Mercury Selected by NAVAIR To Continue To Provide Advanced Data Transfer Systems for Navy Aircraft

Rhea-AI Summary

Mercury Systems (NASDAQ: MRCY) has been awarded a five-year contract worth up to $131.3 million from the U.S. Naval Air Systems Command (NAVAIR) to continue providing Advanced Data Transfer Systems (ADTS) for naval aircraft. The company has been delivering ADTS and components to the Navy since 2017 for various rotary-wing and fixed-wing aircraft.

The new contract allows Mercury to deliver upgraded power-efficient ADTS units incorporating their JDAR encryption module. These systems simplify secure data transfer between ground planners and aircraft, enhancing operational readiness. Mercury's ADTS features include up to 3 TB solid state memory, optional crash survivable memory, high-speed data transfer rates, and various interfaces compliant with military standards.

Positive

• Secured a five-year contract worth up to $131.3 million from NAVAIR
• Continuing to provide Advanced Data Transfer Systems for naval aircraft
• Opportunity to deliver upgraded ADTS units with JDAR encryption module
• Strong partnership with the Navy across multiple aircraft systems

Negative

• None.

Insights

Defense Technology Analyst

The $131.3 million contract from NAVAIR represents a significant win for Mercury Systems, reinforcing its position in the naval aircraft data transfer systems market. This five-year indefinite delivery/indefinite quantity contract provides a stable revenue stream and demonstrates the Navy's continued trust in Mercury's technology.

Key points to consider:

• The contract allows for delivery of upgraded ADTS units with JDAR encryption, showcasing Mercury's ability to innovate and meet evolving security needs.
• Mercury's long-standing relationship with the Navy since 2017 indicates a strong market position and potential for future contracts.
• The ADTS features, including up to 3 TB of solid-state memory and high-speed data transfer rates, highlight Mercury's competitive edge in rugged, high-performance systems.

For investors, this contract signifies steady growth potential in Mercury's defense sector business, particularly in mission-critical data systems. The company's focus on edge computing and advanced technologies aligns well with current defense modernization trends, potentially opening doors for further contract opportunities across various defense programs.

Financial Analyst

This contract is a positive development for Mercury Systems, representing approximately 6.4% of its current market capitalization of $2.05 billion. The five-year duration provides revenue visibility and stability, which is important in the defense sector.

Key financial implications:

• Assuming even distribution, the contract could add about $26.26 million in annual revenue, potentially boosting top-line growth.
• The indefinite delivery/indefinite quantity nature allows for flexibility but also means the full contract value isn't guaranteed.
• Mercury's strong position across 300+ programs and 35 countries suggests diversified revenue streams, reducing dependency on single contracts.

Investors should monitor Mercury's ability to maintain or expand its profit margins with these upgraded systems. The contract's impact on free cash flow and R&D expenses will be important metrics to watch in upcoming financial reports. Overall, this contract strengthens Mercury's financial outlook and competitive position in the defense technology market.

ANDOVER, Mass., Oct. 21, 2024 (GLOBE NEWSWIRE) -- Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), a technology company that delivers mission-critical processing power to the edge, today announced it was awarded a five-year contract worth as much as $131.3 million from the U.S. Naval Air Systems Command (NAVAIR) to continue providing secure data transfer systems for naval aircraft.

Mercury has been delivering Advanced Data Transfer Systems (ADTS) and components to the Navy since 2017 to support numerous rotary-wing and fixed-wing aircraft. These rugged, flexible, and proven systems simplify the secure transfer of data between planners on the ground and aircraft, significantly improving operational readiness of these airborne assets. The new indefinite delivery/indefinite quantity contract will allow Mercury to deliver upgraded power-thrifty ADTS units that incorporate the company’s JDAR encryption module.

“Mercury has a strong partnership with the Navy, providing a range of data storage and transfer, video recorders, mission computers, and cockpit displays for the aircraft fleet,” said Roya Montakhab, Mercury’s SVP of Integrated Processing Solutions. “We are exceptionally proud to continue delivering ADTS systems that ensure critical government data is protected.”

Mercury’s ADTS features:

• Up to 3 TB (3 x 1 TB) solid state memory modules (each module available from 128 GB, 256 GB, or 1 TB) with up to 450/300 MB/s read/write transfer rates
• Optional crash survivable memory module: Up to 30 GB of storage
• 1 SATA port: optional for crash survivable flight data recorder
• Up to 250ms of response time
• MIL-STD-1553B, four 1,000 BASE-TX Gigabit ethernet, analog/digital video/audio, and discrete interfaces
• External command over external communications circuit
• Manual zeroize capabilities: via front panel switch
• Meets information assurance requirements (S&U)

Mercury Systems – Innovation that matters® 
Mercury Systems is a technology company that delivers mission-critical processing power to the edge, making advanced technologies profoundly more accessible for today’s most challenging aerospace and defense missions. The Mercury Processing Platform allows customers to tap into innovative capabilities from silicon to system scale, turning data into decisions on timelines that matter. Mercury’s products and solutions are deployed in more than 300 programs and across 35 countries, enabling a broad range of applications in mission computing, sensor processing, command and control, and communications. Mercury is headquartered in Andover, Massachusetts, and has 23 locations worldwide. To learn more, visit mrcy.com. (Nasdaq: MRCY) 

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, 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 geopolitical unrest 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, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of the Company's products, shortages in 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, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, 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, 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 dispute arising with the former CEO over his resignation, 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 June 28, 2024 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.

INVESTOR CONTACT
David Williams
Mercury Investor Relations
David.Williams@mrcy.com

MEDIA CONTACT
Turner Brinton
Senior Director, Corporate Communications
Turner.Brinton@mrcy.com

FAQ

What is the value of Mercury Systems' new contract with NAVAIR?

Mercury Systems (MRCY) has been awarded a five-year contract worth up to $131.3 million from the U.S. Naval Air Systems Command (NAVAIR).

What products will Mercury Systems provide under the NAVAIR contract?

Mercury Systems will continue to provide Advanced Data Transfer Systems (ADTS) for naval aircraft under the new NAVAIR contract.

How long has Mercury Systems been supplying ADTS to the Navy?

Mercury Systems has been delivering Advanced Data Transfer Systems (ADTS) and components to the Navy since 2017.

What are the key features of Mercury's Advanced Data Transfer Systems?

Mercury's ADTS features include up to 3 TB solid state memory, optional crash survivable memory, high-speed data transfer rates, and various interfaces compliant with military standards.