Mercury Systems, Inc. (MRCY) SEC Filings & Earnings Calls

Settlement of derivative lawsuits; terms not disclosed but removes litigation risk.

“parties to the Settled Matters agreed to a settlement to resolve these matters on July 9, 2026” · word for word

Execution risk on fixed-price contracts

“unanticipated costs under fixed-price service and system integration engagements” · word for word

Supply chain disruption

“shortages in or delays in receiving components, supply chain delays or volatility for critical components” · word for word

U.S. government funding risk

“effects of any U.S. federal government shutdown or extended continuing resolution” · word for word

Cyber security threat

“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” · word for word

GAAP net income declined YoY from $16M to $1M, indicating potential margin pressure from non-cash charges.

“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.” · word for word

Shareholder litigation

“In June 2026, Starboard filed a separate legal action against the Company in Massachusetts state court with similar allegations as the securities class action and additional claims related to its prior standstill agreement with the Company.” · word for word

Government contract risk

“one of our business entities is currently operating on a disapproved CAS system and that business is subject to billing withholding which has resulted in approximately $0.4 million of cash withheld.” · word for word

Cybersecurity compliance cost

“our inability to meet the qualifications to the CMMC and any amendments may increase our costs or delay the award of contracts if we are unable to certify that we satisfy such cybersecurity requirements at our enterprise level and into our supply chain.” · word for word

Product complexity risk

“Our products are extremely complex and must operate successfully with complex products of our customers and their other vendors.” · word for word

Free cash flow turned negative due to working capital and capex.

“Free cash flow... was $(2) million for the third quarter of fiscal 2026 and $24 million for the third quarter of fiscal 2025.”

GAAP net loss persists, though significantly narrowed.

“GAAP net loss of $3 million; and adjusted EBITDA of $36 million.” · word for word

High leverage

“The borrowing capacity as defined under the Revolver as of March 27, 2026 is the total availability of $850.0 million less outstanding borrowings of $591.5 million and outstanding letters of credit of $4.2 million.” · word for word

Program execution risk

“We had the following aggregate effects of favorable and unfavorable margin impacts as a result of changes in estimates across our portfolio for the period presented: ... Net impact of changes in estimates $ (2,095) $ (3,653)” · word for word

Customer concentration

“There were no programs comprising 10% or more of our revenues for the third quarters ended March 27, 2026 or March 28, 2025.” · word for word

Tariff impact on gross margins

“We may experience increases in our manufacturing costs related to the imposition of tariffs on the import of components from other countries. We have not seen material increases to these costs in the second quarter of fiscal 2026, but they could impact our gross margins in the future.” · word for word

Execution on lower margin programs

“The lower gross margin was driven primarily by execution on lower margin programs, higher scrap of $3.1 million, higher inventory reserves of $2.4 million” · word for word

Litigation and settlement costs

“The litigation and settlement expense incurred during the second quarter ended December 26, 2025 was primarily comprised of $2.0 million related to the dispute with our former CEO, which was settled during the current quarter” · word for word

GAAP net loss persists despite operational improvements.

“GAAP net loss of $15 million” · word for word

Still generating negative free cash flow

“Free cash flow of $(4.4) million” · word for word

Tariff impact on gross margins

“We may experience increases in our manufacturing costs related to the imposition of tariffs on the import of components from other countries. We have not seen material increases to these costs in the first quarter of fiscal 2026, but they could impact our gross margins in the future.” · word for word

Litigation costs

“Litigation and settlement expense, net $7,224 (2025) vs $1,394 (2024)”