MERCURY SYSTEMS INC (MRCY)

Mercury Systems, Inc. is a technology company that delivers processing power for aerospace and defense missions. Its end-to-end Mercury Processing Platform brings commercial technology to defense applications, combining signal solutions, display, software applications, networking, storage and secure processing. The company describes its solutions as mission-ready, trusted and secure, software-defined, and open and modular. In fiscal 2023 it reported revenues of $973.9 million and a net loss of $28.3 million, compared with revenues of $988.2 million and net income of $11.3 million in fiscal 2022.

The company groups its products into three categories. Components are basic building blocks such as power amplifiers, switches, filters, data converters, chips, MMICs, and memory and storage devices. Modules and subassemblies combine components into embedded processing boards, switched fabrics, digital receivers, graphics and video boards, multi-chip modules, and RF and microwave assemblies. Integrated subsystems combine components, modules and software, often in open-standards chassis, for sensor processing, aviation and mission computing, and C4I applications. Examples of hardware include custom microelectronics, embedded sensor processing subsystems, RF and microwave components, rugged servers, and avionics mission computers. Differentiating technologies include BuiltSECURE and BuiltSAFE, Air Flow-By and Liquid-Flow-By cooling, and support for open standards such as OpenVPX, SOSA, FACE and VICTORY. Since 2015 the company has completed 15 acquisitions that added capabilities in embedded security, microelectronics, RF and microwave, mission computing, avionics, displays, and rugged servers.

Mercury sells to defense prime contractors, the U.S. government, and commercial aerospace OEMs. Its products are deployed in more than 300 programs with over 25 defense prime contractors and commercial aviation customers, including Aegis, Patriot, LTAMDS, THAAD, F-35, F-16, F-18, P-8 and Reaper. Applications include C4ISR, electronic warfare, radar, EO/IR, mission computing avionics, weapons and missile defense, and hypersonics. Commercial aerospace uses include communications and air traffic control radar. Management cites a Renaissance Strategic Advisors estimate that the global aerospace and defense electronics market is about $148 billion in 2023, growing to $199 billion by 2028, and that the Tier 2 defense electronics market in which Mercury participates is about $48 billion, growing to $67 billion.

The company is headquartered in Andover, Massachusetts. It invests in scalable U.S. manufacturing for microelectronics and secure processing, and stresses a trusted onshore supply chain. Its embedded processing uses Intel server-class processors, AMD FPGAs and NVIDIA GPUs from technology partners. The company says its R&D investment as a percentage of sales is more than double that of its competitors. It also earns non-recurring engineering revenue that supplements internal R&D. Its CES unit in Geneva, Switzerland helps open international opportunities. Strategic priorities are predictable results, organic growth, margin expansion, and cash release. The 1MPACT value-creation initiative has been folded into its Execution Excellence organization.