Mercury Systems, Inc. (NASDAQ:MRCY) Q2 2024 Results Conference Call February 6, 2024 5:00 PM ET

Company Participants

Dave Farnsworth - Executive Vice President and Chief Financial Officer

Bill Ballhaus - Chairman and Chief Executive Officer

Conference Call Participants

Peter Arment - Baird

Seth Seifman - JPMorgan

Jonathan Ho - William Blair

Kyle Wenclawiak - Jefferies

Michael Ciarmoli - Truist Securities

Operator

Good day, everyone, and welcome to the Mercury Systems Second Quarter Fiscal 2024 Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to the company's Executive Vice President and Chief Financial Officer, Dave Farnsworth. Go ahead, Mr. Farnsworth.

Dave Farnsworth

Good afternoon, and thank you for joining us. With me today is our Chairman and Chief Executive Officer, Bill Ballhaus. If you've not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our Web site at mrcy.com. The slide presentation that Bill and I will be referring 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, business prospects and anticipated financial performance. These forward-looking statements are subject to future risks and uncertainties that could cause our actual results or performance to differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements on Slide 2, in the earnings press release and the risk factors included in Mercury's SEC filings. I'd also like to mention that in addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP. During our call, we will also discuss several non-GAAP financial measures, specifically adjusted income, adjusted earnings per share, adjusted EBITDA, free cash flow, organic revenue and acquired revenue. A reconciliation of these non-GAAP metrics is included as an appendix to today's slide presentation and in the earnings press release.

I'll now turn the call over to Mercury's Chairman and CEO, Bill Ballhaus. Please turn to Slide 3.

Bill Ballhaus

Thanks, Dave. Good afternoon. Thank you for joining our Q2 FY24 earnings call. Today, I'd like to talk through three topics; first, some introductory comments on our business and results; second, an update on the progress we are making in each of our four priority areas, delivering predictable performance, building a thriving growth engine, expanding margins and driving improved free cash flow; and third, expectations for our performance both for FY24 and longer term. Then I'll turn it over to Dave who will walk through our financial results and guidance in more detail. Please turn to Slide 4. As I said in the past, while FY24 is a transitional year, I'm optimistic about our strategic positioning as a leader in mission critical processing at the edge, the attractiveness of our business model and our outlook over time to deliver predictable organic growth while expanding margins and robust free cash flow. During Q2, we made solid headway in each of our four priority focus areas and in addressing what we believe to be the two transitory dynamics in our business I referenced last quarter; transitioning our high mix of development programs to production and converting our high level of working capital into significant cash flow. We believe this progress is evident in three highlights from the quarter; strong bookings, solid free cash flow and better than expected progress in closing out our challenge programs, most of which are development in nature.