flow reconciliation
Free cash flow reconciliation (In thousands) Q4 FY23 Q4 FY24 FY23 FY24 Cash provided by (used in) operating $ 12,610 $ 71,761 $ (21,254) $ 60,382 Purchases of property and equipment (8,846) (10,348) (38,796) (34,291) Free cash flow $ 3,764 $ 61,413 $ (60,050) $ 26,091 18 © Mercury Systems, Inc. Does