Q2 2025 Mercury Systems Inc Earnings Call Transcript
Key Points
- Mercury Systems Inc (MRCY) reported a 13% year-over-year increase in revenue for Q2, reaching $223 million.
- The company achieved a record free cash flow of $82 million, up $44 million year over year.
- Bookings for the quarter were strong at $242 million, resulting in a record backlog of $1.4 billion.
- Gross margin improved significantly to 27.3% from 16% in the same quarter last year.
- The company successfully reduced net working capital by $115 million year over year, or 19.5%.
- Despite improvements, Mercury Systems Inc (MRCY) reported a GAAP net loss of $18 million for the quarter.
- The adjusted EBITDA margin was 9.9%, which is below the company's long-term target of low- to mid-20% range.
- The company expects free cash flow to be around breakeven in the second half of the fiscal year.
- Backlog margin remains lower than desired due to low-margin development programs and adverse impacts from FY24.
- The company did not provide specific guidance for FY25, creating some uncertainty about future performance.
Good day, everyone, and welcome to the Mercury Systems second-quarter fiscal 2025 conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to the company's Vice President of Investor Relations, Tyler Hojo. Please go ahead, Mr. Hojo.
Good afternoon and thank you for joining us. With me today is our Chairman and Chief Executive Officer, Bill Ballhaus; and our Executive Vice President and CFO, Dave Farnsworth.
If you have not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our website at mrcy.com. The slide presentation that we will be referencing to is posted on the Investor Relations section of the website under Events and Presentations.
Turning to slide 2 in the presentation, I'd like to remind you that today's presentation includes forward-looking statements, including information regarding Mercury's financial outlook, future plans, objectives,
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