Mercury Systems Inc · NASDAQ:MRCY
Mercury Systems — Q3 2023 Earnings Presentation
17 slides from Mercury Systems's earnings presentation, May 2, 2023
Slide 1: Third Quarter Fiscal Year 2023 Financial Results
THIRD QUARTER FISCAL YEAR 2023 FINANCIAL RESULTS Mark Aslett President and CEO Michelle McCarthy Senior Vice President and Interim CFO May 2, 2023, 5:00 pm ET Webcast login at www.mrcy.com/investor Webcast replay available by 7:00 p.m. ET May 2, 2023 © Mercury Sys tems, 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 products and services described herein and to business performance in fiscal 2023 and
Slide 3: Q3 FY23 revenue trends positive, bottom-line pressures continue
Q3 FY23 revenue trends positive, bottom-line pressures continue ▪ Revenue, GAAP net inc., EPS beat Q3 guidance; adj. EBITDA at midpoint, CF positive ex-R&D tax ▪ Q3 YOY backlog up 10%, bookings tracking expectations; GAAP net income, EPS higher ▪ Q3 adjusted EPS, and adjusted EBITDA decline with ant
Slide 4: Execution, mix shift impacts resolve as conditions normalize
Execution, mix shift impacts resolve as conditions normalize ▪ Fourth fiscal year of dealing with derivative effects of pandemic ▪ Prior-year impacts on revenue and bookings have now shifted to margins ▪ Mix shift, product and program execution driving temporary margin degradation ▪ End-market deman
Slide 5: Focus on operational excellence, execution continues
Focus on operational excellence, execution continues ▪ Leadership driving continuous improvement in key operations, execution areas ▪ Progress on late-stage development programs, new product introductions to continue in Q4, FY24 ▪ Efforts continue to further enhance program margins, unbilled, cash f
Slide 6: Operating environment improves incrementally
Operating environment improves incrementally ▪ Hiring outpacing attrition, supply chain flowing more smoothly ▪ Semis continue to affect program timing, efficiency; no significant improvement until H2 FY24 ▪ 1MPACT program continues to evolve and deliver positive results ▪ Streamlined org. structure
Slide 7: Secular industry trends remain favorable
Secular industry trends remain favorable ▪ Defense bill increases reinforce challenging geopolitical environment ▪ Extended CR appears to be base-case scenario for FY24 ▪ Strong bipartisan support for increased defense spending remains ▪ Positive long-term outlook for growing electronic content spen
Slide 8: Q3 FY23 vs. Q3 FY22
Q3 FY23 vs. Q3 FY22 Notes In $ millions, except percentage and per share data Q3 FY22(3) Q3 FY23(3) CHANGE (1) Organic revenue represents total company revenue excluding net revenue from acquisitions for the first four full Bookings $295.4 $245.0 quarters since the entities’ Book-to-Bill (17%) acqui
Slide 9: Balance sheet
Balance sheet Notes As of (1) Rounded amounts used. (In $ millions)(1) 4/1/22 7/1/22 9/30/22 12/30/22 3/31/23 ASSETS Cash & cash equivalents $91.7 $65.7 $52.0 $76.9 $64.4 Accounts receivable, net 367.1 447.9 494.7 479.3 502.3 Inventory, net 259.6 270.3 287.6 312.0 342.8 PP&E, net 125.7 127.2 125.9 1
Slide 10: 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) 4/1/22 7/1/22 9/30/22 12/30/22 3/31/23 Net Income (Loss) $4.1 $16.9 ($14.3) ($10.9) $5.2 Depreciation and amortization 24.5 23.4 23.7 27.2 23.9 Other non-cash it
Slide 11: FY23 annual guidance
FY23 annual guidance Notes In $ millions, except percentage and per share data FY22(1) FY23(2)(5) CHANGE (1) FY22 figures are as reported in the Company’s earnings release dated August 2, 2022. (2) The guidance included herein is from the Company’s earnings release dated May 2, 2023. Revenue $988.2
Slide 12: Q4 FY23 guidance
Q4 FY23 guidance Notes In $ millions, except percentage and per share data Q4 FY22(1) Q4 FY23(2)(5) CHANGE (1) Q4 FY22 figures are as reported in the Company’s earnings release dated August 2, 2022. (2) The guidance included herein is from the Company’s earnings release dated May 2, 2023. Revenue $2
Slide 13: Summary
Summary ▪ Demand strong and getting stronger as we begin Q4 FY23 ▪ Expect FY23 record bookings and positive book-to-bill ▪ Continued progress, rebound as mix shifts and execution improves, supply chain normalizes ▪ Expect FY24 to begin longer-term period of improved financial performance ▪ Five-year
Slide 14: Appendix
APPENDIX 14
Slide 15: Adjusted EPS reconciliation
Adjusted EPS reconciliation Notes (1) Per share information is presented on a fully diluted basis. (2) Rounded amounts used. (3) Impact to income taxes is calculated by recasting income before income taxes to include the items involved in determining adjusted income and recalculating the income tax
Slide 16: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Notes 1. Rounded amounts used. 2. All references in this presentation to the third quarter of fiscal 2022 are to the quarter ended April 1, 2022, the third quarter of fiscal 2023 are to the quarter ended March 31,2023 and the fourth quarter and the full fiscal 2023 are
Slide 17: Free cash flow and organic revenue reconciliation
Free cash flow reconciliation Organic revenue reconciliation Notes (1) Organic revenue represents total company revenue excluding net revenue from acquisitions for the first four full quarters since the entities’ acquisition date (which excludes any intercompany transactions). After the completion o