The following is a summary of the Mercury Systems, Inc. (MRCY) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Mercury Systems, Inc.'s bookings reached $220 million for Q3 2024, resulting in a backlog of $1.3 billion.

• Revenues were down by 21% compared to the prior year, at $208 million.

• The Q3 gross margin decreased to 19.5% from 34.3% in the previous year.

• Operating expenses decreased by nearly $2 million year-over-year.

• There was a GAAP net loss for the third quarter due to numerous factors such as incremental program cost growth impacts, inventory reserves in scrap, warranty expense, and contract settlement reserves.

• Adjusted EBITDA for the third quarter was negative $2.4 million.

• Adjusted loss per share was $0.26 compared to earnings per share of $0.40 in the prior year.

• The company ended the quarter with cash and cash equivalents of $143 million and funded debt of $616.5 million under its revolver.

Business Progress:

• Mercury is making progress in retiring its challenged programs, expanding its backlog, and reducing its cost structure.

• In Q3, Mercury transitioned its large portfolio of development programs to production.

• Mercury continues to expect bookings to exceed $1 billion for the full year and is confident in a return to growth in FY '25 and beyond.

• Despite challenges, the company expects to see reductions in working capital metrics as it executes and converts unbilled to build receivables and cash.

• Operating leverage is expected to improve in Q4 due to expected sequential revenue and margin increases.

• The development program mix is expected to align better with historical norms.

• Mercury continues to predict positive free cash flow for the year.

More details: Mercury Systems IR

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