MRCY 8-K
Mercury Systems Inc (MRCY)
8-K
2026-08-18
For: 2026-08-18
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August 18, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 18, 2026
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| | ||||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: (978 ) 256-1300
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Item 2.02. Results of Operations and Financial Condition.
On August 18, 2026 , Mercury Systems, Inc. (the "Company" or "we") issued a press release and an earnings presentation regarding its financial results for the fourth quarter and fiscal year ended July 3, 2026. The press release and earnings presentation are attached as exhibits 99.1 and 99.2 to this Current Report on Form 8-K and incorporated by reference herein.
Information in Item 2.02 of this Current Report on Form 8-K and the exhibits 99.1 and 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted EPS, and free cash flow, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non-GAAP financial measures are useful to help investors more completely understand its past financial performance and prospects for the future. However, the presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP financial measures assist in providing a more complete understanding of the Company’s underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | ||||
| 99.1 | Press Release dated | ||||
| 99.2 | Earnings Presentation dated | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: | MERCURY SYSTEMS, INC. | ||||
By: /s/ David E. Farnsworth David E. Farnsworth Executive Vice President, Chief Financial Officer | |||||
EXHIBIT INDEX
Exhibit No. | Description | ||||
Exhibit 99.1
| FOR IMMEDIATE RELEASE | |||||
Mercury Systems Reports Fourth Quarter and Fiscal 2026 Results
•Record Q4 FY26 Bookings of $660 million grew 93.1% year-over-year; book-to-bill of 2.28
•Record Backlog of over $1.9 billion; up 38.4% year-over-year
•Record Q4 FY26 Revenue of approximately $290 million; up 6.1% year-over-year
•GAAP net income of $1 million; adjusted EBITDA of $49 million and adjusted EBITDA margin of 16.7%
ANDOVER, Mass. August 18, 2026 Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), reported operating results for the fourth quarter and fiscal year 2026, ended July 3, 2026.
“We delivered fourth quarter fiscal 2026 results that were ahead of our expectations, with record bookings, record backlog, record revenue, the highest EBITDA margin of the year, and robust free cash flow," said Bill Ballhaus, Mercury’s Chairman and CEO. “Based on our solid execution and strong demand signals, we enter fiscal year 2027 with enhanced visibility and are increasing our outlook for organic growth."
“In the fourth quarter we delivered record bookings of $660 million, up 93% year-over-year and nearly double our previous record bookings quarter; a 2.3 book-to-bill, resulting in a record backlog of approximately $1.9 billion; record revenue of $290 million, up 6.1% year-over-year; GAAP net income of $1 million; adjusted EBITDA of $49 million; adjusted EBITDA margin of 16.7%; cash flows provided by operating activities of $42 million; and free cash flow of $29 million."
Fourth Quarter Fiscal 2026 Results
Fourth quarter fiscal 2026 revenues were $290 million, compared to $273 million in the fourth quarter of fiscal 2025.
Total bookings for the fourth quarter of fiscal 2026 were $660 million, yielding a book-to-bill ratio of 2.28 for the quarter.
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 2
GAAP net income and diluted earnings per share for the fourth quarter of fiscal 2026 were $1 million and $0.01, respectively, compared to GAAP net income and diluted earnings per share of $16 million and $0.27, respectively, for the fourth quarter of fiscal 2025. Adjusted earnings per share (“adjusted EPS”) was $0.37 per share for the fourth quarter of fiscal 2026, compared to $0.47 per share in the fourth quarter of fiscal 2025.
Fourth quarter fiscal 2026 adjusted EBITDA was $49 million, compared to $51 million for the fourth quarter of fiscal 2025.
Cash flows provided by operating activities in the fourth quarter of fiscal 2026 were $42 million, compared to $38 million in the fourth quarter of fiscal 2025. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $29 million for the fourth quarter of fiscal 2026 and $34 million for the fourth quarter of fiscal 2025.
Full Year Fiscal 2026 Results
Full year fiscal 2026 revenues were $984 million, compared to $912 million for full year fiscal 2025.
Total bookings for fiscal 2026 were $1.5 billion, yielding a book-to-bill ratio of 1.57 for the year.
GAAP net loss and loss per share for fiscal 2026 were $30 million, and $0.50, respectively, compared to GAAP net loss and loss per share of $38 million, and $0.65, respectively, for fiscal 2025. Adjusted EPS was $1.06 per share for fiscal 2026, compared to adjusted loss per share of $0.64 per share for fiscal 2025.
Fiscal 2026 adjusted EBITDA was $150 million, compared to $119 million for fiscal 2025.
Cash flows provided by operating activities in fiscal 2026 were $102 million, compared to $139 million in fiscal 2025. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $68 million for fiscal 2026 and $119 million for fiscal 2025.
Backlog
Mercury’s total backlog at July 3, 2026 was over $1.9 billion, an approximate $540 million increase from a year ago. Of the July 3, 2026 total backlog, $1.0 billion represents orders expected to be recognized as revenue within the next 12 months.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 3
Conference Call Information
Management will host a conference call and simultaneous webcast at 5:00 p.m. ET on Tuesday, August 18, 2026, to discuss Mercury's quarterly financial results, business highlights and outlook. In addition, Company representatives may answer questions concerning business and financial developments and trends, the Company's view on earnings forecasts, and other business and financial matters affecting the Company, the responses to which may contain information that has not been previously disclosed.
To participate in the conference call Q&A as an analyst please register online at https://events.q4inc.com/analyst/603599389?pwd=RYGqad9c or dial +1 585 542 9983 by phone using Meeting ID: 603599389. The live listen-only webcast and replay will be available ir.mrcy.com/events-presentations. A replay of the webcast will be available two hours after the call and archived on the same web page for six months.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted earnings per share (“adjusted EPS”) and free cash flow, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non-GAAP financial measures are useful to help investors understand its past financial performance and prospects for the future. However, these non-GAAP measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP measures assist in providing a more complete understanding of the Company’s underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. A reconciliation of GAAP to non-GAAP financial results discussed in this press release is contained in the attached exhibits.
Mercury Systems – Innovation that Matters®
Mercury Systems is a global leader in aerospace and defense electronics, providing breakthrough capabilities in signal and data processing. With a four-decade legacy of innovation that spans silicon to systems and radio frequency front ends to effectors, we accelerate commercial technology
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 4
adoption to deliver powerful and secure mission-critical processing solutions to the edge. We are headquartered in Andover, Massachusetts, and have multiple locations worldwide. Our end-to-end processing ecosystem, the Mercury Processing Platform, is built on technologies we have developed and acquired over 40 years. Our technologies are available as standard products or custom solutions from silicon to system scale to ensure interoperability, reduced complexity, optimized performance and speed development. To learn more, visit mrcy.com. (Nasdaq: MRCY)
Investors and others should note that we announce material financial information using our website (www.mrcy.com), SEC filings, press releases, public conference calls, webcasts, and social media, including X (X.com/mrcy) and LinkedIn (www.linkedin.com/company/mercury-systems). Therefore, we encourage investors and others interested in Mercury to review the information we post on the social media and other communication channels listed on our website.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 5
Forward-Looking Safe Harbor Statement
This press release contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the Company's focus on enhanced execution of the Company's strategic plan. You can identify these statements by the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, cost increases, our inability to increase production and deliver products on time and with appropriate quality, continued funding of defense programs, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company’s markets, effects of any U.S. federal government shutdown or extended continuing resolution, effects of increasingly volatile geopolitical events and regional conflicts, competition, changes in technology and methods of marketing, delays in or cost increases related to completing development, engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S. government’s interpretation of, federal export control or procurement rules and regulations, including tariffs, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of the Company's products, shortages or delays in receiving components, supply chain delays or volatility for critical components, production delays or unanticipated expenses including due to quality issues or manufacturing execution issues, failure to meet contractual performance specifications, adherence to required manufacturing standards, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, failure to achieve or maintain qualified business systems, such as those required by the DFARS, adverse findings in government audits or investigations, the impact of supply chain disruption, inflation and labor shortages, among other things, on program execution and the resulting effect on customer satisfaction, inability to fully realize the expected benefits from acquisitions, restructurings and operational efficiency initiatives or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, effects of shareholder activism, increases in interest rates, changes to industrial security and cyber-security regulations and requirements and impacts from any cyber or insider threat events, including the risks from heightened, persistent, and increasingly sophisticated nation-state level cyberattacks and emerging threats associated with agentic AI-enabled cyber tools, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, litigation, including the state law claim related to our settled federal securities class action lawsuit, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended July 3, 2026 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.
# # #
Contact:
Tyler Hojo, CFA, Vice President of Investor Relations
Mercury Systems, Inc.
978-967-3676
Mercury Systems and Innovation That Matters are registered trademarks of Mercury Systems, Inc. Other product and company names mentioned may be trademarks and/or registered trademarks of their respective holders.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 6
| MERCURY SYSTEMS, INC. | ||||||||||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (In thousands) | ||||||||||||||
| July 3, | June 27, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 214,306 | $ | 309,099 | ||||||||||
| Accounts receivable, net | 69,222 | 109,588 | ||||||||||||
| Unbilled receivables and costs in excess of billings, net | 285,760 | 278,475 | ||||||||||||
| Inventory | 366,968 | 332,920 | ||||||||||||
| Prepaid income taxes | 2,258 | 457 | ||||||||||||
| Prepaid expenses and other current assets | 34,925 | 27,639 | ||||||||||||
| Total current assets | 973,439 | 1,058,178 | ||||||||||||
| Property and equipment, net | 108,413 | 101,440 | ||||||||||||
| Goodwill | 942,419 | 938,093 | ||||||||||||
| Intangible assets, net | 175,820 | 210,611 | ||||||||||||
| Operating lease right-of-use assets, net | 47,713 | 52,264 | ||||||||||||
| Deferred tax asset | 67,188 | 69,016 | ||||||||||||
| Other non-current assets | 7,784 | 5,162 | ||||||||||||
| Total assets | $ | 2,322,776 | $ | 2,434,764 | ||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 91,041 | $ | 79,116 | ||||||||||
| Accrued expenses | 32,991 | 35,264 | ||||||||||||
| Due to factoring facility | 391 | 7,879 | ||||||||||||
| Accrued compensation | 54,537 | 51,321 | ||||||||||||
| Deferred revenues and customer advances | 149,565 | 126,797 | ||||||||||||
| Total current liabilities | 328,525 | 300,377 | ||||||||||||
| Income taxes payable | 3,487 | 4,046 | ||||||||||||
| Long-term debt | 441,500 | 591,500 | ||||||||||||
| Operating lease liabilities | 45,829 | 52,738 | ||||||||||||
| Other non-current liabilities | 5,977 | 12,642 | ||||||||||||
| Total liabilities | 825,318 | 961,303 | ||||||||||||
| Shareholders’ equity: | ||||||||||||||
| Preferred stock | — | — | ||||||||||||
| Common stock | 596 | 590 | ||||||||||||
| Additional paid-in capital | 1,333,410 | 1,287,478 | ||||||||||||
| Retained earnings | 152,222 | 181,895 | ||||||||||||
| Accumulated other comprehensive income | 11,230 | 3,498 | ||||||||||||
| Total shareholders’ equity | 1,497,458 | 1,473,461 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,322,776 | $ | 2,434,764 | ||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 7
| MERCURY SYSTEMS, INC. | ||||||||||||||||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||
| Fourth Quarters Ended | Twelve Months Ended | |||||||||||||||||||||||||
| July 3, 2026 | June 27, 2025 | July 3, 2026 | June 27, 2025 | |||||||||||||||||||||||
| Net revenues | $ | 289,782 | $ | 273,106 | $ | 983,622 | $ | 912,020 | ||||||||||||||||||
Cost of revenues(1) | 201,199 | 188,338 | 702,457 | 657,526 | ||||||||||||||||||||||
| Gross margin | 88,583 | 84,768 | 281,165 | 254,494 | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
Selling, general and administrative(1) | 47,848 | 37,714 | 175,031 | 154,412 | ||||||||||||||||||||||
Research and development(1) | 16,157 | 11,913 | 59,736 | 67,647 | ||||||||||||||||||||||
| Amortization of intangible assets | 9,390 | 10,275 | 38,904 | 42,849 | ||||||||||||||||||||||
| Restructuring and other charges | 348 | (15) | 5,939 | 7,216 | ||||||||||||||||||||||
| Acquisition costs and other related expenses | 375 | 1,331 | 1,275 | 1,997 | ||||||||||||||||||||||
| Total operating expenses | 74,118 | 61,218 | 280,885 | 274,121 | ||||||||||||||||||||||
| Income (loss) from operations | 14,465 | 23,550 | 280 | (19,627) | ||||||||||||||||||||||
| Interest income | 1,541 | 1,367 | 7,723 | 3,607 | ||||||||||||||||||||||
| Interest expense | (6,524) | (8,026) | (29,590) | (33,430) | ||||||||||||||||||||||
| Other (expense) income, net | (1,689) | 1,926 | (7,302) | (974) | ||||||||||||||||||||||
| Income (loss) before income tax provision (benefit) | 7,793 | 18,817 | (28,889) | (50,424) | ||||||||||||||||||||||
| Income tax provision (benefit) | 6,995 | 2,447 | 784 | (12,520) | ||||||||||||||||||||||
| Net income (loss) | $ | 798 | $ | 16,370 | $ | (29,673) | $ | (37,904) | ||||||||||||||||||
| Basic net earnings (loss) per share | $ | 0.01 | $ | 0.28 | $ | (0.50) | $ | (0.65) | ||||||||||||||||||
| Diluted net earnings (loss) per share | $ | 0.01 | $ | 0.27 | $ | (0.50) | $ | (0.65) | ||||||||||||||||||
| Weighted-average shares outstanding: | ||||||||||||||||||||||||||
| Basic | 59,552 | 58,924 | 59,460 | 58,746 | ||||||||||||||||||||||
| Diluted | 61,259 | 59,540 | 59,460 | 58,746 | ||||||||||||||||||||||
| (1) Includes stock-based compensation expense, allocated as follows: | ||||||||||||||||||||||||||
| Cost of revenues | $ | 1,011 | $ | 446 | $ | 5,584 | $ | 1,205 | ||||||||||||||||||
| Selling, general and administrative | $ | 9,319 | $ | 653 | $ | 29,197 | $ | 17,809 | ||||||||||||||||||
| Research and development | $ | 1,586 | $ | 1,318 | $ | 6,351 | $ | 6,005 | ||||||||||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 8
| MERCURY SYSTEMS, INC. | ||||||||||||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Fourth Quarters Ended | Twelve Months Ended | |||||||||||||||||||||||||
| July 3, 2026 | June 27, 2025 | July 3, 2026 | June 27, 2025 | |||||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||||||
| Net income (loss) | $ | 798 | $ | 16,370 | $ | (29,673) | $ | (37,904) | ||||||||||||||||||
| Depreciation and amortization | 17,514 | 19,969 | 72,683 | 82,027 | ||||||||||||||||||||||
| Other non-cash items, net | 23,846 | 6,953 | 61,336 | 26,627 | ||||||||||||||||||||||
| Changes in operating assets and liabilities | (5) | (5,217) | (1,958) | 68,101 | ||||||||||||||||||||||
| Net cash provided by operating activities | 42,153 | 38,075 | 102,388 | 138,851 | ||||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||
| Purchases of property and equipment | (13,588) | (4,098) | (34,301) | (19,803) | ||||||||||||||||||||||
| Acquisition of assets and businesses, net of cash acquired | — | (4,543) | (1,415) | (4,543) | ||||||||||||||||||||||
| Proceeds from sale of manufacturing operations to Cicor Group | — | 6,246 | — | 6,246 | ||||||||||||||||||||||
| Other investing activities | — | — | — | 4,600 | ||||||||||||||||||||||
| Net cash used in investing activities | (13,588) | (2,395) | (35,716) | (13,500) | ||||||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||
| Proceeds from employee stock plans | 2,690 | 2,169 | 5,418 | 3,661 | ||||||||||||||||||||||
| Payments for retirement of common stock | — | — | (15,001) | — | ||||||||||||||||||||||
| Payments under credit facilities | (150,000) | — | (150,000) | — | ||||||||||||||||||||||
| Payments of deferred financing and offering costs | — | — | (3,156) | (2,249) | ||||||||||||||||||||||
| Net cash (used in) provided by financing activities | (147,310) | 2,169 | (162,739) | 1,412 | ||||||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,251 | 1,428 | 1,274 | 1,815 | ||||||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | (117,494) | 39,277 | (94,793) | 128,578 | ||||||||||||||||||||||
| Cash and cash equivalents at beginning of period | 331,800 | 269,822 | 309,099 | 180,521 | ||||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 214,306 | $ | 309,099 | $ | 214,306 | $ | 309,099 | ||||||||||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 9
UNAUDITED SUPPLEMENTAL INFORMATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands, except per share data)
Adjusted EBITDA, a non-GAAP measure for reporting financial performance, excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company’s underlying results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:
Other non-operating adjustments. The Company records other non-operating adjustments such as gains or losses on foreign currency remeasurement, investments and fixed asset sales or disposals among other adjustments. These adjustments may vary from period to period without any direct correlation to underlying operating performance.
Interest income and expense. The Company receives interest income on investments and incurs interest expense on loans, financing leases and other financing arrangements. These amounts may vary from period to period due to changes in cash and debt balances and interest rates driven by general market conditions or other circumstances which may be outside of the normal course of the Company’s operations.
Income taxes. The Company’s GAAP tax expense can fluctuate materially from period to period due to tax adjustments that are not directly related to underlying operating performance or to the current period of operations.
Depreciation. The Company incurs depreciation expense related to capital assets purchased to support the ongoing operations of the business. These assets are recorded at cost or fair value and are depreciated using the straight-line method over the useful life of the asset. Purchases of such assets may vary significantly from period to period and without any direct correlation to underlying operating performance.
Amortization of intangible assets. The Company incurs amortization of intangible assets primarily as a result of acquired intangible assets such as backlog, customer relationships and completed technologies but also due to licenses, patents and other arrangements. These intangible assets are valued at the time of acquisition or upon receipt of right to use the asset, amortized over the requisite life and generally cannot be changed or influenced by management after acquisition.
Restructuring and other charges. The Company incurs restructuring and other charges in connection with management’s decisions to undertake certain actions to realign operating expenses through workforce reductions and the closure of certain Company facilities, businesses and lines of business. The Company’s adjustments reflected in restructuring and other charges are typically related to acquisitions and organizational redesign programs initiated as part of discrete post-acquisition integration activities. Management believes these items are non-routine and may not be indicative of ongoing operating results.
Impairment of long-lived assets. The Company incurs impairment charges of long-lived assets based on events that may or may not be within the control of management. Management believes these items are outside the normal operations of the Company’s business and are not indicative of ongoing operating results.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 10
Acquisition, financing and other third party costs. The Company incurs transaction costs related to acquisition and potential acquisition opportunities, such as legal, accounting, and other third party advisory fees. The Company may also incur third party costs, such as legal, banking, communications, proxy solicitation, and other third party advisory fees in connection with engagements by activist investors or unsolicited acquisition offers. Although the Company may incur such third party costs and other related charges and adjustments, it is not indicative that any transaction will be consummated. Additionally, the Company incurs unused revolver and bank fees associated with maintaining its credit facility as well as non-cash financing expenses associated with obtaining its credit facility. Management believes these items are outside the normal operations of the Company’s business and are not indicative of ongoing operating results.
Fair value adjustments from purchase accounting. As a result of applying purchase accounting rules to acquired assets and liabilities, certain fair value adjustments are recorded in the opening balance sheet of acquired companies. These adjustments are then reflected in the Company’s income statements in periods subsequent to the acquisition. In addition, the impact of any changes to originally recorded contingent consideration amounts are reflected in the income statements in the period of the change. Management believes these items are outside the normal operations of the Company and are not indicative of ongoing operating results.
Litigation and settlement income and expense. The Company periodically receives income and incurs expenses related to pending claims and litigation and associated legal fees and potential case settlements and/or judgments. Although the Company may incur such costs and other related charges and adjustments, it is not indicative of any particular outcome until the matter is fully resolved. Management believes these items are outside the normal operations of the Company’s business, often occur in periods other than the period of activity, and are not indicative of ongoing operating results. The Company periodically receives warranty claims from customers and makes warranty claims towards its vendors and supply chain. Management believes the expenses and gains associated with these recurring warranty items are within the normal operations and operating cycle of the Company’s business. Therefore, management deems no adjustments are necessary unless under extraordinary circumstances.
Stock-based and other non-cash compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of cost of revenues, selling, general and administrative expense and research and development expense. The Company also incurs non-cash based compensation in the form of pension related expenses and matching contributions to its defined contribution plan. Although stock-based and other non-cash compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company’s shares, risk-free interest rates and the expected term and forfeiture rates of the awards, as well as pension actuarial assumptions. Management believes that exclusion of these expenses allows comparisons of operating results to those of other companies, both public, private or foreign, that disclose non-GAAP financial measures that exclude stock-based compensation and other non-cash compensation.
Mercury uses adjusted EBITDA as an important indicator of the operating performance of its business. Management excludes the above-described items from its internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to the Company’s board of directors, determining a portion of bonus compensation for executive officers and other key employees based on operating performance, evaluating short-term and long-term operating trends in the Company’s operations, and allocating resources to various initiatives and operational requirements. The Company believes that adjusted EBITDA permits a comparative assessment of its operating performance, relative to its performance based on its GAAP results, while isolating the effects of charges that may vary from period to period without direct correlation to underlying operating performance. The Company believes that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making. The Company believes that trends in its adjusted EBITDA are valuable indicators of its operating performance.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 11
Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the adjusted EBITDA financial adjustments described above, and investors should not infer from the Company’s presentation of this non-GAAP financial measure that these costs are unusual, infrequent or non-recurring.
The following table reconciles the most directly comparable GAAP financial measure to the non-GAAP financial measure.
| Fourth Quarters Ended | Twelve Months Ended | |||||||||||||||||||||||||
| July 3, 2026 | June 27, 2025 | July 3, 2026 | June 27, 2025 | |||||||||||||||||||||||
| Net income (loss) | $ | 798 | $ | 16,370 | $ | (29,673) | $ | (37,904) | ||||||||||||||||||
| Other non-operating adjustments, net | 69 | (4,645) | 2,963 | (7,742) | ||||||||||||||||||||||
| Interest expense, net | 4,983 | 6,659 | 21,867 | 29,823 | ||||||||||||||||||||||
| Income tax provision (benefit) | 6,995 | 2,447 | 784 | (12,520) | ||||||||||||||||||||||
| Depreciation | 8,124 | 9,694 | 33,779 | 39,178 | ||||||||||||||||||||||
| Amortization of intangible assets | 9,390 | 10,275 | 38,904 | 42,849 | ||||||||||||||||||||||
| Restructuring and other charges | 348 | (15) | 5,939 | 7,216 | ||||||||||||||||||||||
| Impairment of long-lived asset | — | — | — | — | ||||||||||||||||||||||
| Acquisition, financing and other third party costs | 1,097 | 2,126 | 4,509 | 6,638 | ||||||||||||||||||||||
| Fair value adjustments from purchase accounting | 131 | 131 | 525 | 617 | ||||||||||||||||||||||
| Litigation and settlement expense, net | 1,820 | 4,062 | 13,451 | 13,010 | ||||||||||||||||||||||
| Stock-based and other non-cash compensation expense | 14,763 | 4,165 | 57,144 | 38,273 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 48,518 | $ | 51,269 | $ | 150,192 | $ | 119,438 | ||||||||||||||||||
Free cash flow, a non-GAAP measure for reporting cash flow, is defined as cash provided by operating activities less capital expenditures for property and equipment, which includes capitalized software development costs, and, therefore, has not been calculated in accordance with GAAP. Management believes free cash flow provides investors with an important perspective on cash available for investment and acquisitions after making capital investments required to support ongoing business operations and long-term value creation. The Company believes that trends in its free cash flow are valuable indicators of its operating performance and liquidity.
Free cash flow is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenditures similar to the free cash flow financial adjustment described above, and investors should not infer from the Company’s presentation of this non-GAAP financial measure that these expenditures reflect all of the Company's obligations which require cash.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 12
The following table reconciles the most directly comparable GAAP financial measure to the non-GAAP financial measure.
| Fourth Quarters Ended | Twelve Months Ended | |||||||||||||||||||||||||
| July 3, 2026 | June 27, 2025 | July 3, 2026 | June 27, 2025 | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 42,153 | $ | 38,075 | $ | 102,388 | $ | 138,851 | ||||||||||||||||||
| Purchases of property and equipment | (13,588) | (4,098) | (34,301) | (19,803) | ||||||||||||||||||||||
| Free cash flow | $ | 28,565 | $ | 33,977 | $ | 68,087 | $ | 119,048 | ||||||||||||||||||
Adjusted income and adjusted earnings per share (“adjusted EPS”) are non-GAAP measures for reporting financial performance, exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company’s underlying results and trends and allows for comparability with its peer company index and industry. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies. The Company uses these measures along with the corresponding GAAP financial measures to manage the Company’s business and to evaluate its performance compared to prior periods and the marketplace. The Company defines adjusted income as income before other non-operating adjustments, amortization of intangible assets, restructuring and other charges, impairment of long-lived assets, acquisition, financing and other third party costs, fair value adjustments from purchase accounting, litigation and settlement income and expense, and stock-based and other non-cash compensation expense. The impact to income taxes includes the impact to the effective tax rate, current tax provision and deferred tax provision(1). Adjusted EPS expresses adjusted income on a per share basis using weighted average diluted shares outstanding.
The following tables reconcile the most directly comparable GAAP financial measures to the non-GAAP financial measures.
| Fourth Quarters Ended | ||||||||||||||||||||||||||
| July 3, 2026 | June 27, 2025 | |||||||||||||||||||||||||
| Net income and earnings per share | $ | 798 | $ | 0.01 | $ | 16,370 | $ | 0.27 | ||||||||||||||||||
| Other non-operating adjustments, net | 69 | (4,645) | ||||||||||||||||||||||||
| Amortization of intangible assets | 9,390 | 10,275 | ||||||||||||||||||||||||
| Restructuring and other charges | 348 | (15) | ||||||||||||||||||||||||
| Impairment of long-lived assets | — | — | ||||||||||||||||||||||||
| Acquisition, financing and other third party costs | 1,097 | 2,126 | ||||||||||||||||||||||||
| Fair value adjustments from purchase accounting | 131 | 131 | ||||||||||||||||||||||||
| Litigation and settlement expense, net | 1,820 | 4,062 | ||||||||||||||||||||||||
| Stock-based and other non-cash compensation expense | 14,763 | 4,165 | ||||||||||||||||||||||||
Impact to income taxes(1) | (5,662) | (4,576) | ||||||||||||||||||||||||
| Adjusted income and adjusted earnings per share | $ | 22,754 | $ | 0.37 | $ | 27,893 | $ | 0.47 | ||||||||||||||||||
| Diluted weighted-average shares outstanding | 61,259 | 59,540 | ||||||||||||||||||||||||
| (1) Impact to income taxes is calculated by recasting income before income taxes to include the items involved in determining adjusted income and recalculating the income tax provision using this adjusted income from operations before income taxes. The recalculation also adjusts for any discrete tax provision or benefit related to the items. | ||||||||||||||||||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports Fourth Quarter and Fiscal 2026 Results, Page 13
| Twelve Months Ended | ||||||||||||||||||||||||||
| July 3, 2026 | June 27, 2025 | |||||||||||||||||||||||||
| Net loss and loss per share | $ | (29,673) | $ | (0.50) | $ | (37,904) | $ | (0.65) | ||||||||||||||||||
| Other non-operating adjustments, net | 2,963 | (7,742) | ||||||||||||||||||||||||
| Amortization of intangible assets | 38,904 | 42,849 | ||||||||||||||||||||||||
| Restructuring and other charges | 5,939 | 7,216 | ||||||||||||||||||||||||
| Impairment of long-lived assets | — | — | ||||||||||||||||||||||||
| Acquisition, financing and other third party costs | 4,509 | 6,638 | ||||||||||||||||||||||||
| Fair value adjustments from purchase accounting | 525 | 617 | ||||||||||||||||||||||||
| Litigation and settlement expense, net | 13,451 | 13,010 | ||||||||||||||||||||||||
| Stock-based and other non-cash compensation expense | 57,144 | 38,273 | ||||||||||||||||||||||||
Impact to income taxes(1) | (29,592) | (25,091) | ||||||||||||||||||||||||
Adjusted income and adjusted earnings per share(2) | $ | 64,170 | $ | 1.06 | $ | 37,866 | $ | 0.64 | ||||||||||||||||||
| Diluted weighted-average shares outstanding | 60,737 | 59,203 | ||||||||||||||||||||||||
| (1) Impact to income taxes is calculated by recasting income before income taxes to include the items involved in determining adjusted income and recalculating the income tax provision using this adjusted income from operations before income taxes. The recalculation also adjusts for any discrete tax provision or benefit related to the items. | ||||||||||||||||||||||||||
| (2) Adjusted earnings per share is calculated using diluted shares whereas Net loss per share is calculated using basic shares. There was a $0.02 impact and a $0.01 impact to the calculation of adjusted earnings per share as a result of this for the twelve months ended July 3, 2026 and June 27, 2025, respectively. | ||||||||||||||||||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
© Mercury Systems, Inc. WEBCAST LOGIN AT WWW.MRCY.COM/INVESTOR WEBCAST REPLAY AVAILABLE BY 7:00 P.M. ET AUGUST 18, 2026 Bill Ballhaus Chairman and CEO David Farnsworth Executive Vice President and CFO August 18, 2026, 5:00 pm ET FOURTH QUARTER AND FISCAL YEAR 2026 FINANCIAL RESULTS 1
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Forward-looking safe harbor statement This presentation contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the Company's focus on enhanced execution of the Company's strategic plan. You can identify these statements by the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, cost increases, our inability to increase production and deliver products on time and with appropriate quality, continued funding of defense programs, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company’s markets, effects of any U.S. federal government shutdown or extended continuing resolution, effects of increasingly volatile geopolitical events and regional conflicts, competition, changes in technology and methods of marketing, delays in or cost increases related to completing development, engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S. government’s interpretation of, federal export control or procurement rules and regulations, including tariffs, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of the Company's products, shortages or delays in receiving components, supply chain delays or volatility for critical components, production delays or unanticipated expenses including due to quality issues or manufacturing execution issues, failure to meet contractual performance specifications, adherence to required manufacturing standards, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, failure to achieve or maintain qualified business systems, such as those required by the DFARS, adverse findings in government audits or investigations, the impact of supply chain disruption, inflation and labor shortages, among other things, on program execution and the resulting effect on customer satisfaction, inability to fully realize the expected benefits from acquisitions, restructurings and operational efficiency initiatives or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, effects of shareholder activism, increases in interest rates, changes to industrial security and cyber-security regulations and requirements and impacts from any cyber or insider threat events, including the risks from heightened, persistent, and increasingly sophisticated nation-state level cyberattacks and emerging threats associated with agentic AI-enabled cyber tools, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, litigation, including the state law claim related to our settled federal securities class action lawsuit, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended July 3, 2026 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. Use of Non-GAAP (Generally Accepted Accounting Principles) Financial Measures In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted EPS, and free cash flow, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non- GAAP financial measures are useful to help investors better understand its past financial performance and prospects for the future. However, these non-GAAP measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP measures assist in providing a more complete understanding of the Company’s underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. A reconciliation of GAAP to non-GAAP financial results discussed in this presentation is contained in the Appendix hereto. 2
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Today’s call ▪ Opening remarks on business and results ▪ Update on our four priorities ▪ Performance expectations for FY27 and beyond ▪ Q&A 3
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Business and results ▪ Our Q4 FY26 results reflected robust organic growth and margin expansion: • Record bookings of $660M, up 93.1% year-over-year and nearly double our previous record bookings quarter; a 2.3 book-to-bill, record backlog of over $1.9B, and record next-12-month backlog of $1.0B. • Record Q4 FY26 revenue of $290M. • Q4 FY26 adjusted EBITDA of $49M and adjusted EBITDA margin of 16.7%. • Free cash flow of $29M. Ended Q4 FY26 with $227M of net debt, down 19.5% year-over-year. ▪ These results reflect ongoing focus on our four priority areas with highlights that include: • Solid execution across our broad portfolio leading to full-year FY26 organic revenue growth of 7.9% and adjusted EBITDA growth of 25.7%. • Year-over-year growth in backlog and next-12-month backlog of 38.4% and 23.3%, respectively. • An increase of 217 basis points year-over-year in full-year adjusted EBITDA margin; and • Continued progress on free cash flow drivers with net working capital down 4.0% year-over-year while revenue grew 7.9%. 4
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Driving performance excellence ▪ Focused on sound execution on development programs, delivering for our customers across our portfolio, and scaling efficiently on numerous programs transitioning to higher volume production. • In Q4, we ramped up across a number of programs and generated record quarterly revenue. • Our over time revenue in Q4, up 23.6% year-over-year, was the highest in 15 quarters, driven largely by the receipt of material which we believe is an indicator that we are better aligning our supply chain with the increased organic growth we are seeing in several areas across the business. ▪ Our domestic revenue, representing approximately 85.8% of our FY26 revenue, grew 13.0% organically year-over-year. ▪ Continue efforts to expand capacity, increase automation, and consolidate sub-scale sites in our ongoing efforts to drive scalability and efficiency: • Recently announced a strategic agreement with Palantir to leverage AI software to enhance material planning and factory operations in an effort to improve backlog conversion and deliver critical technologies to the warfighter. 5
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Driving organic growth ▪ Record quarter with $660M of bookings resulting in record fiscal year bookings of $1.5B, up 49.8% year- over-year, and a book-to-bill of 1.57 for the year. • Record total backlog approaching $2.0B is also providing enhanced visibility as we enter FY27 and into FY28. ▪ Strength in Q4 bookings was broad-based, with significant production awards across our products and solutions in Common Processing Architecture (CPA), effectors, airborne applications, space and missile defense. • Largest quarter ever for CPA bookings which we believe reflects the differentiation of our CPA solutions and reinforces our confidence in the growth prospects of this area. • The quarter also included significant bookings related to securing memory to support future production requirements across a number of advanced defense platforms. • Beginning to see the favorable impacts of the defense budgetary environment leading to a number of multi-year customer commitments. ▪ Continue to see the potential for higher demand on multiple programs across our portfolio, including space, munitions, missile defense, and our CPA, driven by increased defense budgets globally and domestic priorities. 6
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Expanding margins ▪ In our efforts to progress toward our targeted adjusted EBITDA margins in the low to mid 20% range, we remain focused on the following drivers: • Backlog margin expansion as we convert low-margin backlog and add new bookings aligned with our target margin profile. • Ongoing initiatives to further simplify, automate, and optimize our operations. • Driving organic growth to increase positive operating leverage. ▪ Gross margin for FY26 of 28.6% was up 70 basis points year-over-year, consistent with our expectation that average backlog margin will continue to increase as we convert legacy lower-margin backlog and bring in new bookings that we believe will be in line with our targeted margin profile. ▪ FY26 operating expenses are down year-over-year as a percent of our revenue reflecting our ongoing focus to drive efficiencies and enable positive operating leverage as we accelerate organic growth. ▪ Full year adjusted EBITDA margin of 15.3% was in line with our expectations and up 217 basis points year-over-year. 7
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Driving improved free cash flow conversion and release ▪ Continue to make progress on drivers of free cash flow. Net working capital at approximately $431M is down $18M year-over-year. ▪ Full year free cash flow of $68M led to net debt of $227M at the end of Q4, which we reduced by $55M year-over-year. ▪ Continuous improvement related to program execution, demand planning, and supply chain management, along with strong balance sheet flexibility, positions us well to drive organic growth and capitalize on any additional potential market tailwinds. 8
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Expectations for FY27 and beyond* ▪ Increasing targeted organic revenue growth to low double digits, while maintaining targeted adjusted EBITDA margin in the low to mid 20s and targeted FCF conversion of 50%. ▪ For FY27, expect revenue growth approaching double digits year-over-year with total revenue approaching $1.1B. • Anticipate Q1 FY27 revenue to be the lowest of the year and up high single digits year-over-year, with revenue increasing through the balance of the year. ▪ Expect adjusted EBITDA margin in the high-teens and adjusted EBITDA approaching $200M for the full year, reflecting nearly 30% year-over-year growth. • Expect adjusted EBITDA margin to generally increase through the year, with Q1 FY27 adjusted EBITDA margin expected to be in-line with Q1 FY26. ▪ Amidst increased demand, we plan to make targeted investments in inventory, automation, and factory optimization to drive organic growth. • For the full year, we are anticipating FY27 free cash flow conversion beneath our 50% target, approaching 35%, with free cash flow in the second half expected to be higher than in the first half. • Expect Q1 to be a larger outflow than normal, primarily reflecting the receipt of materials to support our growth outlook and the defense spending tailwinds we see ahead. 9
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Expectations for FY27 and beyond* - continued ▪ In our initial view of FY28, our reference point for top-line organic growth is in the low double digits, for adjusted EBITDA margin in-line with the low end of our target margin profile, and for free cash flow a return towards conversion in line with our target. ▪ Outlook for FY27 and FY28 incorporates a limited set of tailwinds that have materialized in firm bookings. • Does not incorporate the benefit of potential additional tailwinds that could occur on a number of production programs across our portfolio, including our CPA, effectors, airborne applications, space, and missile defense. • Additionally, outlook does not incorporate any benefit from the Palantir partnership or other automation efforts across our organization to improve backlog conversion. • We believe any such improvements may translate into higher organic growth and adjusted EBITDA margin representing potential upside to our outlook. 10 * FY28 reference points, along with our target profile, should not be construed as financial guidance and speak only as of today. They illustrate the financial profile the business could achieve based on the factors referenced in the forward-looking safe harbor statement, including our ability to convert backlog to revenue and gain additional orders beyond current backlog. These factors may materially affect whether we reach these reference points or target profile.
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Q4 FY26 vs. Q4 FY25 11 $ millions, except percentage and per share data Q4 FY26(2) Q4 FY25(2) CHANGE Bookings $659.6 $341.5 93% Book-to-Bill 2.28 1.25 Backlog $1,945.0 $1,404.9 38% 12-Month Backlog 996.0 807.8 Revenue $289.8 $273.1 6% Gross Margin 30.6% 31.0% -40 bps Operating Expenses $74.1 $61.2 21%Selling, General & Administrative 47.8 37.7 Research & Development 16.2 11.9 Amortization/Restructuring/Acquisition 10.1 11.6 GAAP Net Income $0.8 $16.4 (95%) GAAP Net Income Per Share $0.01 $0.27 (96%) Weighted Average Diluted Shares 61.3 59.5 Adjusted EPS(1) $0.37 $0.47 (21%) Adj. EBITDA(1) $48.5 $51.3 (5%) % of revenue 16.7% 18.8% Operating Cash Flow $42.2 $38.1 11% Free Cash Flow(1) $28.6 $34.0 (16%) % of Adjusted EBITDA 58.9% 66.3% Notes (1) Non-GAAP, see reconciliation table. (2) All references in this presentation to the fourth quarter of fiscal 2026 are to the 14 week period ended July 3, 2026. All references in this presentation to the fourth quarter of fiscal 2025 are to the 13 week period ended June 27, 2025.
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ 12 $ millions, except percentage and per share data FY26(2) FY25(2) CHANGE Bookings $1,545.6 $1,032.1 50% Book-to-Bill 1.57 1.13 Backlog $1,945.0 $1,404.9 38% 12-Month Backlog 996.0 807.8 Revenue $983.6 $912.0 8% Gross Margin 28.6% 27.9% 70 bps Operating Expenses $280.9 $274.1 2%Selling, General & Administrative 175.0 154.4 Research & Development 59.7 67.6 Amortization/Restructuring/Acquisition 46.2 52.1 GAAP Net Loss ($29.7) ($37.9) N.A. GAAP Net Loss Per Share ($0.50) ($0.65) N.A. Weighted Average Diluted Shares 59.5 58.7 Adjusted EPS(1) $1.06 $0.64 66% Adj. EBITDA(1) $150.2 $119.4 26% % of revenue 15.3% 13.1% Operating Cash Flow $102.4 $138.9 (26%) Free Cash Flow(1) $68.1 $119.0 (43%) % of Adjusted EBITDA 45.3% 99.7% Notes (1) Non-GAAP, see reconciliation table. (2) All references in this presentation to fiscal 2026 are to the 53 week period ended July 3, 2026. All references in this presentation to fiscal 2025 are to the 52 week period ended June 27, 2025. Fiscal Year 2026 vs. Fiscal Year 2025
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Balance sheet 13 Notes 1. Rounded amounts used. As of (In $ millions)(1) 6/27/25 9/26/25 12/26/25 3/27/26 7/3/26 ASSETS Cash & cash equivalents $309.1 $304.7 $335.0 $331.8 $214.3 Accounts receivable and unbilled receivables, net 388.1 367.5 379.8 365.0 355.0 Inventory, net 332.9 340.2 349.6 361.7 367.0 PP&E, net 101.4 102.6 102.0 102.6 108.4 Goodwill and intangibles, net 1,148.7 1,138.5 1,131.3 1,127.8 1,118.2 Other 154.6 204.1 204.4 192.4 159.9 TOTAL ASSETS $2,434.8 $2,457.6 $2,502.1 $2,481.3 $2,322.8 LIABILITIES AND S/E AP and accrued expenses $173.6 $196.7 $246.1 $224.2 $179.0 Deferred revenues and customer advances 126.8 125.5 136.9 126.3 149.6 Other liabilities 69.4 68.9 67.6 61.6 55.2 Debt 591.5 591.5 591.5 591.5 441.5 Total liabilities 961.3 982.6 1,042.1 1,003.6 825.3 Stockholders' equity 1,473.5 1,475.0 1,460.0 1,477.7 1,497.5 TOTAL LIABILITIES AND S/E $2,434.8 $2,457.6 $2,502.1 $2,481.3 $2,322.8
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Cash flow summary 14 Notes 1. Rounded amounts used. 2. Non-GAAP, see reconciliation table. For the Fiscal Quarters Ended (In $ millions)(1) 6/27/25 9/26/25 12/26/25 3/27/26 7/3/26 Net income (loss) $16.4 ($12.5) ($15.1) ($2.9) $0.8 Depreciation and amortization 20.0 18.9 18.3 18.0 17.5 Other non-cash items, net 6.9 12.7 12.5 12.3 23.8 Changes in Operating Assets and Liabilities Accounts receivable, unbilled receivables, and costs in excess of billings (10.8) 20.1 (12.0) 14.5 10.1 Inventory 12.0 (12.1) (11.6) (12.7) (8.1) Accounts payable and accrued expenses 13.4 20.9 46.1 (19.5) (43.6) Other (19.8) (45.8) 13.4 (3.3) 41.6 (5.2) (16.9) 35.9 (21.0) 0.0 Operating Cash Flow 38.1 2.2 51.6 6.4 42.1 Capital expenditures (4.1) (6.6) (5.9) (8.3) (13.6) Free Cash Flow(2) $34.0 ($4.4) $45.7 ($1.8) $28.6 Free Cash Flow(2) / Adjusted EBITDA(2) 66.3% N/A 152.3% N/A 58.9% Free Cash Flow(2) / GAAP Net Income (Loss) 208% N.A. N.A. N.A. 3,575%
© Mercury Systems, Inc. APPENDIX
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Adjusted EPS reconciliation Notes (1) Per share information is presented on a fully diluted basis. (2) Rounded amounts used. (3) Impact to income taxes is calculated by recasting income before income taxes to include the items involved in determining adjusted income and recalculating the income tax provision using this adjusted income from operations before income taxes. The recalculation also adjusts for any discrete tax provision or benefit related to the items. (4) All references in this presentation to the fourth quarter of fiscal 2026 and fiscal 2026 are to the 14 week and 53 week period ended July 3, 2026, respectively. All references in this presentation to the fourth quarter of fiscal 2025 and fiscal 2025 are to the 13 week period and 52 week period ended June 27, 2025, respectively. (In thousands, except per share data)(2) Q4 FY25 Q4 FY26 FY25 FY26 Income (loss) per share(1) $0.27 $0.01 ($0.65) ($0.50) Net income (loss) $16,370 $798 ($37,904) ($29,673) Other non-operating adjustments, net (4,645) 69 (7,742) 2,963 Amortization of intangible assets 10,275 9,390 42,849 38,904 Restructuring and other charges (15) 348 7,216 5,939 Impairment of long-lived assets — — — — Acquisition, financing and other third party costs 2,126 1,097 6,638 4,509 Fair value adjustments from purchase accounting 131 131 617 525 Litigation and settlement expense, net 4,062 1,820 13,010 13,451 Stock-based and other non-cash compensation expense 4,165 14,763 38,273 57,144 Impact to income taxes(3) (4,576) (5,662) (25,091) (29,592) Adjusted income $27,893 $22,754 $37,866 $64,170 Adjusted earnings per share(1) $0.47 $0.37 $0.64 $1.06 Weighted-average shares outstanding: Basic 58,924 59,552 58,746 59,460 Diluted 59,540 61,259 59,203 60,737
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Adjusted EBITDA reconciliation 17 Notes (1) Rounded amounts used. (2) All references in this presentation to the fourth quarter of fiscal 2026 and fiscal 2026 are to the 14 week and 53 week period ended July 3, 2026, respectively. All references in this presentation to the fourth quarter of fiscal 2025 and fiscal 2025 are to the 13 week period and 52 week period ended June 27, 2025, respectively. (In thousands)(1)(2) Q4 FY25 Q4 FY26 FY25 FY26 Net income (loss) $16,370 $798 ($37,904) ($29,673) Other non-operating adjustments, net (4,645) 69 (7,742) 2,963 Interest expense, net 6,659 4,983 29,823 21,867 Income tax provision (benefit) 2,447 6,995 (12,520) 784 Depreciation 9,694 8,124 39,178 33,779 Amortization of intangible assets 10,275 9,390 42,849 38,904 Restructuring and other charges (15) 348 7,216 5,939 Impairment of long-lived assets — — — — Acquisition, financing and other third party costs 2,126 1,097 6,638 4,509 Fair value adjustments from purchase accounting 131 131 617 525 Litigation and settlement expense, net 4,062 1,820 13,010 13,451 Stock-based and other non-cash compensation expense 4,165 14,763 38,273 57,144 Adjusted EBITDA $51,269 $48,518 $119,438 $150,192
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Free cash flow reconciliation 18 Notes 1. Rounded amounts used.(In thousands)(1) Q4 FY25 Q4 FY26 FY25 FY26 Cash provided by operating activities $38,075 $42,153 $138,851 $102,388 Purchases of property and equipment (4,098) (13,588) (19,803) (34,301) Free cash flow $33,977 $28,565 $119,048 $68,087