You might also like
Mercury Systems, Inc. (MRCY) is a technology company specializing in mission-critical processing solutions for aerospace and defense applications. The company designs, develops, and manufactures advanced processing components, modules, and subsystems for defense contractors, governments, and commercial aerospace OEMs. Its products are used in over 300 aerospace and defense programs across 35 countries, supporting applications such as radar, electronic warfare, and missile defense.
- Integrated Solutions - Combines components, modules, and sub-assemblies with software to create complete systems for specific applications, including radar, electronic warfare, and mission computing.
- Components - Provides essential building blocks for electronic systems, such as power amplifiers, switches, and memory devices.
- Modules and Sub-assemblies - Offers complex functional units that integrate multiple components, often delivered as computer boards or other packaging.
| Name | Position | External Roles | Short Bio | |
|---|---|---|---|---|
William L. Ballhaus ExecutiveBoard | Chairman of the Board, President, and CEO | None | William L. Ballhaus joined Mercury's Board in June 2022 and became President and CEO in August 2023. He was appointed Chairman in October 2023. He has extensive experience in aerospace, defense, and technology industries. | View Report → |
Charles R. Wells, IV Executive | Executive Vice President and COO | None | Charles R. Wells, IV joined Mercury Systems in November 2021 and became COO in January 2024. He has a background in engineering and management roles at Teledyne FLIR and the Department of Defense. | |
David E. Farnsworth Executive | Executive Vice President and CFO | Board of Directors, Merrimack Valley Credit Union; Board of Directors, USA Diving | David E. Farnsworth joined Mercury Systems in July 2023 as CFO. He has a background in financial leadership roles at HawkEye 360 and Raytheon. | |
Stuart H. Kupinsky Executive | Executive Vice President, Chief Legal Officer, and Corporate Secretary | None | Stuart H. Kupinsky joined Mercury Systems in January 2024. He has served as Chief Legal Officer for several technology companies and has experience in government legal roles. | |
Barry R. Nearhos Board | Lead Independent Director | None | Barry R. Nearhos joined the Board in 2018 and became Lead Independent Director in October 2023. He has a background in accounting and governance from his career at PwC. | |
Debora A. Plunkett Board | Director | Director, CACI International Inc.; Director, Nationwide Mutual Insurance; Senior Fellow, Harvard University’s Belfer Center; Professor, University of Maryland | Debora A. Plunkett joined the Board in 2021. She has a background in cybersecurity and national security, including leadership roles at the NSA. | |
Gerard J. DeMuro Board | Director | Director, Eve Holding Inc. | Gerard J. DeMuro joined the Board in June 2023. He has extensive experience in the defense industry, including roles at BAE Systems and General Dynamics. | |
Howard L. Lance Board | Director | Managing Partner, Lance Advisors LLC; Non-Executive Chairman, Summit Materials, Inc.; Non-Executive Chairman, Covanta Energy LLC; Non-Executive Chairman, Heritage Environmental Solutions | Howard L. Lance joined the Board in 2022. He has held executive roles at Maxar Technologies and Harris Corporation. | |
Jean Bua Board | Director | CFO, NetScout Systems, Inc. | Jean Bua joined the Board in January 2025. She has over 40 years of experience in finance and accounting, with a focus on technological transformation. | |
Lisa S. Disbrow Board | Director | Director, Blackberry Limited; Director, CACI International Inc.; Vice Chairman, NDIA; Chair, Secretary of Defense's Reserve Forces Policy Board; Senior Fellow, Johns Hopkins University Applied Physics Lab | Lisa S. Disbrow joined the Board in 2017. She has a background in military and defense budget management, including roles as Under Secretary of the Air Force. | |
Orlando P. Carvalho Board | Director | Board of Advisors, University of Maryland Robert H. Smith School of Business; Associate Fellow, American Institute of Aeronautics and Astronautics | Orlando P. Carvalho joined the Board in 2020. He has a 38-year career in aerospace and defense, including leadership roles at Lockheed Martin. | |
Scott Ostfeld Board | Director | Managing Partner, JANA Partners; Board Member, TreeHouse Foods, Inc.; Board Member, Columbia University’s Richman Center for Business, Law, and Public Policy | Scott Ostfeld joined the Board in July 2023. He has experience in investment and shareholder engagement through his role at JANA Partners. |
-
Given that you reported a record free cash flow of $82 million in Q2 , why are you guiding for breakeven free cash flow in the second half, and what factors are contributing to this significant shift?
-
With your gross margin at 27% in Q2, impacted by lower-margin backlog and certain development programs , how do you plan to improve backlog margins and when do you expect adjusted EBITDA margins to reach your target of low to mid-20%?
-
Can you elaborate on the challenges associated with ramping up production in your common processing architecture product area, and how this will affect your ability to deliver for customers and improve cash flow?
-
Despite a record backlog of $1.4 billion and a trailing 12-month book-to-bill of 1.12 , what specific steps are you taking to convert this backlog into higher-margin revenue and ensure sustainable growth?
-
Considering the increase of $40 million in deferred revenue due to milestone billings , what risks do you foresee in fulfilling these milestones, and how might they impact your future cash flows and revenue recognition?
| Customer | Relationship | Segment | Details |
|---|---|---|---|
L3Harris | Supplier for multiple defense programs and platforms | All | 12% of total net revenues in fiscal 2024, less than 10% in fiscal 2023 and 2022. |
Lockheed Martin | Supplier for multiple defense programs and platforms | All | 11% of total net revenues in fiscal 2024, 13% in fiscal 2023, 10% in fiscal 2022. |
RTX Corporation | Supplier for multiple defense programs and platforms | All | 10% of total net revenues in fiscal 2024, 14% in fiscal 2023, 14% in fiscal 2022. |
Northrop Grumman | Supplier for multiple defense programs and platforms | All | Less than 10% of net revenues in fiscal 2024, 11% in fiscal 2023, less than 10% in fiscal 2022. |
U.S. Navy | Supplier for multiple defense programs and platforms | All | Less than 10% of net revenues in fiscal 2024 and 2023, 14% in fiscal 2022. |
Notable M&A activity and strategic investments in the past 3 years.
| Company | Year | Details |
|---|---|---|
Atlanta Micro, Inc. | 2022 | Atlanta Micro, Inc. was acquired for a net purchase price of approximately $89.24 million (after adjustments) and funded via Mercury Systems’ revolving credit facility; the acquisition brought in advanced high-performance RF modules critical for defense and aerospace markets, with detailed fair value allocations for goodwill and intangible assets. |
Avalex Technologies, LLC | 2022 | Avalex Technologies, LLC was acquired for a net purchase price of $154.145 million (with a post-closing adjustment of $151,000) and funded using Mercury’s Revolver; the deal strategically expanded mission-critical avionics capabilities—including rugged displays and integrated communications systems—while also reflecting specific tax treatment as an asset sale. |
Recent press releases and 8-K filings for MRCY.
- Mercury Systems delivered a strong Q3 FY '25 performance with $211M in revenue and adjusted EBITDA of approximately $25M (11.7% margin)
- Robust order execution was evident with $200M in Q3 bookings and a $1.34B backlog (up 4% YoY)
- Solid cash flow performance featured $24M in free cash flow in Q3 along with a significant $148M YoY reduction in net working capital
- The company also achieved 8.9% year-to-date revenue growth, underscoring ongoing momentum
- Looking ahead, updated FY '25 guidance calls for mid-single digit revenue growth, evolving margins toward a low double-digit to mid 20% adjusted EBITDA range, and a targeted recurring 50% free cash flow conversion that reinforces confidence in Mercury Systems’ strategic positioning
- Mercury Systems reiterated its fiscal year guidance ending June 27, 2025, confirming its updated operational expectations.
- Charles R. Wells, IV, the Chief Operating Officer, resigned to pursue a CEO role at a privately held company, triggering a management change.
- CFO David E. Farnsworth is taking on expanded operational leadership and will receive a $1,000,000 restricted stock unit award as part of his new compensation package.