Mercury Systems Soars with 66% EBITDA Growth and Strong Defense Demand
Mercury Systems, a leading provider of mission-critical technologies, has reported a strong start to its fiscal year. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by 66% in the first quarter, with earnings 20% higher than expected absent a revenue pull-forward. Sales also increased by 6% to $225.2 million, surpassing analyst expectations by $17.93 million.
The company's improved performance is reflected in its margins, which rose from 10.5% to 15.8%. Adjusted for a $20 million revenue shift, the margins would have been 12.5%. Mercury Systems' management expressed confidence in the future, announcing a share repurchase program.
Driving this optimism is the high demand for the company's products, including missile defense, radar programs, electronic warfare, and communication solutions. This demand is fueled by the growing need for advanced battlefield electronics. The company's Revolving Credit Facility has been extended by five years to November 4, 2030, with an increased facility size of $850 million.
Operating cash flow also showed significant improvement, shifting from a $14.7 million cash burn to a $2.2 million cash generation in the first quarter. The company has a $200 million cash app in place, with no specified timeframe for completion.
Mercury Systems' strong first quarter, marked by increased earnings, sales, and margins, signals a positive trajectory for the company. The extended credit facility and improved cash flow, coupled with high demand for its products, indicate a robust financial position. The company's stock has also performed well, advancing nearly 12% since a buy rating in August, outperforming the S&P 500's 4.4% gain.
