Mercury Systems reported third-quarter fiscal 2024 results, falling short of both revenue and earnings expectations within the analyst community. The aerospace and defense technology company disclosed a non-GAAP loss of 26 cents per share, significantly wider compared to the Zacks Consensus Estimate of a loss of 15 cents.
Declining by 21% year-over-year, Mercury Systems saw its non-GAAP revenues dwindle to $208.26 million, missing the consensus projection of $212 million.
Quarterly Performance Highlights
Mercury Systems’ bookings for the quarter totaled $219.9 million, yielding a book-to-bill ratio of 1.06. The company finished the quarter with a backlog of $1.29 billion, marking a $190.5 million increase from the prior year. Approximately $761.2 million worth of products from this backlog are anticipated to be recognized as revenues in the next 12 months.
Despite a gross profit of $40.6 million, down by 55% year-over-year, Mercury Systems experienced a significant contraction in gross margin to 19.5%, declining by 1,480 basis points.
Total operating expenses decreased slightly to $86.3 million, yet operational costs as a percentage of revenues surged to 41.4% from 33.5% in the year-ago quarter.
Financial Position and Outlook
As of March 29, 2024, Mercury Systems held $142.6 million in cash and cash equivalents, a decrease from $168.6 million in the previous quarter. The company’s long-term debt stood at $616.5 million as of the end of the third quarter.
Looking ahead, Mercury Systems anticipates revenues for fiscal 2024 to fall between $800 million and $850 million with adjusted EBITDA margins in the mid-20 percent range. A positive free cash flow is expected for the fiscal year.
Analyst Rankings and Market Comparison
Presently, Mercury Systems retains a Zacks Rank #3 (Hold). Among other notable stocks in the Computer and Technology sector, Babcock, NVIDIA, and Dell Technologies hold a Zacks Rank #2 (Buy). While Babcock is expected to report its first-quarter 2024 results on May 9, NVIDIA and Dell Technologies are scheduled to release their first-quarter fiscal 2025 results on May 22 and May 30, respectively.