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About Mercury Systems, Inc.

Mercury Systems (formerly Mercury Computer Systems) delivers digital signals faster than a wing-footed messenger. The company delivers innovative technology solutions for the homeland security, military and aerospace, and telecommunications markets. In addition, it manufactures essential components, modules and subsystem. It provides customers process radar, electronic warfare, weapons and missile defense . It also makes specialized electronics used in semiconductor wafer inspection and airport baggage screeners. Mercury Systems acts as a subcontractor to prime contractors such as Northrop Grumman and Raytheon. The company was founded in 1981. In late 2019, the company acquired American Panel Corporation.

Operations

Company manages its business on the basis of one reportable segment. In general, the company manufactures essential components, modules and subsystems.

Components include technology elements typically performing a single, discrete technological function, which when physically combined with other components may be used to create a module or subassembly.  Modules and subassemblies include combinations of multiple functional technology elements and/or components that work together to perform multiple functions but are typically resident on or within a single board or housing. Integrated subsystems include multiple modules and/or subassemblies combined with a backplane or similar functional element and software to enable a solution. In addition, the company pioneered or contributed to the development of many of the defense industry's current and emerging open standards, including standards such as RACEway, RapidIO, VXS, VPX, REDI and notably OpenVPX. 

In terms of end application, Radar (30% of the total sales) includes end-use applications where radio frequency signals are utilized to detect, track, and identify objects. Electronic Warfare (20%) includes end-use applications comprising the offensive and defensive use of the electromagnetic spectrum. Other Sensor and Effector products (less than 15%) include all Sensor and Effector end markets other than Radar and Electronic Warfare. C4I (more than 25%) includes rugged secure rackmount servers that are designed to drive the most powerful military processing applications. Other (more than 10%) products include all component and other sales where the end use is not specified.

When it comes to platforms, Airborne platform (more than 50% of the total sales) includes products that relate to personnel, equipment, or pieces of equipment designed for airborne applications. Land platform (less than 15%) includes products that relate to fixed or mobile equipment, or pieces of equipment for personnel, weapon systems, vehicles and support elements operating on land.  Naval platform (nearly 20%) includes products that relate to personnel, equipment, or pieces of equipment designed for naval operations. 

Geographic Reach

Headquartered in Andover, Massachusetts, Mercury Systems has research and development centers and other facilities in the US (Arizona, California, Massachusetts, New Hampshire, Virginia and Georgia) Switzerland, Japan, Spain, Canada, UK, and France. It generates more than 90% of sales from the US; Europe accounts for more than five percent and the Asia-Pacific region accounts for less than five percent.

Sales and Marketing

The company sells to defense prime contractors, the U.S. government and original equipment manufacturers ("OEM") commercial aerospace companies.  

Its top two customers are Raytheon Technologies and Lockheed Martin Corporation. These two accounted for more than 30% of the total sales. Other customers are customers include Airbus, BAE Systems, Boeing, General Atomics, General Dynamics, L3Harris Technologies, Leonardo and Northrop Grumman.

Financial Performance

Since 2016, the revenue performance of the company is encouraging as it posted a 195% jump in the last five years. Net income followed the same trend and posted a 334% increase for the same period.

Revenue jumped 22% in 2020 to $796.6 million. The increase in total revenue was primarily due to $91.4 million and $50.5 million of organic revenues and acquired revenues, respectively. These increases were driven by higher demand throughout all product groupings, especially integrated subsystems, across all end applications and, in particular, radar, within the airborne, naval and land platforms.

Mercury posted a net income of $85.7 million in 2020, $38.9 million higher than in 2019. The increase was brought about by higher revenues, higher interest income, and lower income tax provision.

Cash and cash equivalents at the end of the year were $226.8 million. Net cash provided by operating activities was $115.2 million while investing and financing activities each used $135.5 million and $10.9 million, respectively, for acquisitions and payments under credit facility.

Strategy

The company strategies for growth are: Investing to grow organically; Expanding capabilities, market access and penetration through mergers & acquisitions; Investing in trusted, secure Innovation that Matters; Continuously improve operational capability and scalability; and Attracting and retaining the right talent.

These strategies are built around its key strengths as a leading technology company serving the aerospace and defense industry. These strategies include innovation and investment in scaling existing capabilities, as well as augmenting its capabilities through an acquisition strategy designed to focus on adjacent technologies. The company believes its investment in R&D is more than double that of its competitors on a percentage basis. Its consistent strategies allow it to assist its customers, mostly defense prime contractors, to reduce program cost, minimize technical risk, stay on schedule and budget, and ensure trust and security in the supply chain. As a result, it has successfully penetrated strategic programs including Aegis, Patriot, Surface Electronic Warfare Improvement Program (SEWIP), Gorgon Stare, Predator, F-35, Reaper, F-16 SABR, E2-D Hawkeye, Paveway, Filthy Buzzard, PGK, P-8, Advanced Integrated Defensive Electronic Warfare Suite (AIDEWS), Common Display System (CDS) and WIN-T.

Mercury Systems announced in June 2020 the availability of miniaturization packaging services that complement the U.S. Government's global positioning system (GPS) modernization efforts, advancing the development of smaller, more agile missiles and guided munitions to support mission success. Mercury's innovative three-dimensional (3D) packaging, manufacturing and test services optimize the size, weight and power (SWaP) of new secure military code (M-Code) GPS receivers. Leveraging Mercury's expertise in trusted 3D packaging and selective availability anti-spoofing modules (SAASM) assembly and testing, defense prime contractors can reduce their current electronics design footprint and deliver the greater payload and standoff capability the warfighter requires.

Mergers and Acquisitions

Mercury Systems uses acquisitions to add products, services, and technical capabilities.

In late 2019, Mercury agreed to acquire American Panel Corp., which develops large area display technology, for about $100 million. The company's capabilities are used in the US Army's Apache attack helicopter and M1A2 Abrams battle tank as well as the F-35, F-15, F-16, and F-18 fighter jets.

In early 2019, the Athena Group, Inc and Syntonic Microwave LLC were acquired. Both cost for $46,000. Athena was a privately-held company based in Gainesville, Florida and a leading provider of cryptographic and countermeasure IP vital to securing defense computing systems.  Syntonic was a privately held company based in Campbell, California and a leading provider of advanced synthesizers, wideband phase coherent tuners and microwave.

In early 2019, Mercury Systems, Inc. has acquired GECO Avionics, LLC (GECO) for a total purchase price of $36,500. Based in Mesa, Arizona, GECO has over twenty years of experience designing and manufacturing affordable safety-critical avionics and mission computing solutions.

Company Background

The company was founded in 1981. In 2011, Mercury acquired LNX Corporation of Salem, N.H.

Mercury Systems, Inc.

50 Minuteman Rd
Andover, MA 01810-1008
Phone: 1 (978) 256-1300

Firm Stats

Employer Type: Publicly Owned
Stock Symbol: MRCY
Stock Exchange: , NASDAQ
President and CEO: Mark Aslett
EVP, CFO, and Treasurer: Gerald M. Haines
Chairman: Vincent Vitto
Employees (This Location): 211
Employees (All Locations): 1,979

Major Office Locations

Andover, MA

Other Locations

Huntsville, AL
Phoenix, AZ
Camarillo, CA
San Jose, CA
West Lafayette, IN
Hudson, NH
West Caldwell, NJ
Arlington, VA
Fairfax, VA