Mercury Systems Inc · NASDAQ:MRCY
Mercury Systems — Investor Day (November 2016)
81 slides from Mercury Systems's investor day presentation, Nov 8, 2016
Slide 1: Mercury Systems FY17 Investor Day Presentation
© 2016 Mercury Systems, Inc. Mercury Systems FY17 Investor Day Presentation November 8, 2016 Nasdaq MarketSite New York, NY
Slide 2: Forward-looking safe harbor statement
2 © 2016 Mercury Systems, Inc. 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 fiscal 2017 business performance and beyond and the Company
Slide 3: Agenda
3 © 2016 Mercury Systems, Inc. © 2016 Mercury Systems, Inc. Agenda • Strategy & Business Update – Mark Aslett President & CEO • Growth Strategy at Work • Financial Update • Q&A
Slide 4: Pioneering a next generation defense electronics company
4 © 2016 Mercury Systems, Inc. …to address the industry's challenges and opportunities Pioneering a next generation defense electronics company… • High-tech commercial business model • Secure processing subsystems • Serving defense Prime contractor outsourcing needs • Deployed on 300+ programs with
Slide 5: Acquisitions have transformed Mercury into a commercial provider of secure subsystems
5 © 2016 Mercury Systems, Inc. …provider of secure sensor and mission processing subsystems Acquisitions have transformed Mercury into a commercial… • Acquired capability expands total addressable market • Moved up the value chain • Facilitates greater customer outsourcing • Accelerates customer sup
Slide 6: Deployed on 300+ programs with 25+ Primes
6 © 2016 Mercury Systems, Inc. We are deployed on 300+ programs with 25+ Primes RADAR EW EO/IR – C4I Triton Aegis Patriot F-16 F-35 Global Hawk SEWIP Badger/Buzzard F-15 AH-64 Apache P-8 MMA KC-46 F-16 Reaper/Gorgon Stare MISSILES & MUNITIONS MALD-J SM2/3/6 Paveway SDB II PGK F-35
Slide 7: Critical steps to growth and pioneering a new model
7 © 2016 Mercury Systems, Inc. Critical steps to growth and pioneering a new model Focused on economic core – defense electronics Divested Non Core Assets Expanded addressable market and moved up value chain Pioneered secure embedded open systems and advanced middleware Built trusted, scalable domes
Slide 8: Defense will likely remain a $500B+ industry
8 © 2016 Mercury Systems, Inc. Defense will likely remain a $500B+ industry… …despite the ongoing political and budget uncertainty Crowding Out of Defense Spending and Investment: Rising interest rates, healthcare and social spending; MilPer expense growth, aging military platforms’ O&M costs rising
Slide 9: Defense budget outlook improved
9 © 2016 Mercury Systems, Inc. Defense budget outlook improved GFY17 funded by CR Oct 1-Dec 9 at GFY16 level PBR17 adjusts FY17 to new budget caps but not FY18-21 Sources: National Defense Authorization Act of 2016, FY2017 President’s Budget Request. Both the House and Senate authorized President’s
Slide 10: Captive outsourcing is the largest secular growth opportunity
10 © 2016 Mercury Systems, Inc. …is the defense industry’s largest secular growth opportunity Captive outsourcing by defense prime contractors… • 2016 A&D electronics is $91 billion dollar market $91 $97 $100 $103 $106 $108 $0 $20 $40 $60 $80 $100 $120 2016 2017 2018 2019 2020 2021 Global A&D Electr
Slide 11: Captive outsourcing: US Defense is nearly half of the market
11 © 2016 Mercury Systems, Inc. …is the defense industry’s largest secular growth opportunity Captive outsourcing by defense prime contractors… • 2016 A&D electronics is $91 billion dollar market • US Defense is nearly half of the total market $91 $97 $100 $103 $106 $108 $41 $43 $44 $45 $45 $47 $0 $
Slide 12: Captive outsourcing: Tier 2 compute and RF addressable market
12 © 2016 Mercury Systems, Inc. …is the defense industry’s largest secular growth opportunity Captive outsourcing by defense prime contractors… • 2016 A&D electronics is $91 billion dollar market • US Defense is nearly half of the total market • One third of US Defense compute & RF market addressabl
Slide 13: Investor highlights
13 © 2016 Mercury Systems, Inc. Investor highlights Proven Management Team Pure play aerospace and defense electronics company. Embedded on key growth programs aligned to DoD priorities Leading Positions on Well-funded Platforms Pacific pivot and third offset, aging platform modernization, foreign a
Slide 14: Mercury's vision
14 © 2016 Mercury Systems, Inc. Mercury’s vision is to be the… Leading commercial provider of secure sensor and mission processing subsystems
Slide 15: Business model built for speed, innovation and affordability
15 © 2016 Mercury Systems, Inc. …as customers seek affordable outsourced pre-integrated subsystems Business model built for speed, innovation and affordability… • Traditional COTS board model broken (“Plug-n-Pray”) – Product procurement cost low – Large hidden integration costs – Lower Prime IR&D sp
Slide 16: Only high-tech commercial company with the technology and domain expertise
16 © 2016 Mercury Systems, Inc. Highest Safety Design Assurance Levels (DAL) SPEED SWaP SOFTWARE SECURITY Highest Performance Processing Best Size, Weight and Power (SWaP) Industry-leading Embedded Security Most Advanced Open Middleware SAFETY Only high-tech commercial company with the technology… …
Slide 17: From Teraflop modules and RF subassemblies to secure subsystems
17 © 2016 Mercury Systems, Inc. From highly leveraged Teraflop modules and RF subassemblies… …to secure sensor, platform and mission processing subsystems Secure Sensor Processing Subsystems Secure C2 Blade Servers Miniature RF Transceivers RF and EW Subsystems RF & Microwave MOSA Building Blocks Se
Slide 18: Capabilities aligned to DoD investment priorities
18 © 2016 Mercury Systems, Inc. Mercury’s capabilities and opportunity for growth… …are aligned to DoD investment priorities Pacific Pivot & Third Offset: Platforms need improved sensors, autonomy, electronic protection and attack, on-board exploitation. Greater demand for onboard processing Aging P
Slide 19: Platform, sensor and mission electronics value chain
19 © 2016 Mercury Systems, Inc. Platform, sensor and mission electronics are integrated at the Tier 1 level by large Defense Prime contractors Mission / Integrated Systems Integrated Subsystems Standalone Subsystems Modules Systems Integration Tier 1 Prime Defense Platform Value Chain Integrated sub
Slide 20: Historically, Mercury was a Tier 3 sensor processing provider
20 © 2016 Mercury Systems, Inc. Integrated subsystems Historically, Mercury was a Tier 3 sensor processing product provider Mission / Integrated Systems Integrated Subsystems Standalone Subsystems Modules Systems Integration Tier 1 Prime Defense Platform Value Chain Components Tier 2 RF Microwave &
Slide 21: Moved into RF and up the value chain to Tier 2
21 © 2016 Mercury Systems, Inc. We moved into RF and up the value chain, to Tier 2, and are providing commercially-developed pre-integrated subsystem solutions Mission / Integrated Systems Integrated Subsystems Standalone Subsystems Modules Systems Integration Tier 1 Prime Defense Platform Value Cha
Slide 22: CES acquisition moves Mercury into a large adjacent market
22 © 2016 Mercury Systems, Inc. The acquisition of CES moves Mercury into a large adjacent market leveraging our expertise, program base and channel Mission / Integrated Systems Integrated Subsystems Standalone Subsystems Modules Systems Integration Tier 1 Prime Defense Platform Value Chain Componen
Slide 23: Electronics content broken into seven primary segments
23 © 2016 Mercury Systems, Inc. Platform and mission systems both have significant electronics content, which is broken down into seven primary segments Platform Management Mission Management Comms EW Radar EO/IR Acoustics Avionics / Vetronics Command & Control / Battle Management Dedicated Communic
Slide 24: Started out providing Radar processing modules
24 © 2016 Mercury Systems, Inc. We started out providing Radar processing modules Platform Management Mission Management Comms EW Radar EO/IR Acoustics Avionics / Vetronics Command & Control / Battle Management Dedicated Communications Electronic Warfare Radar Electro Optical / Infrared Acoustics Co
Slide 25: Acquisitions penetrated the EW market and expanded Radar content
25 © 2016 Mercury Systems, Inc. Through a series of capability-led acquisitions, we successfully penetrated the EW market and expanded our Radar content Platform Management Mission Management Comms EW Radar EO/IR Acoustics Avionics / Vetronics Command & Control / Battle Management Dedicated Communic
Slide 26: Moved into platform management and combat system processing
26 © 2016 Mercury Systems, Inc. Most recently, we moved into platform management and combat system processing through our secure rackmount and blade servers Platform Management Mission Management Comms EW Radar EO/IR Acoustics Avionics / Vetronics Command & Control / Battle Management Dedicated Comm
Slide 27: Expanding processing addressable market
27 © 2016 Mercury Systems, Inc. We continue to expand our processing addressable market by moving into platform management, mission computing and comm’s processing Platform Management Mission Management Comms EW Radar EO/IR Acoustics Avionics / Vetronics Command & Control / Battle Management Dedicat
Slide 28: Market definition and segmentation: global A&D electronics $91B
28 © 2016 Mercury Systems, Inc. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Market Definition & Segmentation The global A&D electronics systems market is ~$91B in 2016 US Defense is ~$41B and Commercial Aerospace ~$20B Transport Jet Platform Mgmt $15.1B (4
Slide 29: Tier 2 total addressable embedded computing market is $19.7B
29 © 2016 Mercury Systems, Inc. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Tier 2 Compute: $3.6B (4-5%) Tier 2 Compute: $2.8B (3-4%) Tier 2 Compute: $1.9B (4-5%) Tier 2 Comp: $1.0B (9-10%) Tier 2 Compute: $3.9B (5-6%) Tier 2 Comp’ $1.1B (4-5%) Tier 2 Comp
Slide 30: Tier 2 RF total addressable market
30 © 2016 Mercury Systems, Inc. Global A&D Electronics Systems: $90.7B in 2016 (5-year CAGR range: 3-4% total) Tier 2 Embedded Computing Systems: $19.7B in 2016 (5-year CAGR range: 5-6% total) Tier 2 RF: $8.6B in 2016 (5-year CAGR range: 4-5% total) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10%
Slide 31: Addressable market increased 7.5x
31 © 2016 Mercury Systems, Inc. Mercury’s internal investments and acquisitions have increased our addressable market 7.5x and opportunity for future growth Captive outsourcing is our largest secular growth opportunity 0.6 1.9 3.6 12.5 27.9 19.1 8.2 0 5 10 15 20 25 30 35 Historic Addressable Market
Slide 32: Strategic rationale for CES acquisition
32 © 2016 Mercury Systems, Inc. • Fill capability gaps: mission computing, safety-critical platform management • Become leading provider of secure and safety-critical processing subsystems • Performance, security and safety in demand from our strategic accounts • Disintermediate product competitors
Slide 33: Focused M&A strategy
33 © 2016 Mercury Systems, Inc. We continue to execute on a focused M&A strategy Strong Strategic Rationale Expands Addressable Market Revenue & Cost Synergies Accretive in Short Term Learn Market Add Capabilities Scale Business Leverage Channel Discip
Slide 34: Strategy and investments have positioned Mercury well
34 © 2016 Mercury Systems, Inc. Strategy and investments have positioned Mercury well • Pioneering a next-generation defense electronics business model • Unique technology and capabilities on key production programs • Substantial total addressable market expansion enabling future growth • Low-risk c
Slide 35: Agenda: Growth Strategy at Work
35 © 2016 Mercury Systems, Inc. © 2016 Mercury Systems, Inc. Agenda • Strategy & Business Update • Growth Strategy at Work – Didier Thibaud Executive Vice President & COO • Financial Update • Q&A
Slide 36: Growth strategy driving program content and market expansion
36 © 2016 Mercury Systems, Inc. Growth strategy driving program content and market expansion Platform Management Mission Management Comms EW Radar EO/IR Acoustics Avionics / Vetronics Command & Control / Battle Management Dedicated Communications Electronic Warfare Radar Electro Optical / Infrared A
Slide 37: Radar potential program value from $238M to $683M
37 © 2016 Mercury Systems, Inc. Radar potential program value from $238M to $683M Naval surface fleet growth strategy in action Aegis ballistic missile defense Radar • Radar: – Aegis FMS – Aegis processing refresh – Aegis RF content expansion RADAR PROCESSING AIR TRAFFIC CONTROL BALLISTIC MISSILE DE
Slide 38: EW expansion driving potential growth from $370M to $579M
38 © 2016 Mercury Systems, Inc. EW expansion driving potential growth from $370M to $579M Naval surface fleet growth strategy in action Domestic fleet electronic warfare and signal intelligence upgrades • Radar: – Aegis FMS – Aegis processing refresh – Aegis RF content expansion • Electronic warfare
Slide 39: Total potential Naval surface fleet value from $627M to $1.3B
39 © 2016 Mercury Systems, Inc. Total potential Naval surface fleet value from $627M to $1.3B Naval surface fleet growth strategy in action Navy Multiband Terminal (NMT) expansion into satellite communications and IFF • Radar: – Aegis FMS – Aegis processing refresh – Aegis RF content expansion • Ele
Slide 40: Future growth in processing and RF expansion
40 © 2016 Mercury Systems, Inc. Future growth opportunities in both processing and RF expansion Naval surface fleet growth strategy in action Future market and content expansion in mission computing and platform management • Radar: – Aegis FMS – Aegis processing refresh – Aegis RF content expansion
Slide 41: Strategic account focus driving content expansion
41 © 2016 Mercury Systems, Inc. Strategic account focus driving content expansion Missile defense growth strategy in action Patriot ground mobile missile defense • Ground mobile Radar – Patriot missile defense Radar processing • Platform management – Patriot fire control RADAR PROCESSING MRCY Design
Slide 42: Ground missile defense driving potential growth $82M to $299M
42 © 2016 Mercury Systems, Inc. Ground missile defense driving potential growth $82M to $299M Missile defense growth strategy in action Aegis Ashore; Long Range Discrimination Radar (LRDR) fixed ballistic missile defense • Ground mobile Radar – Patriot missile defense Radar processing • Platform man
Slide 43: M&A should drive additional content expansion opportunities
43 © 2016 Mercury Systems, Inc. M&A should drive additional content expansion opportunities Missile defense growth strategy in action Recent acquisitions expand addressable market • Ground mobile Radar – Patriot missile defense Radar processing • Platform management – Patriot fire control • Ground f
Slide 44: Airborne Radar programs driving value from $409M to $970M
44 © 2016 Mercury Systems, Inc. Airborne Radar programs driving value from $409M to $970M Manned airborne growth strategy in action Leadership in Radar processing • Radar processing: – F-16, F-22, F-35, B1, P-8, E2-D AIRBORNE SURVEILLANCE RADAR PROCESSING MRCY Designed In
Slide 45: EW driving additional value from $188M to $424M
45 © 2016 Mercury Systems, Inc. EW driving additional value from $188M to $424M Manned airborne growth strategy in action Expansion into electronic warfare applications • Radar processing: – F-16, F-22, F-35, B1, P-8, E2-D • Electronic warfare: – Fighter: DEWS, AIDEWS – Helicopter: SIRFC – Widebody:
Slide 46: Mission computing expected to drive additional growth
46 © 2016 Mercury Systems, Inc. Mission computing expected to drive additional growth Manned airborne growth strategy in action M&A-driven content expansion in mission computing and platform management • Radar processing: – F-16, F-22, F-35, B1, P-8, E2-D • Electronic warfare: – Fighter: DEWS, AIDEW
Slide 47: Market expansion opening new opportunities for growth
47 © 2016 Mercury Systems, Inc. Market expansion opening new opportunities for growth Manned airborne growth strategy in action Future market and content expansion in mission computing and platform management • Radar processing: – F-16, F-22, F-35, B1, P-8, E2-D • Electronic warfare: – Fighter: DEWS
Slide 48: Radar, EO/IR programs value from $116M to $171M
48 © 2016 Mercury Systems, Inc. Radar, EO/IR programs value from $116M to $171M Unmanned airborne growth strategy in action Leadership in Radar and WAMI processing • Radar processing – Predator, Reaper, Global Hawk, Triton • Wide Area Motion Imagery – Gorgon Stare WAMI RADAR PROCESSING WAMI MRCY Des
Slide 49: Entering communications market will drive additional growth
49 © 2016 Mercury Systems, Inc. Entering communications market will drive additional growth Unmanned airborne growth strategy in action Recent acquisitions added communications processing • Radar processing – Predator, Reaper, Global Hawk, Triton • Wide Area Motion Imagery – Gorgon Stare WAMI • Miss
Slide 50: New M&A opening broad range of opportunities
50 © 2016 Mercury Systems, Inc. New M&A opening broad range of opportunities Unmanned airborne growth strategy in action Recent and past acquisitions provide opportunities for future expansion • Radar processing – Predator, Reaper, Global Hawk, Triton • Wide Area Motion Imagery – Gorgon Stare WAMI •
Slide 51: Market expansion driving growth from $191M to $417M
51 © 2016 Mercury Systems, Inc. Market expansion driving growth from $191M to $417M Market expansion to smart munitions • PGK – Precision Guidance Kit for large caliber traditional munitions • Paveway – Laser guided bomb • SDB II – Next-generation Small Diameter Bomb • MALD – Miniature Air Launched
Slide 52: Market and content expansion strategy driving growth
52 © 2016 Mercury Systems, Inc. • Designed in on well-funded, long-standing programs of record • Aligned with DoD strategy and in growing areas of the budget • Leveraging long-standing relationships with key strategic accounts • Driving content and market expansion through acquisitions • Technologie
Slide 53: Agenda: Financial Update
53 © 2016 Mercury Systems, Inc. © 2016 Mercury Systems, Inc. Agenda • Strategy & Business Update • Growth Strategy at Work • Financial Update – Gerry Haines Executive Vice President & CFO • Q&A
Slide 54: Pioneering a next-generation business model
54 © 2016 Mercury Systems, Inc. …creating an opportunity for growth and strong returns We are pioneering a next-generation business model… • Start with commercially available technology • Internal R&D funds the development of modular, reusable, open innovations • Pre-integration improves affordabili
Slide 55: Mercury's position is very strong
55 © 2016 Mercury Systems, Inc. Mercury’s position is very strong… …with growth and profitability outpacing industry averages •Budget deal yielded first increases in 5 years •Targeted market segments remain strong • Franchise programs moving into full-rate production •Next-gen programs being awarded
Slide 56: Mercury has broadened its base through acquisitions and investment
56 © 2016 Mercury Systems, Inc. • Acquired businesses brought wide array of new programs & capabilities • Content expansion drives outsized growth in existing programs • New design wins have expanded the program portfolio • Result is expanded, diversified, growing base of programs and content • Broa
Slide 57: Acquisitions and investments driving significant opportunity growth
57 © 2016 Mercury Systems, Inc. …which in turn is driving strong actual results Acquisitions and investments driving significant opportunity growth… • Low-risk content expansion growth strategy • Key production programs • Total potential value grew 2.4x to $3.8B in 4 years • Converted 1.1x of possib
Slide 58: Organic and acquisition growth strategy is working well
58 © 2016 Mercury Systems, Inc. Organic and acquisition growth strategy is working well • Greater program diversity today than in FY13 • 4 continuing programs growing >2.5x since FY13 • 6 other programs comprise 40% of FY17E top 10 revenue Note: *Estimated FY17 amounts are based on the Company’s ful
Slide 59: Organic and acquisition growth strategy is working well
59 © 2016 Mercury Systems, Inc. Organic and acquisition growth strategy is working well • Greater program diversity today than in FY13 • 4 continuing programs growing >2.5x since FY13 • 6 other programs comprise 40% of FY17E top 10 revenue • Grown, added and acquired future top programs • 16 other p
Slide 60: Organic and acquisition growth strategy is working well
60 © 2016 Mercury Systems, Inc. Organic and acquisition growth strategy is working well 14 Programs • Greater program diversity today than in FY13 • 4 continuing programs growing >2.5x since FY13 • 6 other programs comprise 40% of FY17E top 10 revenue • Grown, added and acquired future top programs
Slide 61: Strong revenue growth and operating leverage
61 © 2016 Mercury Systems, Inc. Strong revenue growth and operating leverage… …yielded dramatic growth in adjusted EBITDA Notes: (1) Fiscal years ended June 30; FY13-16 figures are as reported in the Company’s Form 10-Ks. (2) Estimate based upon guidance from the Company’s most recent earnings relea
Slide 62: Double digit revenue growth with gross margin improvement and opex leverage
62 © 2016 Mercury Systems, Inc. Double digit revenue growth was accompanied by... …gross margin improvement and operating expense leverage Notes: • FY13-16 figures are as reported in the Company’s Form 10-Ks and Form 10-Qs, except as noted below. • The first three quarters of FY16 were subsequently
Slide 63: FY13-FY16 Adjusted EBITDA CAGR of 79%
63 © 2016 Mercury Systems, Inc. FY13-FY16 Adjusted EBITDA CAGR of 79% 1.2 0.6 4.7 3.5 3.3 5.2 7.8 7.2 8.0 10.7 11.5 14.2 11.8 12.6 14.6 18.3 18.2 48.3 63.7 3% 1% 9% 7% 7% 10% 15% 13% 15% 19% 19% 22% 20% 21% 22% 21% 21% 20% 21% 0% 5% 10% 15% 20% 25% 0 5 10 15 20 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q41
Slide 64: FY13-FY16 backlog CAGR of 28%
64 © 2016 Mercury Systems, Inc. FY13-FY16 backlog CAGR of 28%... …yielded record backlog and revenue coverage exiting FY16 Notes: (1) Revenue Coverage Ratio = 12-month ending backlog/Next 12 months Revenue (or initial revenue estimate for current/future year). (2) Estimate based upon guidance from t
Slide 65: Strong performance in FY16
65 © 2016 Mercury Systems, Inc. Strong performance in FY16 15% revenue and 29% adjusted EBITDA growth YoY In millions, except percentage and per share data FY15⁽¹⁾ FY16⁽²⁾ Change Backlog $208 $288 38% Revenue $235 $270 15% Gross Margin(²) 47% 47% - Operating Expenses(²) $91.9 $103.6 12.7% Adjusted O
Slide 66: Q1 FY17 vs. Q1 FY16
66 © 2016 Mercury Systems, Inc. Q1 FY17 vs. Q1 FY16 Q1 FY16 adjusted for applicable GAAP accounting changes (stock-based comp.) In millions, except percentage and per share data Q1FY16 Q1FY17 Change Revenue $58 $88 52% Gross Margin(1) 48% 45%(2) (3)pt Operating Expenses(1) $25.2 $35.7 42% GAAP Incom
Slide 67: Q2 FY17 guidance vs. Q2 FY16 actual
67 © 2016 Mercury Systems, Inc. Q2 FY17 guidance vs. Q2 FY16 actual In millions, except percentage and per share data Q2FY16 Q2FY17⁽¹⁾ Change Revenue $60 $91.0 - $95.0 51% - 57% Gross Margin(2) 49% 46% - 47%(3) (3)pt - (2)pt Operating Expenses(2) $23.4 $36 - $37 54% - 58% GAAP Income(4) $5.0 $2.7 -
Slide 68: FY17 annual guidance
68 © 2016 Mercury Systems, Inc. FY17 annual guidance In millions, except percentage and per share data FY16(1) FY17(2) Change Revenue $270 $370 - $380 37% - 41% GAAP Income(3) $19.7 $19.8 - $22.4 0% - 14% GAAP EPS $0.56 $0.50 - $0.56 (12%) - 0% Adjusted EPS(4) $0.96 $1.03 - $1.09 7% - 14% Adj. EBITD
Slide 69: New target business model beginning FY17
69 © 2016 Mercury Systems, Inc. New target business model beginning FY17 Notes: (1) FY15 figures are as reported in the Company’s Form 10-K , except as noted below in footnote 3. (2) The guidance included herein is from the Company’s most recent earnings release and is as of the date of that release
Slide 70: Guidance: Strong performance track record
70 © 2016 Mercury Systems, Inc. Guidance: Strong performance track record Q1 Q2 Q3 Q4 Reported Guidance Reported Guidance Reported Guidance Reported Guidance 2013 Revenue ($M) 49.4 51.0 - 57.0 49.8 43.0 - 49.0 54.1 44.0 - 50.0 55.4 48.0 - 54.0 EPS ($) (0.24) (0.05) - 0.00 (0.16) (0.24) - (0.17) $0.0
Slide 71: Conservative balance sheet
71 © 2016 Mercury Systems, Inc. Conservative balance sheet Ample liquidity, unused $100M credit facility, $400M Universal Shelf capacity Notes: (1) Does not reflect use of approximately $40 million in connection with acquisition of CES completed in Q2 of fiscal 2017. (2) $200 Term Loan A facility en
Slide 72: CES transaction overview
72 © 2016 Mercury Systems, Inc. CES transaction overview Acquired Creative Electronic Systems (“CES”) Privately-owned, defense-oriented, mission computing business Provides key capabilities in large, highly complementary growth markets Strong in mission computing, safety-critical avionics, and platf
Slide 73: Poised for continued, profitable growth
73 © 2016 Mercury Systems, Inc. • Improved defense environment, fast-moving streams enhance opportunities • Acquisitions have transformed top and bottom lines • Broader base of larger, more diversified programs • Record backlog enhances forward visibility, facilitates operational execution • Sustain
Slide 74: Appendix
© 2016 Mercury Systems, Inc. Appendix
Slide 75: Management team
75 © 2016 Mercury Systems, Inc. Management team Since 2007, Mercury management has successfully grown the Company’s defense business, returned the Company to profitability, acquired and integrated several companies, and positioned Mercury as a leading pure-play defense electronics company. Demonstra
Slide 76: Q2 FY17 guidance (as of October 25th)
76 © 2016 Mercury Systems, Inc. Q2 FY17 guidance (as of October 25th) Notes: (1) The guidance included herein is from the Company’s most recent earnings release and is as of the date of that release. Excludes the impact of the Company’s recently announced definitive purchase agreement for the acquis
Slide 77: FY17 guidance (as of October 25th)
77 © 2016 Mercury Systems, Inc. FY17 guidance (as of October 25th) In millions, except percentage and per share data FY16 FY17(1) YoY Change Actual Est. Range Revenue $270 $370 - $380 37% - 41% GAAP Income from continuing operations $19.7 $19.8 - $22.4 0% - 14% Adj. EBITDA(2) $57.3 $83.0 - $87.0 45%
Slide 78: Adjusted EPS reconciliation
78 © 2016 Mercury Systems, Inc. Adjusted EPS reconciliation Notes: (1) Numbers shown are in cents. (2) Upon the adoption of FASB ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, the Company recognized $1,100 of excess tax benefits in FY16. The tax benefit (provision) impacts wer
Slide 79: Adjusted EBITDA reconciliation
79 © 2016 Mercury Systems, Inc. Adjusted EBITDA reconciliation Notes: (1) Upon the adoption of FASB ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, the Company recognized $1,100 of excess tax benefits in FY16. The tax benefit (provision) impacts were $896, $247, $(169), and $12
Slide 80: Sales-related definitions
80 © 2016 Mercury Systems, Inc. Sales-related definitions Design Win A design win means that the customer has selected us to provide services, products, or intellectual property for a program of record or equivalent. In addition, the customer has won the program and we have an initial purchase order
Slide 81: Glossary
81 © 2016 Mercury Systems, Inc. Glossary AEGIS Aegis Ballistic Missile Defense System ECM Electronic Countermeasures OpenVPX System-level specification for VPX, initiated by Mercury AESA Active Electronically Scanned Array EO/IR Electro-optical / Infrared PBR President's Budget Request AIDEWS Advanc