Mercury Systems MRCY reported first-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate.

The aerospace and defense tech firm reported non-GAAP earnings of 4 cents per share against the Zacks Consensus Estimate of a loss of 13 cents. The bottom line surged 116.7% year over year.

Mercury Systems’ non-GAAP revenues increased 13% year over year to $204.4 million. The top line beat the consensus mark by 12.9%. 

MRCY’s earnings beat the Zacks Consensus Estimate once in the last four quarters and lagged in the remaining three, delivering an average negative surprise of 148.69%.

The results reflected solid progress in each of the priority focus areas, with highlights that include reducing operating expenses, aiding increased positive operating leverage and improving the execution across all product offerings, especially the Common Processing Architecture area.

Mercury Systems Inc Price, Consensus and EPS Surprise

Mercury Systems Inc price-consensus-eps-surprise-chart | Mercury Systems Inc Quote

MRCY’s Q1 in Details

Mercury Systems’ total bookings were up 29% year over year to $247.7 million, yielding a book-to-bill ratio of 1.21 for the quarter. 

MRCY’s total backlog as of Sept. 27, 2024, was $1.34 billion, reflecting an increase of $187.8 million from the year-ago quarter’s reported figure. As of Sept. 27, 2024, the total backlog of $777 million represented orders expected to be recognized as revenues within the next 12 months.

Mercury Systems’ gross profit was $51.79 million, up 2.5% year over year. Moreover, its gross margin contracted 258 basis points (bps) to 25.3%.

Total operating expenses decreased 28.12% year over year to $65.2 million due to streamlined operations. As a percentage of revenues, operating expenses contracted 1823 bps to 31.9%.

The company reported an adjusted EBITDA of $21.45 million, up 996% year over year. The margin expanded 941 bps to 10.49% due to the execution of development programs to minimize cost growth, increase organic growth and move closer to a 20:80 ratio of development to production program.

Balance Sheet & Cash Flow of MRCY

As of Sept. 27, 2024, MRCY’s cash and cash equivalents were $158.12 million compared with $180.52 million as of June 28, 2024. The long-term debt as of Sept. 27, 2024, was $591.5 million.

Cash flows used in operating activities in the first quarter of fiscal 2025 were $14.7 million compared with $39.1 million in the year-ago quarter. 

Negative free cash flow was $20.9 million for the first quarter of fiscal 2025 compared with negative free cash flow of $47.1 million in the year-ago period.

Zacks Rank & Stocks to Consider

Currently, Mercury Systems carries a Zacks Rank #3 (Hold).

Some other stocks from the broader Aerospace sector are Archer Aviation ACHR, Intuitive Machines, Inc. LUNR and Ducommun DCO, While ACHR sports a Zacks Rank #2 (Buy), LUNR and DCO each carry a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Archer Aviation have declined 47.1% year to date. ACHR is set to report third-quarter 2024 results on Nov. 7.

Shares of Intuitive Machines have surged 203% year to date. LUNR is slated to report third-quarter 2024 results on Nov. 11.

Shares of Ducommun have increased 18.5% year to date. DCO is set to report third-quarter 2024 results on Nov. 7.

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